The Only Winning Move

The inevitable is now official: Stephane Dion will step down as Liberal Party leader as soon as a replacement has been found (probably at the party convention in May). He could hardly do otherwise. While the Tories didn’t get that coveted majority government when all was said and done, the Liberals did as poorly as they’ve ever done with 76 seats. It isn’t the absolute worst showing they’ve ever had (that being 40 seats in 1984 in the wake of Mulroney’s unprecedented landslide), but it’s close enough, especially given how much people don’t like Stephen Harper.

Was it Dion’s fault? Er - to some extent, but I think it’s unfair to put even most of the blame at his feet. No one was under any illusions about his suitability, I think, probably not even Dion himself. He’s a sharp guy, but he’s bookish and doesn’t speak English well - not exactly an inspiring figure. His election platform strategy - trying to win back votes with an environmentalist appeal in Ontario, where people are more worried about their jobs, and Quebec, where the Bloc already has that position well covered - was a little stupid, but it was hardly unexpected. If the Liberals were looking for something more topical, perhaps they shouldn’t have elected him leader two years (has it really been that long?) ago.

But it’s not like they had much of a choice. We all know the story. Bob Rae and Michael Ignatieff were both so hell-bent on being Party Leader, and evenly-matched to boot, that the only way out of the pissing contest, really, was a dark horse candidate. That was either Kennedy or Dion - in third and fourth place respectively on the eve of the convention, depending on how you count it. When Dion edged Kennedy on the first ballot, Kennedy did what might have been expected and pledged support for Dion. The put Dion ahead of Rae on the thrid ballot, and Rae withdrew, declining to endorse anyone, which is largely the same as a tacit, albeit half-hearted, endorsement of Dion. Dion went on to win. But I don’t think anyone was under any illusions that it had much to do with Dion personally. It’s worth remembering where the Liberal Party was at the time. Paul Martin had just lost the government to Stephen Harper in what had - oh, how to put this? - as much to do with him and his party as with Harper. It was equal parts that Harper was simply brilliant, that a change was long overdue and there was finally a credible opposition after the wilderness years of the 90s, and that Martin was largely sabotaged by his own party. I don’t pretend to understand where the rift with Jean Chretien came from or what the point of it was, but there’s more than a hint of evidence that Chretien cronies were quietly urging Quebecers to vote Conservative for more or less the first time ever just to stick one in Martin’s ass. The point is that Martin saw the writing on the wall and bowed out, announcing his surprise resignation as soon as the results were in - before it was even entirely clear that he had exhausted coalition options. And this left a kind of dangerous power vacuum. People like Bob Rae - who isn’t really a Liberal - and Michael Ignatieff - who isn’t even a politician - don’t get to participate in the leadership conventions of healthy political parties. Dion, at least, had connections to both the Martin and Chretien factions, and a history of cabinet service.

So Dion it was, by accident more than design.

When the dust settles, I think Liberal historians will look on him kindly - if only because all the alternatives were worse. Whatever Dion may have done to the party’s election chances this fall, Stephen Harper still doesn’t have his majority, and it’s clear that the public doesn’t want to give it to him. All the Liberals have to do, one supposes, is offer a credible alternative. For a variety of internecine reasons, that was impossible in 2006 - but thanks to Dion, they have a second go at it now.

If people want to point the finger, I suggest they single out Chretien, actually. There was no sense in the rift with Martin. Chretien was no Trudeau. Had he been realistic, it should have been clear to him that he couldn’t go on being Prime Minister indefinitely. Whatever his reasons for disliking Martin, Martin was the inevitable heir, and it was simply unprofessional to try to sabotage this. Chretien should have stepped down earlier and with more grace. That would have given Martin the time to adjust to the office and prepare for the next election. As it is, Chretien went home late and took his toys with him, leaving Martin to rebuild just as the newly-formed Conservative Party of Canada was gaining real teeth. It’s to Martin’s credit that he won that first election at all, and to no one’s surprise that he lost the second.

Martin’s resignation was more honorable. If it’s clear that you’re not going to be able to hold the coalition together, best to get out of the way and let someone else try. After all, if there was baggage from the rift with Chretien, it wasn’t going away with Martin in the hotseat, and there was no point in trying to contain a minority government with an unstable opposition. People will disagree, but I think Martin was right to call it quits when he did. It’s unfortunate that there wasn’t really anyone to take his place - but how could there have been? From the 2006 election, the story could’ve gone one of two ways. Either the power struggle goes on in the wake of Martin’s demonstrated weakness while he’s trying to run a credible opposition, or the power struggle can take place in the open and hopefully settle on some kind of order. That it landed in Dion’s lap was actually fortuitous: Dion, as mentioned, may not be much as a politician, but at least he was offensive to neither the Martin nor the Chretien cronies. If someone was supposed to put Humpty Dumpty back together again, there were few better-suited for the job.

