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Alberta’s Problem Isn’t Pipelines; It’s Bad Policy Decisions

Alberta’s Problem Isn’t Pipelines; It’s Bad Policy Decisions

Bitumen prices are low because the province has ignored at least a decade of warnings.

The Alberta government has known for more than a decade that its oilsands policies were setting the stage for today’s price crisis.

Which makes it hard to take the current government seriously when it tries to blame everyone from environmentalists to other provinces for what is a self-inflicted economic problem.

In 2007, a government report warned that prices for oilsands bitumen could eventually fall so low that the government’s royalty revenues — critical for its budget — would be at risk.

The province should encourage companies to add value to the bitumen by upgrading and refining it into gasoline or diesel to avoid the coming price plunge, the report said.

Instead, the government has kept royalties — the amount the public gets for the resource — low and encouraged rapid oilsands development, producing a market glut.

With North American pipelines largely full, U.S. oil production surging and U.S. refineries working at full capacity, Alberta has wounded itself with bad policy choices, say experts.

The Alberta government and oil industry is in crisis mode because the gap between the price paid for Western Canadian Select — a blend of heavy oil and diluent — and benchmark West Texas Intermediate oils has widened to $40 US a barrel.

Some energy companies have called on the government to impose production cuts to increase prices.

The business case for slowing bitumen production was made by the great Fort McMurray fire of 2015.

…click on the above link to read the rest of the article…

When America’s Fiscal Crisis Hits, Be Forewarned that Tax Increases Will Make a Bad Situation Worse

When America’s Fiscal Crisis Hits, Be Forewarned that Tax Increases Will Make a Bad Situation Worse

When America’s fiscal crisis hits, remember that raising taxes will only exacerbate the problem.

At some point in the next 10 years, there will be a huge fight in the United States over fiscal policy. This battle is inevitable because politicians are violating the Golden Rule of fiscal policy by allowing government spending to grow faster than the private sector (exacerbated by the recent budget deal), leading to ever-larger budget deficits.

I’m more sanguine about red ink than most people. After all, deficits and debt are merely symptoms. The real problem is excessive government spending.

But when peacetime, non-recessionary deficits climb above $1 trillion, the political pressure to adopt some sort of “austerity” package will become enormous. What’s critical to understand, however, is that not all forms of austerity are created equal.

The crowd in Washington reflexively will assert that higher taxes are necessary and desirable. People like me will respond by explaining that the real problem is entitlements and that we need structural reform of programs such as Medicaid and Medicare. Moreover, I will point out that higher taxes most likely will simply trigger and enable additional spending. And I will warn that tax increases will undermine economic performance.

Regarding that last point, three professors, led by Alberto Alesina at Harvard, have unveiled some new research looking at the economic impact of expenditure-based austerity compared to tax-based austerity.

…we started from detailed information on the consolidations implemented by 16 OECD countries between 1978 and 2014. …we group measures in just two broad categories: spending, g, and taxes, t. …We distinguish fiscal plans between those that are expenditure based (EB) and those that are tax based (TB)… Measuring the macroeconomic impact of a plan requires modelling the relationship between plans and macroeconomic variables.

Here are their econometric results.

…click on the above link to read the rest of the article…

The Dunning-Kruger Effect Explains the Growth of Government

The Dunning-Kruger Effect Explains the Growth of Government

Why do democracies lead to ever-growing states?
We’ve all found ourselves at least a few times in our lives listening to friends or relatives complain about voter apathy. If only voters properly researched policies and politicians, everything would be better, we hear. Unfortunately, the incentives just aren’t there.

Anthony Downs called this phenomenon “rational ignorance,” and it is especially significant with government-related decision-making, or “Public Choice.” Economic analysis shows us that the value of the time individuals spend informing themselves must exceed its opportunity cost. Take this into consideration when contemplating the ludicrous probability of a single participant swaying an entire election. There is very little individual upside to justify any significant effort to inform oneself on voting for the “right” solution.

