Grantcoulson's Blog

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

“Everything that needs to be said has already been said. But since no one was listening, everything must be said again.”  André Gide

   Wherein we learn that the green energy revolution only referred to the amount of money it cost. Solar, wind, hydrogen  and biomass are not viable and never will be. They only exist because of the coercive power of taxation which takes from the productive and gives to those with enough political acumen to extract money from politicians.

Time to gas failed green programs

By Lorne Gunter, QMI Agency

Reuters/Denis Balibouse, FILE

Green energy alternatives are nothing more than expensive fantasies, at least for now. Wind farms, acres of solar panels and ponds of bio fuel are, by and large, uneconomic without huge, direct subsidies from taxpayers.

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    There is no “now”. They are nothing but fantasies.

There may come a day when non-carbon fuels make financial sense, but for now alternate-energy projects are simply money pits. And the private companies that politicians hail as pioneers in “clean” energy are mostly just subsidy miners. They’ve simply figured out how to make money by extracting big grants from crusading politicians eager to prove their environmental bona fides by spending other people’s money.

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      “I don’t mine the mines, honey. I mine the miners” Madame in a mining boom town.

Take hydrogen fuel cells, for instance. The previous Liberal government pumped billions into technology that, they insisted, would convert gasoline and diesel vehicles to low-emission hydrogen. So how did that work out? Where can I buy a hydrogen SUV?

Like most clean-energy dreams, the “promise” of a hydrogen-fuelled future keeps slamming up against immutable realities. For instance, no one has yet figured out how to make hydrogen give up more energy than it takes to convert hydrogen to fuel. Say, for example, it takes 10 units of carbon energy to force eight units of energy out of hydrogen. No matter how many tax dollars go into research, manufacturers still have a 20% deficit on each energy unit produced.

Then there’s the fact that there are about 7,000 retail gas stations in Canada and almost no hydrogen stations. Where would you fuel up your eco-mobile even if you could buy one?

Then there’s the problematic little fact that many “clean” energies aren’t that clean.

Electric cars, as an example, need to be charged. The power to charge them has to come from big generating plants, which means that while electric cars themselves emit no pollution, they cause as much or more pollution to be created from power generation.

And solar panels are dirty to make. Toxic waste is generated during their manufacture, which is one of the biggest reasons most of them are made in China and the developing world rather than in the eco-conscious West.

All of this may explain why Europe is backing away from huge alternate-energy subsidies. Having spent tens of billions of dollars bribing Germans to attach solar panels to every house, apartment and shed in the country, the Berlin government is now ending most such subsidies because the effort simply has not generated enough power to allow conventional electric plants to be closed.

Even the EU energy commissioner is set to recommend next month to the Union’s governing body that European subsidies, too, be scaled back by at least 30%.

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     Why not end them completely?

So it should come as no surprise that University of Alberta energy economist Andrew Leach calculated this week that for Alberta homeowners who choose their utilities‚ current offers to lease solar panels for their rooftops will save no money over the life of their contracts. The panels may be fashionable symbols of a homeowner’s commitment to the environment, but they can cost upwards of $4,300 more than conventional electricity over a 15-year contract.

This has been the experience in Ontario, too, where the government of Liberal Premier Dalton McGuinty has spent billions upon billions on green energy only to find the alternatives have generated little new energy, created few truly new jobs and saddled taxpayers with subsidies to alternate-energy providers that will continue for decades. Just about all Ontario has to show is power rates that are higher by 30-40%.

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   Thank God that energy generation and transmission are in the hands of the government so that rationality prevails.

The province may have thousands of new panels glinting in the sun, but no economical way to get the power to consumers.

It’s time to stop bilking taxpayers and consumers for “green” dreams that never materialize.

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    Now it’s been said again.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

        Do not think about, write about or deal with  human behavior without determining the effects of incentives.

    Wherein we find that people have been playing the system to maximize input and minimize labor. Canada’s system of paying people who are out of work used to be called Unemployment Insurance. Now, with a bureaucratic twist which changed nothing, it’s called Employment Insurance.

EI plan targets only the work-shy
Minority of claimants prefer to be unemployed

That cozy arrangement is set to come to an end

Atlantic Canadians resent the negative stereotype of being a region of loafers, who rely on pogey to pay for their beer and popcorn through the winter. And so they should. The government’s new Employment Insurance reforms show that the work-shy live among us in every province.

Take Alberta: There are currently 347 people claiming EI whose occupational classification is “food counter attendant.” At the same time, there are 1,261 foreign workers filling those jobs.

In Ontario, there are 648 people claiming EI who are listed as “baby-sitters, nannies and parents’ helpers,” while 668 temporary foreign workers have been imported to take similar positions. In Prince Edward Island, there were 294 claims from out-of-work fish plant workers, while 60 temporary workers from overseas were approved to work in the same occupation.

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      Why work at $400 per week when you don’t have to work at $275?

Some employers may have chosen to employ foreign workers deliberately. And, clearly, not all the vacancies are in the same proximity as the local workers who are qualified to fill them.

