Quotulatiousness

January 25, 2011

Margaret Wente: Harper has found the “sweet spot” in Canadian politics

Filed under: Cancon, Media, Politics — Tags: , , , , , , — Nicholas @ 12:14

Margaret Wente is sympathetic to her Liberal friends:

I’ve been feeling kind of sorry for my liberal friends. They can’t stand Stephen Harper. They wince when they hear his name. And yet, in spite of his disagreeable personality, his grip on power is stronger than ever. He has lasted an improbable five years. He has run the longest minority government in Canada’s history and held office longer than Lester Pearson. Aaargh!

On the radio Monday, a Liberal academic was explaining just what makes Mr. Harper so despicable. He’s been stealing Liberal policies! Now that’s dirty. Everyone was certain he would move the country to the right. Instead, he moved the party to the left. He racked up stimulus deficits by the billions and expanded the size of government. He pleased the people by handing them deductions for their kids’ hockey gear. He even quashed an unpopular foreign takeover — only the second veto of a foreign bid in 25 years. The Financial Post went nuts. Who does this guy think he is — Maude Barlow?

Put another way, for everyone who’s attacking Mr. Harper for being too conservative, someone else is attacking him for not being conservative enough. In politics, this is known as “finding the sweet spot.” Both the Liberals and the right-wing National Citizens’ Coalition, which he used to head, are accusing him of reckless spending. Even Peter Mansbridge challenged him for failing to live up to his small-c conservative ideals. (I wonder how the conversation would have gone if Mr. Harper had slashed the CBC.)

Wente may well be right, but I wonder how long Harper can keep the small-c conservatives happy while he does a very credible imitation of Paul Martin’s Liberal government. They wanted a change, but this is a change in labels, not in actual policies.

To be fair, Harper has been able to provide a more distinctive foreign policy than Martin would have done: his outspoken support for Israel is more than enough to set him apart from his Liberal predecessor. On domestic issues? The difference is much more in tone than in substance. On some issues, Michael Ignatieff is running to the right of Harper, which unnerves his own party no end.

January 2, 2011

Dave Barry’s 2010 review

Filed under: Government, History, Humour, Media, Politics — Tags: , , — Nicholas @ 13:53

Who better than Dave Barry to recount to us the manifold miseries we endured and depths of despair we plumbed:

Let’s put things into perspective: 2010 was not the worst year ever. There have been MUCH worse years. For example, toward the end of the Cretaceous Period, Earth was struck by an asteroid that wiped out about 75 percent of all of the species on the planet. Can we honestly say that we had a worse year than those species did? Yes, we can, because they were not exposed to “Jersey Shore.”

So on second thought we see that this was, in fact, the worst year ever. The perfect symbol for the awfulness of 2010 was the BP oil spill, which oozed up from the depths and spread, totally out of control, like some kind of hideous uncontrollable metaphor. (Or “Jersey Shore.”) The scariest thing about the spill was, nobody in charge seemed to know what to do about it. Time and again, top political leaders personally flew down to the Gulf of Mexico to look at the situation firsthand and hold press availabilities. And yet somehow, despite these efforts, the oil continued to leak. This forced us to face the disturbing truth that even top policy thinkers with postgraduate degrees from Harvard University — Harvard University! — could not stop it.

The leak was eventually plugged by non-policy people using machinery of some kind. But by then our faith in our leaders had been shaken, especially because they also seemed to have no idea of what to do about this pesky recession. Congress tried every remedy it knows, ranging all the way from borrowing money from China and spending it on government programs, to borrowing MORE money from China and spending it on government programs. But in the end, all of this stimulus created few actual jobs, and most of those were in the field of tar-ball collecting.

December 3, 2010

Reactions to the Irish financial crisis

Filed under: Economics, Europe — Tags: , , , , , — Nicholas @ 09:09

Kevin O’Rourke sees it as almost a kind of bereavement:

It is one thing to know that someone you love is terminally ill; their death still comes as a shock.

