Quotulatiousness

May 5, 2021

Michael Geist’s overview of the federal government’s steady retreat from their 2015 election promises on protecting Canadians’ online privacy and free speech rights

Filed under: Cancon, Government, Law, Liberty, Technology — Tags: , , , , , , — Nicholas @ 03:00

Reposting his most recent Maclean’s article on his website, Michael Geist explains why the federal government’s blatant hypocrisy over Canadians’ rights online has finally gotten many people paying closer attention:

The government had maintained that it had no interest in regulating user generated content, but the policy reversal meant that millions of video, podcasts, and the other audiovisual content on those popular services would be treated as “programs” under Canadian law and subject to some of the same rules as those previously reserved for programming on conventional broadcast services.

The backlash undoubtedly caught the government by surprise, particularly since the policy change garnered little discussion at committee. As the public concern mounted, Guilbeault retreated to his standard talking points about how the opposition parties were unwilling to stand up to the web giants. The arguments fell flat, however, since the new rules were directly targeting users’ content, not the Internet companies. Further, the public reaction pointed to a government increasingly out-of-step with the public, which may support increased Internet regulation, but not at any cost.

The fact that the Liberal government was open to regulating millions of TikTok and Youtube videos was a reminder of how unrecognizable its digital policy approach has become in recent years. The party was elected in 2015 on a platform that promised to entrench net neutrality, prioritize innovation, focus on privacy rather than surveillance, and support freedom of expression. Most of those positions now seemingly reflect a by-gone era.

It is still anxious to demonstrate its tech bona fides, but now progressive policies appear to mean confronting the “web giants” with threats of regulation, penalties, and taxes. Cultural sovereignty has replaced innovation as the guiding principle, which has meant the Minister of Innovation, Science and Industry has been replaced by the Minister of Canadian Heritage as the digital policy lead.

And so for the past 18 months, Guilbeault has been handed Canada’s digital policy keys. In Guilbeault’s eyes, seemingly everything is under threat – Canadian film and television production, a safe space for speech, the future of news – and the big technology companies are invariably to blame.

Few would dispute that an updated tech regulatory model is needed, but evidence-based policies are in short supply in the current approach. For example, the use or misuse of data lies at the heart of the power of big tech, yet privacy reforms have been curiously absent as a government priority. Indeed, Bill C-11 was promoted by Prime Minister Justin Trudeau last November as legislation to give Canadians greater control over their personal information, but under newly named ISI Minister François-Philippe Champagne, it has scarcely been heard from again.

The government has similarly done little to address concerns about abuse of competition, the risks associated with algorithmic decision-making, or the development of a modernized framework for artificial intelligence. Years of emphasis on the benefits of multi-lateral policy development and consensus-building were unceremoniously discarded the recent budget in order to commit to a digital services tax in 2022 that could spark billions in tariff retaliation. In fact, the US-Canada-Mexico Trade Agreement that the government trumpeted as a major success story restricts Canada’s ability to even establish a new liability regime for technology companies.

April 30, 2021

Bill C-10, despite frequent government denials, would regulate user-generated content on the internet

Filed under: Bureaucracy, Business, Cancon, Government, Media — Tags: , , , , — Nicholas @ 03:00

Michael Geist continues to sound the alarm about the federal government’s bill to vastly increase CRTC control over Canadians’ access to information and entertainment options online, including the Heritage minister’s mendacity when challenged about how the CRTC’s powers will increase to censor individual Canadians in what they post to online services like YouTube:

Canadian Heritage Minister Steven Guilbeault and the Liberal government’s response to mounting concern over its decision to remove a legal safeguard designed to ensure the CRTC would not regulate user generated content has been denial. The department’s own officials told MPs that all programming on sites like Youtube would be subject to regulation, yet Guilbeault insisted to the House of Commons that user generated content would be excluded from regulation as part of Bill C-10, his Broadcasting Act reform bill.

However, based on new documents I recently obtained, it has become clear that Guilbeault and the government have misled the Canadian public with their response. In fact, the government effectively acknowledges that it is regulating user generated content in a forthcoming, still-secret amendment to Bill C-10. Amendment G-13, submitted by Liberal MP Julie Dabrusin on April 7th and likely to come before the committee studying the bill over the next week, seeks to amend Section 10(1) of the Broadcasting Act which specifies the CRTC’s regulatory powers. It states:

    (4) Regulations made under paragraph (1)(c) do not apply with respect to programs that are uploaded to an online undertaking that provides a social media service by a user of the service – if that user is not the provider of the service or the provider’s affiliate, or the agent or mandatary of either of them – for transmission over the Internet and reception by other users of the service.

The amendment is a clear acknowledgement that user generated content are programs subject to CRTC’s regulation making power. Liberal MPs may claim the bill doesn’t do this, but their colleagues are busy submitting amendments to address the reality.

But it is not just that the government knew that its changes would result in regulating user generated content. The forthcoming secret amendment only covers one of many regulations that the CRTC may impose. The specific regulation – Section 10(1)(c) of the Broadcasting Act – gives the CRTC the power to establish regulations “respecting standards of programs and the allocation of broadcasting time for the purpose of giving effect to the broadcasting policy set out in subsection 3(1).”

April 17, 2021

“Today’s Liberal government is […] the most anti-Internet government in Canadian history”

Filed under: Cancon, Government, Media, Technology — Tags: , , , , — Nicholas @ 05:00

Michael Geist gives both barrels to Justin Trudeau’s government, then reloads and fires again:

Canadian Heritage Minister Steven Guilbeault, 3 February 2020.
Screencapture from CPAC video.

