EclectEcon

Strong Words from Melanie Phillips about the Flotilla.

My own question: why not take the humanitarian aid into Gaza through Egypt if you don't want it examined by the Israelis?

From Melanie Phillips:

The notion – uncritically swallowed by the lazy, ignorant and bigoted BBC and other western media – that the flotilla organisers are ‘peace activists’ is simply ludicrous. This research by the Danish Institute for International Studies details the part played by the IHH in Islamist terror in Afghanistan, Bosnia and Chechnya. According to the French magistrate Jean-Louis Bruguiere testifying at the Seattle trial of would-be al Qaeda Millenium bomber Ahmed Ressamin, the IHH had played ‘[a]n important role’ in the al Qaeda Millenium bomb plot targeting Los Angeles airport. It was also involved in weapons trafficking, and played in addition a key role in galvanizing anti-Western sentiment among Turkish Muslims in the lead-up to the 2003 war in Iraq. ‘Peace activists’ these people most certainly are not.

Let me add that so long as Hamas constitutionally threatens the destruction of Israel, it is to be expected that Israel will want to examine anything going into Gaza. As Phillips says, Israel permits tonnes of food, fuel, etc. to go into Gaza, something that even Levy, writing Haaretz sneered about but also acknowledged.

Thanks, AGAIN, EastLink!

Half a day with no cable, internet, or telephone service last week. No service again today. Thank goodness I can use my iPhone to tether to collect at least a portion of my e-mail, surf the web, and post to my blog. If I'm mad, think about the losses being suffered by businesses in the area who depend on them for everything.

Inexcusably poor service.

Eliminate the Penny: a Draft of My Opening Remarks to the Canadian Senate Committee

This is a preliminary draft of the remarks I will make on Tuesday when I appear before the Senate Committee looking into the elimination of the penny. I have no idea whether I'll be allowed enough time to say all this. Comments and feedback welcome.

Ladies and Gentlemen:

Thank you very much for inviting me to be here today.

I first started thinking and writing about the role of the one-cent coin in our economy over twenty years ago. I was prompted to give it somewhat serious consideration one day when, in a longish check-out line, a number of us were held up as several people ahead of us each said something like, "Wait a minute.... I think I have the three cents here." or "Just a minute.... I have the pennies in here with these coins...." I looked at the people in the line and wondered how much time was being wasted while people waited in line as customers and clerks counted out pennies.

At the same time, I realized that even then, in 1990, a one-cent coin wouldn't buy anything. When I was a child, I was able to buy two root-beer barrels, a pack of soft candies, a baseball card with gum, etc. for a penny. By 1990, as a result of inflation, things like these had prices much higher. It occurred to me then that the one-cent coin had out-lived its usefulness. As I wrote then,

Sixty years ago, we had the same denominations for our currency that we have now. But a penny could buy something then. Since 1933, the average price level (as measured by the Consumer Price Index) has increased by a multiple of 20. What we used to buy for a penny would now generally have a price of about twenty cents. "Penny" candy and "penny" whistles are now priced in dollars or tenths of dollars, not pennies.

Shortly after I wrote that piece, my younger son, Adam Smith Palmer who was 15 at the time, let me know in no uncertain terms that he thought it was silly of me to have raised such a fuss about pennies. Before the year was out, however, he had completely changed his tune. Why? Because he had a part-time job with a local fast-food coffee shop and did not like having to

• deal with pennies himself (extra counting and hassles)
• wait while customers said, "Wait a minute... I think I have the four pennies here somewhere..."

In July of 1990, a major Canadian news story picked up my initial writing on this topic, and that story hit the wire services, as I recall, on August 2, the day Iraq invaded Kuwait. That day, and over the next few weeks, many news organizations, looking for a lighter story to add to their news lineup for the day, called me, interviewed me, and added a reference to the idea of getting rid of the one-cent coin to their newscasts or newspapers. Soon I became informally known as the unofficial chair of the "Ban the Penny" campaign, appearing on interview shows, including CBC's The Journal, and making appearances for charitable groups.

A few years ago, before appearing on a CBC radio interview, I did a rough back-of-the-envelope calculation about the value of the time lost because of the use of pennies, just to get an idea of only the transaction costs involved with using a one-cent coin. The results were startling:

• assume that when cash is used, pennies add, on average, 2 seconds to each person's transaction time, either because of their own use of pennies, because of the clerk's added time, or because of the time added by someone ahead of them in line.
• assume this extra transaction cost is incurred, on average only once a week. I realize these numbers are low, but I tried, if anything, to bias the estimate downward.
• assume these transaction costs affect 20 million shopping trips each week. The population of Canada is roughly 35 million people, so this assumption is again likely pretty low, given that many people are affected by these transaction costs on a near-daily basis or even more often than that.
• Based on these assumptions, the time lost by Canadians due to the use of the one-cent coin is, at a minimum, 5-6 million hours each year in total. It doesn't seem like much when we are standing in line, but in total it is quite a bit.
• A very difficult question is how to value that time. Some people value the time lost at the average wage rate, and a compelling case can be made for this assumption. Others, like me, prefer once again to bias the number downward and use a nominal number such as only $4/hour. 
• Even so, using such low numbers that stack the deck against the case for getting rid of the one-cent coin, it seems reasonable to argue that the transaction costs alone from using the one-cent coin in Canada amount to between $20m - $25m per year.

