Friday, November 16, 2012

Australia: The miserable and aggrieved end of politics (Labor Party) versus the cheerful end (conservative coalition)

Even though they are in government, the Leftist party is still the miserable party

So rancorous are relations between the government and the opposition that even the humble Christmas party invitation is being used as a political weapon. At least in Labor's case.

With the festive season approaching - and for many in this place, the temporary lull cannot come soon enough - the usual round of Yuletide knees-ups are being organised for the final sitting week, which is the last week of November.

The Coalition invitation, extended to MPs, senators and staffers, features an innocuous Christmas tree illustration. The most frightening aspect is the revelation that the Northern Territory Country Liberal Party senator, Nigel Scullion, will be plying all and sundry with his "famous mango daiquiris".

Labor's invitation is far more foreboding. It features Tony Abbott, portrayed as the evil Christmas Grinch, poised atop Parliament House, his pointy fingers holding a bright red Christmas bauble upon which is inscribed the word "no".

The portrayal of Mr Abbott as the Dr Seuss character - a bitter, grouchy, cave-dwelling creature with a heart two sizes too small - has not gone unnoticed in the Coalition.

"There's a clear choice this Christmas: enjoying Nigel's famous mango daiquiris, or a Labor Party obsessed with Tony Abbott. Which would you rather attend?" said one senior Liberal figure.

Moreover, the Coalition party is free.  Depending on who you are and when you pay, Labor's shindig costs between $25 and $50 a head. Mr Abbott may be the Grinch but Labor is Scrooge.

A Labor staffer returned fire: ‘‘The Coalition’s has to be free otherwise no-one would turn up. They’ve got to bribe staffers with free booze.’



A Few Observations on the Efficiency of Local Government

Recent discussions of local government and state finances have focused on high-profile employees. Efforts to control costs in Wisconsin resulted in protests and a recall election. Now Scranton, Pennsylvania, has reduced its workers’ wages to the legal minimum wage. Local budgetary crises have made it difficult for towns to pay for police, firefighters, and school teachers. Some people claim that government employment must be maintained—maybe even increased—because these workers provide vital services.

As a teacher at a private college, I can’t help but notice that the private sector can and does supply education—as well as security. Private provision of education and security are and will always be imperfect, but the track record of government services is hardly enviable. Towns like Sandy Springs, Georgia, and Maywood, California, have saved money by contracting local services, except for the police and fire departments, out to the private sector. (While bidding for a government contract is semi-competitive—there’s only one purchaser—the winning firm is a monopolist, so this arrangement is different from a competitive market.)

We should examine the relative merits of private and government education and security, but there are other issues that may deserve more attention. Many town departments get little scrutiny. The operation of our water, road, recreation, and engineering departments often escapes notice.

Twenty-seven years ago I worked as a summer employee of the Livingston, New Jersey, engineering department. At that time I intended to earn a degree in civil engineering, so this job seemed like a good idea. I was told the engineering department hired several local college students every summer so they could learn surveying, build a résumé, and “earn” some money. During this summer I observed a local government from the inside. I had plenty of time to watch what people were doing because as the chief engineer put it on my first day, “There is no work for you to do in this job.” I thought he might be exaggerating, but this was not the case.

One could say that my own observations are merely anecdotal, but Livingston’s government works like other municipal governments. A town council makes decisions, and residents pay for these decisions, mostly through property taxes and small fees.

The time I spent not working that summer enabled me to observe others not working. The engineering department of Livingston had three full-time civil engineers. There wasn’t enough actual work to keep even one busy. We surveyed land that had already been surveyed. We observed a road construction project and some housing construction. Very little of what any of us did had any practical purpose.

The water department was slightly more productive. Every morning the water department van would go out to fix broken water mains. Most of the time there were none to fix, so this crew of about a half dozen men would be “on call.” How often did water mains break? Once every month or two. How long did it take them to fix a broken main? Two or three days. Do the math and it is obvious that these men were paid to do nothing most of the time. What did they do? They would hang around the local parks, the Livingston Mall, the Donut Basket, or somewhere else.

The road department would clear fallen trees or branches a few times a year. During the summer that I worked in the town hall, some of them were busy replacing street signs they had previously misspelled.

The town recreation department was somewhat busy during the spring and summer. I am not sure how they passed the time the rest of the year.

Perhaps the oddest daily event was the 2 p.m. break in the town hall. Every day town employees would gather in the break room for about an hour for donuts and coffee. This was not a break from work so much as a break from sheer boredom. Soon after the “break” ended, town employees would leave this den of inactivity, fill up their cars at the taxpayer-funded town gas pump, and go home.

My overall impression that summer was that if the entire town hall staff had been abducted by aliens, it could have been weeks, perhaps more than a month, before any residents would have noticed.

I doubt much has changed. Several years ago Livingston had a scandal when the town council built a new and lavish town hall. The remodeling was so expensive that it sparked outrage. The point here is not just to note an example of waste, but also the difference between high- and low-profile waste. Livingston wasted $30 million on its municipal building, but paying the salaries and benefits for dozens of nearly useless town employees over decades costs even more.

As a graduate of the Livingston public school system I can say that the teachers do teach.  As a former resident of Livingston I can attest that the streets are safe. High-profile government employees do provide some services. But as an economist I can see that town governments are biased toward waste. Local taxes are coercive and go into a general fund to finance all of a town’s departments. Local taxes disperse costs over all residents, obscuring the costs of financing specific departments and of hiring individual employees. Many costs of operating local government go entirely unnoticed, making cost control impossible. What takes the place of decision-making on the basis of cost? Decision-making on the basis of politics. There is no market test because the “buyers” of services are not free to say no. Thus politicized management by local governments has a proven track record of waste, to the point where many cities and states are faced with budget crises or have gone bankrupt.

In the past several years many people have realized that the overall costs of government are excessive. Public outrage over waste can have two outcomes. Government officials may occasionally respond to public pressure on high-profile issues, perhaps yielding partial or temporary improvements. Lasting solutions to government waste (local or federal) require extensive privatization. There is a fundamental problem with government in that the people who are most familiar with the worst examples of waste are precisely those people who gain from it: public employees. Taxpayers are at a permanent disadvantage when it comes to learning exactly how their tax dollars are spent or wasted. The smartest move for taxpayers is therefore to press not for more efficient government, but for much less government.

Modern government is a failed social experiment at both the local and national levels. Those who insist on maintaining traditional government services at any cost fail to see that we have options. Recent examples of outsourcing services have been successful, but these moves may not go far enough. Economist Walter Block has written extensively on road privatization. The late Elinor Ostrom, who won the 2009 Nobel Prize in economics, examined common-pool resource management by local nongovernment organizations. Alternative institutions have proven track records. We should have moved away from government economic management before it created severe budgetary crises. Now that these crises are upon us, we should act decisively to end the era of big government.



Statist Claptrap on the Gas Lines

by Jacob G. Hornberger

For an excellent example of the economic ignorance that pervades the mainstream press, take a look at these two articles: “Behind New York Gas Lines, Warnings and Crossed Fingers” by David W. Chen, Winnie Hu, and Clifford Krauss and “Around Odd-Even License Plate Rules, a History of Impatience” by James Barron.

The articles address the long lines at gasoline stations in New York in the wake of Hurricane Sandy. What makes the articles so astounding is that as one reads through them, it becomes obvious that all of the authors are totally ignorant of the true cause of the gas lines.

Here’s the lead paragraph from the first article:

The return of 1970s-era gas lines to the five boroughs of New York City was not the result of a single miscalculation, but a combination of missed opportunities, ignored warnings and a lack of decisiveness by city and state officials that produced a deepening crisis and a sense of frustration.

The article then proceeds to explain how New York officials dallied over whether to implement a rationing plan, as New Jersey had already done. In an implicit dig at the “free market,” the authors of the first article state, “These officials seemed to cross their fingers that somehow the gas supply would improve and that they would be able to avoid resurrecting unpleasant memories of the 1970s.”

The authors also alluded to “panic buying and hoarding” as contributing causes of the long lines. On the supply side, they blamed the problem on damage to a refinery and to several gas terminals.

Lest you have any doubts about the ideological perspective of the authors, consider this line from the first article: “Compounding the problem was the lack of a centralized way for officials to coordinate with counterparts in the region’s complicated fuel-distribution network….”

In other words, what was needed to solve the problem of those long gas lines was central planning, with the plan to include a rationing system. You know, just like in the old Soviet Union! You remember that system, right? You remember how well central planning worked there, right? You remember the rations there, right? You remember the perpetually long lines there, right?

Ultimately, New York officials did impose a rationing system, one that permitted people to get gas on certain days depending on the last digit of their license plates.

The second article compared the long gas lines to those in the 1970s. The author of that article blames the shortage of gas on the fact that “the storm forced tankers bound for the New York area to wait it out…” and to the fact that the storm cut off electricity to gas stations. The author then proceeds to describe the long gas lines in the 1970s, blaming them on the Arab oil embargo in 1973 and the Iranian revolution in 1979, which he says set off “panic buying and long lines at gasoline stations.”

As any libertarian or Austrian economist will tell you, all this is just sheer nonsense. But like I say, it’s classic statist. Despite all the writings that libertarians and Austrians have published on this subject over the years, the statist mindset simply cannot process it or even allude to it.

Consider these two articles:

“New York Investigates Price Gouging Post-Sandy” by James O’Toole at CNN Money.

“N.J. Sues Gas Stations, Hotel for Post-Sandy Gouging” by David Voreacos at Bloomberg.

Now, I’d be willing to bet that those four New York Times authors are familiar with these price-gouging legal actions. But what is painfully obvious is that none of the four is able to tie the two things together!

The reason for those long post-Sandy gas lines was not the “free market,” or “panic buying,” or a reduction in supply, or the failure of public officials to implement a good central plan, or their delay in imposing a rationing system.

The reason for those long gas lines was very simple: Price controls, both today and in the 1970s! Those anti-gouging laws are a form of price control. They make it illegal for the free market to operate. Remember: the term “free market” does not mean that things are given away — as in the common use of the word “free.” It means a market that is free of government control or regulation.

Thus, it’s obvious that when the state makes it illegal for owners of gasoline (or anything else) to charge whatever they want, that is not a “free market.” That is a controlled or regulated or managed market.

The worst thing that public officials can do in a hurricane or other disaster is impose price controls (or anti-gouging laws). Prices are nothing more than the free market’s intricate messaging system. When a disaster occurs, the price of gasoline soars, owing to skyrocketing demand and drastically reduced supply.

The soaring price tells consumers to conserve. It also tells suppliers to supply. So, people cut back. They’re more careful about how they use gasoline because it’s so expensive. At the same time, entrepreneurs, attracted by the extraordinarily high profits they can make, figure out ways to get gasoline to consumers. Gradually, the price starts to drop.

When public officials intervene with their price-gouging laws, they disrupt the free market’s intricate messaging system. By artificially keeping prices down, they ensure that consumers will continue using available stocks of gasoline as if nothing has happened. And they destroy the financial incentive of entrepreneurs to rush more stocks of gasoline to the affected areas.

What’s most astounding about all this is that it’s only libertarians who see the moral abomination that is involved with price controls. The gasoline doesn’t belong to the states of New York or New Jersey. It doesn’t belong to society. It doesn’t belong to consumers. It belongs to the owners of the gasoline. An owner of something has the right to sell it at any price he wants. It’s his property! By the same token, consumers have the right to walk away.

Why can’t statists see this? Why do they turn to methods that were embraced by Soviet officials rather than the free market? Because the last thing any statist is going to do is even hint that the state is responsible for the problem. We saw that during the Great Depression, which was caused by the Federal Reserve but blamed on “the failure of free enterprise.” We’re seeing it now in New York. To the statists, the government is god. To them, the state is always the solution, not the source, of the problem.




Businesses against deregulation:  "Most people believe that businesses abhor regulations and would love to do away with them entirely. This belief is often wrong. Many regulations make it harder for startups to enter the market, and can hobble smaller competitors. That’s why incumbent firms in many industries regularly welcome new regulations with open arms, and will spend millions on lobbying to pass them. It’s a way to keep the competition out."

China-bashing season over, but frictions will persist:  "Although bashing China, especially by the candidate trying to unseat the incumbent, has become a feature of nearly every US presidential campaign of the past 20 years, Romney's criticism was particularly intense. Moreover, the Republican Party has changed noticeably over that time, with the role of religious conservatives becoming more prominent and the role of business leaders less so. That shift made it even more likely that a Romney administration would have adopted a hard-line, if not outright confrontational, stance toward Beijing. Obama's re-election makes such a stance less likely. However, complacency about the bilateral relationship is unwarranted and could prove dangerous."

Greed, self-interest, and the extended order of voluntary transactions:  "One virtue of a private-property free market is that it channels our self-interests so that we serve our self-interests best by serving the self-interests of others. I can get a beer from you, a brewer, only by giving you something that you value more than the beer in return. We both gain. Government, in contrast, unleashes greed."



List of backup or "mirror" sites here or  here -- for when blogspot is "down" or failing to  update.  Email me  here (Hotmail address). My Home Pages are here (Academic) or  here (Pictorial) or  here  (Personal)


The Big Lie of the late 20th century was that Nazism was Rightist.  It was in fact typical of the Leftism of its day.  It was only to the Right of  Stalin's Communism.  The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


No comments: