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The Policy and Commentary Blog of The Heartland Institute
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Unnecessary Collateral Damage From FCC Title II Internet Regulation

March 28, 2015, 2:05 PM

The collateral damage is beginning to pile up from the FCC’s February decision to trigger Title II telephone utility regulation of the Internet.

Long called the “nuclear” option, the FCC preemptively triggered Title II Internet regulation ostensibly to prevent potential new net neutrality problems, which the FCC admits it can’t yet identify.

Why is Title II so destructive to the Internet ecosystem?

Few appreciate the awesome governmental power of Depression-era Title II regulation.

Title II is inherently comprehensive, capturing the whole telecommunications ecosystem. It presumes end to end, and top to bottom, FCC control of a vertically-integrated AT&T monopoly, including local and long distance communications, telecom equipment and devices manufacturing, Bell Labs R&D and content, publishing and advertising in Yellow Pages directories.

Most every functional part of the 1934 Title II monopoly AT&T ecosystem has a functional communications equivalent in the 21st century Internet ecosystem.

Title II also is inherently an adversarial, command and control regulatory ecosystem designed for one provider and one decider — the AT&T telephone monopoly network and the FCC monopoly regulator, respectively. Title II Section 201 has sweeping catchall authority empowering the FCC to “prescribe such rules and regulations as may be necessary in the public interest.”

Dropping Title II ecosystem regulation on top of the Internet ecosystem is like dropping an antiquated square-peg model on a modern round-hole model, meaning that literally everything in today’s 21st century Internet eventually may have to be force-fitted into analogous 1934 Title II regulations by the FCC and/or the courts over a period of many years.

Just as the FCC was not the final legal authority over Title II regulation of the monopoly telephone system, the FCC is not the final authority over what portions of the Internet ultimately will be captured by Title II regulations of “telecommunications.”

That’s because any trial lawyer can sue to require that the FCC’s new re-definitions, like “telecommunications” to capture ISPs’ broadband service, be equally applied under the law to functionally similar services.

The courts ultimately will decide much of this, creating potential litigation uncertainty for most every player in the Internet ecosystem.

If broadband is now telecommunications, IP addresses are now the legal equivalent of a phone number, and the Internet itself is now the Public Switched Telephone Network (PSTN) per the FCC’s Internet Order, then are any apps that involve telecommunications of any kind, such as instant messaging, VoIP, or video communications etc., Title II telecommunications as well?

Are cloud service telecommunications analogous to broadband telecommunications?

Are over the top video streaming providers like Netflix, Google-YouTube, Amazon, etc. offering the functional equivalent of a Title II regulated telecommunications service?

Do online advertisers who use Title II Section 222 customer proprietary network information (user identifiers) in their cookies that telecommunicate back to their data centers, have to protect customer privacy like broadband providers do?

Under Title II Section 207 most everyone in the Internet ecosystem may be just one federal lawsuit and decision away from being sucked into the vortex of the Title II regulatory ecosystem.

Why was the Title II collateral damage unnecessary and avoidable?

All alleged net neutrality problems have been resolved without Title II. The relevant court indicated that the FCC’s 706 authority could support the FCC’s net neutrality rules without Title II.

And Congress has offered to codify FCC authority to implement the FCC’s 2010 court-overturned net neutrality rules.

What will be the likely collateral damage from Title II?

Consumers face the uncertainty of higher prices, fees and taxes over time, reduced competition and infrastructure improvements. Minority, poor, and underserved populations are especially at risk of losing service from higher prices, fees and taxes.

Innovators face the new and unnecessary uncertainty of FCC second-guessing and after the fact rejection of their innovations by opaque, arbitrary and unnecessary FCC innovation permission panels.

Investors face new unquantifiable litigation and business risks from an apparently arbitrary regulator picking winners and losers.

In a nutshell, lots of Americans, innovation and business will become collateral damage in an unnecessary, avoidable, and self-serving FCC war on potential future net neutrality problems, which the FCC admits it can’t yet identify.

It’s hard to imagine how another agency could inflict so much pain for so little gain.

Innocent bystanders beware, the FCC treats you as acceptable collateral damage.

 

[Originally published at the Daily Caller]

Categories: On the Blog

Seven States that Deserve an ‘F’ for their Welfare Programs

March 28, 2015, 9:15 AM

When President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act into law in 1996, some Democrats and virtually all Republicans in Congress, led by then-Speaker Newt Gingrich (R-GA), predicted the law would lead to dramatic reductions in welfare.

They were right.

Since 1996, welfare rolls have declined by 73 percent—from 12.4 million in 1996 to 3.4 million in October 2014. Few other reforms over the past 20 years have been as successful or as important.

