Reasons why big government hurts economic growth

This week Bank of Canada Governor Mark Carney backtracked on his outlook for the Canadian economy. Things aren't as rosy as he once thought from his lofty perch in Ottawa. Down here in the real world lots of people have large debt, governments around the world claim to be cutting their size and spending because of debt, debt seems to be in abundance. So it makes sense that people and governments will rein in their spending and slow economic growth. That sounds right on paper but is that really the cause of poor economic growth?

Here is a view from Dan Mitchell at CATO that was produced over a year ago. It focusses on the American situation, but each of the reasons listed applies just as much (maybe more) to Canada.

Bubble Head - Serving and Protecting

The repercussions of this last summer's G20 protest in Toronto keep surfacing in the daily news. The latest story involves the touchy cop "attacked" by a bubble-blowing dissident provocatively blowing bubbles at him. The cop threatens to arrest (see below) the offending bubble-blower and charge her with assault if she persists. Later she is seen being arrested for some other "offence" and charged with conspiracy to commit an indictable offence, the catch-all charge. 
Apparently video of this "incident" which was posted on YouTube has been viewed 300,000 times, and has spawned a cartoon: "Officer Bubbles" that depicts a beefy-black cop wearing sunglasses arresting someone for dancing then joking that the next video will show him shooting a kitten stuck in a tree. The cop involved - Constable Adam Josephs is now suing YouTube because he wants the identity of those responsible for posting the cartoon, defaming him, and bringing threats to his family.
This comedy continues and really does not make anyone look good particularly the Toronto Police. Obviously, now everyone will stop picking on this cop.
        

Be it resolved that religion is a force for good in the world...

The next Munk Debate (Nov. 26, 2010) pits former British P.M. Tony Blair against writer Christopher Hitchens arguing if religion is a force for good. Is there really any point? It might be an interesting evening, but here we will see Blair defending the indefensible and Hitchens arguing for the intolerable.

Who knew that politics gave Blair the credentials to argue in favour of religion? Oh, wait a minute "power" is central to both, and there is corruption, control, obfuscation, and extortion in both; maybe he is qualified. Certainly Blair's recent book tour where he defends Britain's entry into the war in Iraq qualifies him to defend the indefensible.
Hitchens' is a widely respected atheist who certainly qualifies as a worthy opponent, but his position as posted on the Munk website is: "If religious instruction were not allowed until the child had attained the age of reason, we would be living in a quite different world." That is as intolerable to me as religion itself. Imagine "instruction...not allowed", quite a different world indeed. Hitchens' shows us in that statement his true conservative roots - and when I use the word "conservative" I mean it in its most derogatory sense. What an ugly comment, what an ugly thought!

I don't have a problem with anyone practicing and perfecting their religion, just leave me out of it and keep me away from bigots like Hitchens'.

Balancing a budget sometimes means spending less on frills!

According to Dan Mitchell at CATO, spending less on government departments that are not really (according to the US Constitution) functions of government, will quickly balance the US budget. I know that sounds unbelievable; have a look for yourself:

It will always come down to morality

Last week I mentioned the talk given by Stefan Molyneux of Freedomain Radio (FDR) fame. The event was recorded and the YouTube posting is now available. The video spans virtually the entire evening; 90 minutes long, and recorded at a pub in Toronto early in September 2010. The evening was sponsored by the Ontario Libertarian Party. 
Stefan talks about the one unavoidable fact that libertarians frequently fail to address in any discussion and I am as guilty as anyone. It is a fundamental belief, a starting point really of libertarianism. 
All libertarians will agree that the initiation of force in any interactions between people and other people, between individuals and groups of people including organizations and of course government is immoral; period. It is the non-aggression principle,  very simple but with huge repercussions in daily life. Stefan uses this interactive-talk to expand on his acceptance of the non-aggression principle versus the rationale people use today to justify our democracy.
 

Lessons from the European Union

Is America lurching toward European-style statism? Many people think so, I think so. Here in Canada we already "enjoy" a generous helping of European statism. We don't have the same libertarian beginnings as our cousins south of the border, but many of us aspire to those values. Lately the problem has been that the Americans, I should say the American leadership, has the appearance of being worse than our own leadership (if that is possible). The good news of course is that both of our countries share a common heritage, similar political and business practices, and it is not too late to heed warnings when they are given. The CATO video below is a warning we should take to heart.  

"Daniel Hannan's new book, The New Road to Serfdom: A Letter of Warning to America, urges Americans not to take such things as federalism, the rule of law and limited government for granted. He believes the United States could find itself lurching toward European-style socialism even more quickly. He spoke at the Cato Institute September 29, 2010."

Truth in humour - no pressure

This past weekend I had occasion to attend an Annual General Meeting and lecture and sit among some very dedicated environmentalists. The lecture was about the sex-life of song birds, interesting and especially to me because of my biology background. The lecture took me back to my own school days where a variety of Professors tried to convince me that things like the spruce-bud-worm infestation was a serious threat to our Boreal forests, it was a threat but not nearly as bad as they thought, but back to the bird lecture. During the course of the afternoon speaker after speaker kept alluding to the threat of climate change. One of the leaders of the group even suggested that their work helped counter "the ravages of climate change". The group leaders presented the mayor of my town with an award for the town's tree planting program, well deserved I'm sure, we have a lot of newly planted trees here.
I've got nothing against protecting and preserving the environment, using resources in a cost effective manner, minimizing pollution, all those apple-pie and motherhood issues I'm happy to oblige because I think they are good ideas. My problem starts when my choices are limited. That meeting left me with the thought that this group would like to limit my choices with some intrusive new rules; not a good feeling.
Later that day at home and I came across this informative website posting on the issue of climate change. Within the posting there was a graphic video that I saw which I at first thought was a joke, have a look:

It's not a joke. Need proof that those innocent looking environmental types really want to force their will on you and the rest of humanity?   I'd say that is proof, it's meant to be tongue-in-cheek, but there is truth in humour. These were ads in the UK for TV that were pulled and deemed inappropriate (imagine that). The group 1010global is real though, with a section in Canada. There is even a kinder, gentler version of this "green-or-else-snuff-video" for the Canadian market. I understand this and others have been running in British Columbia recently:
 
No pressure eh?

Our crystal ball sucks

The future isn't what it used to be. In my younger days I was an avid reader of Popular Science and magazines of that ilk. It was common for these periodicals to feature the newest and latest gizmo or idea. The future was bright with hope and promise. We were all supposed to be driving flying cars by now. But during the 60's and 70's the prognosticators missed predicting the internet and the impact of computers and mobile devices. Details.
Predictions are virtually impossible to get right. My neighbourhood psychic is still in business (the lights are still on anyway), not yet independently wealthy by predicting the winner of a horse race or winning stock in the market, or anything really.
Predictions lately have been downers, bird flu will cause a pandemic (not yet), H1N1 will cause a pandemic (didn't), the planet is in peril, well that remains to be seen. Al Gore thinks it is, but he is rich and now single again! He also has tons of credibility, Nobel Peace Prize, Oscar winner on his only movie and he lives in a great house - but its green, not the colour.
One of my favourite prognosticators of late is David Suzuki, whom I've actually written about in my other more local blog. Suzuki is a metamorphosed-fruit-fly-geneticist-become-environmentalist. He's making lots of predictions, kind of like the Canadian version of Al Gore, but poorer, leaner and more grizzled but just as gloomy. He also travels lots and I bet he lives in a great house in the woods of British Columbia, but I'm just jealous. Lately he is getting lots of press, a new movie doc about him is out, he has a new book and a foundation and his thumb in every "green-program" in Canada. He is worshipped by some and he is a first class bullshitter, much like Al Gore.
David Suzuki is mentioned in a column by Dan Gardner in the National Post this week. Gardner wrote a book coming out soon called:

Future Babble: Why Expert Predictions Fail and Why We Believe them Anyway (Oct. 12, 2010). The article outlines some of the classic previous failed predictions by environmental groups and people: Limits to Growth, The Population Bomb and so on. It's an interesting read and I can't wait for the book.        

Notes from the trenches on morality, a debriefing.

Out of necessity I try to shield myself from bad politics, which is to say any politics that has coercion as its modus operandi. Lately that has meant subscribing to a different newspaper, listening to different radio stations, following libertarian "friends" on FaceBook, generally just not dealing with the real world, I think it brings down my blood pressure. Sure I keep up with the news of the day and sometimes blog about it, but meeting others is restricted to family, friends, and libertarian pub nights (preaching to the converted). I'm in a libertarian cocoon much of the time and its comfortable. 

This past Sunday presented a chance to interact with the unwashed masses. The Ontario Libertarian Party with my help, presented Operation Politically Homeless (OPH) at Toronto's Word on the Street book festival. Our primary goal is to uncover latent libertarians and bring them out of the closet by joining our cause. Sunday was a good day for the cause, we spoke to hundreds I'm guessing, and some of those were interested in what we offered.

As far as my blood pressure, lets say there were some moments. One of my favourite rebukes goes like this: I had just finished explaining that eliminating various government programs may reduce taxes and give individuals more spending power. It may also lead to larger charitable donations so that those people who depend on charity will get the help they need. It's a perfectly reasonable argument, but I know people who have their mindset on the state as the source of all good, never buy the argument. Several times during the day I was told: "but many people don't or won't contribute to charity, that's why we need those government assistance programs that alleviate poverty and taxes to pay for them!" If you don't give voluntarily, you will be forced. Coercion is a tough nut to crack.

Earlier in September at one of our pub nights we invited Stefan Molyneux of Freedomain Radio (FDR) fame. We had a great turnout including several that had never been to one of our pub nights. We had asked Stefan to speak about morals and ethics with respect to libertarians (see video below from an older FDR posting about the morality of coercion), which he was happy to do. During his talk he used the example of the paradigm shift in thinking that occurred between the time slaves were freed in one country to the present day when just about everyone views slavery as abhorrent. Certainly that was not the case throughout much of history. Even Thomas Jefferson who penned the Declaration of Independence, owned slaves. It took more than a thousand years from the time of Cyrus the Great of Persia until 1981 when Mauritania finally abolished slavery. Of course most of Europe and the Western World was free of slaves by the end of the 19th century. The brief exception being the slave labour camps of the Nazi's, composed mostly of Jews (including my parents and inlaws) and the Japanese Prison camps of the Second World War. Stefan Molyneux likened this shift from 'slavery is good - to slavery is bad' as the requirement before libertarians will form governments in the West. The idea that people/governments have the right to coerce individuals to pay for goods and services they would not support voluntarily, needs to become as abhorrent as slavery is today. I hope it doesn't take a thousand years, but I fear we are still a long way from it.

During that OPH day, some suggested that we (meaning libertarians) can "ride the wave" of protest that exists particularly in the States, you know the Tea Party protests. Our day has arrived they said, wait until the next election! That was not the impression I got from most of the people I spoke to. On the contrary when I mentioned 'libertarian' to many, they linked us to Tea Party lunatics they had seen or read about in the media. No, the Tea Party is not helping our cause.

Towards the end of the day while speaking to an older woman I asked the question "does government do a good job?" She asked, which government? I said we are a provincial party, but any level of government will do, they're all the same, you choose. She looked at me like I had just stabbed her cat, she was indignant. "No, they NOT all the same" she whined, and stomped off. Yes, they are!      

FYI, here is the video where Stefan Molyneux explains why Ron Paul will not achieve power and even if he did why the population is not yet ready for a libertarian type government. It's the slavery paradigm, the shift in thinking must happen first.

Legislating the end of poverty

That is a picture is of an American Food stamp, one of the myriad ways the US government has tried to end poverty. That government currently operates 122 programs which spend $15,000 for each and every individual in the US that is designated as poor. This information and much more was presented by Neil Reynolds in his most recent column this week. The American war on poverty continues, 46 years after Lyndon B. Johnson fired the first shot in 1964.
That futile war is fought in the States, in Canada, and every "well-meaning" democracy on the planet by each particular local government.
The other day a colleague of mine repeated an old aphorism that applies to this sort of futility: What's the definition of insanity? Repeatedly doing the same thing but expecting a different outcome each time. Buying the end of poverty doesn't work.

The politics of letter writing

Aside from blogging I keep the editors of the local and national newspapers busy with a regular stream of letters. My letters have appeared in a variety of newspapers and magazines over the years. This week I sent my first letter to the National Post, it was published and the online version appears above. My record is more spotty with other papers, this was first-time-lucky and I appreciate the opportunity. However my letter was edited so much that my argument was altered, see if you can spot the differences.

Re: Alberta Sands praised as ‘ethical oil’. Adam McDowell, Sept. 22

To the Editor:

I think that reframing the debate by called Alberta’s Oil Sands ‘ethical oil’ is disingenuous, like putting lipstick on a pig, its still a pig. Any kind of oil exploration and production is dirty business; witness the Gulf of Mexico oil debacle.

The ethical focus should be on the producers. Are they responsible enough to clean up after themselves; are they minimizing the impact of production so that the people of Alberta are not stuck with an environmental mess for generations afterward?

Oil is an essential ingredient of modern civilization, it should be traded with as few restrictions as possible, and the market should dictate its price. Alberta should not be ashamed of its good fortune as a major player in oil production. Calling it ‘ethical’ or ‘fair trade’ oil because it comes from Canada as opposed to Saudi Arabia or Nigeria is of no consequence to me, I shop for the best price.

Danielle Smith should reconsider her support of Ezra Levant’s book; it is shortsighted thinking. If ethics dictated trade we should refrain from travel to Cuba or from purchasing Chinese manufactured goods because of human rights issues. That’s wrong, it is trade that brings about change.

If the Americans don’t want our “dirty” oil, someone else will.     


My letter was based on this article. It talks about Ezra Levant's book and how Danielle Smith of the Wildrose Alliance picked up the argument. Full disclosure: I haven't read the book, but I have read about it, this fairly positive review was in the Financial Post the day before my letter was sent.
I admire Levant and I agree with him on many issues, probably even this issue, given the provisos in my unedited letter. But the day after I wrote the letter the National Post ran a lead editorial supporting ethical oil, and not mentioning Levant or Smith. My letter appeared the following day, edited so as to make it look like it was written in response to the lead editorial. While I know the newspaper reserves the right to edit whatever it is sent, this seems fishy to me.

Government interventions create economic niches

According to George Jonas that is what governments do "create economic niches"; he goes on to say: "criminalizing conduct makes it pay"  in his recent The National Post op-ed.
The Post is running a five-part-series on the sale of "illegal" cigarettes by members of First Nations (natives) groups in Canada. Jonas points out that a black market in cigarettes does not exist....."That's the first thing to know about it. Markets are colourless. "Black market" is what the authorities call whatever segment of the free market they want to restrict for whatever reason."
I'm the last person you would expect to defend cigarette smoking or any other kind of addictive habit, but sometimes freedom means 'letting go' and allowing some behaviours to go on as long as they only affect the user. This is such a case, and Jonas's column is worthy of your time.

The race for mayor in Toronto

Municipal politics in this country is typically boring. Not this year in Toronto! The campaigning seems interminably long compared to what happens at the provincial or federal level. At those upper levels, campaigns have been legislated down to just 4 weeks or so. This way the incumbent party can't screw-up too badly and they may be able to finagle another victory.
Not in municipal politics, the Toronto campaign has been in going full-bore (no pun intended) at least three months now and there is still a month to go. In this particular year that is the best thing about it.
One unlikely candidate, Councillor Rob Ford, has emerged with a substantial lead if polls can be believed. He has almost twice the percentage in favour as his closest opponent. Even I like him, sort of.
Toronto has the reputation of voting federally for union-friendly statist politicians. Liberals or New Democrats get elected throughout most Toronto ridings. Even the last mayor and council were big government types and of course their big spending ways have created a huge debt problem for the city during a bad economic downturn.
The current Mayor Miller is known for "negotiating" juicy contracts with unions (like garbage workers), adding all sorts of annoying surcharges for the privilege living in the city and slapping red-tape on anything that looks like progress. Wisely, Miller has decided not to run again because the pendulum is swinging the other way.
The new mantra is responsible government, ('cause they have been irresponsible up until now) even so some candidates insist union jobs should be saved, tunnels should be built for cars to travel unimpeded, transit should be improved and every pot should have a chicken in it.
Ford has a better idea. He is the only one suggesting that cuts need to be made in the size of government. He's still a big government guy (and he's big too) a union-unfriendly statist politician, so I'm not that excited. But the length of the campaign has focused those voters who are paying attention on costs and size of government. That may be why Ford is popular, but it's early days yet.        

Seven days without prayer makes one week!

This was posted by a FaceBook friend and it would hurt not to repost it. Enjoy:

Economics and basketball

Neil Reynolds highlights George Mason University and it's surprising basketball team. More importantly he uses that example to take a kick at Keynes and chalk up one for the Austrian School. Have a look here.