Mulcair's debate "zinger" a calculated lie

William Watson: Oops Mr. Mulcair, you just flunked your recession history

Instant reports on last week’s leaders’ debate suggested one of the most telling lines was Thomas Mulcair’s “Stephen Harper is the only prime minister in Canadian history who, when asked about the recession during his mandate, gets to say, ‘Which one?’”

 That’s too bad. The line wasn’t especially well delivered ... and it was obviously canned. 

... Two more serious problems with Mulcair’s zinger are that it’s almost certainly not true and, beyond that, it’s just not very relevant. But apart from being wrong and immaterial, it was a great line.

Watson provides the record: MacDonald was PM for 6 recessions, Laurier - 4 recessions, Borden - 4,  King - 5, St. Laurent - 3, Diefenbaker - 2, Trudeau - 3 and Harper - 2. 

How much more wrong could Mulcair be!  However, given that it was scripted implies that his "zinger" was a calculated lie, a cheap shot lie for scoring debating points. 

Mulcair could have truthfully claimed that there have been no recessions during any NDP administration, but that wouldn't have scored him any points, except maybe for laughter.

James Moore's urge to micro-manage

If it isn't James Moore telling Tim Horton's how to run it's business,  it's James Moore policing prices at Toys R Us and every other cross-border business.  This is conservatism?

Must be an election coming.

Clear as mud

William Watson:

Even people who may not like it ...  seem happy the claim is finally settled.

In Canadian justice, however, “settled” is a relative term....

... Last week’s decision may clarify the guidelines for establishing aboriginal title, and maybe effectively broadens such title, but it’s going to be a long time and legions of lawyers before all such title is clear. And even once it is, there will still be lawyers, just to adjudicate it all.

Mark Carney - overrated hypocrite

William Watson:

IMF head Christine Lagarde and Bank of England Governor Mark Carney both spoke last week in London on the subject of “inclusive capitalism” at a highly exclusive conference organized by Lady Lynn Forester de Rothschild ...

... [both] made very literate and interesting speeches arguing that rising inequality ...  fundamentally threatens capitalism ...

Strangely, in view of their concern about inequality, neither ... offered to do their bit by taking a pay cut. ... Carney ... total compensation ...reported to be in the neighbourhood of £1 million per annum. ... If people at the top end making too much money is the dangerous social problem they both think it is, why don’t they help out by taking a pay cut?

Peter Foster:

... Canadian rock star Governor of the Bank of England Mark Carney ...  was hypocritically flailing away at a straw man. [He] wittered on last week about how fundamentalist capitalism was increasing inequality and hurting the poor ... It is pretty much a rule that anybody who attaches a qualifier to the word “capitalism” is seeking to undermine it.

Carney may be among the most overrated men in recent history. It’s not that he lacks raw intelligence. It’s that the feats attributed to him ... are within the capacity of no man.

An explanation for this dangerous state of mind is contained in a must-read paper by an academic named Slavisa Tasic: “Are Regulators Rational?” Mr. Tasic concludes that they suffer from “illusions of competence” and are entirely blind to the power and subtlety of markets.

Tory thinking compared with Putin's Russia

William Watson on Fin Min Flaherty's suggestion that the Tories might renege on PM Harper's income-splitting promise:

... The buzz is that the government may backtrack on its promise to introduce income-splitting once it has balanced the budget. 

... If the Tories do decide not to spend a couple of billion dollars establishing what most of their supporters do think of as fairness in the tax system, they need to come up with a better rationale than the one they’ve floated so far, which is the Liberal-technocratic one that in today’s labour market the skill shortage is so acute we mustn’t do anything that encourages skilled workers to withdraw ...

Don’t we know there’s a skill shortage (supposedly) and a productivity crisis (supposedly) and that, like our Olympic athletes, we all need to put our shoulder to the wheel for the Motherland?

Well, that may be how they do things in Putin’s Russia, where the leadership regards every Russian as one of Putin’s workers. But it’s not how we do things here. We’re not all Harper’s, or Flaherty’s, workers.

How we do things here is that we establish a fair tax system that raises the revenues we need to pay for basic services  .... And then we let people make their own decisions about the relative worth of making an extra dollar of market income versus tending to their own or their family’s needs.  In particular, we don’t have a policy that says, even implicitly, a woman’s place is in the labour market combating the skill shortage.

Strengthening families by increasing their options has been core Conservative social policy from square one. And tax policy that encourages people to raise families is one way (besides immigration) to help sustain our economic growth. It is also a step towards an effective alternative to unaffordable "progressive" programs like national universal daycare.

If Stephen Harper fails to keep his income-splitting promise it will be at the Conservatives' peril. While no serious Conservative supporter would waste his vote on any other party, many, like me, would simply withhold their vote and stop donations if betrayed on this.

The marijuana industry after legalization by Prime Minister Justin Trudeau

PM Justin Trudeau

William Watson predicts what a Canadian marijuana industry would look like if Justin should become PM.  For starters, complete takeover by governments and unions:

... Provincial and territorial Cannabis Control Boards
... Board stores, naturally, will be unionized
... The Boards may engage in advertising campaigns
... Sales outside Board stores will be illegal
... GST, PST and/or HST
... Canadian Cannabis Marketing Board
... interprovincial sales of marijuana will be strictly prohibited
... Canadian Cannabis Exporting Agency ... 

... with prices to match.  And, on top of all that, pot will be subjected to the same health and safety regulations that apply to tobacco (eg. for control of second-hand smoke in public places).

Potheads had best be careful what they wish for.

FP's Annual Rubber Duck Awards for Junk Science

Dishonoured for contributions to Junk Science:

Rick Smith for Lifetime Achievement
... the inspiration for the Rubber Duckies, which are named in his honour. Mr. Smith, as president of Environmental Defence Canada, co-authored of a remarkable piece of junk science literature, the 2009 Slow Death by Rubber Duck.

New York Times
... the NYT has aimed much of its junk at Canada...oil sands and the proposed Keystone XL pipeline ... similar canards were regurgitated in a paranoid piece by Canadian academic and zero-growth fan Thomas Homer-Dixon ... On the double-standard beat, the paper nobly refused to reproduce the “private” Climategate emails ... but couldn’t wait to publish Wikileaks

The Ontario Medical Association
... Since 2003, the union managed to boost average doctor salaries by 75% to $385,000
... hectoring the public and policy makers on issues to which the OMA brings no particular expertise ... Bill to ban indoor tanning ... restaurant menu labeling for calories and salt ... Doctors are prescribing too many antibiotics to too many people ...

Bill Gates
... his father headed Planned Parenthood ... Gates plans to reduce the global population by 10% to 15%, or about one billion people through reforms including reproductive health (abortion) ... Gates says we need to get down to zero-carbon to spare us from global warming. ... he’s working to correct “the failure of capitalism,”

For Happiness economics
Rubber duckies to the government of France, Joseph Stiglitz, the United Nations Human Development Report and anti-growth activists everywhere ...

Well deserved awards, congratulations.

Kill the Canadian dairy cartel

The wheat monopoly is as good as gone. Now the dairy cartel needs to be put down.
William Watson responds to a column by Wally Smith, head of the Dairy Farmers of Canada:

... [US vs Cdn prices per 4 liters] Three and two-thirds bucks compared to more than six bucks. Anybody feeling milked? If not hosed?

... Why we pay more for dairy products couldn’t be simpler: Our dairy cartel artificially restricts supply.

... To make the legalized price gouging work, of course, it’s necessary to keep cheaper alternatives out of the market. Which is why, in addition to police protection against excessive production in Canada, we have enforcement at the border via outrageously high tariffs: 241% to 295.5%, including 277% for ice cream. Imagine! A country that puts punitive taxes on ice cream!

... Mr. Smith’s main justification for output restriction is that before it came along, dairy prices would fluctuate. ... (Note that one of OPEC’s official aims is “the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations.” All cartels believe devoutly in “stabilization".)

The dairy cartel should go the way of the Wheat Board. But it'll be a tougher nut to crack given that it's a shared federal/provincial jurisdiction.

Pushing sales taxes

Yesterday, the Fin Post published the authors' (Dahlby's and Ferede's) summary of their recent CD Howe Report which concludes that:

"... we should be taxing consumption spending rather than income."