But despite the many improvements caused by the 1996 changes to welfare, many states’ welfare programs continue to lag behind the rest of the nation because they fail to implement simple, commonsense reforms.

In an effort to identify the reasons why some welfare reform efforts have been far more successful than others, as well as what can be done to improve welfare reform, The Heartland Institute, a free-market think tank headquartered in Chicago, conducted an extensive analysis of every state’s welfare program in 2008. The study also made reform recommendations that history has proven to be effective solutions to helping impoverished Americans move out of welfare and into productive and self-sufficient professional careers.

To determine its rankings, Heartland analyzed and scored each state’s program outcomes and welfare policies. A state’s program outcomes score was determined by looking at overall poverty rates, work participation rates, unemployment, teen birthrates, and the decline in the number of Temporary Assistance for Needy Families (TANF) program recipients.  Welfare reform policies were scored by analyzing state work requirements, cash diversion, service integration, time limits, and sanctions.

On March 19, Heartland released an updated version of the 2008 report card after conducting exhaustive research, and the following seven states have been identified as having the lowest-performing welfare programs and policies in the nation:

#44 Georgia, Grade: F (52/100 points)

Georgia came in as the nation’s seventh-worst state for welfare reform, ranking 49th in unemployment and receiving 0 out of 100 possible points for its poor “cash diversion” program. Cash diversion policies are those that allow case workers to give applicants lump-sum cash payments to meet short-term needs if recipients agree not to participate in TANF for some stated period.

#45 (tied) Alabama, Grade: F (51/100 points)

Alabama finished among the bottom six states, ranking 42nd in TANF recipient decline and earning grades of “F” for having poor cash diversion and sanctions policies. Sanctions are tools state officials can use to ensure recipients comply with work requirements and other mandates necessary for continued use of social services.

#45 (tied) Oregon, Grade: F (51/100 points)

Oregon finished in the bottom 10 of all states for overall poverty rates, work participation rates, and TANF recipient decline. It also received failing marks for its cash diversion and sanctions policies.

#45 (tied) Rhode Island, Grade: F (51/100 points)

The Ocean State finished 49th in the nation for its dismal work participation rate and 40th for its unemployment rate. It also received F grades for its poor service integration and cash diversion policies.

#48 Vermont, Grade: F (46/100 points)

Vermont ranked 48th overall due to its poor reform policies regarding work requirements and time limits, which is the amount of time a recipient is eligible to receive aid in a recipient’s life.

#49 Massachusetts, Grade: F (24.7/100 points)

Massachusetts earned “F” grades in four of five policy categories: work requirements, cash diversion, time limits, and sanctions. Massachusetts received an “A” grade for service integration, but that was only enough to keep it from finishing dead last.

#50 Missouri, Grade: F (24.3/100 points)

The Show Me State receives the dubious honor of being ranked the worst state in the nation for welfare reform, finishing 48th overall for its anti-poverty outcomes and earning “F” grades for its poor sanctions, work requirements, and cash diversion policies. Missouri earned “D” grades for lackluster service integration and poor time limits policies.

Idaho, Michigan, Nevada, South Dakota, Utah, and Wisconsin received “A” grades for enacting proven reform policies that help move recipients off of welfare and into self-sufficiency.

You can read Heartland’s complete welfare reform report card, titled “2015 Welfare Reform Report Card” by going to The Heartland Institute’s website, where the study is available for free at www.heartland.org/welfare-reform

[Published on The Hill]

Categories: On the Blog

Celebrate Progressive Human Achivement Hour, Reject Regressive Earth Hour

March 28, 2015, 12:38 AM

Light Up Night in Pittsburgh should be Light Up Night everywhere during the miserable ‘Earth Hour’ of the environmental extremists.

The technology liberated by fossil fuels allows us to live a longer and better life.  You can now have fresh vegetables from all over the planet and not having to live off canned vegetables that I had to eat back in the 1930s – 1950s.

The Competitive Enterprise Institute invites you to celebrate “Human Achievement Hour” by turning on your lights from 8:30 p.m. to 9:30 p.m. TODAY, March 28. This celebration of human progress and advancement is an alternative to “Earth Hour,” the annual event calling on people and business to turn off their lights for an hour as a symbolic gesture against climate change.

Share in the celebration of modern society on Facebook! And Tweet it with the hashtag #HAH2015.

In contrast, Earth Hour wants you to live like the people in the 17th century — dying young, starving, working yourself to death with manual labor, etc.

Humans were not meant to live that way. Humans learned how to not live that way. Let’s not go back.

Categories: On the Blog

Is Global Warming a Moral Cause?

March 27, 2015, 1:22 PM

On March 1, the New York Times published a silly piece titled “Is the Environment a Moral Cause” by Robb Willer (writing from Palo Alto, CA, of course) saying conservatives don’t embrace global warming alarmism and other popular environmental causes because they are more concerned about “patriotism, respect for authority, sanctity or purity” than “protecting people and ecosystems from harm and destruction.”

With all due respect to Prof. Willer, this isn’t even close to the truth. Rupert Wynham’s wonderful March 26 letter to the BBC makes it abundantly clear that conservatives view global warming as an issue loaded with moral concerns of a different kind: truth-telling, respect for others, healthy skepticism toward authority and propaganda, and willingness to publicly debate those who disagree.

Conservatives – and, opinion polls show, a healthy majority of the American public – don’t “believe in global warming” because its advocates utterly lack credibility. They’ve been caught again and again exaggerating, lying, and even breaking the law to end any civil discussion of the causes and consequences of climate change. Ordinary people aren’t fooled by propaganda. They’ve figured it out.

Willer writes, “To win over more of the public, environmentalists must look beyond the arguments that they themselves have found convincing.” That’s only partly right. They need to start speaking the truth, stop believing government agencies and advocacy groups that have been shown to lie and deceive to achieve power or financial rewards, and start debating their critics. Nothing else will restore environmentalism to the status it properly held before it became an appendage of the left-liberal political movement.

Categories: On the Blog

Ted Cruz Gets Common Core Way Better Than ThinkProgress Does

March 27, 2015, 12:20 PM

ThinkProgress has not one but two articles bashing this tweet from Sen. (and now presidential candidate) Ted Cruz:

Federal Govt has no business sticking its nose in education. We need to repeal every word of Common Core! #nhpolitics #MakeDCListen

The headlines pretty much sum it up: “Ted Cruz Makes Impassioned Plea For Repeal Of Federal Legislation That Does Not Exist” and “Every Claim In This Ted Cruz Statement Is Completely False.” The second critiques this statement from Cruz’s spokeswoman: “Common Core is a federally created curriculum that the state’s ‘Race to the Top’ grants are tied to. So if the state does not adopt the standards, it gives up the grant money. But since the federal government created this mess, there should be a way to undo it.”

ThinkProgress Editor in Chief Judd Legum responds:

Literally every claim in that statement is false.

First, Common Core is not ‘federally created.’ It was created by the states, on a voluntary basis. As NPR reported, ‘the federal government played no role in creating the standards, nor did it require that states adopt them.’

Second, Common Core is not a ‘curriculum.’ Federal law actually prohibits the federal government to ‘to endorse, approve, or sanction any curriculum designed to be used in an elementary school or secondary school. Common Core is a set of math and English guidelines that outline a set of skills one should have at the end of each grade. The curriculum used to obtain those skills is left to school districts, schools and teachers.

Third, ‘Race To The Top’ grants were never tied to the adoption of Common Core.

Legum might want to spend some time googling up the pertinent federal and other publicly available source documents, because he’s flat-out wrong.

Fed Involvement in Common Core

Federal law does indeed prohibit any federal entity from having anything to do with curriculum. Legum may not have noticed, but the Obama administration doesn’t give a damn what any law says. So, in flat contradiction to the law, the Obama administration has indeed funded and coerced Common Core.

These two federal shadow agencies (PARCC and SBAC) explicitly told the Obama administration they would use tax dollars to create Common Core curriculum.

Common Core is not, as its apologists insist because there’s no other way to cover their butts on this, merely “curriculum benchmarks.” The document governors signed to signal their consent to the creation of Common Core defines the initiative in two “phases”: The first is standards, the second linked assessments. And the federal government provided $360 million in tax dollars explicitly to create the pair of linked national testing systems that share test questions and student data, both with each other and the federal government. Federal employees oversaw the creation of these tests right down to the test questions. Without federal money, there would be no second half of Common Core.

Furthermore, these two federal shadow agencies (PARCC and SBAC) explicitly told the Obama administration they would use tax dollars to create Common Core curriculum. SBAC’s grant agreement with the feds promised it would provide teachers “exemplary instructional materials linked to CCSS,”  “model curriculum and instructional modules that are aligned with the CCSS,” and teacher training.  It will send teachers “recommended readings, focused group discussions, use of online tools, and sharing of annotated examples of best practices and exercises.”  The organization budgeted $5.125 million in federal funds to contract with yet another organization to develop such “instructional and curriculum resources for educators.” PARCC’s says it is writing “model curriculum frameworks” and “exemplar lesson plans.”

It’s also utterly blind to pretend the Obama administration’s Race to the Top and No Child Left Behind waivers did not push states into Common Core. State board of education minutes from Race to the Top winners show that these boards believed “The verbatim adoption of these standards is required for Race to the Top approval” (that’s Tennessee’s).As the Washington Post reported, the term “Common Core” was written directly into Race to the Top mandates until substituted for a definition that matched only them so people wouldn’t get “suspicious.”

Lastly, the federal government provides at least half the operating funds of the two organizations that created Common Core, which are private nonprofits with no authority to create any binding national initiatives or laws. So either way, the feds were there at the beginning, at the request of Common Core’s creators, no less.

Ted Cruz Is Basically Right

There’s a lot more nitpicking to be done, but I think a fair reader sees my point. Almost everything about Legum’s posts is wrong, with the technical exception that Common Core itself is indeed not a full curriculum (“it depends on what the definition of ‘is’ is”). Cruz is more accurate than Legum.

Cruz also gets the core of the issue right. The federal government has been breaking its own laws to fund curriculum essentially ever since the feds started stickyfingering education. So while the Obama administration is particularly brazen in its lawbreaking, this history of federal involvement in education essentially demonstrates its refusal to keep itself within bounds. (It also has not helped children of any income level or nationality, but that’s a story for another day.) As Cruz says, “The federal government has no business sticking its nose in education.”

[Originally published at The Federalist]

 

Categories: On the Blog

Heartland Daily Podcast – Marita Noon and James M. Taylor: Solar Power in the U.S.

March 27, 2015, 12:04 PM

In Today’s edition of The Heartland Daily Podcast, we listen in as Senior Fellow James M. Taylor speaks with Marita Noon, host of America’s Voice for Energy. Taylor and Noon discuss solar energy in the United States. Noon and Taylor have both recently focused some of their work on the topic of solar power.

Taylor wrote an article titled “Solar Power Lobbyists seek to subvert Florida Teaparty.” The article explores a solar power ballot initiative in Florida masquerading as a free-market policy. Noon recently published a new report titled “Solar Power in the U.S.” This comprehensive look at solar energy “provides citizens with a more thorough understanding of how energy policy decisions affect their day-to-day lives.” Listen in as Taylor and Noon discuss this very important topic.

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

Categories: On the Blog

Millennials’ Dangerous Growing Addiction to Government

March 27, 2015, 11:34 AM

When a friend and recent college graduate informed me he was receiving food stamps, I was floored. He is a healthy, educated, intelligent individual, but, like many of the millennials I know, entitled. Completely and utterly entitled.

“Is something wrong?” I asked my friend. “Are you going through a tough time or something? I know you’re working and everything seems to be going well with your job.”

“It’s nothing like that,” he assured me. “My job is with AmeriCorps though, and they just don’t pay enough. That’s why I’m eligible for food stamps. I figure, they aren’t paying me what I should get paid so it seems fair I should be eligible for government assistance.”

Somewhere in Fairfax County, Virginia, George Washington is rolling over in his grave.

AmeriCorps is a federal volunteer program—and by “volunteer,” I mean you earn money—that is considered to be quite prestigious by many employers and government agencies. Made up almost exclusively of young college students and graduates, AmeriCorps places individuals into community service organizations, providing a steady stream of cheap labor.

My friend, who was receiving a salary of just under $6,000 for his “service,” felt his decision to enroll in my state’s food stamps program was justified, not because he couldn’t find work and feed himself, but because he felt like he was being underpaid by the government for his “volunteer” job.

Fifty years ago—even 30 years ago—this sort of logic would not be tolerated by society. It used to be embarrassing to receive government assistance, a sign that something was going terribly wrong in one’s life. Not anymore. Government assistance isn’t exclusively for those who are down on their luck and need a helping hand; it’s for nearly everyone.

Millennials now pay for most of their tuition and college costs using federal student loans, a portion of which are guaranteed to be “subsidized.” Once students graduate from college, they are eligible to pay their loans back using income-based repayment plans. After 25 years, the loans are automatically forgiven, even if the student never paid a penny of it back. Loans are forgiven in only 10 years if students work for a non-profit organization.

While in school, non-dependent millennials are eligible for numerous government services. Because student loans do not count as “income” for the purpose of determining eligibility in many government programs, students can borrow as much as a school allows for living expenses and remain eligible for state and federal assistance.

For instance, a student attending New York University can borrow at least $24,000 for living expenses, work part-time earning $14,000, and still be eligible to receive a free cell phone from the federal government’s Lifeline Program, Medicaid health coverage, and could even be eligible for New York’s Supplemental Nutrition Assistance Program.

