Adam Smith on picking winners

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Who was the first President of the United States?

If poverty could be solved by experts, we’d have solved it in 30s @HelenClarkUNDP

Long-term political forecasts should not be based on demographics alone

@UKLabour asked people why they didn’t vote for them

@BillEnglishMP why no SOEs portfolio report for 2 years @TaxpayersUnion @JordNZ

For some months now I’ve been trying to ascertain the latest performance of the state owned enterprises (SOE) portfolio. The last Crown Portfolio Report was issued in December 2013. That was two long years ago. I therefore asked for access to the quarterly report on the Crown commercial portfolio to the Minister of Finance by the Treasury.

My Official Information Act request to the Treasury was declined on commercial in confidence grounds. Not only was my request to the Minister of Finance similarly refused, he told me to do the analysis myself by working my way through the 49 annual reports of the state owned enterprises in New Zealand.

Source: Bill English, Minister of Finance, Response to Official Information Act request, 30 November 2015.

Look it up yourself is not a good approach to public accountability to busy taxpayers who have lives to lead. There is a very well-paid Treasury that can do that analysis and has been doing that analysis every year until two years ago.

There is been no explanation for the non-publication of the Crown Portfolio report for two years. That is unacceptable in terms of tax payer accountability.

What is weird about this blow to taxpayer accountability is I have been refused access to Treasury analysis of public information. I’m not actually asking for the analysis. I am asking for a tabulation of 49 annual reports of state owned enterprises. Somehow a tabulation of public information is commercial in confidence despite the fact I can do it myself. This makes no sense.

It appears that for two years now the Minister of Finance has not been advised on the annual rates of return of the state owned enterprise portfolio as a whole. If he had, the Treasury and the Minister of Finance would have supplied that data to me in the course of my Official Information Act requests because it was obvious that I was after that information and they have a duty to be helpful when processing Official Information Act requests.

The Minister of Finance should be more curious about tens of billions of dollars in taxpayer’s assets that currently struggle to offer a positive return.

Source: The New Zealand Treasury, Crown Portfolio Report 2013, p. 41.

No publicly listed company could fail to publish its annual report. The fact that this has not been picked up as an example of why public ownership is inferior. No one profits from highlighting these governance shortcomings.

If the state owned enterprises were listed on the stock exchange, investors would sell off a company that missed its reporting date. Missing a reporting date is a sure sign of both poor governance and poor performance. Entrepreneurs would see a poorly governed company as a takeover opportunity. There are no similar disciplines for state owned enterprises whose governance and transparency falls short.

By the way, the original objective of my research was to compare state-owned enterprise performance under the current and previous governments. The Treasury was unable to supply data further back than 2007. Everything before then is on paper. The individual company reports have to be looked up by hand.

Nothing is at the fingertips of the Treasury if the Minister of Finance was interested in knowing whether his stewardship of state owned enterprises was superior to that of his predecessors.

Climate sceptics are so low that they must be smeared as libertarians

When the Twitter Left brands an opponent as a libertarian, I assume it’s a secret handshake among true believers trying to identify each other. You need time management counselling in your calling as a political junkie if you knew what a libertarian was until a few years ago. The only reason to change was the election of Senator Ron Paul.

The Twitter Left likes to smear opponents as libertarians despite the fact that certainly outside the USA and even within the USA few know what the libertarian means even with the help of scare quotes.

Only political junkies have an inkling of what a neoliberal is so why smear someone such an even more obscure label such as libertarian? Libertarian must be lower than a neo-liberal and should be hated even more by the Twitter Left must be the implication despite its poor marketing outreach value. I’m still puzzled as to why use such an obscure political label.

Today in the New York Times, a guide was published giving its readers the short answers to the key questions global warming. The author argued that most attacks on the science of global warming come from libertarians and other political conservatives who don’t like the implications of fighting global warming for growth in the size of government.

Source: Short Answers to Hard Questions About Climate Change – The New York Times via Environmental Economics: Short Answers to Hard Questions About Climate Change – The New York Times.

It is true that people attempt to discredit the arguments behind positions. Let he who is without sin cast the first stone.

