O, Canada!

Canada is teetering on the brink of a recession and the first step might be a long one:

The latest economic data from Canada shows that it is inching toward recession, after its economy posted its fifth straight month of contraction.

Statistics Canada revealed on July 31 that the Canadian economy shrank by 0.2% on an annualized basis in May, perhaps pushing the country over the edge into recessionary territory for the first half of 2015.

“There is no sugar-coating this one,” Douglas Porter, BMO chief economist, wrote in a client note. “It’s a sour result.”

There are a lot of reasons being given for Canada’s economic problems including a housing “bubble” in Toronto and Vancouver and associated overbuilding but I think that the linked article has things almost exactly the wrong way around. As it turns out Canada wasn’t immune after all to the recession that started in the U. S. in 2007-2008 and spread around the world. It’s only oil prices that have kept Canada’s economy afloat and now that oil prices have fallen and look as though they’ll remain low for some time, there’s nothing preventing the Canadian economy from falling.


Plastic, Please

Despite the City of Chicago’s ban on plastic shopping bags which went into force on August 1, my beloved Happy Foods is too small to fall within the ban and we’ll continue to receive plastic bags for the foreseeable future.

At least in our case the ban is foolishness. We reuse our plastic bags, in some cases multiple times. If we no longer receive plastic shopping bags, we’ll need to start buying plastic bags. How is that good for the environment? I’d think it was exactly the opposite.

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Is Elena Kagan a Sadist?

Supreme Court Justice Elena Kagan has granted Illinois Attorney General Lisa Madigan’s (if you think that surname is a coincidence guess again) request for more time to file a writ of certiorari to appeal the Illinois Supreme Court’s decision on the public pension case to the Supreme Court of the United States:

In an action that’s going to set some tongues wagging, the U.S. Supreme Court has cleared the way for a possible appeal of an Illinois Supreme Court decision in May that rejected a state pension reform law.

The action came yesterday when the court granted a request from Illinois Attorney General Lisa Madigan to extend from Aug. 6 until Sept. 10 the deadline for asking the court to take up the matter, a legal step known as filing a writ of certiorari.

The request for more time was granted by Justice Elena Kagan, who reviews such requests from Illinois and other states in the federal 7th Circuit. Kagan did not indicate why she approved the application.

What possible basis would the SCOTUS have for overturning the decision? Being “routine” doesn’t seem to me to be enough justification. Shouldn’t some actual basis for an appeal be a necessity? Gen. Madigan hasn’t even filed for cert yet, she’s just wants more time to do it. Why? If this is just a “Hail Mary” on Gen. Madigan’s part, why delay matters? It just makes the final reckoning that much more difficult and costly. Has “we really, really want it” become legal grounds? Or does the SCOTUS now think that carrying water for Illinois’s feckless legislators is their job?

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IRS Data Shows Illinois’s Woes

The IRS has released data for 2011 on a state-by-state basis and, as this analysis shows, Illinois is not faring well:

Illinoisans have voted with their feet. The winner? Anywhere else.

The Land of Lincoln lost head-to-head migration battles with every single state plus Washington, D.C., in tax year 2011, according to new taxpayer migration data released by the Internal Revenue Service on July 31. The 2011 tax year was the first year of Illinois’ historic income-tax hike, when the state raised the income-tax rate by 67 percent.

Illinois lost 24,000 taxpayers along with 26,000 dependents on net that year, for a total net loss of 50,000 people to other states. And when these taxpayers left, they took their incomes with them. The net loss of adjusted gross income for the state of Illinois was $2.5 billion in the 2011 tax year. Illinois’ loss of annual income jumped by $600 million from the 2010 migration data, when Illinois had a net loss of $1.9 billion.

Those who left Illinois tended to make more money than those who entered the state. The average adjusted gross income of those who left Illinois was $63,100, compared to an average adjusted gross income of $53,500 for those who moved into Illinois. So not only was Illinois losing more taxpayers than it gained, but those who left Illinois earned 18 percent more than those who came in.

However, the really shocking news from this IRS data release is the fact that Illinois lost residents to every single state plus Washington, D.C. The historical trend was for Illinois to lose people to 43 of 49 states but gain a few people from Rust Belt peers such as Michigan and Ohio, as well as New Jersey. That trend appears to have changed. Illinois hit a new low and lost people to every other place in America, with the biggest losses being to Sun Belt states and surrounding states.

The loss of taxpayers and their dependents was largely correlated with the loss of annual income. Illinois had a net loss of annual income to 40 out of 50 states plus Washington, D.C. All border states gained income from Illinois, and the top 10 recipients of Illinois earnings include large states such as Florida, California and Texas, but also neighbors such as Indiana, Wisconsin, Michigan and Missouri.

This new data release can be described as nothing other than a complete embarrassment for Illinois. It’s only possible for one state to sweep the board by losing taxpayers and their dependents to every other state, and that sorry distinction goes to Illinois. To lose people to every state is a resounding no-confidence vote in the status quo.

