Weird but Better

What a strange piece?!  Steve Coast (never heard of him before) writes an interesting piece that argues the world is getting weirder.  Why?  Because we have figured out how to manage many of the normal problems so that the weird stuff is the danger now.  He cites air travel--that air frames are far better, so now the problem is the occasional crazy pilot who can lock out the other pilot.  Of course, one of the sources of prior air travel was apparently urine corrosion for airplane bathrooms, so let's not call the old form of crashes entirely un-weird.

And I can see how this applies elsewhere--that war is far less frequent than it once was, but now we have terrorists who have outsized influence.  And terrorists are mostly ... weird. 

The article then turns to solutions: more freedom.  If we have less rules, we can do stuff faster.  Because, you know, speed is really the important thing we value.  As an incredibly impatient person, I might sympathize with that, but not really since I like the safety part.  That rules do get in the way of transactions, as Coast argues, but that just means we need to figure out the best balance.  Instead, the piece SPEEDILY takes a jump in a libertarian direction.  The move is:

If we can measure economic value as a function of transactional volume (the velocity of money for example), which appears reasonable, then fewer rules will mean more volume, which means better economics for everyone. So it used to be very hard to create an airline, now it’s easy, we have more choice and more flights and so on.

I may not an economist, but this seems to be one way to define or measure economic value.  Oh, and more volume means better economics for everyone?  No, not really, as we have found that equity/fairness/etc tend not to be produced in rule-free or rule-scarce places.  Instead, early movers/those with early advantages can use their market (and otherwise) power to dominate.  I think we used to call that colonialism/imperialism which produced stuff like slavery.

Oops, citing slavery might be a Godwin's law-like move, but I am sure enterpreneurs like Coast would prefer to have a situation where there are few laws limiting how labor is used--that would make things speedy, right?

Important Economic Debate Continues

Yesterday, the debate on milk bags vs milk jugs came up yet again.  A newspaper story about a regulatory fight between different factions within the milk industry led to a twitter conversation which led to a newspaper story.  And this led to an appearance on a radio program this morning.

It kind of comes off that I am a zealot:

Although Saideman has lived in Canada for more than a decade, he’s drawn a line in the sand over his national dairy identity.
“I have never bought milk in plastic bags and I never will.”

That much is true. I will not buy the special pitcher that holds a milk bag (the smaller one that is one of three in the big sack they sell in the stores).  The need for heaps of milk in my house are waning as Frosh Spew is weeks away from going off to college.  If the pilot program is expanded to allow more choice of milk conveyance, I will not be buying gallon jugs of milk either--we just are not drinking enough.

The reality is this is both an identity thing and a principle thing.  The identity thing is that I see a bag of milk and it reminds me that I am an alien to this province, just as it did in Quebec (other provinces in Canada don't have bags of milk).  It is a principle thing in that we have restricted choice thanks to the milk industry forming a cartel that lobbies for policies that lead to higher prices (blocks of cheese are most visibly over-priced) and less choice. 

The logic as always is that small concentrated groups tend to have more political power than large diffuse ones because the smaller can organize and the larger are likely to focus on other issues.  In the US, this means a set of very counter-productive prices that limit competition in the sugar industry.   While it raises the price of our cheesy poofs and frosted flakes by a smidge with each bag/box, it deprives poor Caribbean countries of a key market, producing foreign policy problems as well as protecting an awful industry in Florida.

Is First Best? Another Post on Canada-EU Trade Agreement

I am not a scholar of International Political Economy, nor do I play one on TV, but I do have a few quibbles about how the new trade agreement between Canada and the EU is being discussed.  I already posted on the Cheese issue.  The second thing getting played up today is that this is the first trade agreement between a member of the G8 and the EU.  Let's examine that one. 

First, the G8 (group of eight) includes Canada, France, Germany, Italy, Japan, Russia, the UK, and the US.  Since France, Germany, Italy and the UK are members of the EU, Canada has only beaten out Japan, Russia, and the US.  Woot!  Maybe still impressive but not so sure.

Second, since an agreement is the result of a bargaining process, being the first to conclude an agreement can mean several things:

• The agreement deals with less controversial, less combative, less conflictual issues, so an agreement could be reached faster.
• The Canadian government had a great deal of leverage so it brought the EU to its collective knees faster.
• The Canadian government was in a clear position of weakness and conceded whatever it is that the EU wanted quickly (cheesy concessions?).
• The other governments interacting with the EU may have other things on their mind
• Japan: recovering from the Tsunami
• US: the joy that has been budget politics
• Russia: um, Putin is more focused on appearing shirtless and such?

The simple point here is that being first may be either meaningless--that there was no race so coming in first is irrelevant; or it may actually be a bad thing, as Canada could have conceded far more for far less.

To be clear, I am not opposed to a free trade agreement.  Indeed, I am a big fan of lowering barriers especially between advanced countries.  I would like cheaper European products, and the Canadian markets would be better off with more competition and less collusion.  I am just taking shots at a silly way to portray the agreement. The big questions are: who wins, who loses, and how and NOT who is first.  
 

Blessed Are the Cheese Makers

Canada is apparently concluding a major trade agreement with the European Union.  The aspect getting the most play?  Some reduction in the protectionist walls that keep out foreign cheese.  Yes, in a 21st century trade agreement with an organization representing most of the advanced economies of the world, the Canadians are most interested in the impact on the cheese sector.

Why?  Because Canada has something called supply management, which really is a wonderfully Orwellian phrase for "dairy protectionist racket."  Yes, milk, dairy and eggs are much more costly in Canada as foreign products are restricted from entry, and the number of domestic producers is also apparently restricted.  So, a small block of mozzarella (3x5x.75 inches) is over $5.  This set of policies is incredibly anti-consumer, yet the pandering towards the dairy industry has largely kept this set of policies intact regardless of the party in power.

But now, as part of its new pro-consumer stance, the Conservatives have apparently negotiated a deal that might make a small dent on the cheese industry (not sure how eggs/milk will be affected), and so there is much rejoicing in the land.

To celebrate, I am importing into Canada a documentary about cheese, including many foreign forms:



Even when the stakes (cheeses, not steaks) are so obviously in favor of the larger number of voters, change is hard.  Why?  Because Machiavelli was right:

It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.

Marx and Blueprints

Dan Drezner has a good post today on how Marx had much to say that is applicable today even if Marx had little in the way of prescriptions.  However, Drezner missed a key opportunity to provide a link that might explain this well:

[I am not sure if this works since I cannot watch it in Canada, but the Americans should be able to enjoy it]

Best Program Name to Deceive Public

"Supply Management"  This is the set of policies that protects and subsidizes parts of Canada's farming industry--dairy, eggs, chickens, as far as I can tell.  Funny that I have resided here for nearly ten years before I realized how systematic and how amazingly regressive Canada's farming policies happen to be.  Why now?  Because Canada's protection of this small hunk of the farming industry is putting at risk its participation in trade talks--the Trans-Pacific Partnership.

But at least now I understand why milk, eggs and chicken are so damned expensive here.  Competing products from abroad face a 200% tariff or more!  Now, that is what we call protection.  And regressive taxes since the poor pay a larger share of their income on food, and Canada has inflated food prices to help a very small slice of the population.

This makes complete sense to me.  Well, not because it is right and good but because I lectured just a couple of weeks ago about the few things I understand about the politics of international economics.  Specifically, the story of concentrated pain and diffuse suffering.  If Canada changed farm policy to be less protective of this small group, it would that small group quite a lot and benefit the larger group of consumers (some 30 million plus people).  So who mobilizes?  The small group quite energetically and the large group not at all.  Plus the drawing of ridings (districts) is always behind the times, so rural areas always (not just in Canada but most places) have more political clout than their proportion of the population (in the US, we call this the Senate).

The only thing potentially dumber than this policy for the public welfare would be if the government facilitated the use of corn for fuel.  Oh, that already happened?* Terrific.


*  I am thinking of adding Sarcasm sauce to my collection of sauces (perspective, awesome, denial, secret, distraction, ignorance).  What do folks think?  No tariffs on my sauces.

What Do We Want? Cheap Cheese!