I certainly don’t want to compare the arrival of the EU-IMF team in Dublin last week to a bereavement. But I was surprised at how upsetting I found it, given that it came as no surprise. It had been clear for a long time that the blanket guarantee given to the liabilities of Ireland’s rotten banks, in September 2008, had saddled the State with a debt that was too big for it to handle. Ten successive quarters of declining real GNP, and one attempt too many to draw a line under the losses of our banks, made our exclusion from international capital markets inevitable. But to know something is one thing; to see it actually happen is something entirely different.

I am not alone in feeling this way, it seems. The economics editor of the Irish Times, Dan O’Brien, wrote that

“nothing quite symbolised this State’s loss of sovereignty than the press conference at which the ECB man spoke along with two IMF men and a European Commission official. It was held in the Government press centre beneath the Taoiseach’s office. I am a xenophile and cosmopolitan by nature, but to see foreign technocrats take over the very heart of the apparatus of this State to tell the media how the State will be run into the foreseeable future caused a sickening feeling in the pit of my stomach.

This is not to say that we would be happy to have our country’s affairs managed by the current, disgraced, government. I yield to no-one in my loathing of the men and women who have done this to my country. What has been the intellectual low-point of the last couple of years? Was it the cash-for-clunkers stimulus package (Ireland does not produce any cars)? Or the statement by our Finance Minister that Ireland need not fear a bank run, since Ireland is an island? Or the biggest Irish joke of them all, which underpinned the bank guarantee in the first place: that if we wanted investors to retain confidence in the creditworthiness of the Irish State, we needed to make sure that nobody who invested in our (private sector) banks ever lost a penny?”

H/T to Tim Harford for the link.

October 19, 2010

The less-visible effects of workplace demographic changes

Filed under: Economics, History, USA — Tags: , , , , , , — Nicholas @ 12:12

Monty points out that we’ve passed a significant equilibrium point in employment statistics:

Women are vital to the American workforce, and have been since at least the 1940’s, but this recession may have shifted the balance of economic power decisively to women. Men have been the traditional household “breadwinners”, with the wife’s income being seen as augmenting the male’s income, but this recession has hit men disproportionately harder than women. Women are far more likely to work in industries (like services and healthcare) that are more insulated from the downturn, whereas men are far more likely to work in the hard-hit trades and manufacturing sectors. Women also have many more protections — both regulatory and social/cultural — than men do. There are many deep ramifications to this change — the impact of long-term male unemployment on the family; the loss of status, power and prestige that goes with being unemployed; the male self-image and value to society. (Studies of unemployed men during the Great Depression are not happy reading — many of the chronically unemployed males left their families rather than assume a lower status in the family, and were also far more likely to be dictatorial and violent towards their wives and children.)

Social support agencies are not well-equipped to deal with this change, and it will continue to disrupt “normal” life for years to come, unless the economy is allowed to right itself — yet another excellent reason to tell the politicians to stop meddling.

Another valuable observation from the same post:

This is a point I’ve made many times: the economic demographic most impacted by immigrant labor are teens. Low-end “starter” jobs tend to be low-skill, low-paying, part-time jobs, and adult immigrants are often favored over teens for these jobs by employers (they often have families to support, are considered more reliable, etc.). This means that the teen labor-participation percentage has fallen from 50% in 1970 to 25% today. (And even 25% is probably too high.) When faced with this lack of job opportunities, teens often opt to go back to school — but this in turn saddles them with a lot of debt for (in many cases) not much gain. For many teens, it’s simply a way of deferring adulthood, not a way to gain additional skills or knowledge. (I had my first paying job at 14; my first “real” W2 job at 16. I worked nearly full-time all the way through college, and worked full-time during the summers. I wonder how rare this is now?) Another interesting aspect to the immigrant/teen issue: the language barrier. If you’re a teen who doesn’t speak Spanish, just try and get a landscaping or construction job in the Southwest. The same goes for many fast-food crews and oil-change/tire-repair places. Still, we’re not the only ones with immigrant troubles.

Another side to the increasing longevity of western culture is the delayed start to “adult” life: now that a college diploma or university degree has about the same relevance that a high school diploma did a generation ago, young folks are entering the workforce several years later than earlier generations. This delays family formation, children, home-buying, and all the other aspects of independent-from-the-parents life.

No wonder so many of the “rules” no longer seem to apply with so many things changing.

October 17, 2010

P.J. O’Rourke interview

Filed under: Economics, Liberty, Politics, USA — Tags: , , , , , — Nicholas @ 12:01

Parts 2 and 3 are at Liberty Pundits.

October 12, 2010

Monty on structural unemployment

Filed under: Economics, Education, Technology, USA — Tags: , , , — Nicholas @ 12:07

Monty is still too busy with real life to do a daily Financial Briefing, but he’s dropping by a few times a week with his insightful-and-acidic thoughts at Ace of Spades HQ:

Welding jobs may be plentiful, but that’s no help to you if you’re not a welder. This is called “structural unemployment”, and it has no real short-term solution. It results from a disconnect between current worker skills and employer requirements. It’s really a form of malinvestment. Students train in subjects like Postmodernist Literary Theory and The Hermeneutics of Lesbian Cinema, but the job market is asking for engineers and plumbers. Workers in fading industries won’t or can’t retrain. The last time this problem cropped up was during the 1982 recession: the old manufacturing jobs were gone, and the hundreds of thousands of Rust Belt factory workers — many now middle-aged, with high union wages and benefits packages they didn’t want to lose — either could not or would not re-train into other fields. This led to a long cycle of stagnation in which the American upper midwest remains mired to this very day. Pull quote:

Victor Calix Cruz, 51, has been job hunting for two years after being laid off from construction work in Miami. He, his wife and their two teenage children are “surviving” on his wife’s disability and his unemployment payments, he said. While he heard of openings at hotels, he hasn’t applied because the pay and benefits aren’t as good as what he had before.

I don’t imagine that your unemployment check matches what you were making before either, Chief. It’s like the old Rolling Stones song: you can’t always get what you want.

October 4, 2010

Reason TV’s “Fiscal House of Horrors”

Filed under: Economics, Government, Humour, Politics, USA — Tags: , — Nicholas @ 16:26

A cameo economic round-up by Monty

Filed under: Economics, USA — Tags: , , , — Nicholas @ 13:11

One of the most interesting features over at Ace of Spades HQ used to be the daily economic round-ups by Monty. Unfortunately, he had to take a breather, but we’re able to get an occasional update like this one:

[In which Monty, long away from the neighborhood, returns to save the local mom-n-pop bank from a hostile takeover through a stylish melange of breakdancing, infectious urban beats, and the rap music that all the youngsters seem to be so fond of. Thrill to the parachute pants, Jheri curls, and mirrored wraparound sunglasses! (The soundtrack, “Monty Raps! Funky Accordion and Theremin Music For These Troubled Modern Times”, now available in fine discout outlets nationwide!)]

[. . .]

I just wouldn’t be me if I didn’t point out that gold is now $1314/oz as I write this. I bought some gold five years back at about $500/oz; that’s a pretty damned good rate of return for something that’s just supposed to be an inflation hedge. The naysayers can continue mumbling that I can’t eat gold, that I will be crucified on a cross of gold, the gold is just metal and has no innate value — I will simply point to the fact that it has outperformed every other investment in my portfolio, and by quite a large margin. And as a long-term store of value, I trust it a hell of a lot more than Treasuries. (Silver has done even better in absolute terms.)

Ah, but what about those safe-haven darlings of investors, municipal bonds? The romance may be on the rocks. I’ve thought for a long time that municipal debt is the next big shoe to drop in this recession/depression/worker’s paradise that we’re living in. Harrisburg, PA made the news recently when they barely escaped having to declare bankruptcy, but Harrisburg is only one of tens or even hundreds of muncipalities in the nation in dire financial straits. There seems to be a belief that the feds will bail them out before things get too grim, but this ignores two facts: a) the appetite for another trillion-dollar bailout is at subzero levels, and b) it’s not clear that taxpayers of one state will be willing to bail out the profligate citizenry of another. Prudent residents of Lincoln, NE or Minot, ND may not wish to fund the rather more lavish lifestyles of a San Diego or Miami. However much we “feel” the federal and state debt, we’d feel a municipal crash a lot harder because it hits us right where we live (literally): trash collection, sewer, water, road repair, snow removal, all the rest. You pay more and more and get less and less from it. (Oh, and guess what the major financial burden on municipal governments is these days? If you said “public-employee pension and health benefits”, give yourself a gold star and then a smack upside the head for being an insufferable know-it-all.)

September 30, 2010

QotD: Unintended consequences

Filed under: Economics, Media, Politics, Quotations — Tags: , , — Nicholas @ 13:42

Sometimes I think of the political blogosphere as a huge commons. An individual blogger can gain in readership or influence by attacking or ridiculing some enemy, but at the cost of making that enemy stronger in the world as a whole.

I also believe that every time the words “stimulus” or “fiscal policy” are blogged it helps the electoral prospects of the Republican Party, no matter what the content of the blog post.

Tyler Cowen, “Department of Unintended Consequences”, Marginal Revolution, 2010-09-28

September 8, 2010

Austrian economics? That’s crazy talk

Filed under: Economics, Politics, USA — Tags: , , , , — Nicholas @ 07:35

As has been observed over and over again, we’re all Keynsians now. It’s usually meant in the economic sense, but perhaps it’s a reflection of Keynes’ other famous dictum: in the long run, we’re all dead. A different school of economics deserves a longer look:

Common sense is the crux of Austrian theory economics. Austrians look at how individuals act, not how “economies” or “nations” act or behave. Ludwig von Mises, the greatest Austrian thinker, and in my opinion the greatest economist, entitled his great work, Human Action not National Action. The Austrian School was referred to by the Germans as the Psychological School because its analysis started with individual action and how those actions would either attain or fail to attain the goals sought by individuals. In other words, it involves a lot of the “common sense” that guides human behavior most of the time. It’s comforting to know there’s a philosophy of economics that conforms to what human beings actually do rather than how some economist thinks we ought to behave.

Examples of economic Newspeak flourish, especially if you listen to President Obama’s economic team. My favorite example is the present conflict between consumer spending and consumer saving. Since the crash, consumers have cut back on spending and are increasing their savings. Most economists are saying this is bad for the economy; they urge us to spend, spend, spend to save the economy.

Actually, it’s just the opposite: Saving is the road to recovery.

It seems rather obvious that during a downturn of the economy it would be natural for people to save more and spend less: They’re uncertain about their jobs; the values of their homes have plummeted (about 30% since the peak in 2006); their stocks have declined, and their debts are high. Isn’t it common sense that people are doing the rational thing by saving? This is something our parents and grandparents understood well.

September 3, 2010

“Admitting you’re a fan of economics is another way of saying you live a deeply tragic life”

Filed under: Economics, Media — Tags: , , — Nicholas @ 09:33

David Harsanyi loves economists — at least the ones he can quote to support his articles:

[. . .] I can’t seem to get enough of economists who blog about human behavior or write wickedly counterintuitive books about how all the bad things we do are good for society.

Professionally speaking, economists are also vital. Where else are columnists going to find a Ph.D. to corroborate all the gibberish we put in our pieces?

But the most crucial lesson I’ve gleaned from smart men and women who practice the dismal science is this: Those who claim to grasp the vagaries of the economy enough to predict the future with any amount of certitude are charlatans.

August 31, 2010

The “trust problem” in government

Filed under: Economics, Government, Media, Politics, USA — Tags: , , — Nicholas @ 07:41

Charles Johnson rebuts an article by E.J. Dionne which pushed the notion that Obama’s policies are significantly different from those of the Bush administration:

There is one point where I can unequivocally agree with E.J. Dionne’s column “Can We Reverse the Tide on Government Distrust” (Washington Post, May 6, 2010) — when he tells us that “So far, the Obama administration has missed the opportunity to demonstrate . . . how it is changing the way government works. How is its approach to . . . regulations different from what was done before? . . . How are its priorities different?”

How indeed?

Two years in, if there’s any noticeable difference between Bush’s policies of corporate privilege, endless warfare, bailouts, executive power, and bureaucratic expansion, and Obama’s policies of corporate privilege, endless warfare, bailouts, executive power, and bureaucratic expansion, I’d like to know where to find it. The difference between me and E.J. Dionne is that Dionne is apparently surprised by this outcome — why hasn’t Obama done better? At issue is what used to be called “Good Government” – the problem of ensuring that a centralized managerial State, with expansive powers to intervene in all matters economic, social, or hygienic, will be run cleanly, and competently, by qualified experts. Dionne insists that financial market meltdowns, oil spills, and coal-mine disasters reveal the catastrophic results of a few years of Bush-era government neglect. Those of us who remember the Bush administration may have a hard time accepting the claim that it was an era in which government was not doing enough; and we see these headline-grabbing catastrophes as only the tail end of a decades-long crisis — a bipartisan, politically created crisis of institutional incentives and industry “best practice-ism,” created, nurtured, and protected by government itself.

So when Dionne reviews a few headlines — the financial-market meltdown, the Gulf oil spill, the coal-mine explosion at Upper Big Branch — he suggests that “It’s hard to argue that the difficulties we confront were caused by an excessively powerful ‘big’ government.”

Really? Let’s try.

July 29, 2010

QotD: You can’t beat the media

Filed under: Cancon, Government, Media, Politics, Quotations — Tags: , , , , — Nicholas @ 17:16

Stephen Harper is feeling some of that effect from the millions he put into “infrastructure” projects as part of Canada’s own stimulus plan. You will recall that Ottawa solicited proposals from local governments before handing over the money. Inevitably, a goodly number turned out to be . . . shall we say . . . not entirely crucial, leading to articles like this, pointing out that — oh dear — taxpayers were financing bocce courts via deficit spending. Not to mention sending money to rich people in good neighbourhoods! Even funding for the arts — which Harper was previously criticized for providing too little of — was thrown back in his face as a cheap attempt to correct his earlier gaffe. (If he hadn’t corrected the gaffe, of course, it could have been portrayed as a “continuing snub.” Don’t try to beat the media folks, you can’t win.)

So what’s the lesson here? Politicians should ignore the experts and do what makes people happy, even if it’s unlikely to have much long-term benefit? Politicians should never expect the public to appreciate their efforts unless there’s some kind of individual payoff? Politicians should stay out of the economy, because no one is ever satisfied anyway?

Pick any one of those. Just don’t run for president or prime minister if you want to be popular.

Kelly McParland, “Obama could save America and lose the election”, National Post, 2010-07-29

July 9, 2010

Brewing up a real stimulus package

Filed under: Law, USA — Tags: , , — Nicholas @ 20:35

I find it hard to believe that such luminaries as Senator Kerry and Senator Snowe are the moving forces behind this tax reduction scheme:

Can microbreweries revive the economy? That’s the hope of Sen. John Kerry (D., Mass.) and a bipartisan group of senators who are pushing a plan to cut taxes on the nation’s legion of small brewers in hopes of stimulating hiring among craft brewers.

The plan, which was introduced by Sen. Kerry, would lower the per-barrel excise taxes on small breweries’ first two million barrels of beer per year (that’s 62 million gallons) and would triple the size of what the government classifies as a small brewer — to breweries that produce six million barrels a year from two million currently. Some co-sponsors include Sens. Olympia Snowe (R., Maine) and Ron Wyden (D., Ore.), whose states, not surprisingly, rank high on the list of states with the most breweries per capita.

