How to keep an AUD30bn surplus

The short version: you can’t. Not (politically) tenably, at any rate.

The Federal Government could deliver a record budget surplus of between $26 billion and $30 billion under its new fiscal policy tactic for putting downward pressure on inflation.

As the Government faced calls yesterday from a business group to freeze spending, it is emerging that the surplus for next financial year is set to be much larger than the $18 billion flagged.

This would allow the Government to use the budget to sell its message that it is tightening fiscal policy enough to contain inflationary pressures despite keeping its promised $31 billion in tax cuts.

The Treasurer, Wayne Swan, said yesterday the Government would apply a “new era of fiscal discipline” for years to get inflation under control.

Mr Swan said a Business Council of Australia submission calling for no real spending increases correctly identified challenges in areas like improving workforce skills and infrastructure.

I don’t know how the government plans to pull that off. Our economy is under very serious inflationary pressure – as was well-presented only over the weekend by Ross Gittins:

When our real resources reach the point of being fully employed, the economy (gross domestic product; aggregate demand) simply can’t grow faster than aggregate supply is growing – which these days the econocrats estimate to be 3.5 per cent a year at most, and probably nearer 3 per cent.

When we attempt to grow faster than that we don’t succeed, we just generate imports and inflation.

If, for instance, the state governments decide it’s time to start making inroads into the infrastructure backlog, their extra spending is more likely to bid up wages in the construction sector than cause more roads and schools to be built.

…

So how do we reduce the likelihood of such an unhappy event? By reducing the need for the Reserve Bank to rely as heavily on the blunt instrument of further interest-rate rises by making more use of the budget’s braking power.

And that means Kevin Rudd not being so stupid as to keep his ill-considered promise to cut taxes in July.

Needless to say, now that they are in opposition, the liberal party has a different view:

the Opposition Leader, Brendan Nelson, defended the Coalition’s approach. “As a Liberal Party we take the view that those taxes [are] money taken out of the pockets of hard-working, everyday Australians,” Dr Nelson said.

“Once we’ve delivered on our commitments in defence and health, education and roads and all of the things that we need to do to look after pensioners, then that money wherever possible ought to be returned to the people who actually paid it.”

Actually, as a liberal party, you should not have set those tax revenues up in the first place, while allowing a now-probably-non-solvable export bottleneck to hold productivity back.

Budding Austrian economists! This is why (big G) Government isn’t supposed to take away more than the minimum required to do the things for which it was created. It always ends in tears, eventually. I don’t much look forward to another recession we will have to have had (I’m the Picasso of tenses, it’s true).

Given, as Gittins explains, that we are at (and, probably beyond) the non-accelerating inflation rate of unemployment, giving Australian households AUD31bn in negative taxation is not going to help much – irrespective of how much money the government isn’t giving back.

If today’s IHT is correct, the commodities boom could, soon, be boosting Australia’s income still further, as Latin America faces its own problems:

Argentina and Brazil are facing the possibility of short-term energy crises from a lack of natural gas, which is needed to fuel industries and generate electricity for residents. Bolivia is sitting in the middle, with the region’s largest gas reserves.

I’m with Gittins: the government should really consider holding onto that money for awhile. Pour it into the migration of labour within the economy, from low to high-productive areas/industries, if necessary.

This returns us to the notion of complexity, though. If you’d promised AUD31bn in tax cuts, and then I came along and explained the macroeconomic risks of delivering on that promise – the promise of tax cuts – what would you do? Unfortunately, the government is also in politics.

Why are people still ganging up on President Bush?

People just won’t leave him alone about the fact that he couldn’t manage an economy’s way out of a paper bag (into a few trillions dollars of debt, sure).

Mayor Michael Bloomberg has unleashed another flurry of jabs on Washington, ridiculing the federal government’s rebate checks as being “like giving a drink to an alcoholic” on Thursday, and said the presidential candidates are looking for easy solutions to complex economic problems.

The billionaire and potential independent presidential candidate also said the nation “has a balance sheet that’s starting to look more and more like a third-world country.”

…

His tirade against the candidates and the economic stimulus package on Thursday began when he was asked how that experiment is going.

In his answer, he praised Democrat Barack Obama for the plan the Illinois senator outlined on Wednesday that would create a National Infrastructure Reinvestment Bank to rebuild highways, bridges, airports and other public projects. Obama projects it could generate nearly 2 million jobs.

Last month, Bloomberg and Govs. Arnold Schwarzenegger of California and Ed Rendell of Pennsylvania announced a coalition that would urge more investment in infrastructure.

“I don’t know whether Senator Obama looked to see what I’ve been advocating, or not — you’ll have to ask him — but he’s doing the right thing,” Bloomberg said.

But then the mayor went on to say that while the presidential candidates appear to be talking more about the economy now, they are looking for quick fixes to please voters instead of focusing on the roots of the problem.

“Nobody wants to sit there and say, ‘Well there’s no easy solution,”‘ Bloomberg said. “They want to send out a check to everybody to stimulate the economy. I suppose it won’t hurt the economy but it’s in many senses like giving a drink to an alcoholic.”

I agree, certainly – although we should bear in mind that Bloomberg was, and could well still be, considering a Presidential run himself. Good thing he hangs out with Governor Schwarzenegger (“President of 12 percent of us” – none too subtle, but good luck with the constitution-change. If it succeeds it means I might be President, some day!).

To continue:

The mayor last month said the economic stimulus package was shortsighted, and presented his own views on where the federal government should be focusing its attention. Specifically, he said the government should adopt a capital budget to oversee long-term infrastructure spending, instead of the current year-to-year spending.

It should also offer financial counseling, modified loans, and in some cases, subsidized loans to homeowners who find themselves unable to afford their mortgages.

He says that the government should also think differently about immigration, and that bringing more workers in rather than keeping them out is the key to long term economic stability.

Funnily enough, he is the mayor of New York – whose rent control policies are a disaster for precisely the reason that they don’t over subsidies to people (as opposed to offering subsidies to property, which is far and away an inferior approach – see, for example, here, here and here). However that’s another issue (and it certainly does not prevent me liking him as a prospective President).

Trade deficits, multiplier effects and where Keynesian maths breaks down

So, from the Wall Street Journal:

The U.S. trade deficit narrowed sharply in December despite a record foreign oil price, shrinking to a gap smaller than expected as overseas sales rose and imports receded.

The U.S. deficit in international trade of goods and services decreased by 6.9% to $58.76 billion from November’s unrevised $63.12 billion, the Commerce Department said Thursday.

The December deficit was smaller than expected by Wall Street. Economists surveyed by Dow Jones Newswires estimated a $61.70 billion shortfall.

For all of 2007, the U.S. ran a trade deficit of $711.6 billion, $46.9 billion less than the 2006 deficit of $758.5 billion.

Remember our handy equation for the macroeconomy:

Aggregate Demand = Consumption + Investment + Government Expenditure + Net Exports

So the trade deficit is still, well, big: NX, or Net Exports, is still heavily negative in the US equation:

That is month-by-month: every month another big negative bar. However NX is not important: the change in NX is what is important. A decrease in NX of USD47bn(ish) means USD50b47bn back in the US economy.

The Multiplier Effect determines the scale of the contribution this will make to US equilibrium GDP. It is defined as 1/MPS, the Marginal Propensity to Save (Marginal Propensity to Save + Marginal Propensity to Consume = 1).

Now, what is the US’ MPC? According to my Eco 1 textbook (somewhere), it’s 97%. According to Kyle Mudry it’s about 97.87%:

Personal savings as a percentage of disposable income is described in column 5. U.S. personal savings rates have experienced a sharp decline over the period. From the 70’s through the mid-eighties, U.S. citizens saved steadily around 9%-11% of their disposable income. From the mid-eighties to the present there has been a drastic decline, with the sharpest decrease coming during the mid-nineties on, dropping below 5% and almost coming to a complete stop at 1% in 2000.

You will note a discrepancy between Consumption, proportional, and Consumption, Marginal Propensity of – think of it is expenditure on financial services (for example), interest on debt, etc. It’s money not saved, at any rate.

So what does this mean for our USD47bn decline in the trade deficit? Well, according to the Multiplier Effect, it means a 47bn/.02 = USD2.35tr increase in equilibrium GDP!

Ah. This would be where our Multiplier runs into problems. Like many things in statistics and economics, the laws of our physics rather break down, near the corners. In this case, as MPC becomes very close to 1, the Multiplier gets somewhat non-realistic.

Extrapolation! As of last December, total Consumer Credit Outstanding was USD2.52tr, having risen 5.5% over the year. Total household debt is USD12.8tr.

The US population is a little over 301 million people – that’s people, not consumers. With an average household size of 2.6 people, Consumer Credit Outstanding becomes something like USD21,000 per household (total debt USD110,000 or so, but that is mostly secured – i.e. a mortgage).

The punchline? In the United State, the Marginal Propensity to Consume is basically greater than 1. So – give us a USD600 cheque, and we’ll spend some USD800. For example.

Now – what happens to the Multiplier Effect when MPC > 1? It would appear that the increase in GDP is infinite (the limit of the Multiplier as MPS approaches zero). In fact equilibrium GDP decreases. Counter-intuitive? Not so much. The Multiplier Effect works on the long-run equilibrium GDP, and in the long run, we have to repay our debt. More income only invites more expenditure and more borrowing, meaning more money lost to interest payments.

So – just think about that, when you get your recession-fixing cheque, or you read about the trade deficit. As long as we’re not saving for our rainy days, we’re really only getting that little bit more rope with which we’re hanging ourselves.

London to penalise gas-guzzling cars

Eeyess.

Owners of gas-guzzling cars will have to pay £25 ($49) a day to drive them in central London from October, mayor Ken Livingstone said on Tuesday.

The decision, following a year of consultations, is part of a package that Livingstone is bringing in to cut London’s carbon emissions by 60 percent by 2025.

…

The 25 pound daily tax on vehicles in central London’s Congestion Charge zone emitting 225 grams of carbon dioxide per km would apply in the same way as the normal 8 pounds daily charge does to all but the cleanest cars.

But to force home the environmental point of a congestion scheme that initially had no green goal, the exemption granted to residents in the zone will be removed from drivers of the polluting four-wheel drive and top-end luxury cars.

That means that the owner of a gas-guzzler who chooses to drive in the zone every day will end up paying 6,500 pounds a year for the privilege.

Should be interesting. “Gas guzzling” cars are something akin to Giffin goods (unlike normal goods, Giffin goods break the law of demand: as price increases, so too does quantity demand). Hummers, for example, are ever-more popular, despite being ever-more expensive to run – which is precisely where the popularity comes in.

A tax that makes such cars GBP6,500 more expensive to run in the city may send exactly the same “opulence signal”.

Ken Livingstone is gambling however that the other signal will be more important: by sending such a strong signal that society frowns so heavily upon their ass-headed mode of transportation, he is hoping to appeal at least to impure altruism (if not to their bank-books) in getting them to down-size.

Either way, it ought to be fun to watch.

Soros, Davos and threats to the financial system

Five-minute-or-so interview with George Soros, hosted over at the Financial Times.

He’s talking Monolines (single-type instrument firms), the Fed, the banking system and the real economy going forward.

He also gives his take on the use of tax-payers money to deal with the problems (and the increased regulation required from using our money to underwrite others’ debt), and the relative position of the financial world in the US, UK and European economies (quite insightful).

How does one eliminate plastic shopping bags without inconveniencing consumers?

Peter Garrett, Midnight Oil frontman and current Minister for the Environment, Heritage and the Arts has the idea that shopping-bags are evil – entirely correct – but that, while they need to be removed, taxation and regulation are bad ideas:

Mr Garrett is working with state governments to formulate a strategy for weaning the country off plastic bags. It uses 4 billion a year, and Mr Garrett said they were having a serious impact on coastal and marine environments.

…

Banning the bags outright or imposing a levy on them were among proposals being considered, but Mr Garrett said he was conscious of passing costs on.

“We certainly don’t want to disadvantage the consumer, and I don’t believe in any way that any measure that will be brought forward will do that,” he said.

Mr Garrett said biodegradable plastic bags were not the answer, with some taking as long as 1000 years to completely break down.

Should be very interesting indeed. A levy would seem to be the optimal solution: plastic bags cause damage to the environment, damage that costs (a) money, to repair, and (b) not-money, as our environment disappears under the weight of our own waste. The solution? Add that cost to the price of a shopping bag (meaning charge money for them). Consumers cause the damage, consumers get to pay the compensation for that damage.

Thus, the Pigovian tax: add the social cost to the private cost of plastic bags. The market receives price signals based upon the negative externality and fewer bags being consumed. Yes, this causes inconvenience to consumers – why should they pay for the damage their behaviour causes?

The usual alternative is the likes of a ban: simple, efficient, either popular or not. Pass a law that forbids the things being in supermarkets. I actually rather favour this one. Like taking a band-aid ™ off, one may as well just rip it off. Have shopping bags one month and then nothing the next. People who forget to bring bags can purchase cloth ones – they really aren’t that expensive (and usually hold quite a bit).

