With their Economy in the Toilet Argentina looks once again to the Falkland Islands

Posted by PITHOCRATES - January 5th, 2013

Week in Review

The Argentine economy is a basket case.  Annual inflation is estimated to be at 20-25%.  Their currency is worthless outside of Argentina.  They have strict currency controls to keep foreign currency out of the hands of their people.  The economy is depressed.  And they’re defaulting on their foreign sovereign debt obligations.  So with your nation in such a mess what is a president to do?  Why, address a burning national interest.  The Falkland Islands (see David Cameron must return Falklands to Argentina, Cristina Kirchner demands in open letter by Christopher Hope posted 1/2/2013 on The Telegraph).

In an emotional open letter to the British prime minister, Cristina Kirchner, Argentina’s president, has called on him to honour a United Nations resolution dating from 1965 and start negotiations about handing over the islands.

The letter, which was due to be published in the British national newspaper The Guardian on Thursday, is timed to mark the anniversary of when on January 3 1833, Britain took control of the islands from the Argentinians.,,

The 3000-strong population of the Falklands are overwhelmingly pro-British. The islanders are due to be asked if they want to continue to be an overseas territory of the United Kingdom at a referendum in March this year. Mr Cameron has said the UK would “respect and defend” the result of the plebiscite…

A spokesman said: “The people of the Falklands are British and have chosen to be so. They remain free to choose their own futures, both politically and economically, and have a right to self-determination as enshrined in the UN Charter.

“This is a fundamental human right for all peoples. There are three parties to this debate, not just two as Argentina likes to pretend. The Islanders can’t just be written out of history.

The same thing happened in 1982.  When bad governing oppressed the Argentine people.  An economic crisis and an unhappy population caused the ruling junta to look to the Falklands to rally the people behind the government.  And to help the people forget how miserable their lives were so they wouldn’t rise up and over throw the ruling dictatorship.  About the only difference between now and 1982 is that the Argentines invaded the Falklands and went to war with the British.  The only difference so far, that is.  Well, that.  And the possibility of oil in the waters around the Falklands.  Which would come in real handy for a country whose economy is a basket case.

If the Argentine government got their way what would happen to the British in the Falklands?  Would they deport them?  Seize their property?  Would they install an Argentine governor to rule over the British people?  Like the Islanders say, they are a third party in this debate.   So the question is what is Argentina’s plan for them?  Perhaps the UN would be interested in hearing that.

The Argentine people will probably rally around their president for they are a proud people.  And no doubt resent past British colonialism.  But they would probably be happier with economic prosperity.  A little laissez-faire capitalism.  So they can unleash the great potential of the middle class.  To work hard and enjoy the fruit of their labors.  Instead of just working hard only to see the fruit of all their labors disappear by runaway inflation.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , ,

The UK and Canada get Spending under Control while the USA is in Denial

Posted by PITHOCRATES - May 1st, 2011

Teacher Pensions too Generous in the UK, Too

It’s not just in Madison, Wisconsin.  Or Detroit, Michigan.  Those public sector benefits busting budgets in city and states throughout the United States are causing fiscal pain in the UK, too (see Heads vote for industrial action ballot over pensions by Angela Harrison posted 5/1/2011 on the BBC).

A review led by Lord Hutton called for final salary schemes to be replaced by those based on the average salary in a career and said public sector workers should retire later, in line with a rising state pension age…

Schools minister Nick Gibb recently told a teachers’ conference that public service pensions should remain a gold standard – but that rising costs and greater life expectancy meant reform was needed.

These generous public sector benefits are no longer sustainable.  There’s a cost to this kind of spending.  High taxes.  Which don’t create jobs.  Or economic activity.  Which is the source of all taxes.  So raising taxes to pay for this generous spending ends up reducing economic activity, job creation and total tax receipts.  Which creates unemployment.  And deficits. 

So conservative Prime Minister David Cameron is trying to reverse this trend.  He and his coalition government with the Liberal Democrats are implementing austerity programs throughout the UK.  A la Margaret Thatcher.  The great conservative from the Eighties.  Who helped to put the ‘great’ back into Great Britain.  By cutting taxes.  And spending.

The Canadian Government becoming more American

The trend is the same in Canada.  Where Stephen Harper may just win an outright parliamentary majority for his conservative party.  Courtesy of the New Democratic Party (NDP) no less (See Stephen Harper and that elusive majority by The Economist posted 4/28/2011 on The Economist).

THE hitherto sleepy campaign for Canada’s general election on May 2nd was jolted awake over the Easter weekend by a surprising surge by the New Democratic Party (NDP), a leftish amalgam of trade unionists and farmers…

So is Canada about to go socialist? Although the Canadian dollar wobbled this week, the answer is almost certainly not.   Indeed, by splitting the centre-left vote more evenly, the NDP’s rise—if sustained—may provide Stephen Harper, the Conservative leader, with the parliamentary majority that has eluded him ever since he became prime minister in 2006. In the ensuing years Canadian politics has become an unusually shrill, partisan and intransigent affair.  Frequent elections—this is the fourth since 2004—have seen falling voter turnout, while polls show that public trust in politicians is also declining.

This cynicism seems to have helped Jack Layton, the NDP leader. He is seen as the cheerful underdog, who, despite suffering from prostate cancer and hip problems that require he walk with a cane, appears relaxed and smiling. Although based in Toronto, he grew up near Montreal. In colloquial French he claims that “winds of change” are sweeping his native province. His message of higher corporate taxes, more social spending, green measures, and an early withdrawal of Canadian troops from Afghanistan goes down well in Quebec, a traditionally pacifist, big-government kind of place. Mr Layton seems to be successfully wooing disillusioned supporters of the separatist Bloc Québécois.

Once upon a time Canada was New France.  But the British changed French Canada to British Canada after winning the Seven Years’ War.  But the French never stopped being French in Quebec.  Even put ‘je me souviens‘ on their license plates.  So they would never forget their French past.  French tradition.  Or French culture.  The Bloc Québécois even wanted to get Quebec out of Canada.  It turned out that most Quebecers didn’t.  So the Bloc has been marginalized of late.  But if you ever traveled to the province of Quebec it is clear that they like their government big.  Which is why the NDP appeals to Quebecers.

The NDP is also profiting from the travails of Michael Ignatieff, the Liberal leader, who entered politics in 2006 after spending most of the three previous decades working as a journalist and academic in Britain and the United States. Although his campaign appearances have become more assured, he has failed to shake off the gibes of Conservative attack ads that he is an elitist from Harvard who is “just visiting” Canada in the hope of gaining power.

An elitist from Harvard?  Interesting.  For Ivy League elitists have ruled the US since George H. W. Bush.  The latest being perhaps the most elitist.  President Obama.  Who many criticize as being professorial.  And of talking down to the American people.  Which is what they teach you to do at Harvard.  And the other Ivy League schools.

The biggest problem for the Liberals, a centrist, big-tent party, is that Canadian politics has become less European and consensual and more American and ideological. Mr Harper has been the main cause and beneficiary of that process. After five years, he has earned Canadians’ respect if not their love. He is an astute political tactician: he is the longest-serving prime minister of a minority government in Canadian history. But he comes over as a cold control-freak. A headline on the website of the Globe and Mail, a Liberal-leaning paper, summed up popular sentiment when it described the prime minister as “nasty, brutish—and competent”.

Mr Harper’s campaign pitch is that he needs a parliamentary majority in order to sustain the country’s recovery from recession. His message of low taxes, small government and tougher treatment of criminals has won him support everywhere except Quebec…

Now this is very interesting indeed.  Becoming more American?  All the while the Americans, under the rule of those Ivy League elitists, are trying to become more European.  Where the big social democracies wield great power.  And budgets.  Meanwhile, America’s friends to the north are going low taxes and small government.  And however cruel and unfeeling that may be, the Canadian liberals even admit Harper’s government is competent.  Which is another way of saying responsible.  Or grown up.

Medicare Reform has had Bipartisan Support for Decades

The UK and Canada have little choice.  They have to be ‘grown up’ in light of their financial woes.  And it’s no different in the U.S.  Their financial woes just have taken a little longer to hit them.  Because they are the world’s largest economy.  But even size doesn’t matter in the long run.  And some have seen the writing on the wall since the early eighties (see GOP plan to change Medicare is rooted in bipartisan history by Amy Goldstein posted 5/1/2011 on The Washington Post).

There is a broad consensus that Medicare in its current form will be overwhelmed by the financial pressures of the aging baby-boom generation, longer life spans and sophisticated medical treatments. Various estimates say the fund that pays Medicare hospital bills will run short in a decade or two; the program’s trustees are to release new predictions in a few weeks.

The thinking about Medicare and market forces has long bipartisan roots. In the early 1980s, then-congressmen Richard A. Gephardt, a Missouri Democrat, and David Stockman, a Michigan Republican, proposed vouchers to help people on Medicare buy private health plans.

The term “premium support” was coined in 1995 by two respected health policy experts, neither a conservative: Henry Aaron, a Brookings economist, and Robert Reischauer, president of the Urban Institute. “The idea of vouchers was abroad in the land,” Aaron recalled. “We thought there was sort of a free-market-will-cure-all mentality.”

Their idea was to marry market competition in Medicare with regulation to ensure proper benefits and enough financial help. The Medicare commission’s work was an heir to their ideas. Proponents point out that the popular Medicare drug benefit created in 2003 relies on a such a model.

So America has had its grownups looking at the inevitable since the eighties.  Medicare will break unless it’s changed.  For three decades the grownups have been discussing this.  But the Ivy League elitists say ‘pish tosh’ and laugh with all knowing condescension.  For they don’t live in reality.  Their world is an insulated one where the privileged elite don’t work.  But spend their days pontificating.  Safe and snug in their universities.  Or in the federal government.  Where the consequences of their policies will never touch them.

Myopic Ivy League Pretentious Condescension

So we have unsustainable spending in the UK, Canada and the USA.  Concerned citizens in these countries voted in conservative governments.  Rising costs and greater life expectancy have made the state pensions and health plans in days of old no longer doable.  No, austerity is now the name of the game.  People are getting it.  Despite the lies of the politicians.  For the people live in the real world.  The world of paychecks.  And taxes.  Unlike the elite who like to pontificate from their lives of plenty and extreme comfort.  But that doesn’t stop the lying.  The myopic Ivy League worldview.  Or the pretentious condescension.  Case in point is the wonkish Paul Krugman. 

He posted a chart showing changes in revenue and spending from 2007 to 2010.   Spending is up.  And revenues are down.  Ergo, it’s not a spending problem.  We’re simply not taxing enough (see Origins of the Deficit by Paul Krugman posted 5/1/2011 on The New York Times).

Even on this crude calculation, it’s obvious that the slump is responsible for the great bulk of the rise in the deficit. Anyone who says otherwise is either remarkably ill-informed or trying to deceive you.

Budgets in cities and states across the country are facing their biggest deficits in history.  Why?  Recession.  Tax revenues plummet in times of recession.  Housing values tumble during times of recession (and with them property taxes).  People lose jobs during times of recession (the unemployed don’t pay income taxes or payroll taxes).  And it’s the same at the federal level.  Especially during the greatest recession since the Great Depression.  Sustained government spending during times of recession empties treasuries.  And creates deficits.

Federal spending has averaged approximately 20% of GDP since 1960.  It jumped to approximately 25% during the Obama administration.  That’s a huge spending increase.  No matter how you look at it.  And this is why the deficit is soaring into the trillion dollar territory for the first time.  Record spending during the worst recession since the Great Depression. 

“Anyone who says otherwise is either remarkably ill-informed or trying to deceive you.”

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Government Bureaucrats are bad for your Health in the UK and in the US

Posted by PITHOCRATES - March 2nd, 2011

 To be Great be like Margaret Thatcher and Ronald Reagan

People have said that the British and the Americans are one people separated by a common language.  We’re very similar.  Even if we speak the Queen’s English a bit differently.  It turns out that’s not the only thing we share.  We also bend over backwards to compare ourselves with great conservatives from our past (see Look at what the Conservatives are achieving by Michael Fallon, MP for Sevenoaks and deputy chairman of the Conservative Party, posted 3/2/2011 on the UK’s Telegraph).

Yes, Thatcher abolished the dock labour scheme – 10 years after she was elected. Yes, she tackled trade union power: they finally lost their closed shop in 1988, nine years after she started. Yes, she set up grant-maintained schools, independent of local authorities. But when we left office, they comprised less than 5 per cent of the country’s total.

David Cameron’s Government has moved further and faster. Take the public finances: public borrowing, cyclically adjusted, will be 0.3 per cent of GDP by 2015, well below the 2.6 per cent it was in 1990, and the budget will be back in surplus. Corporation tax was 34 per cent when Thatcher left office; by 2015 it will be 24 per cent. Small business tax, 25 per cent in1990, will have fallen to 20 per cent.

Not only is David Cameron Thatcher-like, he’s even out ‘Thatchered’ her.  This speaks volumes about the greatness of Margaret Thatcher.  In America, it’s the other half of that dynamic duo.  Ronald Reagan.  Come election time, every candidate is trying to show how Ronald Reagan he or she is.  Even the Democrats.  Even Barak Obama as his poll numbers plunge.

For a first-term prime minister leading an entirely novel coalition, the essential tasks might be enough: growing the economy; weaning it off its over-reliance on public spending, financial services and an unsustainable property boom; and pulling our finances back from the brink over which Greece and Ireland plunged.

Yet far more significant is the quiet revolution that is turning government inside out – away from Whitehall and targets and regional authorities and back to councils, GPs, head teachers, police commanders, community groups and charities. Ending the state monopoly in almost all public services, encouraging new providers, ensuring competition and choice – these are the most radical reforms since the Attlee government.

And Obama couldn’t be any more un-Ronald Reagan-like if he tried.  He’s trying to take America in the opposite direction that David Cameron is trying to take the UK.  Cameron is trying to decentralize while Obama is trying to centralize.  Especially health care.

Poor Quality, High Cost and Rationing in the National Health Service

The National Health Service in the UK has high costs and quality concerns.  The costs have been addressed in the past by rationing services.  The quality concerns have been addressed by layers of bureaucracy that have often been the original cause of the quality concern.

The problem with the NHS is size.  It’s a behemoth.  And because of that, it has layers of bureaucracy.  Which results in bureaucrats making decisions for patients instead of doctors.  They’re trying to change all this by grouping together and empowering local general practitioners (GPs) into consortia (see Hospitals shake-up essential, says King’s Fund by Nick Triggle posted 3/2/2011 on the UK’s BBC).

The government has protected the NHS budget by giving it small above-inflation budget rises over the next four years.

But the report said it was still entering a “cold climate” because demands and costs were outstripping the settlement.

It said without change there could be a “downward” spiral of falling income, growing deficit and declining quality.

Will this fix all the woes of the NHS?

Scandals such as Mid Staffordshire, where an official report found hundreds of patients died needlessly because of poor care, could not be ruled out.

Probably not.  But it’s a step in the right direction.  For the patients, at least.

A Department of Health spokesman said GP consortia would strengthen the ability of the NHS to make the right decisions.

“We urgently need to modernise the NHS – that is why our plans include many measures to make services more responsive to patients and to consistently drive up quality.”

The key to good health care has always been the doctor patient relationship.  The more people that get in between the doctor and the patient the poorer the health care gets.  Because the focus shifts from quality to cost efficiency.

This is a step in the right direction, but it’s still a heavy bureaucracy.  There is another way to ensure quality, though.  Competition.  When my dad had his first heart attack the paramedics gave us a choice of two hospitals they could take him to.  One had a bad reputation.  The other didn’t.  We chose the one with the good reputation. 

That other hospital continued to do poorly for years and eventually had financial troubles.  Then a big hospital bought it and brought it up to their standards.  And many years later, both of these hospitals are now providing quality care.  You see, competition makes everything better.  Even health care.

Using High-Fructose Corn Syrup instead of Sugar making us Obese?

The British and Americans have something else in common.  We like our sweets.  While one of us loses their teeth to this indulgence, the other has gotten obese (see The Fight Over High-Fructose Corn Syrup by Sharon Begley posted 2/28/2011 on The Daily Beast).

Now a stream of studies shows that sugar and corn sweeteners differ in important ways, including how they affect the appetite-control centers in the brain. That suggests that [High-Fructose Corn Syrup] HFCS may be partly responsible for the obesity epidemic…

The new study is too small to decide the question—it included only nine people—but it fits with other research on both humans and lab animals.  Scientists led by Jonathan Purnell of Oregon Health & Science University gave fructose, glucose, or salt water to volunteers and then measured brain activity with functional MRI scans. Over several regions of the cortex, activity increased in people given glucose but decreased in those given fructose, the scientists will report in Diabetes, Obesity and Metabolism. Cortical regions that responded differently included the orbital prefrontal, a key player in the reward circuit, and regions that process the pleasurable effects of food. “It’s evidence that fructose and glucose elicit opposite responses in the human brain,” says Purnell…

Rats eating equal calories from the two gained significantly more weight on HFCS than on table sugar, scientists led by Bart Hoebel of Princeton reported in 2010. The HFCS-fed animals also had increases in abdominal fat and triglycerides. And in a 2010 review, scientists at the University of California, Davis, noted that, in people, fructose added to abdominal fat and other measures “associated with increased risk for cardiovascular disease and type 2 diabetes.” HFCS is not the sole culprit in obesity. But the body and brain don’t seem to treat it as an innocent bystander, either.

Great Britain’s early Caribbean colonial possessions sent shiploads of cane sugar back to England for their tea.  And to make their chocolates.  They so liked their sweets.  And, as a consequence of this sugary indulgence, their bad teeth are legendary in the world of dental hygiene.  George Harrison even wrote a song about a fellow Brit with a chocolate addiction.  Eric Clapton.  Who he warned that he’ll have to have all his teeth pulled out after the Savoy Truffle (a song on the BeatlesWhite Album).

So the British are the butt of many a dental hygiene joke.  But they aren’t obese.  Like the Americans are.  Who also have a sweet tooth.  But we don’t eat sugar.  We eat HFCS.  Why?  Not because we prefer it.  But because of our government.  Big Corn lobbies Congress for sugar tariffs.  And Congress delivers.  Which makes imported sugar more expensive than HFCS.  So we eat HFCS not by choice.  But by government fiat.  And it now appears it may be part of the cause for the explosion in obesity and diabetes in America.  How about that? 

Yet another reason to keep government bureaucrats out of our health care system.

Conservatism Works every time it’s Tried

Bureaucrats are good at shuffling paper.  They aren’t good research scientists.  Or doctors.  So it’s best to keep them shuffling paper.  And let the professionals determine what we should eat.  What we probably shouldn’t eat.  And take care of us when we get sick.  I’m sure we’d all live a longer and healthier life if we do.

The dynamic duo of Margaret Thatcher and Ronald Reagan knew this.  Their conservatism worked.  It made the UK and the US great again.  And this is why everyone bends over backwards to show how much they are like these great conservatives from our past.  Even those who couldn’t be more opposed to their philosophy.  Because they know that conservatism works and has worked every time it’s been tried.  And they’re willing to admit that (a little) at election time.  Even if they’re lying through their teeth.  That is, if they haven’t been pulled out yet after the Savoy Truffle.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,