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An Immoral Food-to-Fuel Policy

Somewhat Reasonable - June 04, 2015, 12:49 PM

In the early 2000s, ethanol was touted as the solution to a variety of ills plaguing our nation. As is currently the case, those who worshipped at the altar of ethanol placed their faith in a false idol.

Early in the new millennium, oil prices began to rise and natural gas prices shot up. Doomsayers lacking an understanding of history and economics popped up, as they always do, to proclaim the end of cheap oil was nigh. “Peak oil” pundits ruled the airwaves and editorial pages.

The United States had recently suffered the horrific terrorist attacks of Sept. 11, 2001, and national security analysts decried the nation’s increasing dependence on foreign oil, especially from the often-hostile regions of the world from which the terrorists had sprung.

Meanwhile, environmentalists made great headway among politicians with the argument that emissions from burning fossil fuels were causing dangerous global warming.

This confluence of events made ethanol seem a solution to America’s energy problems, worthy of government subsidies and mandates. Ethanol, a renewable fuel, would reduce greenhouse gas emissions, enhance the nation’s energy independence, and soften the blow from the predicted extinction of oil.

The problem is ethanol can’t do any of that.

Rising oil and gas prices sparked new exploration and a revolution in technology that greatly enhanced hydraulic fracturing and horizontal drilling. These factors produced an oil glut, forcing peak-oil prognosticators back into their bunkers — at least until the next rise in prices.

The United States now imports less oil than it has since the 1970s. In 2013 alone, our proven reserves of natural gas rose 9.7 percent to a record 354 trillion cubic feet, and proven oil reserves increased 9.3 percent to 3.179 billion barrels. For the first time since 1975, U.S. annual oil production exceeded 3.1 billion barrels.

Ethanol was never a viable substitute for the quality or quantity of gasoline American drivers need. Researchers at the University of Minnesota found if every acre of corn was used to produce ethanol, it would supply the equivalent of less than 12 percent of current gasoline use.

Ethanol production and use actually produce more greenhouse gas emissions than gasoline. Because ethanol has less energy content than gasoline, cars and trucks have to use more fuel and thus produce more emissions.

Nonetheless, ethanol use has grown more than 700 percent since 2000 due to the national renewable fuel mandate and subsidies, raising the demand for and price of corn. This has resulted in farmers plowing under more than 23 million acres of pristine land, acreage not previously used in crop production, to plant corn. The Environmental Protection Agency has noted this land conversion and the associated use of agricultural fertilizers and pesticides have released an estimated 236 million metric tons of greenhouse gas emissions annually. More emissions were released from burning ethanol fuels than would have been released with traditional gasoline alone because ethanol production emits 33 percent more greenhouse gases than gasoline.

While the politically induced expansion of ethanol neither produced energy independence nor reduced greenhouse gas emissions, it did have an unintended, harmful impact on the world’s food supply.

As corn prices skyrocketed, farmers switched to corn production from other core crops. U.S. consumers substituted less expensive rice and wheat for corn, increasing prices for wheat and rice. Wheat and rice are staple foods across many regions in Africa and Asia, so the switch by U.S. consumers increased prices for staple foods all over the world.

The International Institute for Sustainable Development notes: “The grain required to fill a 25-gallon gas tank with ethanol can feed one person for a year, so the amount of corn used to make [the government-required] 13 billion gallons of ethanol will not feed the almost 500 million people it was feeding in 2000. In addition, because corn is the most common animal feed and has many other uses in the food industry, the price of milk, cheese, eggs, meat, corn-based sweeteners and cereals increased as well.”

Ultimately, U.S. ethanol policy reversed a long-term trend of the reduction of malnutrition. In 2012, the United States diverted enough corn from food to ethanol to feed 412 million people — more than half of the world’s hungry.

The federal government’s ethanol policy offers nothing of value; the new Congress should end this immoral food-to-fuel insanity.

[Originally published at the Washington Times]
Categories: On the Blog

Raleigh restauranteur pushes local government to regulate sidewalk seating

Out of the Storm News - June 04, 2015, 12:39 PM

From Reason:

Lawmakers (or in this case, a particularly well-situated business owner) frequently cite “safety” or “public good” when advocating restrictions on the sale and consumption of alcohol (or other regulations), but as Kevin Kosar of The R Street Foundation points out, “Myriad regulations bear no relationship to the public good, limit consumer choice and profit the politically well-connected at a cost to the public.”

Heartland Daily Podcast – Gary Stone: Fracking Revolutionizing the Oil and Gas Industry

Somewhat Reasonable - June 04, 2015, 11:55 AM

In today’s edition of The Heartland Daily Podcast, H. Sterling Burnett, managing editor of Environment & Climate News speaks with Gary Stone. Stone is vice-president of engineering at FiveStates Energy in Dallas. In this podcast, Stone discusses the economic and political challenges that face the modern oil and gas industry.

Stone provides an insiders view of the oil and gas industry. He talks about the impact that hydraulic fracturing is having and how it has revolutionized the industry, leading to the benefit of the economy and people in general. Stone also discusses why most of the environmental harms attributed to fracking are myths generated by environmental zealots with little or no basis in reality.

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

Categories: On the Blog

It’s time to raise the oil spill liability cap

Out of the Storm News - June 04, 2015, 11:18 AM

Santa Barbara County is the latest seaside community to watch its coastline dirtied by an all-too-recognizable black sludge. Early estimates project that more than 100,000 gallons of oil have spilled onto Refugio State Beach via a pipe that burst the morning of May 19. To address the spill, Gov. Jerry Brown has declared a state of emergency so that special state funds can be dedicated to the cleanup effort.

As regulators endeavor to discover the cause of the spill and plaintiffs line up to be made whole, it may surprise some that, no matter how much actual damage was caused by the spill, there’s a hard cap on the liability the responsible parties will face.

The oil spill liability cap traces its genesis to the 1990 U.S. Oil Pollution Act. That year, a $75 million cap was placed on the amount of economic damages that a company could be required to pay in the event of a spill. Cleanup costs and fines for breaking environmental laws may be levied on top of that amount. But compared to the true cost of oil spills, the cap represents a windfall for those responsible for oil pollution.

Liability caps may sometimes be necessary to preserve the viability of businesses that are risky but essential. But the $75 million cap on oil spills desperately needs to be raised. In February 2014, the Obama administration proposed to do just that. The Bureau of Ocean Energy Management sought to increase the cap to $134 million, to account for inflation since the cap was imposed a quarter-century ago. In December, the cap increase to $134 million was approved through administrative procedures.

While an encouraging development, the cap on oil spill liability should be higher still, particularly in light of the amount of damage that spills repeatedly have been shown to cause. The most memorable spill of late, the Gulf of Mexico’s Deepwater Horizon spill in 2010, is estimated to have caused $8 billion worth of economic damage. Even the newly raised cap pales in comparison to that amount.