But it’s also evident a significant number of Canadian workers prefer to sit on their duffs and claim 55% of their average insurable earnings, safe in the knowledge that their benefits will not be cut off if they don’t look for work.

In any given year, there are 1.4 million Canadians claiming EI and yet 250,000 jobs go unfilled. Ottawa’s reforms are designed to better connect employers and prospective employees — and “encourage” those who prefer not to work to fill some of those jobs.

Diane Finley, the Human Resources Minister, released details of EI reforms Thursday that could cut off the benefits of 5,000-10,000 claimants, if they do not satisfy the new criteria.

She portrayed the reforms in a softer light, as an attempt to connect Canadians to available jobs. “These changes are not about forcing people to accept work outside their own area or taking jobs for which they are not suited,” she said.

But the new legislation will oblige healthy workers to take jobs within a one hour commute.

The one-fifth of all claimants who fall back on the EI system frequently — that is, people who have received over 60 weeks of benefits in the preceding five years — will be most affected. They will be expected to expand their job search beyond the job they normally perform at the outset of their claim and be prepared to accept wages starting at 80% of their previous hourly wage. After receiving benefits for seven weeks, they will have to accept any job they are qualified to perform and accept wages starting at 70% of their previous wage.

Needless to say, the prospect of a 30% pay cut has the labour unions up in arms. Ken Georgetti of the Canadian Labour Congress said he was “astonished” that Ms. Finley would even suggest it.

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    Labour unions know that prosperity comes from legislation protecting them from competition.

Peggy Nash, the NDP finance critic, took issue with the whole EI system, saying these changes will further restrict access to benefits for which only 40% of Canadians qualify.

“EI is an insurance policy owned by the people who paid into it, not the Conservative Party of Canada,” she said, undermining her own argument. “The real problem is people paying into an insurance plan and not getting the benefits.”

This is, of course, nonsense. EI is an insurance policy that pays out to those who have paid in and qualify. Currently, 83% of those laid off have enough hours to get EI. To qualify, you need to have worked roughly 12 weeks in high unemployment areas or 19 weeks in lower unemployment regions. But like any insurance policy, you can only claim if you have paid your premiums.

The critics may carp but the system has allowed the evolution of a culture of entitlement, where it is seen as a badge of honour to work the 420 hours as quickly as possible and then retire on half pay for the rest of the year.

In Ms. Nash’s world, everyone’s a victim and we should all weep for stranded jellyfish. “This is an attempt to demonize people who through no fault of their own are unemployed,” she said.

Yet it’s clear that a minority of EI claimants prefer to be unemployed. One refinery worker in Fort Mcmurray wrote to say that Cape Bretoners at his plant boast openly about filling their 420 hour quota and then heading home to take the rest of the year off.

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   And thus the gaming will occur when it pays off in more money and less work.

That cozy arrangement is set to come to an end, thanks to the reforms announced Thursday and a $21-million allocation in the budget. Some of that new money will be spent sending job postings twice a day to EI claimants; some of it will be allocated for enhanced enforcement — workers will have to submit evidence supporting their job search activities or face loss of benefits.

This carrot and stick approach is designed to give Canadians first crack at available jobs before employers are allowed to import foreign workers. The provisions appear reasonable and well designed.

They will help small businesses fill vacancies, reduce the EI bill and will have the added bonus of making the rest of us feel less like we’re being fleeced by the minority of EI claimants who are gaming the system.

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    We’ll see if this works, but, in government, what is intended is more important than what happens. “We thought it was a safety net, but they’re treating it as a hammock.”

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

   Do not think about, write about or deal with  human behavior without determining the effects of incentives.

   Thanks to marginalrevolution.com for the reference.

    Wherein we learn about the impertinences placed in the way of Individual Striving by those for whom profit is a red flag for taxing and control.

Licensed To Decorate
Taxes don?t kill entrepreneurship. Crazy licensing rules do.

By Matthew Yglesias|Posted Sunday, May 20, 2012, at 10:03:08 PM ET

To hear politicians tell it, the No. 1 barrier to small-business growth is taxes. Last year, John Boehner rebutted Obama administration calls for a surtax on millionaires with the claim that “over half of the people who would be taxed under this plan are, in fact, small businesspeople,” so “you’re going to basically increase taxes on the very people that we’re hoping will reinvest in our economy and create jobs.” The White House has tried to counter this with math, illustrating that relatively little of the revenue it wants to raise derives from small businesses with employees. But this debate leaves small-business operators and their employees—few of whom are members of the fabled top 1 percent—as pawns in a larger ideological struggle about the scope and generosity of the welfare state.

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    Democrats, demagogues extraordinaire, have turned the deficit debate into a debate about “taxing the rich”. That’ll fix overspending.

It turns out that, when surveyed, small-business owners place relatively little weight on tax issues anyway. They’re much more concerned with something Washington rarely talks about: the country’s spreading thicket of licensing rules.

To be charged a high tax rate on your small-business profits, you need to be turning a tidy profit in the first place. Anyone in that position would surely prefer lower taxes but is fundamentally ahead of the game. The main barrier to entrepreneurship is not that you’ll pay taxes if you succeed—it’s that you might not make any money at all.

The evidence comes from a recent survey conducted by the Kauffman Foundation in partnership with Thumbtack.com. They polled small-business owners about how friendly various state-policy factors are to small firms. Then, instead of home-brewing an arbitrary weighting system, they simply asked respondents to give an overall assessment. The basic pattern of the results is that more politically conservative states score higher. Texas, for example, gets an A+ on overall business climate, while California rates an F. But Minnesota and Oregon score highly, while Mississippi, North Carolina, and Arizona look bad. Swing states are all over the map, with Florida a C and New Hampshire an A.

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    Texas versus California–guess which one has had, and will have, more economic growth.

Perhaps most interestingly, the fact that the overall conditions were rated separately from the individual ones means it’s possible to objectively calculate correlations between the factors.

Texas is full of high marks, but it’s not obvious that the discerning voter actually wants to copy the state’s beloved-by-business environmental regulations. Part of the point of such rules, after all, is that businesses don’t always want to do what’s best for local public health or air quality. In any case, according to Kauffman, “environmental and zoning regulations tended to be the least statistically significant predictors of small business owners’ view of the state’s friendliness.” So you can sleep safely in the knowledge that more pollution isn’t necessary to promote a better business climate.

Licensing requirements, by contrast, are by far the best statistical predictor of business-friendliness, for those subjected to them. And unlike taxes or environmental rules, these have spread like kudzu, with little scrutiny and often scant policy rationale.

A recent comprehensive survey of state licensing practices by the Institute for Justice* reveals little consistency or coherent purpose behind most licensing. Nevada*, Louisiana, Florida, and the District of Columbia, for example, all require aspiring interior designers to undergo 2,190 hours of training and apprenticeship and pass an exam before practicing. In the other 47 states, meanwhile, there’s no legal training requirement. My friends and co-workers living in D.C.’s Virginia and Maryland suburbs appear to get on fine with unlicensed interior decorators, and all across America, amateurs have decorated their own homes without imperiling public safety.

Almost all states—though not Alabama* or the anarchic United Kingdom—require barbers to be licensed, but the specific requirements seem to vary arbitrarily. New York barbers need 884 days of education and apprenticeship. Across the river in New Jersey, it’s 280. But getting one’s hair cut in New Jersey (to say nothing of England) is hardly a life-threatening gamble.

In most of the country, what you need to do in order to work as a locksmith is find someone to pay you to fix locks. But in Oklahoma you have to be 21 years old, New Jersey requires a high-school diploma, and Tennessee makes you take two exams.

These rules correlate strongly with burdensomeness in part for the same reason that they seem so random—they’re often imposed specifically in order to create a burden and stifle competition. Once a licensing regime is in place, existing license holders have an incentive to lobby to raise the bar for entry.

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     Restriction of trade, guildism, rent-seeking, all mean that “I’ve got mine, you won’t be getting it.”

Over time, licensing has become much more common. Morris Kleiner of the University of Minnesota and Alan Krueger of Princeton (and current chair of the Obama Council of Economic Advisers) have found that in the early 1950s, less than 5 percent of the population worked in occupations covered by state licensing rules. Today it’s well over 20 percent. Some of this is surely justified. You need a license to drive a car, so requiring a special license to drive a bus is reasonable. Even there, though, you may wonder why it’s so much harder to become a licensed bus driver in New Jersey than anywhere else.

But a wide range of these rules could be done away with entirely at basically no risk. Regulation is needed when it would make sense for a firm to deliberately engage in malfeasance. Dumping harmful toxins into the air is highly profitable unless it’s prohibited. Financiers can draw huge bonuses by taking on too much risk, only to wreck the economy later. In other occupations, though, shoddy work brings its own punishments. An interior decorator who can’t get recommendations from satisfied customers probably won’t remain an interior decorator for long.

In these cases, licensing rules raise the prices the rest of us pay, make it difficult for successful entrepreneurs to expand their businesses, and are often a major barrier to employment for the most vulnerable populations. New Jersey’s ban on high-school dropouts fixing locks sounds silly, but given the generally bleak prospects facing workers with little education, barring them from whole occupations is a big deal. States should take a good, hard look at their existing codes and ask whether mass unemployment isn’t generally a bigger threat to the public than rogue barbers.

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    This is one of Europe’s problems. As said here often, how adding a layer of bureaucracy was supposed to increase prosperity is beyond the understanding of any rational being.

     The business of government is always opposite to the real business of business and cannot be reformed because it’s the nature of government to impede commerce.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

   Do not think about, write about or deal with  human behavior without determining the effects of incentives.

    The Elite have no faith, or knowledge, of the simple virtues of humans. Their faith resides in the coercive touch of government guided, of course, by them.

    The best way to determine if someone believes he is a member of the Elite is that everything he does is Sacred and everything you do is Profane.  If you’re married to one, no fair solving the problem with a sharp instrument, blunt instrument or device based on gunpowder.

“…there’s always one more thing to do.” Colonel Green–The Bridge on the River Kwai.

    Wherein we find how politicians operate.

