Quotulatiousness

August 4, 2013

Who speaks for those neither rich nor poor?

Filed under: Economics, Government, USA — Tags: , , , — Nicholas @ 09:37

Victor Davis Hanson on the forgotten people in the middle:

There are more than 48 million Americans on food stamps, an increase of about 12 million since the beginning of the Obama presidency.

At a time of record-high crop prices, the U.S. government still helps well-off farmers with some $20 billion in annual crop payouts and indirect subsidies.

The Left mythicizes food-stamp recipients almost as if they all must be the Cratchits of Dickensian England.

The Right romanticizes corporate agriculture as if the growers all were hardscrabble family farmers in need of a little boost to get through another tough harvest.

Those in between, who pay federal income taxes and are not on food stamps, lack the empathy of the poor and the clout of the rich. Can’t a politician say that?

Illegal immigration is likewise not a Left vs. Right or Republican vs. Democrat issue, but instead mostly one of class.

The influx of millions of illegal immigrants has ensured corporate America access to cheap labor while offering a growing constituency for political and academic elites.

Yet the earning power of poorer American workers — especially African Americans and Hispanic Americans — has stagnated.

The common bond between the agendas of La Raza activists and the corporate world is apparently a relative lack of concern for the welfare of entry-level laborers, many of them in American inner cities, who are competing against millions of illegal workers.

Given the slow-growth, high-unemployment economy, and the policies of the Federal Reserve, interest on simple passbook accounts has all but vanished.

The poor are not so affected. They are more often borrowers than lenders, and they are sometime beneficiaries of federally subsidized debt relief.

The rich have the capital and connections to find more profitable investments in real estate or the stock market that make them immune from pedestrian, underperforming savings accounts.

In other words, this administration’s loose money policy has been good for the indebted and even better for the stock-invested rich. But it is absolutely lousy for the middle class and for strapped retirees with a few dollars in conservative passbook accounts.

July 30, 2013

The economic inefficiency of “fair trade” goods

Filed under: Business, Economics, Food — Tags: , , , , — Nicholas @ 10:26

Tim Worstall applauds you for wanting to use some of your economic surplus to help out the poor and less fortunate producers of various goods in the developing world, but points out that the “fair trade” method is incredibly inefficient at funnelling any of that extra money to the original producers of your coffee or other “fair trade” goods:

However, you might want to have a little think about this in the lights of these quite astonishing numbers:

    An interesting statistic is that in 2010, retail sales of fair-trade-labelled products totalled about $5.5 billion, with about $66 million premium — or about 1.2 percent of total retail sales — reaching the participating producers. There has to be a better way of helping poor farmers. Having only 1.2 cents out of every dollar spent on fair-trade products reach the target farmers is a hugely inefficient way of helping these people. If people wish to help these farmers there has to be charities out there that can transfer more than 1.2 cents per dollar to them.

It may well be that you are exercising your consumer choice as a way to make the world a better place. It’s just an incredibly inefficient method of doing so and thus you might want to reconsider that plan.

My own supposition is that the reason Fair Trade is so appallingly inefficient is the number of Interchangeable Emmas who have to be paid from that money supposedly going to producers. It takes very many poor coffee farmers’ incomes to pay for the PR bod advertising Fair Trade coffee from an office in central London. It might well be better to simply do as Madsen urges, and buy things made by poor people in poor countries. Then send the money saved by not paying the Emmas off to a charity of some minimal efficiency. Or even, if coffee farmers are really your thing, simply drink an extra cup or two a day and send the money by increasing demand for their production.

Update: In a marginally related item, Jonathan Katz explains why the policy of sending food to distant lands is less an attempt to ameliorate hunger than it is a corporate welfare policy to prop up US agribusiness:

The problem, says Christopher Barrett, an economist at Cornell University and one of the world’s leading experts on food aid, is that the U.S. has an entirely different goal when it comes to sponsoring humanitarian assistance. Feeding the hungry has never been its sole purpose.

Rather, the historical goal of food aid has been to stimulate U.S. businesses — the agriculture and shipping industries above all. Modern food aid was devised in the early days of the Cold War as a way to dispose of government-held surpluses, in order to regulate crop prices at home and create markets abroad. The main programs in the early days of food aid didn’t even give food away for free, rather selling it to foreign governments at a discount. “It just happened that this could get advertised as and provide humanitarian relief on occasion,” Barrett said.

