Saturday Morning Links

Assorted content for your weekend reading.

- Paul Krugman discusses the connection between concentrated wealth and extreme anti-social political behaviour:

Wealth can be bad for your soul. That’s not just a hoary piece of folk wisdom; it’s a conclusion from serious social science, confirmed by statistical analysis and experiment. The affluent are, on average, less likely to exhibit empathy, less likely to respect norms and even laws, more likely to cheat, than those occupying lower rungs on the economic ladder.

And it’s obvious, even if we don’t have statistical confirmation, that extreme wealth can do extreme spiritual damage. Take someone whose personality might have been merely disagreeable under normal circumstances, and give him the kind of wealth that lets him surround himself with sycophants and usually get whatever he wants. It’s not hard to see how he could become almost pathologically self-regarding and unconcerned with others.

So what happens to a nation that gives ever-growing political power to the superrich?

...

(T)he biggest reason to oppose the power of money in politics is the way it lets the wealthy rig the system and distort policy priorities. And the biggest reason billionaires hate Mr. Obama is what he did to their taxes, not their feelings. The fact that some of those buying influence are also horrible people is secondary.

But it’s not trivial. Oligarchy, rule by the few, also tends to become rule by the monstrously self-centered. Narcisstocracy? Jerkigarchy? Anyway, it’s an ugly spectacle, and it’s probably going to get even uglier over the course of the year ahead.

- Meanwhile, Michael Snyder weighs in on how precarious workers are being treated as things rather than people by employers - and how the resulting lack of security is affecting them. And Frances O'Grady makes the case for a meaningful industrial policy to make sure that everybody benefits from economic development.

- Neil Irwin comments on new research showing that an individual's view of the economy is based on partisan preference - but that most people in fact know the underlying facts when they're given even a tiny incentive to get it right.

- Gordon Pape examines the real impact of the Libs' upper-class tax cut - with an individual making $216,000 getting a handout, while somebody making a tenth as much gets nothing.

- Finally, Margaret Wente confirms that her preference for a first-past-the-post electoral system is based on a desire to limit voters' input to a periodic referendum on the incumbent. And Erich Jacoby-Hawkins makes a noteworthy point about the first-past-the-post apologists bleating about refusing to accept a new electoral system without a a referendum:

(W)hat's funny about this likely change are the demands, mainly from supporters of the status quo, that any electoral system reform come only after a successful referendum vote where more than 50% vote for the change. This flies completely in the face of the underlying value of our current electoral system, the one they would have us retain, where decisions aren't made by a 50%+ majority, but by the "majority" of MPs elected with a mere 39% of votes.
...
The basic principle behind first-past-the-post is that whichever party forms a "majority" based on enough local riding pluralities gets to make (and change) the laws. Anyone who argues that such changes should instead require support of 50%+ of voters in a referendum is, in effect, arguing for proportional representation, because under PR, only laws that have more than 50% voter support will pass. So which do you want, the "powerful, stable" false majority governments that FPP elects, or a proportional system that actually reflects voter desires? Because you can't use the latter principle to argue against the former.

Monday Morning Links

Miscellaneous material for your Monday reading.

- The Economist adds a noteworthy voice to the chorus calling for greater tax enforcement to ensure the corporate elite pays its fair share:

Characterising this steady financing as short-term lending is “the ultimate example of form over substance” and undermines a fundamental tenet of American tax policy, huffed Mr Levin. When an HP executive tried to insist the manoeuvre did not constitute profit repatriation, the senator wielded an internal HP document in which it was discussed—in the repatriation-strategy section. The Senate investigators said they suspected other companies were doing the same thing but couldn’t say how prevalent the practice was.

Who to blame for all this darting through loopholes? To no one’s surprise, Mr Levin pointed the finger mostly at the companies that engage in “tax alchemy”.
...
The rule-setters and enforcers deserve their share of the blame. It is true that enforcement of arm’s-length deals is tricky because no two intangible assets are quite the same, making it hard to establish a fair price. Moreover, the IRS has to rely in part on the taxpaying company’s own projections of cash flows, risks and so on. But the agency leans too often on the side of leniency. It does not help that transfer-pricing regulations have grown unwieldy. Some experts describe them as unworkable.

The Financial Accounting Standards Board also took some flak at the hearing. Jack Ciesielski, an independent accounting expert, was scathing about a FASB exception that allows firms to avoid reporting and reserving for American tax liabilities for foreign earnings if they plan to invest these “permanently” overseas—a loophole that they continue to exploit even as they lobby for a tax break so they can bring those same profits home.

By focusing on a few striking cases, Mr Levin and his staff have increased their chances of making a splash with an issue that many find mind-numbingly technical. And profit-shifting is, as he put it, doubly problematic today, given the fragility of the economy and the fact that corporate-tax receipts are at historic lows as a percentage of federal revenue. Expect the IRS to take a dimmer view of avoidance schemes going forward. Whether it will prove a match for the multinationals’ phalanxes of lawyers and beancounters is another matter.

- In case there was any doubt how the power imbalance between employers and workers in Canada is being exploited, CJME confirms that gas station attendants in Saskatchewan - as in Ontario and elsewhere - are being encouraged to risk life and limb to avoid being docked pay based on gas theft. And Wendy Stueck reports on the unsafe living conditions facing temporary agricultural workers in British Columbia.

- For those worried that Robocon wasn't being investigated beyond the most glaring case in Guelph, Stephen Maher and Glen McGregor confirm that Elections Canada is looking into plenty more citizens' concerns.

- Dr. Dawg and Colby Cosh tear into the Globe and Mail and its public editor for a pitiful response to compelling concerns about plagiarism.

- Finally, Rick Mercer rants as to why we need to rant more often. But I'll add that while a good rant can help to define a problem, the words don't go far if not paired with some plan to solve it.

Thursday Morning Links

This and that for your Thursday reading.

- Jim Stanford discusses how Canadian right-wing parties are picking up on the most extreme anti-labour stances of the U.S. Republicans. But I do have to wonder whether the comparison between union dues and taxes is one that they'd particularly shy away from: isn't much of the point to try to eliminate both as means of providing resources to achieve social ends?

- Meanwhile, Linda McQuaig explains why baby hippos and others have plenty of reason to be concerned about debt hysteria. And David Climenhaga points out that even from an economic standpoint, there's far more risk in the Cons' demands for austerity than in funding citizens' basic needs.

- Trish Hennessy serves up some numbers on food security:

900,000
Approximate number of Canadians who turn to food banks every month, up from almost 714,000 who reported using a food bank in 1998. (Source and source)
...
1.9 million
Number of Canadians, aged 12 or over, who lived in food insecure households in 2007-08. (Source)
10.8
Percentage of Canadian families with at least one child under six who were food insecure in 2007-08. That's one in 10 families. (Source)
17.8
Percentage of First Nations adults aged 25-39 who reported they were hungry but could not afford to buy food in 2007-8. (Source)

 - Finally, I'm not quite sure who's writing under Margaret Wente's byline. But more like this please:

Once upon a time, banks and drug companies enjoyed good reputations and a relatively high degree of trust. Most people regarded them as useful industries that created products and services that benefited society. Sometimes the people who ran these companies even lived down the street. Those times are long gone. Today these industries are movie villains – multibillion-dollar enterprises portrayed as so rapacious they’ll do anything to turn a buck. Judging by current events, this characterization is all too true. Some of the most powerful people in these lines of work will lie, cheat and steal until they get caught, all the while assuring us that they are adding incomparable value to society.

What happened? Both banking and pharmaceuticals went global, and the stakes (and rewards) shot up. Today they count their sales and profits in the billions. Today they’re led by corporate rock stars who make more money than most people can ever dream of. Their compensation is tied to stock prices, which means they have every incentive to do whatever it takes to goose short-term results. This is called “aligning management’s interests with the shareholders,” and for years was thought to be a good thing. Unfortunately, it’s not always such a good thing for the public.
...
Simple logic dictates that if the risk is small and the reward is great, the temptation to lie, cheat and steal will occasionally prove overwhelming. Those billion-dollar fines are just the cost of doing business.

Monday Evening Links

Assorted content to end your day.

- Toby Sanger posts about the OECD's findings on inequality in Canada, with this particularly jumping out as to how much less progressive our tax system is now than it was two decades ago:

Taxes and benefits play a smaller role in reducing inequality in Canada than in most OECD countries: prior to the mid-1990s, they offset more than 70% of the rise in market income inequality, now it’s less than 40%(.)

- Leftwords points out that UK hospitals which were built as P3s as a matter of government decree are now demanding - and receiving - a higher cost for services as a result of that ill-advised choice. And Tim Harford highlights the absurdity of the free-marketeers' argument that public-sector pay should be seen as nothing but a cost to society while private-sector pay is seen as the be-all and end-all of policy development.