It is funny what causes people to protest.  The university students are protesting around Canada today because of the injustice they see in increased tuition.  Some of these folks don't want hikes, while others believe tuition should be free.  Anyhow, they argue this is an issue of social justice.  Well, thanks to a tweet by Roland Paris, I have another social justice issue: cheese, damn it!  Well, for me, not so much about cheese but about milk, chicken and other such stuff.

You see, Canada may not be alone in protecting farmers from foreign competition, but Canada does seem to do it far more intensively than other countries.  This article has some very striking comparison about the price of cheese, chicken, and other farm products where the costs in Buffalo vs. Ottawa are very, very stark, as in 50% to 250% more expensive in Canada.  And, yes, it is done to protect the 13,000 dairy farmers.

How is this an issue of social justice?  Because expensive food hits the poor and lower middle class far more than everyone else.  It is a much bigger percentage of what they spend money on.  In my previous posts and subsequent comments, I tended to scoff at the social justice argument about tuition.  Actually, I argued that the current low tuition is a social injustice since it has the poor/lower middle class essentially subsidizing the rich.  Same here: while farmers face a tough life, the protections here benefit the 1% and harm the 99% (actually the .04% vs the 99.6%).  And it is more than just an extra five cents for one's cheesy poofs.

But we will not see change since the electoral maps give disproportionate power to the rural parts of the country (see Canada is not so unique after all).

When Life Imitates Art

When I returned to teaching POLI 244 (Intro to IR) after my sabbatical, the advent of youtube proved to be way too tempting. I ended up using way too many clips in my class.  I have dialed it back some, but when a topic is as far outside of my comfort zone as International Political Economy is, then I over-indulge. 

I started class the other day with this classic clip:

This scene from Mary Poppins made sense long before this particular economic crisis, as it illustrates how collective behavior can lead to suboptimal outcomes--that fears about bank failure can cause a panic, producing bank failure.  This year, well, the joy of the "stability" of the British pound take on a special meaning with the Euro crisis revealing the wisdom of the Brits staying out of the Eurozone.

And then I was inspired to show the underwear gnome clip due to op-eds about solving the EU crisis through greater integration:


Alas, there may be lots of good policies to follow, but how to we get there from here?

Third, friends on FB had another clip that did a fair better job explaining the crisis than I ever could, so I showed this to my students:


Thus, the internet provided me with a heap of help this week.  I will be on safer ground next week when it comes to Terrorism and Ethnic Conflict--far simpler stuff.

Innovate This!

Canada apparently does not innovate so well:

Canada ranked 14th out of 17 peer countries in overall innovation performance in the Conference Board’s How Canada Performs: Innovation report card (published in 2010). Moreover, Canada has obtained consistent “D” grades in innovation performance since the 1980s. 

Perhaps Canadians are too busy trying to stay warm to spend time tinkering with the latest widget.  Nope, Sweden is ranked ahead and it is mighty cold here.

Perhaps Canadians do not innovate because those who do, such as Jim Basillie and the folks behind Blackberry, are denied the fruits of their labor (NHL is not letting Basillie move a team to Hamilton, Ontario). 

Perhaps it is because Canada produces few PhDs:

 Yet Canada is a consistent top performer overall in the Education and Skills report card, ranking second only to Finland in the most recent release. Canada’s ranking slips, however, as we move from high-school completion (second) to university completion (fifth) to PhD graduates (last of 17).

Apparently, PhD production is correlated with innovation. Perhaps unemployed PhDs can develop critical mass and then propose all kinds of new ideas?  It is this point that raises the hairs on the back of my neck.  Given the current employment crisis for PhDs, I fear that the desire for more innovation would lead to encouraging more programs to produce more PhDs but not necessarily jobs for those PhDs. 

The funny thing is that the Canada Research Chairs program and the Canadian Foundation for Innovation were aimed at reversing the brain drain, bringing back lost Canadian scientists and bringing in folks form elsewhere to compensate for the lost Canadians.  So, it is apparently my fault, as I enter my tenth and final year in the CRC program (the junior chairs are for five years and can only be renewed once) that Canada is failing to innovate.  I have not come up with enough new ideas, invented any widgets, or produced enough brilliant PhD students.  Well, the latter I have in great surplus but most of them have gone south for jobs.

Aye, there is the rub.  I am not sure we can figure out how innovative Canadians are anymore since there are plenty of Canadians innovating in the US and plenty of foreigners innovating while in Canada.  There is no Silicon Valley up here, but then again, Silicon Valley is not what it used to be.  I guess I have a hard time seeing how business and academics are supposed to work together to foster innovation since there are few corporations in the Irredentism business.  And those that might be would probably not make it past a research ethics board.

The only thing I can recommend is: more slots for academic researchers.  But you knew that i would be saying that.

If A Tree Falls on a Mailman in a Forest, Will We Notice?

Canada is bracing for a postal strike.  Sort of.  The possible strike is both caused by the decline of first class mail and is mediated by this development.  In the US and Canada (and elsewhere), the bread and butter business of postal services, the first class letter, is waning as people now communicate via email, skype, and all the rest.  This is putting pressure on the postal services and thus onto postal workers.

So, the Canadian postal workers are going on strike, but will we notice with our paychecks being direct deposited, with our bills being paid via electronic banking, and so forth?  I already feel as if the mail here is only delivered four days a week (it is a rare Friday that we get any mail),* and most of the rest of the mail is crapola.  Bills, checks, and stuff we don't want. Except for magazines, which are dying as well.  So, will we notice if the mail stops being delivered?  A bit, as some of those checks are delivered by mail still.

* The Canadian postal service does not have the same ethos of through rain and sleet and all of that.

Like the existing delivery patterns of the post, the strike is spotty.  This time deliberately so, focusing on one city at a time, starting with Winnipeg.  So, I guess this means that Winnipegians cannot write each other to celebrate the return of professional hockey to the city.

The good news is that I can continue to post through a strike, and, if the strike becomes painful, I will whine about it.  You can always count on that.

Party's Over

Whenever I read a headline like this "In Its Rebound, Detroit Focuses on Selling Smaller Cars," I just want to bang my head against a desk.  How many times must this happen and happen late?  Detroit was surprised by the oil crises of the 1970s and then again and again since.  The lure of easy money by selling big cars packed with stuff always seems to trump the long term challenge--that oil is a scarce commodity subject to the ebbs and flows of international relations. 

Yes, these companies have gotten more serious about electric cars and hybrids, but only because they have been dragged here.  As I prepare to buy a new car (thanks to the maniacal inattentive school bus driver), I have only considered one company, Ford, and only if I cannot get a good deal from a South Korean company (Hyundai).  Sure, I would like to buy a hybrid, but they are out of my price range.  The good news is that the mileage (or, as I am always confused by here, litres per 100 km) is much better than it used to be, so the difference between Prius and Elantra is not so startk. 

Anyway, back to the point: short term profits seem to trump the long-term (which is not terribly surprising), but these companies hedge so very poorly that any price shock (plus a shock to capital markets) threatens their survival.  The funny thing is that Ford is said to have a "head start" by focusing on smaller cars five years ago.  Um, a head of whom?  GM and Chevy, yes.  Hyundia, Kia, Honda and the rest not so much.  The only good news is that Toyota has lost its sheen for being reliable and Honda is not so exalted these days either (plus as we found out, Hondas have been the target of thieves). 

This entire article is far too laudatory--the car companies are coming to the party after the party is over.  Yes, they can make a comeback and do ok, but they hav

He knew G.M. was on the right track when he parked one of the first new Cruzes off the assembly line at a supermarket in suburban Detroit, and a store employee rushed over to check it out. “She said, ‘I can’t believe Chevrolet is building a car this size that’s this good,’ ” Mr. Reuss said.e frittered away so much time and money that it reminds of the US effort in Afghanistan and Iraq.  Not good.

 Ah, the joy of low expectations!

What is a Keynesian To Do?

The word is getting out there: that unions and state deficits are not terribly related.  What we really see out there is a revenue problem, not a spending problem.  It is no accident that we live in a time of historically low taxes (in the US, not in Quebec) and high deficits (Quebec tends have both high deficits and high taxes, plus high subsidies from Canada, etc, but manages to have lousy services, but that is a rant for another day, or a previous day). 