As I watched Canadian Heritage Minister Steven Guilbeault yesterday close the Action Summit to Combat Online Hate, I was left with whiplash as I thought back to those early days. Today’s Liberal government is unrecognizable by comparison as it today stands the most anti-Internet government in Canadian history:

  • As it moves to create the Great Canadian Internet Firewall, net neutrality is out and mandated Internet blocking is in.
  • Freedom of expression and due process is out, quick takedowns without independent review and increased liability are in.
  • Innovation and new business models are out, CRTC regulation is in.
  • Privacy reform is out, Internet taxation is in.
  • Prioritizing consumer Internet access and affordability is out, reduced competition through mergers are in.
  • And perhaps most troublingly, consultation and transparency are out, secrecy is in.

This is not hyperbole. The Action Summit is a case in point. I was part of the planning committee and I am proud that the event produced two days of thoughtful discussion and debate, where the both the importance and complexity of addressing online hate brought a myriad of perspectives, including from the major Internet platforms. There was none of that nuance in Guilbeault’s words, who spoke the evil associated with the “web behemoths” and promised that his legislation would target content and Internet sites and services anywhere in the world provided it was accessible to Canadians. The obvious implications – much discussed in Internet circles in Ottawa – is that the government plans to introduce mandated content blocking to keep such content out of Canada as a so-called “last resort”. When combined with a copyright “consultation” launched this week that also raises Internet blocking, Guilbeault’s vision is to require Internet providers to install blocking capabilities, create new regulators and content adjudicators to issue blocking orders, dispense with net neutrality, and build a Canadian Internet firewall.

If that wasn’t enough, his forthcoming bill will also mandate content removals within 24 hours with significant penalties for failure to do so. The approach trades due process for speed, effectively reducing independent oversight and incentivizing content removal by Internet platforms. Just about everyone thinks this is a bad idea, but Guilbeault insists that “it is in the mandate letter.” In other words, consultations don’t matter, expertise doesn’t matter, the experience elsewhere doesn’t matter. Instead, a mandate letter trumps all. If this occurred under Stephen Harper’s watch, the criticism would be unrelenting.

In fact, one of the reasons that the government finds itself committed to dangerous policy is that it did not conduct a public consultation on its forthcoming online harms bill. Guilbeault was forced yesterday to admit that the public has not been consulted, which he tried to justify by claiming that it could participate in the committee review or in the development of implementation guidelines once the bill becomes law. This alone should be disqualifying as no government should introduce censorship legislation that mandates website blocking, eradicates net neutrality, harms freedom of expression, and dispenses with due process without having ever consulted Canadians on the issue.

April 3, 2021

QotD: When governments try to “help” small businesses

Filed under: Bureaucracy, Business, Government, Quotations, USA — Tags: , , — Nicholas @ 01:00

In 1961, economist Benjamin Chinitz argued that New York was more resilient than Pittsburgh because New York possessed a culture of entrepreneurship, originally inculcated by the garment industry, where anyone with a good idea and a couple of sewing machines could start a business. By contrast, gritty cities like Pittsburgh, dominated by large smokestack industries that tended to snuff out small-scale entrepreneurial activity, eventually faced a crisis when those industries grew less profitable, and the local economy struggled to adjust.

Love for small business is one of the few universals in American politics. In a 2018 Gallup poll, just 56 percent of Americans viewed capitalism positively; but 92 percent had a positive view of small business, and 86 percent viewed entrepreneurs positively. Government at all levels has policies intended to help small businesses, but there’s little evidence that these programs are effective — and even when bureaucrats try to help, they impede small-business creation by imposing new regulations. The New York City Business License and Permit index presents a daunting compendium of licenses and certifications that can be required to start a business in the city — such as the Esthetics License (needed if you want to “conduct beauty treatment”) and the Certificate of Fitness for Fire and Emergency Drill Instructor (necessary to “lead fire drills in buildings that do not require a Fire Safety Director”).

Such overregulation represents a second way that the deck gets stacked in the American economy against outsiders. The decline of American entrepreneurship is a discouraging trend of the last 30 years. In 2015, economist John Haltiwanger documented numerous signs of diminished business dynamism in the United States. In the early 1980s, he noted, America’s startup rate exceeded 13 percent, which meant that about one-eighth of all firms had just begun. The startup share fell to 10 percent near the end of the Clinton years and below 8 percent during the Great Recession. While no consensus exists about the causes of this dramatic drop, expanding business regulation is a plausible candidate.

Edward L. Glaeser, “How to Fix American Capitalism”, City Journal, 2020-12-13.

March 30, 2021

QotD: Static societies and disruptive outsiders

Filed under: Books, Britain, Economics, Government, History, Japan, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

In 1981, the social scientist Mancur Olson published his magisterial The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. Olson had already won acclaim for The Logic of Collective Action, which explained why some groups received an outsize slice of the political pie. In his new book, Olson turned to the question of why nations fail. His thesis: nations lost dynamism when insiders managed to stack the rules against disruptive outsiders.

Stable societies with unchanged boundaries, Olson observed, “tend to accumulate more collusions and organizations for collective action over time.” Instead of accepting rules that encourage overall growth, these collusive organizations — trade groups and labor unions were paradigmatic examples — fight to keep what they have, slowing down “a society’s capacity to adopt new technologies and to reallocate resources in response to changing conditions,” thus reducing economic efficiency. Decline follows.

Olson pointed to Japanese stagnation under the Tokugawa shogunate, when, “before Admiral Perry’s gunboats appeared in 1854, the Japanese were virtually closed off from the international economy.” Ruling Japanese society, he writes, “were any number of powerful za, or guilds, and the shogunate or the daimyo often strengthened them by selling them monopoly rights.” The guilds “fixed prices, restricted production and controlled entry in essentially the same way as cartelistic organization elsewhere.”