Thus, ignorance is a perfectly reasonable alternative and should be a completely expected outcome of democracy. After all, the individual losses of inadequate voting are just too low to matter much, if at all. Proper examination simply doesn’t make nearly as much economic sense for political agents as it does for market ones.

But if people are choosing ignorantly, wouldn’t the properly-educated minority weigh the scale towards good, effective policies? And if, as I believe, good policy means a less-intrusive government, why does the opposite always seem to happen?

The Head Start of Statism

An important distinction must here be made: the issue at hand is not an admitted lack of knowledge. Otherwise, the very fact that voting is not random at all would completely debunk the theory. In this case, however, ignorance is knowing things wrong.

…click on the above link to read the rest of the article…

Minimum Wage Fallout Is Caused by Government, Not Businesses

Minimum Wage Fallout Is Caused by Government, Not Businesses

Employees don’t magically become more productive because businesses have to pay them more, so they need to make up the losses elsewhere.

Both in Canada and in the U.S., many jurisdictions have “listened” to the people and enacted feel-good legislation like increasing the minimum wage, sometimes up to $15 an hour. Now that the consequences of such actions are being felt, people naturally blame… private corporations.

In Ontario, famous doughnut chain Tim Hortons sent a letter to all their employees saying that many of their benefits, such as paid breaks and dental benefits, will be scaled down or canceled altogether. Meanwhile, the Great Canadian Bagel chain has announced a price increase to pay for the newly imposed wages.

Unhappy with these changes, an Ottawa-based labor council set up a “bully hotline” so that employees can anonymously denounce employers who “violate the spirit of the new law.” Many “Timmies” regulars are even calling on a boycott of the chain to show their discontent.

In the U.S., a recent picture from a Subway restaurant in Seattle, Washington, shows the franchise owner stating that, because of all the costs incurred (including high minimum wage), he cannot accept one-dollar coupons for the footlong of the day.

It is almost a miracle that the chain hasn’t cut back on employees altogether.

Market Forces Affect EverythingWho is to blame for those changes on both sides of the border? Unfettered-capitalist-neoliberal-puppy-eating-Koch-brother greed? Heartless managers who just want to exploit their workers?

No, the cutting back of hours, benefits, and discounts is a working of the markets, i.e. of every customer’s decisions. Since franchises like McDonald’s have, on average, a profit margin of 2.4 percent, the slightest sudden increase in costs will eat that margin away. It’s a highly competitive and difficult world; as much as 30 percent of Quiznos franchises default on their government-backed loans.

…click on the above link to read the rest of the article…

Missile False Alarm in Hawaii: How Wrong Buttons Can Wreak Havoc

Missile False Alarm in Hawaii: How Wrong Buttons Can Wreak Havoc

Should the survival of humanity hinge on bureaucratic protocols?

On Saturday at 8:05 am, residents of Hawaii were terrified by a text message that said a missile was heading their way, and they should “seek shelter immediately.” Helpfully, the message also said, “this is not a drill.” And it wasn’t – it was merely a stomach-clenching error.

A notable thing about Saturday’s mistake is how human it was.

Ten minutes after it was sent, it was canceled, and updates were broadcast over social media saying so. However, it wasn’t until 8:45 that a follow-up text saying it had been a mistake was sent out. In the meantime, according to The New York Times and other reports, more than a few families huddled completely terrified, assuming that they were about to die – or at least that there was nothing to be done about it if they were.

An Infamous Error

Hawaii, which is 2,400 miles from California and 4,600 miles from North Korea, is a lot closer to a potentially hot sequel to the Cold War than the rest of us and is understandably tenser, even without this kind of morning. Last year, they started monthly bomb drills thanks to the ongoing battle between President Trump and Kim Jong-Un.

The error was the fault of a still unnamed employee of Hawaii’s state version of FEMA – The Hawaii Emergency Management Agency. According to the BBC:

“State Governor David Ige apologised and said it was caused by an employee pressing the wrong button.”

And though this might end up a valuable push towards fixing a rickety system that managed to incorrectly inform people that they should duck and cover, but not officially say “hang on, not really” for more than half an hour, it is a truly unforgivable error.

…click on the above link to read the rest of the article…

Ready or Not for the Next Recession?

Woman counts out customer's changeJoe Raedle/Getty Images

 

Ready or Not for the Next Recession?

Policymakers normally respond to recessions by cutting interest rates, reducing taxes, and boosting transfers to the unemployed and other casualties of the downturn. But, for a combination of economic and political reasons, the US, in particular, is singularly ill-prepared to respond normally.

COPENHAGEN – A sunny day is the best time to check whether the roof is watertight. For economic policymakers, the proverbial sunny day has arrived: with experts forecasting strong growth, now is the best time to check whether we are prepared for the next recession.

The answer, for the United States in particular, is a resounding no. Policymakers normally respond to recessions by cutting interest rates, reducing taxes, and boosting transfers to the unemployed and other casualties of the downturn. But the US is singularly ill-prepared, for a combination of economic and political reasons, to respond normally.

Most obviously, the US Federal Reserve’s target for the federal funds rate is still only 1.25%-1.5%. If no recession is imminent, the Fed may succeed in raising rates three times by the end of the year, to around 2%. But that would still leave little room for monetary easing in response to recessionary trends before the policy rate hits zero again.

In the last three recessions, the Fed’s cumulative interest-rate cuts have been close to five full percentage points. This time, because slow recovery has permitted only gradual normalization of interest rates, and because there appears to have been a tendency for interest rates to trend downward more generally, the Fed lacks room to react.

In principle, the Fed could launch another round of quantitative easing. In addition, at least one of US President Donald Trump’s nominees to the Federal Reserve Board has mooted the idea of negative interest rates.

So This Is What Happens With Government Disaster Relief?

So This Is What Happens With Government Disaster Relief?

There is no possibility of eliminating corruption in government.

The idea of having government assist after a natural disaster sounds great. It makes us feel good. Houston floods? Send millions. New Orleans floods? Send hundreds of millions. Puerto Rico? The place is a mess and needs billions and billions. It all seems right.

The great truth about government is that every penny it spends must come from somewhere and must land somewhere else. 

Until you look at the details. Someone gets the money. Whether they are the same institutions who actually do the reconstruction is another matter. And what kind of relief they provide is still another question. Other people’s money usually works this way. Look closely enough and you find corruption at every level.I recall living in a town hit by a hurricane many years ago. The town mayor instructed people not to clean up yet because FEMA was coming to town. To get the maximum cash infusion, the inspectors needed to see terrible things. When the money finally arrived, it went to the largest real estate developers, who promptly used it to clear cut land for new housing developments. That’s some nice capital if you can get it.

And now we have the remarkable case of Whitefish Energy. It’s a good example of how a website can make anything seem awesome. You would never know by looking at the impressive digital space that this is a father/son business. That’s right: just two employees.

It does seem highly strange that this desktop operation in Montana would be awarded a $300 million contract to rebuild the electrical grid in Puerto Rico. That sounds outrageous. But guess what? This is a day and a half of disaster relief spending.

…click on the above link to read the rest of the article…

Bringing Back the Draft Won’t Stop Unnecessary Wars

Bringing Back the Draft Won’t Stop Unnecessary Wars

Conscripting soldiers neither stops unnecessary wars nor makes the death toll more egalitarian.

Every now and then the old argument that the draft should be reinstated pops back up. Most recently it appeared here at The American Conservative in a piece by Dennis Laich and Lawrence Wilkerson that contended America’s all-volunteer force is deeply unfair. Without directly stating it, they implied that the draft should be brought back.

“Said more explicitly,” they write, “if the sons and daughters of members of Congress, of the corporate leadership, of the billionaire class, of the Ivy Leagues, of the elite in general, were exposed to the possibility of combat, would we have less war?”

It seems like a reasonable question. Fortunately, history gives us the answer: No, we would not have less war. In fact, when we’ve had a draft we’ve actually had more war and more Americans killed in battle by several orders of magnitude.

Conscription Leads to More Death

In one 33-year period from 1940 to 1973 when conscription was in effect, we had three of the largest wars in American history, resulting in 497,271 Americans killed. In the 44 years since the end of the draft, we’ve engaged in a series of small overseas conflicts and three undeclared wars with about 7,000 Americans killed. About as many of our countrymen were killed in the Normandy landings than in all the wars since the end of the draft.

America has never fought a war with volunteers in which more than 10,000 Americans were killed in action. America has never fought a war with draftees in which there were fewer than 30,000 KIAs. There is no question about it: our biggest and highest-casualty wars have been fought with drafted troops.

…click on the above link to read the rest of the article…

Post Paris, Are Canada’s Internet Privacy Laws at Risk?

Post Paris, Are Canada’s Internet Privacy Laws at Risk?

Attacks may renew calls to go beyond Bill C-51 and restrict encryption technologies.

Vigil for Paris terrorist attacks

The Paris attacks have also escalated calls to reconsider plans to reform Canadian privacy and surveillance law, a key election promise from the Trudeau government. Photo by Garry Knight, Creative Commons licensed.

As the world grapples with the recent terrorist attacks in Paris, the policy implications for issues such as the acceptance of refugees and continued military participation in the fight against ISIL have come to the fore. The attacks have also escalated calls to reconsider plans to reform Canadian privacy and surveillance law, a key election promise from the Trudeau government.

Despite the temptation to slow the re-examination of Canadian privacy and surveillance policy, the government should stay the course. The Liberals voted for Bill C-51, the controversial anti-terror law, during the last Parliament, but promised changes to it if elected. Even in the face of a renewed terror threat, those changes remain essential and should not have an adverse impact on operational efforts to combat terror threats that might surface in Canada.

The Liberals promised to establish an all-party review mechanism similar to those found in many other countries that will bring members of Parliament into the oversight process. The Conservatives’ opposition to increased oversight was always puzzling since oversight alone does not create new limitations on surveillance activities. Rather, it helps ensure that Canada’s surveillance and police agencies operate within the law and restores public confidence in those entrusted with Canadian security.

The other Liberal commitments would similarly address oversight without curtailing surveillance powers. For example, the party promised to increase the powers of the Privacy Commissioner of Canada and to add a mandatory three-year review provision to the law.

…click on the above link to read the rest of the article…

Research Confirms ExxonMobil, Koch-funded Climate Denial Echo Chamber Polluted Mainstream Media

Research Confirms ExxonMobil, Koch-funded Climate Denial Echo Chamber Polluted Mainstream Media

A new study published today in the Proceedings of the National Academies of Science (PNAS) shows that the climate denial echo chamber organizations funded by ExxonMobil and Koch family foundations produced misinformation that effectively polluted mainstream media coverage of climate science and polarized the climate policy debate.

The abstract and full text of the study can be found here: Corporate funding and ideological polarization about climate change.

The analysis of 20 years’ worth of data by Yale University researcher Dr. Justin Farrell shows beyond a doubt that ExxonMobil and the Kochs are the key actors who funded the creation of climate disinformation think tanks and ensured the prolific spread of their doubt products throughout our mainstream media and public discourse.

The contrarian efforts have been so effective for the fact that they have made it difficult for ordinary Americans to even know who to trust,” Dr. Farrell told the Washington Post which was first to cover the news of the study’s release. “This counter-movement produced messages aimed, at the very least, at creating ideological polarization through politicized tactics, and at the very most, at overtly refuting current scientific consensus with scientific findings of their own,” Dr. Farrell said.

From PNAS’s press briefing note about the article by Dr. Farrell:

Corporate funding likely influences the nature and content of polarizing texts pertaining to climate change, according to a study. Political polarization has become a hallmark of climate change policy discussion, with multiple groups in various sectors contributing to public discourse regarding climate and energy. To quantify the influence of corporate funding in climate change discourse, Justin Farrell analyzed more than 39 million words of text produced by 164 organizations active in the climate change counter-movement between 1993 and 2013. The author examined the ideological content of the produced texts, as well as the funding behind the organizations that produced the texts.

…click on the above link to read the rest of the article…

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