Sobering Thoughts

Comments on politics, the culture, economics, and sports by Paul Tuns. I am editor-in-chief of "The Interim," Canada's life and family newspaper, and author of "Jean Chretien: A Legacy of Scandal" (2004) and "The Dauphin: The Truth about Justin Trudeau" (2015). I am some combination of conservative/libertarian, standing athwart history yelling "bullshit!" You can follow me on Twitter (@ptuns).

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Wednesday, March 29, 2017
 
Tax reform
Two columns worth reading on Republican hopes for tax reform and tax cuts.
The first is the New York Times column of David Brooks yesterday. His key point:
The first is simplification, the idea that a cleaner tax code, with fewer loopholes and lower rates, would foster economic growth. The second is substitution, the idea that the overall rate of taxation is less important than what you tax. The current code taxes income heavily and barely taxes consumption. To increase dynamism and growth, we should substitute taxes on investment with taxes on spending.
Reaganism and 1980s National Review-style conservatism stunted the Right. We generally think that the solutions to the problems of three decades ago is what is needed today. But tax rates were much higher in the 1980s than they are today. Now the problem is not mostly that people are paying too much income tax but that the economy is stuck in very slow growth. We need economic dynamism but our tax code prevents that not just because high rates are a disincentive to risk-taking and success (as conservatives argue) but because the tax system (and system of regulations) is complex and inefficient. Conservatives within the Republican Party have different priorities. Some want lower income and corporate tax rates (for a variety of reasons but to help the donor class would be a big one), others want to spur economic growth. It might be marginally less complex than reforming health care, but it still won't be easy. Brooks is correct to recognize that the GOP is going into this debate from a position of weakness and that the political tradeoffs to get anything passed could radically alter a good tax reform plan into something else that is complex and inefficient.
Michael Tanner of the Cato Institute agrees it will be difficult: "the U.S. has gone more than three decades, encompassing four presidents, since the last time we seriously reformed taxes. There’s a reason for that." As Tanner explains:
The tax code is a cornucopia of special-interest goodies. There will be losers as well as winners. Any change is going to make for many powerful enemies. The tax code isn’t just part of the Washington swamp, it is the swamp. And draining that particular swamp was never going to be easy.
Every stupid special interest privilege is going to be defended by its beneficiaries. They donate to help elect or help defeat incumbents. Benefits are concentrated but costs are spread across the economy or amongst taxpayers. It doesn't help that President Donald Trump doesn't get policy intricacy or that the White House and Congressional leadership favour a policy -- the border-adjustment tax -- that might be defensible as sound policy but which is a giant tax increase on consumers, the mechanism, let alone the benefits, of which are difficult to explain.
Brooks says that there will be a temptation to get some sort of political victory with a package of simple tax cuts in order to avoid another big policy defeat. That's probably not good enough policy-wise but is what Trump needs and, perhaps more importantly, what Paul Ryan needs at the moment. But cutting taxes again means putting off reform again -- and perhaps leaving altogether for another president.


Tuesday, March 28, 2017
 
Danes are a model of telecommunications deregulation
I was going to write about the new Mercatus Center paper by Roslyn Layton and Joseph Kane, "Alternative Approaches to Broadband Policy: Lessons on Deregulation from Denmark," but Reason's Jesse Walker nicely distills the basics and lessons: the Danish government ended the state's telephone monopoly, disbanded the telecom regulatory agency, resisted price controls, and limited subsidies to the industry. It isn't perfect as some of the regulatory agency's responsibilities were given to other government agencies, but the net result is much less government intervention than there used to be. Walker concludes: "It used to be a cliché to suggest that socialism works better in Scandinavia than elsewhere. The best argument that that's true may be the ease with which Scandinavian socialists have moved toward markets."


 
Daily Mail's leg fetish
The Daily Mail has come in for a lot of criticism for focusing on the legs of Prime Minister Theresa May and the leader of the Scottish separatist party. Even the New York Times took notice of the British tabloid: "Daily Mail Compares 2 U.K. Leaders — Their Legs, Not Their Ideas." Apparently sexism or not 2017 something. The question is whether the paper will turn off its majority female readership (the only paper among ten publications Media Briefing looked at which has more than 50% female readers).


 
Social media and home burglaries
Jack Dunphy at PJ Media:
Note to social media users: When you share your whereabouts on Twitter, Facebook, Instagram, or what have you, it may not be just your friends who are paying attention. If you let it be known that you are away on that fabulous holiday in Mexico, Hawaii, or the South of France, you may be doing more than inspiring envy among your friends and followers. There may be lurking among them people whose only interest in your holiday is the distance it takes you away from your home and for how long.
His examples are all celebrities with profile and riches, so I'm not sure the Los Angeles-based security expert can extrapolate to the general public. And as Dunphy notes, tony West LA is experiencing a 24% increase in burglaries; not all of them are telegraphing to their dishonest followers when they are away and their home is easy pickings.