    Big Lies in Politics

   Thomas Sowell

May 22, 2012

    The fact that so many successful politicians are such shameless liars is not only a reflection on them, it is also a reflection on us. When the people want the impossible, only liars can satisfy them, and only in the short run. The current outbreaks of riots in Europe show what happens when the truth catches up with both the politicians and the people in the long run.

Among the biggest lies of the welfare states on both sides of the Atlantic is the notion that the government can supply the people with things they want but cannot afford. Since the government gets its resources from the people, if the people as a whole cannot afford something, neither can the government.

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    The home truth of deficit financing–Liberals believe that if it’s the right thing to do, it must be done.

There is, of course, the perennial fallacy that the government can simply raise taxes on "the rich" and use that additional revenue to pay for things that most people cannot afford. What is amazing is the implicit assumption that "the rich" are all such complete fools that they will do nothing to prevent their money from being taxed away. History shows otherwise.

After the Constitution of the United States was amended to permit a federal income tax, in 1916, the number of people reporting taxable incomes of $300,000 a year or more fell from well over a thousand to fewer than three hundred by 1921.

Were the rich all getting poorer? Not at all. They were investing huge sums of money in tax-exempt securities. The amount of money invested in tax-exempt securities was larger than the federal budget, and nearly half as large as the national debt.

This was not unique to the United States or to that era. After the British government raised their income tax on the top income earners in 2010, they discovered that they collected less tax revenue than before. Other countries have had similar experiences. Apparently the rich are not all fools, after all.

In today’s globalized world economy, the rich can simply invest their money in countries where tax rates are lower.

So, if you cannot rely on "the rich" to pick up the slack, what can you rely on? Lies.

Nothing is easier for a politician than promising government benefits that cannot be delivered. Pensions such as Social Security are perfect for this role. The promises that are made are for money to be paid many years from now — and somebody else will be in power then, left with the job of figuring out what to say and do when the money runs out and the riots start.

There are all sorts of ways of postponing the day of reckoning. The government can refuse to pay what it costs to get things done. Cutting what doctors are paid for treating Medicare patients is one obvious example.

That of course leads some doctors to refuse to take on new Medicare patients. But this process takes time to really make its full impact felt — and elections are held in the short run. This is another growing problem that can be left for someone else to try to cope with in future years.

Increasing amounts of paperwork for doctors in welfare states with government-run medical care, and reduced payments to those doctors, in order to stave off the day of bankruptcy, mean that the medical profession is likely to attract fewer of the brightest young people who have other occupations available to them — paying more money and having fewer hassles. But this too is a long-run problem — and elections are still held in the short run.

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     If there is a problem, blame the physicians. Like the relationship between British Tommies and their officiers, we simultaneously hate and revere them.

Eventually, all these long-run problems can catch up with the wonderful-sounding lies that are the lifeblood of welfare state politics. But there can be a lot of elections between now and eventually — and those who are good at political lies can win a lot of those elections.

As the day of reckoning approaches, there are a number of ways of seeming to overcome the crisis. If the government is running out of money, it can print more money. That does not make the country any richer, but it quietly transfers part of the value of existing money from people’s savings and income to the government, whose newly printed money is worth just as much as the money that people worked for and saved.

Printing more money means inflation — and inflation is a quiet lie, by which a government can keep its promises on paper, but with money worth much less than when the promises were made.

Is it so surprising voters with unrealistic hopes elect politicians who lie about being able to fulfill those hopes?

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    As usual, Thomas Sowell gets to the heart of the matter.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

This is what happens when irrational reverence is coupled, as it always is, by slathers of government money.

Soon every faculty member will have a personal senior manager: Is this a good way to spend money?

by Richard Evans

In a letter to the UC Davis community, Chancellor Katehi and Provost Lavernia declared that we should work collectively “to address today’s major budget cuts, which come as a consequence of the state’s decade-long disinvestment in higher education.” I think there is a more immediate target for constructive change that would balance the UC budget.

It’s true that UC’s share of the state’s general fund has been declining (from 7.5 percent in 1967-68 to as low as 3 percent in recent years, according to the California Postsecondary Education Commission[1]), but that has been a steady trend. The more immediate reason for the current enormous increases in student fees, and for the sudden need for employee furloughs, is the startling recent growth of UC’s senior management. Data available from the UC Office of the President shows that there were 2.5 faculty members for each senior manager in the UC system in 1993. Now there are as many senior managers as faculty.[2] Just think: Each professor could have his or her personal senior manager.

    One of the irrational notions of higher education is that it is a public good, independent of reality. Constantly striving for more education only makes sense if the training bears some relation to post-education work activity. Increased money without performance requirements produces the kind of high costs higher education is becoming famous for.

In the decade beginning in 1997, while faculty increased by 24 percent and student enrollment increased 39 percent, senior management grew by 118 percent. This past year, with the budget crisis in full swing, senior management has grown at twice the rate of faculty. That comes at a high price, because many managers are very well compensated for their work. A report on administrative growth by the UCLA Faculty Association[3] estimated that UC would have $800 million more each year if senior management had grown at the same rate as the rest of the university since 1997, instead of four times faster.