And these estimates do not include the costs to merchants and financial institutions who have to deal with pennies at their end. 

There are numerous arguments that I have come across in the past twenty years for why we should keep the penny. I should like, time permitting, to address them:

1. Won't all the merchants just round up and rip off the consumers? My personal reaction is to let them. I don't want the pennies, and I don't care. But we all know that many other Canadians will object. But we do not need explicit gubmnt invtervention to deal with this. Many merchants will round down, customers who care will favour those merchants who round 3 and 4 up to 5, while rounding 1 and 2 down. Letters to the editor and news stories will create informal pressure for most merchants to fall in line with this rounding practice. There are much more valuable things for gubmnt policy-makers and authorities to do with their time than wrangle over things like this that will be solved readily by market forces. Keep in mind, too, that the rounding would take place on the total, after-tax, bill, not on each item. But as I said this concern is a non-issue and never amounted to anything in Australia when they eliminated their one-cent coin.
2. What about young people who want to start coin collections? Yes, this argument has been raised many times. There is no reason why they cannot start collecting nickels and dimes, both of which have less purchasing power than pennies did in the 1950s when I began collecting pennies.
3. What about the people at the mint who will lose their jobs? I don't know of anyone who jumps for joy when others lose their jobs. At the same time, we live in a dynamic, changing world, and that is why we have a social safety net in place; that is also why we have gubmnt programmes designed to encourage people to save for contingencies. In the end, society will be better off if those who lose their jobs are freed up to produce something else, some other good or service, rather than produce something that adds costs to our economy.
4. Won't the mint have to use a lot of other coins to "buy back" all the pennies out there? Why? The simplest way to eliminate the one-cent coin is for the mint (and the gubmnt of the day) to announce that as of January first they will no longer be minting any new one-cent coins. As a result, to plan for this eventuality, merchants will begin rounding automatically. As they receive pennies in payment for items, they will take the pennies to the bank where they pennies will be sent to the mint to be melted down and the metal recycled. 
5. What about the charities that depend on pennies as a major source of contributions? This concern will not go away by fatuously replying, as one person has, that people can donate nickels and dimes instead. As my older son David Ricardo Palmer recently said, "Lots of people will gladly throw six pennies in a charity bucket but would not even consider putting a nickel in one." These organizations will lose, in the short run (though it is easy to imagine some creative campaigns they might use to collect pennies during the transition phase, during which they might actually gain donations). But their loss should be no reason for imposing such high transaction costs on all Canadians. Times change, economic conditions change, we experience what Joseph Schumpeter referred to as "creative destruction" during the changes. It behooves us all to encourage and foster the "creative" part of that phrase.
6. What about the costs and confusion of having prices rounded to the nearest five cents for cash customers to the nearest penny for credit- and debit-card customers? My expectation is that, if left to decide for themselves, merchants will deal with this question in an efficient manner. Some will round every purchase total to the nearest five cents. Others won't. At this point, gasoline credit cards do not record all my purchases of gasoline to nearest tenth of a cent and provide me with a tally at the end of the month. I would expect that analogously most merchants will eventually just round all totals to the nearest five cents, regardless of the method of payment.

Let me add that I know of some merchants, particularly fast-food coffee outlets, who set prices so that after taxes the total on many small-item purchases will not come out even, say to the nearest dollar or so. They do this to reduce employee theft. If I buy a coffee for a dollar and give the clerk a dollar, it is easy for the clerk to say "Thank you", take the dollar coin, but not ring it in, and later put it in his/her pocket. But if the coffee, with tax, has a price of $.94 or $1.02 or something like that, customers will tend not to have the correct change (note: or will hold up the line looking for it), forcing the clerk to ring in the sale. 

As you will note, I have not addressed the seigniorage argument. Even though it is a compelling argument, as other witnesses before your committee will show, my approach to the topic has been from the perspective of transaction costs. These costs are in addition to any seigniorage losses suffered by the mint and the federal gubmnt.

Thank you for your time and interest.

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Additional links:

http://www.eclectecon.net/pennies/

http://the-econoclast.blogspot.com/2005/12/pennies-coins-dirhams-and-fils.html

http://the-econoclast.blogspot.com/2005/01/lets-get-rid-of-pennies-and-nickels.html

http://the-econoclast.blogspot.com/2005/02/ban-penny-againstill.html

http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/05/ban-the-penny-and-the-nickel-while-were-at-it.html?cid=6a00d83451688169e20133eee40094970b

To What Extent are Environmentalists Responsible for the Gulf Oil Spill?