Some would argue that this has been a deliberate effort by the Republicans to starve the various levels of governments of money so that they can then claim that government needs to be gutted.  Whether they were clever enough or not to do this, the reality is the same--lots of hate for taxes despite the low rates, states having cut their taxes find it hard to raise them, and an economic crisis that make past tax cuts bite even harder as tax bases go down and spending on safety nets goes up (basic macroeconomics).

The problem we face if we are good Keynesians* is that we ought to be spending our way out of the bad times and then collect the taxes in the good times (this is what happened under Bill Clinton, more or less).  But we seem to be hitting the wall, more or less, on how much we can borrow.  So, should we raise taxes and perhaps hurt the growth that is just starting to develop in the economy?  Well, cutting budgets is also bad for growth, if conventional economics is correct.  All these budget cuts are going to mean less money going to less people, which means they can spend less stuff and so on.  So budget cuts are just as bad, if not worse, for fostering growth.

 * The caveat here is that all my economics I got long ago in college, so I could be wrong about this.  All I do know is that the Republican stands on these issues tend not to be based in reality at all. 

As lil' Steve put it, it is about Revenues, stupid!  If we have to fight deficits, then I would rather see taxes increased than spending cut.  Of course, the Republicans would rather use the deficits to bust unions and gut  states and the federal government

Where is Norma Rae When We Need Her?

The union-busting in Wisconsin confuses me.  Not because the GOP wouldn't love to destroy what is left of the American union movement--that I expect.  No, it is that I am coming full circle on unions.  I grew up with a Liberal (American liberal, not Canadian liberal) mother who shaped my thinking about unions.  It was a time where the history classes in high school focused on the roles unions played in humanizing the workplace after the era of child labor and all the rest.

Yet I have always had a bit of bitterness towards unions, as my first taste was the teachers' union.  My junior year of high school essentially took place two weeks later than it should have due to a strike by the teachers.  This meant that my last summer at camp, the one where I would be a counselor-in-training with all of the responsibility and fun attached, started late for me.  So, I lost 25% of what was supposed to be one of the best summers of my life.

After that, I had little experience with unions until I came to Canada.  Here in Montreal, unions are powerful actors and they rely on old school coercion to make their points.  The cable tv union was on strike when we arrived, and the workers were famously cutting the cables to express their displeasure (so we have a satellite dish instead).  The city workers were on strike, so the parks were getting overgrown.  Parents tried to move the fields themselves so that their kids could play, but then they were intimidated by the workers.  The firefighters painted their trucks and put stickers all over them about political issues. So, I started developing a nasty attitude towards unions.

And then my teaching assistants struck during finals.  Of course they would.  It was the time at which their leverage was the greatest.  I am not a big fan of this union and not just because that one semester became pretty challenging.  Every time I have TAs, I must fill out a form allocating the hours that they will work. This is to protect them from being abused, and I get that.  The problem is that the social sciences tend not to abuse their TAs like the sciences, but we all have to live within a system that creates perverse incentives (assign less writing for the undergrads so that we do not exceed the TA's hours) and fosters lies (how long does it take to grade an exam?). 

McGill's professors are not unionized, for which I am ever thankful, given what I have heard about the other universities around here that are.  There is a union at McGill, but salaries are not fixed to a grid to make sure the mediocre do as well as those who are productive.  Funny how the mediocre are big fans of the union, though. 

So, I have been joking for years that Quebec is turning me into a Republican because I have become anti-union and anti-tax.  But then the Wisconsin governor, Scott Walker, reminds me why unions exist in the first place--to protect workers from capricious employers.  I get upset at unions that seem to be overly entitled (name your average union in Quebec), but the case in Wisconsin and now elsewhere is more than just about efficiency and cost savings.  Indeed, as this chart shows, there is little correlation with unionized state workers in the US and deficits:

 

 Thanks to http://www.themonkeycage.org/2011/02/the_relationship_between_union.html

Indeed, the interviews with the Scott Walker, as clipped by Jon Stewart and the Daily Show, demonstrate this is much more about union busting that cost cutting.  Given that the rest of the financial package seems to involve benefits to rich folks (the Koch brothers yet again?) and a refusal to raise taxes, when it is clear that the deficits problem come from too little revenues, I find it hard to have anything but empathy for the unions, even the hated teachers unions.

What the pro-business folks forget is that the market (hee, hee) not only creates incentives for the development of the firm, but also incentives for workers to organize.  It drives me crazy that the mad, delusional libertarians (unlike the semi-reasonable ones) seem to believe that the market works without regulation when they actually like having regulations and government decisions that facilitate businesses at the expense of everyone else.  Such as selling off assets of the state without bidding.  Oh wait, would bidding be a market process?  Damn.  How inconvenient.  It is kind of like the bible or Clausewitz or the Constitution--people focus on the parts they like and forget the rest.  Market capitalism requires competition in the marketplace to work, yet the folks who seem to be behind much of the anti-regulation fever really do not want competition--they want monopoly, preferential access, and protection.  For themselves, but not for anyone else.

So, I have come full circle--I am a big fan of capitalism (as the alternatives suck bigtime), but make mine a well-regulated capitalism, where government works to make sure the system functions and that there are safety nets for those that capitalism would ignore or damage.  And one of those aspects that helps make the system work happen to be organizations that represent workers, just as there are organizations that represent capital.  Yes, unions can be too strong, too entitled and cause tremendous dysfunction, but American unions are simply not in the same ballpark as those in Quebec.  Pretending that they are is just silly, and we can see that the American people via the polls and the Republicans as they run away from Walker, that the pretense is not going to carry very far.

Correlation Means Confusion

Very interesting set of figures on food prices and health problems:

 The obvious conclusion to draw is that cheap food causes obesity, diabetes, and heart disease.  This makes sense, but the comparative statics here may be the product of something else.  It could be that the US health care system is responsible for all but the first figure, and so the correlation might be spurious.  It would be interesting to see what the figures look like over time and whether correlations change over time, as that might help us figure out how much of this is new and which way the causal arrows are going.  My guess is that the institutions that have led to more equality and better health come are independent of the price of food.  I'd also like to see where Canada fits in, as the food here is more expensive in the US, but perhaps not as much as in Europe. 

The interesting implication here is that ethanol, by driving up the prices of corn and corn-based products (that would corn syrup that is in heaps of processed food), would actually be improving American health in the long run.

But the author of this stuff has another axe to grind, suggesting that cheap food facilitates or is perhaps even caused by income inequality--that the American system of inequality works by providing underpaid working folks with cheap food.

To me, cheap food underpins our highly inequitable income system. If we're going to have a large low-income class, a perpetually squeezed middle class, and a small caste of super-rich, then a cheap food system plays a vital role in keeping those at the bottom fed -- if under-nourished.

Interesting conclusion, but it is not clear that raising food prices would create the revolution that this guy apparently seeks.  Going back to the top, I guess I would want to distinguish between cheap good food and cheap bad food.  Is it that Americans have lots of cheap broccoli?  Or lots of cheap potato chips?  I have not read all of the books and articles that address the food industry's manipulation of our taste buds, so I cannot say much about what is going on here.  I can raise two questions: why is food so expensive in Europe and why is it tolerated?


HT to Brian Sala for the FB link.

US-China Economic Relations Ilustrated

 Next year, I guess I can just show this rather than provide a lecture on exchange rates and protectionism


HT to Dan Drezner

When Life Imitates Our Models

Is it wrong for me to delight in the news that the Premier of Quebec, Jean Charest, is embracing protectionism by trying to pass a special law that will hand over a lucrative subway train contract to a local company?  Maybe.  You see, I forgot to include protectionism/free trade as one of the classic examples of the prisoner's dilemma when I discussed it for my big Intro to IR class.  There is always the temptation to protect one's own market, and this is just fine and dandy if no one else does it.  I guess that is Charest's hope.  Bombardier, the company that has received heaps of handouts over the years from Quebec and from Canada, has a train that costs about 50% more than the competitor's, so it needs a bit of favoritism. 

If I were running Bombardier, I would wonder just a bit what this might mean for future plane/train sales to Europe, as the Spanish company can surely try to get some kind of retaliation against this decision. 

What does this mean for Montreal?  More delays in getting new trains, more money spent on each one, and less money for other stuff.  Oh, and business as usual.  Is this an example of the corruption that folks speak of?  Perhaps not, but it does corrupt the contracting process by eliminating competition.