Over time, things began to change. Surplus disposal became less important than other forms of domestic price control, and the cheaply sold food did not prove very effective in opening markets. When in the 1970s and 1980s, food donated during famine emergencies in Asia and Africa proved effective, free-food distributions took over as the dominant programs.

Today, the major players in food aid are nongovernmental organizations (NGOs) such as World Vision. But, because of how American laws are structured, domestic corporations still reap the much of the profit. Major U.S. agribusinesses can count on hundreds of millions of dollars in annual sales to the government.

Shipping companies do even better. Federal law mandates that at least half of all U.S. food aid must be shipped aboard U.S.-flagged vessels. With shipping costs taking up nearly 40 percent of any food assistance funding, the law guarantees hundreds of millions of dollars in contracts for shipping companies. The winner of the Mozambique shipment was no exception: Sealift Inc. has grossed $203 million in government contracts since 2011, mostly from the Pentagon, according to data at USASpending.gov. This benefit is not lost on the shipping industry: The sector’s leading coalition, USA Maritime, spent $250,000 lobbying Congress on food aid and cargo-preference laws in 2011 and 2012.

July 29, 2013

“Junk food costs as little as $1.76 per 1,000 calories, whereas fresh veggies … cost more than 10 times as much”

Filed under: Economics, Food, Health, USA — Tags: , , , , — Nicholas @ 10:35

Making a case for the McDonald’s McDouble as the greatest food in human history:

What is “the cheapest, most nutritious and bountiful food that has ever existed in human history” Hint: It has 390 calories. It contains 23g, or half a daily serving, of protein, plus 7% of daily fiber, 20% of daily calcium and so on.

Also, you can get it in 14,000 locations in the US and it usually costs $1. Presenting one of the unsung wonders of modern life, the McDonald’s McDouble cheeseburger.

The argument above was made by a commenter on the Freakonomics blog run by economics writer Stephen Dubner and professor Steven Leavitt, who co-wrote the million-selling books on the hidden side of everything.

Dubner mischievously built an episode of his highly amusing weekly podcast around the debate. Many huffy back-to-the-earth types wrote in to suggest the alternative meal of boiled lentils. Great idea. Now go open a restaurant called McBoiled Lentils and see how many customers line up.

But we all know fast food makes us fat, right? Not necessarily. People who eat out tend to eat less at home that day in partial compensation; the net gain, according to a 2008 study out of Berkeley and Northwestern, is only about 24 calories a day.

The outraged replies to the notion of McDouble supremacy — if it’s not the cheapest, most nutritious and most bountiful food in human history, it has to be pretty close — comes from the usual coalition of class snobs, locavore foodies and militant anti-corporate types. I say usual because these people are forever proclaiming their support for the poor and for higher minimum wages that would supposedly benefit McDonald’s workers. But they’re completely heartless when it comes to the other side of the equation: cost.

Update, 30 July: Stephen Dubner notes that the Kyle Smith story has triggered “about one zillion” media requests for more comment on the original post, but that he’s too busy writing to take time out to respond.

July 21, 2013

Reason.tv – Detroit’s Tragedy and How to Fix It

Filed under: Economics, Government, USA — Tags: , , , — Nicholas @ 09:12

The key things about Detroit’s bankruptcy are that it didn’t happen overnight – and it didn’t have to happen at all.

Detroit’s long, sad slide started in 1950, when the Motor City’s population peaked at nearly 2 million people. Now it’s around 700,000.

The hollowing out of the city was on gut-wrenching display in two recent exhibits at the National Building Museum, featuring photographs by Camilo Jose Vergara and Andrew Moore.

In fat times and lean, the city’s pols and power-brokers chose to focus their energy, and the residents’ tax dollars on gigantic, big-ticket development scams while ignoring the basics that let cities thrive — or at least survive.

Detroit’s leaders poured money into a never-ending assembly line of sad-sack projects such as the Renaissance Center, the Fox Theater, Comerica Park, Poletown, the People Mover, and Ford Field.