What could we do with $800 million? That is the total amount of the state funding cuts for 2008-09 and 2009-10, and four times the savings of the employee furloughs.[4] Consider this: UC revenue from student fees has tripled in the last eight years. The ratio of state general fund revenue to student fee revenue in 1997 was 3.6:1. Last year it was 1.9:1. If we used that $800 million to reduce student fees, the ratio would go back to the 1997 value.[5] To put another way, it could pay the educational fees for 100,000 resident undergraduates.

Of course the budget crisis is more complex than this. Of course we must try to convince the state government and the public of the wisdom of investment in our university system. But changing attitudes about public investment is a large task that involves far more than just UC. I’m not sure that those who are reluctant to increase UC support will be swayed by arguments presented by a UC president whose 2008 compensation was $828,000. Or by a new UC Davis chancellor whose salary (27 percent greater than that of her predecessor) equals that of the US president.

Our effort to solve the budget problems has a greater chance for success if we first aim at something we have direct control over. UC has shared governance (in theory), and does its own hiring. I suggest that we — administrators, faculty, staff and students — review the justification, costs, and benefits related to the explosive growth in senior management. If we could reduce management costs by $800 million, we could eliminate much of the financial hardship on students and staff. We could argue convincingly to the governor and state legislature that a well-run UC deserves full support. Perhaps most impressive, we could present a model for turning back a nationwide trend in university hiring.

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    Don’t count on an outbreak of rationality and thrift among the high priests of “more education is a good thing—keep sending money” movement.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

   Do not think about, write about or deal with  human behavior without determining the effects of incentives.

    One person I know had a excellent job as an ironworker, got unemployment insurance for the winters off and renovated houses. He was paid for being unemployed while working. Social justice is such a nice concept. It means, “pay forever for the giveaways we believe in.”

DARREN CALABRESE / NATIONAL POST

Is the EI system making it more attractive to not work?

Jenna Somerton views her layoff from a job at Algonquin College in June of 2010 as a blessing in disguise: She lived on employment insurance benefits for eight months, took stock and decided what she really wanted to do with her life.

Of course, she admits to taking advantage of her EI cheques at the beginning, after hunting for a job with no luck.

“I was thinking, ‘ Free money, the government owes me, I paid for school…. I deserve this,’ ” the 27-yearold Ottawa resident says now.

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    I believe in my right to live off others.

She soon got serious, using the subsidized income to hatch plans to start her own web development business. Some of her friends, she said, have not been so diligent.

“I’ve known lots of people on EI and I know a lot of them just stayed on EI and as soon as it ran out they started freaking out and then they started looking for jobs…. [The government] makes it so easy.”

The difference between Ms. Somerton and what critics would call EI abusers is a priority for a government trying to close the productivity gap and get more Canadians contributing to the economy through work. This week, reports confirmed these changes will demand repeat users of the program take lowerpaying jobs than Canadians who are using EI for the first time — a move that specifically targets seasonal workers and those who are arguably coasting on the system. As Stephen Harper’s Conservatives push ahead with their mandate to make Canada a formidable competitor with the world’s emerging markets, the task of lowering unemployment rates and solving labour shortages has become a more pressing one.

There is a sense among business owners and prominent members of the Harper Cabinet that Canadians may be aiming too high, whether they are spoiled, unwilling to take on jobs that are deemed “beneath” them or their work ethic has waned to the point that a farmer in the Okanagan can’t get students to pick fruit in the summer because they’d rather work in an air conditioned office, or so goes an anecdote Immigration and Citizenship Minister Jason Kenney likes to use.

“I think we need to revalue work itself and encourage people to think a little bit more broadly and open their horizons,” Mr. Kenney told the National Post’s editorial board last month.

Finance Minister Jim Flaherty raised a bit of a firestorm with his comments this week that “There is no bad job; the only bad job is not having a job,” but Dan Kelly, the senior vicepresident of legislative affairs for the Canadian Federation of Independent Business, said Mr. Flaherty’s message resonates with small business owners.

In some areas, they have found themselves competing with the EI system for workers who are weighing opportunity costs: Would I toil in a hard labour job for $10 an hour or not go to work for roughly the same amount of cash?

Fish processing plants in Prince Edward Island are bringing in Russian workers because they can’t find locals to do the work, despite a local unemployment rate of 11% reported in April. Farmers in Saskatchewan are offering $25 an hour for unskilled farm labour, but rely on the Temporary Foreign Worker Program because they can’t find workers at home.

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     Can’t get people to process the fish caught by Canada’s heavily subsidized fishing industry.

“Many Canadians — not all, but many Canadians — do believe that they are above a whole bunch of different occupations,” Mr. Kelly said. “And yet, these same Canadians depend desperately on people to take these jobs to better their own quality of life. These same Canadians that are looking down their noses at the so-called ‘bad jobs’ out there, who’s taking care of their parents at the personal care home? Who’s washing their dishes in the restaurant? Who’s cleaning the toilets at the shopping centre that they go to?”

Torontonian Adam Labadie stopped just short of working in retail when he was on EI last year, deciding instead to focus on brushing up his skills in sound production and doing gigs for free.

“I’m 28, I have an education in a technical skill…. I think people like myself should hold out for what they’re trained to do,” he said. “You wouldn’t say to a doctor, ‘Hey, maybe you should give roller-skating lessons.’ ”

Mr. Kelly says the government-created EI system — heavily subsidized by Canadians who never use it — is being abused by people who return to it again and again.

A CFIB survey published in September, 2009, found 22% of small businesses owners had trouble hiring people who are on EI, as workers said they would rather continue collecting benefits than work in the more hands-on jobs. Another 16% said that in the past year, they had an employee ask to be laid off so he or she could collect EI benefits (these rates were higher in Newfoundland and Prince Edward Island).

“Even in the depths of the recession … we had close to 40% of our members say that they couldn’t find the people they needed for the jobs they had,” Mr. Kelly said. “It’s right across the industry spectrum, but you hear particular problems in a lot of the trades, in agriculture, in construction, the service economy and retail. In many of those sectors it’s gone beyond skill shortages, it’s an actual labour shortage.”

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     Not eating is a wonderful motivator.

The problem is also true in Atlantic Canada, he said, where employers tell him qualified workers are “People that will show up to work on time, people that will work a full week without disappearing.”

He believes the work ethic has waned over the generations and young people have never been through a bad economy. Even prior to Generation Y, youngsters have been raised to aim high — stock up on the extracurricular activities and start paving an intellectual career path when they begin high school. That, paired with the protective nature of parents today and educational competitiveness (it’s hard to get a good professional job without a master’s degree), begets a crush of people who are overqualified for many jobs, Mr. Kelly said.

“Political correctness” is not allowing for a debate over who is going to take the lowerskilled entry level and semiskilled positions in the future, he added.

David Bradley, CEO of the Canadian Trucking Industry Association, says the growth of the knowledge economy, including technology, has contributed to staffing problems in his well-paying industry.

“Somewhat of an intellectual snobbishness [has] crept in and now we’re perhaps paying a price for that in our country,” he said. “We have people with a goal in mind for what an ideal career would be and they’re not willing to do [this kind of work].”

Employment Insurance in Canada has a training program for recipients so they can learn how to drive a truck, he said, but it hasn’t gained a significant amount of traction. People can come in from the Temporary Foreign Worker Program, but by the time they’re trained, they have to leave the country.

While many Atlantic Canadians have left their homes in search of work, there is a lot of resistance to the idea.

A survey of repeat EI recipients, conducted by Social Research and Demonstration Corp. in 1997, found that while they would be open to the opportunity if an employer in their area offered them a similar job, only 30% of male repeat and occasional EI claimants said it was “very likely” or “somewhat likely” they’d accept a comparable job away from home. Among women, only 14.8% of occasional users would accept, while 11.3% of repeat users said they would go.

Lyne Gionet works for 14 weeks of the year as a general store supervisor at Village Historique Acadien in Caraquet, which is about 45 minutes away from Bathurst, N.B. She collects EI for the remainder of the year because, she says, it’s too dangerous to drive to the city for work. She did a stint as a gas station attendant last winter, but stopped because she wasn’t getting enough hours.

The 41-year-old has moved away to find work in the past, but returned home “because this is where I want to raise my kids,” she said.

<insert>

     Government programs are all about personal comfort.

“I wish there were enough jobs for everybody,” she said. “I know that when my daughter and son graduate from university or college, that there’s a very good chance they won’t be living here. And that’s sad.”

A 2006 Fraser Institute report, Long-term Effects of Generous Unemployment Insurance: Historical Study of New Brunswick and Maine, 19401990, found that much greater percentages of workers in N.B. claimed jobless benefits than in neighbouring Maine — an area with virtually the same seasonally specific labour market of fisheries and tourism.

The study, Mcmaster University economics professor Arthur Sweetman says, illustrates how societies adapt to an Employment Insurance system that has become much more generous.

“[There was] a giant shift over multiple decades in the number of people in New Brunswick who are working part-year compared to Maine, and it’s because of the nature of the EI system that effectively subsidizes part-year work,” he said.

Linda Duxbury, a business professor at Carleton University asks: “Whose fault is this? Is it [the seasonal workers’] for taking advantage of a system we created, or is it ours for creating the system?

“If people can live on half a salary a year and we pay them to do nothing the other half, fair enough.”

Instead of the very subjective notion of “good jobs, bad jobs” that Mr. Flaherty is raising, perhaps the conversation should really focus on the “value we place on being employed.”

“There’s a very famous business article called The folly of rewarding A and hoping for B, and it says you don’t get what you talk about, you get what you reward,” she said. “So we talk about ‘People should get out there and they should work,’ but we’re rewarding not working.”

<end>

    Reward A and Hope for B.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

   Do not think about, write about or deal with  human behavior without determining the effects of incentives.

      Wherein more of what caused the problem is recommended to fix the problem.

Germany, the Crisis and the G-8
Published: May 17, 2012

When the leaders of the Group of 8 gather at Camp David on Friday, President Obama and the others must press Chancellor Angela Merkel of Germany to commit to a euro-zone growth package. This is no time to mince words: Her one-size-fits-all austerity program has been a failure, pushing heavily indebted countries deeper into recession, making it even harder for them to pay off their debts. It is putting the already-weak recovery in the United States at risk and is fueling instability and extremism in Europe.

