the aggressor in the Kulturkampf

Mostly because of my interest in economic policy, and the fact law makers actually spend very little of their time developing legislation that deals with social issues like abortion, I consider myself a economic or business conservative, which overlaps, or ought to, with libertarianism.

But libertarianism is broader. While libertarians are economic conservatives (supporting, for example, free markets), they are social liberals. As my previous post may illustrate, I am frequently frustrated by the anti-intellectual demogoguery emanating from self-styled so-cons, to the point whereby I am often tempted to just state clearly that I, likely my former high school friend Colby Cosh, am a libertarian, full stop.

But while I would then have less of a need to elaborate on why I support a scientific, evidence-based, "intellectual" approach to resolving policy issues in general, fact is I am postmodern enough to NOT see Reason as the final touchstone in all realms. I see a need to circumscribe it to the instrumental realm, a project that's been described in more detail by German philosopher Jürgen Habermas.

It's the fact that in practice we could use more reason, not less, in our public debates that tempts me to endorse full-on libertarianism without qualification. But philosophically sophisticated arguments for social conservatism such as those described by Daniel Bell are compelling, or at least deserving of more attention.

Norms have value. People who believe some emancipatory effect will follow from the elimination of sexual norms are putting too much stock into theory (Reason, if you will) and not enough into the reality of human nature. The idea that youth, for example, will be more self-determined if traditional influences are removed is largely a fiction. What would replace it are other cultural influences. Undermine the norms generally endorsed by parents, for example, and you'll empower unreflective peer pressure, not individuals in idealized, abstracted isolation, and that peer pressure would generally serve the baser elements of social darwinism. What people are being emancipated to, in other words, is the prehistoric savannah where the contributions of potential Newtons, Einsteins, Vivaldis etc were undeveloped and unsupported. The point here can, and is, frequently taken too far. But there is a point, just as Nietzsche makes something of a counterpoint. What's missing is an intellectual curiousity about why norms like not running around in the nude arose in the first place.

The content of the norms is generally not so important as the fact they simply exist, in my view. Is one superior by virtue of being, say, white, male, and Protestant? No. But is it reasonable to consider that important? Yes. Whether it should be important may be debated, but where the social left goes most awry is on the issue of whether it is important. A religious revival might well do more to solve otherwise intractable social problems and improve human satisifcation than a new bureaucratic government spending program.

Which brings me to the uproar over Obama's invitation to Rick Warren. Rich Lowry identifies the "cultural left" as the "aggressor" in this latest flare-up in the culture war. I agree, and am futhermore reminded of why I'm not a libertarian. A libertarian might well be compelled to agree that Warren should be disinvited, which would be an extremely dogmatic stance that furthered a distorted view of the particular facts. Pastor Rick is not a hatemonger, and the efforts to paint him as such strike me as less loving, more "hateful" if you will, than what Rick Warren has been preaching and writing about his whole career. The activists here are looking to provoke a political showdown that Warren is not looking for.

I've argued elsewhere that gay marriage is not a libertarian issue anyway. I won't repeat the reasons here in detail, other than to say that the issue is unlike the decriminalization of homosexuality by going to positive "rights", namely the right to compel government action, as opposed to negative rights. Gay marriage is about normalizing deviancy, not about the right to deviate. Some readers may jump at my use of the word deviant here, saying its highly pejorative, but for what it's worth I am using the term as an entirely descriptive, sociological term.

UPDATE:
This San Francisco pundit supported same sex marriage in the past but has since turned cold on the idea because of the intolerance exhibited... by SSM supporters.

UPDATE 2:

Continuing with this theme, what I think bothers a lot of moderates is the, shall we say, lack of magnanimity shown by the left:

The Left has won the culture war, and, at least in the near-term, its victory is irreversible. In social relations, the right to choose trumps all other considerations: to fornicate, marry, breed, abort, divorce, and abandon. That a single mother with six kids should opt for another eight because she feels like it captures the distilled essence of the cultural moment that we have entered. 

Andrew J. Bacevich, Feb 9

meanwhile, in Alberta

According to the Canadian Press, British Columbia is "seen to have a more attractive fiscal regime than Alberta" and notes that energy execs "have said they're spending more in B.C. and less in Alberta on account of the latter's "punitive" royalty regime. Other names like EnCana, Talisman, Petro-Canada, Nexen and Imperial have also been grabbing land in Northeast B.C."

A securities analyst observed that "As much of Alberta likes to think we're the king of the hill as far as resources go, we're losing ground to Saskatchewan as well."

According to the executive director of the Small Explorers and Producers Association of Canada, the Stelmach government showed an extreme over-confidence when it opted for the royalty hike saying, "It's not just enough to say 'well, where else would they go? Surely Alberta's the place to be. It's not."

"We've done a lot of things as a province in the last year or two to chase away investment," Mazar added.

On the one hand, these reports from my home province reduce my incentive to return. I plan on starting a business and want to do that in a business friendly environment. But on the other hand perhaps Alberta politics will change if these reports continue. If energy prices remain where they are, spending-spree Stelmach may be in deficit in 2009, and voters may not be forgiving.

Obama impressive so far

I'd be remiss if I didn't applaud Barack Obama's appointments to date. According to PBS Newshour, 'Scientists and scientific organizations hailed the president-elect's choice of top science advisers as a "dream team.'" I just take this an example. More important is Obama's economic team, and on that count most people should be equally impressed, given Obama's leftish background.

There were, or course, many signs before the election that Obama would govern from the centre, but distinguishing between what was campaigning and what was the real Obama was not easy. One key bit of evidence that the real Obama would be a President whom conservative intellectuals could potentially live with was an anecdote in PBS FRONTLINE's "The Choice", which aired in October. It described how the small minority of "right wing" students in Harvard Law grudgingly supported Obama for President of the Law Review and were subsequently satisfied with his performance in that role. Obama was more concerned with producing a top quality product than with serving up red meat for his liberal base, to the point where most of the frustration with Obama ending up coming from campus radicals who thought Obama wasn't delivering on their agenda.

This was almost enough to move me to endorse Obama over McCain. In the end I could not, because although Obama is impressively cerebral and deliberate in his apparent decision making style, the FRONTLINE anecdote was just that, an anecdote, and Obama's official positions on issues like trade and US agricultural subsidies were indisputably inferior to McCain's.

In Canada, we supposedly have our own intellectual politician, one Michael Ignatieff. If the grandstanding populist antics of the nominally "Conservative" Danny Williams in Newfoundland (e.g. expropriating the property of a private firm by simply passing a new bill instead of going before a court to obtain a government-favourable result under pre-existing contracts and legislation) are compared to the corporate-tax-cutting/staunch-refusal-to-expropriate policies of the nominally "Liberal" Shawn Graham in New Brunswick, I dare say that libertarians, and people who are unimpressed with thorough-going populism of other "Canadian Conservatives" like Alberta premier Stelmach or, for that matter, Prime Minister Harper, can quite defensibly find more of a home for themselves in the Liberal party than a Conservative one.

Such is the magnitude of Obama's popularity with educated Americans that Krugman may will be right: Republicans are in danger of becoming the "party of stupid". And I'll be frank, Sarah Palin would do nothing to arrest such a slide. Canada's Tories may be headed in the same direction, not just because of their own tendency to play to the rabble, but because the nomination of Ignatieff and the pursuit of policies like the Green Shift (which didn't quite put them into the "Pigou club" beloved of economists like Greg Mankiw but was definitely in a step in that direction) have raised the policy respectibility of the Liberal brand (a respectibility that was nonetheless greatly eroded by the announced "coalition" with the economically dangerous NDP and Bloc).

"I just hope they know what they're doing."

It's just a gigantic scale.... It's the entire economic consensus in this country, including the academic economists, the Treasury people.... We're just taking such big moves. As I say, I just hope they know what they're doing.
- David Brooks, The Newshour with Jim Lehrer, November 28

I also hope they know what they're doing.

And I have major doubts that they do.

Let's start with the contradictions. "The entire economic consensus" used to be that cutting consumption taxes, like Canada's GST, which was just cut another 1% earlier this year, was the worst possible tax cut. Yet Britain cuts its VAT 2.5% and "Jonathan Loynes, chief UK economist at Capital Economics, said: 'This would be a bold, high-impact way of putting money straight into consumers’ pockets.'" Another source says that "[Britain's] economists seem united by a single opinion over the Government's immediate move to slash VAT from 17.5% to 15%. ... The move was, broadly, welcomed, and [even] criticised as not on its own being enough..."

So what was formerly out of fashion, to put it charitably, is now "bold" and "high impact"?

Auto sector bailout? Joseph Stiglitz is opposed, which wouldn't be especially surprising were it not for the fact that Stiglitz has been the most prominent economist to repeatedly jab an accusing finger at the Washington Consensus and free markets generally. Apparently Stiglitz doesn't think the decisions of private finance re the allocation of capital should be second-guessed... except when they should.

The incongruities increase: Germany's Social Democratic finance minister, Peer Steinbrück, said:

All this will do is raise Britain's debt to a level that will take a whole generation to work off. The same people who would never touch deficit spending are now tossing around billions. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking. When I ask about the origins of the crisis, economists I respect tell me it is the credit-financed growth of recent years and decades. Isn’t this the same mistake everyone is suddenly making again, under all the public pressure?

A supposedly left wing politician, and a Continental one at that, is the voice speaking out against a deficit-financed government spending spree? I'm reminded of when the NDP criticized Alberta's "Conservative" government for its spending. Considering the source, perhaps they have a point?

It is true that there are economists like Greg Mankiw who consider themselves stimulus skeptics, but Mankiw is (1) apparently very much in the minority ("Only one outside economist contacted by Obama aides, Harvard's Greg Mankiw, voiced skepticism") and (2) Mankiw is careful to call himself a skeptic and not an opposer.

There was a time when I put a lot of stock in what academics hold as true with respect to finance and economics. But my experience of the real world of finance disabused me of notions that are still considered gospel for professors, like market efficiency. Markets are not efficient with respect to pricing; they are inevitably subject to manias, panics, and crashes (unless (and even then this is just a theoretical unless) there is total transparency and simplicity with respect to how to determine fundamental values). Indeed, this is at the very core of what got us into this mess: the idea that market-determined prices reflect economic fundamentals. Financial engineers were given free reign to innovate ever more exotic financial products that worked AGAINST efficiency instead of for it by reducing transparency and simplicity. You didn't get better capital pricing with more financial market development, you got worse. Things got further and further away from fundamentals because the trial of bread crumbs became so long and convoluted nobody could understand it.

Now, as an aside, when I speak of market development I speak of the number and complexity of financial instruments (in particular second and third order instruments, aka derivatives) as opposed to liquidity. If I were pointing the finger at liquidity or trading levels, I'd be pointing the finger at capitalism itself.

These academics, in conjunction with the Wall Street veterans who have a conflict of interest with respect to bringing the sort of transparency to capital pricing that would allow non-Ivy League MBAs to figure out what was going on, are supposed to be now be deferred to with respect to a gi-normous dump of future generation financed government spending?

Germany's social democrats are questioning the wisdom of a massive expansion of government, while the Anglo-Saxon world is gung-ho. May you live in interesting times.

Dion tape proves necessity for public subsidies

The production quality of (soon to be Prime Minister) Dion's televised speech last night has removed the few remaining objections I had to a minimal level of public support for political parties.

If Canadians stand for anything, it's a fair fight, and the federal Liberals are clearly desperately short of resources!

The NDP said Wednesday's fiasco undermined the credibility of the coalition.... (Bloc Quebecois Leader) Gilles Duceppe ran into Mr. Dion in the elevator and asked 'What the hell happened?'
- Robert Fife, CTV

Former GG says too much?

In her memoirs, former governor general Adrienne Clarkson said ... she would only have allowed a [Former Prime Minister Paul] Martin request for dissolution if he had been in office six months. "To put the Canadian people through an election before six months would have been irresponsible," she wrote.
- CBC

The problem with this statement is that it essentially says if opposition forces engineer a confidence vote that brings down the government within six months of an election, there will be no electoral accountability. The statement itself is not problematic so much as what it omits. What it omits is a qualifying clause to the effect that any new government created in the absence of an election should go to the polls for its own mandate within a certain period.

Canadians are currently facing the prospect of two consecutive Prime Ministers, Dion and Ignatieff (or, less likely, Bob Rae), each with a mere quarter of Commons seats held by their party, serving for up to 5 years between the two of them, should NDP and Bloc MPs decline to vote against them during that time period. By convention, that shouldn't happen. But in a constitutional democracy, one would think there should be a constitutional limit to how long a Prime Minister Ignatieff could govern without facing the polls, a limit less than 5 years. The only one who could really impose such a limit on the Prime Minister is the monarch (the GG), and the time do it would be when denying the request of the previous Prime Minister (the one being ousted) for a vote on the newly configured government.

This change of government would likely be easier to swallow for a lot of Canadians if Harper had lost the confidence of federalists in the House. But the fact is that his party's seats outnumber the seats of the Liberals and NDP by a couple dozen. As such, he's the federalist choice for Prime Minister, love it or hate it, and could not be forced out of office but for separatists.

stimulus? - the facts

• The IMF currently projects a contraction of output in all G7 economies EXCEPT CANADA in 2009.


• According to StatsCan and surveys of private forecastors, final domestic demand in Canada continues to grow, "supported by the solid financial positions of both households and businesses"


• According to the Department of Finance, "the decline in consumer confidence in Canada has been much less pronounced than in the U.S"
and "private sector forecasters have not significantly altered their medium-term economic outlook since Budget 2008"

• Again according to Finance Canada, "housing activity has been solid, with housing starts so far in 2008 well above the average over the previous 30 years" and "none of the conditions that led to the U.S. housing and financial market collapse are present in Canada."

Consider this from the supposedly offending Update:

Yes, it is a Department of Finance graphic. But, no, I do not believe it should be dismissed as somehow partisan and unreliable. I worked at Finance and we did not just make things up.

See also this:

Apparently, somewhere in the above chart is massive unemployment, such that an massive change in government is needed to bring about a massive increase in government spending.

I don't see it. What we have here is a true opportunity to contain the growth of the size of government. And it follows from the fact Canadians don't like deficit spending. Irrational? Perhaps. But as someone who has run for office in Alberta, I can assure you that if you are a fiscal conservative, there is no political market for restrained spending when the government is flush with cash. Alberta is supposedly one of the most conservative jurisdictions in North America, yet it has increased per capita spending the most in recent years. That's because the public sees "fiscal conservatism" as being all about deficits.

Britain cuts VAT by 2.5%

Effective December 1.

When you consider that Canada's last GST cut just took effect this year, and that we now know that the US recession officially began in December 2007, where, again, are all those economists who panned the wisdom of the GST cut? No change of opinion?

Simpson mistaken re economist consensus

In a G&M option piece Jeffrey Simpson suggests that economists are unwilling to acknowledge that the Canadian government spending and tax cuts of the last 3 years did anything to reduce the need for a stimulus now. I don't believe that's the case. If he read his own newspaper he would have noted the headline that Jack Mintz "defends Harper's approach" to a stimulus.

Many if not most economists believe it takes several months if not years for fiscal measures to work their way through the economy. If Simpson could produce economists who say IN HINDSIGHT (i.e., now) that the GST cuts were a mistake, he might have a point. But I'm one economist who believes that subsequent developments on the ground have gone to some length to suggest the GST cuts constituted timely demand management, insofar as it is possible to really manage demand at all, whatever the textbook failings of the move.