Today, William Watson praises their report suggesting:

"... a special forces team ... kidnap the country’s finance ministers, lock them up in a mountain hideaway and not let them out again until they proved by written or oral examination that they understood the message ..."

And highlights Ontario and other Laffer-ing-stock provinces (the majority):

Besides Ontario, the other guilty parties — “bonehead provinces” would be an equally apt term — were Saskatchewan, Nova Scotia and P.E.I. If they had reduced corporate tax rates, they would have made more corporate tax revenue.

It gets better — or worse, depending how you look at it. Even in those provinces that weren’t on the wrong side of the Laffer curve, the cost of raising an extra dollar of tax revenue using corporate taxes was ridiculously high. In Alberta, it was $40.83.

Then there's the feds:

If you’re not already depressed enough, consider this: The federal government subsidizes all this inefficiency by compensating the provinces for the loss in tax capacity that their own fool taxes bring about. Even when the marginal economic cost of a tax is sky-high, provinces may not actually suffer very much, at least revenue-wise, as a result. Equalization bails them out.

Anyway, the bottom line - corporate taxes are worst, personal taxes next worse and consumption taxes the least harmful. All very interesting and enlightening. And I might be in favour of higher sales taxes if personal and corporate taxes were reduced accordingly. Well, that and if the governments were chopped in size and spending and equalization killed. But what are the odds of any of that happening?

Potash Corp - politics over principle

William Watson:

There may be a Tory justification for blocking the sale of Potash Corp ...

... There may be a Conservative justification for blocking the sale. ... with the Premier going Danny Williams about the takeover, blocking it may have been politically expedient.

... But there is no conservative case for blocking the sale, despite the best efforts of Adam Daifallah and Dov Zigler to invent one ...

... As so often, principle lost out to politics. But let’s not compound the error by pretending conservatism had anything to do with it.

Right on, Mr. Watson! Politicians, unfortunately, often resort to lying, obfuscation and hypocrisy to avoid or combat attacks from the opposition. It would have been better, if the Conservatives couldn't stick to free market principles, had they at least been able to admit they were selectively compromising them to chase votes in Saskatchewan (ahem, I mean "honouring the preferences of the great people of Saskatchewan", or something). It would be more honest and then supposedly conservative commentators wouldn't feel they had to twist themselves into pretzels trying to justify an unconservative position.

Thanks for capitalism

To mark the approach of Thanksgiving weekend William Watson has penned an excellent column, "Giving thanks for capitalism":

... Maybe in the end material circumstances are not important. Maybe poverty would not prevent spiritual wealth. Maybe if we were poorer, we'd be happier, or more fulfilled. Most of us seem unwilling to take that chance, however. Thanks to the effort of those who came before us, thanks to our own efforts, we don't have to take that chance.
... Life might be better all round if as a species we weren't acquisitive. But we do seem to be acquisitive. And it has brought hundreds of millions of us to a standard of living that while probably pitiful by the standards of the future is astounding by the standards of the past.
... Excessive acquisitiveness we usually call "greed." Critics of capitalism, from Marx to Moore, see it as a system founded on greed. Acquisitiveness and self-interest are clearly key to capitalism. But is most people's acquisitiveness really excessive? Is the desire to work hard, to save and to better oneself really "greed"?
... who's to say what's excessive? One man's obsession is another man's passion. We admire obsession in sports, entertainment and the arts. [And let’s not forget science and the obsessions of people like Albert Einstein and Richard Feynman.]
... The only place such obsession is regarded as hurtful or evil is business. Outside business it's regarded as "dedication."
... some participants in capitalism probably are motivated by "greed." But the acquisitiveness that motivates the rest of us is normal and healthy and something we should be thankful for.

Amen!

The financial crisis and corporate greed

Most MSM reporting on the on-going monster financial crisis in the U.S. points to a consensus that it’s entirely a result of the actions of greedy, reckless corporate executives. Anchors and pundits invariably point fingers in that direction. And the left is presenting the crisis as a failure of capitalism in general - backed up Thursday, for example, by a Wall Street protest by unions objecting to the proposed $700 billion taxpayer bailout as a bailout of greedy Wall Street executives.