<insert>

     Telling the Germans how to run an economy by doing what the losers are doing.

After months of obstinance, Ms. Merkel has softened her stance — saying that Germany is open to stimulus to spur growth, employment and development in Greece and pledging to work with the new French president, François Hollande, on a program to promote growth across recession-racked Europe. It is unclear, however, whether her comments reflect a true and lasting change of heart.

Ms. Merkel’s new talking points appear to be driven mainly by the defeat in France of Nicolas Sarkozy, her longtime partner-in-austerity, and the spreading chaos in Greece, where anti-austerity voters brought down the government this month and fears that the country could soon exit the euro have provoked a run on the banks and capital flight.

<insert>

    Learning from the pampered recipients of government handouts is the perfect way to shape government spending.

German officials made things worse by talking about the euro zone’s ability to carry on without Greece. Ms. Merkel is now insisting that she wants Greece to remain, but it will take more than kind words to change things.

What is needed is a real “growth compact” to boost the capacity of the European Investment Bank and other European Union funds to invest in infrastructure and other job-creating projects in crisis countries. It would need to be coupled with a plan to soften or delay agreed-upon spending cuts. That would be a breakthrough but only a start on the road to recovery.

<insert>

     Government stimulus programs–What could go wrong? Governments know how to build prosperity–just ask any government employee.

Germany still strongly opposes a sensible plan, endorsed by the International Monetary Fund, in which euro-zone members jointly issue bonds. Such bonds would both help pay for stimulus projects while easing borrowing costs for vulnerable countries like Spain and Italy.

Some German voters have also begun to question austerity. But after insisting for so long that the profligate must pay for their sins, Ms. Merkel will need political cover from her fellow leaders. And there is no question that many of the struggling countries need to reform.

Greece and many others need to collect taxes, reform their labor markets and commit to honest and transparent budgeting. France could also soften its resistance to stronger pan-European institutions. That would allow for more effective decision-making on financial reform, emergency aid, fiscal discipline and structural reforms.

Everyone needs a way out. At the G-8 meeting, world leaders must find one.

<end>

     Wait for the results—they’ll be awful, but governments will pretend they’re wonderful.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

   Do not think about, write about or deal with  human behavior without determining the effects of incentives.

    Now someone is taking my advice on pirates, perhaps they’ll listen about government, deficits and free enterprise.

EUROPEAN FORCES TAKE FIGHT TO PIRATES
Helicopter raid on Somali beach opens new front

European anti-piracy forces carried out their first air attack on mainland Somalia Tuesday, strafing a beach from a low-flying helicopter and destroying pirates’ boats, fuel supplies and an arms cache.

The attack is likely to lead to an intensification of the campaign against the multi-million-dollar piracy racket that is damaging international trade, naval intelligence sources say.

But the pirates responded by threatening to kill crew being held on more than a dozen hijacked vessels if they were attacked again.

The dawn raid, launched from one of nine European warships patrolling off Somalia, was aimed at “making life as difficult for pirates on land as we’re making it at sea,” a European Union military official said.

The operation was ordered after weeks of surveillance on the pirates’ known hideouts from European spy planes and patrol boats spying from offshore.

Pirates in Xarardheere said they ran as the helicopter gunship began hitting the area.

Residents said the helicopter had strafed the pirate skiffs, which the pirates call their hunting boats, and also destroyed several old-fashioned Arab dhows, wooden sailboats sometimes used by the pirates to ferry supplies to captured ships. A Somali pirate who identified himself as Abdi told Reuters, “An unidentified helicopter destroyed five of our speedboats early in the morning. There were no casualties. We were setting off from the shore when the helicopter attacked us. We ran away without counter-attacking,” he said.

“If we are attacked while with hostages, we shall take any necessary step to save ourselves, we may also kill the hostages if we miss other options to survive.”

It is believed pirates have more than 300 hostages of various nationalities.

Pirates said the strike also hit drums of diesel and a weapons store.

It is the first time European military units have been ordered to attack pirates on land and follows an EU ruling two months ago allowing “disruptive action against known pirate supplies on the shore.”

“We believe this action will further increase the pressure on [pirates] and disrupt pirates’ efforts to get out to sea to attack merchant shipping and dhows,” said Rear Admiral Duncan Potts, the British operation commander of the EU naval force.

The attack involved several European navies, including seven frigates patrolling off Somalia, from France, Germany, Italy, Spain, the Netherlands and Portugal. No one was injured on land during the mission, and all the EU troops involved returned safely to their vessels after the attack. None set foot on Somali soil.

With the arrival of the French amphibious assault ship Dixmude in the coming weeks, the attacks are likely to escalate. The newly commissioned vessel can accommodate Tiger attack helicopters, which can carry out sophisticated missile strikes from a safe distance.

“The time is now right to step up the attacks on the infrastructure to put the pirates considerably on the back foot,” said a Royal Navy source. “However, the Somalis will certainly be better prepared next time round and are likely to defend their bases with significant anti-aircraft assets now they know that the ante has been upped. This will inevitably lead to bloodshed and escalation.”

