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A New Approach – To Finally End an Old Farm Bill Problem

Somewhat Reasonable - March 26, 2015, 8:58 AM

The Farm Bill is a bane of we Conservatives’ existence – and Reality-based policymaking.  It is a relic of President Franklin Delano Roosevelt (FDR)’s horrendously failed New Deal – a top-down, central-planning nightmare mess.

And over the last eighty-plus years, FDR’s heinous domestic policy has gone global.  A worldwide farm market has arisen.  We no longer just grow for ourselves.  We sell all over – and they sell to us.

And our Farm Bill – which warps our market – has warped the world’s as well.  FDR helped beget an eight-decade-long international regulatory arms race.  Other produce-producing nations saw our lattice-work panoply of tariffs and subsidies – and felt compelled to match them.  And then exceed them.

Round and round we go.  Myriad nations outdo our government interference in the marketplace – so we outdo theirs.  Lather, rinse, repeat.  So what we now have is a global lattice-work panoply of tariffs and subsidies.  A thicket that grows ever thicker – as each next government tries to outdo the last.

We take our swing every half decade – when our heinous Farm Bill comes up for Congressional renewal.  A $1 trillion redux passed last year.

We Conservatives tried then to do what we always try to do – unilaterally kill it.  And we were just as successful then as we always have been – not at all.

So let’s try something new, shall we?

 We’ve spent the better part of a century erecting ever-higher walls of trade impediment.  And watching the world’s nations do the same.  It would seem we need to work together to tear down those walls.

Here’s a start of that deconstruction.

Rep. Ted Yoho, R-Fla., reintroduced a bill Friday that encourages the (Barack Obama) administration to target foreign sugar subsidies. Under the “Zero-for-Zero” plan, U.S. sugar policy would also be rolled back in exchange for the elimination of foreign programs, which Yoho says are distorting world prices and inhibiting a free market.

Congressman Yoho is, of course, absolutely correct.  We’ve been “distorting world prices and inhibiting a free market” for decades – and on oh-so-much-more than merely sugar.

Here’s hoping the Administration makes this move – and on oh-so-much-more than merely sugar.

It’s way past time we end this fossilized facet of FDR’s New Deal.  Both here – and abroad.

Categories: On the Blog

RAWA hearing criticised by PPA, anti-igaming claims get airing

Out of the Storm News - March 26, 2015, 8:46 AM

From iGaming Business:

However Parry Aftab, executive director cyber safety advice group WiredSafety, recognised that regulation of online gambling would better protect American consumers, families and problem gamblers; while Andrew Moylan, executive director of R Street Institute, said he opposed RAWA for overstepping state rights.

Hillary now thinks this email thing is hilarious

Out of the Storm News - March 26, 2015, 8:43 AM

If you’re keeping score, based on familiarity with the Clinton playbook, we have now delightfully exited the “pretend nothing is wrong” phase of Hillary Clinton’s private email scandal and we’ve moved into the “joke about it as though it’s funny” phase.

If you recall, this closely mirror’s Bill Clinton’s response to the Monica Lewinsky scandal, where, after denying his scandal under oath and then recanting it, embraced his public personal as a lovable, yet kind of creepy oaf, bound to haplessly follow the edicts of his nether regions: “Oh, that’s just Bill!” and “Did someone say Colombian prostitutes?” Hillary is following suit. Fresh off her United Nations press conference, where she revealed her own technological vulnerability, as well as her abject commitment to the feminist principle of always playing too dumb to know what’s going on, she’s confident the situation has been completely resolved. And so, on to the jokes.

“I am well aware that some of you may be a little surprised to see me here tonight,” Clinton said.

“I wanted to spend an evening with a room full of political reporters, I thought to myself: ‘What could possibly go wrong?’”

The former secretary of state told the crowd that she was ready to open up a new era of transparency and divulge all her classified information.

“No more secrecy, no more zone of privacy — after all, what good did that do me,” she announced.

“But first of all, before I go any further, if you’ll look under your chairs you’ll find a simple nondisclosure agreement. My attorneys drew it up. Old habits last.”

Har, har, harrrrrrrr.

In her mind, I’m sure Hillary Clinton was absolutely positive that this spelled the end of her press wrestling. After all, if they can laugh at a quip about an unsigned legal agreement guaranteeing their silence on an issue, they’ve definitely put that little tidbit about sending emails from a private server to other private email addresses during a major administration crisis that resulted in a dead ambassador, so as to avoid the unnecessary involvement of congressional investigators who would no doubt want to know what happened, right?

Right.

Fear-mongering testimony overshadows facts at Internet gambling ban hearing

Out of the Storm News - March 26, 2015, 8:34 AM

From PokerNews:

There were two reasonable witnesses in WiredSafety executive director Parry Aftab, who recognizes that regulation of online gambling in the U.S. will better protect American consumers, families and problem gamblers; and R Street Institute executive director Andrew Moylan, who opposes RAWA for overstepping state rights…

…Moylan, a late addition to the panel, indicated that RAWA not only overreached from a federalism perspective in attempting to prohibit intrastate activity but was largely unnecessary.

“If a state wishes to prohibit gambling within its borders, it has the sufficient power to do so and sufficient legal remedies at its disposal,” Moylan said.

RAWA rhetoric sweeps House subcommittee meeting in federal online gambling debate

Out of the Storm News - March 26, 2015, 7:49 AM

From Casino.org:

Next up was Andrew Moylan, executive director and senior fellow at R Street Institute, a conservative-libertarian think tank. Moylan was a late addition to the list of witnesses, a concession, perhaps, to criticism of the largely partisan panel.

However, he confusingly stated that he was not particularly knowledgeable about or interested in gambling. Instead, he was here to “articulate a conception of limited government and federalism as it relates to gambling legislation.”

Moylan noted that RAWA and its blanket ban on online gambling was at odds with the principles of federalism and also the “more narrowly targeted language of the original Wire Act and UIGEA.” Both the Wire Act and UIGEA, he said, were enacted to help states in their own law enforcement pursuits.

He also said that RAWA “potentially establishes a dangerous precedent by suggesting that the mere use of a communication platform like the internet subjects all users and all activity to the reach of the federal government, no matter its location or its nature.”