Let's not get too carried away, but this article does raise some interesting and important questions about trade-offs and incentives [h/t Eva]. An excerpt:

...we must ask why BP was drilling in 5,000 feet of ocean when there are so many other accessible and safe alternatives. There are large deposits of oil shale in Western Colorado that could easily and safely be extracted as it is now in Western Canada. We have all heard of the huge deposits of oil in ANWR, on Alaska's North Shore. Because of improved drilling technology, all available oil in ANWR can be extracted by using only 2,000 of its roughly 19,000,000 acres.

BP now drills in 5,000 feet of ocean because these better alternatives have been foreclosed to the oil industry. Environmental groups have effectively stymied this safe and relatively easy production of oil in the name of some higher but more nebulous good.

"I'm from the Gubmnt, and I'm here to help you...."

Every time I hear or read about people recommending that we need more gubmnt regulation to control greedy, selfish behaviour, I think of stories like this one:

WASHINGTON – Staff members at an agency that oversees offshore drilling accepted tickets to sports events, lunches and other gifts from oil and gas companies and used government computers to view pornography, according to an Interior Department report alleging a culture of cronyism between regulators and the industry.

In at least one case, an inspector for the Minerals Management Service admitted using crystal methamphetamine and said he might have been under the influence of the drug the next day at work...

The report cites a variety of violations of federal regulations and ethics rules at the agency's Louisiana office. Previous inspector general investigations have focused on inappropriate behavior by the royalty-collection staff in the agency's Denver office.

This is just one of the latest examples of the selfishness and greed of gubmnt regulators. Another that frequently comes to mind in our area is the case of the gubmnt employees who drank on the job and essentially caused the Walkerton water tragedy a decade ago by falsifying water safety tests.

In both cases, employees became careless in their sinecures to the point of criminal negligence. And in the case of the ongoing Gulf oil spill, it appears that even more than criminal negligence was involved.

When this type of regulation does not work, what do most people see as the remedy? More regulation! Here is another option: how about if regulators are found negligent, they are held personally liable? How about the Koebel brothers in Walkerton lose their life savings? And how about the regulators in the gulf lose theirs, too? I.e., how about placing more emphasis on tort-negligence and less emphasis on gubmnt regulation?

A standard response to my questions is that people will not take these jobs if they must bear such risk. That strikes me as a fine result. People will be induced to assume these risks by taking these jobs only if they are paid more. And knowing that they face the loss of their life savings, they will exercise diligence and care in their daily work. 

As is clear, I am not saying there should be no regulation. I am not that much of a libertarian. But I am concerned that gubmnt regulators can shirk responsibilities with little regard for losses they or others might suffer.

On a broader scale, it looks as if the gulf oil spill might be an extreme example of Regulatory Capture:

Regulatory capture occurs when a state regulatory agency created to act in the public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as an encouragement for large firms to produce negative externalities. The agencies are called Captured Agencies.

[R]egulatory capture occurs because groups or individuals with a high-stakes interest in the outcome of policy or regulatory decisions can be expected to focus their resources and energies in attempting to gain the policy outcomes they prefer, while members of the public, each with only a tiny individual stake in the outcome, will ignore it altogether. Regulatory capture refers to when this imbalance of focused resources devoted to a particular policy outcome is successful at "capturing" influence with the staff or commission members of the regulatory agency, so that the preferred policy outcomes of the special interest are implemented.

Regulatory capture theory is a core focus of the branch of public choice referred to as the economics of regulation; economists in this specialty are critical of conceptualizations of governmental regulatory intervention as being motivated to protect public good. ... The theory of regulatory capture is associated with Nobel laureate economist George Stigler, one of its main developers. The risk of regulatory capture suggests that regulatory agencies should be protected from outside influence as much as possible, or else not created at all. A captured regulatory agency that serves the interests of its invested patrons with the power of the government behind it is often worse than no regulation whatsoever. [emphasis added]

Stupid Attempts at Insider Trading

Behaviour like this deserves more than injunctive relief just because of the stupidity involved, not to mention the criminal intent.

"One year for being stupid."

"Circuit Breakers" and Computerized Stock-Trading Models

As a result of the massive sell-off and rebound of stocks on May 6th, the Securities and Exchange Commission is contemplating putting in circuit breakers which would halt the wild gyrations of the markets. From the NYTimes,

 The circuit breakers will pause trading in those stocks for five minutes if the price moves by 10 percent or more in a five-minute period. The trial run will begin after a 10-day comment period and will last through Dec. 10, the commission said. The circuit breakers will apply both to rising and falling stock prices.

But in a separate report, the S.E.C. and the Commodity Futures Trading Commission said that they had not been able to pinpoint the cause of the sharp market decline that shook investors and markets two weeks ago.

Generally, the agencies said, the drop was caused by traders stepping back from the market and refusing to buy or sell, in both the stock and futures markets. The government found that there was also a heavy reliance by investors on automated orders to sell at the market price once stock prices had declined by a certain amount. Further, there were different rules on different exchanges about when trading is automatically slowed or stopped.

The agencies said they had found no evidence that the market decline was caused by so-called fat finger trading errors, or by computer hacking or terrorist activity. They added, however, “we cannot completely rule out these possibilities.”