“How to discredit an unwelcome report:

… Stage Four: Discredit the person who produced the report. Explain (off the record) that
1. He is harbouring a grudge against the Department.
2. He is a publicity seeker.
3. He is trying to get a Knighthood/Chair/Vice Chancellorship.
4. He used to be a consultant to a multinational.
5. He wants to be a consultant to a multinational.”

Sir Humphrey, The Greasy Pole.

As a professional economist, I am used to special interests as well as the Twitter Left arguing that economics is “just a theory” and its methodology is unrealistic along with various other attempts to avoid engaging with the actual advice put forward.

It is also true that scepticism about climate science has a partisan divide. In the USA, for example, Democrats are far more worried about global warming then independents or Republicans. (Independents is their name for swinging voters. They are called independents because if they register as one, they can vote in the Republican or Democratic primaries in many states).

Source: Republicans and climate change: Is it more about politics than science? – AEI | Economics Blog » AEIdeas.

I have argued in the blogosphere since 2011 that let the science be settled, only the economics matters because the economic cost of global warming is small.

Global warming, although real, is not apt to be severe. It will lower the level of GDP by maybe 2%. The loss of one year’s income growth! Courtesy of David Friedman’s reading of the report, this is what the most recent report of the IPCC said:

With these recognized limitations, the incomplete estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0% of income (±1 standard deviation around the mean)

I have also argued that the climate alarmists scored a great tactical victory in keeping the debate about the reliability of the science. By successfully baiting that trap for opponents, the climate alarmists have avoided having to discuss the costs and benefits of global warming.

So it is rather curious that climate sceptics are playing to the strength of the climate alarmists rather than their weaknesses. Those weaknesses are the economics of global warming and the public choice economics of international climate agreements.

Source: Richard Tol.

Not only is the economic cost of global warming small, the chances of supplying an international public good such as a treaty to reduce carbon emissions is minimal.

The New York Times today in its Q&A guide did not quantify the costs and benefits of global warming. That makes their guide deeply misleading. This is because such estimates of the cost of global warming as a percentage of GDP are available from the IPCC. Which is worse? Being a libertarian or a misleading, low rent journalist?

Source: Short Answers to Hard Questions About Climate Change – The New York Times via Environmental Economics: Short Answers to Hard Questions About Climate Change – The New York Times.

What is even more bizarre in the guide today in the New York Times is the claim that politicians are finally taking climate change seriously. Anyone who claims that a climate change treaty will come out of Paris that is in any way binding is simply not paying attention to the last 5 years of politics and who controls the U.S. Congress. They cannot be taken seriously as a political commentator.

Obama gave up on a climate bill passed by the House of Representatives in 2010 despite the fact that he had the numbers in the Senate to break a filibuster. There were 5 Republican senators who would have voted for cap and trade in April 2010: Lindsey Graham, Susan Collins, Olympia Snowe, Scott Brown, and George LeMieux. There were 57 Democrat Senators. It takes 60 votes to break a filibuster.

Obama gave up because he didn’t want the additional political flak of passing a climate change bill in the aftermath of the political costs of passing Obamacare. President Obama could have fought harder to get the Bill the House passed through the Senate but he did not.

Concern about global warming fads away when it becomes a hip pocket issue. Rather than blaming vast right-wing conspiracies, using Google searches for “unemployment” and “global warming”, Kahn and Kotchen found that:

  • Recessions increase concerns about unemployment at the expense of public interest in climate change;
  • The decline in global-warming searches is larger in more Democratic leaning states; and
  • An increase in a state’s unemployment rate decreases in the probability that Americans think global warming is happening, and reduces the certainty of those who think it is.

As Geoff Brennan has argued, CO2 reduction actions will be limited to modest unilateral reductions of a largely token character. There are many expressive voting concerns that politicians must balance to stay in office and the environment is but one of these. Once climate change policies start to actually become costly, expressive voting support for these policies will fall away, and it has.

Adam Smith on export promotion @stevenljoyce

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@UNEP lethal advice to switch to renewables in poor countries

An example of American gerrymanders

@stevenljoyce has his bridge too far on corporate welfare

There are two @uklabour parties

Gordon Tullock and James Buchanan: The Calculus of Consent After 25 Years

Why propaganda?

How Scandinavian Countries Pay for Their Government Spending

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