It’s widely accepted that it’s the government’s responsibility to devise a rescue plan (and given the size of the problem this seems true). So there have been many, many interviews with politicians who, naturally, encourage the view that someone other than government (ie. themselves) is to blame. Both Obama and McCain are pointing fingers at Wall Street greed and calling for more government regulation including, as a sop to the vengeful masses, capping executive salaries. Almost no one asks what government’s role has been in causing the crisis.

One notable exception to this trend has been the Financial Post where Terence Corcoran, Peter Foster and William Watson have been pointing out a few inconvenient truths.

For example, here’s a list of relevant questions and answers from William Watson:

* Who inflated the housing bubble with 1% money in a strong economy? (The Greenspan Fed.)
* Who encouraged all sorts of low-income, high-risk borrowers to acquire mortgages and homes they were doomed to lose? (Government agencies of all stripes.)
* Who created the stock-option mania in big investment companies by capping tax deductions for executive salaries? (Congress, in the early 1990s.)
* Who prolonged the current crisis with continuing destructive ambiguity, still unresolved, about which institutions would be bailed out and which wouldn't be? (Today's regulators and policy-makers.)

Here’s Peter Foster on the calls for more government regulation:

There is almost universal "consensus" (a shudder-worthy concept) that the recent turmoil in U.S. financial markets must be due to insufficient regulation, or at least regulation of the "wrong" kind. So now we must have more and better regulation.
[...]
It seems beyond the conceptual abilities of most people that current problems might have been based on too much rather than too little regulation.
[...]
They have a blind spot to the role of government programs and policies in promoting the housing bubble, and of facilitating institutions, especially Fannie Mae and Freddy Mac, that were widely perceived as being government backed (and ultimately were).
[...]
Wall Street’s recent difficulties have inevitably brought the usual anti-capitalist suspects from their lairs to claim Cassandra status, while in fact merely displaying their deeply embedded prejudices and historical amnesia. Take the CBC. .... Its doleful Washington correspondent, Michael Colton, declared that recent events were an embarrassment for "free enterprise." He then channeled a puzzled public’s lament: "Why can’t American business stand on its own feet?" One might well ask the same question of the CBC.

And here and here Mr. Foster points to lessons from the Great Depression:

...what made the Great Depression great was not its depth but its length, and what made it so long was lousy legislation based on misunderstandings of markets and demonization of capitalists. Similar legislation is now being proposed again.
[...]
FDR’s attempts to "correct" markets and counter capitalist greed led to such policy fallacies as believing that more unionization would force up wages and thus kick-start the economy. These and similar interventionist measures proved disastrous and prolonged the slump.
[...]
Lord Skidelsky implies that the Great Depression was a failure of laissez-faire capitalism, but as Milton Friedman pointed out, it should be more accurately laid at the door of government monetary manipulation, while the Depression’s depth and length were due to the uncertainty created by interventionist policies.

And on interference with executive compensation:

Attempts to control salaries have had perverse impacts before. There was uproar over executive incomes during the recession of the early 1990s. This led to restrictions that resulted in the flourishing of stock options, which were poorly accounted for, and in turn were blamed for the excesses of the dot-com boom and collapse of Enron and WorldCom.

More here and here from Terence Corcoron.

And there's an instructive thread here, of all places, at Climate Audit.

And finally, Mark Steyn’s observation:

... whenever anything goes wrong in the economy, the fault is always blamed on capitalism, red in tooth and claw. And in this case, both candidates tend to blame greed, untrammeled greed. Well, greed is writ in the human heart and is embedded in our DNA, and has been since the beginning of time. So clearly, greed itself is not the factor...

Amen.