But I’m hippie scum, utterly without sympathy for non-hippie scum like me (and, believe me, I use my share of plastic bags. Then end up garbage bags, and they end up in land-fill. I also use my fair share of cloth shopping bags – I just don’t always remember, or I shop while I’m out.

Anyway, this too would inconvenience consumers. In fact, given that consumers are getting these basically for free, anything that isn’t this way of doing things is likely to be inconvenient. This is what makes Garrett’s statement so interesting.

My guess is that they will come up with something geared towards voluntary conversion by stores, hopefully big-box retailers first. I would like to see them push the system that I saw Sainsbury’s use, when I was there. Several different types of bags for use/sale, and a rebate if you brought your own.

Unless the government intends to use the levy-money to repair environmental damage (making the levy a Coasian solution), the tax is not a good idea: it’d be unpopular, and the effect on the number of plastic bags used is more likely than not to be both small and short-lived. Customers will end up adding the cost in to their expected cost of a shopping trip.

Stores, however, should be encouraged to levy their own goods, on a weighted basis, and use that money to fund re-usable cloth bags. Those can be free for customers, and you receive a discount equal to the estimated cost-increase when you bring your own bag (either theirs or someone else’s). Yes, goods would be more expensive – but probably not by much. Think about how much a single, $1, $1.50 cloth bag will hold: add $1 to the cost of all the groceries inside, and it’s a fairly small change. At that level of the customer’s budget, their consumption will not be very responsive at all to the increase, meaning inefficiency (deadweight loss, excess burden) will also be acceptably low.

Does this inconvenience shoppers? A bit, sure – bear in mind, though, that, by bringing bags with them, they can erase that cost completely (on average). Given that we’re all, currently, choking off the environment with our toxic plastic bags, that hardly seems too inconvenient for mature economies to handle. The alternative is for the government to underwrite the cost of cloth bags – but that means taxing all of us. Moreover, it means the market can’t clear properly (e.g. by taking your own bags to the supermarket) because the price signals are all out of whack, moreso even than before.

In any event, if the government intends non-intervention to be their solution, they have few enough options thereafter. The market for plastic bags got to this point without intervention, so it stands to reason that non-intervention will leave it at this point, over the long-term.

The French word for taxation

For those who are not so immersed in public economics, it is safe to say that most people agree Goverment (big G) should be as small and efficient as possible, subject to meeting the needs of its electorate. When it interferes with an otherwise unencumbered market, it should be for specific reasons: information asymmetry, externalities, etc. – poor price signalling, generally.

Along the way, Government should institute, as agent for the economy as a whole (now and future), policies that secure sustainable, stable long-run economic growth (increasing technological change, increasing labour productivity, increasing Efficiency with respect to the use of finite resources, etc.).

All of which serves to make this article in the International Herald Tribune very amusing:

Sarkozy proposes taxing new technology to finance the old

In a move that could profoundly reshape the media landscape in France, President Nicolas Sarkozy on Tuesday proposed banning commercials from public television and making up for some of the lost revenue with a first-of-its-kind tax on the Internet and mobile phones.

A government tax on Internet connections would be virtually without precedent and could be politically controversial, given that public policy experts say that Internet access drives a country’s economic growth and productivity.

…

In France, competition for Internet customers is intense, resulting in prices that are well below those of elsewhere, and an “infinitesimal” tax would presumably not discourage potential subscribers. The French pay an average of 37 percent less than the OECD average, or $36.70 a month as of October, compared to $49.36 for all 30 countries belonging to the group.

The share of residents with fast Internet connections in France is also slightly higher than elsewhere – 22.5 subscribers per 100 inhabitants, compared to 18.8 for the OECD as a whole.

But policy experts mostly advise making the Internet cheaper and not weighing down its growth with extra charges. The U.S. Congress last year extended a federal moratorium on Internet taxes for the next seven years.

While it is far from widespread, there are a few other examples of government levies on new technologies or communications to help older ones. In Europe, many countries tax blank storage media like CDs and devote that money to support music. Turkey and South Korea have also used telecommunications taxes to raise money for other industries.

Sarkozy’s proposal was part of a dense salvo of measures fired off in a New Year’s speech aimed at redirecting the focus from his Hollywood-style love affair with the Italian singer Carla Bruni to his vision for France.