A second example: Great Britain, “the major nation with the longest immunity from dictatorship, invasion and revolution” and, consequently, Olson explained, suffering “this century a lower rate of growth than other large, developed democracies.” In Olson’s view, the weak performance resulted from limits on change established by a “powerful network of special-interest organizations,” which included labor unions, industrial groups, and aristocratic cliques. By the 1970s, after the conservative government of Edward Heath fell in a losing battle with striking miners, many deemed Britain ungovernable. Olson contrasted the British situation with that of postwar Germany and Japan, where the chaos and destruction of wartime defeat wiped away established industrial and retail groups, leaving the field open to newcomers like Soichiro Honda or the Albrecht family (creators of international supermarket giant Aldi), who could work economic magic.

The word “ungovernable” was also used to describe New York in the 1960s and 1970s, when Mike Quill’s transit union ran roughshod over Mayor John Lindsay’s attempts to control public-sector wage growth. New York was a long-established city with lots of political collusion. The old Tammany Hall could broker deals to keep Gotham going, but Lindsay’s successor, Abe Beame, proved too weak to resist any special interest that wanted more spending or government favors. New York’s spending kept rising even as public services worsened, until bankruptcy loomed and public power wound up in the hands of the unelected Municipal Assistance Corporation. Thankfully, New York reformed itself economically, at least to some extent, under Mayors Rudolph Giuliani and Michael Bloomberg, as Britain did under Prime Minister Margaret Thatcher. Sufficiently strong leaders can buck entrenched insiders.

Edward L. Glaeser, “How to Fix American Capitalism”, City Journal, 2020-12-13.

February 12, 2021

Calls for the federal government’s Broadcasting bill (Bill C-10) to be withdrawn

Filed under: Cancon, Government, Media, Technology — Tags: , , , , , — Nicholas @ 05:00

Michael Geist updates the situation with the federal government’s attempt to massively rework the Canadian broadcast and internet regulation framework without proper scrutiny or transparency:

I have not been shy about expressing my concerns with the Bill C-10, the Broadcasting Act reform bill. From a 20 part series examining the legislation to two podcasts to a debate with Janet Yale, I have actively engaged on policy concerns involving regulation that extends far beyond the “web giants”, the loss of Canadian sovereignty over broadcast ownership, the threat to Canadian intellectual property, and the uncertainty of leaving many questions to the CRTC to answer. Yet beyond the substance of the bill, in recent days an even more troubling issue has emerged as Canadian Heritage Minister Steven Guilbeault, his Parliamentary Secretary Julie Dabrusin, and the Liberal government abandon longstanding commitments to full consultation, transparency, and parliamentary process.

Last week, I appeared before the Standing Committee on Canadian Heritage as part of what it is calling a “pre-study” on Bill C-10. In this case, “pre-study” is euphemism for avoiding the conventional parliamentary process. Bill C-10 has not yet passed second reading in the House of Commons and has not been referred to committee for study. There have been extensive debates in the House and last week Conservative MP Michael Kram called for the bill to be withdrawn, noting that politicians could do Canadians a lot of good by “rewriting it from scratch.” That move drew criticism from Guilbeault during an interview at the CMPA Prime Time event, as he called for pressure on the Conservatives to support referring the bill to committee. There are instances of pre-study, but doing so concurrently with second reading makes no sense since a pre-study allows for a wide range of amendments, whereas after second reading the permitted amendments are more limited.

In an earlier era (or with a different government), the prospect of conducting a study of the bill while simultaneously engaging in second reading would garner loud objections. In fact, at the Heritage Committee hearing last week, opposition MPs wondered why they were already being asked for amendments to the bill when they had yet to hear from witnesses, much less conduct an actual study of the bill. Indeed, for a government that once prized itself on robust consultation, it seemingly now wants to avoid any genuine consultation on Bill C-10, content to have potential amendments presented through lobbyists, rather than on the public record in open hearings.

The secrecy does not end there. At the same hearing (I was a witness and waited patiently for these issues to play out), Conservative MPs raised questions about promised data on how the government had arrived at claims that the bill will generate over $800 million in new money. Leaving aside the fact that Guilbeault has often inflated that figure to over $1 billion, there has no public disclosure about the source of this claim. Cartt.ca reports that officials told the committee that the calculations could be “confusing” without a verbal explanation. Days later, Dabrusin told the committee that in fact the data had been provided to the committee late last year but perhaps not distributed to committee members.

When I was questioned by Conservative MP Kevin Waugh during my appearance before the committee, he again raised concerns about the claim. Dabrusin interjected with a point of order to make it clear that the data had been provided to the committee, albeit not distributed to MPs. What made the exchange so striking was that Dabrusin – a parliamentary secretary – seemingly did not give any thought to the fact that the data has not been made publicly available. Promoting long overdue disclosures to a handful of MPs while the public is kept in the dark is hardly the stuff worthy of praise or a point of order.

QotD: Repartee

Filed under: France, Humour — Tags: , , , — Nicholas @ 01:00

Clever banter can only be called “repartee” if it’s from the Repartée region of France. Otherwise it’s just sparkling wit.

Daniel Hannan, Twitter, 2020-11-06.

February 6, 2021

“WebMD is the Internet’s most important source of medical information. It’s also surprisingly useless”

Filed under: Bureaucracy, Health, Technology, USA — Tags: , , , , — Nicholas @ 05:00

Scott Alexander discusses why WebMD is not the be-all and end-all of internet medical resources:

WebMD is the Internet’s most important source of medical information. It’s also surprisingly useless. Its most famous problem is that whatever your symptoms, it’ll tell you that you have cancer. But the closer you look, the more problems you notice. Consider drug side effects. Here’s WebMD’s list of side effects for a certain drug, let’s call it Drug 1:

    Upset stomach and heartburn may occur. If either of these effects persist or worsen, tell your doctor or pharmacist promptly. If your doctor has directed you to use this medication, remember that he or she has judged that the benefit to you is greater than the risk of side effects. Many people using this medication do not have serious side effects. Tell your doctor right away if you have any serious side effects, including: easy bruising/bleeding, difficulty hearing, ringing in the ears, signs of kidney problems (such as change in the amount of urine), persistent or severe nausea/vomiting, unexplained tiredness, dizziness, dark urine, yellowing eyes/skin. This drug may rarely cause serious bleeding from the stomach/intestine or other areas of the body. If you notice any of the following very serious side effects, get medical help right away: black/tarry stools, persistent or severe stomach/abdominal pain, vomit that looks like coffee grounds, trouble speaking, weakness on one side of the body, sudden vision changes or severe headache.

