EclectEcon

Is it appropriate for the university to bar the tax authorities from receiving information about a student's class schedule?

I received the following notice from an associate dean a couple of days ago:

It has come to my attention that Canada Customs and Revenue Agency has approached an instructor in a large first year course to provide information about a student's examination schedule so that the student could be served with papers, presumably at the examination. (CCRA was clearly fishing. The student in question is not enrolled in that instructor's class.)

There are NO circumstances under which any information about students should be given out to persons outside the university. If faculty or staff receive inquiries of this type, they should direct the questions to the Office of the Registrar.

Does this sound weird to you? Why wouldn't the tax authorities go directly to the registrar in the first place? And if they had already been rebuffed by the registrar, how would they go about selecting various professors for their fishing expedition? Do you think maybe this was a collection agency or something similar?

About a month ago, I mentioned that a student in my introductory economics class had sent me e-mail expressing concern because I frequently said insulting things about York University and the students there. She also objected to my spelling of gubmnt. I never met this student, and I also have no idea what she looks like (she was one of 350 in the class).

Today my teaching assistant sent me the grades for the class. My correspondent earned a mark of 39 (out of 100, not out of 40 as one person wondered). I figure she's a prime candidate for York's Sociology department. Jack figures she's likely to sue me for discrimination.

Back in the days when I thought I might be able to do some acting (how disillusioned we all can be sometimes), I read some plays by David Mamet. I didn't much like them, even though he was revered by many as a great playwright. But, WOW, look at what he has written recently about his transformation (h/t to Salim Mansur, but others have already blogged about this, too):

What about the role of government? Well, in the abstract, coming from my time and background, I thought it was a rather good thing, but tallying up the ledger in those things which affect me and in those things I observe, I am hard-pressed to see an instance where the intervention of the government led to much beyond sorrow.

... I began reading not only the economics of Thomas Sowell (our greatest contemporary philosopher) but Milton Friedman, Paul Johnson, and Shelby Steele, and a host of conservative writers, and found that I agreed with them: a free-market understanding of the world meshes more perfectly with my experience than that idealistic vision I called liberalism.

When utopian schemes fail, we are left to choose from among the feasible alternatives. Within that choice set, once we rid ourselves of our pollyanna-isms, less gubmnt intervention looks pretty good.

I see Mamet mispelled "gubmnt".

For the most part, Rondi Adamson liked it:

He is an amazing speaker, no matter the topic, and it was a beautiful speech.
I thought the speech was maybe a bit long — he could have left out the part where he read from his own book, I suspect. And frankly, if I were his grandmother I doubt I'd like having him say bad things about me. But surely he got her permission, first? (Is she alive?) I find it odd, as well, that he would compare Wright's insane comments — expressed to a crowd — with the concerns of an elderly lady — expressed to family members.
Still, I like any man who quotes William Faulkner — and he used one of my favourite Faulkner quotes.
I am, however, left with one worried thought: I had liked Obama because, unlike Jesse Jackson or Al Sharpton, he didn't make his candidacy about race. He made it about stuff like taxes, health care, foreign policy. Now, sadly, it appears to be about race. I hope it doesn't stay that way. One lives in hope.

Kip Esquire has a different take on it:

I fail to understand why people are so orgasmic over it:

--I agree with Jeremiah Wright, except when I disagree with him.

--I look up to him, except when I condemn him.

--I'm proud of my membership in his church, except when I'm ashamed of it.

--I transcend race-based politics, except when race matters.

--Oh, and more government is always the answer to every problem, especially the problems created by government in the first place.

Did I miss anything?

Salim Mansur, writing in the Trono Sun, has a careful statement of why western cultures are in danger of being swamped if they continue to pursue multi-culturalism without regard for the ethics and culture of individual freedom:

The most pressing issue in the West at the present time relates to culture and not the economy....

At the core of this culture is the affirmation that an individual irrespective of gender and colour represents the centre of the liberal world's ethical foundation. This was a radically altered vision of humanity rejecting the view that an individual is an appendage of the collective -- tribe, caste or class -- into which he or she is born.

The triumph of the West as the second millennium ended was a confirmation of this liberal idea, however incomplete and with distance still to go, of freedom and democracy. ...

But the worm inside the multicultural apple was the mistaken view that the West could extend equal treatment to other cultures based on group identity without concomitant erosion of its own cultural value of individual freedom.

Multiculturalism weakened the argument that newcomers should adjust to the cultural values of the West by adopting the guilt-ridden notion that any such demand smacks of imperialism....

It became a one-way concession in which the West did the conceding and non-Westerners made rising demands....

The West is now exposed to the paradox of how self-generated loss of cultural identity is politically weakening in a global village, and the task ahead is for its recovery from multicultural delusion by reasserting once again values that made it strong and appealing to the rest.

Bens recently recommended that I look into some of Murray Rothbard's writings. One bit that struck a chord with me was this, from Wikipaedia,

Rothbard notes that the functions of the economist on the free market differ strongly from those of the economist on the hampered market. "What can the economist do on the purely free market?" Rothbard asks. "He can explain the workings of the market economy (a vital task, especially since the untutored person tends to regard the market economy as sheer chaos), but he can do little else."

And that, it seems, is more than enough to provide full-time endeavours for hundreds, if not thousands, of economists.

I hasten to add that most philosophical debates about libertarian thought and the role of gubmnt are way over my head. I'm sure the more anarcho-libertarians will disagree with me, but I see an important role for gubmnt in helping to define, provide, and enforce property rights and contracts.

via BenS and John Meuller:

Many years ago, Stan Liebowitz analyzed the Boston Fed's study on mortgage discrimination. His finding? It was flawed beyond belief. From the NYPost (via Newmark's Door [still the first blog I read each weekday]),

...[A] "landmark" 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic.

That study was tremendously flawed - a colleague and I later showed that the data it had used contained thousands of egregious typos, such as loans with negative interest rates. Our study found no evidence of discrimination.

Nevertheless, political correctness carried the day:

No sooner had the ink dried on its discrimination study than the Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: "discrimination may be observed when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants."

Some of these "outdated" criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification. Instead, the Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant's ability to manage debt.

Stan warned back then that such policies could lead to bigger problems in the future:

For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage caused by relaxed lending standards.

This damage was quite predictable: "After the warm and fuzzy glow of 'flexible underwriting standards' has worn off, we may discover that they are nothing more than standards that lead to bad loans . . . these policies will have done a disservice to their putative beneficiaries if . . . they are dispossessed from their homes." I wrote that, with Ted Day, in a 1998 academic article.

Sadly, we were spitting into the wind.

What bothers/puzzles me is that investment bankers bought these collateralized debt instruments. Surely, even three years ago, people could see that these sub-prime mortgage packages were not bundles of independent risks but were bundles of highly correlated risks, all of which would tumble if/when housing prices began to fall. Even if the regulators forced lenders to make crappy loans, and even if the lenders fobbed them off on investors as quickly as they could, who was forcing these investors to buy the packages? Didn't they do their due-diligence and risk-analyisis?

Tom Hanna says it is because Obama presents a message of hope and optimism whereas the other candidates downplay the strengths of the US and engage in fear-mongering.

With the mixed outcome of the Democratic Party primaries yesterday in the US, what are the chances that Edwards will be able to call the shots in the end?

I have rarely come across such a good example as this one.