Monday, March 27, 2017
 
Labour is disappearing. From the news, at least.
ConservativeHome's Mark Wallace writes:
Regular readers may have noticed rather less coverage of the Labour Party on ConservativeHome recently. This extends not just to our opinion and analysis pieces, but also to the daily newslinks, where we collate and summarise all the political content in each day’s newspapers.
There’s a reason for this – Labour has become less and less relevant to the nation’s political life. Indeed, where normally we could provide at least one headline and several bullet-points about the Opposition in each day’s newslinks, currently it’s common for the Labour Party not to have a single story of interest in the entire national press – even in The Guardian. Labour is disappearing from the media about as fast as it is falling in the polls.
Wallace says opposition parties can usually count on a little coverage of their inevitable infighting, but even that barely warrants close scrutiny (unless you a Labour MP or otherwise heavily invested in their never-ending trouble). At CapX, Chris Deerin offers a reason why after reading the long New Statesman essay by Dan Jarvis on the post-Brexit Labour strategy (and others offering their too inside baseball accounts of Labour's woes:
But none of them has yet answered the great questions that confront them and their party: what, today, is the point of the centre-Left? Who are their people? Are they socialists or just nicer Tories? Do they genuinely believe in the market, or is that merely an attempt to accommodate the grim prejudices of the electorate? And if not the market, what? What, in the end, is the simple message that will bring voters back? It sure ain’t “a civic capitalism in the public interest”.
Labour have been horsed at Westminster and in Scotland because voters look at them and see nothing much that they want. The party expresses its loathing of its one popular modern PM at every opportunity. It has twice voted in an incompetent scarecrow as leader, who every time he opens his mouth makes you long for the oratorical skills of, say, Lassie. It has failed to come up with anything as credible or compelling as New Labour. And from the looks of things, that’s not changing anytime soon. Meh Labour, No Danger.
Deerin is on to something, but isn't quite there. Jeremy Corbyn doesn't just look "not like a leader" but like he could never be one. Tony Blair was once popular but his brand is tarnished, perhaps more so within his old party than the public at large. But stuck between Corbyn's socialism-lite and Blair's embrace of markets and George Bush's foreign policy, the Labour Party is, at best confused, at worst divided, about what it is. Just as I write that sentence I don't think it's right. The Labour Party is not stuck between those two sides -- its membership has chosen Corbyn twice -- but is perceived to be stuck. It has factions completely at odds with each other and there is no conceivable way to reconcile them. Historically factions can come together with the prospect of victory, with one side willing to take some lumps for the sake of power and little victories here or there. That's not possible at the moment.
So deeply divided internally, the Labour Party cannot answer the important question for progressives: what is it and what is the point. Too much of the maneuvering is less about principles than personalities (including that of Dan Jarvis); journalists, the public, and perhaps even members don't particularly care for those battles, at least right now. Labour could get people to care if the party looked like it had a viable (if unlikely) path to power, but at this point nobody can see one. And it all becomes a viscous circle. Until it doesn't. Perhaps Corbyn will resign. Perhaps the Theresa May government will make a major misstep (Brexit is full of traps). But until something changes, Labour will appear irrelevant to many observers. But when it does change, it will become obvious that we should have been paying closer attention and we'll wish we read that overly long New Statesman essay.


 
Culture trumps economics
Arnold Kling posits six cultural explanations for why America has ended up, "in Josh Barro’s words, with an economy that spends 1/6th of GDP on health care with nobody wanting to spend 1/6th of their income on it." Some include the obvious like a desire to pay (or have someone else pay) for medical treatments to deal with the results of lifestyle choices rather than changing one's bad habits or the reluctance for health care providers to admit health care is a commodity. These two have the biggest policy implications:
1. The American middle class does not believe in saving up for health care expenses. The idea that you should have $10,000 – $15,000 set aside for the occasional acute medical episode is abhorrent. The idea that you should save up for the inevitable medical expenses of old age is abhorrent. We are not Singapore.
2. The American middle class does not believe in paying taxes in order to support people who are very poor or very sick. We are not Denmark.
In short, we tend to overvalue our lives relative to what we are willing to pay for it, and undervalue the lives of others.


 
Loewen on McGill fiasco
University of Toronto political scientist Peter Loewen has a great thread that you should read, but these two tweets are worth highlighting:


 
What makes headlines and talk radio might not be the most important news
Tyler Cowen wonders in a post about what's happening in Washington and abroad (Donald Trump not scaring his party or foreign governments) if we are ignoring the real news: "the end of global QE is rapidly approaching, with U.S., European, and possibly Chinese central banks all tightening at about the same time; maybe that’s the real news!" Washington politics is "the show" while what is happening at the central banks really matters.


Sunday, March 26, 2017
 
Use Brexit to cut regulations in UK: Gove
According to The Independent, Conservative MP Michael Gove told a Advertising Week Europe event his past week that the United Kingdom should sheer itself from the European Union's onerous business regulations. Gove said, "If there are regulations which hold any business here back, we now have the potential to amend or even if necessary rescind them." He cited the Commission’s Habitats Directive which impedes the construction of housing with environmental limits and the Clinical Trials Directive which could slow or prevent treatments that could address patients' "pain and misery."
The paper reports:
The Government plans to transfer all EU law into British law with the so-called Great Repeal Bill. Ministers are then expected to remove regulations they do not like on a case-by-case basis, meaning all EU laws would stay on the books until they were specifically repealed.
Gove's argument is simple: the UK doesn't need many of these regulations, and in many cases they cause harm, so there is no need to keep them.


 
Thy does the Republican Party win locally and suck nationally
By winning and sucking I don't mean electorally. In The Corner, Charles C.W. Cooke writes about how North Dakota lawmakers have passed a conceal carry law while in Washington, healthcare reform is (at best) stalled and (at worst) dead. Cooke notes that Republicans control both elective branches of government in both Bismark and DC, but that one scores policy victories but the other doesn't. Cooke says that the GOP is better at the state level than the national level in implementing conservative/libertarian policy:
At the state level, the GOP has been remarkably effective at ushering in reform over the last seven years; at the federal level, by contrast, it has been able only to hold the line.
This, of course, is partly because the GOP has only just got full control of the federal government, whereas it has been running most of the states for half a decade now. But one can’t help but notice the difference in ambition. At the state level, Republicans have ruthlessly passed right to work legislation, even in unlikely places such as Michigan, Indiana, and Wisconsin; they have expanded charter schools; they have done yeoman’s work restoring the Second Amendment; they have cut taxes and regulation; and they have enacted as many pro-life measures as the courts have allowed. They have, in other words, lived up to their billing.
At the federal level, meanwhile, they have narrowed their intentions from the get-go. Under Donald Trump, there will be no entitlement reform, and possibly no healthcare reform either; there will likely be a massive, goodie-laden “infrastructure” bill, of the sort that GOP likes to rail against when a Democrat is in the White House; no departments will be shuttered, or radical structural changes made to the federal behemoth; and the promise of tax reform — that is, a substantial change to the way the system works — has already been replaced by “tax cuts.” How strange the difference in achievement between the local and the national.
Is this because the Republican lawmakers and executive in the states have more spine or are more principled? Maybe. But this seems an oversimplification. Cooke doesn't say Republicans in Washington are cowardly or unprincipled, but many readers could jump to that conclusion. What other reasons might contribute to the fact Republicans seem to achieve more at the state level than in the nation's capital? I can think of a few.
1. The issues politicians deal with at the state level are easier to deal with or have greater demand from voters than do national level issues. The issues at the state level more directly affect the lives of voters (delivery of education and health, local transportation) and therefore voters expect results.
2. The stakeholders (from bureaucrats to unions to special interest groups) at the state level may be more interested in change and achievement.
3. Politics at the national level is more symbolic than is politics at state level. See points #1 and #2.
4. Some states may have veto-proof majorities in the legislature thereby negating the need to compromise with Democrats.
5. The Republican caucuses could be more monolithic at the state level. The national GOP caucus is diverse, representing Congressional Districts from across the country and therefore its members are less likely to agree. The representatives and voters within a state, a smaller jurisdiction, are more likely to agree on solutions than are representatives and voters from across the country.
6. Republicans in mostly Republican states might face particularly weak political opponents (Democrats) or stakeholders (unions and bureaucrats).
7. Republicans have a less hostile media than the Washington press corps and therefore aren't afraid of controversy.
8. State-level Republican politicians are looking at higher office (Congress, governor) and must deliver resume-padding achievements to get elected; there is less incentive to have delivered policy as a member of Congress.
9. Systems of survival come into play in Washington. The ambitious member of a state legislature might look to move up to Washington or the governor's mansion, but the ambitious member of the national legislature is looking to move up the leadership ladder in his or her institution of the moment. Becoming chairman of an important committee or moving up the ranks to whip or leader requires not rocking the boat.
10. The states as laboratories for policy have winning examples from other states. Washington doesn't have that luxury.
There are other possible theories and explanations and contributing factors. Many work together.


 
The irony of Ottawa funding a Toronto AI project
Colin Horgan at The Article: "What the budget didn’t tell you: Toronto is getting an A.I. institute: The federal budget was vague, but more AI investments are coming." Horgan writes:
[Jordan] Jacobs is the co-CEO and co-founder of Layer6 AI, a Toronto company that markets an end-to-end deep learning recommendation prediction engine — a tool that might be used to curate personalized video recommendations, or understand a consumer’s level of satisfaction in real-time and proactively help them, or even engage in predictive health care.
Jacobs, together with his business partner, Tomi Poutanen, along with Geoff Hinton and Rich Zemel — both professors at the University of Toronto — conceived of the new facility.
The concept, Jacobs says, is “a grad school that is a world leader in research, that graduates more machine learning PhDs and master’s students than any school in the world, that is designed in a way to create flexibility so that…faculty don’t have to get bought out by a company; that if they can decide if they want to do research, they can do both – so research and commercialization.”
It’s an idea the federal government will soon announce it is going to help come to fruition. The Ontario government and other partners will also provide funding.
The plan, Jacobs says, is to have this institute become the engine for an AI-based economic “supercluster” – a term Canada’s minister for innovation, Navdeep Bains has used a lot lately.
Jacobs says Canadian artificial intelligence projects cannot attract personnel because the big companies can easily buy whatever talent they want to grab for themselves. So this independent institute, affiliated with the University of Toronto but open to other institutions, will be funded by Ottawa and competing with Google and Facebook and Apple. Not sure that this is the best use of taxpayer money. If the institute wants to fund research, it should commercialize its early successes not suck at the teat of government. And yet it isn't that government is picking winners and losers that most bothers me about this project but its irony: at a time when government is rightly looking at skills development and retraining for people who have lost or risk losing their jobs (due to automation and globalization), it seems odd to be spending money subsidizing jobs in a tech sector that could lead to more automation and other job-killing technology.


Saturday, March 25, 2017
 
But the west does give in to terrorism
Charles Moore writes in the Daily Telegraph that despite the bold rhetoric of politicians, the United Kingdom (and other western democracies) does legitimate terrorism:
Although it beat the Provisional IRA militarily, Britain did, to a surprising extent, give in to them. We accepted (and thus boosted) their democratic pretensions, released their prisoners, got rid of the police force (the RUC) which used to catch them, and never collected their guns and bombs. We gave them large chunks of political power and public money. McGuinness became one of the Queen’s (deputy) first ministers. Beside McGuinness’s coffin on Thursday stood Bill Clinton. It is hard to imagine a former US president making that journey for any Northern Irish politician who had never killed anyone. Sinn Fein/IRA did not win outright in Northern Ireland, but they did a lot better than if they had always followed the paths of peace.


 
A treatment for sepsis
Instapundit points to a story from Norfolk, Virginia, in which a local doctor treated several patients that had sepsis with a concoction of vitamin C, vitamin B, and hydrocortisone. They all recovered. As one nurse said, "We have seen patients walk out of here we didn’t think would leave." To get widespread usage, the treatment would require studies but no pharmaceutical company is going to fund a study to determine if a $60 treatment saves lives. An Instapundit correspondent suggests insurance companies, which could save a bundle of money to avoid long-term treatment and hospital liabilities, might step up to fund studies.


 
'Europe's soulless liberalism'
The Wall Street Journal's Sohrab Ahmari writes about two recent disturbing cases of the intolerance of continental liberalism: the French state's reaction to an advertisement about Down syndrome because it could bother women who aborted their preborn Down syndrome-diagnosed babies and the persecution of a midwife in Sweden that did not want to participate in a late-term abortion. Ahmari writes:
At its best, liberalism revels in the hubbub of a crowded marketplace of ideas. But a dour, self-righteous and conformist model has now come to define the liberal idea across much of Europe, one that brooks no dissent from the latest progressive precepts.


 
Divided government with one party in charge of both elected branches of government
The Wall Street Journal's Gerald F. Seib writes about the failure of the health care bill and the root of the Republicans' political problem: they are not really one entity. There is a Republican of one sort in the White House, and Republicans of another sort in the Congressional leadership, and the GOP caucus is not monolithic. Seib writes:
In the aftermath of the failure of the health bill in the House, Mr. Trump immediately blamed that lack of Democratic support. And Democratic opposition was, in fact, absolute and unshakable. But ultimately the fatal problem was his inability to move enough wavering House Republicans to pass the measure in the way it was always destined to be moved along: on a straight party-line vote.
And the biggest problem on the Republican front was Mr. Trump’s inability to pull a set of the House’s most conservative members over the line to support the measure.
Why?
[T]he difficulty in moving those conservatives also reflected the fact that some of them remain suspicious of Mr. Trump, who they think doesn’t really share their beliefs and didn’t do enough to push their principles into the health legislation.
Many of those House members come from reliably conservative districts, where defying a president and House leaders on ideological grounds isn’t a politically risky step. Mr. Trump’s sway also isn’t helped by the fact that his job-approval ratings are slumping below 40%.
Seib says the Republicans will need to find a creative way to build a Team Trump. The next issue on the agenda is tax reform, and nothing unites Republicans like tax cuts. There can be different priorities and agendas, but unlike the complexity of health care reform, there should be more room for cooperation and compromise. But even if the different wings of the party and branches of government can find agreement, it could prove an insufficient foundation for long-term unity.


 
What I'm reading
1. The Benedict Option: A Strategy for Christians in a Post-Christian Nation by Rod Dreher (Again.)
2. Sir John's Echo: The Voice for a Stronger Canada by John Boyko
3. Basic Income: A Radical Proposal for a Free Society and a Sane Economy by Philippe Van Parijs


Friday, March 24, 2017
 
Trudeau's imperialism
Glen Argan has a terrific column in the Catholic Register on Justin Trudeau seeking to impose liberalism on the developing world:
Liberalism is not Stalinist communism, but it has its own authoritarian streak. The most recent evidence on this matter is Prime Minister Justin Trudeau’s $650-million program to finance and promote abortion and related “reproductive health” concerns in the developing world. This, according to International Development Minister Marie-Claude Bibeau, is in the interest of empowering and protecting women.
Unstated was how the Trudeau government would react if other foreign governments began sponsoring advocacy groups in Canada to change our laws in line with their own ideals. The age of imperialism supposedly came to an end with World War II, but no, not really.
Today, we have liberal imperialism, a religion which aims to impose its will on countries around the world in the interests of their own “improvement.” The heathens are not capable of discerning right from wrong — abortion being a putative right — and so enlightened Canada will have to show them the way.
If this is not cultural imperialism, it is hard to know what might be deserving of the name ...
What needs to be recognized is that liberalism, secularism or whatever you want to call it is a religion of its own, an aggressive religion that wants to impose itself on the rest of the world. It is not at all pluralistic; it is determined to wipe out all alternative views. Dialogue is not part of its modus operandi.


 
Cost of the Brexit divorce
CapX's Andrew Lilico says the £50 billion price tag that is bandied about for the United Kingdom leaving the European Union is surely exaggerated, and he suggests some considerations in regard to what the British government should pay for and for what it shouldn't. In short, the UK should "pay because we get something in return," either directly or indirectly. An example of the latter is paying for EU inspections in Europe that could be duplicated when they enter the UK if that is the cost of a trade deal. There are also obligations that the UK undertook whilst a member (pensions for workers, mortgages on buildings) that it should fulfill. That said, they own a portion of those buildings, too. The UK would also contribute to its obligations through 2020 (under the current 2014-2020 budget framework) even if the country leaves the year before. This all makes sense, as does Lilico's idea that the UK remain a member of the Single Market for an extra year sans a no-free-movement provision to allow a smooth transition within the obligations the UK has. I doubt that there will be the prerequisite "common sense and goodwill all around" that would make this possible.
These are all pragmatic contributions for the UK. I share Lilico's rejection of the idea that the UK be liable for new expenditures arising before they leave (and after the invocation of Article 50). Based on existing obligations and the benefits the UK receives, there will be a substantial cost to London for leaving but Theresa May's government must reject the high-end estimates that are surely little more than attempts by Brussels (and the remaining 27 capitals) to be punitive.


 
Robocall fact of the day
The Federal Communications Commission is considering regulations that would crack down on robocalls. The Washington Post reports that there are 2.4 billion automated calls each and every month in the United States. That sounds like a lot, but is it really? There are 125.82 million households in the US, or about 19 calls per month per household. It should be noted that not all automated calls are illegitimate or illegal so the new restrictions will not eliminate the problem, only curb it, even if they work, which should not be assumed.


 
The myth of the lone wolf terrorist
Lone wolf terrorists are still attracted to radical networks and while they often act alone (and sometimes without direction), they seek to connect to a larger group. The Henry Jackson Society has an illuminating report based on the profiles and analyses of 269 people convicted of Islamist terror offenses, or those killed while committing acts of terror, in the United Kingdom between 1998 and 2015. Fortunately, all but two were arrested before they struck with their lethal intentions. In the report's introduction, David Anderson says:
It comes as no surprise that most Islamist terrorists in the UK are British men aged 18-34. But the reader learns also that 16% of offenders were converts, 76% were known to the authorities prior to their terrorist offences and 26% had prior criminal convictions. Trends noted include rises in travel related offending and in intended beheadings and stabbings. And while individual offending and online radicalisation have both increased, this work reveals the extent to which offenders – even if convicted alone – tend still to be in real-world networks with partners, siblings or long-standing friends.
The six-page executive summary is full of statistics to paint a picture of who is committing what author Hannah Stuart calls "Islamism-related offenses." It is also broken down into sets of dates from 1998-2010 and 2011-2015 to illustrate that the stark increase in IROs after the death of Osama bin Laden and the beginning of the Syria and Iraq conflicts. Another noteworthy finding: "there is little correlation between involvement in terrorism and educational achievement and employment status where known."


 
Jordan Peterson AMA
Last night Jordan Peterson did an Ask Me Anything on Reddit. If you have watched a lot of his videos or interviews there wasn't a lot of new stuff there, and that's fine. Something new, at least to me, was his view on pornography. He said:
I think that pornography entices people away from life. So that's not good. It's a quick, easy, low quality solution to a complex problem. I can't see its use as something that increases integrity and promotes strength.
Then he was asked: "Should every aspect of one's life promote strength? Is there room for weak indulgences?" He replied:
I think there's room for indulgence, that I don't think that that's the same as saying that there's room for weak indulgence. Why do something if it makes you weak? Unless you wish to be weak...
Asked about whether he believes in God and whether he prays, Peterson answers:
My God is the spirit that is trying to elevate Being. My God is the spirit that makes everything come together. My God is the spirit that makes order out of chaos and then recasts order when it has become too limiting. My God is the spirit of truth incarnate. None of that is supernatural. It is instead what is most real.
It depends on what you mean by pray. I don't ask God for favors, if that's what you mean.


Thursday, March 23, 2017
 
NCAA tournament, 2nd weekend
The first round was almost universally crapped on by basketball pundits as boring because there weren't enough upsets. For just the second time in decades, the top four seeds in every region won their opening game to make it to the round of 32. You know what that set up? The best round of 32 in recent memory. There were a number of good four-five contests. As exciting as watching your 13-seed defeat a 4-seed is (or 12s over 5s, ect&), it sets up too many one-sided contests in the second round. Most upsets are the result of 1) unfavourable match-ups for the better seeded team due to personnel (size) or scheme or facing a dominant defense that can shut down good offenses, 2) improperly seeded teams that score superficial "upsets" based on seeding not quality (think Wichita State this year), and 3) a particularly good night for the lower-seeded team or off night for the favourites. It's good to remember that if the game was played 1000 times, the lower-seeded team would probably lose two-thirds of the time or more. If alternative universes are your bag, we saw upsets in that rare parallel universe in which the lower-seed team actually won. But then that lower-seeded -- and frankly inferior team -- plays another top seed and promptly loses a one-sided affair. There was less of that this year and we had excellent games in round two and will continue to have them throughout the tournament. That's a great thing for fans of quality basketball.
My predicted final of North Carolina beating Duke for the championship cannot happen. Fortunately, the Tar Heels are still in but (happily) the Blue Devils got beaten by the South Carolina Gamecocks. UNC almost lost to the Arkansas Razorbacks. Both SEC teams played scrappy, in-your-face defense and took advantage of turnovers against their superior ACC opponents but only one of them was fortunate enough to win. UNC played a great game in their 49-point opening win and flashed their dominance for brief stints against Arkansas, leading the pundits to point out the obvious: play their best and the Tar Heels can beat anyone but play their worst and they are beatable. Of course, that's true of every team. Gonzaga looked pedestrian in the first half of their opener. UNC was tied with the team they almost lapped for the first ten minutes in their opener. Teams are prone to hot and cold streaks within games. It is dangerous to make too many conclusions based on one or two games -- 40 or 80 minutes -- in a tournament setting. That said, this information can be added to what we know (not replace what we already knew) to make some predictions going forward.
My (updated) predictions:
Midwest:
Kansas (1) vs Purdue (4), Thursday, 9:40: Purdue was thought to be the best team coming out of the Big 10 and the only team from the conference on selection Sunday thought to be able to make it to the Elite Eight. The Boilermakers will have to get through what most people consider the best team in the tournament, the Jayhawks. This should be a great game featuring two finalists for the National Player of the Year: Jayhawk Frank Mason III and Boilermaker and double-double machine Caleb Swanigan. Outside of watching those two, the game-within-the-game to watch is Kansas' superior outside shooting facing Purdue's so-so three-point defense and Purdue's strong inside game against Kansas' middling defense on the inside. Here's the problem for the Jayhawks if they scheme to stop the inside game: Purdue is the nation's sixth best three-point shooting team with four players hitting 40% of their treys. That said, the Jayhawks are entirely capable of coasting to victory if Swanigan gets into foul trouble, Kansas freshman guard and likely high lottery pick Josh Jackson takes over the game, or Purdue's shooting goes a little cold. Kansas wins.
Oregon (3) vs Michigan (7), Thursday, 7:09: The Wolverines are the narrative favourite, going from near tragic plane accident to winning four straight to take the Big 10 tournament, to winning their first two NCAA tourney games. They are now ranked third overall in Ken Pomeroy's offensive efficiency rankings and they'll be tough to beat. Against #2 seed Louisville, their three-point shooting went cold and they still beat one of the best defenses in college hoops. Oregon is not as strong as they could be without six-ten forward Chris Boucher who is missing the tournament with an ACL injury. With Boucher, Oregon could beat anyone in the country but their chances are severely diminished without their second best player. It is one thing to beat lower seeds on opening weekend, but now dipping further into the bench will get exposed. Should be a close game, but I see Michigan scoring the upset.
West
Gonzaga (1) vs West Virginia (4), Thursday, 7:39: Zaga is rated 12th overall in KenPom's offensive efficiency and 1st overall in defensive efficiency. They are almost criminally underestimated by fans, although not by analysts. The school has made it to 19 consecutive NCAA tournaments and made the Elite Eight several times, but have never been in the Final Four. Mark Few has his best squad he's coached at the school. And with Villanova and Duke out in the East, their path to the finals, let alone the Final Four, is as clear as it has ever been. But they have a tough path back to the Elite Eight. Press Virginia as they are called by basketball writers play a suffocating defense and their superiority on the offensive glass gives them second chances to make up for an improved but still inferior (at this level) shooting percentage. Gonzaga has not put together a solid game yet in the tournament; West Virginia is capable of laying an egg on the court. It should not surprise anyone if either team has fans scratching their heads wondering why it is still in the tournament, but more likely they should play a close, tight game, with each team dominating for brief periods. Zaga should be able to do that at the end of the contest and move onto the Elite Eight.
Arizona (2) vs Xavier (11), Thursday, 10:09: Xavier has too much history in the tournament to be considered a Cinderella but they are the lowest seed left at #11. A poor second half of the season had them on the bubble, a case of adapting to the injury of guard Edmond Sumner. The Musketeers have beat both their tournament opponents by double digits on the strength of guard Trevon Bluiett's play. It seems their run should end, facing a versatile Arizona Wildcats team that can beat opponents in any element of the game. Zona is not super great at any aspect of the game, but they don't really have weaknesses. They also have seven-foot power forward Lauri Markkanen. He score 15.8 ppg and hits more than 43% of his three-pointers. Meanwhile guard Allonzo Trier average 17.1 ppg. It is hard to stop both of them. I don't see Xavier doing it.
South
North Carolina (1) vs Butler (4), Friday, 7:09: The Tar Heels are the better team but Butler defeated #1 overall Villanova twice in the Big East this year and defeated another top seed (Arizona) early in the season. Carolina is a veteran team with phenomenal depth that survived Arkansas despite two of their top players barely being a factor in the contest. They dominate the boards, especially on offense, which helps when their shooting is off. Against the Razorbacks, the Tar Heels made an unusual number of turnovers and that almost cost them. They shouldn't be that sloppy in back-to-back games. Butler is capable of winning, but I think UNC wins comfortably.
Kentucky (2) vs UCLA (3), Friday, 9:39: This is the only 2-3 contest and it features two teams that many pundits said on selection Sunday could win the tournament. UCLA is a scoring machine (2nd according to KenPom) and they beat Kentucky 97-92 at Rupp Arena in December. Perhaps no game features as much top-level talent (Lonzo Ball and TJ Leaf for the Bruins, Malik Monk, Bam Adebayo, and De'Aron Fox for the Wildcats). UCLA is probably the most entertaining team to watch because of their high octane offense and giant personalities. The Bruins don't do defense, so Kentucky is facing a different challenge than the defensive-minded Wichita State opponents they struggled to beat last weekend. Kentucky can hold their own and in a tournament that hasn't had its buzzer beater moments, this game might be expected to come down to the last possession. These are not the same teams that faced each other in December, with Kentucky becoming a solid defensive team and the Bruins improving, too. The Wildcats are adept at taking away the three. Kentucky gets their revenge and makes it to the Elite Eight to face North Carolina, a team they beat 103-100 in December.
East
Baylor (3) vs South Carolina (7), Friday, 7:29: As exciting as the Gamecocks victory over #2 Duke, effectively at home, was, they have a tough road ahead. South Carolina isn't a strong offense (122nd according to KenPom) but they won on the strength of 65 second-half points against Duke. That isn't sustainable so they'll have to beat Baylor with their fourth-ranked defense. Baylor is a solid team, with superior offensive rebounding and a strong defense (14th according to KenPom). They've held some of the top scoring teams to low scores this season (Arizona to 49, Michigan to 58). Baylor has a big size advantage, which means a lot more rebounds and a trip to the Elite Eight.
Florida (4) vs Wisconsin (8), Friday, 9:59: A defensive battle featuring (according to KenPom) the 3rd (Gators) and 7th (Badgers) best defensive units. Florida demolished Virginia 65-39 in round 2 while Wisconsin beat the #1 overall seed Villanova. The Gators had some help as the Cavaliers were stone cold on offense (as they are prone). The Badgers have the better talent (Ethan Happ and seniors Nigel Hayes and Bronson Koenig) that seems more Final Fourish than a Florida team missing center John Egbunu. That said, KenPom has Florida as the third best team in the nation. In a low-scoring game, either team has a real chance and while Florida has been playing as well as anyone in the tournament, I like the Badgers to make the Final Four from the region.
My new final four: Kansas (same), North Carolina (same), Arizona (same) and Wisconsin (replacing Duke). North Carolina beats Arizona for the championship.


 
What Hayek knew
F.A. Hayek died 25 years ago today. There are essays remembering his legacy by Matt Ridley at CapX, David Boaz at the Cato Institute, Eamonn Butler at the Adam Smith Institute, and Donald Boudreaux at Cafe Hayek. The unifying theme of their essays or remarks is praise for Hayek's insight that freedom is critical to spontaneous order because collective action through uncoordinated efforts (markets) is superior to collective action through coordinate efforts (central planning) as the planner has insufficient knowledge to take into account everyone's wants and needs. John Cassidy describes this understanding in his 2000 New Yorker column (via the Hoover Institute):
Centralized systems may look attractive on paper, he argued, but they suffered from a basic and incurable ailment: the "division of knowledge" problem. In order to know where resources should be directed, the central planner needs to know both what goods people want to buy and how they can most cheaply be produced. But this knowledge is held in the minds of individual consumers and businesspeople, not in the filing cabinets (or, later, computers) of a government planning agency, and the only practical way for customers and firms to relay this knowledge to each other, Hayek argued, is through a system of market-determined prices.
"We must look at the price system as such a mechanism for communicating information if we want to understand its real function," he wrote in a 1945 paper, "The Use of Knowledge in Society." In a market system, people simply go out and buy the things they like, leaving unwanted goods on the shelves. If they want more of something—say, heating oil—it becomes scarce and its price rises, thereby prompting oil companies to increase production and consumers to economize. If people decide to use less oil, say, because natural gas has become cheaper, the price of oil will fall, and its production will be scaled back—all this taking place without any orders being issued by a government agency. "I am convinced that if it were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind," Hayek wrote.
This view of capitalism as a spontaneous information-processing machine—a "telecommunications system" was how Hayek referred to it—was one of the great insights of the century. It may have been implicit in the work of some previous economists, notably Adam Smith, but Hayek was the first to spell it out.


 
Thinking about UBI
I don't think Oren Cass makes the case against Universal Basic Income in this short essay for City Journal. He begins by raising an important and largely ignored question: "what would it mean to remove the expectation that one provide for oneself and one's family?" Important, indeed. Ignored, in part because it is unanswerable. I'm not sure Cass proves his cases that UBI would turn everyone in society into trust-fund kids.
But a sentence in the Cass essay got me thinking. He describes UBI as "an unconditional, irrevocable right to receive the cash for meeting basic needs." UBI could begin as unconditional and irrevocable, but short of a constitutional requirement for this form of social policy, there is no guarantee it is either. It is easy to imagine that eventually conditions could be imposed. Perhaps UBI becomes contingent on completing high school or, more ambitiously, university. Benefits could become dependent on some form of national service, either serving in the military or mandatory volunteer time. William Buckley favoured tying government benefits from student loans to welfare to voting rights to a form of national service. But the UBI, which begins with the intention to help individuals have more choice (in jobs, work-family balance), could become a vehicle by which to punish people by cutting the UBI for individuals that commit crimes or sin against social norms (failing to vote, holding the wrong views). I'm most worried about using UBI as a weapon in the war against crime; it isn't difficult to see the public uproar over paying someone convicted of a crime but who served their time as gist for politicians to score easy points (looking tough on crime and protecting the public purse).
This is not to say that UBI is unwise social policy. It might very well be. But UBI could be used to nudge -- or more than nudge -- citizens to certain behaviours and outcomes because, hey, if the state is paying a significant benefit, the state gets input on how you live your life. And it isn't hard to see how universal wouldn't be universal for long. These are aspects of UBI to think about.


 
Budget 2017: red ink as far as the eye can see
Federal Finance Minister Bill Morneau presented his budget today. The Finance Department website has the budget, budget in brief, press release, and text of Morneau's speech. The Canadian Press has highlights (via the Toronto Star) and Deloitte has a good summary of the budget's implications for business. Bottom line: there's an increase in projected spending to $330.2 billion while revenues will be just $304.7 billion, for a deficit of $28.5 billion. That means the Liberal government is running another deficit much larger than the tiny deficits of no more than the $10 billion they promised on the campaign trail in August 2015. Morneau projects nearly $120 billion in new debt over the next five years. As the Toronto Sun's Anthony Furey says the budget "offers no plan of escape from years of red ink."
Balanced budgets are out, but gender balance is in vogue. The CBC has a story on the gender-sensitive budget noting it focuses on getting women into the workforce. On the gender-based budget approach, the Globe and Mail's Erin Anderssen says: "Canada’s first gender-based budget is like a friend who oozes sympathy over coffee but can’t find cash when the check comes: It falls short, but means well." Kate McInturff of the Canadian Centre for Policy Alternatives disagrees, noting in an Ottawa Citizen column the government is responding to differences in male-female outcomes with policy and an indication it will undertake more analysis of what might have once been considered disparate impacts.
There is media coverage from the Canadian Press (via the Toronto Sun), CBC, Globe and Mail, and CTV. In a thorough report, Bloomberg summarizes the budget: "Prime Minister Justin Trudeau hit the brakes on new spending and major tax changes in a wait-and-see budget that marked a major shift for his activist administration, which last year unveiled an ambitious deficit-spending plan to stoke growth." The Vancouver Sun looks at how the budget affects British Columbia by funding transit and infrastructure. The Calgary Herald looks at how the budget affects Alberta, including the elimination of (new) drilling deductions and $30 million to clean-up closed and unowned wells; the paper reports, "the Petroleum Services Association of Canada had originally sought $500 million in loans from Ottawa for the project," with PSAC head Mark Salkeld complaining the oil industry only got about a tenth of what Quebec-based Bombardier got in the form of a loan previously from this government. Of course, the Quebec government doesn't think it got enough money from Ottawa. The Halifax Chronicle Herald looked at seven ways the budget affects Nova Scotia, focusing on employment insurance (including skills training). According to the Toronto Star, the winners are cities, parents, caregivers, and veterans, while losers include Uber users, transit users, the military, and tax cheats. The Globe and Mail editorial is excellent: "Move along, nothing to see here – but just wait until next year."
Maclean's has comprehensive coverage including stories on "21 ways the federal budget will hit Canadians’ wallets" and "Eight Liberal budget promises that recycle old spending." It also has a good column by Mark Milke on how the budget brings back 1970s industrial policy as the Liberal government tries to micromanage the economy.
For the most part there is nothing new in the immediate future. Most of the new announcements (social housing, daycare) are over the long-term and don't kick in until later. There is only about $4.4 billion in new net spending over the next five years. For example, spending for daycare spots doesn't begin until 2019 and most of the $11.2 billion slated for housing isn't scheduled to be spent until after 2022. As the National Post's Andrew Coyne says there was no new money or no new ideas but plenty of "empty buzzwords": "I have read a good many tedious, empty budgets in my time. I cannot recall ever reading one quite as mind-bendingly empty as this one." Many of those buzzwords are about innovation. The budget is aspirational talking about the idea but there is no clear plan to foster innovation (if government even can do it).
The banks have their analysis: TD Economics (cautious, business as usual), BMO Capital Markets (delivers on low expectations, no plan to balance budget), RBC Economics (stay the course), CIBC Economics (an unexciting budget that finally puts the details on last year's plans), and Scotia Bank ("no market impact anticipated" because there were no surprises).
Right reaction (and business). The Canadian Federation of Independent Business welcomed spending on skills development, initiatives to support entrepreneurs, and measures to ease the hiring of foreign workers, but is worried about increases in employer and employee contributions to Employment Insurance. The CFIB is "relieved to learn there are no measures to raise taxes on capital gains or small business income in 2017," but is still "concerned that several key tax measures for independent businesses are under active review." The Chamber of Commerce applauded some of the "measures in the budget on skills and innovation" but is deeply concerned that Canada's competitiveness will take a hit as Ottawa stubbornly refuses to roll back regulations or cut taxes. Canadian Manufacturers and Exporters welcomes the plan to spend innovation but says the budget is short on details of how that will be delivered. The Canadian Taxpayer Federation said deficits continue to grow, innovation is largely corporate welfare, and boutique taxes are back. The Fraser Institute says it is a status quo budget that doesn't have a plan to bring down deficits or tackle the debt and does nothing to address uncertainty about the possibility of tax increases. Cardus has concerns about money for childcare; Cardus executive vice president Ray Pennings also has a video questioning whether government is the instrument to "renew social architecture" saying that central planning cannot replace bottom-up flourishing, and that the budget fails on that count. The Conservative Party talking point is that the Liberals are nickel-and-diming Canadians.
Left reaction (and labour). The Canadian Federation of Municipalities called the budget "a game-changer for municipalities" because it puts money into transit, housing, and infrastructure. Other than the CFM, the reaction was generally more critical. The Broadbent Institute's Rick Smith called it "Crumbs for Canadians" claiming there was nothing to address inequality. The Canadian Centre for Policy Alternatives complained the budget didn't tackle inequality. The Canadian Labour Congress welcomed money for skills training and child care but is worried about public-private partnerships for infrastructure. Predictably the Public Service Alliance of Canada did not think there was enough money for to help federal workers deliver "quality" services to Canadians. The Canadian Federation of Students said the government has no vision for higher education. The Canadian Council for International Co-operation is not happy that there is no commitment to increase foreign aid. Despite $7 billion over a decade being committed to daycare beginning in 2019, even the Child Care Advocacy Association of Canada was "disappointed the budget is not more ambitious in its spending especially at the start of the ten year period" claiming there are insufficient funds to "build accessible, affordable, quality child care."
Me: while Finance Minister Bill Morneau talked about the debt-to-GDP ratio as a fiscal anchor in his post-speech interviews, the budget documents dropped that language and the ratio is projected to mostly flatline in the forseeable future. It is disconcerting that the Liberal government is ditching this (last) fiscal anchor after brazenly breaking its campaign promise not to run deficits over $10 billion and to only do so for a few years. Now its massive deficits for decades. I'm pleased that the government didn't raise capital gains taxes, but it is clearly leaving the door open to doing so and raising other taxes if it needs to. At a time when the United States is considering lowering top income and corporate tax rates, Canada should have boosted the competitiveness of this country's economy by lowering these tax rates, too, or at the very least ruling out tax increases on high income earners, small business, and capital gains. I don't buy the narrative that this budget is a reaction to the uncertainty caused by the Trump administration (and what will happen with trade and tax rates there); that seems like a convenient excuse to stay the course rather than introduce major spending initiatives or radical tax changes. The Trudeau government is more handcuffed in their budget choices by their large deficits than the Trump effect.