And here’s their list of side effects for let’s call it Drug 2:

    Nausea, loss of appetite, or stomach/abdominal pain may occur. If any of these effects persist or worsen, tell your doctor or pharmacist promptly. Remember that your doctor has prescribed this medication because he or she has judged that the benefit to you is greater than the risk of side effects. Many people using this medication do not have serious side effects. This medication can cause serious bleeding if it affects your blood clotting proteins too much. Even if your doctor stops your medication, this risk of bleeding can continue for up to a week. Tell your doctor right away if you have any signs of serious bleeding, including: unusual pain/swelling/discomfort, unusual/easy bruising, prolonged bleeding from cuts or gums, persistent/frequent nosebleeds, unusually heavy/prolonged menstrual flow, pink/dark urine, coughing up blood, vomit that is bloody or looks like coffee grounds, severe headache, dizziness/fainting, unusual or persistent tiredness/weakness, bloody/black/tarry stools, chest pain, shortness of breath, difficulty swallowing.

Drug 1 is aspirin. Drug 2 is warfarin, which causes 40,000 ER visits a year and is widely considered one of the most dangerous drugs in common use. I challenge anyone to figure out, using WebMD’s side effects list alone, that warfarin is more dangerous than aspirin. I think this is because if WebMD said “aspirin is pretty safe and most people don’t need to worry about it”, people might use aspirin irresponsibly, die, and then their ghosts might sue WebMD. Or if WebMD said “warfarin can be dangerous, be careful with this one”, people might refuse to take warfarin because “the Internet said it was dangerous”, die of the stuff warfarin is supposed to treat, and then their ghosts might sue WebMD. WebMD solves this by never giving the tiniest shred of useful information to anybody.

This is actually a widespread problem in medicine. The worst offender is the FDA, which tends to list every problem anyone had while on a drug as a potential drug side effect, even if it obviously isn’t. This got some press lately when Moderna had to disclose to the FDA that one of the coronavirus vaccine patients got struck by lightning; after a review, this was declared probably unrelated. For the more serious version of this, read Get Ready For False Side Effects. Why does the FDA keep doing this if they know it makes their label information useless? My guess is it’s because they don’t want to look like cowboys who unprincipledly consider some things but not other things. What if someone accused the person deciding what things to consider of being biased? So the FDA comes up with a Procedure, and once you have a Procedure it has to be “take everything seriously”, and then it falls on random small-fry people who aren’t the FDA to pick up the slack and explain which side effects are worth worrying about or not, and then those small fries don’t do that, because they could get sued.

I think the same concern motivates WebMD diagnosing everything as cancer. If they said something other than cancer, then people might sigh with relief, not bother to get a cancer screening, die from some weird cancer that doesn’t present the way normal cancers do, and then their ghosts might sue WebMD.

Of course, WebMD and other online medical information sites didn’t invent hypochondria, they merely made it easier to do to yourself what Jerome K. Jerome did one fine London morning in 1888:

I remember going to the British Museum one day to read up the treatment for some slight ailment of which I had a touch — hay fever, I fancy it was. I got down the book, and read all I came to read; and then, in an unthinking moment, I idly turned the leaves, and began to indolently study diseases, generally. I forget which was the first distemper I plunged into — some fearful, devastating scourge, I know — and, before I had glanced half down the list of “premonitory symptoms,” it was borne in upon me that I had fairly got it.

I sat for awhile, frozen with horror; and then, in the listlessness of despair, I again turned over the pages. I came to typhoid fever — read the symptoms — discovered that I had typhoid fever, must have had it for months without knowing it — wondered what else I had got; turned up St. Vitus’s Dance — found, as I expected, that I had that too, — began to get interested in my case, and determined to sift it to the bottom, and so started alphabetically — read up ague, and learnt that I was sickening for it, and that the acute stage would commence in about another fortnight. Bright’s disease, I was relieved to find, I had only in a modified form, and, so far as that was concerned, I might live for years. Cholera I had, with severe complications; and diphtheria I seemed to have been born with. I plodded conscientiously through the twenty-six letters, and the only malady I could conclude I had not got was housemaid’s knee. […] I had walked into that reading-room a happy, healthy man. I crawled out a decrepit wreck.

February 1, 2021

In the wake of l’affaire GameStop, frantic regulators call for more power to intervene in the market

Filed under: Business, Government, Politics, USA — Tags: , , , , , — Nicholas @ 03:00

“Regulatory capture” is the term for situations where the regulators and the regulated begin to get too close and the regulated industries or organizations begin to indirectly control the actions of the regulator for their own benefit. A topical example would be the sudden, agonized cries of politicians and market regulators for new powers to clamp down on disruptive players like the Redditors or other small investors who triggered the rise in GameStop share prices causing potentially ruinous financial losses for regulated hedge funds.

“GameStop” by JeepersMedia is licensed under CC BY 2.0

Although the story has garnered the attention of regulators and even the White House, the wrong takeaway is to suggest options for retail investors should be restricted more than they already are. Yet this is precisely what William Gavin, Secretary of the Commonwealth of Massachusetts, has called for. Gavin argued that there should be a 30-day trading suspension on GameStop to protect “small and unsophisticated investors.”

Gavin’s suggestion would have serious extended consequences. First, consider the knowledge problem that is involved in constructing such a restrictive regulation. When exactly would a rally become unacceptable? Despite years of decline, Kodak experienced a rally after its announcement that it would move into pharmaceuticals. Would this be permissible? If so, one could simply point to GameStop’s decision to appoint three new directors in an effort to turn the company around. If this is not enough, regulators must clearly state what identified the investments as unacceptable.