• From Greg Mankiw:
  

  When designing a tax system and evaluating tax proposals, policy analysts have at least four goals in mind:
  
  1. Efficiency: The tax system should distort incentives as little as possible (and, in the case of externalities and Pigovian taxes, correct incentives when necessary).
  2. Intergenerational equity: The tax system should raise enough revenue so current generations do not unduly burden future generations.
  3. Egalitarianism: The tax system should try to achieve a more equal distribution of after-tax incomes.
  4. Stabilization: The tax system should help maintain the economy at full employment.

• And in contrast from Gabriel Mihalache,
  

  Let me offer a different picture.
  
  When designing a tax system and evaluating tax proposals, policy analysts have at least four goals in mind:
  
  * Reelection of the incumbent party.
  * Nondecreasing interest groups’ income.
  * Having the burden fall on the least (politically) organized group possible.
  * Bullying the central bank into monetarizing the debt.
  
  Harsh, I know, but don’t come to me complaining when you’ll get European-style G shares of Y. (60%+) You have been warned.

It is left as an exercise to the reader to determine which is normative and which is positive (I know: there's a chance they're both positive, but I don't believe it.)

Via Hispanic Pundit, who always has good quotes, comes this by Charles Krauthammer:

Clinton is no doubt shocked that a simple argument about experience versus inspiration becomes the basis for a charge of racial insensitivity. She is surprised that the very use of “fairy tale” in reference to Obama’s position on Iraq is taken as a sign of insensitivity, or that any reference to his self-confessed teenage drug use is immediately given racial overtones.

But where, I ask you, do such studied and/or sincere expressions of racial offense come from? From a decades-long campaign of enforced political correctness by an alliance of white liberals and the black civil rights establishment intended to delegitimize and marginalize as racist any criticism of their post-civil rights-era agenda.

Anyone who has ever made a principled argument against affirmative action only to be accused of racism knows exactly how these tactics work. Or anyone who has merely opposed a more recent agenda item -- hate crimes legislation -- on the grounds that murder is murder and that the laws against it are both venerable and severe.

Courtesy of the WSJ, via Brian Ferguson:

Yesterday, the San Francisco company that runs the popular fantasy game pulled the plug on about a dozen pretend financial institutions that were funded with actual money from some of the 12 million registered users of Second Life. Linden Lab said the move was triggered by complaints that some of the virtual banks had reneged on promises to pay high returns on customer deposits.

Second Life is an elaborate online world where players create new identities for themselves -- images called avatars. These avatars can own land, run businesses and build homes. And there's a link to the real economy: To buy things, players use credit cards or eBay Inc.'s alternative payment service PayPal to convert actual U.S. currency into "Linden dollars," which can be deposited using pretend ATMs into Second Life's virtual banks.

The banks of Second Life were operated by other players, who enticed deposits by offering interest rates. While some banks paid interest as promised, others used depositors' money for unsuccessful Second Life land and gambling deals. Under its new banking rules, Second Life says only chartered banks will be allowed -- though it isn't clear any real chartered banks will operate in the virtual play world.

The company now believes that (and I am translating very loosely here) transaction costs of the players to check out the banks' reliability, etc., are greater than the benefits from having no regulations of the banks.

Which candidate has policy positions and views which are closest to yours? To see, click here, via Phil Miller. Of course there is an underlying premise to this survey/questionnaire that people are actually able to identify what a candidate's position is on each of the questions.

As usual, I did the questionnaire twice, to test for robustness. Both times, I ended up with Giuliani #1, and McCain #2. Also both times I ended up with Obama ahead of Clinton, but much lower than the leading Republicans.

I did not like all the questions (especially the one about the environment), but I guess it was reasonably informative anyway.

Ms. Eclectic also did the test/survey. There was almost a perfect negative correlation between our choices! Makes you wonder how we lasted this long, doesn't it? Maybe it's true that "opposites attract." [Update: But maybe not. See this]

My favourite drug dealer, JB, sent me a link to this quiz, which gave similar results — mostly Republicans ahead of the Democrats, McKeyneMcCain near the top, but in this one Thompson was ahead of him. The second time I took it, Giuliani moved ahead of both of them. One major reason for the differences might be that in the first one I could attach weights to some of the issues.

From Roger Simon:

Big winners tonight:

John McCain
Charles Darwin

Big losers:

Mike Huckabee
Sean Hannity

Don Boudreaux says it very well:

I'm in the camp whose members ... hold that hiring the state to forcibly stop people from patronizing competitors at mutually agreeable prices is no different morally than hiring a street gang or your brother-in-law to do the same.

It's not just inefficient; it's immoral.

Many years ago, my older son, David Ricardo Palmer, had a summer job paying minimum wage. When the province raised the minimum wage, he thought it was a great idea. He said something to me like,

I know you don't like the minimum wage, Dad, but it means I'll get paid more.

Explaining to him that a higher minimum wage would lead to increased unemployment among teenagers just didn't carry much weight with him; he didn't know of anyone who had been laid off because the minimum wage had been raised, and he knew he'd be better off. Based on his own experience, he simply didn't believe the economic analysis of minimum wages.

If economists have such a lack of success in explaining their tools and analyses, we're doomed to have increasing amounts of inefficient gubmnt interventionism.

Mike Moffat, prompted by Gabriel Mihalache, explains why views which are so widely held by economists hold so little sway with the general public. His answer is two-fold:

1. Economists are really lousy at presenting ideas to the general public....
2. The incentives for academic economists are really, really screwed up.

I completely agree with both of his points.

Unfortunately, the comparatively few economists who do try to popularize our consensus views (see here, here, and here, for example) do not seem to be convincing very many people (comparatively few, that is, relative to the special interest groups arguing for gubmnt support, protection, intervention, etc). Even Milton Friedman, one of the most convincing and brilliant economist-libertarians, had only limited success.

One reason for this lack of success is that no matter what we say, no matter what evidence we present, it is just too easy in the case of trade to see who loses, and not at all obvious to many people that consumers all gain from lower prices, increased choice, etc. And for many voters, these small gains for the many just do not seem worth the imposition of losses on a few.

Similarly for minimum wages, it is easy to see that those who have jobs receive higher wages. But rarely, if ever, are people actually laid off because of an increase in the minimum wage, and so it is difficult (or impossible) to point to someone who wasn't hired and say, "See? That person was hurt by the minimum wage."

Politics seems to be very visible. Politicians and voters seem to respond to visible, obvious, winners and losers. I'm not sure economic analysis can overcome this phenomenon.

George Will is aghast at the misdirected populism of candidates Edwards and Huckabee:

Edwards and Huckabee lament a shrinking middle class. Well.

Economist Stephen Rose, defining the middle class as households with annual incomes between $30,000 and $100,000, says a smaller percentage of Americans are in that category than in 1979 -- because the percentage of Americans earning more than $100,000 has doubled, from 12 to 24, while the percentage earning less than $30,000 is unchanged. "So," Rose says, "the entire 'decline' of the middle class came from people moving up the income ladder." Even as housing values declined in 2007, the net worth of households increased.

Huckabee told heavily subsidized Iowa -- Washington's ethanol enthusiasm has farm values and incomes soaring -- that Americans striving to rise are "pushed down every time they try by their own government." Edwards, synthetic candidate of theatrical bitterness on behalf of America's crushed, groaning majority, says the rich have an "iron-fisted grip" on democracy and a "stranglehold" on the economy. Strangely, these fists have imposed a tax code that makes the top 1 percent of earners pay 39 percent of all income tax revenue, the top 5 percent pay 60 percent and the bottom 50 percent only 3 percent.