But unlike Pompei and other cities crushed by Nature’s wrath or God’s wrath, Detroit’s destruction is completely man-made and thus can be reversed. The city that midwifed the Model T and the Cadillac, Bob Seger and Eminem, Ted Nugent and the Insane Clown Posse, still has tremendous assets in terms of infrastructure, location, and people.

Like Buffalo, Cleveland, St. Louis, and other dead cities scattered across the map of the industrial Midwest like so many cigarette burns, Detroit can stage its own comeback by reducing crime and picking up garbage; by freeing kids, parents, and property values from an abysmal school system; and getting the government out of everything that isn’t essential.

In other words, Detroit’s leaders only need to do what they should have been doing for the past 50 years. And the city’s dwindling supply of residents needs to keep them honest this time.

Because Detroit is finally out of next times.

Produced by Jim Epstein. Written and narrated by Nick Gillespie. Additional camera by Meredith Bragg.

July 18, 2013

Foodstamps as a form of corporate welfare

Filed under: Business, Government, USA — Tags: , , , , , — Nicholas @ 09:43

Mike Krieger explains how the US foodstamp program can be seen as a form of corporate welfare:

This ridiculously condescending budget put out by McDonald’s in partnership with Visa has been making the rounds today. I’ll allow excerpts from the Gothamist article on it and their corresponding video do most of the explaining, but the key point I want to hammer into people is that food stamps are corporate welfare. They actually are not welfare for the workers themselves, who undoubtably don’t have wonderful lives. What ends up happening is that because the government comes in and supplements egregiously low wages with benefits like food stamps, the companies don’t have to pay living wages. So in effect, your tax money is being used to support corporate margins. Even better, many of these folks who get the food stamp benefits then turn around and spend them at the very companies which refuse to pay them decent wages. Who benefits? CEOs and shareholders. Who loses? Society.

From the Gothamist post by Nell Casey:

Let’s take a look at what else McDonald’s imagines its employees’ expenditures should look like. First off, the site sets employees’ mortgage/rent at $600, which even if we didn’t live in an outrageously expensive city is still a laughably small figure. Next, the site tallies health insurance at a mere $20 per month. Where is this magical land of nearly free independent healthcare? We want Obama’s unicorn to fly us there! Also as a McDonald’s employee, your cable and phone bills should only come to $100 a month (HA!), your electric bill should hover around $90 (for serious?) and apparently if you work at a fast food chain there’s absolutely no need to ever buy any food ever. Maybe they offer employees a lifetime supply of fries?

So tallying up all of these totally realistic expenses, a McDonald’s employee would need to net $2,060 per month to make this budget work. Broken down, that would mean working at least 40 hours per week and making at least $15 an hour pre-taxes to earn the necessary $12.86 an hour. Currently, McDonald’s workers earn an average of $8.25 per hour, barring any funny business.

Update: A couple of comments have been logged on this post, and Megan McArdle’s first Bloomberg column also addresses the McDonalds/Visa budget thingy:

Speaking of food, a sample budget put together by Visa Inc. and McDonald’s Corp. is rocketing around the Internet. Most of the commentary suggests that McDonald’s is heartless, and gauche, to suggest how its employees might live on the embarrassingly paltry wages that they are paid. (According to the Census Bureau’s American Community Survey of 2009-11, median earnings for a fast-food worker were $18,564 a year.) The budget is based on two jobs, which has aroused special ire: Is McDonald’s telling its employees to get a second job so they don’t have to pay them anything?

[…]

Keep in mind that most McDonald’s workers don’t live close to New York City or Washington, the sources of much of the commentary I’ve seen. These are, respectively, the first- and fourth-most-expensive cities in the country. In many areas, the median after-tax household income is not that far from that on the McDonald’s worksheet, and it’s pretty easy to rent a room in a friend’s house for less than $600 a month. Memphis, Tenn., for example, has a median household income of $35,000, which, according to Paycheckcity.com’s take-home calculator, would give a single person about $2,300 a month after taxes. And that’s the median — 50 percent of the city is below that. You should not develop a theory of household finance that declares that the city of Memphis does not exist.

Survival on such a lean budget is possible because people who do it are not trying to live the atomized life of an upper-middle-class college graduate. They band together, sharing rent, cars and cash when needed, handing down clothes and generally spreading fixed costs over as many people as possible.

Should McDonald’s pay enough to support a thrifty-but-not-too-difficult independent lifestyle? Is that now the minimum decent standard for society? Obviously, a lot of people think that they should. Washington’s City Council just passed a “living wage” law directly targeted at Wal-Mart Stores Inc. that aims to force the retailer to pay its workers $12.50 an hour.

What would that look like nationwide? Let’s set the floor a little above the amount in the budget — about $27,500 after taxes, which will allow them to enjoy the full McDonald’s budget, plus health insurance on an exchange. That’s a minimum wage of $13.75 an hour for a full-time worker, almost double the current minimum; obviously, everyone else would also have to be paid more. The minimum that a two-earner household could bring in would be $55,000 a year — not that far from the current median income for a two-earner household.

Even if it were possible to mandate that everyone in the country make almost the median income, this would come with a cost; I’d guess that most economists would agree that such a hike in the minimum wage would cause fairly significant job losses.

July 11, 2013

Inane new “measurement” claims 1978 was the “best year ever”

Filed under: Economics, History — Tags: , , , , — Nicholas @ 08:39

An editorial in New Scientist (which I can’t quote from due to copyright concerns) claims that using a new “measurement” called the Genuine Progress Indicator (GPI), human progress peaked in 1978 and it’s all been downhill since then. Anyone who actually lived through 1978 might struggle to recall just what — if anything — was better about 1978 than following years, but the NS editors do point out that the GDP measurement generally used to compare national economies doesn’t capture all the relevant details, while GPI includes what they refer to as social factors and economic costs, making it a better measuring tool for certain comparisons.

I can only assume that most of the economists who believe that 1978 was a peak year for the environment hadn’t been born at that time: pollution was a much more visible issue in North America and western Europe than at almost any time afterwards (and eastern Europe was far worse). Industry and government were taking steps to cut back some of the worst pollutants, but that process was really only just in its early stages: it took several years for the effects to start to show.

In the late 1970s, the world was a much dirtier, poorer, less egalitarian place than even a decade later: China and India were both much more authoritarian and had still not mastered the art of ensuring that there was enough food to feed everyone. Behind the Iron Curtain, Soviets and citizens of their client states in Europe were falling further and further behind the material well-being of westerners (and becoming much more aware of the deficit).

No matter how much emphasis you put on nebulous “social factors”, the fact that the world poverty rate — regardless of how you measure it — has been cut in half over the last twenty years, lifting literally billions of people out of near-starvation makes an incredibly strong case that the world is doing better now than at any time since 1978. You can prattle on all you like about “rising inequality”, but for my money it’s a better world where the risk of people literally starving to death is that much closer to being eliminated. Give me an “unequal” world where even the poorest have enough food and clean water over an egalitarian world where billions starve, thanks very much.

June 28, 2013

QotD: In praise of Bastiat’s “What is seen and what is not seen”

Filed under: Economics, Education, Government, Liberty, Quotations — Tags: , , , , — Nicholas @ 00:01

For me, [Bastiat’s “What Is Seen and What Is Not Seen“] is the pinnacle of economic profundity. You can call it obvious. But when I first started learning economics at the age of 17, none of Bastiat was obvious. I was an honors student at a well-regarded California high school. Yet as far as I can remember, I had never heard any argument against the minimum wage, Social Security, or the FDA in my entire life.

Every teacher and book I ever encountered treated naive populism like the Law of Gravitation. Evil businesses aren’t paying workers enough? Raise the minimum wage; problem solved. The elderly are poor? Increase Social Security payments; problem solved. Evil businesses are selling people bad drugs? Impose more government regulation; problem solved.

If you favor these programs, you can call these arguments straw men. But I assure you: These “straw men” were never presented by opponents of these policies. On the contrary, these “straw men” were invariably presented by people who favored these policies. How is that possible? Because during my first 17 years of life, I never encountered an opponent of any of these policies! You might assume I was grew up in a weird Berkeley-esque leftist enclave, but bland Northridge, California hardly qualifies.

What was going on? The best explanation is pretty simple: I only heard straw man arguments in favor of populist policies because virtually everyone finds these straw man arguments pleasantly convincing. Regardless of the merits of the minimum wage, Social Security, and the FDA, economic illiteracy is the reason for their popularity. If someone like Bastiat convinced people that the pleasantly convincing arguments are inane, proponents would have to fall back on arguments that are intellectually better yet rhetorically inferior.

Bryan Caplan, “Who Loves Bastiat and Who Loves Him Not”, EconLog, 2012-08-15

June 27, 2013

How many “environmental” groups are actually harming the environment

Filed under: Economics, Environment, Media — Tags: , , , — Nicholas @ 00:01

Willis Eschenbach at Watts Up With That:

Now, given that poverty is the greatest threat to the global environment, the inescapable conclusion is that the only way the global environment stands a chance is if poor countries can develop economically.

And that is why the anti-development, pro-expensive energy stance of the large environmental NGOs is one of the great environmental tragedies of our times.

Here’s the chain of causality:

1. Climate alarmists, with the strong support of the major environmental NGOs like Greenpeace and WWF, declared war on CO2.

2. The method that they chose to fight CO2 was to discourage fossil fuel use by making energy more expensive, using a combination of taxation, legislation, international pressure, and expensive subsidies to achieve that end. Obama’s War on Coal, announced today, is just one of hundreds of examples of the wealthy NGOs and the rich governments working to increase the price of energy.

3. Since energy is development, expensive energy keeps poor countries in poverty. When the World Bank denies loans for coal fired plants in India, the poor suffer … but the environment suffers more. Until they can afford to use coal and gas, they’ll run the country on wood … I refer you back to Figure 1 for how well that works out.

4. Expensive energy slows a country’s economic development, and as President Obama pointed out, people worried about money don’t pay attention to the environment.

This ends up in a bizarre position—the actions of the major environmental NGOs are ensuring continued environmental destruction in the developing world.

June 19, 2013

V for Vinegar

Filed under: Americas, Media, Soccer — Tags: , , , , , — Nicholas @ 08:29

The Economist reports on the rising tide of protest in Brazil:

All that changed on June 13th when the state’s unaccountable, ill-trained and brutal military police turned a mostly peaceful demonstration into a terrifying rout. Dozens of videos, some from journalists, others from participants and bystanders, show officers with their name tags removed firing stun grenades and rubber bullets indiscriminately at fleeing protesters and bystanders and hunting stragglers through the streets. Motorists trapped in the mayhem ended up breathing pepper spray and tear gas. Demonstrators found with vinegar (which can be used to lessen the effect of tear gas) were arrested. Several journalists were injured, two shot in the face with rubber bullets at close range. One has been told he is likely to lose his sight in one eye. The following day’s editorials took a markedly different tone.

By June 17th what has become dubbed the “V for Vinegar” movement or “Salad Revolution” had spread to a dozen state capitals as well as the federal capital, Brasília. The aims had also grown more diffuse, with marchers demanding less corruption, better public services and control of inflation. Many banners protested against the disgraceful cost of the stadiums being built for next year’s football World Cup. Brazil has already spent 7 billion reais, three times South Africa’s total four years earlier, and only half the stadiums are finished. “First-world stadiums; third-world schools and hospitals”, ran one placard.

[. . .]

So, why now? One reason is surely a recent spike in inflation, which is starting to eat into the buying power of the great majority of Brazilians who are still getting by on modest incomes, just as a big ramp-up in consumer credit in recent years has left them painfully overstretched. Bus fares have not risen for 30 months (mayors routinely freeze fares in municipal-election years, such as 2012, and in January this year the mayors of Rio and São Paulo agreed to wait until June before hiking in order to help the federal government massage the inflation figures). In fact, the rise in São Paulo’s and Rio’s bus fares comes nowhere close to matching inflation over that 30-month period. But bus fares are under government control, unlike other fast-rising costs such as those for housing and food. Perhaps they were simply chosen as a scapegoat.

More broadly, the very middle class that Brazil has created in the past decade — 40m people have escaped from absolute poverty, but are still only one paycheck from falling back into it, and 2009 was the first year in which more than half the population could be considered middle class — is developing an entirely new relationship with the government. They see further improvements in their living standards as their right and will fight tooth and nail not to fall back into poverty. And rather than being grateful for the occasional crumb thrown from rich Brazilians’ tables, they are waking up to the fact that they pay taxes and deserve something in return. Perhaps their government’s triumphalism over those shiny new stadiums was the final straw.

June 4, 2013

Finland’s cardboard box babies

Filed under: Europe, Health, History — Tags: , , , — Nicholas @ 08:56

An interesting bit of history on the BBC News website:

It’s a tradition that dates back to the 1930s and it’s designed to give all children in Finland, no matter what background they’re from, an equal start in life.

The maternity package — a gift from the government — is available to all expectant mothers.

It contains bodysuits, a sleeping bag, outdoor gear, bathing products for the baby, as well as nappies, bedding and a small mattress.

With the mattress in the bottom, the box becomes a baby’s first bed. Many children, from all social backgrounds, have their first naps within the safety of the box’s four cardboard walls.

Mothers have a choice between taking the box, or a cash grant, currently set at 140 euros, but 95% opt for the box as it’s worth much more.

The tradition dates back to 1938. To begin with, the scheme was only available to families on low incomes, but that changed in 1949.

“Not only was it offered to all mothers-to-be but new legislation meant in order to get the grant, or maternity box, they had to visit a doctor or municipal pre-natal clinic before their fourth month of pregnancy,” says Heidi Liesivesi, who works at Kela — the Social Insurance Institution of Finland.

So the box provided mothers with what they needed to look after their baby, but it also helped steer pregnant women into the arms of the doctors and nurses of Finland’s nascent welfare state.

In the 1930s Finland was a poor country and infant mortality was high — 65 out of 1,000 babies died. But the figures improved rapidly in the decades that followed.

June 3, 2013

“Checking your privilege”

Filed under: Britain, Humour, Media, Politics — Tags: , , , — Nicholas @ 09:14

Sean Thomas outlines the notion of “checking your privilege” before discovering that he is the most underprivileged person in Britain:

The idea of Checking Your Privilege is that the opinions of “underprivileged” people, in any political debate, are deemed to be intrinsically more important and valuable than the beliefs of those who are luckier in life.

This is especially true if the debate relates to an area in which The Underprivileged Person is adjudged to be deprived. Extreme versions of Privilege Theory assert that, in especially sensitive arguments, the more privileged person should say nothing at all. e.g. white people are not allowed to express an opinion on racism.

[. . .]

It’s an impressive list of deprivations. Sometimes, when I look at my life, I wonder if I am [a] talented black saxophone player in the 1950s, or at least a meth dealer in central Baltimore – rather than a writer in north London. Certainly, I am THE most underprivileged person in the UK. And this means that my opinion is the most worthy and important of all, and everyone else must shut up, while I opine.

And my opinion is this: Privilege Checking is stupid. It is vacuous and diseased. It is a duet of moral vanity and bourgeois guilt which symptomizes the decadence and redundancy of what passes, today, for lefty “thinking”. Karl Marx (middle-class, well-travelled, disapproved of Engels’s plebby girlfriend) must be spinning on his Highgate pedestal when he sees what his great discourse has turned into.

I hope that clears things up. Now we can move on; IMHO, of course.

May 26, 2013

Bangladesh needs legal reform and free markets

Filed under: Asia, Bureaucracy, Economics, Law — Tags: , , , , , , — Nicholas @ 10:37

Sheldon Richman discusses the plight of workers — especially poor women workers — in Bangladesh:

According to a report written for the Netherlands ministry of foreign affairs, most Bangladeshis, unsurprisingly, are victimized by a land system that has long benefited the rural and urban elites. “Land-grabbing of both rural and urban land by domestic actors is a problem in Bangladesh,” the report states.

    Wealthy and influential people have encroached on public lands…, often with help of officials in land-administration and management departments. Among other examples, hundreds of housing companies in urban areas have started to demarcate their project area using pillars and signboard before receiving titles. They use local musclemen with guns and occupy local administrations, including the police. Most of the time, land owners feel obliged to sell their productive resources to the companies at a price inferior to market value. Civil servants within the government support these companies and receive some plot of land in exchange.

Women suffer most because of the patriarchy supported by the political system. “Women in Bangladesh rarely have equal property rights and rarely hold title to land,” the report notes. “Social and customary practices effectively exclude women from direct access to land.” As a result,

    Many of the rural poor in Bangladesh are landless, have only small plots of land, are depending on tenancy, or sharecropping. Moreover, tenure insecurity is high due to outdated and unfair laws and policies…. These growing rural inequalities and instability also generate migration to towns, increasing the rates of urban poverty.