It is unclear if there is a perfect benchmark to distinguish rallies. But without such a measure, the suspension proposal would put every rally at risk of wrongful closure — potentially halting the growth of companies and industries, alike. Worse yet, the fear of missing out on a rising stock may push some investors to rush in with less information than they would otherwise acquire. Even if it is in a traditional rally, an uninformed decision could cause more harm than good.

Yet suppose the knowledge problem is solved and there is a perfect measure in place. Should other protections be put in place? One could make the case for a law against allowing “unsophisticated” gamblers from going to Las Vegas and losing money. And although this may seem like a leap, Gavin himself told Reuters, “This isn’t investing, this is gambling,” when he spoke of the GameStop rally.

The rally has attracted the world’s attention, but it does not require it. Rallies are a normal part of financial market activity. The only difference here is that it was Main Street that pulled one over on Wall Street.

January 28, 2021

The economic impact of a US national minimum wage of $15 per hour

Filed under: Business, Economics, Government, USA — Tags: , , , — Nicholas @ 03:00

I missed this post by Warren Meyer last week, but it’s still very topical:

I have talked a lot about the negative effects of higher minimum wages on low-skill workers. Two good example background posts are here and here. I covered how a broad range of labor regulation hurts unskilled workers in a cover story for Regulation magazine a few years back. Unfortunately, in a country where the average American buys about $1000 in lottery tickets each year, the willingness to believe we can get something for nothing is strong.

But I want to talk specifically about a Federal minimum wage increase, where one other problem emerges. The best way to state this is — how can one possibly set the same minimum wage for San Francisco at the same rate as one does for rural Mississippi? Here is one source for comparative state cost of living. Doing this by county would make the curve even wider.

Cost of living in Hawaii is more than 2x that of Mississippi. CA and NY are not far behind. A minimum wage that might comfortably be accommodated in San Francisco (and note even there the rise to $15 was ending service jobs in that city long before COVID), would be an economic disaster for rural Alabama. I don’t tend to think primarily along racial lines as seems to be the case on the Left today, but basically this is a policy driven by rich white tech guys in San Francisco that is going to devastate the employment prospects of rural blacks.

Whatever one’s misgivings about minimum wages, it is certainly true that allowing states to take the lead on setting minimum wages (counties would make even more sense) makes a lot more sense that trying to take action at the national level. Even with state action there are disparities.

January 26, 2021

The brief and inglorious life of Penn Central

Filed under: Books, Economics, History, Railways, USA — Tags: , , , , , — Nicholas @ 04:00

In City Journal, Nicole Gelinas recounts the tale of the fateful merger of two great American railroad systems that lasted just long enough to support massive financial chicanery before descending into inevitable bankruptcy:

More than 50 years on now, the spectacular collapse of the Penn Central railroad in 1970 is little remembered today, but its legacy is still with us — not so much as a warning, but as a prelude: to New York City’s own near-bankruptcy in the 1970s; to four decades of financial engineering, beginning in the 1980s; to the 2001 Enron downfall; to the 2008 financial crisis and its “too big to fail” bailouts — and yes, even to the public discontent that elected President Donald Trump.

As America emerged from World War II, most people would have laughed at the idea of the nation’s two premier freight and passenger railroads, the Pennsylvania and the New York Central, going broke in a quarter-century’s time. By design, the Pennsy and the Central were not fierce competitors but complementary “frenemies” that had long agreed not to undercut one another’s monopoly profits. From Massachusetts to Missouri, the two railroads dominated freight and passenger travel in the northeast quarter of the United States, with nearly 21,000 miles of track between them.

Yet even as America built its powerhouse postwar economy, the railroads struggled. As Joseph R. Daughen and Peter Binzen write in The Wreck of the Penn Central, their cult-classic chronicle of the Penn Central’s demise, during the war the then-separate railroads had been running their equipment 24 hours a day to transport troops and supplies, leaving them with “worn-out” equipment.

In the fifties and sixties, moreover, new competitive pressures prevented them from catching their breath. Trucks competed with the railroads for freight hauling via the new, free highways the nation was building. Commuter-rail passengers moved to the highways as well, while long-haul rail passengers took to the skies. The railroads’ decline accelerated in the sixties, partly because of the collapse of northeast manufacturing.

In 1962, the two companies decided to merge. But railroading was one of the most heavily regulated industries in the United States, so the merger took six years, as it wound its way through multiple levels of public approval for the creation of the 100,000-worker, 100,000-shareholder, 100,000-creditor behemoth. Meantime, government-set rates already fell short of the railroads’ long-term costs.

The combined entity that would become the Penn Central made significant concessions to win political support for the merger, including no-layoff pledges that would hamper its ability to cut spending and a promise to take on the independent (and chronically insolvent) New York, New Haven, and Hartford passenger railroad.

After the merger, the railroads discovered that they had incompatible computer systems, which threw railyards into chaos and angered customers. The Penn Central’s three top officials, too, were incompatible. They “scarcely spoke to one another,” write Daughen and Binzen. Stuart Saunders, the board chairman, was a political guy. Alfred Perlman, the president, was a trains guy. These different outlooks could have complemented each other, but personalities got in the way. Rounding out this dysfunctional triumvirate was Penn vet David Bevan, the top financial official, perpetually “angry and humiliated” at not being picked for the top job.