Do Illinois’s legislators think that the state will make up for the lost economic activity in volume? Drive more people out and replace them with an even larger number of people more likely to place demands on state and local government services? That’s not a winning formula.

I’d genuinely like to know how Speaker Madigan plans to reverse this trend. So far he’s mostly complaining that Gov. Rauner is a hard bargainer.


The “Voters First” Forum

It’s hard for me to imagine anything that would interest me less than the Voters First Forum (which I assume is a proposed exit plan from the U. S.). That’s the name given to the first “beauty contest” display of Republicans running for president last night. I didn’t listen to it, I won’t listen to it, and you can’t make me.

Of the list I can imagine myself voting for four (Trump and Bush not being among them). For comparison I could imagine myself voting for two of the announced Democratic presidential contenders (neither of which have the initials “HC”).

It’s going to be a loooonnnngggg campaign.


The President’s War on Coal

From my point of view the big political/economic news of the day so far is the president’s plan for reducing the use of coal and natural gas in producing energy in the United States. I think the editors of the Wall Street Journal are right in declaiming that the move is unconstitutional:

States have regulated their power systems since the early days of electrification, but the EPA is now usurping this role to nationalize power generation and consumption. To meet the EPA’s targets, states must pass new laws or regulations to shift their energy mix from fossil fuels, subsidize alternative energy, improve efficiency, impose a cap-and-trade program, or all of the above.

Coal-fired power will be the first to be shot, but the EPA is targeting all sources of carbon energy. As coal plants have retired amid seven years of EPA assault, natural gas recently eclipsed coal as the dominant source of electric power. This cleaner-burning gas surge has led to the cheapest and fastest emissions plunge in history, but the EPA isn’t satisfied.

Thus the new rule’s central planning favors green energy sources like wind and solar. The plan expands their quotas and funding, while punishing states that are insufficiently enthusiastic. The EPA estimates renewables will make up 28% of U.S. electric capacity by 2030, up from less than 5% today.

The estimates of the cost of all of this aren’t fully in yet. Early estimates reckon it at something in excess of $2.5 trillion and its effect on warming as likely to be less than two hundreds of a degree Celsius over the next century:

The Obama administration unveiled its climate change regulations for new and existing power plants, calling the plan “the biggest, most important step we’ve ever taken to combat climate change.”

It may be the most “important” from a top-down, regulatory mandate for high energy prices, but it won’t accomplish much, if anything, in terms of combating climate change.

Even though electricity generation accounts for the single largest source of carbon dioxide emissions in the United States, the estimated reduction is minuscule compared to global greenhouse gas emissions.

Climatologists estimate that the administration’s climate regulations will avert less than two hundredths of a degree Celsius by 2100.

Just to recap my own views on the subject of climate change briefly, I think that the climate is changing, I think that we’re likely to be responsible for at least part of that, I think it’s possible that excessive carbon emissions is having some impact on that, and I’d like to see our emissions of carbon reduced. I also think that it’s a moral imperative for anyone who believes that anthropogenic climate change is the greatest threat facing us to put their cards on the table and lay out their complete plan, not just their first step but their complete plan, for dealing with it. Obviously, the president’s proposal is far from a complete plan.

I’m not that extreme but the plan I’d advocate would consist of several components:

  • Eliminate all subsidies on energy production, including indirect ones like subsidies for road construction and for the construction of single family homes.
  • If you absolutely must spend money on infrastructure development, spend your money on power distribution.
  • Impose a tax on carbon.
  • Subsidize research on small scale modular nuclear reactors (especially thorium reactors) with a view towards implementation in no less than 10 years.
  • Start deploying some of the half dozen or so “geo-engineering” solutions I’ve mentioned here over the years.

which is a political non-starter for any number of reasons. I’m attacking the middle class, it’s a security threat, why do I hate poor people, etc.

I’d also offer a few tips. First, anyone who proposes a less than complete solution is casting around for political power, full stop. Second, anyone who tells you that their proposal will cost nothing or even be a net savings is either a con man or a fool. Third, there will be winners and losers in any plan. If all of the winners are the proponents’ buddies and all of the losers are those they deem enemies, smell a rat.

Finally, IMO the real problem is China. With the exception of the “geo-engineering” solutions, no effective plan can be implemented without getting China on-board. The huge hot spot in southeastern China, obvious in any heat distribution map of the world, isn’t there for decoration.


One Darned Thing After Another

Shortly after I updated the post below, I lost Internet and cable. If anyone has any questions about why I keep my landline, this is it. Throughout our bad weather yesterday power has stayed on. It went down for about a second but came right back up. I lost my cellphone connection briefly. My plain old AT&T telephone service has remained available throughout. I also have a plain old AT&T rotary handset. It’s not plugged in—just there in case of emergency.

My Internet connection on the other hand has been out for nearly 24 hours.


Microburst (Updated)

My area has just been struck by what I can only conclude was a microburst. We had an enormous frenzy of wind, rain, and hail, lasting about two minutes. Trees and bushes were thrashing wildly. A few minutes later the skies were clear and blue. Here’s the view from my front door:

The only damage to my house or property appears to be a shattered gate, destroyed more by the wind than by flying limbs:

A beautiful black walnut tree belonging to neighbors across the alley, perhaps a foot and a half thick, was sheared in half.

The response from my neighbors was what I would expect. As soon as the wind died down people came out and started checking up on elderly neighbors, making sure no one was hurt, and surveying the damage. Over in the next street two cars were taken out.

A few neighbors had branches across their roofs. I guess we’ll need to wait until they’re cleared before we know the full extent of the damage.

Except for a few seconds we retained power. Farther down the block and in the next street the power is out.


Here’s the view down our alley:


Understanding the Appeal

The older I get the more I think that Camus and the other absurdist philosophers had a point. The order in the universe is the order we bring to it rather than the order that’s there. I find myself increasingly in agreement with this passage from “The Myth of Sisyphus”:

If the descent is thus sometimes performed in sorrow, it can also take place in joy. This word is not too much. Again I fancy Sisyphus returning toward his rock, and the sorrow was in the beginning. When the images of earth cling too tightly to memory, when the call of happiness becomes too insistent, it happens that melancholy arises in man’s heart: this is the rock’s victory, this is the rock itself. The boundless grief is too heavy to bear. These are our nights of Gethsemane. But crushing truths perish from being acknowledged. Thus, Edipus at the outset obeys fate without knowing it. But from the moment he knows, his tragedy begins. Yet at the same moment, blind and desperate, he realizes that the only bond linking him to the world is the cool hand of a girl. Then a tremendous remark rings out: “Despite so many ordeals, my advanced age and the nobility of my soul make me conclude that all is well.” Sophocles’ Edipus, like Dostoevsky’s Kirilov, thus gives the recipe for the absurd victory. Ancient wisdom confirms modern heroism.

In the ancient world men were the bread of the gods. It is the lovely conceit (definition 1a) of Christianity to turn this on its head and that God has become the bread of men.


Kaus vs. Schuler On Immigration

I’ve been meaning to get around to posting on this for some time but this is the first opportunity I’ve had. Recently, Mickey Kaus posted a summary of his views on immigration, a topic which is important here but has come close to overwhelming the latest incarnation of his blog, kausfiles. I’m going to post them in parallel to my own because I think my views are different from his in some signficant ways:

Kaus Schuler
The immigrants we get, including illegal Mexicans, are mainly hard-working potential citizens, like waves of immigrants before them; I think that most of Mexican immigrants who enter the country illegally are migrant workers, not particularly interested in becoming citizens. After the amnesty of the 1980s, only a minority of the Mexican immigrants then eligible elected to seek American citizenship. Are today’s illegals more likely to seek citizenship than the previous cohort? I think it’s almost exactly the opposite. I’d like to see some evidence.
The problem, as Mark Krikorian argues, is that we’ve changed, and the world has changed. We don’t need unskilled labor like we used to. Our native unskilled workers are having trouble earning a living. I agree with most of that but would go one step farther. IMO importing unskilled workers has been a conscious strategy to avoid dealing with the problem of racism against blacks. Having a reliable stream of new unskilled workers has also allowed business models that depend on such a stream to prosper.
The main reason to limit immigration flow, then, is to protect wages of Americans who do basic work. We desperately need a tight labor market. We won’t get it as long as millions of people from abroad respond to any tightening by flooding our work force. Once again I agree with that. I would add that the demographics of Latin America and the Caribbean means that those who rely on a steady stream of unskilled workers will need to go much farther afield.
The most important thing, then, is getting control of that number by securing the border — stopping illegal immigration. Once that’s done we can argue about what the legal number should be (and what should be done about current illegals). I think that trying to control the border is nearly futile but, since I think that most of the immigrants who arrive across our southern border are economic migrants, I think that getting control of immigration in the workplace would be much more effective.
But if wages are rising, it could be a reasonably big number! See point 1; I think that increasing the number of work visas by several orders of magnitude, i.e. into the millions rather than the present absurd 10,000, would be a practical approach to the problem.
There are second-order worries about cultural assimilation, especially the huge flow from Mexico, a nation a day’s drive away many of whose citizens (polls show) don’t acknowledge the legitimacy of our Southern border. See my first answer above. While I think they’re not illegitimate, I’m not unduly worried about those “second-order worries”.
One solution is to let in more people from other, non-Mexican cultures — Koreans, Chinese, Africans, Indians, etc. We want diversity! Ha ha. That joke never gets old. I suspect that a million unskilled, uneducated Chinese or Indian peasants would be just as difficult to assimilate in the age of the Internet as a million Mexicans are. And they’ll have the same influence on wages at the low end.

There are other issues, e.g. the incompatibility of mass immigration with our burgeoning welfare state, birthright citizenship, and family reunification as a policy goal, that we need to come to terms with but those are a start.