So I think if people are going to write honest histories of all this, Dion deserves better than being blamed for this year’s loss. People don’t realize it quite yet, but he managed to stop the bleeding. The Liberal Party could’ve gone on feuding forever if not for the election of a bona fide establishment party veteran with a finger in each pie.

Maybe it would’ve been better for Canada if the Liberal Party had tanked. But I guess I can’t quite bring myself to imagine that ever happening. Love ‘em or hate ‘em, the Liberals are as Canadian as it’s possible to be. With all due respect to the other pockets of political thought in Canada, and with my own staunch opposition to Socialism anywhere firmly in mind, the Liberals really do best represent what Canadians expect from their government.

Stephen Harper is working hard to change that, and I wish him all the luck in the world. Whatever his public thinks of him, I sit here in the US envious. I’m sick to death of the way politics gets done here - where elections (the current one a case in point) tend to be between two frauds, neither of whom has a clue what he’s talking about, and both of whom leverage identity politics rather than policy for support. Stephen Harper beat Martin by being what a politician should be: cold, unemotional, and evincing a decisive and intelligent command of the issues. I don’t have any illusions about how Canada works, mind you. Unlike most Americans, I’m well aware that the recent oasis of intelligence in Canadian politics is not the norm. There was Day vs. Chretien in 2000, after all, and that’s hardly an improvement on Bush or Gore. But recently it’s been nice watching smart people like Dion and Harper at the top and thinking about what it would be like to see such a thing here.

Well, Dion’s gone. We’ll see what comes next. I can’t imagine it will be good. Harper’s holiday ends in May. If he’s going to shore up support, he needs to do it now before the Liberals take their new lease on life and use it to appoint someone charismatic. I can’t say my hopes are all that high, but best of luck all the same. It’s better for all of us if Canada keeps its head while the rest of the world slides left.

Via Econopundit, this interesting graph showing the nations plotted by the percentage of the population that believes luck is the main determinant of their outcome vs. the percentage of its GDP that country devotes to social spending. Maybe it’s not a stunning revelation, but there is a correlation:

Econopundit’s analysis:

So what do we learn from this? Although many other factors are involved (meaning the observations don’t all exactly line up in a straight line) there’s a reasonably good positive correlation between, on the one hand, belief that luck (rather than hard work) determines income, and, on the other, the percentage of GDP a nation decides to devote to social spending.

I think the correlation is a bit clearer than Antler gives it credit for being. Notice that all the nations well below the line (i.e. not Chile, Australia or Iceland) are developing countries. They’re up-and-comings, maybe, but definitely “not there yet.” If you were to plot this group separately, you would have a regression line with almost exactly the same slope, just lower down on the plot. Ditto that cluster at the top. If you were to plot Austria, France, Sweden, the Netherlands and Belgium on a plot by itself, you would get a regression line that was maybe slightly steeper, but not by much. In other words - if you eyeball this graph, there are three pretty obvious clusters of nations - call them “social spending tracks” - and each of those three clusters shows the same pattern between belief in luck as main determinant of success among a nation’s population strongly positively correlated with how much emphasis that nation places on social welfare spending. I consider the pattern robust, and the more interesting question becomes one of what accounts for the three “tracks” of nations we see?

The sticking point, obviously, is Germany. We would get a pretty clear pattern if I could be allowed to include it in the top group, rather than the middle group it seems to cluster with. If Germany could be in the top group, it would be pretty clearly the group that Rumsfeld called “Old Europe,” i.e. the EU establishment. (Yes, Sweden’s not in the currency reform, but it’s culturally exactly what Rumsfeld was complaining about.) The middle cluster would be the “standard” first world. And the lower cluster the group of nations that seem poised to leave the third world (some - Turkey and Brazil - having already achieved this now properly belong to what we might call the “second world”).

In any case, this graph lends credence to something that I’ve believed on annecdotal evidence from my own life for a long time: that support for Socialism is motivated in large part by insecurity. I’ve noticed an unmistakable patterns among my own friends and acquaintances that’s just like the one on the graph: the more socialist a particular friend/acquaintance is, the more likely he is to carp about how “it’s all luck” or “it’s all who you know” or any of that. People who believe that effort is rewarded more often than not tend to be more capitalist. Not that annecdotal evidence from my life is conclusive exactly, but it makes inuitive sense that it should be this way, and this graph goes some way to confirming it.

Of course, there are obvious omissions from the graph. Why these nations and not others? Where, in particular, are Mexico, China and Japan?  More interesting would be to have included the Eastern Bloc as well.  These nations are culturally more likely to believe that luck and connections determine individual success than average, I would imagine, and yet they are often in the news these days for relatively free-market approaches to taxation (Romania and Estonia in particular).  Their inclusion might seriously skew the trend.  The paper this came from is here, but I won’t have time to read it. Maybe they explain their choices better there.

In any case, if this is to be believed the lesson for libertarians is this. If we want to shrink the size of government and return economic decision-making to individuals, we need to play up stories about self-made men in popular culture - because apaprently the more people think their effort will be rewarded, the more libertarian they become. Alternately, I suppose, the lesson could be that corruption is a self-fulfilling prophecy. Once you turn your nation into a welfare state, then conenctions do matter, because the government runs everything, and so the beast feeds on itself.

Well, well. You know all those arguments that legalizing prostitution would lead to some kind of explosion in the rates? Not true in New Zealand, where “a comparison between the number of sex workers in Christchurch in 1999, before decriminalisation, and 2006 - after the act was passed - showed the total had stayed about the same.”

More goodies:

Before the act, the illicit status of the industry meant workers were open to coercion and exploitation by managers, pimps and clients. Research indicated there had been “some improvement” in employment conditions “but this is by no means universal”.

In other words, laws banning prostitution actually work against prostitutes by making them complicit in the “crime.” They are reluctant to go to the police with abuses for fear of arrest. Who knew?

Not to mention - sex work isn’t all (or even mostly, or even at all in many cases) about exploitation.

Around 93 per cent of sex workers cited money as the reason for getting into and staying in the sex industry.

“The most significant barriers to exiting are loss of income, reluctance to lose the flexible working hours available in the sex industry and the camaraderie and sense of belonging that some sex workers describe.”

So sex work is a good part-time job, actually. That’s backed up by this UChicago working paper, which reports that prostitutes in Chicago work an average of 13 hours a week for $26-31/hour. Better money than most of these women can earn anywhere, with flexible hours. One of the women in the study, in fact (the one with a pimp) was earning more like $50/hour for about 12 hours a week.

Is there any reason at all why this should be illegal? Oh, right, the danger of violence. Certainly that comes with the territory, but making anything against the law guarantees it will be more dangerous. Again from the New Zealand article:

More than 60 per cent felt they were more able to refuse to provide commercial sexual services to a particular client since the enactment of the law.

Other findings included that the majority of sex workers felt the act could do little about violence that occurred, although a significant majority felt there had been an improvement since the passing of the act.

So violence remains a problem, but sex workers now feel more in control of the situation. A step in the right direction rather than a panacea, in other words - exactly what one might expect.

I realize that New Zealand is a demographic outlier in the world and that its experiences with policy implementation can’t be taken as definitive for that reason. But these results are just intuitive; there is no reason to believe the situation after decriminalization or (better still) legalization in the US would be any different. Let’s legalize it already.

Telling statistics on the effects of gun control. There are now more guns in Australia than before Port Arthur, at least in Western Australia. There were 270,371 registered guns before the 1996 massacre, now there are 282,853. Possible mitigating factor: they’re owned by a smaller number of people (112,620 in 1996, 77,895 now). Still, gun control advocates are using this as an excuse to claim that the post-1996 policies have failed and need to be toughened.

The lesson they need to take instead, of course, is that such policies are absurd to begin with. What is the possible utility in reducing gun ownership among law-abiding citizens? Martin Bryant (the Port Arthur shooter) was NOT in possession of legal guns as he didn’t have a license for the guns he used - had in fact been denied purchase of a gun earlier on the grounds that he didn’t have one. So one of two things about him is true. Either the existing Australian laws at the time would have prevented him from obtaining his AR-15 and L1A1 SLR he used had they been faithfully enforced, or Bryant would have gotten the guns illegally on the black market and gone on his rampage anyway. Details about the case are guarded (leading to the inevitable spate of conspiracy theories), so we don’t really know. But it’s pretty clear from what we do know that Bryant’s rampage was premeditated. This wasn’t the standard media bogeyman case of someone snapping, buying a gun, and running amok. So the enaction of draconian restrictions in the wake of Port Arthur seems unlikely to have had much of an effect in any case. A more rational response would’ve been a call for stricter enforcement of existing laws.

What do the numbers say? Is Australia safer?

Well, maybe. Certainly the number of violent incidents involving guns are down. But there’s a huge caveat here: they were probably on their way down anyway. Have a look at the government numbers on the subject and you’ll see what I mean. For the period 1991 to 2001 (which the survey covers), there is a notable downward trend of gun violence period. The magical year 1996 doesn’t really stand out. Furthermore, as with anywhere else:

Academics and police agree that the vast majority of gunrelated crime is committed with unregistered firearms by people not licensed to carry guns. They also concede that the black market does not appear to have been affected by the stricter rules on gun ownership. In Victoria alone, thousands of illegal firearms are destroyed each year.

So as usual, law-abiding citizens have their guns registered and regulated to appease the public, even though this isn’t the demographic that’s the problem. No criminal worth his salt uses a legally-purchased firearm to commit a crime.

And of course there’s the usual silliness of mistaking a drop in the gun crimes rate for a drop in the crime rate. From the same source:

Australian Bureau of Statistics figures show that despite an overall increase in the number of armed robberies, those committed with a firearm have declined. In 1993, 1983 armed robberies involved firearms, compared with 1328 in 2000.

So even though there are fewer armed robberies with guns, there are more armed robberies. When criminals don’t use guns, they use other kinds of weapons. Who knew?

And the police get to have their fun even though everyone knows there’s no point:

Despite the reduction in gunrelated crime, Victoria Police will begin a new inspection regime from July 1. There will be random checks on 10 per cent of firearm storage locations across the state as a further safety measure.

In ohter words, if there’s a massacre at Port Arthur, the government will use it as an excuse to bully gun owners. And if there isn’t a massacre - if, in fact, there is an overall reduction in gun crime, the government will use it as an excuse to bully gun owners.

So let’s sum this up. In 1996, in the middle of a general downward trend in gun violence, a crazed, unlicensed gun owner walks into Port Arthur, kills 37 people and blows up a building. The public panics, so the government enacts a bunch of gun legislation. The downward trend in gun violence that was already underway continues as if nothing had happened, but the government gets to spend $320million anyway in a  buyback program to separate people hugely unlikely to commit crimes from their mostly legally-obtained guns. Meanwhile, violent crime in general increases in Australia, notably the kind of crime like armed robbery that is likely to be deterred by general gun ownership (criminals don’t generally attack people who will shoot back). And, just like everywhere else in the world, nearly 100% of gun crimes in Australia were then and are now committed with guns that are outside government control in any case because they were purchased on the black market.  10 years pass, and even with the new restrictions in place, gun ownership starts to rise again, rendering the “point,” to the extent there ever was one, moot in any case.

Does anyone see in any of this an effective argument for gun control? Didn’t think so.

There’s a fascinating read on the mess that is Venezuela here. Highlights follow.

(1) Government currency price controls exposed as futile by the coolest black-market exchange scheme I’ve heard about. The situation is this. The government imposes tight restrictions on currency exchange, including operating a fixed official exchange rate. However, it allows people to spend $5000 a year on their credit cards abroad. So Venezuelans take cheap flights to nearby Curacao, in a territory of the Netherlands and max out their credit cards on casino chips. Yup - casino chips - which they buy at the official exchange rate, turn around and cash in for dollars, and then cart the dollars home to sell at a profit (probably a whopping 63%, and possibly twice that last year) on the black market currency exchange.

(2) Killing the goose that lays the golden egg. That would, of course, be the state-owned petroleum concern PDVSA, which accounts for 90% of Venezuela’s export income. Chavez soaks it for $13.9billion a year to pay for his social programs (officially the company “contributes” this money), with the result that both production and income are down in this time of record oil prices. There is no money for the company to invest in future exploration and productivity increases. And indeed, it’s started demanding that customers pay within 8 days, as opposed to the normal 30 days - a sure sign that it is cash-strapped.

(3) Cars are good investments. Yeah - you know how you always hear that a new car is the worst investment you can make - that it loses value as soon as you drive it off the lot? Not in the craziness that is Venezuela, apparently.

And there’s an incentive to take out a car loan. The average interest rate on car loans in late April was about 27 percent, a couple of points below inflation.

“With cars, you never lose,” says Eduardo Pacheco, a pilot who says he bought a 2007 Toyota pickup truck in December 2006 that he sold this year for a 67 percent gain. “I wouldn’t leave any of my money in the bank.”

The government, of course, is only “helping” this situation:

The government imposed new import restrictions on cars this year, limiting the types of vehicles that can be brought into the country so that food importers can be given priority for dollars. That’s created even bigger shortages of popular models, says Silvestre Tovar, vice president of Iveco Venezuela, a unit of Fiat SpA’s truck-making division.

So who knows what Pacheco would’ve gotten if he’d waited a year. Double?

And of course the general truism about Venezuela - that price controls are killing everything - remains as true as ever. Imports surged 40% last year, while exports only rose 6.1%. That’s because most of what Venezuela produces besides oil is agricultural goods that are now subject to heavy price controls. Beef production, for example, is down 22%. So Chavez steals money from the oil company, hands it out to people who can’t spend it in local supermarkets (because there isn’t anything to buy), and so they spend it on imports instead. He’s turned Venezuela’s petroleum cash cow into a wealth transfer business for foreigners. Socialism works. Really.

Polls show it may all be coming to an end. Thanks to the shortages any credible economist could’ve told him would result from price controls (when has a serious price control ever FAILED to result in a shortage? Is there even a single example?), Chavez’ formerly rock-solid support is hovering at parity. It may just drop below 50% in time for an election. One can hope…