The commonly articulated rationale for increasing the cap, the need for remuneration after a spill, belies a more important reason: deterrence. Civil liability can act to discourage risky behavior. Would wells and pipelines be placed in anything but the safest locations were the cost of an accident borne by those responsible? The cap is, in a sense, a form of too-cheap societal insurance.

Liability caps are a form of subsidy. Like any other subsidy, they distort markets, in this case by signaling that the value of drilling is so great that society as a whole should be willing to take on the risk. The result of shifting the risk is moral hazard, since the firms responsible for oil spills can avoid carrying an otherwise appropriate amount of private insurance. When those firms do not properly account for the real risks they incur, they miss crucial price signals that would otherwise discourage such behavior.

Though it belies convention, there is a free-market solution to oil spills. Raise the oil spill liability cap, substantially, and allow private risk-transfer mechanisms to send the sort of price signals that will deter risky behavior. Failing that, the devastation in Santa Barbara will stand as yet another missed cautionary tale.

The debate over NSA spying is finished. Or is it?

Out of the Storm News - June 04, 2015, 11:14 AM

From Advocates for Self Government:

With the support of hawks in the Senate Republican Conference, McConnell proposed amendments that would have increased the transition period from three to six months, removed essential transparency requirements, and required private companies to notify the federal government if they changed their data retention policies. Each of the amendments failed, falling short of the majority needed for passage.

Nevada Passes Education Savings Accounts to Benefit All Students

Blog - Education - June 04, 2015, 10:15 AM

Image via Edfly Blog

Nevada passed education savings accounts (ESA), which Gov. Brian Sandoval is expected to sign into law. Nevada becomes the first state to allow ESAs in a universal manner where all students and not just those with disabilities can benefit. This bill does the following:

  • Provides parents $5000 into an ESA to attend a private school they choose via the State Treasurer. This money can be used for Tuition, Fees, Textbooks, Tutoring, Distance Learning, Achievement Tests, Transportation (up to $750 per year).
  • Funds students 100% of the $5000 who have disabilities or a household income of less than 185% of the federal poverty level.
  • Funds all other students 90% of the $5000.
  • State Treasurer can deduct no more than 3% for administrative fees.
  • Students and parents are participating will not be identified by the Treasurer, only the list of providers.
  • All students participating must take standardized tests in Math and Language Arts.
  • The independence and autonomy of any private schools will not be infringed upon.
  • Homeshoolers who wish to participate can do so with the same rules as an opt-in student (Section 15.1 and 16.4)

Read the full text of the bill here.

Arizona and Florida were the first 2 states with ESA laws. Both of theirs were limited to students with disabilities. Tennessee will become the third to have ESAs for children with special needs with the Governors signature to after passing an ESA bill in April this year.

Several other states are discussing ESA bills as you can see in the following image from the Edfly Blog.

Image via Edfly Blog

 

Nevada Passes Education Savings Accounts to Benefit All Students

Somewhat Reasonable - June 04, 2015, 10:15 AM

Image via Edfly Blog

Nevada passed education savings accounts (ESA), which Gov. Brian Sandoval is expected to sign into law. Nevada becomes the first state to allow ESAs in a universal manner where all students and not just those with disabilities can benefit. This bill does the following:

  • Provides parents $5000 into an ESA to attend a private school they choose via the State Treasurer. This money can be used for Tuition, Fees, Textbooks, Tutoring, Distance Learning, Achievement Tests, Transportation (up to $750 per year).
  • Funds students 100% of the $5000 who have disabilities or a household income of less than 185% of the federal poverty level.
  • Funds all other students 90% of the $5000.
  • State Treasurer can deduct no more than 3% for administrative fees.
  • Students and parents are participating will not be identified by the Treasurer, only the list of providers.
  • All students participating must take standardized tests in Math and Language Arts.
  • The independence and autonomy of any private schools will not be infringed upon.
  • Homeshoolers who wish to participate can do so with the same rules as an opt-in student (Section 15.1 and 16.4)

Read the full text of the bill here.

Arizona and Florida were the first 2 states with ESA laws. Both of theirs were limited to students with disabilities. Tennessee will become the third to have ESAs for children with special needs with the Governors signature to after passing an ESA bill in April this year.

Several other states are discussing ESA bills as you can see in the following image from the Edfly Blog.

Image via Edfly Blog

 

Categories: On the Blog

New Eurobarometer report supports the ‘Swedish Miracle’

Out of the Storm News - June 04, 2015, 8:56 AM

How can the European Union continue to deny Sweden’s success in tobacco harm reduction?  I have documented how Swedish snus has contributed to that country’s world-record-low rates of smoking (here and here) and smoking-related deaths – rates that would translate into hundreds of thousands of lives saved if snus were not banned in the rest of Europe (here and here).

The EU’s  European Commission persists in ignoring a growing number of international tobacco research and policy experts. Perhaps a new report by Eurobarometer, the EU’s official survey organization, will force a policy change.

The 200+ page report analyzes tobacco prevalence and consumption, including cigarettes, snus and e-cigarettes, across all EU countries. Its findings substantiate the dire consequences of the EU’s misguided ban on snus.

The following table of reported key smoking indicators clearly demonstrates the effect of the Swedish snus experience.  Sweden has the lowest smoking prevalence, at 11 percent — less than half the 26 percent prevalence throughout the EU and eight points lower than second-place Finland. Sweden also leads the EU in prevalence of former smoking, at 35 percent.  It is the only country in the EU with cigarette consumption among smokers of less than 10 per day.  The reason is obvious: half of Swedes have “ever tried…oral tobacco (snus), chewing or nasal tobacco.”

Tobacco Use in Sweden Versus the Rest of the European Union, 2014 EU Country Current Smoking (%) Former Smoking (%) Cigarettes Per Day Ever Tried Oral, Nasal Tobacco (%) Sweden 11 35 9.9 50 Finland 19 24 13.5 14 Malta 20 19 14.8 1 Luxembourg 21 22 12.8 7 Italy 21 16 13.2 3 Ireland 21 19 13.9 5 Slovakia 21 16 12.5 4 United Kingdom 22 19 14.3 4 Estonia 22 21 11.5 10 Denmark 23 30 13.3 13 Netherlands 23 31 11.4 4 Belgium 25 19 14.1 5 Portugal 25 12 14.9 2 Czech Republic 25 18 14.3 9 Lithuania 26 18 12.1 5 Austria 26 17 19.8 10 Germany 27 22 15.3 9 Romania 27 13 14.2 1 Poland 28 15 15.6 5 Spain 29 19 13.7 2 Slovenia 30 18 16.5 6 Latvia 30 21 12.7 8 Hungary 30 11 16.1 3 Cyprus 31 15 19.5 2 France 32 22 13.0 4 Croatia 33 16 16.7 3 Bulgaria 35 16 15.6 2 Greece 38 21 19.5 1 EU 26 20 14.4 5

Intriguing numbers are also supplied from Finland.  That nation has the second-lowest smoking rate (19 percent) and the second-highest proportion of residents who have ever used smokeless tobacco (14 percent).  It is widely known that snus use remains popular in Finland.  In fact, snus importation increased last year, even though the product officially has been prohibited since Finland joined the EU in 1995.  Research shows Finnish smoking rates would have declined even more if snus sales had not been banned.