In March, the EU adopted a more robust mandate for its naval force, allowing it for the first time to mount strikes against pirate targets on Somalia’s “coastal territory and internal waters.”

Somalia’s government was informed of the operation before it began and gave it full support, an EU force spokesman added.

A study published earlier this year by the One Earth Future Foundation showed Somali piracy cost the world economy some $7-billion last year, with ransoms paid reaching $160-million.

<end>

    Outlaws, by definition, only understand force so that the judicious application of it is the only thing that will end outlawry.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

     Do not think about, write about or deal with  human behavior without determining the effects of incentives.

National Post May 15, 2012
The doctor won’t see you yet

Cutting physicians’ pay does nothing to fix the healthcare system’s deep-seated structural problems

Imagine a world where you book your doctor’s appointment online. Where there is no one in the waiting room when you arrive and you are seen immediately by your physician.

In this world, your doctor doesn’t leave you waiting in an examination room while he plays musical patients. Nor does he start edging out of the room at the seven minute mark, informing you that if you have additional issues, you will need to book another appointment.

Your doctor allots the appropriate amount of time to deal with your queries, because he already knows what they are; you told him when you made your online appointment. Imagine that while you are with him you are given your referral appointment (not the promise of one that might take months to secure) and when you leave, your prescription is already waiting at the pharmacy downstairs.

To the benighted Canadian healthcare patient, this imagined world is as fantastical as being able to gorge on donuts and lose weight. And that’s because it’s predicated on a concept that is foreign to Canadian healthcare: customer service. But according to Shaun Francis, the CEO of the country’s largest private clinic, Medcan, it’s a world that can exist — and already does in many corners of the globe.

But as Francis told an Economic Club gathering in Toronto recently, don’t bet on any of these dreamy conveniences coming to Canada, or more precisely Ontario, where the province is grappling with a massive $15-billion deficit and skyrocketing healthcare costs that threaten to overwhelm the rest of the budget.

In a bid to reign in ballooning spending that prompted two credit rating agencies to downgrade Ontario’s sovereign debt outlook in the past month, Dalton Mcguinty’s Liberal government unleashed its first major offensive. The target was an easy one: doctors’ pay. Specifically, the 400 or so specialists who bill over $600,000 a year.

It was a calculated political manoeuvre. Beating on the rich has become a popular pastime these days, and it’s hard to justify those rates when the system is facing chronic shortages of everything from nurses to long-term care beds. If a few hundred doctors are upset, it’s a small price to pay, particularly since they probably don’t vote Liberal anyway.

The problem is that while the optics are great, it really doesn’t do anything to fix the system’s deepseated structural problems. As Francis pointed out: “Cutting doctors’ pay deals with the symptom, but not the disease.” The cuts are expected to save the province $338-million this year, compared to annual healthcare spending of $47-billion. But will they bring us any closer to the idea of a customer-focused system, which drives better quality care, greater efficiency and innovation?

Right now there is only one customer — one that is spending other people’s money. When the Ontario government started running out of other people’s money in the 1990s, it simply capped the number of doctors allowed into the system, creating huge shortages and a flight of doctors across the border. In the early 2000s, the government began hiking doctor pay to lure them back. And now, unable to afford those increases, it’s cutting back once again.

<insert>

    If anyone thinks socialism is a good idea, that person should spend hours in an emergency waiting room, note the inefficiencies and surly indifference. It you can’t take your custom elsewhere, the service will be indifferent. Just talk to a few people from the public school system.

In this command-and-controlstyle regime, there is little room for customer service. In fact, doctors, which are still in short supply in Ontario, actually interview patients before accepting them. As for physicians, who are technically private businesspeople who bill the government for their services, their entrepreneurial spirit has been starved.

“We need to turn patients into customers and open the system to entrepreneurs and competition,” says Francis. Unfortunately, he adds, there is no Canadian politician today with the courage to talk about new ideas. Although many of them, as customers of his private medical clinic, which is limited to providing services not covered by the government, certainly appreciate topnotch service.

Francis is currently living in France, which just elected a socialist president, but as he notes, has plenty of private clinics. Waiting in the hospital emergency room is a foreign concept there. Sadly for Canadians, not waiting for a doctor is the foreign notion, and it will remain firmly fixed in the realm of the imaginary for the foreseeable future.

<end>

    Socialized medicine where the maximum payment becomes the minimum, the workforce is unionized and people with limited skills and ability get paid far beyond their worth.  Members of these systems are the new Elite where knowledge and hard work bow to club membership. Mix in a little reverence and you have a replay of religion in the Middle Ages.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

thanks to marginalrevolution.com for the graph

    Politicians are always trying to solve the same problem—how to stay in power.

   The argument is that “austerity” isn’t working. It has not, of course, been tried. Reality will force austerity when sources of government lending dry up. It will take a decade or two to correct overspending and overreach by governments everywhere.

     There’s nothing more important in life than spontaneity and sincerity. If you can rehearse one and  pretend the other, you’re set.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies