BobbyBroccoli
Published Nov 4, 2023For a brief moment, Nortel Networks was on top of the world. Let’s enjoy that moment while we can. Part 1 of 2.
00:00 This is John Roth
02:04 The Elephant and the Mouse
12:47 Pa without Ma
26:27 Made in Amerada
42:15 Right Turns are Hard
57:43 Silicon Valley North
1:07:37 The Toronto Stock Explosion
(more…)
February 27, 2024
The Company that Broke Canada
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February 24, 2024
Never mind the unfunded liability … money printer go brrrr!
Kulak at Anarchonomicon points out that the US government’s debt situation — which was alarming 20 years ago — has continued to get worse every year:
Libertarian Economists have been predicting this collapse of the federal system would happen “By About 2030” since before 2008. I remember in high school in the early 2010s listening to Ron Paul lectures and visiting USDebtClock.com, this was a hot button issue after 2008 … (then of course there was no political will to do anything and everyone just stopped talking about it)
I honestly forget that everyone around me doesn’t already know this, this is so common and accepted in libertarian and economic circles, and everyone who knows it got bored of eyes glossing over when they tried to explain it (in an autistic panic) decades ago.
US Unfunded liabilities:
Social Security, Medicare, Medicaid, US Debt, and Federal employee benefits and pensions, are all basically intergenerational ponzi schemes that require constant 1950s level population growth amongst the productive tax paying middle-class to maintain. By 2000 it was obvious this population growth was not happening, that population was beginning to age and collapse, and NO, the illegals at the border weren’t adequate replacements … (they weren’t adequate to prop up federal expenses in 2000 when they were still Mexican, now that they’re Guatemalan, Haitian, and Senegalese they’re almost certainly a net drain).
The Specter of Mass Boomer retirements with few to no children and grandchildren to replace them and pay for all the costs of their retirements and healthcare was maybe the slowest but most assured crisis ever to be seen in human history … Demographics is destiny.
This was a foreseen problem in 2000 when US Debt to GDP (just the portion that’s already been spent and interest has to be paid on) was 59% of GDP. Today the US Debt to GDP ratio is 122% of GDP whilst just in the past 24 years. Absolute US Federal Debt (not including state or local) has grown from 5.6 trillion dollars to 34 trillion dollars (102k per citizen: man, woman, and child). just the interest that has to be paid out of your tax dollars on that debt is set to eclipse ALL US Military spending sometime this year … And by 2028 Debt to GDP will be 150% (46.4 Trillion, 132k per citizen, 12 trillion more in 4 years, with no additional spending bills) and the Interest (at current estimates) will be over 2.5 trillion dollars, over a third of all Tax Dollars brought in will be spent on just interest, because dollar confidence has collapsed and the only way to keep inflation from destroying the dollar has been to radically raise the interest rates the Federal Reserve offers.
Now all that, That catastrophic state of things, is just the debt, the money that’s been spent … The real crisis is the Unfunded liabilities, all the promises the US has made to Boomers (who dominate the vote) and others about money they’re GOING to spend.
As of now total Unfunded liabilities stand at 213 trillion dollars, $633,000 per US Citizen (Man woman, and newborn babe)… These are all dollars the US has promised to pay to someone somewhere at some point: Social Security, Medicare, Medicaid, Federal pensions, VA Benefits, etc. And cannot in any politically feasible way restructure or get out of.
If no one ever contributed another dime to social security, and in so doing was promised in turn significantly more than that dime (it’s a Ponzi scheme, it loses money in proportion to and at a greater rate than the money being contributed to it (every dollar you contribute you’re promised multiple dollars in return, and your dollar is not invested, it just pays off previous contributors)) … If everything froze and every young person was locked out of ever receiving Social Security, Medicare, or Medicaid, the Unfunded Liability would be $633k per every man, woman, and child … that’d be the debt a newborn American would be born with.
However because it is NOT frozen and it will not be, by 2028 that number will Rise to $837k and an ordinary household of 4 will have seen their, politically unavoidable, family obligation in future tax payments to the federal government increase by $804,000 in just 4 years.
If your response is that your family doesn’t even make 804k in 4 years and there’s no way you could ever pay that much in 4 years given its just going to increase at a faster rate the next 4 years … CONGRATULATIONS! 90% of families don’t make that much, and less than 1% of families could ever afford to pay that much in taxes in a 4 year time.
This has been slowly growing for decades, and in the late 2000s and 2010s Ron Paul types were screaming that those Benefits needed to be reformed NOW (in 2008) or they’d drown America. But of course, cutting benefits is political Anathema to boomers, so nothing was done …
The Course of Empire – Destruction by Thomas Cole, 1836.
From the New York Historical Society collection via Wikimedia Commons.
October 31, 2023
In the 1920 presidential election, Americans voted overwhelmingly for a return to “normalcy”
Warren G. Harding’s term in office has been treated like a punchline by progressive writers and commentators for a century, but Lawrence W. Reed refutes this easy mockery and points out that the winner of the 1920 election deserves much better:
Warren G. Harding, 14 June 1920.
Library of Congress control number 2016828156
Routinely dismissed as a bad chief executive, Harding’s reputation is undergoing a long overdue renovation. The latest contribution in that regard is a new, must-read biography by Ryan S. Walters titled, The Jazz Age President. Read it, and you’ll forever be skeptical of the lazy, biased, conventional historians who worship power and those who wield it.
Warren Harding didn’t just tell audiences what they wanted to hear. He sometimes told them what they did not want to hear. He went to Birmingham, Alabama to condemn racism and Jim Crow laws, for example — a fact I’ve previously pointed out.
Conventional historians praise Presidents for the bills they signed into law but often it requires more courage and conviction to veto them. On that score too, Harding can be judged favorably. He vetoed six bills in the 2-1/2 years he served in the White House. None of the six was overridden. That may not sound like a lot but remember, his party controlled both houses by big majorities; Congress didn’t send him much it thought he wouldn’t sign.
Four bills Harding vetoed concerned minor issues and generated little attention, but one concerned a bonus for veterans of World War I. It stirred up quite a fuss. As the bill worked its way through the House and Senate, Harding gave ample warning that he wouldn’t even consider a bonus that wasn’t paid for. Congress ignored him and sent the bill to his desk. He rejected it, noting as follows:
In legislating for what is called adjusted compensation, Congress fails to provide the revenue from which the bestowal is to be paid. We have been driving in every direction to curtail our expenditures and establish economies without impairing the essentials of governmental activities. It has been a difficult and unpopular task. It is vastly more applauded to expend than to deny.
After the Civil War, Congress paid pensions to veterans of the conflict and their dependents. Sixty years later, in 1923, it sent a bill to Harding to grant pensions to women who married aging Civil War veterans long after the war. It even authorized higher payments to them than what recent widows of veterans in the war with Germany were getting. His veto message included this unassailable objection:
The compensation paid to the widows of World War veterans, those who shared the shock and sorrows of the conflict, amounts to $24 per month. It would be indefensible to insist on that limitation upon actual war widows if we are to pay $50 per month to widows who marry veterans 60 years after the Civil War.
Congress should have known better than to expect Harding to sign such bills. This was the same man who declared at his modest, unembellished inauguration that “Our most dangerous tendency is to expect too much of government”. He had expressed a desire to put “our public household in order”. He said he wanted “sanity” in economic policy, combined with “individual prudence and thrift, which are so essential to this trying hour and reassuring for the future”.
If somebody told me all that, I wouldn’t even think of asking him to approve a check for an able-bodied 30-year-old simply because she married an 80-year-old veteran.
This was the same Warren Harding, remember, who gave the country perhaps the best Treasury Secretary in its history, Andrew Mellon. According to historian Burton Folsom, Mellon slashed government expenses and eliminated an average of one Treasury staffer per day for every single day he held the office. Harding, Mellon and Calvin Coolidge (Harding’s successor), together with a friendly Congress, reduced the federal budget and cut the national debt by more than one-third.
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April 16, 2023
Raising the minimum retirement age may be necessary, but it will never be politically popular
As protests and riots continue against the French government’s attempt to raise the minimum retirement age from 62 to 64, Theodore Dalrymple explains why he finds sympathy with the working poor who will be most directly hurt by the change:
Riot police on the streets of Bordeaux as violent protests against French government plans to raise the retirement age continue.
YouTube screen capture from an AFP report.
As I hope to be able to work till my dying day, I am perhaps not the right person to animadvert on the present disturbances in France about the raising of the retirement age from 62 to 64. My work has always been pleasing to me, and it remains so; I even manage to delude myself sometimes that it is important.
I am forced to recognize, however, that not everyone is in the same happy position as I. I am sure that if I had been a dustman all my life, I should not hope to be emptying dustbins at my present age (73), let alone at the age of 85. While my work remains work, and in a certain sense occasionally even hard work, especially when I have to think, what I do is not physically demanding. No one ever got arthritis or fibrosis of the lung by writing a few articles.
The reform of the pension system in France, from my limited understanding of it, is rather unfair. It is true that some reform is necessary: There are ever fewer workers to fund the pensions of ever more pensioners (the system being entirely unfunded by investment). On the other hand, it is those who do the most unpleasant and unremunerative jobs who have to work the longest, and the reform only increases this unfairness. As the old cockney song has it, it’s the rich what gets the pleasure.
Nevertheless, the extreme opposition to the reform, which is hardly a radical one, strikes most foreigners as rather strange. In a way it is also sad, for it implies that a long retirement is the main aim of all that precedes it, which in turn implies that all the work done for several decades before retirement has been an unpleasant imposition rather than something of value in itself. That the quid pro quo for a longer life expectancy is a greater number of years spent working seems not to strike anyone with force.
The demonstrators probably think, no doubt correctly, that the reform is the thin end of a wedge: If it is allowed to pass without a fuss, there will be further such reforms until the retirement age will be 70, 80, or never, depending on life expectancy. As for the younger demonstrators, they do not seem to worry much that it is they who will be paying for the people older than themselves to retire early, the distant prospect of early retirement being more real to them than the far more proximate high rates of taxation.
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October 16, 2021
QotD: Social security
[F]rom a pure policy perspective, Social Security makes little sense except as a modest welfare program. There is, after all, no earthly reason why most middle class or wealthy citizens need the government to garnish their wages for decades and then provide a retirement benefit later: People are generally perfectly capable of saving for their own retirements. Those who want to paint the program as indispensable are fond of pointing to the large numbers of retirees who rely almost wholly on Social Security for their incomes. But then, when you take a hefty 12.4 percent bite out of people’s paychecks — leaving them with less to save — and tell them they can rely on a government benefit later, it’s not exactly shocking that many people don’t save and rely on a government benefit later.
Julian Sanchez, “Social Security’s Progressive Paradox: Retirement ‘insurance’ as a Rube Goldberg machine”, Reason, 2005-05-02.
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May 24, 2019
Ontario universities’ “quarter-million dollar club”
Being a tenured university professor is generally a well-paid job, even in Canada. But thanks to an unintended interaction between pension legislation and retirement policies, older tenured professors are required to draw their pensions (which are pretty damned good by themselves) and their salaries from the university, which boosts many of them well into the quarter-million a year range:
University College, University of Toronto, 31 July, 2008.
Photo by “SurlyDuff” via Wikimedia Commons.
Ontario is a weird place sometimes. One month ago, the government announced that it was implementing a performance-based funding plan which – if you took the government’s half-thought-out comments seriously – raised the possibility that hundreds of millions or perhaps even billions of dollars currently projected to be spent on institutions might be snatched away if institutions failed to hit some ill-defined targets in a type of contract-based funding system. You’d think this would be a big deal, something people would want to talk about and discuss.
But no. Somehow, this is not what is currently obsessing the Ontario university sector. Instead, apparently, we need to talk about how it’s a human rights violation for professors to be asked to enjoy their retirement on a six-figure annual pension.
Crazy? Well, yes. Here’s the deal. Time used to be that universities could tell professors to retire at age 65 or 67 or whenever. Over the course of the 2000s, provinces gradually got rid of mandatory retirement; in Ontario this occurred in 2006, when the provincial government amended the Human Rights Code to that effect. It should have surprised absolutely no one that more and more full professors, who towards the end of their career routinely make over $180,000 per year, decided to delay retirement not just past 65 but pretty much forever. In 2011, only 6.7% of professors were over 65 and 0.9% 70 or over. Just five years later in 2016, that was up to 10.2% and 3.3% respectively. At the time, I estimated that the compensation costs for the over-65s amounted to $1.3 billion, or enough to hire about 10,000 new junior faculty. The share of that going to the 70-pluses would amount to a little north of $400 million.
But here’s the thing: federal pension legislation requires individuals to start drawing down their pensions at age 71. You can’t opt-out. And so as a result you get individuals who are in what Carleton University economist Frances Woolley recently called the “quarter-million dollar club” (do read Frances’ piece – everything she does on higher education is excellent, but she is extra-excellent on this one). Even if you understand the legislative path that led us here, you probably – rightly – think this is an outrageous sum, particularly in light of the fact that research productivity tends to decline over time and teaching loads among full professors are not all that onerous.
On the other side of the pond, a recent tribunal ruling at Oxford’s St. John’s College points in a very different direction:
Oxford and Cambridge universities can force old professors to retire in order to boost diversity, a tribunal ruling suggests.
Prof John Pitcher, a leading Shakespeare scholar and fellow at St John’s College at Oxford, claimed that he had been unfairly pushed out at age 67 to make way for younger and more ethnically diverse academics.
He sued the College and university for age discrimination and unfair dismissal, claiming loss of earnings of £100,000 – but Judge Bedeau dismissed both claims.
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April 3, 2019
Greater Poland Uprising – Book Picks – Veteran Care I BEYOND THE GREAT WAR
The Great War
Published on 2 Apr 2019It’s time for another episode of Beyond The Great War where we answer questions from the community. This time we take a look at the Greater Poland Uprising and the situation of Poland in early 1919, Jesse recommends a few of his favourite history books and we also talk about how veterans were treated after the 1918 armistice.
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Boysen, Jens. “Polish-German Border Conflict”, in 1914-1918 online. International Encyclopedia of the First World War. https://encyclopedia.1914-1918-online…Davies, Norman. White Eagle, Red Star. The Polish-Soviet War 1919-1920 and the ‘Miracle on the Vistula’ (London: Pimlico, 2003 [1972]).
Gattrell, Peter. Russia’s First World War (Pearson, 2005).
Gerwarth, Robert. The Vanquished. Why the First World War Failed to End, 1917-1923 (Penguin, 2017).
Horne, John. “The Living,” in Jay Winter, ed. The Cambridge History of the First World War, vol. 3: Civil Society (Cambridge: Cambridge University Press, 2014): 592-617.
Leonhard, Jörn. Der überforderte Frieden. Versailles und die Welt 1918-1923 (CH Beck, 2018).
Pawlowsky, Verena/Wendelin, Harald. “Government Care of War Widows and Disabled Veterans after World War I,” in: Contemporary Austrian Studies, XIX: From Empire to Republic: Post-World War I Austria, eds. Bischof, Günter/Plasser, Fritz/Berger, Peter (2010): 171-191
Prost, Antoine. “Les anciens combattants”, in Stéphane Audoin-Rouzeau and Jean-Jacques Becker, eds. Encyclopédie de la Grande guerre 1914-1918 (Paris: Bayard, 2013): 1025-1036.
Snyder, Timothy. The Reconstruction of Nations. Poland, Ukraine, Lithuania, Belarus, 1569-1999 (Yale University Press, 2003).
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June 29, 2018
QotD: What is a discount rate?
It is not the 20 percent savings you got by buying a new washing machine on Black Friday last year. A discount rate is a way of accounting for the fact that dollars in the future are not quite the same as dollars you have right now.
You know this, don’t you? Imagine I offered to give you a dollar right now, or a dollar a year from now. You don’t have to think hard about that decision, because you know instinctively that the dollar that’s right there, able to be instantly transferred into your sweaty little hand, is much more valuable. It can, in fact, be easily transformed into a dollar a year from now, by the simple expedient of sticking it in a drawer and waiting. It can also, however, be spent before then. It has all the good stuff offered by a dollar later, plus some option value.
Even if you’re sure you don’t want to spend it in the next year, however, a dollar later is not as good as a dollar now, because it’s riskier. That dollar I’m holding now can be taken now, and then you will definitely have it. If you’re counting on getting a dollar from me a year from now, well, maybe I’ll die, or forget, or go bankrupt.