This new policy by the SEC puzzles me:

• If regulators at the SEC can spot when the market is spiraling out of control (regulators who are not investing their own money in the common stocks in question, presumably), then why can't private investment firms devise computerized trading rules to do the same thing more profitably and more efficiently? 
• In fact, just what was the problem on May 6th? Some people panicked and some computerized trading programmes forced the sale of a bunch of stock as prices plummeted. But within less than an hour, other computerized trading programmes and other people recognized some serious profit opportunities and started buying stocks. If a bunch of widows and orphans and pensioners lost a bundle because the firms managing their money panicked or used sloppy computer models, then they should place their money with other financial managers or take their money out of actively managed funds.
• With the SEC in the game, traders will have less incentive now to continue their development of trading strategies that, in the end, offset the wild swings on the market.
• I.e., more gubmnt intervention means less private entrepreneurship. 
• And the gubmnt regulators are not necessarily the best people to be betting on whether a market dip is reasonable.

More Guns, Less Crime (3rd Edition is now available)

Until I read John Lott's initial work on gun control, I was pretty strongly in support of gun control legislation. But the more I read, the more I became persuaded that he has a strong argument in favour of permitting people to own and carry guns.

Even if you are adamantly opposed to his position, you owe to yourself to read the latest edition of his book, More Guns, Less Crime (3rd edition). Here is the blurb describing it:

On its initial publication in 1998, John R. Lott’s More Guns, Less Crime drew both lavish praise and heated criticism. More than a decade later, it continues to play a key role in ongoing arguments over gun-control laws: despite all the attacks by gun-control advocates, no one has ever been able to refute Lott’s simple, startling conclusion that more guns mean less crime. Relying on the most rigorously comprehensive data analysis ever conducted on crime statistics and right-to-carry laws, the book directly challenges common perceptions about the relationship of guns, crime, and violence. For this third edition, with more than 200 pages of new material, Lott draws on an additional ten years of data—including provocative analysis of the effects of gun bans in Chicago and Washington, D.C—that brings the book fully up to date and further bolsters its central contention.

Israel and Humanitarian Supplies to Gaza --- Much, Much More Than You Might Think

When I listen to the major, mainstream media, I often get the impression that Israel is trying to decimate the Gazans with its blockade. That simply isn't true.

 Israel continues to transfer basic food supplies and humanitarian goods into the Gaza Strip. Items such as medical supplies, meat, chicken, fish, grains, legumes, oil, flour, salt, sugar, fresh vegetables and dairy products as well as animal feed, hygiene products and clothes are all transferred through the Israel-Gaza goods crossings, Kerem Shalom and Karni.[1]

The total amount of aid transferred from Israel to Gaza in 2009 increased by 180 percent, compared to the amount transferred 2008.[2]

A flotilla of nine vessels organized by pro-Palestinian activists is currently en route to Gaza carrying various goods. However, the total amount of supplies transported by the flotilla, 10,000 tons, is less than the weekly average amount of goods transferred by Israel into Gaza.[3] ...

Humanitarian Aid Transferred from Israel to Gaza in 2010, as of May 8, 2010: [9]

• In 2010, 230,690 tons of humanitarian aid has been transferred from Israel into Gaza through the Israel-Gaza goods crossings
• More than 6.5 million gallons (25 million liters) of heavy duty diesel fuel for Gaza’s power station has been transferred from Israel to Gaza
• More than 12,000 tons of cooking oil has been transferred into Gaza
• 6,354 Gazans have entered Israel on medical grounds
• 86 truckloads of flowers and strawberries have been exported from Gaza into Israel

Humanitarian Aid Transferred from Israel to Gaza in 2009: [10]

• 738,576 tons of humanitarian aid was transferred from Israel into Gaza through the Israel-Gaza goods crossings
• More than 26 million gallons (100 million liters) of heavy duty diesel for the Gaza power station was transferred from Israel to Gaza
• 10,544 patients from Gaza, along with their escorts, passed into Israel for medical attention
• 4,883 tons of medical equipment and medicines entered Gaza
• 44,500 H1N1 vaccines sent from Israel to Gaza95 truckloads of equipment for water and sewage systems were transferred into Gaza from Israel 

Humanitarian Aid Transferred from Israel to Gaza in 2008: [11]

• 263,063 tons of humanitarian aid was transferred from Israel into Gaza through the Israel-Gaza goods crossings
• More than 18 million gallons (70 million liters) of heavy duty diesel for the Gaza power station was transferred from Israel to Gaza 

At the same time, what about Egypt, which controls the southern Gazan border?

I Walked to Goderich Last Week

According to my Garmin Vista hcx60, it was about 12 miles. Why on earth would I do such a thing? There were several reasons:

• A number of years ago, on a whim, I issued a challenge to my granddaughters to walk to Goderich with me. They wisely declined the challenge.
• In the spring and summer, I often spend time in England, and while I'm there I do quite a bit of hiking. I realized that if I was going to do any more hiking there this summer, I needed to get into better shape. I also needed to assess my current hiking stamina to see how much more work I need to do to get ready.