Much as in Britain after the Enclosures, urban migration swells the ranks of workers, allowing employers to take advantage of them. Since Bangladesh does not have a free-market economy, starting a business is mired in regulatory red tape — and worse, such as “intellectual property” law — that benefit the elite while stifling the chance for poor individuals to find alternatives to factory work. (The owner of the Savar factory, Mohammed Sohel Rana, got rich in a system where, the Guardian writes, “politics and business are closely connected, corruption is rife, and the gap between rich and poor continues to grow.”) Moreover, until the factory collapse, garment workers could not organize without employer permission.

Crony capitalism deprives Bangladeshis of property rights, freedom of exchange, and therefore work options. The people need neither the corporatist status quo nor Western condescension. They need radical land reform and freed markets.

The war on drugs is “a holocaust in slow motion”

Filed under: Health, Law, Liberty, USA — Tags: , , , , , , — Nicholas @ 08:33

To my surprise, the creator of the TV series The Wire has come out against legalization of marijuana:

David Simon surged into the American mainstream with a bleak vision of the devastation wrought by drugs on his home town of Baltimore — The Wire, hailed by many as the greatest television drama of all time. But what keeps him there is his apocalyptic and unrelenting heresy over the failed “war on drugs”, the multibillion-dollar worldwide crusade launched by President Richard Nixon in 1971.

When Simon brought that heresy to London last week — to take part in a debate hosted by the Observer — he was inevitably asked about what reformers celebrate as recent “successes” — votes in Colorado and Washington to legalise marijuana.

“I’m against it,” Simon told his stunned audience at the Royal Institution on Thursday night. “The last thing I want to do is rationalise the easiest, the most benign end of this. The whole concept needs to be changed, the debate reframed.

“I want the thing to fall as one complete edifice. If they manage to let a few white middle-class people off the hook, that’s very dangerous. If they can find a way for white kids in middle-class suburbia to get high without them going to jail,” he continued, “and getting them to think that what they do is a million miles away from black kids taking crack, that is what politicians would do.”

If marijuana were exempted from the war on drugs, he insisted, “it’d be another 10 or 40 years of assigning people of colour to this dystopia.”

[. . .]

Simon took no prisoners. In his vision, the war on — and the curse of — drugs are inseparable from what he called, in his book, The Death of Working Class America, the de-industrialisation and ravaging of cities that were once the engine-rooms and, in Baltimore’s case, the seaboard of an industrial superpower.

The war is about the disposal of what Simon called, in his most unforgiving but cogent term, “excess Americans”: once a labour force, but no longer of use to capitalism. He went so far as to call the war on drugs “a holocaust in slow motion”.

Simon said he “begins with the assumption that drugs are bad”, but also that the war on drugs has “always proceeded along racial lines”, since the banning of opium.

It is waged “not against dangerous substances but against the poor, the excess Americans,” he said, and with striking and subversive originality, posited the crisis in stark economic terms: “We do not need 10-12% of our population; they’ve been abandoned. They don’t have barbed wire around them, but they might as well.”

April 14, 2013

Alternet: Ten facts about state lotteries and the poor

Filed under: Cancon, Economics, Government, USA — Tags: , , , — Nicholas @ 11:20

While I don’t object to lotteries existing, I still don’t think governments should be running them, but they’re involved in most states and provinces:

State lotteries amount to a hidden tax on the poor. They eat up about 9 percent of take-home incomes from households making less than $13,000 a year. They siphon $50 billion a year away from local businesses — besides stores where they’re sold. And they are encouraged by state-sponsored ads suggesting everyone can win, win, win!

State lotteries, which once were illegal, now exist in most states. What many people don’t know about lotteries is that they prey on those who can least afford it; most people never win anything big; and 11 states raise more money from lotteries than from corporate taxes. Beyond the moral, mental health or religious debates over gambling, lotteries are another example of how society preys on the poor and the working-class.

Let’s look at why state lotteries do far more harm than good — especially at the bottom of the economic ladder.

[. . .]

4. They hit the poorest the hardest. “Simply put, lotteries take the most from those who can least afford it,” wrote economist Richard Wolff. “Instead of taking those most able to pay (the principle of federal income tax in the U.S.), state leaders use lotteries to disguise a regressive tax that falls on the middle and even more on the poor.” A 2010 study found that households with take-home incomes of less than $13,000 spent on average $645 a year on lottery tickets, which is about 9 percent of their income. The reason people play lotteries varies, but it mixes hopes and dreams with desperation: poorer people see it as a slim chance to radically improve their standard of living.

5. Communities of color, less-educated spend the most. Numerous academic studies have found that non-whites spend much more on lotteries than whites, with one study putting the figure at $998 for African Americans and $210 for whites. Household with incomes under $25,000 spent an average of about $600 a year, while $100,000-plus earners spent about $300 year. People who never graduated from college spent the most, about $700 a year, while graduates spent under $200.

Of course, being Alternet, we have to have at least one of our traditional straw men to knock down:

7. They give the wrong message about solving poverty. Lotteries reinforce libertarian political messages, suggesting that everyone needs to take individual action in response to society’s inequities, even though the government has helped well-connected individuals, businesses and industries become rich for decades. This easy money for states diverts political debate away from society-wide analyses and solutions to what prevents people from moving up the economic ladder. Instead, it pushes individuals in marginal circumstances toward gambling as their hope for gain.

I’m not sure what is “libertarian” about corporate welfare, crony capitalism, and other economic distortions on the part of government to favour certain people over others, but setting aside the slur, this is otherwise a valid point. Encouraging people to take individual action? I don’t see buying a lottery ticket as falling into that category.

April 9, 2013

Britain’s wartime rationing was the actual start of the modern welfare state

Filed under: Britain, Bureaucracy, Food, Government, History, WW2 — Tags: , , , — Nicholas @ 08:31

In the Telegraph, Daniel Hannan shows that the wartime coalition government led by Winston Churchill actually laid the groundwork for the post-war “creation” of the welfare state:

British WW2 Fuel ration book cover

It wasn’t the 1945 Labour Government that created the welfare state, that Saturn which now devours its children. The real power-grab came in 1940.

With Britain’s manpower and economy commandeered for the war effort, it seemed only natural that ministers should extend their control over healthcare, education and social security. Hayek chronicled the process at first hand: his Road to Serfdom was published when Winston Churchill was still in Downing Street.

Churchill had become prime minister because he was the Conservative politician most acceptable to Labour. In essence, the wartime coalition involved a grand bargain. Churchill was allowed to prosecute the war with all the nation’s resources while Labour was given a free hand to run domestic policy.

The social-democratic dispensation which was to last, ruinously, for the next four decades — and chunks of which are rusting away even today — was created in an era of ration-books, conscription, expropriations and unprecedented spending. The state education system, the NHS, the Beveridge settlement — all were conceived at a time when it was thought unpatriotic to question an official, and when almost any complaint against the state bureaucracy could be answered with “Don’t you know there’s a war on?”

All quite true, and all quite necessary at the time. Without significant amounts of imported food, Britain could not feed its people. Even with imports, the amount of available food was subject to unpredictable fluctuations as losses at sea interrupted supply and left empty shelves in grocery stores. Although losses were relatively low early in the war (early U boats were unable to stay at sea for long periods, and German bases were a long way from most British trade routes), the writing was on the wall if the war continued for years.

To fight a totalitarian regime, Britain had to emulate some of its methods (ironically, full rationing wasn’t introduced in Germany until much later in the war). For the middle classes, this was an unwelcome intrusion of the state into private affairs, but generally accepted due to the war. For the working classes, in many cases it was actively welcomed. While the rations were small, there was the promise — and generally a fulfilled promise — that some would be made available even in the poorest areas of the country. My mother was nine when the war began, and she remembers seeing more food in the stores of Middlesbrough after rationing was introduced. After the deprivations of the Great Depression, many people in the north and in Scotland were better fed and clothed during the rationing period than they had been for nearly a decade.

Given that information, it should not be surprising that so many people voted for Labour in the 1945 elections: they’d had what they believed to be a live demonstration of the benefits of socialism for six years of war, and didn’t want to go back to the pre-1940 status quo.

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