In the 45-minute speech, Sarkozy declared the death of the 35-hour week, suggested that large companies may have to double or triple the part of their profit they are obliged to share with employees and vowed to replace gross domestic product with a more holistic indicator of economic welfare that he has commissioned from two Nobel laureates in economics, Amarthya Sen and Joseph Stiglitz. He also said that he would put a state bank in charge of defending French industry against sovereign wealth funds and other financial predators.

They had it at the title, really. Taxing new technologies – that are popular – in order to bolster old technologies – that are not – is not a great way to go about things. It’s a good way to raise money: demand for internet access is going to be fairly inelastic, at least for the people using it. Getting that ratio reversed would make a lot more sense, though, and a tax won’t contribute at all to Middle France’s willingness to embark on new technology.

The tax on blank media is also a poor comparison: blank CDs are almost guaranteed to be used to copy protected music/film. The internet? Not so much. I don’t like that sort of equivalency (and I’m welcome to start my own newspaper, I know).

The two things that are most interesting, yet received the least attention in the article, are this apparent “GDP plus” measure of well-being and welfare, which will be very interesting to observe, as well as the plan to set up a defense against predatory behaviour by Sovereign Wealth Funds. The latter is a little paranoid, I think, but then France is fairly high on the list of xenophobic economies.

So there may be some fiscal policy response, after all

According to Bloomberg,

President George W. Bush and Treasury Secretary Henry Paulson said that U.S. economic indicators are sending “mixed” signals and that they are considering whether a stimulus is needed.

“We’re all focused on this,” Paulson told the New York Society of Security Analysts. “This is a decision he still has to make,” Paulson said of the president, who told an audience in Chicago today “indicators have become increasingly mixed.”

“Become”? Meh. This is the man who Treasury-Secretary’d our way into this mess – God only knows how he interprets “signals”. Someone should ask him what sort of signal those CMO trades sends.

Oddly, though, he had this to add:

Paulson said he expected the economy would keep growing and suggested the administration wouldn’t rush to Congress with a fiscal stimulus plan.”Working through the current situation and getting the policy right is more important than getting the policy announced quickly,” he said.

“This economy is really quite resilient in the face of some pretty strong headwinds,” Paulson said. At the same time, he added that “the consumer is facing some real challenges right now – the housing downturn, energy prices, the unemployment numbers.”

The “resilience” crack is fine – it’s the extent of the job, in modern times, but “getting policy right”? – this would, of course, not include Monetary Policy. The policy known to have substantial long-term effects when used heavy-handedly. The policy we’ve all been black-mailing the Fed into using, successively, for the last few months because the Federal Government preferred to throw its spare hundreds of billions of dollars at the Defence Department.

So it looks like more (or making permanent the existing) tax cuts on non-labour income. With Public Debt now a tick above USD30,269.04 per citizen (Federal Debt less, but still over USD5tr overall), it would nevertheless appear that we’re about to blow – yet again – through the most recent debt limit increase – the limit now standing at USD9.8tr. The mere tanking of the dollar very likely brings us closer to that this year, without dropping more government income.

Do you live in New York City?

According to Wikipedia, back in 2000 when the Debt Clock was de-activated people thought the debt was gone (it was still around USD5tr). Now, the clock is still going to go because it doesn’t have enough digits to show USD10tr in debt.

But back to the article. Former students will remember me harping on about the impossible job of the Fed, and the absence of fiscal policy (and why). Now talk of it emerges and I’m still not happy. Well (a) vegans can be miserable bastards, socialist scum-types doubly-so. More importantly, though, consider this:

Paulson said making permanent the tax reductions Bush implemented in 2001 and 2003 would “provide great relief” to investors. He acknowledged that it’s unlikely he will be able to convince a Congress led by Democrats who campaigned on pledges to reverse some of Bush’s tax policy to go along.

Tax cuts on non-labour income are regressive. They benefit people who make money from money, rather than money from labour – and you can guess how the ownership of capital is distributed. The people losing their houses will not benefit. The Waltons will be able to stick a few more masterpieces in their living room. National parks, public schools, city police departments, public housing – these will all feel the bite of cuts in government expenditure, as tax receipts decline in the face of a public debt larger than a lot of whole economies. Grover Norquist will be pleased.

My silver lining? The Batman comics for such an era ought to be pretty cool. It isn’t much.