... Although Huckabee and Edwards profess to loathe and vow to change Washington's culture, each would aggravate its toxicity. Each overflows with and wallows in the pugnacity of the self-righteous who discern contemptible motives behind all disagreements with them and who therefore think that opponents are enemies and differences are unsplittable.

The way to achieve Edwards's and Huckabee's populist goal of reducing the role of "special interests," meaning money, in government is to reduce the role of government in distributing money. But populists want to sharply increase that role by expanding the regulatory state's reach and enlarging its agenda of determining the distribution of wealth. Populists, who are slow learners, cannot comprehend this iron law: Concentrate power in Washington, and you increase the power of interests whose representatives are concentrated there. [emphasis added]

This observation helps explain why so many economists tend toward libertarianism.

From Mark Steyn (h/t to Eva):

This is the time of year, as Hillary Clinton once put it, when Christians celebrate “the birth of a homeless child” — or, in Al Gore’s words, “a homeless woman gave birth to a homeless child.”

Just for the record, Jesus wasn’t “homeless.” He had a perfectly nice home back in Nazareth. But he happened to be born in Bethlehem. It was census time and Joseph was obliged to schlep halfway across the country to register in the town of his birth. Which is such an absurdly bureaucratic over-regulatory cockamamie Big Government nightmare it’s surely only a matter of time before Massachusetts or California reintroduce it.

Tim Worstall summarizes it succinctly, saying "To Spend Is To Tax":

It’s not just the tax rises, it’s also the rise in borrowings: and, even more than that, the rise in promises of future spending (on pensions and the like) which are not being accrued.

Future taxes have gone up by vastly more than current ones have.

and with good reason. See his latest column here. He concludes:

In the month since the NAS released its study, none of the schools covered by it has contested its findings. Because there might as well be signs on the doors of many schools of social work proclaiming "conservatives need not apply," two questions arise: Why are such schools of indoctrination permitted in institutions of higher education? And why are people of all political persuasions taxed to finance this propaganda?

I am convinced that the average and marginal social products of social workers are negative.

If people stay home in droves today, it will be because they recognize the wisdom of these words by Schumpeter (from Cafe Hayek):

Politicians are like bad horsemen who are so preoccupied with keeping in the saddle that they can't bother about where they go.

That observation, sadly, captures the essence of both the Ontario PCs and Liberals.

Jack is spending some time in British Columbia. He writes that the provincially operated auto insurance is,

... far pricier than the private Ontario system, in part because of subsidies to bad drivers who wouldn't be insurable there.

This is to be expected. If the risk pool includes people who impose high costs on the system, and if they cannot be charged premia to match those costs (probablistically), then everyone else will have to bear a share of those costs. It is inefficient because the system tends to encourage too many risky drivers to be on the roads; it also, because of the higher insurance premia, tends to discourage some very low risk drivers from driving.

Jack continues,

Privatized alcohol businesses compete with the Provincial outlets. Prices about 25% higher than Ontario though, flying in the face of the usual predictions.

This seems unlikely to me. I know from nothing about the BC retail liquor business, but here are my suspicions:

1. It is extremely unlikely that gubmnt and private retail liquor outlets compete head-to-head.
2. One way the gubmnt stores can survive is if they are subsidized, directly or indirectly.
3. More likely in this instance is that the prices are regulated and kept above the Ontario levels to guarantee the survival of the gubmnt stores. Otherwise the private outlets would compete the snot out of them.

On Facebook and elsewhere, I list my political views as "Libertarian", which in my mind means favouring individual freedom and responsibilities over state or gubmnt interventionism.

I'm far from being a hard-core libertarian, though, as this quiz revealed. Depending on how I answered some of the questions, my score was between 25 and 35 [out of a maximum possible of 160!]. Here is the assessment of scores in that range:

16-30 points: You are a soft-core libertarian. With effort, you may harden and become pure.

31-50 points: Your libertarian credentials are obvious. Doubtlessly you will become more extreme as time goes on.

As you go through the survey, you get the impression that to get a really high score, one must be a wacko-anarchist, something I think of as substantially different from a libertarian. But, then, check out some of the scores listed in the comments here.

I had long thought that one reason modern developed societies have more gubmnt intervention is that there is a positive income elasticity of demand for gubmnt-provided insurance [i.e. as we become wealthier, we politically demand that the gubmnt look after us more, especially regarding unanticipated negative events].

It turns out there is a strong alternative explanation. According to John Lott, gubmnt intervention in the economy really took off after women were given the right to vote. His analysis is presented in an article in the Journal of Political Economy, and is summarized in his recent book, Freedomnomics:

There is a close relationship between marital status and women's voting patterns — generally, as divorce rates have increased, women have become more liberal. Over the course of women's lives, their political views on average vary more than those of men. Young single women start out being much more liberal than their male counterparts and are about 50 percent more likely to vote Democratic. As previously noted, these women also support a higher, more progressive income tax as well as more educational and welfare spending. But for married women this gap is only one-third as large, and married women with children become even more conservative. But divorced women with children suddenly become 75 percent mor likely to vote for Democrats than single men. [pp. 164-5]

[and from the footnote to the above quotation] Interestingly, men raising children on their own are only three percent more likely to vote Democratic than single men without children.

Of course, given some recent trends among Republicans in the US (and Conservatives in Canada), it is no longer absolutely clear that Democrats (or Liberals in Canada) are the only interventionists out there.

. .

digression: I note that Amazon.ca, Amazon.uk, and Amazon.com prices still do not fully reflect recent movements in the exchange rates!

Tom Hanna has a great post about the use of dishwater, etc., to water lawns and gardens or to flush toilets. Sounds good, right? But maybe not in California:

A lesson that environmentalists should have learned about socialism after the Iron Curtain fell is now striking a bit closer to home. Liberty frees people to solve problems, including environmental problems. Bureaucracy entrenches problems, including environmental problems. Bottom line: Capitalism is better for the environment than socialism.

Nightline ran a piece on a group calling themselves the “Greywater Guerillas.” This is a group of environmental activists doing exactly the sort of voluntary action to conserve water that conservation minded conservatives and libertarians love. They’re revamping plumbing to recycle waste water from sinks and showers to water yards and gardens and flush toilets. One of the group’s founders estimates that she saves 100 gallons of water a day.

The problem…they’re in California.

This shouldn’t be a problem, after all California is ecologically minded and constantly suffering water shortages (in spite of being right next to 1/3 of the liquid water on earth). Ah, but you see, California is also one of the most regulated places on earth. ... And, in that California, you have to have a permit to install a greywater system (the technical term for what these folks are doing). A system that passes the requirements could exceed $10,000 in costs, not including the cost of the permit. The systems they are installing start at less than $100 for a system to divert sink water for flushing toilets.

Who else has a greywater system in his home? Not Al Gore, not John Kerry….George W. Bush.

Once the gubmnt gets involved, look out!

There is a shortage of physicians (at P=0) in many places in Canada. In New Brunswick, the gubmnt decided to offer physicians a bounty of $150 for each new patient they took on. Sounds like a good idea for getting physicians to work a bit longer and sandwich in a few more patients, doesn't it. Here are the bizarre results:

New physicians receive a bounty for each new patient they take on. Hence, they are unwilling to buy the built-up good will in the practices of retiring physicians. So as a physician retires or leaves the province, that doctor's patients must scramble to try to find a new family physician. At the same time, new physicians do not fill their practices instantaneously. Consequently, if anything, the match between patients and physicians is imperfect and there remain many patients without a family doctor.

