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Constitutionally Limited Gov’t: A Pragmatic Response to Gov’t Picking Winners and Losers

Somewhat Reasonable - May 03, 2016, 4:27 PM

In a recent article published by Bloomberg View, Harvard law professor Cass Sunstein discusses “an important but widely overlooked speech” made by Elizabeth Warren (D), in which the Massachusetts senator bemoans the influence of powerful industry groups on the regulatory process. To Warren, the problem is not overzealous administrative bodies, eager to impose unwanted, unnecessary new rules, but regulatory capture—the notion regulation is, in the words of economists Michael E. Levine and Jennifer L. Forrence, “simply an arena in which special interests contend for the right to use government power for narrow advantage.”

Libertarians have been touting the insights of regulatory capture theory for a long time, and its ideas are simple enough: Special-interest groups have a concrete incentive and the resources to engage in the convoluted minutiae of the regulatory process, whereas the citizenry at large has neither. The general population doesn’t have the time, money, or the inclination to engage in byzantine federal rulemaking affairs, which means well-organized pressure groups have a significant advantage and an opportunity to tailor rules not for the public good but in accordance with their own interests.

It is refreshing to see a prominent progressive acknowledge this conundrum, particularly because the modern administrative state, often called the fourth branch of government, is a distinctly progressive invention. At the beginning of the twentieth century, during the Progressive Era, reformers began to see the Enlightenment principles of traditional or classical liberalism as outdated and obsolete, at odds with new scientific and political thinking. Guided by the objectivity of science, and therefore allegedly free of bias, federal experts in new executive branch agencies would work with academia, think tanks, and the private sector to chart the correct course to rescue society from the perceived precariousness and chaos of a laissez-faire system.

The problem is the one Warren highlights: Even if we assume sclerotic bureaucracies are able to identify the ever-elusive “public good,” what incentive do they have to serve it and not their own ends? Progressivism and its crusaders simply never bothered to answer this fundamental question; their solution is always to further concentrate power in the executive branch of the federal government by giving increasing amounts of authority to unaccountable, unelected “public servants.”

As is so often the case, there is a grain of truth in Warren’s speech, but it’s one that is quickly lost to basic misunderstandings about the interactions between the government and the economy. In all of her worries about the dangerous power of special interests, Warren seems not to realize that as the power of the administrative state has grown, so too has the list of perquisites available to it and the opportunities for corruption and collusion.

Today’s libertarians and conservatives believe limited government, individual rights, and robust private property never stopped being good ideas, that the progressive administrative state gives far too much power and discretion to supposed experts—power that ought to be vested in the free and voluntary spheres of civil society. Moreover, we challenge the legal bases of the administrative state as a constitutionally-suspect revival of, as legal scholar Philip Hamburger describes it, “the era of the prerogative,” a time of arbitrary class rule.

The administrative state and its “law” represent a return to a government of men rather than law. It’s based on the idea we need not worry about pesky notions of the separation of powers. Constitutionally limited government isn’t some aesthetic fetish of libertarians and conservatives; it is a pragmatic response to the problems associated with concentrated political power and an attempt to divide that power and prevent the kind of political economy that sadly rules today: government picking winners and losers.

Real regulatory reform—reform that actually addresses the fundamental problem—means retrenchment, diminishing the authority of the administrative state and dispensing with millions of its pernicious rules.

[Originally published at CNSnews]

Categories: On the Blog

Heartland Daily Podcast – Hans von Spakovsky: Nonprofit Organizations and Donor Privacy

Somewhat Reasonable - May 03, 2016, 4:16 PM

In this episode of the weekly Budget & Tax News podcast, managing editor and research fellow Jesse Hathaway talks with The Heritage Foundation’s senior legal fellow Hans von Spakovsky about the fallout from California Attorney General Kamala Harris’ (D) attempt to force Americans for Prosperity, a national nonprofit organization advocating for fiscal responsibility in government, to make the private information of contributors public information.

Von Spakovsky explains why registries detailing the private contributions of individuals to private organizations are not necessary for good governance. Instead, he explains, lawmakers often propose donor disclosure laws to reduce the ability of groups of people to criticize them. Liberal groups, he says, often advocate for donor disclosure laws because they seek to enable their members to harass and ostracize individuals contributing to causes with which those liberal groups disagree.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

Risk doesn’t stand still

Out of the Storm News - May 03, 2016, 1:59 PM

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe explores the movement and transformation of risks in adapting, self-referencing systems, of which financial systems are a notable example. In this provocative new book, the Wall Street Journal’s chief economics commentator Greg Ip contemplates how actions to reduce and control risk are often discovered to have increased it in some other way, and thus, “how safety can be dangerous.”

This is an eclectic exploration of the theme, ranging over financial markets, forest fires, airline and automobile safety, bacterial adaptation to antibiotics, flood control, monetary policy and financial regulation. In every area, Ip shows the limits of human minds trying to anticipate the long-term consequences of decisions whose effects are entangled in complex systems.

In the early 2000s, the central bankers of the world congratulated themselves on their insight and talent for having achieved, as they thought, the Great Moderation. It turned out they didn’t know what they had really been doing, which was to preside over the Great Leveraging. Consequently, and much to their surprise, they found themselves in the Great Collapse of 2007 to 2009, and then, with no respite, in the European debt crisis of 2010 to 2012.

Ip begins his book two decades before that, in 1989, at a high-level conference on the topic of financial crises. (Personally I have been going to conferences on financial crises for 30 years.) He cites Hyman Minsky, who “for decades had flogged an iconoclastic theory of business cycles that fellow scholars had largely ignored.” Minsky’s theory is often summarized as “Stability creates instability”—that is, periods of safety induce the complacency and the mistakes that lead to the crisis. He was right, of course. Minsky (who was a good friend of mine) added something else essential: the rise of financial instability is endogenous, arising from within the financial system, not from some outside “shock.”