The point is that if you’re valuing assets, and some of your assets are dollars you actually have, and others are dollars that someone has promised to give to you at some point in the future, you should value the dollars you have in your possession more highly than dollars you’re supposed to get later.
The rule for establishing an exchange rate between future dollars and current ones is known as the “discount rate.” Basically, it’s a steady annual percentage by which you lower the value of dollars you get in future years.
All you need to remember is two things: the longer you have to wait to get paid, the less that promise is worth to you today. And the higher the discount rate you apply, the lower you’re valuing that future dollar.
Megan McArdle, “Public Pensions Are Being Overly Optimistic”, Bloomberg View, 2016-09-21.
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February 25, 2018
Amphibious Landing Craft – Widow Compensation – Repatriation I OUT OF THE TRENCHES
The Great War
Published on 24 Feb 2018Ask your questions here: http://outofthetrenches.thegreatwar.tv
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March 16, 2017
Words & Numbers: Blocked by a State’s Wall of Taxes
Published on 15 Mar 2017
This week, James & Antony discuss the case of Connecticut’s budget shortfall. The state hopes to solve their financial problems by raiding the retirement accounts of previous Connecticut government employees who have moved out of the state, and take 30% of those savings. This plan would hurt retirees, break promises, and trap many people in the state based on a policy that may be illegal.
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January 26, 2017
QotD: Why government intervention usually fails
We saw in an earlier story that the government is trying to tighten regulations on private company cyber security practices at the same time its own network security practices have been shown to be a joke. In finance, it can never balance a budget and uses accounting techniques that would get most companies thrown in jail. It almost never fully funds its pensions. Anything it does is generally done more expensively than would be the same task undertaken privately. Its various sites are among the worst superfund environmental messes. Almost all the current threats to water quality in rivers and oceans comes from municipal sewage plants. The government’s Philadelphia naval yard single-handedly accounts for a huge number of the worst asbestos exposure cases to date.
By what alchemy does such a failing organization suddenly become such a good regulator?
Warren Meyer, “Question: Name An Activity The Government is Better At Than the Private Actors It Purports to Regulate”, Coyote Blog, 2015-06-12.
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January 22, 2017
QotD: Conflict of interest
I am not sure that this is a suitable subject for a blog post, probably more a project for an aspiring PhD student, but with all the discussion of conflicts of interest in the Trump cabinet, it strikes me that the most glaring conflict in the public sector is ignored: The CoI between state and local politicians elected with the support of public sector unions who then participate in compensation negotiations for the members of those unions. Here the temptation of the politicians to buy the support of the unions with public money is overwhelming. The impact of this is potentially trillions when public pension liabilities are included.
This is such an obvious conflict that I have looked to see if there are laws preventing this, but my initial research shows nothing.
It would be interesting to see if there is a statistical relationship between union support and subsequent pay rises. I would expect this relationship to be especially strong with deferred compensation (such as pensions) since this is very difficult for voters to monitor and can be easily gamed with unrealistic assumptions about, for example, investment returns.
Roger Barris, quoted by Tyler Cowen, “Understudied conflicts of interest in American government”, Marginal Revolution, 2017-01-11.
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December 12, 2016
Refuting Piketty’s call for revolution, again
Tim Worstall points out that Thomas Piketty has mis-diagnosed the “problem” of rising capital:
The report shows that there were 13 OECD countries in which assets in funded pensions represented more than 50% of GDP in 2015, up from 10 in the early 2000s. Over the same period, the number of OECD countries where assets in funded private pension arrangements represent more than 100% of GDP increased from 4 to 7 countries.
We’re living longer lives these days, we’re working for fewer decades of them and thus people are rationally saving for their expected golden years. Thus capital as a percentage of GDP rises – not to produce inheritances, but to produces incomes in retirement. And rises by potentially at least more than 100% of GDP.
We can’t see that this is a problem and we most certainly cannot see that this is an argument for greater taxation of capital. Quite the reverse in fact, people saving for their old age should be encouraged, not specifically taxed.
So much for the most recent French call for revolution then, eh?