Current physicians nearing retirement age are upset because they have invested so much in building up their practices and now are unable to sell them. Also, taxpayers recoil when they learn that the bounty is not going only to those who have nearly full practices.

As Brian Ferguson is quoted in the article as saying,

Doctors' decision-making is affected by financial incentives to a greater extent than many think, according to a 2002 AIMS report. Dr Ferguson looked at a number of Canadian and international examples and concluded that physicians respond to market forces, including cash bonuses, the same as any other professionals.

But that's a view not universally shared in government circles. "Much confusion and bad policy follows from the inability of many policy analysts to handle the techniques of an elementary economics course," wrote Dr Ferguson in a scathing commentary that now appears prescient.

As Brian has said, if he is so prescient, he is going to start picking stocks.

On the right is Ms. Eclectic, mailing some of many postcards she sent while she was with me in England.

The mailbox looks old and beaten up, but that is mainly because it is on a high traffic route at Paddington Station and probably has, indeed, been seriously beaten up many times by delivery vehicles. It cannot be more than 55 years old at the most, though, because it has "ER" on it, with II between the E and the R, meaning it was installed while Elizabeth II was queen (she became queen in 1952).





On the left is an older mail boxin Hailsham (in East Sussex, southeast England). It has GR on it, meaning it was installed while George VI (Elizabeth's father) was king.






And below, from the town of Rye, is a photograph of a mailbox that is probably more than 100 years old. It has VR on it, meaning it dates from Queen Victoria's era.



Here are some other examples of the different-aged mailboxes. Most of the VR mailboxes I've seen have been embedded in brick columns. Presumably they are left in place because ripping them out and replacing them would be costly (though it appears that all the mailboxes are repainted fairly frequently).



[h/t to JZ for explaining all this to me!]






Update: Here is a website with tonnes of information about British Letter Boxes. Part II of the history has more information about the era about which I wrote above [h/t to Tim Worstall in the comments].

One of the papers at the conference I am attending has the phrase "social justice" in the title. Last week, before leaving for the conference, I told my colleagues at The Castle that typically this is just a buzz word/phrase for "condescending paternalistic pinko left-wing elitist interventionism". I'll be very curious to see if the paper fits the mold. I have tight priors that it will.

Here, from an article in the New Criterion about Hayek, is a similar perspective:

Think only of the odious phrase “social justice.” What it means, in practice, is de facto injustice, since it operates by enlisting the legal machinery of justice in order to support certain predetermined ends. Partisans of “social justice” eschew “merely formal” justice; in so doing they replace the rule of law—which was traditionally represented as blind precisely because it was “no respecter of persons”—with the rule of (pseudo) “fairness.”

Let me add that despite his strong criticisms of socialism and big gubmnt, it is not at all clear to me that Hayek was opposed to having some sort of social safety net provided by gubmnt. It seemed to me, though, from what I read by him, that he favoured a much lower social safety net than we now have in either Canada or the US, that he saw the ideal as a bare minimum safety net.
[h/t to BenS]

I am in Madrid this weekend to attend a conference on the economic analysis of intellectual property. I am really looking forward to spending some time with my friend, Stan Liebowitz at the conference (who is doing some interesting empirical work in the field).



The conference starts on Monday, but I arrived Friday evening so I could do some sight-seeing first. I had no idea where to stay or what to do here, and the conference organizers booked me into this hotel.


As you can see from the "norte" it is in the north end of Madrid, in a newish business section of the city. Unfortunately it is miles and miles and miles from central and old Madrid, so I am quickly familiarizing myself with the Metro/subway here, having bought a tourist 5-day pass.

As you look north from the steps of the hotel, you see all the construction continuing in this section of town. Spain, like Ireland, seems to be booming in part as a result of its entry into the European Union.




The hotel is on a short street named Mauricio Ravel. I think he probably deserves more that a two-block-long street named in his honour, don't you? But maybe it's because Ravel was French, even though Bolero was a (sort of) Spanish dance piece. Or, more likely, it's named for someone else who isn't even listed in Wikipedia.

I arrived at about 6:30pm and had read that the city just wakes up then and stays up very late.

So after checking in, I started walking south toward the main part of the city (note: I never really got there). The first place I passed of interest was a shop with this in its window:



An interesting toilet paper holder, but even more interesting toilet paper! I've never seen toilet paper in those colours before, and I'm not sure I'd want to use it. I'd seen pink crepe paper masquerading as toilet paper near the Victoria Gardens in London, but never these colours.

A bit further south is the Plaza Castilla. That diamond shape sculpture in the foreground is not really all that tall (maybe 3or4 stories tall), but look at the twin buildings behind it! I sure hope (and certainly expect) that they are well-anchored because they look as if they would fall over if you let too many people visit the upper floors. You can see the construction just north of my hotel in the very centre of the photo.



After I walked south some more, I decided to stop walking (I've been doing far too much walking lately) and went into the next place I saw (after making that decision) that had outside tables where I could sit and drink some beer or wine.

Btw, the temp at 7pm was shown by several places as 32.5C, which is about 149F, I think. Or so it felt after leaving cool England. Thank goodness the forecast highs for the next few days are only in the mid 20s. I brought along a pair of shorts to wear, but I noticed last night that I saw zero men wearing shorts in this part of Madrid, and heaven knows I do not want to stand out, looking like a tourist (of course the only short-sleeve shirt I brought was my Eastbourne soccer/football shirt, which is probably a tip-off anyway....). I didn't bring any sunscreen, so I went into a pharmacy to buy some. They wanted 21 Euros for a small thing of 50block — that's about $30 Cdn or so. I decided to look elsewhere.

The first food and drink place I went into didn't serve wine, so I tried to order a beer. But the server didn't know English, and the phrase section in my travel guide didn't have the word for "beer". Another customer helped me out though.

The woman who helped me there chided me for not ordering a sandwich, too, because that place just happened to be the best place in Madrid for sandwiches, according to her. I told her I was saving room for food from some tapas bars — bars where they serve little bits of food to go with your drinks. She pointed me in the direction of several that she said were very good.

But when I got to them, I realized they were very upscale, and I really wanted more of a smaller neighbourhood type place where the waiters weren't wearing tuxes. So I wandered on south, thinking I might go past the the stadium where Real Madrid plays football/soccer, but I didn't get that far. I passed a smallish corner place that had a few tables and lots of glasses hanging over the bar and all the patrons were looking at the far wall. I figured they were watching something on tv, so I stopped to look.

Yup, a bullfight. So I went in. That bartender also spoke no English, but I had memorized how to say "a glass red wine please", figuring I'd stay watch a bit of the bull fight and try to figure it out. He poured some wine for me, and then put up a plate of tapas — a small ham and potato thingy that was sort of nice, and I hadn't even expected it. It turned out to be one of the places where tapas are complimentary.

I had that wine, watched tv and then had another. The second plate of tapas was a small piece of bread (from a baguette) and some thinly sliced dried sausage/salami type of meat.

Bullfighting. I really can't understand it. I'll have to read up on it some more before Sunday, when I think I might go to one with my friend Stan and his wife. but it looks pretty damned cruel, even to me, a devout speci-ist.

By the time I'd had a beer and two glasses of wine, I was pretty blitzed. and I had at least a mile, maybe two, to walk to get back to my hotel. It was 9:30 by then, and the city was just coming alive. That's so hard for me to get used to. People just going out to eat so late, even in delicatessens, some obviously just leaving work:



Look at all that ham!! And look at the old guy who had pulled up a chair so he could play the slot machine there.

As I continued to walk home, I saw this car, an Aixam "half-car" which is a French vehicle that is probably too underpowered to make it in North
America. Cute, eh?



And then in a bus stop, I saw a sign for my favourite soft drink, Coke Zero. I don't know Spanish, but I agreed with the ad that seems to be saying something like "It tastes just like the original Coke, not like crappy old Tab or Diet Coke"-- that's a very loose translation.



Sadly, though, it doesn't. I bought some, and the Spanish version tastes nothing like the original Coke in North America anyway. So I'll have to stick to beer and red wine.

If one of the goals of the public funding of the CBC is to help inform the rest of the world about Canada, surely a mandate of the CBC should be to telecast everything they can (I realize there might be contractual barriers with some programming) via broadband so that anyone with a computer anywhere in the world can watch CBC programming. And yet, the last time I scoured their website, I could find nothing about broadband telecasts from the CBC. This just smacks of more misplaced priorities within the CBC.

The next time they need a chairman, I nominate myself.

I have never understood formulas that determine pay people receive when they retire — defined benefit plans. Such plans are often un- or under-funded, expecting to make payments out of current revenues. I guess such plans are okay so long as you expect the revenue sources to continue to grow at adequate rates. .... and so long as you trust the people managing the plan. But I don't much trust politicians and CEOs of struggling firms not to dip into the funds of these plans, as has happened recently in New Jersey:

In 2005, New Jersey put either $551 million, $56 million or nothing into its pension fund for teachers. All three figures appeared in various state documents — though the state now says that the actual amount was zero.

The phantom contribution is just one indication that New Jersey has been diverting billions of dollars from its pension fund for state and local workers into other government purposes over the last 15 years, using a variety of unorthodox transactions authorized by the Legislature and by governors from both political parties.

The state has long acknowledged that it has been putting less money into the pension fund than it should. But an analysis of its records by The New York Times shows that in many cases, New Jersey has overstated even what it has claimed to be contributing, sometimes by hundreds of millions of dollars.

Another good reason to prefer defined-contribution plans. Or as Craig Newmark said on Monday,

Now do you want to tell me how privatizing Social Security is too risky?

From yesterday's London Free Press (aka "the Freeps"),

Mayors of Ontario's automotive cities are rallying to fight a recently announced tax on gas guzzlers they say will "decimate" the province's auto industry. ... Mayors from 13 Southern Ontario cities met in Woodstock to talk about how to help the province's auto industry.

... "This could decimate an entire industry," said Woodstock Mayor Michael Harding, who will co-chair a committee opposing the tax with Gray.

... The mayors oppose penalizing large fuel users, fearing Ontario will move toward adopting California standards for vehicles that, by 2012, would mean Ontarians would not be able to buy cars assembled here, Harding said.

... In its budget, Ottawa said some large gas users will be hit with a tax of up to $4,000, hurting primarily the traditional Big Three. Buyers of fuel-efficient vehicles will receive rebates of up to $2,000.

New cars contribute to only only one per cent of greenhouse gas emissions, yet the largest contributors, fossil fuel burned for electricity and the Alberta tar sands project, were ignored in the budget, the mayors point out.

... The only automaker to speak in favour of the federal government policy is Toyota, the company building a new assembly plant in Woodstock that will employ 2,000. Despite the fact Harding's hometown manufacturer supports the policy, it is still bad for the industry, he said.

"I appreciate that Toyota is green, but the Big Three are still the largest employers of auto workers. We cannot, as an industry, favour one automaker over another."

I had two reactions to this article:

• It seems like a clear case of NIMBY [Not In My Back Yard]. The mayors might all be in favour of reducing pollution or reducing carbon dioxide emissions, but at the same time they want policies that do not affect their constituents so directly.
• If, indeed, burning carbon fuels is so horrible, why tax the vehicles??? Why not just tax the fuel purchases directly (and reduce other taxes, so the programme would be revenue-neutral)? Then, if people want to burn a lot of fuel, they would be individually paying high taxes to do so. People who drive small cars a lot would be paying for all the negative externalities they generate, and people who drive humongous SUVs very little would be causing less total pollution and could easily end up paying less in total taxes, too.
  
  Taxing the vehicles is such an indirect way of doing this, involving ham-fisted taxes, when fuel taxes would be tied much more directly to the use of carbon-based fuels.

So while I am not at all thrilled with the mayors' position that the federal gubmnt shouldn't pursue policies that might hurt the auto industry, I agree that there is a better, more efficient way to pursue the same goal. I'm guessing the mayors' reactions to a big fuel tax would be less negative than would the reaction from the oil patch, even though it might have a similar (though smaller) effect on the demand for gas guzzlers. One reason is that it would appear to be a tax on oil, not on SUV manufacturers; another is that it would tax all fuel users according to how much fuel they use and would not be directed only to the purchasers and suppliers of gas guzzlers.

Tom Palmer, who is with the Cato Institute, is a strong supporter of individual freedoms. He recently was quoted by the Washington Post as saying,

Let’s be honest: Although there are many fine officers in the police department, there’s a simple test. Call Domino’s Pizza or the police and time which one gets there first...

Unfortunately, he is right, and that makes the case for personal defence and prevention measures all that much stronger. If the publicly provided protection is not likely to be as good as we might like, we have more incentive to invest in locks, alarm systems, private weapons, and private security systems. We also have an incentive to buy detection systems, such as video cameras, to deter potential criminals.

At our house, we have reset our alarm system to ring at Godfather's Pizza, which is just down the street from us and can be here in no time flat.

Some of about 20,000 mobile homes and travel trailers owned by the Federal Emergency Management Agency sit at the Hope Municipal Airport near Hope, Ark., Friday, March 2, 2007. A year and a half after Hurricanes Katrina and Rita, FEMA is auctioning off at fire-sale prices thousands of trailers used by storm victims, raising fears among mobile-home dealers that the government will flood the market and depress prices.

(AP Photo/Danny Johnston); story from AP via Yahoo, via Coyote Blog. The non-market interventionist policies and fiscal mismanagement by the Republicans in the U.S. has been very disappointing.

Low-income people enjoy much more leisure than do high-income people, no matter how you measure it. Steven Landsburg provides an overview of these data and then says that if we want to fix income inequality, we should also want to fix leisure inequality:

[A] certain class of pundits and politicians are quick to see any increase in income inequality as a problem that needs fixing—usually through some form of redistributive taxation. Applying the same philosophy to leisure, you could conclude that something must be done to reverse the trends of the past 40 years—say, by rounding up all those folks with extra time on their hands and putting them to (unpaid) work in the kitchens of their "less fortunate" neighbors. If you think it's OK to redistribute income but repellent to redistribute leisure, you might want to ask yourself what—if anything—is the fundamental difference.

If blogging is work, I have very little leisure time.

And you may want to get the Microsoft patch to update the auto-clock in your PC.... then again, if it is just to change the time, I think I'll do it manually. Here's a slightly edited version of one memo about it:

This is a reminder of an upcoming important date, Sunday, March 11th, 2007.

This is the day when the newly proposed time zone changes will take effect.

Starting in the spring of 2007, Daylight Saving Time (DST) start and end dates for most time zones in Canada and the United States will be changed to comply with the Energy Policy Act of 2005. Daylight Savings Time dates in affected areas will start three weeks earlier (2:00 A.M. on the second Sunday in March) and will end one week later (2:00 A.M. on the first Sunday in November).

For official site information on this subject please visit:
http://www.microsoft.com/windows/timezone/dst2007.mspx

Actually, I think it'll be easier to set the time ahead manually in March, back in April (when the computer makes the auto-adjustment) ahead in October and back in November. Then again, maybe MS has already automagically loaded the correct time-changer along with all the other updates it keeps installing on my PC.

Then again (again), let's just spend lots of hours arguing about which is more efficient — downloading a patch or manually changing the time....

[h/t David Ricardo Palmer]

Update: Stephen Gordon's comment that it is probably just as easy to live with a computer that has the wrong time for a few weeks each spring and fall might be correct. When I teach in England, I do not change the time on my computer — I just do mental mapping of time zones. It might be easier, though, to do that for a five-hour time difference than for a one-hour time-difference, but I think I'll try his suggestion which amounts to, "ignore it."

Tim Horton's, an iconic Canadian coffee and donut chain that is slowly expanding into the U.S. (digressive recommendation: sell Dunkin' Donuts short in anticipation of this move), reported that its profits sky-rocketed last quarter from 10 cents/share to 35 cents/share.

Mr. House [CEO] said fourth-quarter results were strong because of a range of new product introductions, some price increases and a milder December in some parts of Canada and the United States.

... “Western New York is the gateway for Tim Hortons into the U.S. market . . . The people of Western New York have truly embraced Tim Hortons and we thank them for making Tim Hortons a part of their everyday life,” the company said in its earnings release.

I am absolutely certain that the price of coffee at Tim Horton's is wwaaaayyyy higher than the (short-run) marginal costs of producing it. Clearly they are ripping off their customers, and the chain has become so dominant and successful in the industry that much of the competition has been driven out of existence, leaving "Timmy's" in a position where they can rip us all off. If socialist NDP Leader Jack Layton wants Canadian banks to give away their ATM services [see this and the links provided there], he should also demand that Tim Hortons lower their coffee and donut prices, too.

Why is it that banks are considered a fair target but Tim Hortons isn't?
One possibility is that gubmnt regulations keep the banks are free from much competition because insurance companies and foreign banks find it next-to-impossible to compete with the major banks in Canada. Another possible explanation is just plain old William Jennings Bryan-type populism and antipathy toward banks. I see, too, that some commenters on the G&M article are, indeed, asserting that the high Tim Horton profits are a sign of (a)consumers' being ripped off, and not (b) Tim Hortons' providing better service and products that consumers want and are willing to pay for. And that sounds like a nasty combination of ignorance, greed, and envy to me.

Whatever the reason, let me make two things clear:

1. Given my personal record of prognostication, I assume no responsibility for any investment advice I give, should you choose to follow it. I use low-MER index funds myself.
2. I do not really think Tim Hortons is ripping off its customers, and I am absolutely not serious about wanting politicians to regulate the prices at Tim Hortons.

When ATMs were first introduced over 30 years ago, financial institutions encouraged their own customers to use them, hoping to reduce teller costs. And for the most part this change has been successful.

When I was in England last summer, I was both pleased and surprised to notice that the financial institutions there all (at least all that I used) had official-sounding notices on their screens, telling people that they did not charge fees for using their ATMs. I could withdraw cash pretty much anywhere and not be charged for the service.

That's weird, isn't it? I was doing something, using a service, that used scarce resources (restocking time, interest costs for the cash in the ATM, depreciation of the machine) but I wasn't paying anything to cover those costs. I didn't bank at those institutions. I (and most of us from Canada who were there) was just receiving a freebie at the expense of the stockholders of those institutions. At the time I liked it, but I figured there must be legislation requiring these kind people to treat us so generously. It just didn't seem to me that zero transaction charges for ATM use would emerge in a competitive, profit-maximizing equilibrium.

And yet politicians continue to try to win votes by telling banks they should give away the ATM service. From the January 26th Nat.Post (courtesy of Jack, no link though),

Finance Minister Jim Flaherty is demanding Canada's banks explain why they charge fees to customers for using automated bank machines.

Mr. Flaherty said yesterday he has raised the question of scrapping the fees with the banks, and he is awaiting their response.

Bank customers use the machines, also known as automated teller machines or ATMs, for more than a billion transactions each year. Customers are charged for some of those transactions — typically there is a fee of $1 to $2 for withdrawing cash from a machine owned by a bank at which the customer does not have an account.

... Mr. Layton said the NDP will press for changes to the banking laws to eliminate the fees.

Why don't these politicians just come right out and say what they mean:

The banks earn profits and we want to redistribute those profits to our constituencies.

Is there some way to force an RSS feed from this blog to these politicians? Here is an excerpt of what I wrote on this topic earlier [see here and here]:

Where did we obtain the idea that we are entitled to no-charge ATM services? ATM hardware is expensive, and so is replenishing the machines. Banks usually provide ATM services for their own customers at no charge, as a way of attracting and retaining customers, but why do we think they should provide these services at no charge to everyone else?

... [P]eople's use of an ATM from another bank or using an independent for-profit ATM service is a convenience. But we do have choices:

* We can pay for most purchases with our debit or credit cards
* We can walk or drive a few extra blocks to a place with lower ATM fees.
* We can plan ahead and get more cash when we are at our own bank or at a no- or low-fee ATM.

In other words, we do have choices. We may not like the inconvenience of the remaining options, but it just plain silly to promote the idea that we have no choice.

We have enough choice that it is unlikely the chartered banks are monopolistically exploiting their ATM users.

For more, see this at Gods of the Copybook, which says, in part,

On a perhaps obvious sidenote, does it strike anyone else as absurd that people complain about these fees? ATM machines don't exactly spring from the ground ready made and filled with multi-hued cash, ready to be dispensed. Does it not seem at least a little reasonable that banks should not be subsidizing the financial activities of their competitors' clients?

Again, from the Nat.Post:

"Mr. Layton said that customers in the United Kingdom are not charged these fees," Mr. Protti [Cdn Banking Association President] said. "However, he should realize that services are not delivered for free. There is a cost to providing banking services. Looking at one service in isolation does not take into account that the costs to provide it are recouped through higher costs for other products and services."

Update #1: One of the costs of operating ATMs is fixing/cleaning them after people take out their frustrations and anger on them. See this [h/t to King]

Update #2: For a taste of real William Jennings Bryan-type populism and how much some people seem to detest or envy bank profits, see the comments to this same posting at The Western Standard.

That's what the Province of Quebec is spending, explicitly and implicitly, to entice Alcan to build a smelting plant in the Saquenay-Lac St Jean region. That is one heck of a lot of money to spend on job creation, for jobs that probably would be created elsewhere in the economy anyway, especially if the province were to cut taxes instead.

I am skeptical, to say the least, of "job creation" statistics and arguments. If the long-run Phillips Curve and the long-run aggregate supply curves are vertical, we know that job-creation programmes do nothing more than rearrange jobs rather than create them.

As Stephen Gordon says, "Electric Boondoggle du jour".

That's what my friend Jack said when he read this.

Canada apologized to software engineer Maher Arar and his family on Friday and said it would pay him C$10.5 million ($8.9 million) in compensation after Canadian police falsely labeled him an Islamic extremist, which led to Arar being jailed in
Syria.