- Erika Shaker takes Margaret Wente more seriously than Wente deserves, but makes up for it with a thorough skewering of her condescension toward the Occupy movement.

- Finally, Mia Rabson points out that the Cons can't be taken seriously in feigning concern with bullying in Canada at large when it forms the centrepiece of their political strategy.

On virtuous choices

Margaret Wente's latest isn't that far off of my criticism of most of her reactionary pablum. And the fact-checking of her column is entirely deserved. But she does manage to highlight an important choice, even if she rhetorically assumes exactly the wrong outcome.

In fact, I'd think there's indeed a problem if large numbers of well-educated people can't find work related to their fields of expertise. And that goes doubly if students have to take out massive student loans to get an education that's setting them up for little opportunity.

Where Wente goes astray, though, is in assuming that the solution is for more people to avoid higher learning and instead train only for the jobs that best suit the interests of those with the most money to pay. And Wente's own choice of words signals how glaringly bizarre her position is: since when is "virtue" a vice to be mocked, rather than something that should be generally pursued (even if different political actors may disagree on its exact form)?

Fortunately, the gap between the projects people value most and those that are currently being funded can be bridged at least as easily by changing the funding structure as by forcing a change in values on people willing to dedicate years of training to making a better world. And in pointing out the gap between our theoretical ability to fund worthwhile social ends and the minimal amount of resources actually dedicated to them after decades of anti-tax spin, the Occupy movement is in fact right on target in highlighting a solution.

Of course, it's far beyond Wente to recognize that choice given her self-appointed role as a protector of those who already enjoy a disproportionate share of our society's wealth. But let's not pass up an opportunity to discuss the real choice - and note that the Occupy movement is exactly on track in noting that a focus on further rewarding the top end of the income and wealth scale has both increased the cost of an education, and limited the availability of careers which advance social ends rather than private profits. And it's only by making use of the tools available to us as activists and voters that we can change that state of affairs.

On elite efficiency

Sure, it's easy enough to criticize Margaret Wente's latest column if one takes it the least bit seriously.

But let's at least give Wente some grudging credit for her unique business model. After all, who among us can produce our required work output merely by looking at what well-informed people are criticizing, then slapping together a caricature of it to go under our byline?

The price of fraud

Not that I entirely disagree with Margarent Wente's argument that corporate crime needs to be far better prosecuted and punished. But she's far off base in suggesting that it's only in Canada that corporate crooks can buy their way out of serious consequences.

Here's Wente:

(T)hose in business must know Canada is a fine place to fleece the innocent and cook the books. Not for us the crusading prosecutors, the quick indictments, the speedy trials, and the lifetime jail sentences so popular in the United States.

Here, you can be pretty sure the law will take years to catch up to you (if it ever does). In the event you are found guilty, the penalty won't be so bad.

So let's check on the latest prominent white-collar crime story from the U.S. to see just what kind of sentence is being applied for those who "cook the books":

Federal regulators accused Maurice R. Greenberg, the former chief executive of the beleaguered American International Group, on Thursday of overseeing deals that fraudulently overstated A.I.G.’s financial position, claims that came after a four-year investigation.

Mr. Greenberg, 84, will pay $15 million to settle the suit, an agreement that was announced simultaneously as the government described the accusations against him. A former chief financial officer at A.I.G., Howard I. Smith, will pay $1.5 million to settle similar accusations.
...
The S.E.C. said that Mr. Greenberg and Mr. Smith were involved in “numerous improper accounting transactions” that inflated A.I.G.’s earnings from 2000 to 2005. Regulators said Mr. Greenberg publicly boasted about the company’s strength and double-digit growth while concealing its weaknesses through accounting sleights of hand.

“Greenberg and Smith oversaw various improper transactions that presented a false financial picture and allowed A.I.G. to claim success in meeting its performance goals,” Robert S. Khuzami, director of the S.E.C.’s division of enforcement, said in a statement.

Now, I'll readily note that there's a case to be made that both systems are likely painfully underequipped to provide the combination of enforcement and punishment that would be required to properly limit the risk of white-collar crime. But for anybody actually looking to determine where they can pay the lowest price for defrauding the public, the choice between at least receiving a prison sentence and being able to buy one's way out of trouble south of the border would seem to make for a fairly clear conclusion that Canada isn't the most enticing target.

(H/t to John Cole.)