Bipartisan Program Works!

TARP costs smaller than Ireland's

Tim Geithner projected yesterday that the final cost of the $700 billion TARP program — as unpopular as ever — will be under $50 billion*, and Jackie Calmes writes that it "could conceivably earn taxpayers a profit."
A reader sends over another story from today's Times to put that in perspective: Ireland just took over a bank in an intervention that will put the total tab for propping up the banking sector alone at $68 billion. That's for a country with a population of 4.5 million — a bit more than 1 percent of the population of the United States.
The government obviously took a range of actions and spent a lot of money around the financial crisis. But it is increasingly hard to argue that TARP should be seen — as it still is — as some kind of original fiscal sin.

This was considered by one article (source forgotten) as the most recent bipartisan program.  And it worked great.  Well, it worked to stave off economic collapse.  It failed politically--that politicians have gotten heaps of blame even though it will net a small cost or even perhaps a gain.  There is no reward for prevention.  We knew that, but this situation will provide a glowing example for the next generation of politicians--better to cower in fear of a reaction than do something that is costly in the short term but beneficial in the medium to long term.

Stop the Facts! They Are Inconvenient

Ok, so this conveniently omits the first year of the Obama administration.  Yet, it is pretty darned striking that tax cuts surprisingly lead to less revenues (oh, and Republicans tend to have nasty recessions while the stats show Democratic Presidents have higher growth and employment).

And of course, I got it from the facebook page for the March to Keep Fear Alive.

Next One to Fall?

Cuba is now firing public sector employees.  It reminds me of a title of a great book on the disintegration of Yugoslavia: Socialist Unemployment by Susan Woodward.  Surprisingly readable for a book that contains the words "socialist" and "unemployment" in the title, Woodward essentially argues that the existence of significant unemployment undermined the promise of Socialism and thus its legitimacy. 

“The Cuban government is going to allow and by definition encourage people to go into private sector opportunities,” he said. “What happens when some people get rich?”
“The government is going to have to determine whether it will allow and embrace success, not just opportunity,” he said.

I think that success is the least of the problems ahead.  So, Cuba is in for some hard times even if it does not have deep ethnic cleavages that are ripe for opportunistic politicians.  There are storms ahead, not just the usual hurricane season.

Welfare Rant #1

A friend of mine on facebook "liked" one of the groups or threads or whatever that tied together welfare and drug-users, basically complaining that our tax dollars are subsidizing drug abusers.  And that pushed a button--my rant button. 

I am no expert on welfare, but I did have to teach about it for several years at Texas Tech, so I did try to find some stuff out along the way.  I may not be entirely accurate here, but as I understood it then (and I doubt it has changed much), the single most common event leading someone into poverty and onto welfare is .... divorce.  Becoming a single mom is the event most associated with needing some sort of welfare program.  One of my relatives got a divorce from an exemplar of a deadbeat dad, and she needed help from her state to get by.  Food stamps made a difference until she was no longer eligible (I have to say that limit of eligibility was mighty, mighty low) once her deadbeat ex was required to pay child support of around $165 a month.  The good news about this low assessment* is that it was small enough not to be missed that much when he didn't pay.  Anyhow, so she got food stamps for a while, she got free counseling for her kids, her kids still are on Medicaid, and she has gotten subsidized day care and day camp so that she can continue to work. 

Now that she has an hourly job, she is making too much money to get as much assistance from the state. What she could really use would be housing subsidies, but that does not seem to exist, I guess, in her state.  She, of course, is also getting assistance from her family (her mother, us), and her deadbeat husband occasionally kicks in the $165 or so that he owes her but not regularly, not monthly.  And so far, he has gotten away with that.  We may have had a cultural shift in attitudes about deadbeat dads, but the actual enforcement is blunted when counties facing budget problems want to keep their prisons clear of folks who merely default on their financial obligations to their families.

Good times.  So, pardon me if I do not really care if some tax dollars make it into the hands of folks who use drugs.  I care more that some of this money actually does make it into the hands of single moms (and single dads, too) that have incredible responsibilities, difficult choices, and few options.







*  The lesson is not to marry someone who owns their business because they can easily hide/deny their income.