Some suggest that would have no appeal outside of Sweden, but the product is clearly popular in Finland and in Denmark. Last year, the EU sued Denmark for permitting snus sales. Also popular among Danes is a chewing tobacco product, Oliver Twist, another effective cigarette substitute and one that is legal in the EU.  The Eurobarometer numbers show that snus could work in Austria, Estonia and several other countries that have populations with smokeless tobacco experience.

Keep in mind that the differences in snus and smoking rates noted here would have been even more impressive if Eurobarometer had separately reported men’s and women’s numbers.  The snus experience has primarily affected smoking rates among Swedish men, although snus use also has been linked to smoking cessation in Swedish women.

The EU should take its head out of the sand and dissolve its unhealthy snus ban.

Feds Releasing Patient Care Outcomes Data, Creating New Niche for Health Entrepreneurs

Somewhat Reasonable - June 04, 2015, 8:11 AM

The feds are making patient outcome data from Medicare and Medicaid available to health IT entrepreneurs — a first.

The federal government this week disclosed that it is making its data on patient care outcomes available for commercial use, though individual patient profiles will still remain private. The goal – giving commercial companies access to the health care information to improve patient outcomes. Informatics, or health IT, is a locus of innovation in health care.

“We do this with the clear expectation that you [health IT entrepreneurs] will create new streams of tools to improve care,” said Andy Slavitt, the acting director of the Centers for Medicare and Medicaid Services (CMS), a unit of the U.S. Department of Health and Human Services (HHS).

Previously, CMS data has only been available to researchers not intending to develop commercial products, but now will be made available to all health IT and informatics entrepreneurs, The news was released at the Health Datapalooza conference.

The CMS director Slavitt noted that the data would not permit identification of patients, but would provide the identity of providers of care. The agency, in September 2015, will start accepting research requests for the data.

Data can be located through CMS’s Virtual Research Data Center, where data for Medicare fee-for-service claims and other programs is stored. Researchers will have direct access to approved data files and will conduct analysis within a secure CMS environment, the agency said

“Researchers will not be permitted to remove patient-level data from the Virtual Research Data Center, but will be able to download aggregated, privacy-protected reports and results to their own person workstation,” said Slavitt.

Categories: On the Blog

Stacey Edington

Out of the Storm News - June 03, 2015, 7:16 PM

Stacey Edington is administrative assistant for the R Street Institute.

Stacey’s background is as a leasing agent and community manager in the property management and student housing sectors. She also did a four-month stint as a Peace Corps volunteer in Tanzania and is proficient in the Kiswahili language.

An Ohio native, she has a bachelor’s in psychology from the University of Cincinnati. She enjoys beaches, Nigerian music and city life in the District of Columbia area.

Email: sedington@rstreet.org

Pipeline Lack Hurts Energy Production

Somewhat Reasonable - June 03, 2015, 3:23 PM

Thanks to what’s sometimes called the “shale revolution,” America has re-emerged as an energy superpower.

Even with prices 40 percent lower than a year ago, we remain the world’s No. 1 producer of crude oil and other liquid hydrocarbons. Imports of oil have dropped from 60 percent of consumption to about 35 percent just in the past five years. We’re also the world’s largest producer of natural gas.

Both our oil and natural gas output would be even higher if not for regulatory and infrastructure constraints.

For example, crude oil exports have been virtually prohibited by law for more than 40 years while federal regulatory agencies have been slow to issue permits for the export of liquefied natural gas (LNG).

Drilling for oil and gas on the outer continental shelf and federal lands is largely prohibited, while several states and local governments have imposed bans on hydraulic fracturing.

The Jones Act, which requires all goods shipped between U.S. ports be carried on American-built, owned and operated vessels, makes it more expensive to ship petroleum products from Corpus Christi to New Jersey than from Corpus Christi to Rotterdam.

But the most serious nonregulatory constraint on expansion of America’s oil and gas production — other than low prices — is a lack of pipeline capacity, both upstream and downstream.

For example, as production of natural gas has surged in the Marcellus and Utica shales of the Northeast, investment in pipeline and processing plant infrastructure has lagged. Consequently, Marcellus gas sells at up to a 50 percent discount to the national benchmark at Henry Hub, a distribution hub on the natural gas pipeline system in Erath, La.

Although 10 new pipelines have been proposed to alleviate these takeaway constraints, the projects will take years to complete and some may never materialize because of pushback from environmentalists and the difficulty of securing long-term supply agreements with electric utilities.

In terms of downstream bottlenecks, President Obama’s veto of the Keystone XL pipeline is perhaps the most egregious example.

Opposition from environmentalists and aboriginal groups has also stalled the Enbridge Northern Gateway project in western Canada, while another Canadian aboriginal group recently turned down a $1 billion fee to help push through a proposed gas pipeline and LNG terminal in British Columbia.

A proposed dual pipeline between Albany, N.Y., and Linden, N.J., that would transport Bakken crude oil south and refined products north also faces environmental and community opposition.

This lack of pipeline capacity helps explain why so much crude oil is now moving by rail tanker car. In 2008, only about 10 million barrels of oil were transported by rail. Last year’s volumes exceeded 300 million.

Though this growth has been a boon to the rail industry, moving crude oil long distances by train is more expensive than by pipeline, and spill rates are considerably higher.

Oil transport by rail is also under fire from environmentalists, with seven groups filing a lawsuit on May 14 challenging recently issued safety rules for trains hauling oil.

Despite projected expansion of renewable energy sources and pushback from anti-hydrocarbon groups, the U.S. Department of Energy, in its latest Quadrennial Energy Review, predicts we’ll still be dependent on oil and natural gas to meet more than 60 percent of our energy needs in 2040.

Because of our prolific shale plays, we should be able to supply virtually all of our future consumption from domestic sources. But this won’t happen unless we make the requisite investments in essential infrastructure, especially pipelines.

Each year, our pipelines safely carry more than 14 billion barrels of crude oil and trillions of cubic feet of natural gas. Upgrading and expanding both upstream and downstream pipeline networks can help sustain our energy renaissance while creating thousands of new jobs.

On the other hand, not investing in pipeline infrastructure will stifle energy growth, leave us vulnerable to supply disruptions, and weaken energy security.

[Originally published at the Star-Telegram]

 

Categories: On the Blog

Keynesian Medicines are Not a Cure for China’s Ills

Somewhat Reasonable - June 03, 2015, 3:10 PM

Keynesians never seem to learn. Every time an economy slows down or reverses gears and “goes negative,” in terms of growth and employment, their only answer is a call for “aggregate demand” stimulus and more government spending manipulation.

An example of this is a recent article by Washington Post columnist, Robert Samuelson raising the question, “China’s Coming Crash?” (May 24, 2015). Samuelson summarizes the economic data behind the apparent economic slowdown in the Chinese economy.

Gross Domestic Product growth in China has decreased from its sizzling annual rates of 10 percent to seven percent or less. The Chinese housing market has seen significant price declines. And government debt at local levels has exploded in recent years from six percent of GDP less than ten years ago to more than 33 percent by 2013, putting a drag on government spending.

The American media have had numerous articles about high-rise residential housing complexes in China that run for miles along the highways that are hardly occupied; or “ghost cities” with shopping malls that stand eerily empty; or industrial plants that have disproportional unused production capacity; or infrastructure construction projects funded by municipal, provincial and national government spending binges that often seem to have no rationality other than expenditures to generate production and employment for anything.

China’s Twisted Economy Seen Close Up

Over the last three years I’ve traveled to China twice and had a chance to see some of this close up. And there is very little, if anything, that is exaggerated in these news reports. Many different “supplies” in the Chinese economy are way out of balance with a wide variety of actual “demands.”

For example, in the industrial city of Wuxi, about 90 miles west of Shanghai, the city government zoned and subsidized a huge complex of dozens of restaurants one right after another along the famous Grand Canal. Nicely built, one establishment next to the other with a touch of traditional Chinese architectural style, they offer plenty of alternative dishes of Chinese cuisine.

There is only one problem. Whether you go out for a meal on a weekday evening or on the weekend, few of them are even half occupied with customers and others seem to be practically empty all the time. A concentrated complex of high-end dining establishments constructed according to government plan, with little thought, clearly, to either the amount of consumer demand or their potential profitability.

A construction boom in Wuxi saw the destruction of entire neighborhoods of people’s small shops and residential homes to make way for skyscraper business office buildings, with no hesitation to evict property owners and their families without any financial compensation under the Chinese version of “eminent domain.” Businesses with “good connections” to the municipal and provincial governments wanted the land for their construction projects and the previous occupants and owners were left out on their own.

The high rise apartment complexes that dot the skyline in and around Wuxi all got the “go ahead” for the companies constructing them by giving free or heavily discounted sets of posh apartments, once they were built, to the politicians and bureaucrats with whom they wheel and deal. These “servants of the people” would then give these sets of apartments to their family members or turn around and try to sell them for prices far above the “discount” at which they obtained them for their crony business associates.

The apartment complexes as a whole often stand 70 to 80 percent unoccupied, being priced far beyond what most of the surrounding population of ordinary Chinese can afford to pay as rent or condominium costs to purchase them from the companies that have built them.

All of this was fed by cheap credit financed by monetary expansion by the Chinese central bank and with tax breaks or subsidies from the central or local governments. The Chinese version of “capitalism” is a twisted and corrupt political game of privilege, power, connections, bribes, and manipulation to feather the financial nests of local politicians, Communist Party members, and ministry bureaucrats with power and clout to determine where government money is spent and who has access to politically directed loans supplied with paper money at artificially lower rates of interest.

China’s Crony Capitalism Serves Privilege and Power

It has served two purposes: privilege and power. After the death of Mao Zedong in 1976, the new Chinese Communist Party leader, Deng Xiaoping, said that it was “glorious to be rich” and it did not matter what color a cat might be as long as it could catch mice.

Permitting growing degrees of market-based arrangements to emerge with limited private property rights after decades of strict socialist central planning under Chairman Mao has allowed hundreds of millions of Chinese to escape from centuries of poverty and hardship. It has demonstrated that even a little bit of capitalism, no matter how impure and imperfect, goes along way in improving the lives of ordinary people.

But for the Communist Party hierarchy and the bureaucracy through which their control is manifested, it has allowed their own privileged enrichment through corrupt deals, government-business “partnerships” and favors and perks for determining where and in what form the post-Mao political plundering would operate.

At the same time that it has created wealth that has alleviated the impoverished condition of multitudes of Chinese, it has generated the “fat” that has enlarged the bounty to be extracted from the producers by those in political control.

The creation of wealth also has been the way to maintain and solidify the power of the Communist Party. What does it matter what the color of the cat is – “capitalism” or “socialism” – as long as it serves as an institutional method for the Chinese Communist Party to rationalize and justify its hold on power as the “leadership” without which the improvement in the condition of “the people” would not have been possible?

Censoring Information to Control Minds

At the same time, the Party has used that power to manipulate, control and restrict sources of information and access to non-governmental news. Sitting in my hotel rooms in China, regardless where in the country, an attempt to access on my computer certain “Western” search engines or websites on the internet either were impossible to connect to or were cut off after a brief moment.

Flipping among the television channels in my hotel rooms, the monotonous content of most of the movies at night did not require knowledge of the Chinese language. One movie after another was about the heroic People’s Liberation Army’s fight against the murderous Japanese invaders during the Second World War.

Self-sacrificing Chinese men and women partisans fighting behind Japanese lines give each other yearning looks of romantic desire, in the films, as they forgo their personal desire to, instead, go and die for “the people” against the evil Japanese occupiers.

The Japanese were cruel and murderous in their invasion of China in the 1930s and 1940s. It is estimated that at least 10 million Chinese civilians died in the war. But it was clear to me that these films, repeated in an unending stream on the televisions of hundreds of millions of Chinese homes, are meant as propaganda tools to legitimize the history of the right to rule by the Communist Party.

Mao’s communist Red Army and guerilla forces are portrayed as the defenders against the foreign invaders; while the members of the, then, non-communist Nationalist (or Kuomintang) Chinese government headquartered in the wartime capital of Chungking far up the Yangtze River are shown as corrupt and filled with traitors unwilling to fight or collaborating with the Japanese.

Creating Jobs, Any Jobs, Considered the Basis of Communist Legitimacy

But while militaristic and ideological propaganda are essential political tools for the justification of communist monopoly rule in China, in the eyes of the Party leadership, it is the promise and delivery of jobs and an improved standard of living for “the masses” that is crucial to prevent anger or resistance to the existing political order and regime within the country. In other words, a growing economy is the Chinese version of “bread and circuses” to keep the unruly mob passive and obedient.

That is why, as the Financial Times reported in May, the Chinese government has ordered banks to provide funding to insolvent or potentially bankrupt businesses and municipal “public works” projects for which the tax revenues are insufficient to support locally. Explained the Financial Times (May 15, 2015):

“China has ordered its banks to prop up insolvent provincial government projects, in the latest effort to support rapidly cooling growth and put off dealing with the mountain of debt that has built up in the past six years.

“Authorities told financial institutions to keep lending to local government projects even if the borrowers are unable to make principal or interest payments on existing loans.

“The directive, issued jointly by the finance ministry, banking regulator and central bank, highlights the challenges facing China as it struggles to deal with the massive volume of debt left in the wake of its post-crisis stimulus, amid a sharply slowing economy.

“It explicitly banned financial institutions from cutting off or delaying funding to any local government project started before the end of last year and said any projects that are unable to repay existing loans should have their debt renegotiated and extended.

“The directive issued on Friday also said that if existing projects could not be finished with the loans they already have then they should look first to private sector investors and then to local governments, who are required to raise the money by selling bonds.”

Keynesian Demand Management to “Solution” to China’s Problems

And this gets us back to Robert Samuelson’s diagnosis and prescription in the Washington Post for what economically ails China.

The Chinese economy, he says, is suffering from over-investment and under-consumption. If the investment boom cannot be prolonged, then the answer to a threatened falling off of capital projects and jobs in that part of the economy is consumption stimulation.

You see, according to Samuelson, the Chinese save too much and spend too little. The government needs to introduce more of the welfare state: “China needs to strengthen the social safety net so that people can save less to meet personal disasters.”

This is an old Keynesian song – a broken record, in fact, that keeps going ‘round and ‘round. Saving is a drag on the economy, while consumption spending is the source of “aggregate demand” that fosters production and employment.

China is not suffering from insufficient consumer spending. What the Chinese economy is experiencing is a vast misdirection of capital and labor caused by political directives, below market-based rates of interest, and huge monetary expansion.

Government-Created Malinvestment is the Cause of China’s Problems

It is not that there has been too much investment in China; rather it is a problem of the wrong types of investments – malinvestments– in unsustainable capital projects and enterprises. Precisely because China’s is a politically twisted market and not a competitive free market, government mismanagement and unworkable planning has resulted in mismatches between supplies and demands.

Investments undertaken have been in the wrong places, in the wrong amounts, and involving the wrong durations of time to complete and maintain in terms of long-term profitability, and in terms of producing the types and quantities of final goods that consumers actually are willing, able and desirous to buy.

Attempting to either prop up projects and employments that are underlyingly unprofitable, the way the Chinese government is reported to be trying to do, or to follow Robert Samuelson’s Keynesian policy prescription to “stimulate” consumer demand by more government guarantees and spending on the welfare state to substitute for private savings, will merely superimpose on the existing distortions and imbalances another set of layers of misdirected investments, capital projects and employments that cannot be sustained in the longer-run.

Savings Makes Investment, Production and Jobs Possible

Savings is not the “enemy” of progress, prosperity and employment. Quite to the contrary. Savings is essential to provide the resources and finances to undertake time-consuming capital projects that increase output, raise productivity, and enable the employment of workers during the periods of production leading up to the finishing and sale of products that may recoup the costs of investment and production.

What is destabilizing are government interferences with markets and prices – including financial markets and interest rates – that when allowed to function in free and competitive ways assure that investment does match savings (regardless of how much income earners may be deciding to save), and that what is produced is tending to reflect what consumers actually want and desire to buy, and are willing to pay for.

The potential economic crisis in China is not a “failure of capitalism” or proof of insufficient consumer “aggregate demand” as the Keynesians would claim. It is, instead, another case study in the failure of government intervention and political distortions introduced into heavily regulated and managed markets.

Free Markets are the Cure for Economic Imbalance

The cure for such imbalances in supply and demand, in mismatched relationships between savings and investment, and the misdirection of capital and employment due to government’s misplaced hand in market activity is the same whether in China, America, France, Japan, or Greece.

Markets must be left free to sort out the mismatches and distortions so to rebalance the patterns of production and supply for a proper coordination with non-manipulated consumer demand and actual available savings to support and sustain profitable capital projects.

No doubt and unfortunately, the Chinese and the world will be witness to another episode of wrong government monetary, fiscal and interventionist policies that prolong the agony, delay or prevent the market cures, and set the stage for a future cycle of another artificial boom followed by another inescapable bust.

[Originally published at Epic Times]

 

Categories: On the Blog

Obamacare’s Muse: The UK’s NHS

Somewhat Reasonable - June 03, 2015, 2:03 PM

As I previously discussed in Townhall Finance, real and sustainable private investment is being held back in large part due to the regime uncertainty caused by such regulations as Dodd-FrankObamacare and climate change. In fact, I first pointed this out publicly as one of the guest speakers at a large Tea Party rally on Tax Day 2010 in Appleton WI.

Given the large and rising costs of healthcare in the US (eg 17.9% of GDP in 2014, up 5% from 1999), it is understandable that many Americans voted for reform. But Obamacare will only make the already government-centric American system even worse in terms of costs, prices, quality, innovation and care (including more bureaucratic rationing).

If Obamacare is not repealed and replaced by a more free market style system, then it will over time become more and more like its inspiration or muse of the UK’s National Health Service (NHS) … where each regulatory failure calls forthmore regulation ad infinitum. As a late great economist once pointed out in the context of Hillarycare:

“On the free market, the consumer is ‘king or queen’ and the providers are always trying to make profits and gain customers by serving them well. But when government operates a service, the consumer is transmuted into a ‘pain-in-the-neck’, a ‘wasteful’ user-up of scarce social resources.” – Murray N. Rothbard

It thus seems appropriate to revisit the NHS. In doing this, I not only can offer my perspective as an economist but also as a patient of the NHS in the late 2000s. I have also been a patient of the US health care system in the 2010s, and of the Australian system for many years from the late 1980s. Although all three systems are far from perfect, the UK’s is a distant third place in my experience, including (no doubt surprisingly to most American liberals) the pervasiveness of ‘cold and uncaring’ NHS staff that I encountered from almost day one in the UK.

The NHS has for many years been referred to glowingly by the US liberal elite. One of these admirers of the NHS is former Obama ‘technocrat’ at the Centers for Medicare and Medicaid Services (CMS), Dr Donald Berwick.

Dr Berwick has described the NHS as: “universal, accessible, excellent, and free at the point of care – a health system that is, at its core, like the world we wish we had: generous, hopeful, confident, joyous, and just.” And he added: “I am romantic about the NHS; I love it.” Perhaps this ‘love affair’ with the NHS is driven by his belief that: “Any health care funding plan that is just, equitable, civilized and humane must redistribute wealth from the richer among us to the poorer and the less fortunate. Excellent health care is by definition, redistributional.”

The NHS has its origins in the rise of western Progressivism (such as UK Fabian Socialism) and Imperial Germany’s mandated health insurance from the 1880s onwards. Again we can see the ‘Bootleggers and Baptists” phenomenon in action, with the ‘Progressives’ and ‘Fabians’ playing the role of the ‘Baptists’ and with the ‘Iron Chancellor of Germany’ and his cronies as the ‘Bootleggers’.

The NHS came into being in the late 1940s, with the express goal of providing the best and most up-to-date health care services available to anyone who wanted it free-of-charge. It was to do this by essentially nationalizing the entire health care sector in the UK. The NHS has since then grown to be the largest employer in Europe, employing more than one million people.

As demand is not constrained by market prices, the NHS has mainly resorted to rationing of services in the face of excess demand, which has resulted in the NHS’ infamous queuing. As Michael Tanner of the Cato Institute has previously highlighted, as many as 750,000 Britons were awaiting admission to NHS hospitals in 2007. Cancer patients, for example, can wait as long as 8 months for treatment resulting in nearly 20% of colon cancer patients, considered treatable when first diagnosed, being incurable by the time treatment is finally offered. The waiting times for many other less urgent procedures have usually been measured in months, with one in eight patients still waiting more than a year.

Less obvious than the quantity of services provided, is the non-stop rising costs to the British taxpayer. Dr Helen Evans of the UK’s Nurses for Reform pointed out that, even in between the 1944 ‘White Paper’ and the 1948 start of the NHS, the budget was already being revised upwards by nearly 75%. In its first year of operation, the NHS actually costed over 230% more than originally estimated. The main driver behind these cost overruns was the assumption that demand would remain roughly constant despite services being delivered ‘free’ at the point-of-use. Nominal charges have been introduced over the years, with negligible impact.

Capital investment in new, expanded and renovated hospitals was minimal until the great ‘Hospital Plan’ of the early 1960s. In fact, a significant proportion of the inherited NHS hospitals predated the First World War and, despite this, not a single new hospital was built during the first decade of the NHS. The ‘Plan’ aimed, over the course of a decade or more, to build 90 new hospitals, drastically remodel 134 more and provide 356 further improvement schemes. Even by the 1990s the ‘Plan’ remained unfulfilled, with only a third of the projects completed and a third not yet started.

Of course, the news headlines are more so dominated by quality of service issues. As of 2008 in many NHS hospitals, more than 10% of patients were picking up infections and illnesses they did not have prior to being admitted. And up to 60% of NHS hospital patients could be undernourished during inpatient stays.

All of these worrying themes have continued unabated through to the present. Despite all of this, the NHS is still a ‘sacred cow’ in the UK, and the prospects for even minor free market friendly reforms in the foreseeable future are still very slim indeed.

Given the benchmark of the NHS, the future of Obamacare is perhaps best encapsulated by two former HHS ‘apparatchiks’ who purportedly said:

“National Health Insurance means combining the efficiency of the Postal Service with the compassion of the IRS … and the cost accounting of the Pentagon.” – Dr Louis Sullivan & Constance Horner

[Originally published at TownHall]

 

Categories: On the Blog

Heartland Daily Podcast – Jeff Stier: FDA vs. E-Cigarettes

Somewhat Reasonable - June 03, 2015, 1:39 PM

In today’s edition of The Heartland Institute Daily Podcast, Kenneth Artz, managing editor of Health Care News speaks with Jeff Stier. Stier, a senior fellow at the National Center for Public Policy Research in Washington D.C., heads their risk analysis division.  In this podcast, Artz and Stier discuss the U.S. Food and Drug Administration’s (FDA) proposed rule that would extend the agency’s authority over tobacco products to include e-cigarettes.

Under the proposed rule, the FDA would have authority over e-cigarettes despite the fact that the devices have been widely touted as successful smoking cessation products by many scientists and doctors. Stier explains why this is an issue that should concern not only users of e-cigarettes, but all those who advocate free markets.

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

Categories: On the Blog

Common Core: Quick Guide to the 2016 Candidates

Blog - Education - June 03, 2015, 1:35 PM

New Jersey Gov. Chris Christie (R) has reversed course on Common Core State Standards and is calling for a review of the standards by a group of teachers and parents.

“It is time to have standards that are even higher and come directly from our own communities,” Christie said in a speech at Burlington County College. “In my view, this new era can be even greater by adopting new standards right here in our state – not 200 miles away on the banks of the Potomac River.”

This is after Christie was completely on board with Common Core in 2013: “We’re doing Common Core in New Jersey and we’re going to continue. And this is one of those areas where I’ve agreed more with the president than not, and with Secretary [Arne] Duncan. They haven’t been perfect on this but they’ve been better than a lot of folks have been in terms of the reform movement.”

With Christie apparently abandoning Common Core, where do the other presidential candidates stand on the issue?

The chart below is a quick overview of the candidates current positions. The comments from the candidates on Common Core are below for further reading.

Jeb Bush

“In my view, the rigor of the Common Core State Standards must be the new minimum in classrooms,” Bush said. He challenged critics, saying, “For those states choosing a path other than Common Core, I say this: Aim even higher, be bolder, raise standards and ask more of our students and the system.”

Ben Carson

“Common Core is not school choice. I do believe in standards, but those standards obviously are set by parents and people who do home schooling or they wouldn’t be doing so well.”

Hillary Clinton

“Wow, that is a powerful, touching comment that I absolutely embrace. You know when I think about the really unfortunate argument going on around Common Core, it’s very painful because the Common Core started off as a bipartisan effort, it was actually non-partisan.”

Ted Cruz

“We should repeal every word of Common Core,” he said. “We should get the federal government out of the business of curriculum.”

Carly Fiorina

“America’s future prosperity requires that changes be made to Common Core. The facts are pretty clear, the bigger our education department becomes, the worse our public education becomes. There’s no connection between spending more money in our nation’s capital and a better school system. Parents should be given choice, competition, and accountability in the classroom.”

Mike Huckabee

May 2013
“Parents and people involved in their local schools should let it be known that core standards are valuable, and they’re not something to be afraid of—they are something to embrace.”

August 2013
“Rebrand it, refocus it, but don’t retreat.”

May 6, 2015 – Twitter
“Kill Common Core. Restore common sense.”

Bobby Jindal

Prior
Implemented Common Core in Lousiana

March 18, 2015 Press Release
“This legislation will help us get Common Core out of Louisiana once and for all. We will not accept this one-sized-fits-all approach to our children’s education. The package of legislation will make clear that the federal government or third parties do not have control over Louisiana’s schools, and help ensure that Louisiana parents and teachers create Louisiana standards and curriculum.”

John Kasich

“The Common Core was written by state education superintendents and local principals in my state of Ohio. We want higher standards for our children and those standards are set, and the curriculum is set by local school board. Barack Obama doesn’t set it. The State of Ohio doesn’t set it. It is local school boards driving better education, higher standards, created by local school boards.”

Martin O’Malley

“That’s why we are choosing to adopt the Common Core Standards. New curricula that will prepare our kids to winners in a global economy.”

Rand Paul

“President Obama has been focused on nationalizing what is taught in each of our nation’s schools since he was sworn into office. The President’s flagship ‘Race to the Top’ competitive grant program was used to entice states to adopt the K–12 standards developed by a joint project of the National Governors Association and the Council of Chief State School Officers. Also, in the President’s 2009 Blueprint for Education Reform, it is suggested that the adoption of these common standards could one day be a qualification for states wanting future Title I dollars for low-income schools.”

“I have many concerns about the constitutionality and transparency of the Common Core State Standards Initiative as well as the loss of local control of curriculum and instruction.”

Rick Perry

“Common Core has got to be stopped in this country.”

Marco Rubio

“Common Core started out as a well-intentioned effort to develop more rigorous curriculum standards. However, it is increasingly being used by the Obama administration to turn the Department of Education into what is effectively a national school board. This effort to coerce states into adhering to national curriculum standards is not the best way to help our children attain the best education.”

Bernie Sanders

Mr. Sanders has not given much public indication on whether he supports Common Core. It appears he does support it by voting against a budget amendment that would have allowed states to opt-out of the standards without facing a financial penalty from the federal government.

From Sen. Sanders senate website on the revamped No Child Left Behind (NCLB):
“The most punitive and restrictive requirements of No Child Left Behind are removed from this bill. This new legislation eliminates the “adequate yearly progress” requirement so that there is less pressure to “teach to the test.” It supports states, like Vermont, that have adopted the Common Core Standards so students are taught the skills they need to be in college and career ready.”

Rick Santorum

“We don’t need educational standards, or Common Core, to tell America how to educate our children.”

Scott Walker

Prior
Implemented Common Core in Wisconsin

July, 2014
“Today, I call on the members of the state Legislature to pass a bill in early January to repeal Common Core and replace it with standards set by people in Wisconsin.”

 

Common Core: Quick Guide to the 2016 Candidates

Somewhat Reasonable - June 03, 2015, 1:35 PM

New Jersey Gov. Chris Christie (R) has reversed course on Common Core State Standards and is calling for a review of the standards by a group of teachers and parents.

“It is time to have standards that are even higher and come directly from our own communities,” Christie said in a speech at Burlington County College. “In my view, this new era can be even greater by adopting new standards right here in our state – not 200 miles away on the banks of the Potomac River.”

This is after Christie was completely on board with Common Core in 2013: “We’re doing Common Core in New Jersey and we’re going to continue. And this is one of those areas where I’ve agreed more with the president than not, and with Secretary [Arne] Duncan. They haven’t been perfect on this but they’ve been better than a lot of folks have been in terms of the reform movement.”

With Christie apparently abandoning Common Core, where do the other presidential candidates stand on the issue?

The chart below is a quick overview of the candidates current positions. The comments from the candidates on Common Core are below for further reading.

Jeb Bush

“In my view, the rigor of the Common Core State Standards must be the new minimum in classrooms,” Bush said. He challenged critics, saying, “For those states choosing a path other than Common Core, I say this: Aim even higher, be bolder, raise standards and ask more of our students and the system.”

Ben Carson

“Common Core is not school choice. I do believe in standards, but those standards obviously are set by parents and people who do home schooling or they wouldn’t be doing so well.”

Hillary Clinton

“Wow, that is a powerful, touching comment that I absolutely embrace. You know when I think about the really unfortunate argument going on around Common Core, it’s very painful because the Common Core started off as a bipartisan effort, it was actually non-partisan.”

Ted Cruz

“We should repeal every word of Common Core,” he said. “We should get the federal government out of the business of curriculum.”

Carly Fiorina

“America’s future prosperity requires that changes be made to Common Core. The facts are pretty clear, the bigger our education department becomes, the worse our public education becomes. There’s no connection between spending more money in our nation’s capital and a better school system. Parents should be given choice, competition, and accountability in the classroom.”

Mike Huckabee

May 2013
“Parents and people involved in their local schools should let it be known that core standards are valuable, and they’re not something to be afraid of—they are something to embrace.”

August 2013
“Rebrand it, refocus it, but don’t retreat.”

May 6, 2015 – Twitter
“Kill Common Core. Restore common sense.”

Bobby Jindal

Prior
Implemented Common Core in Lousiana

March 18, 2015 Press Release
“This legislation will help us get Common Core out of Louisiana once and for all. We will not accept this one-sized-fits-all approach to our children’s education. The package of legislation will make clear that the federal government or third parties do not have control over Louisiana’s schools, and help ensure that Louisiana parents and teachers create Louisiana standards and curriculum.”

John Kasich

“The Common Core was written by state education superintendents and local principals in my state of Ohio. We want higher standards for our children and those standards are set, and the curriculum is set by local school board. Barack Obama doesn’t set it. The State of Ohio doesn’t set it. It is local school boards driving better education, higher standards, created by local school boards.”

Martin O’Malley

“That’s why we are choosing to adopt the Common Core Standards. New curricula that will prepare our kids to winners in a global economy.”

Rand Paul

“President Obama has been focused on nationalizing what is taught in each of our nation’s schools since he was sworn into office. The President’s flagship ‘Race to the Top’ competitive grant program was used to entice states to adopt the K–12 standards developed by a joint project of the National Governors Association and the Council of Chief State School Officers. Also, in the President’s 2009 Blueprint for Education Reform, it is suggested that the adoption of these common standards could one day be a qualification for states wanting future Title I dollars for low-income schools.”

“I have many concerns about the constitutionality and transparency of the Common Core State Standards Initiative as well as the loss of local control of curriculum and instruction.”

Rick Perry

“Common Core has got to be stopped in this country.”

Marco Rubio

“Common Core started out as a well-intentioned effort to develop more rigorous curriculum standards. However, it is increasingly being used by the Obama administration to turn the Department of Education into what is effectively a national school board. This effort to coerce states into adhering to national curriculum standards is not the best way to help our children attain the best education.”

Bernie Sanders

Mr. Sanders has not given much public indication on whether he supports Common Core. It appears he does support it by voting against a budget amendment that would have allowed states to opt-out of the standards without facing a financial penalty from the federal government.

From Sen. Sanders senate website on the revamped No Child Left Behind (NCLB):
“The most punitive and restrictive requirements of No Child Left Behind are removed from this bill. This new legislation eliminates the “adequate yearly progress” requirement so that there is less pressure to “teach to the test.” It supports states, like Vermont, that have adopted the Common Core Standards so students are taught the skills they need to be in college and career ready.”

Rick Santorum

“We don’t need educational standards, or Common Core, to tell America how to educate our children.”

Scott Walker

Prior
Implemented Common Core in Wisconsin

July, 2014
“Today, I call on the members of the state Legislature to pass a bill in early January to repeal Common Core and replace it with standards set by people in Wisconsin.”

 

Categories: On the Blog

Did West Antarctica’s ice fall into the sea 120,000 years ago?

Environment Suite - In The News - June 03, 2015, 12:45 PM
One of the bigger risks we’re running with our planetary warming experiment is the melting of the vulnerable West Antarctic Ice Sheet, raising sea levels much…

On Alabama’s coast, preserve the environment or protect the economy?

Out of the Storm News - June 03, 2015, 12:21 PM

Would you rather preserve the environment or protect the economy?

What if I told you that, right here in Alabama, we’re coming up with creative solutions that benefit both our environment and our economy?

South Alabama is one of the most politically conservative areas of the state. It also happens to be one of the state’s most environmentally aware communities. Those two characteristics aren’t at odds with each other.

Alabama’s coastal areas face significant challenges in keeping their waterways open for business and recreation. Over time, sediment fills many rivers and tributaries; take Fowl River, for example. The river, which discharges into Mobile Bay, is authorized at eight feet. Recently, the mouth of the river has been as shallow as three feet. That creates economic problems when boats can’t safely navigate for commercial purposes or use the channel as a safe harbor during hurricanes.

The environmental problem is equally troubling. Many of Alabama’s wetlands are threatened, due to storms and turbulence from human activity. They are important environments for many species of plants and animals, but they also serve as critical buffers against hurricanes and the storm surges they bring.

A Republican state senator, who happens to also be a global business consultant, is working on a solution. Yes, that’s right. A conservative industrialist is attempting to protect Alabama’s environment and its economic interests at the same time.

State Sen. Bill Hightower, R-Mobile, is not amused that Alabama has “given the sovereignty of our waterways to the federal government.” The Army Corps of Engineers simply does not have enough money to keep many of Alabama’s waterways regularly dredged. “Alabama has more navigable waterways than almost every state in the nation,” notes Hightower. “We must take a strategic approach to the care of our own waterways.”

According to Hightower, the corps prioritizes dredging projects based on cargo tonnage passing through waterways. Alabama’s economic activity involves plenty of volume, such as fishing or shrimping, but is relatively light in terms of tonnage.

Back to Fowl River

Hightower has supported an effort, actually a patchwork of different programs, to dredge Fowl River and restore the wetlands on nearby Mon Louis Island.

The project includes funding and expertise from the National Fish and Wildlife Foundation, Alabama Department of Conservation and Natural Resources-State Lands Division, Mobile Bay National Estuary Program, U.S. Army Corps of Engineers, Mobile County and Fowl River LLC. There was not enough money to complete the dredging and restoration work, so Hightower asked Gov. Robert Bentley to facilitate the groups working together to make sure the resources and expertise materialized.

It worked, and the project is slated to get underway shortly.

“The project is an excellent example of how these entities have solved the problem of limited resources, using creativity with collaboration,” said Hightower.

But it’s not as simple as dig and drop. The dredge from the river is too full of silt to place on Mon Louis Island. To solve the problem, sand from Mobile Bay goes to Mon Louis Island and the dredge from Fowl River will fill the hole in the floor of the bay.

That sounds like a lot of work for one project, but frankly, that’s the type of creative leadership we should expect from the people we elect. If real solutions to our problems were as easy as throwing money at them, most of our politicians would be heroes.

Funding and leadership will always be challenges, but perhaps the greatest hurdle of all is rejecting the false choice that we can’t protect our economy and our environment at the same time.

Hightower Letter to Bentley Regarding Fowl River by David Cameron Smith

A gambling ban’s federalism problem

Out of the Storm News - June 03, 2015, 11:53 AM

Even as the rise of the Internet has driven communications and economic growth to heights previously unimagined, some lawmakers are using that very explosion as pretext to expand the federal government’s power and reach in ways that threaten the delicate balance of powers inherent in our federalist system.

A key example is a new piece of legislation called the “Restoration of America’s Wire Act,” or RAWA. Introduced in the House as H.R. 707 by Rep. Jason Chaffetz, R-Utah, the bill purports simply to update the half-century-old Wire Act, originally signed by President John F. Kennedy to combat the influence of organized crime. A deeper reading of the new legislation reveals a troubling assertion of federal authority over conduct typically regulated by states, with far-reaching implications for the concepts of limited government and federalism in the Internet Age.

RAWA’s supporters say it modernizes the law to cover Internet transmissions of illegal interstate bets. Given that the Wire Act was written well before the Internet was conceived, its text currently only refers to telephone or wire transmissions. But lurking beneath the surface of that “technical correction” is a hugely problematic provision that overrides state laws to license and regulate gambling. The provision effectively renders illegal any use of the Internet to conduct bets, even when that bet originates and terminates in a state where it is legal under state law.

To illustrate the impact, consider the State of Georgia, which currently sells tickets to games like Powerball and keno via the Internet. These games are operated under a law Georgia voters approved in a 1992 referendum and all profits are devoted to the state’s HOPE scholarship program for college financial assistance. If RAWA were passed, it would be illegal for Georgia to sell lottery tickets online to Georgia citizens. In other words, the federal government would be regulating wholly intrastate behavior in precisely the way the Founders worried about when they drafted the U.S. Constitution.

RAWA goes a step further than the plain language of the original Wire Act and the closely related Unlawful Internet Gambling Enforcement Act, a 2006 law that banned payment processing for interstate gambling. Both laws were carefully written to exempt bets made in states where the conduct was legal under state law, ensuring that the federal government’s role was limited to regulating transactions across state lines.

This bill comes in service of a goal that’s questionable to start: cracking down on the ability of Americans to participate in games of skill and chance. After all, if gambling is an unmitigated evil, then why does RAWA exempt activities like bets on horse racing from its prohibitions? What distinguishes betting on fantasy sports – an enormously popular industry that is legal on grounds that it’s a game of skill – from betting on poker, which is illegal despite containing similar elements of skill?

RAWA not only tramples on an area of law traditionally reserved for the states, but also potentially establishes a dangerous precedent. The bill’s provisions suggest that merely using a communications platform like the Internet is sufficient to subject all users and all activity to the reach of the federal government, no matter the location or nature of the activity in question.

If limited government and federalism are to have any meaning in the 21st century and beyond, Congress must exercise restraint in using the powers granted to it by states and by the people. Federal officials already have capitalized on the growth of the Internet to vastly expand their domestic spying capabilities. If we’re not careful, they’ll exploit the Internet to vastly expand the power of regulators, tax collectors and bureaucrats as well. Sadly, RAWA would be yet another push down the slippery slope toward an all-powerful federal government.

Study Shows Limiting Hospital Beds, As State Health Policy, Harms the Poor

Somewhat Reasonable - June 03, 2015, 11:05 AM

Why should surgeons have to wait for government permission to try new operations, or new equipment? A new study questions the relevance of Certificate of Need laws.

A new research by report by Thomas Stratmann  and Jacob Russ at The George Mason University’s Mercatus Center shows that restrictions on the operation of hospitals is hurtful to the poor in the U.S.  The study reveals that there is “no relationship between CON (Certificate of Need) regulations and increased access to health care” for the poor.

Thirty-six states and the District of Columbia currently proscribe entry or expansion of health care facilities through certificate-of-need (CON) programs. These programs prohibit providers from entering new markets or making changes to their existing capacity without first gaining the approval of state regulators, with the advice and consent of rival health care providers.

For nearly 40 years, West Virginia has been among the U.S.  states that legally limit the supply of health care with this kind of regulatory regime, with 21 devices and services—including acute hospital beds, magnetic resonance imaging (MRI) and positron emission tomography (PET) scanners—requiring a “certificate of need” from the state before the device may be purchased or the service offered by physicians.

There are, however, serious consequences for continuing to enforce CON regulations. “For West Virginia these programs could mean approximately 2,424 fewer hospital beds, between four and seven fewer hospitals offering MRI services, and between 13 and 16 fewer hospitals offering computed tomography (CT) scans,” the study notes. “For those seeking quality health care throughout West Virginia, this means less competition and fewer choices, without increased access to care for the poor.”

When first proposed, decades ago, legislators and regulators claimed that restricting hospital and large practice growth would be helpful to the poor, but those claims “failed to materialize,” the study said.

Categories: On the Blog
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