“Locavores” - incipient food nazis

I always enjoy William Watson’s wit and wisdom. In his column yesterday the topic is the agriculture economy and the growing AGW/green-inspired eat-local-and-save-the-planet movement:

[My bold]
'Buy local' is just the latest bid for protection from our tiny, shrinking agricultural sector [...] counting only what farmers actually sell brings them down to 0.57% of GDP.
[...]
.... a "locavore" is a devotee of the "local food" movement. Eating locally, which ... agricultural protectionists have been recommending ... ever since the first turnip peddlar wheeled his wagon in from the next settlement over — seems to be the next green fad.
... one movement member ... said local eating is so popular because it's voluntary: "We're not telling people to do something ? We're telling people to try something." How long will it be, though, before the Minister for Local Food tells us the time for trying is over, now we must do?
... another locavore [is quoted] as saying: "Why would we be buying garlic in China when we could go out to our garden and dig it?" I can think of six reasons for starters:

1. I have a skating rink in my backyard and don't really want a garden.
2. If I had a garden, it would currently be covered with snow.
3. I'm not good at gardening.
4. Doing other things I'm better at allows me to make income I can use to buy garlic.
5. The Chinese do garlic well and sell it for less. ("Save money. Live Better.")
6. There are things we'd like to sell China that they won't buy if we boycott their garlic.
And, oh, a seventh: Most of the world's poor people would like to try to better themselves selling us food. Should we really tell them to "Stuff It"?

But what chance does good sense have in the face of green mania? My bet is we're about to reverse four centuries of progress ...[and raise the farmer’s share of the GDP]

It’s hard not to notice grocery stores getting-with-the-fad and increasingly pushing ‘local’ and ‘organic’ produce labels -- often to the detriment of choice and quality. So I believe Mr. Watson. It won’t be long before the green ‘revolution’ has our living standards (not mention the rest of the world's) driven down to former Soviet lows.

Healthcare - Canuckistan versus America

As all Canadians are reminded almost daily -‘American-style’ health care is B A D. It’s a given that the Canadian/Cuban/North Korean/Soviet universal healthcare model is the best in the world.

According to a new study by economists at Baruch College in New York - not quite so. William Watson summarizes the results:

The health payoff to higher income ("income-health gradient") is bigger here than in the United States... even though the whole purpose of medicare is to eliminate the effect of income on health. [my bold]

And some small details:

one magnetic resonance imager for every 37,000 Americans, versus one for every 182,000 Canadians.

computed tomography scanners ... one for every 31,000 Americans, versus one for every 87,000 Canadians...

The Japanese ... have even more [CT scanners and MRI’s] than the Americans.

...Americans seem happier with their health care than we are with ours.

...we have better longevity and infant-mortality statistics. But other differences between our societies explain that..

Fifteen percent of older Americans say their health is excellent, versus only 8% of Canadians...

...more Americans than Canadians who have a given condition receive treatment for it.

In several forms of preventive care, we lag the Americans.

Americans have a higher incidence of cancer, we have higher mortality rates...

And, there’s no mention of the fact that "waiting lists" are essentially unheard of in American healthcare.

Now, let’s hear it one more time for Saint Tommy.

Ref also.

Capitalism denigrated by the usual suspects

The alternative to private ownership is state ownership or communism (or socialism as defined by Mises). And you’d think by now it would be obvious to all but the most fanatic socialist that capitalism has a far, far better track record than the alternative in terms of improving peoples’ lives around the world. In fact, using the word ‘better’ in this context is inappropriate - the socialist record is uniformly dismal.

Yet, unfortunately, many people who ought to know better, since their own lucrative incomes derive from the capitalist system, routinely denigrate capitalism by equating it with greed, crime, corruption and worse. In his column yesterday William Watson quipped:
Peter Foster’s column today pursues a similar theme, this time using the new Denzel Washington flick "American Gangster" as a case in point. While the movie itself makes odious equations between gangster criminality and capitalism the reviewers are just as bad or worse. Mr. Foster reviews the reviews from more than dozen mainstream newspapers and journals in the USA and UK including the New Yorker, Guardian, Chicago Sun-Times, People, etc. All of them draw the same offensive comparisons - criminality = capitalism.
My own two cents: These film-makers and critics seem not to notice that American gangsters carry out their criminal operations in much the same way that Stalin, Hitler, Mao, Saddam and every other statist totalitarian gangster did/does. They control their turf ruthlessly, brook no dissent, no opposition and demand the absolute loyalty of their underlings on penalty of murder or worse. In a socialist totalitarian system, private criminality cannot readily compete with the state because it is ruthlessly put down - no competition allowed. The baddest ass in town is the state. The fact that American criminals operate within a capitalist system and so adopt its trappings and use it to their benefit is not an indictment of capitalism but of criminality. As Mr. Foster put it:
Western media twits ought to know better but, sadly, they don’t. This is yet one more instance of ongoing western"liberal" reflexive self-loathing - attacking western civilization as the root of all modern evil. The opposite is far closer to the truth.

That criminals might use business methods is no more an indictment of capitalism than the experiments of Joseph Mengele were an indictment of science.
Capitalism is not a perfect system, but ... if it is sloppily considered the bedmate of crime, what chance does it have against the Naomi bin Ladens of this dangerous world?

This insult to the Invisible Hand is served up with a liberal helping of Black History Month-style condescension.
What is more disturbing is that so many reviewers have accepted the notion that ... capitalism and gangster-ism are pretty much joined at the hip.

"Two words bring roughly equal discomfort in polite Canadian conversation:
pedophile and capitalist."

capitalism: economic system characterized by private ownership of property,
production of goods for private profit, and the institution of bank credit. (The
Columbia Encyclopedia). See also.

Tax cuts, dopey jingoism, etc

Tax cuts are good.

But, predictably, not everyone is happy with the ones just announced by the Tories. Naturally the socialists see no good in them at all - it’s all lost revenue and breaks for the rich and their evil corporations. Stéphane (the idiot) Dion muses about reversing the GST cuts. Though some economists do think that GST cuts are a mistake. Other, more sensible ones, like William Watson are more upbeat, concluding: "Keep it coming, Mr. Flaherty."

Not being an economist I don’t really follow the anti-GST-cut arguments. And even though he’s for the cut William Watson says: "cutting the GST may tilt people unproductively toward consumption". That’s one of the things I don’t get. If people tilt towards consumption don’t the producers have to ramp up production accordingly. Won’t increased production mean more jobs in the manufacturing, distribution and retailing sectors. Won’t increased production mean more profits to be re-invested in production or elsewhere. So, just how is more consumption "unproductive"?

Whatever. Mr. Watson’s column also hits on one of my pet peeves - the Canadian propensity for self-congratulation: "...the Economic Statement: Page 1: "Canada is the greatest country in the world." They said this in the Throne Speech too." It’s meaningless jingoism that reminds me of the new BC license plate motto: "The Best Place on Earth", which is embarrassingly meaningless jingoism. It ought to play really well on trips outside the province. As Watson observes everybody thinks they live in the best place, for one reason or another, otherwise they’d move.

Republican debate moderated by flaming liberal

William Watson liked what he saw in the recent Republican debate. Even though moderator Chris Matthews didn’t seem to have much of a clue, Fred Thompson showed he knows his stuff on Canada. And Rudi Giuliani had a good line on health care:

"... a looming problem with Canada that you missed. If we do HillaryCare or
socialized medicine, Canadians will have no place to go to get their health
care."

But flaming liberal Chris Matthews as moderator? That’s like having Glenn Beck or Sean Hannity moderate a Democratic debate on Fox. Never happen!

“Make the students pay”

That’s the title of William Watson’s excellent Financial Post column on university tuition. Of course this flies in the face of socialist received wisdom and NDP policy on the subject but what else is new?

Mr. Watson’s main argument is that a university education is actually a very good investment with annualized returns for many disciplines in the double digits (detailed figures for Canada here). Some, like women’s MBA’s in business and commerce, come in at a whopping 25.8% rate of return and female B.Eng’s in mining, metal and petroleum engineering at 20%. Why should taxpayers subsidize students’ lucrative investments in themselves?

Another compelling argument is that fewer than a third of Canadians attend university. So, the more than two thirds who do not attend, subsidize the others’ investment in education.

And there are many other considerations beyond the purely financial that argue in favour of students paying their own way. People value things they pay for more than those that are "free". A fully government subsidized system, like healthcare, would soon become starved for cash, stifled by bureaucracy and limited in choice. Students, like patients, would become liabilities instead of assets - and treated accordingly. ...

Make the students pay - its good for them, and us.