Morning roundup

This morning's worthies:

• Michael Reddell in defence of capital charges and higher public sector discount rates. Bottom line: you will have nonsense if public sector entities don't have to account for their costs of capital. 


• Construction and Corruption: the game. Based on Montreal's construction sector. 

  Each player is a Construction boss, responsible for a Construction contract on each turn. If you do not finish your contract, you keep it, and get paid again the turn after.
  
  The incentive is to keep your work unfinished as long as possible. Bosses can send their workers to opposing players’ sites, and finish their work instead. Thus the dynamic of the game is ‘screw your neighbour,’ with the added element that players’ cash totals are secret. Each turn also holds an election for mayor, who can punish their opponents, and reward supporters.

  Relevant to the environment in which SNC-Lavalin grew up.


• Insurance rationing in Wellington. Why is this market not clearing on prices? Are there just fixed costs in contracting for greater reinsurance coverage?


• The perils of woke governance. Kerry McDonald on some of the dangers in the wellbeing approach. 


• Duncan Greive on Ian Taylor and computer science innovation at Otago Uni


• 100 females for every 72 males in Australian universities in 2016.

Rent Extraction: Quebec Edition

Ah, campaign finance. There's always a workaround.

Suppose you're worried about undue corporate influence on politics because of corporate donations. So you ban it. Here's the Winnipeg Free Press on a lovely Quebec case study.

It has been illegal since the 1970s for companies to make political donations in Quebec...

Suppose there's still demand among political parties for donations though. What do you do? You tell your employees to make personal donations and you reimburse them for it. Maybe you have their whole families do it up to the personal donation limit, as in a fun Ontario case. And that's what happened in Quebec too:

A vice-president at SNC-Lavalin (TSE:SNC) admitted to participating in such financing activities while testifying Thursday at Quebec's corruption inquiry.

Yves Cadotte said dozens of SNC executives, and sometimes even their spouses, donated just over $1 million to the Quebec Liberal party and the Parti Quebecois between 1998 and 2010. A small majority of that cash went to the Liberals, although the PQ got nearly 50 per cent of the amount.

He said executives would get company bonuses after they donated, with the amount of the bonus greater than the donation amount.

What do you do then?

...the law was tightened in 2010 to crack down on companies that reimbursed people for making endorsements.

SNC-Lavalin notes that their practice was entirely in keeping with the letter of the law prior to 2010. And I would be surprised if there weren't other workarounds for the post-2010 period.

In a tense exchange, Cadotte was told by a commission lawyer he was breaking election laws and was asked whether he was aware it was illegal for companies to donate.

Cadotte replied yes.

But he said it was the political parties that came to solicit the money. He said the parties would even set fundraising targets for his company.

SNC-Lavalin received 550 contracts, worth $247.5 million, from Quebec's Transport Department between 1997-98 and 2011-12.

Cadotte said he didn't believe the donations helped get public contracts. On the other hand, he said the company was afraid of what would happen if it didn't donate.

"That's the dilemma: not contributing would be a risk that is perhaps intangible," he said. "Maybe there is no (consequence), but in our mind it's a risk we don't necessarily want to take."

Why is it legal for political parties to have fundraising targets from corporates that are forbidden from making donations?

Of course the companies will find some workaround where they're highly dependent on government contracts and where they're being leaned on for donations. A few options that could still be legal, depending on how the Quebec laws are written:

• Hire a Party official as consultant on inflated salary; the official or the official's spouse donates to the Party.
• Rent property owned by the Party at inflated prices.
• Subscribe to a Party newsletter at a high subscription fee.
• Host Party events on corporate property for low/no rent.
• Pay very high speakers' fees to have party officials give breakfast or luncheon addresses for your staff.
• Have staffers work the parties' election campaigns as volunteers while still on the corporate payroll.

Or at least those are a few things that occurred to me within half a minute. Surely sharper folks than me with more at stake could come up with better ones. 

Quebec student thugs

Andrew Coyne takes on the Quebec student thugs who have been rioting against tuition increases.

What they have to offer is violence and lawlessness. Which is what this is about. It isn’t about the poor: the enriched bursaries that accompany the fee increase ensure nobody on low income would pay another nickel. It isn’t about accessibility: a smaller proportion of Quebecers attend university than elsewhere in the country, notwithstanding fees that are a fraction of the national average. It isn’t even about students, really, two-thirds of whom are not participating.

Rather, it is about how we distribute resources in a society.
...

A civilized society distributes resources in two ways. One is through the market, based on mutually beneficial exchange. The other is through the state, based on need: the only moral basis of redistribution.

But the coercive power of the state is all too easily diverted into other, less savoury schemes of redistribution: on the one hand, by lobbying, connections or outright bribes; on the other hand, by threats, whether of the lawful, pressure-group kind, or the unlawful, violence-and-mayhem kind. In either case the aim is the same: to enlist the state to extract from others what we could not persuade them to give us freely. This has nothing to do with need, and everything to do with raw power.

Let's not forget that Canadian tuition subsidies are largely a transfer to the upper middle class. The Quebec thugs are rioting not for the poor but for a transfer to themselves.

Bon mot

"Maintaining the crucifix is simply a way of letting everyone know that the religion in which Quebecers no longer believe is the official religion not to be believed in."

Barbara Kay in the National Post. I don't endorse the rest of the piece. But the quip above nicely sums up Quebec.