To top it all off, because there is no lifetime aggregate limit on the amount of money a graduate student can borrow from the federal government and because students are not required to pay loans back while enrolled at least half-time, students can literally attend school forever and never actually have to pay off any of their student loans—all while remaining eligible for countless government assistance programs.

Could someone please explain why Americans should ever work another day again? What a country!

[Published by The Blaze]

Categories: On the Blog

Heartland Daily Podcast – Andrew Moylan: Marketplace (un)Fairness Act

March 26, 2015, 2:03 PM

In this episode of The Heartland Daily Podcast, Managing Editor of Budget & Tax News Jesse Hathaway is joined by Andrew Moylan. Moylan is a senior fellow and executive director at R Street. Hathaway and Moylan talk about the recent reintroduction of the Marketplace Fairness Act.

Moylan explains that the Act isn’t very fair at all, as it treats e-commerce customers differently, based on their physical location. Brick-and-mortar stores, he explains treat all customers the same, charging everyone the same sales tax rate. Also, the Act would effectively “deputize” online businesses as tax collectors for nearly 10,000 taxing jurisdictions, creating massive amounts of paperwork and compliance costs for small business owners.

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

Categories: On the Blog

The Death Throes of Common Core

March 26, 2015, 10:28 AM

Americans are learning the hard way that the federal government should not be permitted to impose one-size-fits-all standards to education. It was never intended to play a role in education and the absence of any mention in the Constitution is proof enough that education was intended to be supervised by the states where the school districts, schools, and parents are closest to the process.

Common Core is going to play a large role in the 2016 elections and that is likely to impact former Governor Jeb Bush the most. At the heart of the unhappiness with Common Core has been its emphasis on testing.

A March 20th Wall Street Journal article, “Bush Faces Test of Exam Policy”, reported that “A Rasmussen Reports nationwide survey in February found that 52% of respondents thought there was too much emphasis on testing in schools and 69% believed there was too much ‘teaching to the test.’”

The transformation of the nation’s educational system began when the Department of Education was signed into law by Jimmy Carter in 1979 and began operating in 1980. It continued with the passage of No Child Left Behind (NCLB), the name given to the reauthorization of the Elementary and Secondary Education Act. It requires all public schools receiving Title 1 federal funding to annually administer a state-wide standardized test to all students. NCLB was coauthored by Representatives John Boehner (R-OH), George Miller (D-CA) and Senators Edward Kennedy (D-MA) and Judd Gregg (R-NH).

President George W. Bush was a leading NCLB advocate and signed it into law on January 8, 2002. Each state was expected to develop its own standards because NCLB did not impose a national one. This year when its reauthorization came up for consideration, it was pulled from the House floor in February. The Heritage Foundation deems it “outdated, ineffective, and prioritizes government standards over the needs of individual students.”

According to Neal McCluskey, Associate Director of the Cato Institute’s Center for Educational Freedom, “There is no compelling evidence that No Child Left Behind, and federal intervention overall, has produced much good, while it is very clear it has cost substantial money and is unconstitutional.”

In Missouri, circuit court Judge Daniel R. Green, ruled in February that the state’s payment of more than $4 million in membership fees as part of a standardized testing consortium was illegal. The Smarter Balanced Assessment Consortium “is an unlawful interstate compact to which the U.S. Congress has never consented, whose existence and operation violate” Article 1 and 10 of the federal Constitution. It dealt a blow to Common Core.

It’s not just Missouri. In January the Mississippi Board of Education voted to withdraw from the Partnership for the Assessment of Readiness for College and Careers consortium which is one of the two tests aligned to Common Core. A full repeal of Common Core standards is under discussion.

By June 2014, two months before its implementation date, 19 states had either withdrawn from the tests or had paused implementation of the standards. Four of the 19, Indiana, Oklahoma, South Carolina and Louisiana had completely exited the national standards. Alaska, Nebraska, Texas and Virginia never adopted it.

Gov. Bush is beginning to put some distance between himself and Common Core. His spokeswoman, Kristi Campbell, said “There is such a thing as too much testing.” Reportedly “he says the federal government shouldn’t impose particular tests or curricula on states.” Meanwhile, in one state after another, Common Core is being rejected.

On the political front, the Heartland Institute’s monthly newsletter, School Reform News, reported in March that “Wisconsin Gov. Scott Walker, a front runner in the contest for the Republican nomination for president, made bold reforms of elementary, secondary, and college education a prominent part of his proposed 2015-17 budget.”

“The budget, presented on February 3, would remove the cap on the state’s school choice program, eliminate state funding for Smarter Balanced tests tied to Common Core State Standards, and cut $300 million from the University of Wisconsin over two years in exchange for greater autonomy for the system.”