"On behalf of the government of Canada, I wish to apologize to you, Monia Mazigh (Arar's wife), and your family for any role Canadian officials may have played in the terrible ordeal that all of you experienced in 2002 and 2003," Prime Minister Stephen Harper stated [EE: He wasn't Prime Minister then; the Liberals controlled Parliament when this happened. I note with disgust that the MSM fail to point this out.].

Arar says he was repeatedly tortured during the year he spent in Damascus jails after he was deported to Syria by U.S. officials during a stopover in New York in 2002.

The apology and compensation were a part of settlement agreed to by Arar after he launched a suit against the Canadian government. He is also suing the United States.

Harper objected to the United States continuing to keep Arar on its security watch list. A Canadian judicial inquiry concluded last year that Arar had never been a security threat and it recommended compensation.

In addition to the C$10.5 million, the Canadian government will also pay Arar's legal bills, which a Harper aide estimated at C$1.5 million.

Jack's wife concurs: send him to Syria to be tortured!

Seriously, though, I once had a friend who taught in the law school here who had a standing offer that anyone could inflict all the pain and suffering they wanted on his right shoulder (he was right handed) for $5m. This was back in the days before E-Bay, so he didn't try to auction off the right. The point he was trying to make, I think, was that in most instances people do not think of what compensation they would accept ex ante when a tort is inflicted upon them.

There still are rumours floating around (see maybe this) that all is not as it seems with Arar, which is why the U.S. has not conceded that they made an error with him. If so, I hope he continues his suit and the U.S. clears the air. BenS wonders what if, in the end, the U.S. defends itself successfully? Should the Canadian gubmnt sue Arar to get its money back?

These photos are exquisite. I find it difficult to believe that if we could vertically sum across people's preferences, we would not come up with a sum that would be more than enough to renovate the Hubble and send up another space telescope as well. Of course identifying and collecting the sums would be no easy task. And it's easy for me to say all this since the contributions of Canadian taxpayers to the Hubble are likely to be miniscule.

I think my favourite of the images is the "hour glass nebula".



[h/t to Jack]

With all the on-going discussion in the blogosphere concerning the effects of minimum wage legislation (e.g. see this at Cafe Hayek, this at Market Power, and this by Greg Mankiw; and see this earlier piece by Craig Newmark), I'd like to add these observations.

Some years ago, a professor in socionomology argued that raising minimum wages wouldn't cause job losses in the fast food industry because you'd still need workers (graduates from his department, probably) to flip burgers.

There are two problems with this so-called analysis.

1. It assumes a fixed-coefficents production function [you need a fixed proportion of labour and capital, no matter how much you produce] in the fast-food industry. But as one who has happily worked and consumed in the fast-food industry for nearly half a century, I can assure you that production techniques are changing all the time. And much of the technological change that is implemented seems to allow the substitution of capital for labour.
2. The second problem is both larger and more subtle. As minimum wages increase in the fast-food industry, prices rise too. And as the prices of fast food increase, people start buying more microwavable food in grocery stores, storing it at home in freezers, and preparing it themselves. The substitution of capital for labour takes place in the factories that produce the food, in the grocery stores, and people's homes, not in the fast-food restaurants themselves, but it is every bit as important a phenomenon.

For a good but lengthy summary of the economics of minimum wages, see this.

Courtesy of Stephen Pollard, from the tag end of this piece in the Telegraph:

... a warning: I'm about to share something with you that may well distract you at inopportune moments in days to come, possibly while operating heavy equipment, possibly even this evening as you are counting down to midnight. It is this. I was travelling on South West Trains the other day when the announcement was made: "We regret to inform you that the buffet trolley is unable to come down the train as it is too wide for the aisles."

Think about it. Aisles must be a standard size. So must buffet trolleys. Was a batch of trolleys manufactured to the wrong specifications, then sent out anyway in the hope that no one would notice?

My guess is that the buffet carts were ordered by the catering firm, not SW Rail, but there was probably a bureaucratic snafu at work here. Another possibility is that some employee in the catering firm got the carts mixed up. Even so it is funny.

My own experiences with the British rail system last summer were mostly good, but they were pretty bad at times. The worst example: I could buy a ticket online from southeast England to Scotland, but nowhere did the webpages inform me how to get a reservation for a specific seat. And once I arrived at the train, it was impossible to make a reservation. And the conductor did not seem to understand my confusion and frustration. Next time I'll probably just take RyanAir. Yes, there is serious competition in many of these transportation markets.

In a NYTimes OpEd, "Govern, Don't Gloat," Leon Panetta says to the U.S. Congress and to President Bush,

Last Tuesday, the American people sent a clear message that they are sick and tired of government by crisis. They elected Democrats to the House and Senate not to prolong gridlock, but to govern.

Ignoring the non-sequitur in that passage, I am with Kip Esquire on this topic,

Remember: ... I like gridlock. And a split Congress [would have] guaranteed gridlock regardless of who occupied the White House.

Now we only have "gridlock-lite."

One of the reasons that I think Gerald Ford was among the best recent U.S. presidents was that he didn't "get anything done". I subscribe to the Jeffersonian maxim,

That government governs best that governs least.

Unfortunately, in the parliamentary system of gubmnt, like the one we have in Canada, any minority gubmnt that tries to reduce its size faces the threat of being voted out of office sooner rather than later.

For the past three years, Transparency International has published a Corruption Perception Index.

A strong correlation between corruption and poverty is evident in the results of the CPI 2006. Almost three-quarters of the countries in the CPI score below five (including all low-income countries and all but two African states) indicating that most countries in the world face serious perceived levels of domestic corruption. Seventy-one countries - nearly half - score below three, indicating that corruption is perceived as rampant. Haiti has the lowest score at 1.8; Guinea, Iraq and Myanmar share the penultimate slot, each with a score of 1.9. Finland, Iceland and New Zealand share the top score of 9.6.

Some of the results are:
Finland, Iceland, and New Zealand all tied for first place with a score of 9.6.
Austria, Luxemburg, and the United Kingdom all tied for 11th place with a score of 8.6, just ahead of Canada at 8.5.
The U.S. ranked 20th, tied with Belgium and Chile, at 7.3.
For the full table, click here.

Keep in mind that these scores are the results of surveys, so do not get overly excited about them:

The 2006 Corruption Perceptions Index is a composite index that draws on multiple expert opinion surveys that poll perceptions of public sector corruption in 163 countries around the world, the greatest scope of any CPI to date. It scores countries on a scale from zero to ten, with zero indicating high levels of perceived corruption and ten indicating low levels of perceived corruption.

[via The Emirates Economist, a site worth bookmarking].

On Wednesday morning Canadians learned that a major tax loophole is being closed by the Canadian gubmnt. Here is how the loophole worked, and here is what the gubmnt did (for more, see many articles; this is one; here is another):

"Income trusts" as a legal construct have evolved that do not pay the corporate income tax but pass their earnings through to their stockholders (or the equivalent thereof). These earnings are taxed as income, not as dividends.

This legal device for avoiding double taxation was becoming increasingly attractive in Canada, especially since during the previous election campaign, Conservative leader (and now Prime Minister) Stephen Harper repeatedly pledged that income trusts would not become liable for corporate profits taxes.

The tax break, along with Harper's commitment, provided considerable impetus for the growth of income trusts. More major corporations were considering becoming income trusts. (see here) My major surprise was that more corporations had not made the move.