Obamacare Failing, Doctors Will Take Future Blame

Somewhat Reasonable - March 25, 2015, 4:43 PM

The Congressional Budget Office (CBO) released a report on March 9 projecting Obamacare premium prices to outpace both private insurance premiums and government spending between 2016 and 2018.

This report comes just one week before The Washington Post’s Guy Gugliotta reported on Sunday that rural health facilities across the nation are struggling to survive. Since 2010, 48 rural hospitals have closed, according to the National Rural Health Association.

“Experts and practitioners cite declining federal reimbursements for hospitals under the Affordable Care Act as the principal reasons for the recent closures,” reported Gugliotta. “Besides cutting back on Medicare, the law reduced payments to hospitals for the uninsured …”

Needless to say, the Affordable Care Act (ACA) is causing all sorts of chaos, but don’t expect the Obama administration to admit defeat anytime soon. While the evidence against the law is stunning and apparent, Democrats would rather see George W. Bush become president again than allow Obamacare to falter.

This doesn’t mean, however, that someone—or some group—isn’t going to be held responsible for the failures caused by the ACA. In Washington, DC, someone is always to blame, and in this case, doctors, not incompetent bureaucrats and greedy politicians, will be next on the blame-anybody-but-Democrats media tour.

It may seem counterintuitive to some since doctors spend their whole lives healing sick people, including many sick and poor people, but the reality is that doctors actually make easy political targets for the Democrat machine.

For starters, Doctors are wealthy, especially highly trained specialists. The average base pay for a family practitioner is $189,000 according to Merritt Hawkins & Associates’ 2012 Review of Physician Recruiting Incentives. But this figure seems paltry in comparison to the average salaries of cardiologists, orthopedic surgeons, and neurosurgeons, all of whom earn more than $500,000 per year on average.

Specialists’ earnings put them securely within the “top 1 percent” category in virtually all states, the very same group of people demonized by the Occupy Wall Street crowd and their DNC supporters.

Second, most doctors are not politically active and are poorly represented in government. In the current Congress, there are only 17 physicians out of the 535 available seats despite the fact that doctors are some of the most educated people in the nation.

Third, many doctors have already started to turn away Medicare and Medicaid patients because the government’s reimbursement rates are too low, making doctors as a group seem unsympathetic to the elderly and the impoverished.

Their wealth, lack of a big public microphone, and seemingly uncaring behavior with Medicaid and Medicare patients make doctors the obvious scapegoat for Obamacare’s struggles. Rather than raising taxes or cutting benefits, both of which are politically difficult to accomplish, Democrats looking to defend the ACA will pin increasing costs and reduced benefits and coverage on greedy, rich, selfish doctors more interested in helping retain their status as members of the 1 percent than saving lives and serving the public.

The political hit pieces and election-season television commercials practically write themselves.

It’s true that doctors earn a lot of money, but notice the key word there is “earn.” Doctors are required to attend four years of college, four years of medical school, and then as many as seven years of residency, where most doctors make roughly $40,000–$50,000 per year. They spend thousands of dollars on required internships, residency interviews, applications, standardized test, and numerous other fees. Many doctors graduate medical school hundreds of thousands of dollars in debt, and all medical students are required to work for two years without any pay at all.

Many doctors work 60 hours per week or more, and it’s not uncommon for specialists to work as many as 80 hours per week. Doctors miss holidays, birthdays, and make numerous other personal sacrifices in order to help other people. If ever there was a group of people who deserve to make a lot of money, it’s doctors.

This, however, won’t matter in the coming years to politicians in the nation’s capital looking to score cheap political points when the ACA’s flaws become even more apparent than they are today.

[Published on Human Events]

Categories: On the Blog

The Trouble with Google as Truthsayer

Somewhat Reasonable - March 25, 2015, 4:39 PM

Google, Inc., with its $385 billion share value, has bumped Exxon to become America’s No. 2 ranking company in market capitalization.

That may not be a good thing. A February article in New Scientist announced, Google wants to rank websites based on facts not links, and writer Hal Hodson said, “The internet is stuffed with garbage. Google has devised a fix – rank websites according to their truthfulness.”

The idea of changing page rank from popularity to “truthfulness” based on a Google-made “knowledge vault” did not go down well.
Fox News reported, “Google’s plan to rank websites raising censorship concerns.” Douglass Kennedy opened with, “They say you’re entitled to your own opinions but you are not entitled to your own facts. It’s a concept not everyone is comfortable with.”

They’re saying we’re only entitled to Google’s facts, which completely shortcircuits how slippery facts are and naively equates facts with truth. Ask any lawyer about truth.

Today’s climate wars consist of arguments between highly qualified scientists about facts that some sincerely believe are true and some sincerely believe are false, each for solid reasons. It should be an honest debate among equals, but it’s degenerated into a power play by alarmists to kill debate for policy’s sake, pushed by politicians and their social base.

Google’s truth plan is not so simple. Facts are statements about existence. Statements about existence can be true or false. Existence itself – your kitchen sink or the climate or whatever – can’t be true or false, it just exists. Say anything you want about existence and it won’t change a thing – it still just exists. Existence doesn’t give a damn what you think about it. Facts are statements about existence, and statements are always arguable.

But get everyone to believe Google Facts, and you can enforce political policy worth trillions to climate profiteers.

You can see where this is going.

Imagine: Big Google the Universal Truthsayer. That’s as scary as “Mr. Dark” in Ray Bradbury’s 1962 novel Something Wicked This Way Comes, only worse, because it’s the perfect machine to kill all dissent and wither the Internet into a wasteland of groupthink, susceptible to disinformation campaigns from any power center from the CIA to the rich bosses of Google, Inc.

What about those rich bosses? Google’s two co-founders, Larry Page and Sergey Brin, created a corporate foundation in 2005, Google Foundation, with 2013 assets of $72,412,693, grants of $7.9 million, and $29.4 million added from corporate profits.

Three of Google’s top-ten recipients are key climate alarmists: World Wildlife Fund ($5 million); Energy Foundation ($2.6 million); and the Natural Resources Defense Council ($2.5 million).

NRDC is particularly influential because it received $3.01 million in Environmental Protection Agency grants since 2009 and has 50 employees on 40 federal advisory committees: NRDC has 33 employees on 21 EPA committees, and more in six other agencies.

The big gun in Google philanthropy is Executive Chairman Eric Schmidt, whose Schmidt Family Foundation ($312 million, 2013 assets) is a major armory for anti-skeptic groups. Schmidt has given $67,147,849 in 295 grants to 180 recipients since it was endowed in 2007.     

Top Schmidt money went to Climate Central ($8.15 million), a group of activist climate scientists bolstered by $1,387,372 in EPA grants since 2009.

Schmidt gave $3.25 million to the Energy Foundation, which was almost superflouous, since EF is practically the Mother Ship of green grants, with $1,157,046,016 given in 28,705 grants to 11,866 recipients since 1999.

Among the shadier grants in the Schmidt portfolio are anti-fracking, anti-fossil-fuel grants totaling $1.19 million to Sustainable Markets Foundation, a shell corporation that gives no recorded grants, but funnels money to climate and anti-fracking organizations such as Bill McKibben’s 350.org so the donors are not traceable.

Schmidt supported the far-left Tides Foundation empire with $975,000 for an anti-consumer film, “The Story of Stuff;” the Sierra Club ($500,000 for anti-natural gas activism); the Center for Investigative Reporting ($985,000 for an anti-coal film), and so forth. This list goes on for pages.

With all the massive resources of wealth and power alarmists have, we must ask why they give so much to destroy the climate debate and the debaters? What are they afraid of?

It may be what Eric Schmidt said at January’s World Economic Forum in Davos, Switzerland, when he was asked for his prediction on the future of the web. “I will answer very simply that the Internet will disappear.”

How? The mature technology will be wearable, give us interactive homes and cars and simply fade into the background to become something that we all have, that most of us don’t really know very much about (or care) only that it can do whatever we want.

That’s the view from the pinnacle of wealth and power. On the ground, the joke is on Google.

Michael Humphrey, Forbes contributor and instructor at Colorado State University sees younger people abandoning the public forum in favor of one-to-one connectivity. He says they don’t trust the Internet.

Why? Millennials say the Internet is cheapening language, it is stunting curiosity (because answers come so easily), we are never bored so we lose creativity, it steals innocence too quickly, it makes us impulsive with our buying and talking, it is creating narcissists, it creates filter bubbles which limits discovery, it hurts local business, it is filled with false evidence, it desensitizes us to tragedy, it makes us lonely.

They want the real world.

Google that.

Categories: On the Blog

R Street urges caution against expanding the scope of federal government in Judiciary testimony

Out of the Storm News - March 25, 2015, 3:52 PM

WASHINGTON (March 25, 2015) – The Restoring America’s Wire Act (RAWA) would overextend federal reach and usurp states’ rights, the R Street Institute’s Executive Director Andrew Moylan said in testimony before the House Judiciary Committee today.

The legislation expands the 1961 Wire Act to cover all forms of gambling, but goes a step further to prohibit all wire or Internet gambling transmissions, including those conducted over the Internet in states that may have chosen to license and regulate gambling.

Both the Wire Act and the Unlawful Internet Gambling Enforcement Act (UIGEA) were written to help states in their own law enforcement pursuits and were circumscribed to cover only genuinely international or interstate activity.

“By appearing to extend its reach to wholly intrastate conduct, RAWA unwisely empowers the federal government,” testified Moylan. “This both impedes upon an area of law that is traditionally reserved for the states, and establishes a dangerous precedent in suggesting that mere use of a communications platform like the Internet subjects all users and all activity to the reach of the federal government, no matter its location or nature.”

Instead, Moylan suggested modifying the language of the RAWA to more closely resemble that of UIEGA, which carefully exempted intrastate payments and those between states with legal gambling.

“If limited government and federalism are to have any meaning in the 21st century and beyond, Congress must exercise restraint in claims of such power and RAWA in its current form is not consistent with that needed restraint,” he said.

Moylan’s full testimony can be found here.

Testimony on H.R. 707, the Restoration of America’s Wire Act

Out of the Storm News - March 25, 2015, 3:00 PM

The attached testimony from R Street Executive Director and Senior Fellow Andrew Moylan was delivered to the House Judiciary Committee’s Subcommittee on Crime, Terrorism, Homeland Security and Investigations at the March 25, 2015 hearing titled “H.R. 707, the Restoration of America’s Wire Act.”

Is Sheldon Adelson’s online gambling ban unconstitutional, or is it constitutionally required?

Out of the Storm News - March 25, 2015, 2:01 PM

From Reason:

Today a House subcommittee held a hearing on the Restoration of America’s Wire Act, which would ban online gambling throughout the country, even in states that choose to allow it. The witnesses included Andrew Moylan, executive director of the R Street Institute, who explained why that policy would violate the federalist principles reflected in the 10th Amendment.

The bill, introduced last month by Rep. Jason Chaffetz (R-Utah), prohibits “any bet or wager” communicated by “any transmission over the Internet carried interstate or in foreign commerce, incidentally or otherwise.” Those last three words “carry a tremendous amount of weight,” Moylan noted, because they make the ban applicable to wholly intrastate betting that happens to be routed through equipment located in another state. “To treat all use of the Internet, no matter its nature, no matter the individuals or entities it might connect, as ‘per se interstate’ and thus subject to Commerce Clause regulation,” he argued, “would constitute an enormous shove down the slippery slope toward federal power without meaningful limits.” Ron Paul agreed.

Heartland Daily Podcast – John R. Graham: How Would the GOP’s Proposed Budget Affect Medicare and Medicaid

Somewhat Reasonable - March 25, 2015, 1:23 PM

In today’s edition of The Heartland Daily Podcast, managing editor of Health Care News, Sean Parnell, talks with John R. Graham. Graham is a senior fellow in health care policy at the National Center for Policy Analysis. Graham and Parnell discuss the health care related impacts of the proposed GOP budget.

Graham explains the recently unveiled budget released by Congressional Republicans and what it means for Medicare and Medicaid, including how states might be able to innovate with block grants to integrate other welfare programs with the existing program for the poor. He also explains the two good ideas President Obama’s budget has in it for health care, ending one of the ways states manipulate the Medicaid funding formula to get more federal dollars and restricting Medigap policies.

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

Categories: On the Blog

D-Day for RAWA as Poker Players Alliance fights back

Out of the Storm News - March 25, 2015, 12:27 PM

From Cards Chat News:

Andrew Moylan, executive director of libertarian think tank R Street, will now be joining the hearing and will be arguing for states’ rights.

Anti-Vaxxers, Anti-Frackers Show Similar Disregard for Science

Somewhat Reasonable - March 25, 2015, 10:57 AM

How would you feel if you or your child became sick with a potentially deadly disease such as the measles, mumps, or whooping cough because the governor of your state banned the vaccines preventing these diseases in deference to a small yet vocal group of anti-vaccination activists who claimed these vaccines cause autism, even though the “science” they cite has been thoroughly discredited?

This scenario should sound absurd, because lawmakers ought never to base laws on bad science. Unfortunately, we don’t live in perfect world, and bad science has ruled the day in New York State, where Gov. Andrew Cuomo (D) has deferred to anti-fracking activists and their widely discredited claims.

Instead of putting New York’s economy first, Cuomo enacted a ban on hydraulic fracturing, also known as “fracking.” As a result, Upstate New York’s economy continues to suffer from a debilitating economic anemia while states that have embraced fracking experience healthy, growing economies.

Despite a lackluster national economy, states that allow hydraulic fracturing have been bright spots among the blight. According to U.S. Census Bureau Director John H. Thompson, “mining, quarrying, and oil and gas extraction industries were the most rapidly growing part of our nation’s economy over the last several years.” As a result, 903,641 people now earn a living in the U.S. energy sector, where employment grew by 23.3 percent between 2007 and 2012.

None of this growth has occurred in New York, which has effectively banned fracking since 2008, even though the state sits atop the Marcellus Shale—the largest natural-gas producing formation in the United States that accounts for 40 percent of the nation’s shale gas.

It would make some sense if the ban on hydraulic fracturing in New York was based on sound science that shows the costs of fracking outweigh the benefits, but the report produced by the New York Department of Health (DOH) Cuomo used to justify the fracking ban is fraught with bad science that does not hold up to scientific scrutiny.

One of the problematic studies cited in the DOH report is from the Colorado School of Public Health (CSPH), which attempted to establish a connection between birth defects and hydraulic fracturing operations. The study, conducted by Dr. Lisa McKenzie, failed to correct for even the most basic factors, such as genetics or whether the mothers drank alcohol or smoked tobacco.

In addition, the CSPH researchers used proximity to natural gas wells as their metric for risk, failing to distinguish between conventional wells and unconventional wells; there is no way to determine whether the wells in question actually used high-volume hydraulic fracturing.

The study was so poorly conducted the Colorado Department of Public Health and Environment (CDPHE) disavowed it. Larry Wolk, the executive director of CDPHE, told pregnant mothers not to take the study seriously, and he warned the public could be easily misled by its findings. Unfortunately, Cuomo, who defended his decision to ban fracking by stating, “I am not a scientist,” may not have seen Wolk’s comments and thus was easily misled by the conclusions of the CSPH study.

Lawmakers have a responsibility to weigh the costs and the benefits of the policies they implement when based on the best available science, because public policy decisions often have profound effects on our lives. For the highest elected official in New York to base his decision to ban fracking on studies that have been thoroughly debunked by public health officials in other states is a disservice to all New Yorkers.

The evidence from states all around the country is in: Hydraulic fracturing is a safe and environmentally responsible way to increase oil and natural gas production. Cuomo’s fracking ban is like banning vaccines based on the misguided notion they cause autism. It’s an unscientific, discredited, and harmful decision.

Categories: On the Blog

How the California Dream Became a Nightmare

Somewhat Reasonable - March 25, 2015, 9:10 AM

Important attention has been drawn to the shameful condition of middle income housing affordability in California. The state that had earlier earned its own “California Dream” label now limits the dream of homeownership principally to people either fortunate enough to have purchased their homes years ago and to the more affluent. Many middle income residents may have to face the choice of renting permanently or moving away.

However, finally, an important organ of the state has now called attention to the housing affordability problem. The Legislative Analyst’s Office (LAO) has published “California’s High Housing Costs: Causes and Consequences,” which provides a compelling overview of how California’s housing costs have risen to be by far the most unaffordable in the nation. It also sets out the serious consequences.

The LAO says that:

Today, an average California home costs $440,000, about two-and-a-half times the average national home price ($180,000). Also, California’s average monthly rent is about $1,240, 50 percent higher than the rest of the country ($840 per month).

LAO describes the evolution:

Beginning in about 1970, however, the gap between California’s home prices and those in the rest country started to widen. Between 1970 and 1980, California home prices went from 30 percent above U.S. levels to more than 80 percent higher. This trend has continued.

Much of the LAO focus is on California’s coastal counties, where:

….community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction.

These causes result from conscious political decisions. While California’s coastal counties do not have the vast stretches of flat, appropriately developable land that existed 50 years ago, building is increasingly  prohibited on that which remains (for example, Ventura County, northern Los Angeles county and the southern San Jose metropolitan area).

Demonstrating an understanding of economic basics not generally shared by California policymakers or the urban planning community, LAO squarely places the blame on the public policy limits to new housing construction:

This competition bids up home prices and rents.

In other words, where the supply of a demanded good is limited, prices can be expected to rise, other things being equal. LAO describes the impact of so-called “growth control” policies, which are also called “urban containment” or “smart growth:”

Many Coastal Communities Have Growth Controls. Over two-thirds of cities and counties in California’s coastal metros have adopted policies (known as growth controls) explicitly aimed at limiting housing growth. Many policies directly limit growth—for example, by capping the number of new homes that may be built in a given year or limiting building heights and densities. Other policies indirectly limit growth—for example, by requiring a supermajority of local boards to approve housing projects. Research has found that these policies have been effective at limiting growth and consequently increasing housing costs.

According to LAO, the problem is exacerbated by voter initiatives: “More often than not, voters in California’s coastal communities vote to limit housing development when given the option.” It is hard to imagine a more sinister disincentive to aspiration, under which voters can deny equality of opportunity in housing to others by artificially driving up the price.  Because new housing further from coast is also limited, options for a middle income living standard are also diminished.

These public policies have consequences.

Notable and widespread trade-offs include (1) spending a greater share of their income on housing, (2) postponing or foregoing homeownership, (3) living in more crowded housing, (4) commuting further to work each day, and (5) in some cases, choosing to work and live elsewhere

Each of these consequences is described below.

LAO Consequence #1: Spending a Greater Share of Income on Housing

LAO models the market situation from 1980 to 2010 to estimate the prices that would have prevailed if the regulatory environment had permitted building sufficient to satisfy customer demand at previous lower price levels. In both years, LAO estimates that the median priced house would have cost 80% more than in the rest of the nation (actual data in 1980, modeled data in 2010). This would have kept California house price increases at the national level. I think it would have been better to have modeled from 1970, before the huge house prices before 1980 described by Dartmouth economist William Fischel.

I have applied this LAO model estimate to the median multiple for California’s six major metropolitan areas (Los Angeles, San Francisco-Oakland, Riverside-San Bernardino, San Diego, Sacramento, and San Jose) to identify how much better middle income housing affordability would be without California’s excessive regulation. Using the LAO estimates the median multiple (median house price divided by median household income) in 2014 would have been at least 40% lower than the actual level in each of the metropolitan areas (Figure 1).

Many California households already have been priced out of the market. In the worst case, it is estimated that in the San Francisco metropolitan area, a median income White Non-Hispanic household will have nearly $60,000 annually left over after paying the mortgage on the median priced house. This is less than they would have if house prices had remained reasonable, but it’s enough to live on. The median income Asian household would do almost as well, with about $50,000 left over. The median income Hispanic household would have less than $20,000 left, which is considerably less than is likely to be needed for other essentials. The median income Black household would have less than $3,000 left over (Figure 2). If the price ratios of 1980 were controlling, that amount would rise by $16,000.

LAO also points out that the Golden State has the highest housing cost adjusted poverty rate in the nation. The latest data shows housing-adjusted poverty rate is far higher even than that in states with a reputation for grinding poverty. California’s housing adjusted poverty rate is more than 50% higher than that of Mississippi and approaches double that of West Virginia (Figure 3, LAO Figure 13)

LAO Consequence #2:  Postponing or Forgoing Homeownership

LAO indicates that California ranks 48th in homeownership percentage, behind only New York and Nevada. LAO emphasizes the value of home ownership:

Homeownership helps households build wealth, requiring them to amass assets over time. Among homeowners, saving is automatic: every month, part of the mortgage payment reduces the total amount owed and thus becomes the homeowner’s equity. For renters, savings requires voluntarily foregoing near-term spending. Due to this and other economic factors, renter median net worth totaled $5,400 in 2013, a small fraction of the $195,400 median homeowner’s net worth.

Californians are buying their first houses later. LAO indicates that the average first home buyer in California is three years older than the national average.

LAO Consequence #3:  Living in More Crowded Housing

The nation’s worst overcrowding is an unfortunate result of California’s housing policies.

LAO indicates that California’s overcrowding rate is well above that of the rest of the nation’s rate. Among Hispanics, which were expected to exceed the White-Non-Hispanic population in 2014, to become the state’s largest ethnic group, California overcrowding is more than 2.5 times the Hispanic rate elsewhere. Among households with children, overcrowding in California is four times the national households with children rate. Among renters, overcrowding in California is more than three times the national renter rate (Figure 4, LAO Figure 15).

This has important negative social consequences. According to LAO, research indicates that overcrowding retards well-being and educational achievement:

Individuals who live in crowded housing generally have worse educational and behavioral health outcomes than people that do not live in crowded housing. Among adults, crowding has been shown to increase stress and aggression, lead to social isolation, and weaken relationships between parents and their children. Crowding also has particularly notable effects on children. Researchers have found that children in crowded housing score lower on standardized math and reading exams. A lack of available and distraction-free studying space appears to affect educational achievement. Crowding may also result in sleep interruptions that affect mood and behavior. As a result, children in crowded housing also displayed more behavioral problems at school.

Overcrowding is particularly acute in the higher cost coastal metropolitan areas of Los Angeles, San Francisco, San Diego, and San Jose. There, overcrowding among households with children reaches 10%, and among Hispanic households, overcrowding reaches 18%. Among households with children the figure is slightly higher (Figure 5, LAO Figure 16). Overcrowded housing is generally worse, according to LAO, in areas with higher house prices.

In a state with a political establishment that prides itself in watching out for low income citizens and ethnic minorities, the need to reform the responsible policies could not be clearer.

LAO Consequence #4: Commuting Farther to Work

LAO finds that California’s average work trip commuting times are only moderately above the national average. However, LAO suggests that the commute lengthening impact of higher house prices may be reduced by California’s widespread (I call it dispersed) development pattern, its freeway system and the “above-average share of commuters who drive to work. (Driving commutes are generally fast, and therefore metros with higher shares of driving commuters tend to have shorter commute times.)”

Nonetheless, according to LAO:

…our analysis suggests that California’s high housing costs cause workers to live further from where they work, likely because reasonably priced housing options are unavailable in locations nearer to where they work.

LAO Consequence #5:  Choosing to Work and Live Elsewhere

LAO also indicates that California’s high housing prices are likely to have reduced its population (and economic) growth. LAO sites the strong net outmigration of California households to other states. LAO also finds in its national metropolitan area analysis that counties with higher growth rates tend to have better housing affordability than counties with lower growth rates.

There has also been strong net outmigration from the coastal counties to inland counties. This is most evident in the growth of the Riverside-San Bernardino metropolitan area (the Inland Empire) between 2000 and 2010. The Inland Empire captured more than two thirds of the population growth of the Los Angeles Combined Statistical Area (Los Angeles, Orange, Riverside, San Bernardino and Ventura counties). LAO notes the impact of the excess of demand in the coastal counties, again recognizing the nexus between overzealous regulation and the loss of housing affordability:

This competition bids up home prices and rents. Some people who find California’s coast unaffordable turn instead to California’s inland communities, causing prices there to rise as well.

LAO also refers to the difficulty that employers have in retaining and recruiting staff. LAO cited survey data from the Silicon Valley, which has for years been California’s economic “Golden Goose” in recent years:

In a 2014 survey of more than 200 business executives conducted by the Silicon Valley Leadership Group, 72 percent of them cited “housing costs for employees” as the most important challenge facing Silicon Valley businesses.

In addition, there has been a strong movement of California companies to other parts of the nation, where more liberal regulations foster a better business climate.

Restoring Housing Affordability

LAO indicates the importance of fundamental reform and calls for putting “all policy options on the table.”

Major changes to local government land use authority, local finance, CEQA (California Environmental Quality Act), and other major polices would be necessary to address California’s high housing costs.

In addition:

The greatest need for additional housing is in California’s coastal urban areas. We therefore recommend the Legislature focus on what changes are necessary to promote additional housing construction in these areas.

Perhaps the only weakness of the report deals with densification, particularly in coastal counties. For example, LAO suggests that without the housing restrictions the city of San Francisco is population would be 1.7 million, rather than the approximately 800,000 who live there today. In fact that would be unprecedented beyond belief. No core city that had become fully developed and reached 500,000 people by 1950 has achieved growth of this magnitude. The greatest growth was less than 10%, in this category of 60 core cities (which includes the city of San Francisco). Even less likely would be public support for such huge population growth in the second densest major municipality in the nation.

While LAO does not indicate the additional population that its estimates would have placed in the core of Los Angeles, given the scale of the San Francisco increase, this could be a number of up to 3 million. This area, the broadest expanse of over 10,000 population per square mile density in the nation outside New York City is in the middle of the urban area with the nation’s worst traffic congestion, according to the Texas A&M Transportation Institute. It is doubtful that residents would have the “stomach” to expand roadway capacity to keep the traffic moving. Transit could not have made much difference. Even with its now extensive rail network that has opened since the early 1990s, driving alone accounted for 85% of the additional travel to work from 2000 to 2013 in the city of Los Angeles. Yet, the city of Los Angeles has the most extensive transit in the metropolitan area, including service by all rail lines.

In reality, core densification is likely to be modest. Keeping housing affordability from getting worse requires regulatory liberalization throughout California, including coastal and inland areas

The reality is that if California had permitted growth, it would naturally occurred mostly on the periphery. Even with the restrictions on building, the preference for suburban living (largely in detached housing) could not be repressed between 2000 and 2010. Less than 10% of the population growth in the Los Angeles and San Francisco Bay areas occurred in the cores.

The Challenge

Should the state of California begin to seriously discuss housing affordability, it will be important to ease restrictions throughout the state, not just in the coastal counties. There are serious barriers to placing the appropriate priority on improving the standard of living and minimizing poverty rates among California’s diverse population. Perhaps the biggest impediment is Senate Bill 375, which is being interpreted by the state and its regional planning agencies to require even more stringent land-use regulation.

In this environment, LAO rightly raises this concern:

If California continues on its current path, the state’s housing costs will remain high and likely will continue to grow faster than the nation’s. This, in turn, will place substantial burdens on Californians—requiring them to spend more on housing, take on more debt, commute further to work, and live in crowded conditions. Growing housing costs also will place a drag on the state’s economy.

It is to be hoped that California’s distorted policy priorities will be righted to restore the California Dream.

[Originally published at New Geography]

 

Categories: On the Blog

Prop 103’s authors argue for changing Prop 103

Out of the Storm News - March 25, 2015, 9:00 AM

Scottish poets from the 18th Century are rarely credited for their insights into California politics. Yet the architects of Proposition103, California’s 25-year-old attempt to rigidly control prices in the state’s insurance market, would have done well to heed the insight of Robert Burns as they crafted their lamentable brainstorm and sought to leave no angle unaddressed.

In proving foresight may be vain:

The best laid schemes o’ mice an’ men

Gang aft a-gley, [often go awry]

Not unlike Burns’ “mice”, their foresight had its limits.

In an obscure section of the California Insurance Code inserted by Prop 103 lies a provision that inadvertently bucks Prop 103’s otherwise unifying trend, in that it doesn’t hurt California consumers. It is a provision that allows groups to negotiate collectively with insurers to achieve discounts based upon their shared characteristics. This is a good idea, because certain groups have better loss experiences than other policyholders and should pay lower premiums as a result.

The people who receive discounts under this provision are referred to as “affinity groups.” To date, the California Department of Insurance has approved rating plans that include affinity groups.

In spite of the fact that the rates charged to affinity groups enjoy the blessing of the CDI, the authors of Prop 103, Consumer Watchdog, are up in arms. Their complaint is that groups they don’t fancy are receiving lower premiums than they otherwise would on a differentiated basis. The groups who are receiving benefits, in the words of Consumer Watchdog, are:

college graduates who can afford to maintain memberships in an alumni association, people with high paying jobs like doctors, lawyers, and business executives, and other elite members of the 1%.

That politically charged and polarizing class-driven characterization might come as a surprise to the elderly fixed-income AARP members who enjoy more accurate rates. It might also surprise the public-spirited teachers, public safety professionals and members of the military who enjoy affinity group status, since they don’t typically identify as members of the 1 percent.

But those inconvenient truths complicate a simplistic narrative that does more to obfuscate than it does to enlighten. As is often the case, an intentionally partisan and misleading surface-level discussion of who is “deserving” of what rate belies more problematic issues.

First, narrowing the regulatory definition of “group” will deny consumers an opportunity to enjoy rates that more accurately reflect their level of risk – rates that are often lower than what they currently pay.

Second, and not without some irony, attempting to promulgate a definition of the word “group” that meaningfully changes the scope of Prop 103 via the administrative rule-making process violates the very language of the initiative. Instead, to make this change, it is necessary to appeal to either the Legislature or directly to the people.

Bereft of both a sound policy rationale and the governing authority to make this change via administrative action, the ongoing controversy surrounding affinity groups only makes sense in the light of a profound historical embarrassment. The best-laid plans of Prop 103’s drafters, to gain an inimitably complete level of control over California’s insurance market, has gone awry through an action of their own.

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

The myth of the child poker player

Out of the Storm News - March 25, 2015, 8:26 AM

The House Judiciary Subcommittee on Terrorism, Homeland Security and Investigations is scheduled hold hearings today on a federal bill aimed at stopping states from legalized online gambling.

The Restoration of America’s Wire Act comes in response to a 2011 Justice Department memo stating that, apart from sports betting, there is nothing in the federal Wire Act that prevents a state from permitting intrastate online gambling. Since that memo, Nevada, New Jersey and Delaware have set-up regulatory structures to accommodate online gambling (poker only, in Nevada). Players and advocates are watching California closely, although legislation seems stuck amid political fights between the big casino interests, smaller card rooms, tribal casinos and prohibitionists.

Prohibitionists worry that if California’s sizable population gains access to online gambling, online wagering will spread to other states and, consequently would be difficult to reverse. Hence the urgency of their efforts to win federal preemption before that can happen. At the subcommittee hearing, the R Street Institute’s executive director, Andrew Moylan, will be speaking on behalf retaining state sovereignty over gambling regulation.

Andrew’s addition to the speaker list is welcome, considering that the committee’s original line-up consisted completely of online gambling critics and opponents, many relying on inaccurate data and overly emotional appeals.

A favorite tactic has been to present online gambling as a danger to children. This is a go-to message for the Coalition to Stop Internet Gambling, the organization funded heavily by brick-and-mortar casino magnate Sheldon Adelson. It can be seen in these comments from former U.S. Sen. Blanche Lincoln last November on Mike Huckabee’s Fox News show. Adelson’s less articulate, yet more risible, rant at last year’s Global Gaming Expo can be viewed here (hat tip to World Series of Poker’s Nolan Dalla). They are encapsulated most luridly in a coalition video that shows a pre-teen hacking his father’s iPhone to gamble online.

Among the reasons the commercial fails is its focus on the boy’s poor playing decisions, such as doubling down at blackjack too often and going all-in with poor poker hands. It calls to mind dice-player Sky Masterson’s question to anti-gambling crusader Sarah Brown in Guys and Dolls: “Is it wrong to gamble, or only to lose?”

But practically speaking, it’s very hard for a child to play on a gambling site. To begin with, he needs access to funds to play real money games. This is tautological, but it’s surprising how fast it gets overlooked. Even if junior steals dad’s credit card, a feat in and of itself, he has to be able to negotiate an electronic application form and successfully make a deposit. While it’s true that a seven-year-old can intuit enough to play Angry Birds proficiently, filling out an online financial form requires a level of real-world knowledge and experience that most grade-schoolers don’t have. But even if the occasional precocious kid gets through this, he could be tripped up immediately if he deposits too much. Heck, my credit card company calls me when a series of legitimate transactions for clothing and electronics are processed too close together. Even if mom or dad isn’t alerted at the time of the transaction, when they get the first bill, the chips, so to speak, will hit the fan.

The issue of parental responsibility can’t help but come up, mainly because it’s so carefully avoided in these heated calls to “protect the children.” Like porn sites and online music stores, gambling sites can be easily blocked through at-home filtering. And just like with other harmful issues related to online use—bullying, sexting, inappropriate content—parents can talk to their kids about Internet gambling.

Yes, these games are set up to be alluring and addictive. But they can be resisted with emotional control and a sound knowledge of facts. Frankly, I think there’s a great opportunity to use games that employ cards and dice to introduce children to basic concepts such as probability, expected return, risk management and the gambler’s fallacy, especially because what is often mathematically correct is also counterintuitive. For instance, in Monopoly, most players covet the high-rent properties of Boardwalk and Park Place because they yield high payoffs. But in the long run, the mid-range properties in the orange color group (St. James Place and New York and Tennessee Avenues) are the more profitable. The reason has everything to with probability.

Kids naturally get excited about games of chance. When chance is combined with decision-making strategy that can be mathematically calculated, as it is in gambling games such as poker and blackjack, and with sound adult guidance, it offers adolescents a gateway not to vice, but to the true elegance and science of mathematic concepts, ranging from statistical analysis to equilibrium theory and game theory – the stuff Nobel Prizes are made of. The math argument was strong enough that at least one high school—George Mason in Fall Church, Va.—was allowed to start a poker club.

Opponents of online gambling play up the danger angle because it gets attention. Yet when it comes to consumer protection, in contrast to the propaganda, online casinos may do a far better job at preventing underage players, as spelled out here by Marco Valerio in the current issue of Global Gaming Business. It’s an emotional, anecdotal message that should be given little weight. Certainly it does not justify creating yet another federal prohibition.

Contrary to what many believe, there is no federal law against gambling. The Wire Act simply prohibits using telephone and telegraph facilities to place wagers across state lines. In spite of the RAWA bill’s name, there is nothing about the Wire Act to “restore.” States have been regulating gambling since the nation’s founding. There’s no reason to change that.

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

Broad coalition demands NSA surveillance reform

Out of the Storm News - March 25, 2015, 7:30 AM

March 25, 2015

We the undersigned represent a wide range of privacy and human rights advocates, technology companies, and trade associations that hold an equally wide range of positions on the issue of surveillance reform. Many of us have differing views on exactly what reforms must be included in any bill reauthorizing USA PATRIOT Act Section 215, which currently serves as the legal basis for the National Security Agency’s bulk collection of telephone metadata and is set to expire on June 1, 2015. That said, our broad, diverse, and bipartisan coalition believes that the status quo is untenable and that it is urgent that Congress move forward with reform.

Together, we agree that the following elements are essential to any legislative or administration effort to reform our nation’s surveillance laws:

  • There must be a clear, strong and effective end to bulk collection practices under the USA PATRIOT Act, including under the Section 215 records authority and the Section 214 authority regarding pen registers and trap & trace devices. Any collection that does
    occur under those authorities should have appropriate safeguards in place to protect privacy and users’ rights.
  • The bill must contain transparency and accountability mechanisms for both government and company reporting, as well as an appropriate declassification regime for Foreign Intelligence Surveillance Court decisions.

We believe addressing the above must be a part of any reform package, though there are other reforms that our groups and companies would welcome, and in some cases, believe are essential to any legislation. We also urge Congress to avoid adding new mandates that are controversial and could derail reform efforts.

It has been nearly two years since the first news stories revealed the scope of the United States’ surveillance and bulk collection activities. Now is the time to take on meaningful legislative reforms to the nation’s surveillance programs that maintain national security while preserving privacy, transparency, and accountability. We strongly encourage both the White House and members of Congress to support the above reforms and oppose any efforts to enact any legislation that does not address them.

Thank you,

Advocacy for Principled Action in Government
American-Arab Anti-Discrimination Committee
American Association of Law Libraries
American Booksellers for Free Expression
American Civil Liberties Union
American Library Association
Application Developers Alliance
Association of Research Libraries
Brennan Center for Justice
Center for Democracy & Technology
CloudFlare, Inc.
Committee to Protect Journalists
Competitive Enterprise Institute
Computer & Communications Industry Association
The Constitution Project
Constitutional Alliance
Defending Dissent Foundation
DownsizeDC.org, Inc.
Electronic Frontier Foundation
Engine Advocacy
Free Press Action Fund
FreedomWorks
Global Network Initiative
Government Accountability Project
Hackers & Founders
Human Rights Watch
Internet Association
Internet Infrastructure Coalition
Liberty Coalition
Mozilla
National Association of Criminal Defense Lawyers
New America’s Open Technology Institute
Niskanen Center
OpenTheGovernment.org
PEN American Center
Project On Government Oversight
Public Knowledge
R Street
Reform Government Surveillance
ServInt
Silent Circle, LLC
Sonic
TechFreedom
Venture Politics
Wikimedia Foundation
World Press Freedom Committee

Free-market groups urge senators to support the Small Business Regulatory Sunset Act

Out of the Storm News - March 25, 2015, 7:00 AM

Dear Senators,

On behalf of the millions of Americans represented by the organizations below, we urge you to support Sen. Mark Kirk and Sen. Steve Daines’ recently introduced “Small Business Regulatory Sunset Act,” which aims to protect small enterprises from the large and growing costs of regulatory compliance.

According to the National Association of Manufacturers, regulatory compliance for small businesses cost an average of $11,724 per employee in 2012. For small manufacturers, that cost was $34,671. More than 87,000 rules have been issued since 1993, with an average of 3,500 new rules each year, many of which affect small business. In fact, according to analysis by the Competitive Enterprise Institute, if the cost of complying with U.S. regulations were an economy unto itself, it would be the 10th largest in the world, coming in at $1.863 trillion.

This regulatory burden acts as a hidden tax on consumers, who ultimately shoulder the costs. It discourages hiring, sidelining Americans who are struggling to find work, and lowers productivity, as vital resources are wasted adhering to outdated and unnecessary rules.

Despite being authorized to review and update rules affecting small business, most agencies fail to complete this review in an acceptable manner. This ensures the ever-growing list of rules continues to multiply, disproportionately weighing down small entities with fewer available resources. That’s why the Small Business Regulatory Sunset Act is crucial to jump-start economic growth. The act would:

Require agencies to publish on their websites plans to periodically review rules affecting small business;

    • Force agencies to review existing covered rules within nine years of publishing the plan, as well as new and existing rules every nine years thereafter;
    • Require agency reviews to include comment from small entities and assess the cumulative economic impact of the rules, among other criteria;
    • Compel agencies to issue compliance guides for small enterprises;
    • Sunset each new covered rule seven years after the final rule is issued, unless the agency takes action to renew the rule.

Agencies must be held accountable for the toll their actions take on the American economy, particularly those most vulnerable to agency overreach. We applaud Sens. Kirk and Daines for crafting a pragmatic solution and encourage all senators to join him in this effort to protect small business from an overzealous executive branch.Sincerely,

Lori Sanders
R Street Institute

Wayne Crews
Competitive Enterprise Institute

Tom Schatz
Council for Citizens Against Government Waste

Seton Motley
Less Government

Gregory Angelo
Log Cabin Republicans

Pete Sepp
National Taxpayers Union

David Williams
Taxpayers Protection Alliance

Major insurers to strike deal to support compromise TNC language

Out of the Storm News - March 24, 2015, 4:46 PM

For much of the past year, we at R Street have been active in trying to promote reasonable, effective compromise on ride-sharing regulations. The goal all along has been to arrive at a model that allows transportation network companies like Uber, Lyft and Sidecar to operate, ensures that basic coverage requirements are met and preserves the greatest possible flexibility for new insurance products to come to market that meet the needs of this emerging risk.

If the rumblings we’re hearing from a number of state houses across the country prove to be accurate, we’re about to see a major step in that direction.

Today, we learned from sources familiar with the deal that a joint legislative framework for ride-sharing insurance requirements will be supported both by Uber and by State Farm, Farmers, USAA and the American Insurance Association. (Lyft may also soon join the deal). The model already has been discussed in ongoing legislative debates in Tennessee, Maryland, Washington state and Kansas and could be expanded to debates in more states in the coming weeks.

According to 2014 SNL Financial data, State Farm, Farmers and USAA combine to write 33.7 percent of the private auto market in Kansas, 31.5 percent of the market in Tennessee, 31.3 percent of the market in Washington state and 28.2 percent of the market in Maryland. State Farm is also a major writer of commercial auto insurance in all four states, as are a number of AIA members, such as Zurich and Travelers.

Under the model, primary insurance coverage would have to be in-force during all three periods of the ride-sharing experience, including the hotly contested “Period 1,” during which a driver is logged in to the TNC application but has not yet matched with a fare. Required liability limits during that period would be $50,000 in per-person bodily injury, $100,000 in per-incident bodily injury and $25,000 in physical damage.

The model would recommend state law be agnostic about whether the coverage is procured by the TNC, the driver or a combination thereof, so long as consistent terms are applied. That’s a provision we at R Street are particularly happy to see, as the roll-out of new insurance products targeted toward TNC drivers – particularly to cover Period 1 – has been rapidly accelerating. Just this past week, Geico announced plans to introduce its end-to-end TNC product to the Maryland market, one of the states where the model could gain traction.

The coverage limits in Period 2 (when a driver is en route to pick up a passenger) and Period 3 (when a driver is actually traveling with a passenger) would match those currently required of limousines in each state. Importantly, this would mean that comprehensive and collision coverage would not be required, as recently has been proposed in some states.

Insurers also would be ensured a right to subrogation, in cases where they feel they paid out a claim that ought not have been covered. That provision, one hopes, would reduce significantly instances of upfront claims denials, instead moving such disputes to litigation between a driver’s personal insurer and the carrier offering coverage to the TNC.

We haven’t seen the final language, as yet, but this has to be considered good news, both for the health of the insurance market and for the emergence of these exciting new service platforms.

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

The Climate Complex Strikes Back : Blog : Foundation for Economic Education

Environment Suite - In The News - March 24, 2015, 4:25 PM
Climate-change skeptic Willie Soon may be an unethical, corporate-bought climate-change denier or the latest casualty of the Climate-Industrial Complex’s immune…
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