On Capitol Hill, four Republican senators including Rob Portman of Ohio and Pat Roberts of Kansas have introduced a bill that would prevent the federal government from strong-arming states into adopting education standards such as Common Core and, presumably, NCLB. The bill is called learning Opportunities Created at the Local Level Act. As reported in the Daily Caller.com, it “would limit the federal government’s ability to control state educational standards and curriculums through financial incentives, grants, mandates, and other forms of influence.”

There’s no way to know when Common Core will die or whether No Child Left Behind will suffer a similar fate but the trend nationwide is obvious. Parents, teachers, schools and districts want to determine the best curricula for the children in their systems. They want the federal government out and that is a very good thing.

Categories: On the Blog

Climate Witch Hunt Is Bad For Science, Bad For Witch Hunters

March 26, 2015, 10:16 AM

Desperate times breed desperate measures, and for climate alarmists these are desperate times.

There has been no measurable global warming for 18 years. The majority of polar bear populations are stable or growing; hurricane landfalls have been virtually nonexistent in the United States for a decade; cold temperature and snowfall records are being set daily (more than 2,600 cold temperature records were set or broken between February 19 and February 25 of this year alone); Antarctica is setting sea ice records in the middle of its summer; and in the Arctic, the much ballyhooed sea ice decline of the late 1990 and early 2000s has recovered over the past two years.

By almost every metric, the predictions made by climate change believers have failed or are failing, and reasons for climate alarm are fading from view as a result.

Perhaps this explains climate alarmists’ desperate attempts to smear the reputations of climate researchers who scientifically reject any aspect of the “human-catastrophic-climate-change-connection.”

The latest salvo in this desperate gambit comes from Rep. Raul Grijalva (D-AZ), ranking member of the House of Representatives Committee on Environment and Natural Resources. He sent a letter to seven university presidents demanding information on funding sources and all draft testimony and exchanges relating to the testimony of select researchers who have testified before Congress on climate change issues and did not express an alarmist view.

Grijalva’s original letter asked about the climate research and funding for seven scholars: geographer Robert C. Balling Jr., Arizona State University; atmospheric scientist John Christy, University of Alabama; climatologist Judith Curry, Georgia Institute of Technology; historian Steven Hayward, Pepperdine University; climatologist David Legates, University of Delaware; atmospheric physicist Richard Lindzen, Massachusetts Institute of Technology; and political scientist Roger Pielke, Jr., University of Colorado.

As one of the targets of Grijalva’s probe, Legates points out, “Grijalva was asked why he targeted the seven of us. His response was we were the most well-published, most often-cited, and had the most impact on public policy in the United States. Not that our research was likely fraudulent, not that we had taken big sums of money from foreign governments, or that we simply had been publishing bad research. None of these were the reason. It was simply we are too effective with our research and too persuasive with our arguments. Pure and simple. And since we disagree with him and his views, we must be harassed. Maybe that will stop us.”

Pielke, a researcher who accepts that humans contribute to global warming but does not believe a modest warming signifies disaster, has repeatedly testified under oath before Congress he never received any funding from fossil-fuel companies. Pielke wrote, “I know with complete certainty that this investigation is a politically-motivated ‘witch hunt’ designed to intimidate me and to smear my name.”

Tired of years of abuse, Pielke is bowing out of further climate research.

The American Meteorological Society, the national scientific society for research in atmospheric, oceanic, and hydrologic sciences, added its voice to the growing chorus defending scientific freedom of enquiry and speech with its own letter to Grijalva. The letter, written by AMS Executive Director Dr. Keith L. Seitter, states, “Publicly singling out specific researchers based on perspectives they have expressed and implying a failure to appropriately disclose funding sources — and thereby questioning their scientific integrity — sends a chilling message to all academic researchers.”

Seitter continued, “Further, requesting copies of the researcher’s communications related to external funding opportunities or the preparation of testimony impinges on the free pursuit of ideas that is central to the concept of academic freedom.”

Even some climate alarmists believe Grijalva has gone too far. Bob Ward, policy director for the Grantham Research Institute on Climate Change and the Environment, a frequent critic of climate skeptics, tweeted, “Politicians should not persecute academics with whom they disagree. No ifs or buts.”

Climate alarmist organizations and scientists had better hope public scrutiny does not turn to their funding sources. Climatologist Judith Curry has asked, “Are we not to be concerned by funding from green advocacy groups and scientists serving on the Boards of green advocacy groups?”

 

Pielke tweeted, “Once you tug on the thread of undisclosed financial interests in climate science, you’ll find it more a norm than exception.”

In fact, according to Imablawg, Rep. Grijalva, the self-appointed climate witch finder general, has taken $78,854 from environmental lobbying groups.

I’d like to propose a solution: Let’s all stick to an honest debate concerning the scientific and economic issues of climate change and stop the mudslinging, yellow journalism, and political harassment.

 

[Originally published at the Daily Caller]

Categories: On the Blog

Overhaul Public Pensions Now

March 26, 2015, 10:05 AM

Unless local and state governments act now, a tsunami of underfunded public pension plan obligations will soon rush ashore and drown taxpayers with tax hikes and crippling debt.

According to State Budget Solutions, a nonpartisan public policy organization focusing on local and state budget issues, states’ total unfunded public pension liabilities reached $4.7 trillion in 2014, an increase of more than 14 percent since 2013.

That puts each American citizen on the hook for an average of $14,156 in public pension debt, up from about $12,852 per person in 2013. If the problem is allowed to continue to fester unabated, taxpayers will ultimately be forced to make up the difference in the form of higher taxes.

For years, state pension boards have used overly optimistic investment return assumptions to “cook the books” and make the funds they manage appear financially sounder than they really are.

In California, the Public Employees’ Retirement System assumes it will consistently beat the market and receive a fabulous 7.25 percent return on its investments. In reality, CalPERS’ books showed a net loss of 0.5 percent at the end of fiscal year 2014.

Using a more realistic assumption of a 2.734 percent yield on returns, roughly the same yield received from investing in 15-year U.S. Treasury bonds, SBS says CalPERS can realistically expect to pay only about 39 percent of its total pension liabilities.

Vermont’s pension liabilities exceed its ability to pay by more than $7 billion, or about $11,375 per Vermonter. The Vermont State Employees’ Retirement System (VSERS) assumes its investments will earn 6.25 percent per year. In reality, VSERS fell far short of its expectations, realizing just 3.7 percent growth between June 30, 2013 and June 30, 2014.

According to SBS’ calculations, Vermont’s public pension plans can only pay out $1 for every $3 promised to state employees.

The problem of looming public pension liabilities is not limited to California and Vermont. States such as Alaska, Connecticut, and Kentucky are in even worse shape. For example, Connecticut’s public pension funds can only pay out 23 cents for every dollar of entitlements promised to government workers.

Ignoring the approaching public pension tsunami means taxpayers will get swallowed up in an ocean of red ink.

Unlike a real tsunami, this wave of underfunded public pensions can be stopped. By shifting from defined-benefit programs to 401(k)-like defined-contribution plans, and applying common sense, honesty, and transparency when preparing investment plans, state pension boards can make a plausible effort to safeguard government workers’ money and taxpayers against potential economic shocks in the future.

 

[Originally published at The Press Enterprise]

Categories: On the Blog

Gary MacDougal Discusses Welfare Reform on NPR’s ‘The Jefferson Exchange’

March 26, 2015, 10:01 AM

On March 23, Policy Advisor Gary MacDougal was a guest on NPR’s “The Jefferson Exchange,” broadcasted out of Southern Oregon University. MacDougal was on with host Geoffrey Riley to discuss the 2015 Welfare Reform Report Card and Oregon’s ‘F’ grade.

The 2015 Welfare Reform Report Card is an analysis of the welfare polices and outcomes of each of the 50 states. The states are given letter grades based on their programs and performance and ranked against each other. This 2015 edition of the report card is an update of the original published in 2008. MacDougal, the lead author of the report, was chairman of the Governor’s Task Force in Illinois, where he led an effort to help people from dependency to a state of self-sufficiency.

In the interview you can listen to with the player above, MacDougal explains that how the grades were formulated, with an emphasis on whether or not a state’s welfare programs use cash diversion, sanctions, and time limits. He explains how these factors improve the state welfare programs and encourage people to become more self-sufficient.

Among other things, Riley questions why Oregon received an ‘F’ grade while California got a ‘C’ — something that seems counter-intuitive. MacDougal responds by explaining the process in which the states were ranked and graded. One reason why Oregon ranked poorly was because the state lacked a cash diversion option and sanctions. MacDougal said, “Oregon can do better, we’d like to call attention to it and we’d like to help.”

If you would like more information on the 2015 Welfare Reform Report Card and to see where your state is ranked, visit our website. Included in the website is an interactive map as well as the full report.

Categories: On the Blog

Heartland’s Jay Lehr Talks Fracking Regulations with Neil Cavuto

March 26, 2015, 9:56 AM

On March 20, Heartland Institute Science Director Jay Lehr was on the Fox News Channel’s Your World with Neil Cavuto to discuss new regulations on hydraulic fracturing. Lehr was joined by The Accountability Project’s president Nomiki Konst. As you can see in the clip above, Lehr and Konst have very different views on the safety and reliability of fracking. 

Konst repeats the exaggerated claim that fracking contaminates well water which poses a threat to public health. Dr. Lehr crushes this argument saying, “We fractured a million wells between the beginning and when the shale gas boom began and we really haven’t proven that there’s been a single water supply contaminated.”

This idea that hydraulic fracturing is a major public health concern has been propagated by faulty and debunked studies. In fact, a recent statewide ban of fracking in New York by Gov. Andrew Cuomo used these studies as justification. In the interview, Dr. Lehr states, “We’ve fracked 200,000 well in the shale gas era of today. And again, we haven’t had a problem.”

Watch the clip above as Dr. Lehr dissolves the myths surrounding fracking and gives sensible answers as to why we should take advantage of the inexpensive energy that is being produced as a result of this shale boom.

What more info on hydraulic fracturing?

Heartland Daily Podcast – David Quast: Hydraulic Fracturing Ban in New York

Banning Industrail Sand Mining Would Be a Mistake

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

Andrew Cuomo’s Fracking Psuedo-Science

Categories: On the Blog

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

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

Obamacare Failing, Doctors Will Take Future Blame

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

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

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

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

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

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

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

Don’t Dump Dumbo

March 24, 2015, 3:51 PM

For all the families who have yet to take their children to a Ringling Bros. and Barnum & Bailey Circus — hurry. The company announced recently that its storied elephant act will no longer appear in the traveling circus as of 2018.

This decision has been met with disappointment by people like myself who value the wholesome entertainment that the circus provides, and bristle at hysterical attacks by animal rights extremists. Groups like People for the Ethical Treatment of Animals (PETA), on the other hand, have cheered the decision and claimed victory in the long fight against elephants in the circus. This, in their view, is a major victory in their broader war against any human ownership of animals.

But those, like me, whose initial reaction was anger at Ringling Bros. and its parent company, Feld Entertainment, for “capitulating” to animal rights activists should consider placing the blame on the activists themselves. By engaging Feld in a perpetual stream of litigation and proposed bans, activists were able to distract the company from its core competency — family entertainment — until those distractions became too onerous.

What’s particularly obnoxious about the litigation brought on by radical animal rights groups, including the Humane Society and the American Society for the Prevention of Cruelty to Animals (ASPCA), is that it was summarily dismissed in court. In fact, these plaintiffs ended up paying Feld for bringing such outrageous claims. Just last year, the Humane Society and other animal rights groups paid a $15.75 million settlement to Feld after their lawsuit alleging elephant abuse was found without merit.

Two years earlier, the ASPCA was ordered to pay Feld $9.3 million after making false claims against the company in court. These groups aren’t just having their claims thrown out; they’re so egregious that they are compensating Feld and Ringling Bros. for their misdeeds.

So the claims by these animal rights extremists against Ringling Bros. have been shown in court to be a total fraud, and claims that the “Greatest Show on Earth” is harmful to animals have been debunked repeatedly in court, as well as in the court of public opinion.

But the threats of further litigation didn’t stop. Activists publicly admit that it doesn’t really matter if you’re successful in court — the act of suing is a useful irritant that costs your adversary time, money and focus, and gets them to give in, even if the underlying litigation is without merit. . In fact, here, Feld conceded that the non-stop litigation and costs of opposing regulatory threats in localities around the country were integral to the Feld family’s decision to retire the 13 currently performing Asian elephants from the traveling circus.

The suit against Ringling Bros. is just one of a long and colorful list. I will mention just a few other animal rights zealot’s efforts here. PETA condemned the Pokémon media franchise because the video game “paints a rosy picture of what amounts to thinly veiled animal abuse,” PETA filed suit in federal court in Southern California seeking to declare that SeaWorld’s whales are being held in slavery in violation of the 13th Amendment. The failed litigation sought a court-ordered release of the whales “from bondage.” CNN reported that the suit sought “a permanent order against holding them in slavery, as well as appointment of a legal guardian to carry out the transfer of the whales to a suitable habitat.” The Animal Legal Defense Fund is planning to sue a Napa restaurant for serving foie gras during a now-overturned ban on foie gras.

The irony here is that Ringling Bros. has done far more to preserve Asian elephants’ on planet earth than the flailing animal rights groups. They, instead, are popping corks that children can’t see elephants in the circus anymore, and I’m certain will continue their tried and true pattern of focusing their time, energy and resources ginning up lawsuits or other bogus attacks on human interaction with animals — impacting the ability of companies and governments who come under their scrutiny from focusing on their missions. Sadly, I guess that’s the point.

[Originally published at Pundicity]

 

Categories: On the Blog