At the same conference, the famous former Federal Reserve Chairman Paul Volcker raised “the disturbing question” of whether governments and central banks “end up reinforcing the behavior patterns that aggravate the risk.” Foolproof shows that the answer is yes, they do.

Besides financial implosions, Ip reflects on a number of natural and engineering disasters, including flooding rivers, hurricane damage, nuclear reactor meltdowns, and forest fires, and concludes that in all of these situations, as well, measures were taken that made people feel safe, “and the feeling of safety allowed danger to re-emerge, often hidden from view.”

The natural and the man-made, the “forests, bacteria and economies” are all “irrepressibly adaptable,” he writes. “Every step we take to suppress the risks . . . will provoke some other, offsetting step.” So “neither the economy nor the natural world turned out to be as amenable to human management” as was believed.

As Velleius Paterculus observed in the history of Rome that he wrote circa 30 AD, “The most common beginning of disaster was a sense of security.”

Why are we like this? Ip demonstrates, for one thing, how quickly memories fade as new and unscarred generations arrive to create their own disasters. Nor is he himself immune to this trait, writing: “The years from 1982 to 2007 were uncommonly tranquil.”

Well, no.

In fact, the years between 1982 and 1992 brought one financial disaster after another. In that time more than 2,800 U.S. financial institutions failed, or on average more than 250 a year. It was a decade that saw a sovereign debt crisis; an oil bubble implosion; a farm credit crisis; the collapse of the savings and loan industry; the insolvency of the government deposit insurer of the savings and loans; and, to top it off, a huge commercial real estate bust. Not exactly “tranquil.” (As I wrote last year, “Don’t Forget the 1980s.”)

“Make the most of memory,” Ip advises. After the Exxon Valdez oil spill disaster, he says, the oil company “used the disaster to institute a culture of safety . . . designed to maintain the culture of safety and risk management even as memories of Valdez fade.”

We often do try to ensure that “this can never happen again.” After the 1980s, many intelligent and well-intentioned government officials went to work to enact regulatory safeguards. They didn’t work. As Arnold Kling pointed out in an insightful paper, “Not What They Had in Mind: A History of Policies that Produced the Financial Crisis of 2008,” some of the biggest reforms from the earlier time became central causes of the next crisis—a notable example of Ip’s conclusions.

We are forced to realize that the U.S. housing finance sector collapsed twice in three decades. We may ask ourselves, are we that incompetent?

Consider a financial system. The “system” is not just all the private financial actors—bankers, brokers, investors, borrowers, savers, traders, speculators, hucksters, rating agencies, entrepreneurs, principals and agents—but equally all the government actors—multiple legislatures and central banks, the treasuries and finance ministries who must constantly borrow, politicians with competing ambitions, all varieties of regulatory agencies and bureaucrats, government credit and subsidy programs, multilateral bodies. All are intertwined and all interacting with each other, all forming expectations of the others’ likely actions, all strategizing.

No one is outside the system; all are inside the system. Its complexity leaves the many and varied participants inescapably uncertain of the outcomes of their interactions.

Within the interacting system, a fundamental strategy, as Ip says, is “to do something risky, then transfer some of the risk to someone else.” This seems perfectly sensible—say, getting subsidized flood insurance for your house built too near the river, or selling your risky loans to somebody else. But “the belief that they are now safer encourages them to take more risk, and so the aggregate level of risk in the system goes up.”

“Or,” he continues, “it might cause the risky activity to migrate elsewhere.” Where will the risk migrate to? According to Stanton’s Law, which seems right to me, “Risk migrates to the hands least competent to manage it.” Risk “finds the vulnerabilities we missed,” Ip writes. This means we are always confronted with uncertainty about what unforeseen vulnerabilities the risk will find.

Finally, the author puts all of this in a wider perspective. “My story, however, is not about human failure,” he writes, “it is about human success.” There can be no economic growth without risk and uncertainty. The cycles and crises will continue, so what we should look for is not utter stability but “the right trade-off between risk and stability.” The cycles and crises are “the price we pay for an economic system that encourages and rewards risk.” This seems to me profoundly correct.

Grant Bosse: How the left tries to shut us up by wearing us down | New Hampshire

Stuff We Wish We Wrote - Homepage - May 03, 2016, 12:30 PM
May 02. 2016 4:41PM “‘Shut up,’ he explained.” — Ring Lardner I just want to watch Captain America fight Iron Man. I don’t want to have to think about how…

Pollock talks Puerto Rico on CCTV

Out of the Storm News - May 03, 2016, 11:37 AM

R Street Distinguished Senior Fellow Alex Pollock was interviewed in a recent segment by CCTV America on the Puerto Rican debt crisis and steps Congress should take to solve it. You can view the full clip embedded below.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

Broad coalition supports bill to curtail forum shopping in patent litigation

Out of the Storm News - May 03, 2016, 6:00 AM

Dear Chairman Grassley, Ranking Member Leahy and members of the Senate Judiciary Committee,

On behalf of the undersigned civil-society and public-interest organizations, we write to express strong support for S.2733, the Venue Equity and Non-Uniformity Elimination (VENUE) Act of 2016, sponsored by Sens. Jeff Flake, R-Ariz., Cory Gardner, R-Colo., and Mike Lee, R-Utah. Preventing gamesmanship in litigation through choice of court, while not a comprehensive fix to problems within the patent system, would go a long way toward stopping a longstanding abusive practice that harms legitimate innovators, the economy, and the public.

The patent system currently suffers from a pervasive venue-shopping problem that unfairly distorts legal outcomes by allowing plaintiffs to select friendly judges in advance. According to the Mercatus Center and George Mason University, nearly half of all patent cases are filed in the U.S. District Court for the Eastern District of Texas. That’s more than 70 times the average number of patent cases heard in other federal judicial districts. According to a January 2016 report, filings in that district have “accelerated,” especially among repeat patent asserters who threaten business after business with patent lawsuits.