New York City: curb your damn UPS trucks

Walking downtown to meet the missus today. This was just in Little Italy, but I went via Prince St/Broadway to go to Best Buy. This is only to explain how I came to be at this intersection (click for the large version):

The corner of Spring and Crosby, to get coffee (there’s a Starbucks franchise under the scaffolding). Now to the problem. Sadly, this picture was not taken this afternoon because, this afternoon, the part of Crosby St directly in front of this street view contained the following. On our left, two UPS trucks: one right on the corner (nearer to the corner than where you currently also see a truck), one directly behind it (parked, curbside, on deliveries). On our right, a third freaking UPS truck, also parked curbside. Between these was another truck, trying to get any sort of visibility whatsover – i.e. sticking its idiot front out into the traffic on Spring Street itself. Unbelievable.

Back in 1986, the New York Times had a story about UPS owing the city USD1.2m in fines (story behind the wall). More recently (thank you, Lexis Nexis) the Washington Times reminds us that the practice hasn’t changed (also behind a wall):

… records obtained through the DMV’s Office of General Counsel showed that on a typical day earlier this year, UPS owed $28,755 on 471 open tickets.

That’s second only to its competitor FedEx Corp., which had 493 open tickets for $30,630. Each company had more than 100 vehicles ticketed. The only other company with more than $10,000 in open tickets was Verizon, owing $10,430 on 289 tickets.

A UPS spokesman said the company encourages its drivers not to get tickets, but added the tickets are sometimes an unavoidable cost of doing business.

“We train our drivers to try to avoid tickets, but we have to provide service to our customers,” said spokesman Malcolm Berkley.

Mr. Berkley also said UPS has enrolled in parking-adjudication programs in other cities such as San Francisco and New York City. “It’s a vehicle that allows us to manage the tickets we do receive,” he said.

It’s commonly-known that UPS treats parking fines as an ordinary cost of doing business as UPS. Back in 2006 the NY Daily News covered the complaint specifically with regard to this city:

Police Commissioner Raymond Kelly blasted a city policy that allows FedEx, UPS and other delivery companies to defy parking rules without punishment – while average New Yorkers get socked with tickets.

Kelly said guidelines that permit delivery giants to clog streets by double parking without punishment for up to three hours should be reined in.

“Does that make sense? Is that common sense living in this 8.1 million-population city?” Kelly asked the City Council.

“You can double-park and unload a commercial vehicle for three hours and that’s considered expeditious parking.”

Kelly’s words resonated on the city’s crowded streets, where many New Yorkers slammed the three-hour grace period crafted by the city Finance Department.

“They park out here all day,” said Manhattan handyman Mike Pau, pointing to trucks double-parked along 47th St. near Fifth Ave. “It’s like their office.”

Kelly said the grace period should be shrunk to 30 minutes – and only if there are no legit spots nearby.

The delivery outfits get the grace period on top of another city perk that allows them to avoid paying full price for all their parking tickets. Since July 2004, City Hall has offered companies a chance to pay reduced fines in exchange for dropping their right to go before a judge.

“It’s not fair,” said Mark Carbone, 55, a precious-metal buyer. “I’m here two minutes and I get a ticket.”

But jeweler Leon Garadet, 25, saw wisdom in the perks. “They deliver millions of dollars of merchandise,” he said. “It’s important for the economy.”

That last line is ridiculous: M. Garadet might be reminded that everybody living and working in New York City is responsible for billions of dollars of merchandise – but they all get their cars towed or clamped. So what we have here is the twin system: preventive taxation for ordinary individuals (or small businesses), but mere revenue-raising off the backs of bigger companies like UPS and FedEx.

Seriously, though, the situation this afternoon was just moronic. For a start, why can’t UPS figure out how to use only one truck for deliveries in a single set of city blocks in lower Manhattan? Thus, the question: how to figure out a system by which to make UPS bloody-well behave? The administrators at/of Long Beach figured out that day-trippers were treating the parking fine as an ordinary cost of the day at the beach – so they jacked up the fines (significantly).

Would the same work with UPS? No. The costs would simply be passed along to consumers (more than not), while businesses would hammer the City over the policies. The Washington Times article, for example, specifically discusses the use of fleet-adjudication programmes to pay fines in toto, per month. Escalation? Good luck towing a UPS truck (and, probably, sorting out the lawsuits from people who needed the things that had been inside). Same for clamping them.

My plan!

Part 1: a stated hierarchy of violations. The one I saw this afternoon, for example: Class 1. Random double-parking can be, say, Class 3. Doing so in narrow mid-town cross-streets can be Class 2. You get the idea. If you’re the third UPS truck and you block up a street by parking next to two others, you should absolutely be hammered for it.

Part 2: Come the end of the month, businesses should attract a progressive rate of taxation on parking violations, case-mix-adjusted. UPS pay fines at an increasing marginal rate, the more violations they collect. If UPS breach pre-specified thresholds (too many overall, too many Class 1’s, etc.) they cop real punishment: punitive levels of taxation, limits to the number of trucks they can operate in the city. Something.

That’s my plan. If UPS wants to treat every street like a potential parking-space, fine – but we can, very easily, produce the incentives required to at least have them do it in a manner that minimises our inconvenience or endangerment.

“Ultimately, our nation’s goal should be to move children who have no health insurance to private coverage, not to move children who already have private health insurance to government coverage.”

President Bush vetoed legislation Wednesday that would have expanded government-provided health insurance for children … Bush vetoed the bill in private.

Funny, the things that man does in private. If this is such a big deal, do it publicly. Let us all know about it. Let the debate form around the actions of the Executive and Legislative branches.

In a statement notifying Congress of his decision, Bush said the bill was unacceptable because – like the first one – it allows adults into the program, would cover people in families with incomes above the U.S. median and raises taxes.

“This bill does not put poor children first, and it moves our country’s health care system in the wrong direction,” Bush’s statement said. “Ultimately, our nation’s goal should be to move children who have no health insurance to private coverage, not to move children who already have private health insurance to government coverage.”

The House voted 211-180 late Wednesday to put off until Jan. 23 a vote on overriding the president’s veto. “We are not going to let this veto stand,” said House Speaker Nancy Pelosi. Republicans said Democrats were scheduling the veto override vote to coincide with the week Bush comes to Congress for the State of the Union address.

As another thing gets not done by the government. Two things of note: First, the more-or-less grown-up part.

A major point of contention with the White House was Bush’s demand that nearly all poor children eligible for the program be found and enrolled before any in slightly higher-income families could be covered. He originally proposed adding $5 billion to the program over five years but later said he was willing to go higher as long as his conditions were met.

The president also has opposed using an increased tobacco tax to fund the program expansion. The bill includes a 61-cent rise on a package of cigarettes.

Then, the less grown-up part.

In his veto statement, Bush said: “The leadership in the Congress has refused to meet with my administration’s representatives.” White House press secretary Dana Perino said that “even on a staff level, we weren’t invited to negotiate.”

“They’ve instead been intransigent and sent us two bills that they knew he wouldn’t sign,” she scoffed.

Not so, said Jim Manley, spokesman for Senate Majority Leader Harry Reid, D-Nev.

For instance, Reid approached Bush to ask for negotiations during a ceremony for the Dalai Lama in the Capitol Rotunda in mid-October, a couple of weeks after Bush’s first SCHIP veto, he said. The president told Reid, “No, I’m not moving, meet with my staff,” Reid said at the time.

“The fact is that Senator Reid and Speaker Pelosi asked to meet with the president to discuss giving children the health care they need, and he blew them off by telling them to talk to his staff,” Manley said before the veto. “Now he’s going to veto it for a second time without negotiating once.”

God bless tax dollars at work. Of Bush’s objections, the second is the same one I listed for this plan being a bad one the first time. The first one looks, to me, more than anything else a jade’s trick to ensure that the programme can be criticised: identify the poorest people first? Do these people pursue inefficiency actively, or were they all just born with pieces of their brain missing?

Apropos the original quote, and the lengthy title of this piece. The nation’s goal should be none of these things. The nation’s goal should not include child health insurance: it should be child health. Why not just toss the insurance bullshit aside and stop inventing lucrative legislation for the (private) primary care industry in the US? Build an SCHIP/Medicaid/Medicare hospital in every major city. Fill it with appropriately paid, appropriately (i.e. not, necessarily, fee-for-service) incentivised staff, and tell every concession card holder that they can have free treatment at this hospital.

Is it free market? Of course not. Health care isn’t supposed to be. If poor people were as good at identifying optimal resource allocation in terms of healthcare and education, they probably wouldn’t be poor people. The government’s job is supposed to be to act as agent for the people who gave it the job – not as agent for the people profiting from the bad job they do while there.