Penn Central route map from us.leforum.eu
http://us.leforum.eu/t1355-Photos-du-Penn-Central-PC.htm

H/T to Ed Driscoll at Instapundit, who also posted this video the combined entity put together to celebrate the merger:

January 7, 2021

Fallen Flag — the New York Central System

Filed under: History, Railways, USA — Tags: , , , , , , , — Nicholas @ 03:00

This month’s Classic Trains fallen flag feature is the first part of the history of the New York Central System by George Drury. The New York Central was one of the biggest and most economically powerful American railways for over a century before the postwar boom turned into the economic disaster of the 1960s and 70s, as passengers switched from rail to road and plane and the decline of northeastern heavy industry and mining hit the established eastern railroads very hard:

The New York Central was a large railroad, and it had several subsidiaries whose identity remained strong, not so much in cars and locomotives carrying the old name but in local loyalties: If you lived in Detroit, you rode to Chicago on the Michigan Central, not the New York Central; through the Conrail era and even now, the line across Massachusetts is still known as “the Boston & Albany.”

The streamlined steam locomotive New York Central Hudson No.5344 “Commodore Vanderbilt”, leaving Chicago’s LaSalle Street station pulling the NYC’s premier passenger traing, the 20th Century Limited, 22 February 1935.
Photo originally copyrighted International News Photos (copyright not renewed) via Wikimedia Commons

The system’s history is easier to digest in small pieces: first New York Central followed by its two major leased lines, Boston & Albany and Toledo & Ohio Central; then Michigan Central and Big Four (Cleveland, Cincinnati, Chicago & St. Louis). By the mid-1960s NYC owned 99.8 percent of the stock of Michigan Central and more than 97 percent of the stock of the Big Four. NYC leased both on Feb. 1, 1930, but they remained separate companies to avoid the complexities of merger.

In broad geographic terms, the NYC proper was everything east of Buffalo plus a line from Buffalo through Cleveland and Toledo to Chicago (the former Lake Shore & Michigan Southern). NYC included the Ohio Central Lines (Toledo through Columbus to and beyond Charleston, W.Va.) and the Boston & Albany (neatly defined by its name). The Michigan Central was a Buffalo–Detroit–Chicago line and everything in Michigan north of that. The Big Four was everything south of NYC’s Cleveland–Toledo–Chicago line other than the Ohio Central.

The New York Central System included several controlled railroads that did not accompany NYC into the Penn Central merger. The most important of these were (with the proportion of NYC ownership in the mid-1960s):

  • Pittsburgh & Lake Erie (80 percent)
  • Indiana Harbor Belt (NYC, 30 percent; Michigan Central, 30 percent; Chicago & North Western, 20 percent; and Milwaukee Road, 20 percent)
  • Toronto, Hamilton & Buffalo (NYC, 37 percent; MC, 22 percent; Canada Southern, 14 percent; and Canadian Pacific, 27 percent).

[…]

The New York & Harlem Railroad was incorporated in 1831 to build a line in Manhattan from 23rd Street north to 129th Street between Third and Eighth avenues (the railroad chose to follow Fourth Avenue). At first the railroad was primarily a horsecar system, but in 1840 the road’s charter was amended to allow it to build north toward Albany. In 1844 the rails reached White Plains and in January 1852 the New York & Harlem made connection with the Western Railroad (later Boston & Albany) at Chatham, N.Y., creating a New York–Albany rail route.

The towns along the Hudson River felt no need of a railroad, except during the winter when ice prevented navigation. Poughkeepsie interests organized the Hudson River Railroad in 1847. The railroad opened from a terminal on Manhattan’s west side all the way to East Albany. By then the road had leased the Troy & Greenbush, gaining access to a bridge over the Hudson at Troy. (A bridge at Albany was completed in 1866.)

By 1863 Cornelius Vanderbilt controlled the New York & Harlem and had a substantial interest in the Hudson River Railroad. In 1867 he obtained control of the New York Central, consolidating it with the Hudson River in 1869 to form the New York Central & Hudson River Railroad.

Vanderbilt wanted to build a magnificent terminal for the NYC&HR in New York. He chose as its site the corner of 42nd Street and Fourth Avenue on the New York & Harlem, the southerly limit of steam locomotive operation in Manhattan. Construction of Grand Central Depot began in 1869. The new depot was actually three separate stations serving the NYC&HR, the New York & Harlem, and the New Haven. Trains of the Hudson River line reached the New York & Harlem by means of a connecting track completed in 1871 along Spuyten Duyvil Creek and the Harlem River (they have since become a single waterway). That was the first of three Grand Centrals.

The Wikipedia page on the New York Central includes a good overview of the decline of the railway:

The New York Central, like many U.S. railroads, declined after the Second World War. Problems resurfaced that had plagued the railroad industry before the war, such as over-regulation by the Interstate Commerce Commission (ICC), which severely regulated the rates charged by the railroad, along with continuing competition from automobiles. These problems were coupled with even more formidable forms of competition, such as airline service in the 1950s that began to deprive NYC of its long-distance passenger trade. The Interstate Highway Act of 1956 helped create a network of efficient roads for motor vehicle travel through the country, enticing more people to travel by car, as well as haul freight by truck. The 1959 opening of the Saint Lawrence Seaway adversely affected NYC freight business. Container shipments could now be directly shipped to ports along the Great Lakes, eliminating the railroads’ freight hauls between the east and the Midwest.

The NYC also carried a substantial tax burden from governments that saw rail infrastructure as a source of property tax revenues – taxes that were not imposed upon interstate highways. To make matters worse, most railroads, including the NYC, were saddled with a World War II-era tax of 15% on passenger fares, which remained until 1962, 17 years after the end of the war.

Robert R. Young: 1954–1958
In June 1954, management of the New York Central System lost a proxy fight in 1954 to Robert Ralph Young and the Alleghany Corporation he led.

Alleghany Corporation was a real estate and railroad empire built by the Van Sweringen brothers of Cleveland in the 1920s that had controlled the Chesapeake and Ohio Railway (C&O) and the Nickel Plate Road. It fell under the control of Young and financier Allan Price Kirby during the Great Depression.

R.R. Young was considered a railroad visionary, but found the New York Central in worse shape than he had imagined. Unable to keep his promises, Young was forced to suspend dividend payments in January 1958. He committed suicide later that month.

Alfred E. Perlman: 1958–1968
After Young’s suicide, his role in NYC management was assumed by Alfred E. Perlman, who had been working with the NYC under Young since 1954. Despite the dismal financial condition of the railroad, Perlman was able to streamline operations and save the company money. Starting in 1959, Perlman was able to reduce operating deficits by $7.7 million, which nominally raised NYC stock to $1.29 per share, producing dividends of an amount not seen since the end of the war. By 1964 he was able to reduce the NYC long-term debt by nearly $100 million, while reducing passenger deficits from $42 to $24.6 million.

Perlman also enacted several modernization projects throughout the railroad. Notable was the use of Centralized Traffic Control (CTC) systems on many of the NYC lines, which reduced the four-track mainline to two tracks. He oversaw construction and/or modernization of many hump or classification yards, notably the $20-million Selkirk Yard which opened outside of Albany in 1966. Perlman also experimented with jet trains, creating a Budd RDC car (the M-497 Black Beetle) powered by two J47 jet engines stripped from a B-36 Peacemaker bomber as a solution to increasing car and airplane competition. The project did not leave the prototype stage.

Perlman’s cuts resulted in the curtailing of many of the railroad’s services; commuter lines around New York were particularly affected. In 1958–1959, service was suspended on the NYC’s Putnam Division in Westchester and Putnam counties, and the NYC abandoned its ferry service across the Hudson to Weehawken Terminal. This negatively impacted the railroad’s West Shore Line, which ran along the west bank of the Hudson River from Jersey City to Albany, which saw long-distance service to Albany discontinued in 1958 and commuter service between Jersey City and West Haverstraw, New York terminated in 1959. Ridding itself of most of its commuter service proved impossible due to the heavy use of these lines around metro New York, which government mandated the railroad still operate.

Many long-distance and regional-haul passenger trains were either discontinued or downgraded in service, with coaches replacing Pullman, parlor, and sleeping cars on routes in Michigan, Illinois, Indiana, and Ohio. The Empire Corridor between Albany and Buffalo saw service greatly reduced with service beyond Buffalo to Niagara Falls discontinued in 1961. On December 3, 1967, most of the great long-distance trains ended, including the famed Twentieth Century Limited. The railroad’s branch line service off the Empire Corridor in upstate New York was also gradually discontinued, the last being its Utica Branch between Utica and Lake Placid, in 1965. Many of the railroad’s great train stations in Rochester, Schenectady, and Albany were demolished or abandoned. Despite the savings these cuts created, it was apparent that if the railroad was to become solvent again, a more permanent solution was needed.

December 2, 2020

Bill C-10, An Act to amend the Broadcasting Act hijack the internet

Filed under: Bureaucracy, Cancon, Media, Technology — Tags: , , , , — Nicholas @ 03:00

At The Line, Josh Dehass outlines the benign-sounding claimed intent of Bill C-10 and the malign reality if it is implemented as written:

Bill C-10 would expand the term “broadcasters” to include online content creators. This means that after decades of a mostly regulation-free Internet, the CRTC will soon have a say in what content you can and can’t see on services like Netflix, Amazon Video and Spotify. The bill says these “broadcasters” will be required to “serve the needs and interests of all Canadians — including Canadians from racialized communities and Canadians of diverse ethnocultural backgrounds, socio-economic statuses, abilities and disabilities, sexual orientations, gender identities and expressions, and ages — and reflect their circumstances and aspirations, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of Indigenous peoples within that society.”

In the Globe and Mail Guilbeault helpfully translated from Newspeak: broadcasters now must create “Indigenous programming,” and possibly other forms of mandatory content by and for minority groups. Guilbeault said that the mandatory Indigenous programs are necessary to correct the “historical mistake” that Canada made when it denied Indigenous people their cultural expression. That historical mistake apparently cannot corrected solely by forcing Canadians to fund APTN and non-stop Indigenous content at CBC. Only when every private company is co-opted in the mission will the mistake be corrected.

It’s bad enough that this new law will require Canadians to pay for shows and podcasts that they’re unlikely watch. What’s really disturbing is that this new law means any large company that wants to produce artistic and cultural content online in Canada will no longer be permitted to devote their time and money exclusively to expressing the ideas that they wish [to] express. Instead, they will be forced to also express the ideas the government wishes them to express. This is compelled speech, which is the term lawyers use when the government forces you to mouth its message. This is contrary the spirit of free expression rights that the Charter of Rights and Freedoms guarantees.

The new policy might strike you as old-fashioned broadcast regulation. It isn’t. The theory behind the original Broadcast Act was that the airwaves were a finite resource, requiring the government to act as referee. Otherwise, we could end up consuming nothing but low-brow American cultural products rather than high-brow CanCon like Family Feud Canada and Hedley. This was an elitist argument, since it assumed that individual consumers weren’t capable of determining what content is in their own interests, but at least it made a little sense, because it was theoretically possible for important programming like news to get completely crowded out. The Internet, on the other hand, is effectively infinite. There’s room for everyone’s content in the online marketplace of ideas. So far, it’s worked wonderfully. Virtual nobodies can find huge audiences without big money to get started. There’s really no reason for the government to interfere.

November 26, 2020

“… the Liberals’ oft-stated commitment to listen to the experts and the frontline workers fizzles when said experts and workers disagree with a preferred policy”

Filed under: Cancon, Government, Law, Weapons — Tags: , , , , , , , — Nicholas @ 05:00

In The Line, Matt Gurney explains why the Liberals are so in love with a set of proposed rule changes that will do almost nothing to reduce gun crime in Canada and might even end up creating criminals of previously law-abiding Canadians … but it polls well in Liberal ridings:

Restricted and prohibited weapons seized by Toronto police in a 2012 operation. None of the people from whom these weapons were taken was legally allowed to possess them.
Screen capture from a CTV News report.