Unlike income trusts, corporations' profits are subjected to double taxation. First, they are taxed at the corporate profits tax rate; second, the dividends are taxed as income and/or capital gains. Many economists, me included, have long wanted gubmnts to get rid of the double taxation of corporate income. So, from that perspective, the growth of income trusts seemed like a good direction — a backdoor way to get rid of double taxation without the potentially unpopular (unpopular with the NDP and CBC anyway) options of eliminating either the corporate income tax or the taxation of dividends (I know, I know — dividends are treated differently from income).

But what did Harper do? Instead of promoting income trusts, he both broke his campaign promises and eliminated this tax-efficiency which had evolved over the past few years or so.

The current speculation is that the Conservative gubmnt did this so they can raise more tax income this way and then cut taxes in other ways next spring, when we are closer to having an election. So we are probably going to see more changes in the tax code that cause more tax lawyers to get rich and which do not have the efficiency basis of (a) eliminating double taxation and (b)having a consumption-based tax instead of an income-based tax.

Reducing the GST and now this. I'm disappointed in the tax policies of the Conservative gubmnt.

Note: I did not have any money invested in income trusts, at least not directly. Some friends, however, probably lost some sizable portions of their nest eggs as a result of this policy change.

I didn't realize I had written so much on medical tourism in the past, but there have been three or four postings on the topic (see here, here, and here for example). But the fact remains that at current, gubmnt-set prices (mostly zero), we have a shortage of physicians in Canada. The result, of course, anytime a price is set below the market price, is that some of those potential purchasers who would otherwise be rationed out of the system or who do not wish to join the seemingly interminable queue, look for quasi-market solutions; they look for some other way to receive the services, even if they have to pay for them. And in health economics, one very attractive solution is medical tourism — travel to some exotic locale during a season when the weather there is much better than in Canada and as an aside while you're there, have a medical procedure carried out.

After my most recent posting, which listed some links for medical tourism, Lauren H sent me a message with several more links:

I have been working on the wikipedia page on medical tourism lately:
http://en.wikipedia.org/wiki/Medical_tourism

CBS News did a very informative story on medical tourism in 2005:
http://www.cbsnews.com/stories/2005/04/21/60minutes/main689998.shtml

Another great article was from the University of Delaware's UDaily:
http://www.udel.edu/PR/UDaily/2005/mar/tourism072505.html

Time Magazine wrote an article just this year:
http://www.time.com/time/magazine/article/0,9171,1196429,00.html

I expect I am being unduly risk averse, and I have no idea how I would respond if I really wanted to have a medical procedure but would otherwise have to wait two years or spend tens of thousands of dollars, but no matter what Lauren and Jack have told me, I might tend to be somewhat hesitant. But at the price differentials listed in some of the above articles, and if the length of the queue continues to grow in Canada, who knows?

With thanks to Alan Adamson, who told us this at lunch today. From the Trono Globe & Mail:

Liberal MP Belinda Stronach has been named as the other woman in a divorce application filed by Leanne Domi, the wife of former Maple Leafs tough guy Tie Domi.

... In the documents, Ms. Domi says she asked her husband to leave their home in July because she "just couldn't believe that he was telling me the truth about Belinda Stronach's 'business relationship' with him."

And more details from another article in the Globe & Mail:

Former Maple Leafs tough guy Tie Domi is dating heiress and federal politician Belinda Stronach, a source said yesterday.

Mr. Domi has recently brushed aside questions about the persistent rumours he was romantically linked to Ms. Stronach. But it was confirmed yesterday that he is indeed in a relationship with the Liberal Member of Parliament.

The daughter of Frank Stronach, the auto-parts billionaire, Ms. Stronach was a Conservative until she crossed the floor to the then-governing Liberal Party early last year [emphasis added]. She has been on the opposition benches since the January election.

Ms. Stronach has been married twice and has two children from the first marriage. She also had what appeared to be a serious relationship with Peter MacKay, now Minister of Foreign Affairs, which ended abruptly when she quit the Tories. The tabloids have tried to link her to former U.S. president Bill Clinton, but the two insist they are just friends.

Mr. Domi began and finished his career in Toronto, playing also for the New York Rangers and the Winnipeg Jets. He was an enforcer, racking up a club record of 2,265 penalty minutes with the Leafs.

He had three children with his wife Leanne before their marriage ended in 2005.

Update #1: Eric McErlain has some choice speculation about the future of Tie Domi as Canada's "First Man".

Update #2: Alan Adamson alerted me that the Trono Sun is full of the topic. See here, and here,

For those of you who don't know who Bob Rae is, he is a former NDP [New Democratic Party](i.e. socialist) premier of Ontario. When he was elected as premier, he took over when the provincial budget was massively overspent and the economy was headed into a recession. He was hated by many, both within his party and outside it, for trying to implement some fiscal responsibility. He is now seeking the leadership of the federal Liberals. I can see a very close connection with the views of Paul Summerville. You can see this connection in the following excerpt of an interview Bob Rae did with Bill Good of CKNW:

Good: Why the Liberal Party? Why didn't you challenge Jack Layton and try to lead the NDP, the party you led in Ontario?

Rae: ... I left the NDP in the late nineties, and I concluded that it really was and is a party of protests and not a party of power, that it's fundamentally a party that prefers to be on the margins of things. That's where its activists are, frankly, happiest, I think.

Also, I don't think they really understood, or they don't get the economy. I concluded after my time in office that it was very, very tough to convince a whole section of the party that the market was a great thing and it was something to be celebrated and it was not something to run away from [emphasis added] and that we had to recognize that the world had changed all around us and globalization was here to stay.

I find that resistance to those ideas is still pretty strong in the NDP when you actually look at it. I mean the resistance to any tax cuts, the resistance to any…the way in which they look at business with a sort of sceptical eye all the time, the assumption that business is bad and government is good and private is bad and public is good. That still lies pretty deep in a lot of sections of the NDP and I frankly just decided that I wasn't going to spend my life inside trying to fight that — that I was really fundamentally going to be happier in another political party.

Good: In fact, wasn't it those activists who brought you down when you tried to tackle the economy, when you understood that you had issues, that you were in a recession and that you had to challenge the unions.

Rae: There was a lot of resistance in the party to what we felt we had to do to deal with the recession and its impact on the province and on public finances in the early nineties. Sure, that's true. And when I was in government I think there were a lot of people who came with me and there were some people who didn't, and then when the government was defeated I think there was almost like a collective sigh of relief in the NDP in Ontario, saying: well, thank God that's over. Now we can go back to our old ways and to opposing whatever comes along and to just sticking with our own tidy little knitting over on the left hand side of the spectrum, and that's not really where I think a big party needs to be. A party needs to be close to the centre and try to talk to all people and that, I guess, in my case is the Liberal Party of Canada.

Now I understand why Bob Rae and Paul Summerville are working together. A little dose of reality always helps people understand the benefits of the market and the detriment of relying on well-intentioned bureaucrats.

Some folks are pretty skeptical, though. Check out the comments here.

Update: For those who would like to listen to the entire interview, I received the following e-mail from CKNW:

You can re-listen to the interview on our website's Audio Vault. Head to cknw.com then click on the Audio Vault. You will have to sign in with an email address & a password to access the files. Just select the date and time it aired (Monday Sept. 18th from 8:30 - 9:30 am) and it should start playing on your computer.