So-called craft brewers are one of the few industries to thrive through the recession. The segment grew from 7.2% by volume last year and 5.9% in 2008. The segment has even become a haven for budding entrepreneurs that have been let go from corporate jobs. “There’s not that many success stories in American manufacturing today and craft beer is one of them,” says Jim Koch, founder of The Boston Beer Co. which makes the various Samuel Adams beers. Mr. Koch — whose company is in Mr. Kerry’s home state — has been leading the charge for a lowering of the excise tax on small brewers.

Admittedly I’m in favour of most tax reductions, but this one in particular seems to be a good idea.

June 28, 2010

Tackle the debt, reduce regulatory uncertainty to tackle economic woes

Filed under: Economics, Europe, Government, History — Tags: , , , , — Nicholas @ 08:59

In a difficult business environment, companies take precautions to avoid getting deeper into debt or engaging in risky new projects. Companies and individuals do this because the penalty for getting too deeply into debt is bankruptcy: at best, you survive financially but in much reduced circumstances. Governments, despite evidence to the contrary, seem to think they’re immune to this problem and pile on additional debt even when there’s no reasonable short-term hope of getting out of debt. They should learn from Margaret Thatcher’s approach:

A group of 346 noted economists had just written a scathing open letter to Prime Minister Margaret Thatcher, predicting that her tough fiscal policies would “deepen the depression, erode the industrial base, and threaten social stability.” Thatcher wanted to make absolutely certain her unpopular attack on huge deficits and rampant spending, in the face of high unemployment and a weak economy, was the right one.

So Thatcher summoned Meltzer, along with a group of trusted advisors, to explain why the experts were wrong. Even leaders of her own party advised Thatcher to make what they called a ‘U-Turn,’ and enact a big spending program to pull Britain out of recession. “Our job was to explain why lower deficits and spending discipline were the key to recovery,” recalls Meltzer.

Thatcher was regally unamused by arcane jargon. “Being right on the economics wasn’t enough,” intones Meltzer. “She made it clear that our job was to explain it so she could understand it. If we didn’t, she made it clear we were wasting her time. She’d say, ‘You’re not telling me what I need to know.'”

Thatcher stuck with draconian policies, invoking the battle chant “The Lady’s Not for Turning.” She launched Britain on years of balanced budgets, modest spending increases, falling joblessness, and extraordinary economic growth.

The classic Keynesian theory called for governments to run deficits during tough economic times in order to “prime the pump”: using government money to make up for the lack of private spending in the economy for a short period of time, until the private sector recovered. Governments worldwide grabbed on to this theory, but dispensed with the balancing notion that as soon as the economy recovered, the government had to pay off that debt to return to a balanced budget (or even go into surplus).

Politicians, as a class, love spending money. The more money, the better. They also have remarkably short timelines: the life of this parliament, the next election, pension eligibility date1. Anything that happens beyond that short window of time isn’t important. Spending money the government doesn’t have now is a good thing, to a sitting politician. Paying off the debt later can be left to some mythical future politician.

The other problem that individuals and companies have, but governments don’t, is uncertainty due to regulatory change. Governments don’t have that worry because they’re the ones making the rules (and ignoring them when it’s politically convenient). If you want to depress investment in a given area of your economy, a swift way of doing so is to start faffing with the rules governing that sector. Until you stop changing rules, no company in that sector is going to spend any more than they absolutely have to spend, because you’re creating regulatory uncertainty beyond normal operating levels.

Multiply this by the number of separate government branches involved in making (overlapping, and sometimes conflicting) rules and you can get most major companies to stop expansion, reduce sales, slow or even cease hiring staff until the regulatory environment settles out and the “real” new operating conditions become clear.

[1] Interestingly enough, today happens to be the day that 75 members of parliament qualify for their lifetime gold-plated pensions. I didn’t realize that when I posted this item. Thanks for the heads-up, Kevin Gaudet.

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