Talking about gun policy in Canada is tricky, because the debate is highly technical. The regulation of firearms in this country, at least in theory, depends on the specifications of the firearm in question. Mode-of-operation, magazine capacity, ammunition calibre or barrel-bore width, barrel length, muzzle energy — these are all the criteria upon which a firearm is classified into one of three categories under Canadian law: prohibited, restricted or non-restricted. Any Canadian who wishes to own or borrow a firearm, or purchase ammunition, must be licenced, a process which includes mandatory safety training and daily automatic background checks.

Prohibited firearms are essentially banned in Canada; a relatively small number are held by private citizens who already possessed them when the current regulatory regime was brought in in the 1990s. The government of the day didn’t want to get into the thorny issue of confiscation, so it let existing owners keep them under strict conditions. The vast majority of guns in Canada, and all new guns sold for decades, therefore fall into the other two categories. Restricted guns are generally pistols and revolvers, but also some rifles and shotguns. Non-restricted guns are run-of-the-mill hunting rifles and shotguns, though some sports-shooting rifles (used for target practice) are also included.

The above is all somewhat theoretical, as the regulations are twisted and pulled in a variety of ways to suit political ends, leaving a system that’s tortured and confusing even for those of us who study it. But it gives you at least an idea of how the system is designed. If you know guns, of course, you knew all this already. If you don’t, I wouldn’t blame you if your eyes glazed over a bit while reading the above. Without a basic working familiarity with all the terminology and technical specs and regulations, it’s damn hard to follow the debates over gun control. This is why I have to ask you non-aficionados to take my word for it: the Liberal proposal is really bad.

Well, actually, you don’t have to take just my word for it. You can read the NPF’s position paper, which makes at least some of the case. It notes, correctly, that “military style assault weapons” aren’t actually a thing that’s defined under Canadian law; it can therefore mean whatever the government of the day wants it to mean. True military style battle weapons — fully automatic weapons with high-capacity magazines and full-sized ammunition — are already effectively banned in Canada and have been for decades. Further, the NPF notes, firearms are used in a minority of homicides in Canada, a majority of those homicides are committed with handguns, and a majority of those killings are directly linked to organized crime or gang activity.

You’re probably starting to see the problem: Going after the guns that aren’t being used in the crimes, and taking them from the people who aren’t committing them, isn’t a public-safety policy. It’s a political gift to the Liberals’ urban base, where the proposal is popular and gun literacy low (those two latter points are not unrelated).

While the ban is almost entirely a political sop, it’s probably a good political sop, alas. I’m sure the proposal will be very well received in ridings the Liberals would like to hold or flip. But it’s still a stupid policy, even if it’s popular. The Liberals are proposing to spend tons of money on this. They estimate hundreds of millions, but recall that the long-gun registry came in about 1,500 times overbudget. And all to “ban” some of the rifles used by a segment of the population — licenced and screened gun owners — that’s been found to be the several times less likely to commit murder than those without licences.

November 21, 2020

About that “Canadian content crisis” the feds are trying to “fix” with Bill C-10

Filed under: Cancon, Government, Law, Media — Tags: , , , , , — Nicholas @ 03:00

Michael Geist begins a series of posts on the ongoing blunder that is the federal government’s “get money from the web giants” proposed legislation:

Canadian Heritage Minister Steven Guilbeault, 3 February 2020.
Screencapure from CPAC video.

Canadian Heritage Minister Steven Guilbeault rose in the House of Commons yesterday for the second reading of Bill C-10, his Internet regulation bill that reforms the Broadcasting Act. Guilbeault told the House that the bill would level the playing field, that it would establish a high revenue threshold before applying to Internet streamers, would not impact consumer choice, or raise consumer costs. He argued that even if you don’t believe in cultural sovereignty, you should still support his bill for the economic benefits it will bring, warning that Canadian producers will miss out on a billion dollars by 2023 if the legislation isn’t enacted. He painted a picture of Internet companies (invariably called “web giants”) that have millions of Canadian subscribers but do not contribute to the Canadian economy.

Guilbeault is wrong. He is wrong in his description of the bill (it does not contain thresholds), wrong about its impact on consumers (it is virtually certain to both decrease choice and increase costs), wrong about the contributions of Internet streamers (who have been described as the biggest contributor to Canadian production), wrong about level playing field claims (incumbent broadcasters enjoy a host of regulatory benefits not enjoyed by streamers), wrong about the economic impact of the bill (it is likely to decrease investment in the short term), and wrong about cultural sovereignty (it surrenders cultural sovereignty rather than protect it).

With the bill starting its Parliamentary review, this is the first in a new series of posts on why a careful examination of the data and the bill itself reveals multiple blunders. There are good arguments for addressing the sector, including tax reform, privacy upgrades, and competition law enforcement. There are also benefits to updating the Broadcasting Act, but in an effort to cater to a handful of vocal lobby groups over the interests of the broader Canadian public, Guilbeault’s bill will cause more harm than good. The series will run each weekday for the next month, first addressing the weak policy foundation that underlies Bill C-10, then a series a posts on the uncertainty the bill creates, a review of the trade threats it invites, and an assessment of its likely impact on consumers and the broader public.

The series begins with a post on the fictional Canadian content “crisis.” Canadians can be forgiven for thinking that the shift to digital and Internet streaming services has created a crisis on creating Canadian content. Canadian cultural lobby groups regularly claim that there is one (Artisti, CDCE) and Guilbeault tells the House of Commons that billions of dollars for the sector is at risk. Yet the reality is that spending on film and television production in Canada is at record highs. This includes both certified Canadian content and so-called foreign location and service production in which the production takes place in Canada (thereby facilitating significant economic benefits) but does not meet the narrow criteria to qualify as “Canadian.” I have written before about the need to revisit the Canadian content qualification rules which enable productions with little connection to Canada to receive certification and some that directly meet the goal of “telling Canadian stories” that fail to do so.

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