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December 1, 2015
Britain’s welfare system
Brendan O’Neill says it’s time to smash the welfare system because it’s too badly broken to fix:
… however much the the apologists for the Byzantine system of welfarism might kick and shout, we need to get the facts out there, and we need to talk about them frankly.
The fact that more than half of Britain’s households, 13.7m, receive more in welfare benefits than they pay in taxes. The fact that this represents a rise from 45.9 per cent of households in 1997 to 51.5 per cent today. The fact that 20.3m families now receive some kind of state benefit. The fact that for 9.6m of these families, benefits account for more than half of their income. The fact that nearly five million people have their rent paid by the state. The fact that vast numbers of people, first through Incapacity Benefit and then through Employment Support Allowance, have been redefined by the state as ‘incapable’ — of work, of independence, of dignity, in effect — and have been put out to pasture. There are parts of Britain where a state-sanctioned culture of incapacity has deadened community spirit, destroyed its soul.
The growth of welfarism in recent decades, the replacement of economic vision and the creation of new wealth with a colossal system of state charity and therapy, has terrible consequences. It dents individual ambition, and corrodes social solidarity. When people are invited to rely for their every financial and psychic need on the distant, faceless state, then they’re less likely to rely on their own volition and on the support and kindness of neighbours and friends.
Welfarism is a classic good intention turned hellish: in the name of helping people it actually weakens both individual pluck and community zest. Of course, the loudest cheerleaders of welfarism — the comfortable, cushioned liberals who shout down anyone who criticises the welfare state — have no experience of this. They don’t even want to see it on their TV, as their lust to censor Benefits Streets demonstrated. Yet a few miles from the leafy suburbs in which they churn out their defences of welfarism there will be communities branded incapable and made divided by that welfarism.
Some people say, ‘But welfare benefits is not a huge part of government spending!’ This is true. It accounts for somewhere over 20 per cent. Or they say, ‘And old people get most of it!’ This is also true, and I think it is quite proper: the generational jihadists who moan about pension spending don’t seem to realise that old people who have worked or child-reared all their lives deserve society’s help in their twilight years, and that this is massively different to giving state largesse to fit, young 25-year-olds.
But my concern with welfarism is not how much it costs the government but the costs it has for community life, public spirit, the self-willed individual. Welfarism should be radically rethought not in order to save a few billion quid but in order to reverse the state’s spread into communities and to repair the self-belief and independence of working-class and poorer sections of society.
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August 12, 2015
“… premiers look to Ottawa for one reason and one reason only: To beat the Prime Minister … over the head with their begging bowls”
Richard Anderson explains why Ontario Premier Kathleen Wynne is upset with Prime Minister Stephen Harper:
It is a time honoured tradition that premiers look to Ottawa for one reason and one reason only: To beat the Prime Minister of the day over the head with their begging bowls. What Kathleen Wynne is looking for is not a “partnership” but a ceaseless no-strings-attached flow of federal money. Like a petulant teenager the sextuagenarian premier always wants more and offers little in return. Prime Minister Harper has wisely refused to play her game.
[…]
Now imagine that you’re Kathleen Wynne — please try to subdue the gag reflex — and billions of dollars now flow into the provincial coffers from this de facto payroll tax. Perhaps the money gets tossed into general revenues. Queen’s Park then turns arounds and issues IOUs to the “arm’s length board” in the form of increasingly worthless provincial bonds. The pension would for actuarial purposes be “fully funded” but as a practical matter one pocket of government is borrowing from the other.
But perhaps the Wynnesters are a tad more clever than all that. The revenues from this payroll tax go directly to the allegedly “arms length” investment board. Nothing goes into general revenues and the Liberals allow themselves a patina of fair dealing. The board, however, will almost certainly have its investment guidelines laid out by the government. Those guidelines, by the strangest coincidence, will likely have an “invest in Ontario” component.
Some of the money will get used to buy up provincial bonds, lowering the government’s cost of borrowing at a time when capital markets are getting skittish about Ontario debentures. Quite a lot of the rest will be used to fund infrastructure projects, private-public sector partnerships and other initiatives that will, mysteriously, favour Liberal allies. The Chretien era Adscam scandal will seem like chump change in comparison.
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