The enthusiasm amongst economists for the Canadian stimulus being discussed is also less than overwhelming. There are serious concerns about creating a structural deficit; that is, a deficit that will be difficult to reverse in the future. Again, what the Keynesian textbook says and what political reality says are two different things. How is a massive deficit supposed to be reversed in the future? Which benefiting constituency will agree to see its increases cut in the future?

This isn't to say I disagree with need for fiscal stimuli elsewhere in the world. But the situation in Canada is not nearly so dire. Monetary policy is far more effective and appropriate, and should be largely sufficient in Canada. There's a reason why monetary policy is independent of political game playing, and the same reason would apply to fiscal policy to a large extent.

From the IMF:

In practice, discretionary fiscal measures are typically slower to arrive than monetary policy responses... Moreover, fiscal measures often become permanent, implying that public debt creeps upward.
... there have been calls in many countries for governments to actively use fiscal policy to stimulate the economy. Indeed, the United States has already responded.... But there are many commentators and economists who argue that these sorts of actions stand to do more harm than good.

Great Firewall of China a strange beast

Unfortunately, various Canadian pundits are censored here. I can't get anything from Macleans.ca. Andrew Coyne, Paul Wells, and Warren Kinsella are blocked as well. Everything on the Globe and Mail IS available, though, as is CalgaryGrit and Stephen Taylor. The National Post is also available. I can't really see a pattern here...

I understand I can get around the Firewall using Tor, but that isn't helpful advice when the Tor project homepage is itself censored as well as lists of proxy servers that I've looked for...

Dion about to be come PM of Canada

I believe it is entirely democratic for Stephane Dion to become Prime Minister. If more Parliamentarians support him than Stephen Harper, then c'est la vie. There should be a substantive and irreconcible economic policy difference if there is to be a change of government, however. That condition for a democratic, orderly change of government seems to be satisfied, in that there's apparently a fundamental disagreement over the amount of money the government should be spending in 2009.

However, one has to ask whether there is really a mandate for the spending spree (aka "stimulus") that the Liberal-NDP coalition is clearly about to embark on. Fact is, blue or business-friendly, fiscally conservative Liberal supporters together with Tory supporters form a majority in Canada. Were the Canadian government of the last three years a hard right government, it would be one thing, but the reality is that federal spending increased substantially during this period... certainly the budgets have not been remarkably "un-Canadian" in any way. But the next Liberal-NDP budget might well be "un-Canadian" in the extent to which it diverges from Canadian budgets since 1984. Keep in mind that it was a Liberal government that balanced the budget in the 90s and moved forward on a corporate tax cut agenda. That had the support of the majority of Canadians. It is far from clear that Canadians support deficit spending, and an auto and forestry industry bail-out in particular.

According to the coalition's announced policy framework, there will be
- Support for culture, including the cancellation of budget cuts announced by the Conservative government.
- Support for Canadian Wheat Board and Supply Management
- Immigration Reform
- Reinstate regional development agency funding...

The first is ultimately a relatively minor matter budget-wise, or at least the extent to which Canadians seem to vote on it is out of proportion to its impact on the budget. The second, support for supply management, is anti-free trade and accordingly unsupported by most economists. I don't know what John Manley's role is supposed to be when there is explicit support for policies like this. Keep in mind that the Tories weren't exactly aggressively dismantling supply management in the first place. "Immigration Reform" in the context of what the political debates have been means a dialing down of efforts to prioritize skilled worker immigration over family immigration; social policy pursued at the expense of economic policy, in other words. The last point refers to the boondoggle of regional subsidies, again something the Conservative government has pedaled softly on, such that one can only imagine a significant ramping up of the dubious practice under a new Liberal-NDP coalition.


UPDATE:

A lot of people will focus on the reference to "Canadians and Quebecers" in the preamble. As far as I'm concerned, this is largely optics. If it makes Quebecers (isn't it Quebeckers?) happy, I tend to be libertarian about such things. I'm more concerned that the focus on "supply management" and "regional development" means national economic policies that harm the country, with particular harm to Alberta and west.