Several friends in England have encouraged me to get in touch with them while I'm there next month to go walking/hiking, especially in the Yorkshire Dales. In the past I have sauntered on 12 - 16 mile-long hikes (the Seven Sisters along Beachy Head, the 1066 Trail, and of course hikes in The Peaks District and in Yorkshire Dales) with little difficulty (generally well-planned with stops at a pub or two along the way, when possible). I don't want to let these people down by not being able to keep up this year.

Some observations:

• I absolutely love the open footpath system in England which gives walkers the right of access across fields so long as they stay on the footpaths, don't harass the animals, and close the gates they use. I don't even mind it if the farmers have altered the paths to follow fence lines instead of cutting diagonally across a field. I am slowly building up a collection of Ordnance Survey maps, showing the footpaths in various areas.
• Without a footpath system like that, I mostly just walked along the highway between Clinton and Goderich. It was terribly unpleasant, compared with hiking on common footpaths. The dust and noise, not to mention danger, from the traffic made the walk unpleasant. And to top things off, the walk was on the left side shoulder of a crowned road, meaning I was walking lop-sided the entire distance.

I recently purchased a ScottEVest packable windbreaker, a very light jacket that is loaded with pockets. I thought it would be perfect for the hike. I hooked up my earbuds through all the loops of the jacket so I could listen to podcasts while walking. And I filled my 3L Platypus hydration system with about two and half litres of water. I loaded this water-filled pouch through one of the pockets to the back of the jacket, hoping I wouldn't need a backpack for the walk.

That plan didn't work so well (I'm glad I found out here at home, before trying it in Austria or England). 

• Two and a half litres of water weighs a lot. Having that weight at the bottom in the back of a jacket is not a very comfortable weight distribution. I kept the jacket mostly zipped up to help with weight distribution (until I had drunk most of the water). That wasn't a big problem so long as the weather was cool (it was about +10C when I began the walk).
• But after an hour or so, as the temperatures rose and as I generated more body heat, I was stuck, having to keep the jacket zipped up. Of course I dealt with this by drinking the water pretty quickly, to reduce the weight, and that probably wasn't all that bad a result anyway.
• Also, I realized that if I took the jacket off, I would have to take the earbuds out of the intricately woven system that is otherwise very convenient with this jacket. So I left the jacket on for the entire walk, but I unzipped it after I had reduced the weight of the water considerably.

In other words, as much as I like many aspects of the ScottEVest windbreaker, it does not substitute well for a hiking pack. Three other improvements I hope they will make:

• the cuffs on the sleeves are elasticized. They should be velcro to make for easier tight or loose fits.
• too many of the pockets have vertical zips along the side instead of horizontal zips across the top, making it too easy for things to fall out of them.
• some reflective tape on the sleeves and back would be nice for increased safety.

According to the Garmin GPSr, I averaged about 3.7 mph for the first part of the walk (to Holmesville, for those familiar with this area). After a short rest there, I slowed my pace considerably, averaging 3.3 mph for the entire walk. After that, Ms. Eclectic met me at Tim Horton's for coffee, we went shopping at Walmart and Canadian Tire, and then she took me to lunch at Bailey's on The Square in Goderich. 8-)

Overall, I'm glad I pushed myself to do the walk. But I won't do it again. There are several hiking trails around our area that are fun to walk and that are much safer and more pleasant. Getting to them isn't all that easy, unfortunately, especially on foot, so I will probably have to drive to them. 

And an aside to Stuart, Duncan, Gaynor, and John: I think I'll be okay next month.

. . .

Happy 2-4 Weekend

I just read on a FB friend's posting that she is not looking forward to having the weekend be over and having to go to work on Monday. She lives in the US. 

In Canada, this is a major three-day weekend, commonly known as the May Two-Four Weekend. It originated as Victoria Day, a day to celebrate the birth of Queen Victoria. Then the holiday was moved to the Monday so we could all enjoy a long weekend. 

Since the holiday is so near May 24th, the holiday is often known as the May Two-Four Weekend. It also is the weekend that young people buy cases of 24 bottles of beer (known as two-fours), take them to nearby campgrounds, and drink themselves silly.

Would a VAT Help or Hurt the Economy? "it all depends"

From the Market Forecast Project (for which I am a regular survey participant):

Question 9. Would adding a VAT [Value-Added Tax] to our existing tax structure help or hurt the economy in the long term?

Help: 22.73%

Hurt: 77.27%

When I read this question, I first assumed that it meant "revenue-neutral". In other words, I assumed it meant, assuming the income tax were reduced by an amount that would offset the revenue raised by the Value-Added Tax. Under those assumptions, I think most economists agree that a VAT would help the economy by removing the tax on labour income but adding a tax on consumption, which would in turn encourage saving and investment.

Then I realized that the plan in question was probably not revenue-neutral. Rather, it is just another way to increase the size of the gubmnt by increasing overall taxation. Once I realized this, I understood why so many people said it would hurt the economy.