The incredible popularity of one district as venue for one type of lawsuit raises legitimate questions of fairness to the parties who are hauled into court there. Respected academics have identified evidence that procedures in the Eastern District of Texas unnecessarily favor plaintiffs and impose significant, unnecessary costs on companies and individuals accused of infringement, however questionable the patents and demands may be. Indeed, Kimberly A. Moore—a judge on the Federal Circuit court responsible for all patent appeals—once wrote that pervasive venue shopping in patent cases represents a failure of “the promise of equal, consistent and uniform application of justice,” besides creating “economic inefficiency in the legal system.”

These inequities cost innovative companies time, money and other resources fighting legal battles—resources that could otherwise go into creating better, more innovative, more competitive products and services. They further represent a failure to give patent litigants a fair trial, denying them access to justice and trapping them in a forum intentionally selected for its favorableness to the other side.

Although patent reform has been a hotly debated and complex topic, there is near universal agreement that patent-venue abuse must be addressed. Writing in The Washington Post, law professors Colleen V. Chien and Michael Risch acknowledged that patent reform “has divided those who write and think about the patent system.” However, they noted “there is one issue upon which we—and most stakeholders—agree: The staggering concentration of patent cases in just a few federal district courts is bad for the patent system.”

An opportunity to correct egregious patent-venue shopping now is in the hands of Congress. Although venue reform will not solve all problems with the patent system, it is an important first step directed to an important problem. There is no question that abuse of venue stands in the way of both market competition and the right to fairly-applied due process of law. Addressing this should be common sense to individuals across the ideological spectrum, regardless where they stand on other approaches to reform our patent system.

We thus strongly urge you to support the VENUE Act to fix this abuse of our legal system.

Sincerely,

Public Knowledge

R Street Institute

Electronic Frontier Foundation

TechFreedom

Copia Institute

Engine

Institute for Liberty

Niskanen Center

The Latino Coalition

American Consumer Institute

Taxpayers Protection Alliance

Fight for the Future

Knowledge Ecology International

Historic tax credits: A 45% government subsidy wearing a mask

Out of the Storm News - May 02, 2016, 3:50 PM

My apologies for interrupting the glowing love fest for Alabama’s historic preservation tax credit that’s set to expire next month, but there are a few things you should know.

Alabama offers plenty of tax credits that permit taxpayers to keep more of their income for certain activities. For example, an Alabama business with 50 or fewer employees may receive a one-time income tax credit equal to $1,000 per new job paying over $10 per hour. If the cost of a new hire is $25,000 per year, the state tax credit covers 4 percent in the first year and nothing in subsequent years. Nobody in his or her right mind makes a hiring decision based on such an insignificant tax reduction.

Alabama’s historic tax credit is a different beast entirely. It’s not a credit designed for the average taxpayer; it’s a directed government subsidy that manipulates the marketplace.

The program sets aside $20 million in tax credits each year for rehabilitation of historical properties in Alabama. Each qualifying commercial project is eligible to receive an income tax credit for 25 percent of the project cost up to $5 million. On top of the state credit, the federal government offers a similar tax credit for 20 percent of qualifying restoration expenses.

Yes, you read that correctly.

For certain rehabilitation projects, the combined credits could offset up to 45 percent of a developer’s project costs. This isn’t just about a nostalgic love of older buildings; it’s about money…and lots of it.

What industry wouldn’t thrive if the government shouldered a huge portion of the risk? If developers won’t restore older properties without the credit, the state is radically manipulating the market. If the projects would have happened anyway, the credit doesn’t really have a purpose other than letting developers avoid income tax.

The program permits a developer to either carry the credits forward for up to 10 years or sell them at a discount to another party with income tax liability. According to the Alabama Department of Revenue, developers for six of the 10 projects that have filed to claim the credit are selling the credits anywhere from 63 to 90 cents on the dollar. That’s a nice income tax cut for someone with connections.

Alabamians are enjoying renovated offerings like the Lyric Theater in Birmingham and the Admiral Semmes Hotel in Mobile. There’s no question about that. The bigger issue is whether they’re paying attention to the fact that they’re massively subsidizing the project costs for private developers.

There’s no difference to the state between foregoing a dollar of revenue into the Education Trust Fund and using that dollar to fund a direct subsidy for the same purpose. Legislators might wish to significantly subsidize historic restoration projects, but they shouldn’t be able to hide behind the fact it’s a tax credit.

If there’s enough economic demand for properties to be renovated, a developer will do it even without government subsidies. That’s how markets work.

It basically boils down to priorities. Would Alabamians rather have that money go to public education or businesses renovating old buildings? For conservative members of the Alabama legislature, that’s the choice. For the rest, they’ll just keep trying to raise taxes on everyone to pay for both. 

The Union War on Charter-School Philanthropists

Education - In The News - May 02, 2016, 3:28 PM
Randi Weingarten, president of the American Federation of Teachers, at a rally for public education in Albany, N.Y., in 2015. Photo: Associated Press If you…

US House unanimously passes flood insurance bill

Out of the Storm News - May 02, 2016, 3:00 PM

From SNL Financial 

“Catastrophes such as Hurricane Katrina and Superstorm Sandy, coupled with the $20 billion-plus debt of the NFIP and its $1.1 trillion of total property exposure make it necessary for the flood insurance market to grow, noted senior fellow R.J. Lehmann of the R Street Institute in a news release.”

The Climate Police Escalate

Environment Suite - In The News - May 02, 2016, 3:00 PM
Sometimes we wonder if we’re still living in the land of the free. Witness the subpoena from Claude Walker, attorney general of the U.S. Virgin Islands,…

The Climate Police Escalate

Stuff We Wish We Wrote - Homepage - May 02, 2016, 3:00 PM
Sometimes we wonder if we’re still living in the land of the free. Witness the subpoena from Claude Walker, attorney general of the U.S. Virgin Islands,…

Heartland Daily Podcast – David Schnare: State AGs Colluding with Radical Environmental Groups

Somewhat Reasonable - May 02, 2016, 2:42 PM

In today’s edition of The Heartland Daily Podcast, David Schnare, general counsel of the Energy & Environment Legal Institute, joins H. Sterling Burnett to discuss the collusion between state attorney’s general and radical environmental groups.

Schnare talks about some of the work being done at the Energy & Environment Legal Institute finding state AGs investigating climate skeptics in an attempt to silence them have been trying to cover up the fact they have been collaborating with radical environmental groups.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

What’s Up With Prices at the Pump and Why it Could Be a Good Sign

Somewhat Reasonable - May 02, 2016, 12:19 PM

All of us loved paying less than $2 a gallon at the pump. AAA reports: “Americans paid cheapest quarterly gas prices in 12 years”—which resulted in savings of nearly $10 billion compared to the same period last year. However, oil (and, therefore gasoline) has been creeping upward since the February low—topping $45 a barrel, a high for the year. And that could be a good thing.

While low prices at the pump have been a boon to consumers, the plunge in oil prices has been a bust for American producers.

Throughout the past 20 months, crude oil prices have dropped almost 80 percent, nearly 300,000 people are out of work, and corporate valuations for oil and gas companies have plummeted—even Exxon Mobil’s credit rating has been downgraded. In this environment, bankruptcies are frequent, and stock portfolios and retirement funds are feeling the pinch.

You may not care about “big oil,” but there’s still reason to be positive about the rising prices.

There are several causes for uptick. First is the weaker U.S. dollar. As oil is traded in dollars, a weaker dollar means that it takes more of them to buy the same amount of oil.

Additionally, we are heading into a busy summer driving season and refineries are switching to the more expensive “summer blend.” The switch typically means a brief shut down for maintenance—which reduces the gasoline supply. Summer driving increases demand.

Globally, oil production is down due to a workers’ strike in Kuwait that took about 1.3 million barrels a day of production offline, and disruptions in Iraq, Nigeria, Venezuela, and the North Sea. Former investment advisor and financial writer Tony Daltorio writes: “That brought the total to roughly 3 million barrels a day that were offline.” In the U.S., according to the Wall Street Journal (WSJ), “oil production has fallen below 9 million barrels a day in recent weeks, down from a peak of 9.7 million barrels a day last April.”

In addition to supply contractions, there is a “risk” factor in the calculations. Risk can mean disruptions from a geo-political situation, such as those threatening to erupt in the Middle East, or weather. Because of the now-constant volatility in the Gulf States, that risk is already factored into the global price of crude oil.

But risk can also come from weather disruptions. Energy economist Tim Snyder explains: “Last week’s hurricane prediction report from renowned Colorado State University Professor, Dr. Phil Klotzbach predicted that due to more of a La Niña pattern we should see a slightly more active hurricane season in 2016 than the last couple of years. He predicted 12 named storms with 6 hurricanes and 3 of them category 3 or higher. The fact that the first storm of the season was Alex, in January, has prognosticators worried and has added to the risk premium in the price of crude oil. The risk of a hurricane can—and most of the time does—cause supply disruptions and damage to a port and/or a refinery.”

These are all supply issues that can easily be eradicated with increased production—such as recently threatened by Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman. Additionally, in the U.S., reports Bloomberg: “Drilled, uncompleted wells could return 500,000 barrels a day back to the market.” The potential for increased production has many, including Daltorio, predicting a fall in price from current levels.

Consumers like lower prices, but they signal economic concerns as the price of oil is directly connected to the global economy.

In February, a Citibank strategist warned that due to the extended oil price collapse, the global economy “appears to be trapped in a death spiral.” Eric Sharpe, Publisher atEnergy Ink Magazine, states: “Citi’s assessment is clear, and easy to understand: weak global growth results in continued depressed oil prices as demand weakens under over-supply.” Conversely, strong growth increases demand—which raises prices.

This is why I posit higher prices are a good thing for everyone, not just the oil industry.

Simple economics are based on a supply vs. demand formula. So far, I’ve mostly addressed the supply side. But a careful read of the forecasts indicates an increase in the demand side. Sharpe points out: “The single most important factor for the stabilization of oil prices is for demand to outpace growth which it has not done for over two years. Though demand growth is slow, it is still climbing.”

On April 23, the Financial Times reported that commodities, led by oil, rallied “on signs of stronger growth” that bolstered demand. It also referenced: “better housing and infrastructure demand after China’s economy rebounded in March.”

On April 27, in a story about the price of oil hitting “another 2016 high,” WSJ addressed the fact that the Federal Reserve officials “left interest rates unchanged.” The last time the same decision was made, the statement included language that indicated the global economic and financial conditions posed risks to their outlook. This time, that was removed—“signaling less concern about risks posed to the U.S. Economy by global financial conditions.” In WSJ, Robert Yawger, director of the futures division at Mizuho Securities USA, is quoted as saying: “The elimination of international elements in the language may mean that the market feels that the international situation is improving, and we’ll get a bit of demand from emerging markets which wasn’t there.”

Additionally, Phil Flynn, Sr. Market Analyst at the PRICE Futures Group and a Fox Business Channel contributor, in his daily energy report, on April 22, wrote: “Demand is busting out all over.” He explains: “Low gas prices are causing a buying frenzy at the pump as gasoline demand in the month of March hit an all-time record high.” He continues: “But it’s not just gasoline demand, it is oil demand all over. Not just here in the United States but also in China. China reported that crude-oil imports in March were up a whopping 21.6% from last year coming in close to 7.7 million barrels a day. …China’s demand for imported oil is stronger than it has ever been.” He also addressed; “the strongest ever volume increase in Indian demand.”

So there is growing demand.

There is also decreased production and dramatic cuts in the spending on new exploration and development (Flynn reports: “In February, ExxonMobil cut capex [capital expenditures] by a quarter to 23.2 million”). Many are seeing the loss of billions and billions of barrels of oil in the future. In his daily Corn & Ethanol report, Phil’s brother, Daniel Flynn (also with the Price Futures Group), on April 29 wrote: “On the crude oil front the market is trading higher on fundamentals and the expected weaker earnings from the Big Three today that should fundamentally show that they cannot keep up capital spending to meet demand with the huge losses suffered—which should catapult oil futures even higher.”

Snyder analyzed the oil supplies on hand, how much we are going to need to meet refinery demand, and how much crude oil we are producing in the U.S.—Supply vs. demand vs. production. He concluded that we have about 33 days of demand in storage. He says: “All of a sudden, 33 days of oversupply doesn’t look like such a big number.”

“The market is coming in better balance,” Jason Gammel, an analyst at Jefferies, stated, according to the WSJ. “We maintain the view that the current oversupply will flip into an undersupply in the second half of the year.”

Sharpe concludes: “Cautious optimism has finally begun to permeate the industry.”

While this is good news for the oil industry, it is also good for everyone—even though it means higher prices at the pump. If this optimistic view is correct, it means the global economy—despite the bad economic news on the American front—may be heading toward a net positive; that it is not “trapped in a death spiral.”

A growing economy needs energy. And strong growth means job security and higher wages. That is why higher demand—that equals higher prices—is good for everyone.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.

Categories: On the Blog

Heartland Institute Panel: Vaping as a Public Policy ‘War’

Somewhat Reasonable - May 02, 2016, 11:48 AM

Public Health England in August of 2015 became the first national government agency to endorse e-cigarettes as safer options for current smokers. Its report also dispelled several bogus anti-tobacco claims. Why is it that e-cigarettes are seen as life-savers by the UK Government, but condemned by the US?  Find out why by checking this April 13 article.

Brian Fojtik, guest speaker at The Heartland Institute’s event about “The Vaping War” on April 20 (watch above and see Part 1 of this post), linked the “war” on vaping to 52 years ago when the Surgeon General recognized tobacco as a health hazard — and the avalanche of anti-smoking programs ever since. Even though many e-cig users begin vaping to wean themselves off tobacco products, why do e-cigarette smokers reap the same hatred from the non-smoking public as those who smoke tobacco cigarettes? Might it be because people are taught not only to hate cigarettes, but also to hate those who once smoked them? Does it not matter that tobacco smokers are transitioning to products that are safer for them and everyone around them? Apparently not.

Vaping as a Consumer-Driven Business

More and more individuals desire a safe and effective smoking cessation aid — so it is no wonder that the number of consumer driven vapor shops are growing to (currently) 15,000 vapor shops in the US.  These are all relatively new businesses; people are employed and property taxes are paid. When there are people who want something, products are offered as a solution to the problem. This is the free market at work. Regulations and taxes only inhibit innovation in a free market system — but regulations and taxes are coming fast.

Pharmaceutical companies continually come up with new products to help people stop smoking, but each new product must receive FDA approval, which requires an expensive and lengthy process to market a new product. This is no huge hurdle for Big Pharma. But the vaping industry is just getting started, and cannot afford to jump through FDA hoops and have each vaping product approved by the FDA — which is why it is important to limit the FDA’s authority in vaping. As the law kinda stands now, every different vaping flavor would require new FDA approval at a great cost and with considerable approval time.

Fortunately, the vaping industry enjoyed a bit of a victory on April 14 when the House Appropriations Committee voted to approve an amendment to the FY 2017 Agricultural Appropriations bill that would change the predicate date for “newly deemed” tobacco products. Under previous FDA regulations, vaping products on the market since 2007 would be essentially “newly deemed” — essentially making the entire vaping industry illegal. Thankfully, that is not the case — as long as President Obama signs the current Agriculture Appropriations Bill. 

Victoria Vasconcello, former long-time smoker and owner of Cignot Inc.

As already noted in Part 1, Ms. Vasconcello — who spoke at the Heartland vaping event — is a former long-time smoker who has been in the vaping business since 2009.  She considers vaping a consumer-driven solution to a problem, i.e. people who want to stop smoking cigarettes.

In response to a question from the audience about what what the vaping community can do to help, Vasconcello suggested vapers should join the 135,000 member CASAA, and contact local legislators to inform them about the issue. The science is out there to support the use of e-cigarettes, she said (paraphrasing). Help legislators know what the science is. Genuine fear develops from not knowing the truth. Finally, at long last, smokers have found something that helps them quit cigarettes, and they are standing up and fighting with truth on their side. Consumers do have power!

Concluding Thoughts

Support for the vaping community can be broadened by minimizing the arguments of center-left groups.  Unfortunately, PR hasn’t been on the side of e-cigarettes to enable them to become mainstream — unlike in England where the government backs e-cigarettes for smokers. There is limited money in the vaping community to get out the truth. This results in most of the studies being done by those who hold positions against e-cigarettes. The minds of the American people must be changed. A new poll finds that Americans’ Risk Perception of Vaping is All Wrong. There is work to do.

Working against the case of vaping is the fact that government is addicted to the money it receives from tobacco products. This money is decreasing as smoking decreases, so governments want to tax e-cigarettes to keep the “tobacco coffers” filled. The good news: 500 pieces of legislation have tried to tax or restrict vaping in recent years, but only a few  have passed. Writing letters to the editor of your local paper are an old-school way to go, but is a good way to educate the public about e-cigarettes.  

E-Cigs in Chicago

Below are three articles that show how Chicago is dealing with e-cigarettes. The e-cigarette tax referred to in the first article went into effect on January 1, 2016. 

Chicago’s Deadly E-Cigarette Tax Takes Effect Tomorrow

Chicago Vaping Tax is About Cigarette Tax Dollars, Not Health

Rahm Emanuel’s E-Cig Tax Will Kill Smokers & Small Businesses

The following are additional note-worthy e-cigarette articles:

Articles by Brad Radu, Heartland’s Senior Fellow who holds the Endowed Chair in Tobacco Harm Reduction Research at the University of Louisville.

This Wall Street Journal article published on April 11, 2016

The article “Are E-Cigarettes a Healthy Way to Quit Smoking?” presents both sides of the vaping debate. Even though use e-cigarette sales have been growing, they remain dwarfed by the $100 billion tobacco market. 

See the full video of The Heartland Institute’s Vaping Event in the player above. And see Part 1 of my recap of the issues talked about at that event here.

Categories: On the Blog

States Should Not Increase Tobacco Use Age to 21

Somewhat Reasonable - May 02, 2016, 11:41 AM

Some states, including California and Illinois, are now considering proposals that would increase the legal age limit required to consume tobacco and tobacco-like products, including electronic cigarettes, from 18 years old to 21. Hawaii was the first state to enact such laws, which became effective January 1, 2016.

Health policy advocates argue an increase in age is necessary to protect the health of our youth, but does this type of policy actually help the general welfare of the population?

The National Institute on Drug abuse reports in its study Monitoring the Future Study: Trends in Prevalence of Various Drugs 58 percent of 12th graders reported consuming alcohol in the past year in 2015. Additionally, 35 percent of respondents reported having used marijuana in the past year, and over 21 percent had said they used the drug within a month of taking the survey. Alcohol and marijuana are both illegal substances for 18 year olds in every state, even in states where marijuana is legal, but that didn’t stop these teens from finding a way to obtain them. It is clear criminalizing the use of these substances has not been an efficient deterrent.

The age of first-time smokers does seem to be connected to adult tobacco consumption. The Surgeon General reports almost 90 percent of smokers began smoking before 18. According to some data, 99 percent of all cigarette smokers begin smoking by the age of 26. If the current age for legal consumption of cigarette products is not impacting the rates of smoking, how would increasing the age make a difference? Why not just increase the limit to 26 years old?

Another key point these age limits miss is the positive impact electronic cigarettes are having on smoking rates. Including e-cigarettes under legislation as “tobacco products” would likely have a negative effect in the fight against youth smoking. Recent evidence suggests e-cigarettes may actually deter teenagers from traditional cigarettes, and numerous studies show they are a much safer alternative to tobacco. If a state decides to ban a 19-year-old consumer from purchasing either traditional cigarettes or e-cigarettes, the advantages linked to vaping and other tobacco alternatives will be significantly reduced.

Perhaps the strongest argument against these proposals is that they limit individual freedom and make the government the arbiter of what is moral. Bureaucrats have become the nation’s nannies, babying each one of us from our first moments on Earth until our very last breath. At the age of 18, a person enters new parameters of life. They are able to go to war, to vote, to be held legally responsible for contracts that can amass significant debt, such as credit cards and student loans, and at 18 years old, a person can and will be defined as an adult in a court of law. But despite all of the responsibilities the government heaps on young adults, many officials believe they simply can’t handle making tobacco-related—or even electronic cigarette-related—decisions.

The argument many use when advocating for such measures is that it’s comparable to the national alcohol consumption age limit of 21 years old, but such a comparison is completely unwarranted. When former President Ronald Reagan signed the National Minimum Drinking Age Act of 1984, it collided against his own philosophical view of a limited role of government, but drunken driving, which Reagan referred to as “a national tragedy involving transit across state borders,” was a significant public health concern at the time and the key rationale behind the legislation. Cigarettes do not have the same dangers associated with them, so similar action is nothing less than a spectacular example of government overreach.

It’s time to let our adults be just that: adults. The evidence shows increasing the age limit required to consume tobacco and e-cigarettes will be a wasted effort that could actually lead to negative externalities, such as a loss of tax revenues, wasting police resources, and higher smoking rates. Even worse, it would send a false and dangerous message to an entire generation of Americans that it is proper for the government to tell adults how to live their lives.

[Originally published at Inside Sources]

Categories: On the Blog

Elizabeth Warren Despises ‘Special Interests,’ But Supports Their Master: The Administrative State

Somewhat Reasonable - May 02, 2016, 9:48 AM

In a recent article at Bloomberg View, Harvard law professor Cass Sunstein discusses “an important but widely overlooked speech” by Elizabeth Warren, in which the Massachusetts senator bemoans the influence of powerful industry groups on the regulatory process. To Warren, the problem is not overzealous administrative bodies, eager to impose unwanted, unnecessary new rules, but regulatory capture — the notion that regulation is, in the words of economists Michael E. Levine and Jennifer L. Forrence, “simply an arena in which special interests contend for the right to use government power for narrow advantage.”

Libertarians have been touting the insights of regulatory capture theory for a long time, and its ideas are simple enough: Special interest groups have both a concrete incentive and the resources to engage in the convoluted minutiae of the regulatory process, whereas the citizenry at large has neither. The general population doesn’t have the time, money, or the inclination to engage in byzantine federal rulemaking affairs, which means that well-organized pressure groups have a significant advantage and, importantly, an opportunity to tailor rules not for the public good but in accordance with their own interests.

It is refreshing to see a prominent progressive acknowledge this conundrum, particularly because the modern administrative state, often called the fourth branch of government, is a distinctly progressive invention. At the beginning of the twentieth century, during the Progressive Era, reformers began to see the Enlightenment principles of traditional or classical liberalism as outdated and obsolete, at odds with new scientific and political thinking. Guided by the objectivity of science and therefore free of bias, federal experts in new executive branch agencies would work with academia, think tanks, and the private sector to chart the correct course, to rescue society from the perceived precariousness and chaos of laissez-faire.

The problem, of course, is the one that Warren highlights: Even if we assume that sclerotic bureaucracies are able to identify the ever-elusive “public good,” what incentive do they have to serve it and not their own ends? Progressivism and its crusaders simply never bothered to answer this fundamental question; their solution is always to further concentrate power in the executive branch of the federal government, in unaccountable, unelected “public servants.” As is so often the case, there is a grain of truth of Warren’s speech, but one that is quickly lost to basic misunderstandings about the interactions between the government and the economy. In all of her worries about the dangerous power of special interests, Warren seems not to realize that as the power of the administrative state has grown, so too has the list of perquisites available to it and the opportunities for corruption and collusion.

Today’s libertarians and conservatives believe that limited government, individual rights, and robust private property never stopped being good ideas, that the progressive administrative state gives far too much power and discretion to supposed experts — power that is rightly vested in the free and voluntary spheres of civil society. Moreover, we challenge the legal bases of the administrative state as a constitutionally-suspect revival of, as legal scholar Philip Hamburger describes it, “the era of the prerogative,” a time of arbitrary class rule.

The administrative state and its “law” represent a return to a government of men rather than law, based on the idea that we need not worry about pesky notions of the separation of powers. Constitutionally limited government isn’t some aesthetic fetish of libertarians and conservatives; it is a pragmatic response to the problems associated with concentrated political power, an attempt to divide that power and prevent the kind of political economy that sadly obtains today, government picking winners and losers.

Real regulatory reform — that is, reform that actually addresses the fundamental problem — means retrenchment, diminishing the authority of the administrative state and dispensing with millions of its pernicious rules.

Categories: On the Blog

InsideClimate News = Inside Climate Propaganda

Somewhat Reasonable - May 01, 2016, 6:06 PM

Have you ever wondered how the LA Times, Associated Press, Weather Channel and your local media always seem to present similar one-sided stories on climate change, fossil fuels, renewable energy and other environmental issues? How their assertions become “common knowledge,” like the following?

Global temperatures are the hottest ever recorded. Melting ice caps are raising seas to dangerous levels. Hurricanes, tornadoes, floods and droughts have never been more frequent or destructive. Planet Earth is at a tipping point because of carbon dioxide emissions. Fracking is poisoning our air, water and climate. 97% of scientists agree. A clean renewable energy future is just around the corner.

It’s as if a chain of command, carefully coordinated process or alliance of ideological compatriots was operating behind the scenes to propagate these fables. This time, conspiracy theorists have gotten it right.

A major player in this process and alliance is one that most citizens and even businessmen and politicians have never heard of. InsideClimate News (ICN) has been called “highly influential,” a “pioneer of nonprofit advocacy journalism,” the recipient of “prestigious awards” for “high-impact investigative stories” on important environmental issues.

The Washington Free Beacon, National Review and Energy in Depth offer detailed and far less charitable assessments. Less friendly observers, they note, call ICN a “mouthpiece” for extreme environmentalist groups, because it is run by and out of a deep-green public relations consultancy (Science First) and is funded almost exclusively by wealthy foundations that share its and the PR firm’s anti-fossil fuel, pro-renewable energy, Bigger Government agenda. ICN was founded by David Sasoon, a true believer in catastrophic manmade climate change who wants to do all he can “to usher in the clean energy economy.”

Even praise from its supporters underscores the dark side of this “influential” force in eco-journalism. Its approach is “advocacy,” not fairness, accuracy or balance. Its goal is to drive a monolithic, hard-line, environmentalist narrative and political agenda, with little suggestion that other perspectives even exist.

Some of its awards come from an organization that has itself become politicized and too closely allied with Big Green views and organizations: the Society of Environmental Journalists. They increasingly operate too much as mutual admiration societies and support groups, say outside observers.

ICN and its Science First alter ego received their 2007 startup grant from the Rockefeller Brothers Fund, where Sasoon once served as a consultant. They now derive the bulk of their funding from the RBF, NEO Philanthropy (aka, Public Interest Projects), Marlisa Foundation and Park Foundation. These and other sugar daddies are covered in a Senate Environment and Public Works Committee staff report, which describes a “Billionaire’s Club” of “left-wing millionaires and billionaires [which] directs and controls the far-left [US] environmental movement.”

The same foundations also give major tax-exempt donations to the Sierra Club, Earthworks, NRDC, EarthJustice, the climate crisis coalition 350.org, and many other anti-coal, anti-drilling, anti-fracking, anti-Keystone pressure groups that together form the $10-billion-a-year US environmentalist industry.

ICN has active partnerships with the LA Times, Associated Press, Weather Channel, Bloomberg News and other media organizations that help coordinate and disperse stories. The Times promotes the “dangerous manmade climate change” meme and refuses to print letters that reflect skeptical views.

The Associated Press has likewise become a reliable purveyor of manmade climate chaos stories. The Weather Channel and ICN teamed up in 2014 on a series of “investigative reports” that claimed hydraulic fracturing was causing serious environmental and human health problems in Texas.

The partners team up and coordinate to “have one group write on an issue, another quote them or link to them, and so on,” Media Research Center VP Dan Gainor explains. “It keeps going until they create this perception that there’s real concern over an issue, and it bubbles up to top liberal sites like Huffington Post, and from there into the traditional media,” which itself is too predisposed to the green narrative.

The foundations “have incorporated ostensibly dispassionate news outlets into their grant-making portfolios,” says the Free Beacon’s Lachlan Markay, “creating what some describe as self-sustaining environmentalist echo chambers.”

They make it look like widespread public concern and spontaneous grassroots action – when in reality it is loud but small Astroturf activism, orchestrated by the ICN brigade and the foundations behind it.

InsideClimate News now brags about its involvement in the extensive collusion among the leftist foundations, environmental pressure groups and state attorneys general that are devising, coordinating and advancing AG prosecutions of ExxonMobil, the Competitive Enterprise Institute and other groups for alleged “racketeering” and “fraud,” to hold them “legally accountable for climate change denial.”

The efforts “stretch back at least to 2012,” ICN notes, when a meeting was held in California to develop legal strategies. In late 2015, letters from several Democrat members of Congress called for investigating and prosecuting climate skeptics; the letters cited independent journalism “investigations by the Los Angeles Times and InsideClimate News” to back up their request.

However, the intrepid Times and ICN investigators had conducted no investigation. They simply parroted and amplified “research” from a group of activist professors and students at the Columbia School of Journalism – without disclosing who had funded the CSJ studies. Transparency for thee, but not for me.

It was George Soros’s Open Society Foundations, along with the Rockefeller Brothers Fund, Rockefeller Family Foundation, Energy Foundation, Lorana Sullivan Foundation and Tellus Mater Foundation – all of which virulently oppose hydrocarbon production and actively promote climate change alarmism.

Emails subpoenaed by the Energy & Environment Legal Institute later revealed that many of the same environmentalist groups and lawyers met again in January 2016 at a secret meeting in the Rockefeller Family Fund’s Manhattan offices. Yet another secret meeting was held in March 2016, between climate activists and state attorneys general – hours before the AGs announced that they were launching RICO and other prosecutions of “climate skeptic” companies and think tanks.

The success of this campaign thus far, says ICN, has persuaded the activists to “step up efforts to pressure more attorneys general to investigate [more climate crisis skeptics] and sway public opinion, using op-eds, social media and rope-line questioning of [Republican] presidential candidates at campaign stops.”

This collusion among activists, foundations and attorneys general seeks to silence, bankrupt and defund organizations that challenge their catechism of climate cataclysm. These conspirators want to deprive us of our constitutional rights to speak out on the exaggerated and fabricated science, the coordinated echo- chamber news stories, and the pressure group-driven policies that impair our livelihoods, living standards, health, welfare and environmental quality. We will not be intimidated or silenced.

As CFACT’s new Climate Hustle film notes, manmade plant-fertilizing carbon dioxide has not replaced the powerful natural forces that have always driven Earth’s temperature, climate and weather.

The problem is not climate change. It is policies imposed in the name of preventing climate change.

That’s why Climate Crisis, Inc. wants to silence and jail us. Just imagine how much more they’ll be foaming at the mouth after throngs go to ClimateHustle.com and buy tickets for its May 2 one-night-only showing in hundreds of theaters across the United States.

Categories: On the Blog

Victims of Communism Day

Stuff We Wish We Wrote - Homepage - May 01, 2016, 2:20 PM
The three biggest Communist mass murderers: Lenin, Stalin, and Mao. Today is May Day. Since 2007, I have defended the idea of using this date as an…

The Marketplace Delivers More Data

Somewhat Reasonable - May 01, 2016, 9:55 AM

The Oxford Dictionary defines capitalism as “an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.”  A new poll on the topic from Harvard received some attention yesterday, garnering headlines about millennial’s view of capitalism. The poll is challenging to interpret given that most people likely have a connotative sense of capitalism, but helpfully Harvard dug a little deeper by interviewing a group of people regarding their view of capitalism.  As it turns out  those who were wary of capitalism were not so much rejecting it but rather were concerned that today it seems unfair and leaves some people out.

One blog immediately opined in part, “It’s no surprise that a generation of people who grew up in the era of ‘everyone gets a trophy’ reject the idea of unequal rewards based on hard work. Millennials were educated largely by public schools obsessed with the idea of fairness and afraid in some cases to let children play the game of tag.”  In fact, the benefits of the marketplace are being returned in various ways, some of which were likely not considered by those polled.

Take just one example.  As announced yesterday Comcast will begin providing all of their customers in internet data trials a terabyte of data, more than triple what is offered now.  For extremely heavy users who want even more data, they will have options to increase the amount of data either in an unlimited way or in more discreet chunks.

Why the change?  The market reacted and Comcast responded.  Comcast listened to its customers and are exceeding their needs, given that most customers do not come close to using a terabyte of data in a month.  How much data is it in real terms?  Enough to watch more than 29 days straight, with no sleep, of HD video.  Enough for more 16 people to play online games for the entire month.

This follows a string of other announcements from Comcast including that subscribers will now be freed from having a “cable box,” but rather will be able to stream video to connected TV devices, such as a Roku box.  And last month Comcast announced the expansion of the Internet Essentials to include ConnectHome, a partnership with HUD to provide broadband for access for those with the greatest financial challenges.

The public is taking notice.  During earnings calls this week Comcast reported an increase of 53,000 new subscribers, a nine year record new subscribers during the first quarter of the year.

When examined individual by individual capitalism can be challenging if one thinks that regardless of one’s industry and talent that all should be monetarily equal.  However, if viewed appropriately,one can see that the marketplace works in delivering benefits to many when the marketplace has a demand.  Comcast has responded in offering data that is increasingly inexpensive and abundant, freeing consumers from the cost of a “cable box,” and still investing in our communities by providing the most needy with broadband.  This is the free market at work.

Categories: On the Blog

AGs redefine climate dissent as “fraud”

Out of the Storm News - April 30, 2016, 2:59 PM

From Overlawyered

“While I think that climate change is both human-caused to a significant extent and likely to be a problem, I would warn my environmentalist friends about the dangerous precedent the attack on CEI sets.” [Eli Lehrer, Washington Examiner]

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