Note that in Canada we have a GST (Goods and Services Tax) which is now in many provinces morphing into an HST [Harmonized Sales Tax, harmonizing both the Provinical Sales Taxes with the Federal GST]. 

When the Federal GST was introduced in Canada, it was intended to be revenue-neutral, replacing the hidden manufacturers sales tax. It had the desired effect of making taxes more noticeable to Canadians and spreading the base to cover many services and not just goods. The unfortunate aspect of the GST (and now the HST) is that so many people who objected to the tax do not object to the size of gubmnt; they want the tax lowered but are unwilling to reduce the size of gubmnt at the same time. 

Maybe they should move to Greece if that is what they want.

EastLink Cable Update

I just received a telephone call from Ashley at EastLink. She says they have worked out an arrangement whereby we will now be able to watch Toronto Blue Jays games on the MLB extra-innings package (channel 456 in our area) for the duration of the Memorial Cup hockey play-offs. I hope so; we'll find out tonight. 

I gather this plan required some fairly quick negotiations on their part. Surely in the long-run  it would have been (or would be) preferable for them just to carry the Alternate Sportsnet channel. Also, channel 456 is not in high definition (I don't know whether the Alternative Sportsnet channel is available in hi-def).

She was also quite apologetic about the inability to provide feedback to them via their website and said she had sent a note to their IT folks asking them to work on it.

Earlier today, I received e-mail from Sportsnet confirming that indeed they do NOT charge service providers to carry the Alternative Sportsnet channel.

Finally (full disclosure), to compensate me for my angst and hassles, EastLink is providing us with a month of no-charge for the sports package.

Dear EastLink Cable Company

You folks are total jerks. Here is what happened:

• In its infinite wisdom, Rogers Sportsnet decided to carry the Memorial Cup (Junior A) hockey games instead of Toronto Blue Jays baseball on ALL of its channels. They announced on the air and on their website that we could watch the baseball games on their "alternate network", which I gather is not unlike TSN2 or CBC-Bold --- a second set of programming from the network.
• We were unable to find the Alternate Sportsnet channel among the hundreds of channels carried by EastLink Cable (which recently acquired Bluewater Cable, our original cable service provider.
• So during the weekend, I called Eastlink to find out where I could watch the ballgames that were being played.
• During my first call, I spoke with Andy, based in Prince Edward Island (note: I live in Ontario). He remarked that one of his co-workers was dealing with a call about exactly the same issue. They had no idea why we did not have access to the Alternate Sportsnet channel. 
• I complained that since I, in effect, sign over my entire monthly paycheque (or so it seems --- I pay quite a lot for a home customer) to you folks, I thought it reasonable that I be able to watch the game somewhere, somehow on my cable system. I even pay extra for the MLB package, and said, "Well surely I should be able to find a telecast of the Jays game somewhere in that package. 
• Andy agreed and said he was certain I could view the Jays game on at least one of the MLB  package channels. To that end, he consulted with someone else and then gave me two different channel numbers to try that afternoon (I was calling in the morning).
• Well, sure as shootin', when game time rolled around, we tried every channel we could in the entire lineup from EastLink, and we could not find the game. 
• So I called your customer service number again. 
• This time I was connected with Tim in Halifax, Nova Scotia. He clearly had no idea what was going on, but he checked with someone at EastLink who said that EastLink was unable to obtain the license for the Alternative Sportsnet channel. 
• I said, "I don't believe EastLink is unable to obtain the license. Alternate Sportsnet is carried on Shaw Cable; it is also carried by Bell Satellite and by something called Cable-Cable. I don't believe EastLink couldn't get the license if you wanted it." He stuck by his story, and I stuck by my criticism, feeling considerably cheesed off.
• To make matters worse, it seems that because the BlueJays are carried on the Alternate Sportsnet channel, they are blacked out on the MLB package. So we were stuck: no Blue Jays games while the Memorial Cup is being played.
• Because I was curious, I sent e-mail to Sportsnet to ask why EastLink was unable to obtain a license for the Alternate Sportsnet channel:

Is there some reason I cannot watch the Toronto Blue Jays on East Link? I gather they do not provide the Alternate Sportsnet channel, but can you tell me why? They say it is because they are unable to obtain the license, but I don't understand that explanation.

What is worse, we cannot even see the Blue Jays on MLB extra innings. Why are we being left out?

• Today I received the following response from Sportsnet:

Thanks for your recent email. We provided the feed for the Sportsnet Alternative channel to all providers including Eastlink. No license was necessary, they just had to get the broadcast feed from us. We are not sure why they were not able to do so.

Sincerely
Jim LaChapelle
Audience Relations


• It isn't completely clear that Sportsnet provides the feed for Sportsnet Alternative at no charge to all providers. Their response certainly reads that way, though. And even if they were charging for the feed and you folks didn't want to pay for it, you should have told me that instead of saying you were unable to obtain the license.
• I then tried to write to you in e-mail to inquire further about the situation. I logged onto your site.
• But before I could click on "Contact Us", a box popped up that requires a user to click on the name of their former cable provider, in my case, Bluewater Cable.
• And no matter what browser I use, I am told that the link doesn't work. I cannot even write to you directly to express my concerns. Hence, I am left with posting this on a blog for others to read.

So, 

• not only did someone tell me I could watch the game on certain channels when I couldn't, 
• not only did someone tell me that you were unable to obtain the license when apparently you can,
• but then your "contact us" link is inoperable.

Is it time for the CRTC to look into your behaviour? Or is it just time for people in our area to reconsider their satellite vs cable decision?

There is a simple, two-part solution to this situation:

1. Stop lying to (or at the very least misleading) your customers.
2. Start providing the Alternative Sportsnet channel for your customers.

Regards,

John Palmer

Fleeing to a Safe Currency? Why Not the Canuck Buck?

I keep reading that demand for the US dollar is rising as people around the world seek a safe haven and flee from the Euro and the British Pound. [e.g. here] But I don't get it. How safe is the US dollar, anyway? US gubmnt debt is skyrocketing, and it looks as if the long-term outlook for the US currency cannot be good. 

At the same time, the Canadian dollar looks strong: inflation is under control, the Canadian public fisc is in decent shape, and even the public pension plan is reasonably well-funded. 

So why are investors fleeing to the US dollar and not to the Canuck buck? Is the Loonie too much of a petro currency to be a safe haven?

More on Comparative Advantage and Music

My previous posting on this topic was woefully incomplete. It focused primarily on comparative advantages within the community band but abstracted from them in a broader sense.

More important in a working market economy are comparative advantages throughout the economy. 

I stopped conducting the Blyth Festival Orchestra several years ago primarily because of the opportunity costs involved. Because of my weak background and preparation, I spent hours, even days, preparing for each rehearsal, and all this for comparatively low pay (but tonnes of utility, I must admit). I was foregoing far too much for the joys of conducting an orchestra.

 If music were my primary career, I would not be nearly so likely to have high-paying alternatives. Also, I might be more interested in spending time working on conducting.

But in the world that goes beyond music, my relative strength lies in teaching and doing economics, not in doing music.  Further, even though they may not think so, I expect that compared with most community music conductors, I have a comparative advantage in doing economics relative to them.  And that probably, more than anything else, explains why I play French horn badly in a community band and no longer conduct any musical groups.

Kagan: It Just Doesn't Matter

One of the things that separates me from most of my right-wing friends is that I am definitely not a social conservative. Rather, I am more libertarian, valuing freedom highly. 

An example of this distinction comes from US Supreme Court Justice nominee Kagan. I do not care what her sexual preference or sexual orientation is. And to be more blunt, I don't think anyone else should either. And so I find articles like this to be of little relevance in considering whether she would be a good justice. 

Is she gay? It doesn't matter and it shouldn't be an issue.

Absolute and Comparative Advantage: A Simple Example and some interesting wrinkles....

My friend, Jason, is a superb French horn player; I am mediocre at best (my motto: "I'm not good but I make up for that by being loud."). 

At the same time, we are both also conductors. I'm a pretty decent conductor but Jason is probably better because of his talent, background, experience, and musical knowledge.

So, in economics jargon, Jason has an absolute advantage over me in both playing French horn and conducting. But if he tried to do both at the same time, he would probably not be so good (though I expect he'd be more than passable). 

Overall, Jason is tonnes better than me at playing French horn and only somewhat better than me at conducting. So, again in economics jargon, Jason has a comparative advantage over me in playing, which leaves me with a comparative advantage in conducting. 

The neato Ricardian theory of comparative advantage suggests, therefore, that I should be conducting and Jason should be playing French horn in our community band. 

It doesn't work that way, though. Why not?

First, there are four people in the band with conducting experience, not just Jason and me. 

Second, there is only one paid position in the band: conductor. Given the choices, Jason chooses to take the paid position rather than play French horn (an unpaid position). And given the options, the band chooses to hire Jason to do the conducting instead of me because he is the better conductor.

So even though the theory of comparative advantage suggests the band would be better off with Jason on horn and me conducting, it doesn't always work that way when prices and wages are not completely flexible and determined in competitive markets.

Notes: 

• the above thoughts occurred to me during a rehearsal in which I butchered a few horn solos and I wished Jason had been playing them instead of me.
• it might even be more efficient to have both Jason and me play French horn and have someone else conduct the band. But I expect Jason has a comparative advantage in conducting over them; besides, I think he quite likes the job. In the past, we did indeed have a different conductor, and Jason and I both played French horn, but that conductor has retired from the position.

Proportionality, Bias, and Hypocrisy

I never understood the criticisms of Israel for its having responded to Gazan rocket attacks "disproportionately." Of course it didn't. Hamas was shooting smallish rockets into civilian communities. If Israel had responded "proportionally", they would have randomly fired smallish rockets back into Gaza. But of course their goal was to destroy all or most of the rocket sites and discourage Gazans from continuing their rocket attacks. Given that the number of rocket attacks on Israel from Gaza seems to have diminished dramatically, it looks as if this strategy of "disproportionate" response was successful.

But step back and consider other "disproportional" responses. How many Afghan and Pakistani civilians have been killed as a result of the allied attacks on the Taliban and Al Qaeda? How many Iraqi civilians were killed as a result of the US incursion into Iraq? 

Another clear example is the NATO attacks during the Kosovo war. From Martin Sherman (h/t Eva):

The issue of proportionality, or rather the alleged lack thereof, has been the basis the fierce condemnation of Israel's conduct in its military operations in Gaza because the number of Palestinians casualties far outweighs that of Israeli ones. The conduct of military operations in Kosovo by many of Israel's present detractors, however, shows that this was never a consideration or constraint to which they felt bound. Quite the contrary, the very modus operandi they adopted such as high altitude bombing, demonstrates that they deliberately aspired to disproportionality. As noted, this ensured an almost zero casualty rate among their own combatants but inevitably resulted in less accurate targeting of alleged military objectives on the ground, exposing a virtually defenseless civilian population to far greater danger and far higher casualties.

The blatant hypocrisy of those who criticize Israel for its lack of proportionality reflects a bias against Israel that smacks of anti-Semitism. I see no other reasonable interpretation. 

Astounding Conspicuous Consumption from a Major Re-Distributionist

Al Gore buys his FOURTH mansion?? From the National Post (relying on the LATimes):

 The Los Angeles Times reported recently:  

Former Vice President Al Gore and his wife, Tipper, have added a Montecito-area property to their real estate holdings, reports the Montecito Journal.

The couple spent $8,875,000 on an ocean-view villa on 1.5 acres with a swimming pool, spa and fountains, a real estate source familiar with the deal confirms. The Italian-style house has six fireplaces, five bedrooms and nine bathrooms. 

This makes four mega-homes for the Gores, who have made vast amounts of money urging people to reduce the amount of energy they consume. It's safe to say approximately everyone in the world (give or take a plutocrat) has fewer mega-homes and uses less energy than the Gores.

I'm astounded that this guy hasn't been embarrassed by all this extravagance. 

The Gaza-Egypt Border

People who are concerned about the limits Israel imposes on traffic between Israel and Gaza need to keep in mind the blockade on the Egyptian side. From the BBC,

The Egyptian government says it began constructing the barrier along the Gaza-Egypt border last year. When finished it is meant to be 11km-long (seven miles), stretching down 18m (59ft) underground.

 According to Egypt it is made of bomb-proof, super-strength steel and is costing millions of dollars to build. 

Mohammed smiles when he hears this. "We pay around a $1,000 (£665) for a man with an oxygen-fuelled cutter to come and break through it. It takes up to three weeks to cut through but we get there in the end," he says.

...Egypt's secular government is opposed to Hamas, which has historical ties to the Muslim Brotherhood, the main opposition movement in Egypt which is illegal but largely tolerated.

Many Gazans are angry with the Egyptian government, which - they say - is increasing their suffering.

The blockade has meant that Gaza is to a great extent dependent on the smuggling tunnels from Egypt. Millions of dollars worth of goods are smuggled in every month. Everything from fridges to fans, sheep to shampoo comes through the tunnels.

What Ten Books Would You Save in a Fire?My Answer: None.

I came across this question the other day while reading this (likely via Craig Newmark). I thought about the question for a few minutes, and then I realized my answer is "none".

Not that I want the contents of books to disappear. Even I am not so much of an unlettered person that I would wish for that.

Rather, it's that I don't read books as books much anymore. I read books on the internet, I read books on my iPhone, but I don't often read hard copy books. And the ones I read as hard copy are generally (like most textbooks) so unimportant to me in the grand scheme of things that I wouldn't really miss them anyway (in part because they were sent to me by publishers at no charge). 

And in another 5-10 years I will hold this view even more strongly. I really doubt there will be many, if any, books in the homes of most of us or even in most libraries that are not available electronically.

This realization makes several things more interesting.

• First, censorship and control of the internet will be increasingly important. I hope people will continue to work for maintaining freedom of expression via the internet.
• Book burnings will be a thing of the past, if they aren't already. 

Ms. Eclectic and I both use our iPhones to read books electronically. They are very light and portable and are capable of carrying tonnes of books. I see little or no reason to buy books when the electronic versions are so much more convenient. And increasingly educators will be moving in this same direction.

If there were a fire, I would grab my laptop and iPhone long before I would think about saving my hardbound copies of Balzac or Shakespeare or Ayn Rand.

Phebe: A New Young Star on the Horizon?

Phebe introduces herself and a few of her songs, a capella. My favourite of the three is her rendition of "At Last", an Etta James classic:

I think her favourite is "Hit Me with Your Best Shot", but I'm not as keen on this song, which somehow makes me less keen on her performance of it, too:

But in many ways, this next one, "Rapunzel", is the most impressive of the three. She wrote it.

 Phebe is 11 years old. While I'm not keen on girls this young singing love songs and love-lost songs, I know it is common. And I have loved hearing her sing ever since I heard her perform "On My Own" from Les Miserables a few years ago.