Washington, D.C. is a dysfunctional mess. Just about nothing gets done unless it absolutely has to get done. And when things do get done – they are just about always horrible. Bigger and bigger government, over and over again, as far as the eye can see.
For instance, DC hasn’t passed an actual budget through the actual process since 2009 – the year of the $878 billion alleged “Stimulus.” DC has ever since set its spending via Continuing Resolutions (CRs) – which means with the alleged “Stimulus” built in to the baseline. Meaning we’ve now had an additional $5+ trillion in “Stimulus” thrown down the rat hole – above and beyond the original “Stimulus” and the already heinous 2009 pre-“Stimulus” budget level. Wonder why we have in that time added $8+-trillion-and-counting to the national debt – despite repeated record-setting tax takes? This is largely why.
This all-encompassing DC disarray is in part created by Democrat President Barack Obama. Who is a strident, nightmare Leftist – with no regard for the Constitution or its limits and processes. He doesn’t budge an inch. On anything. Ever. And his Democrats controlled the Senate all the way through until January. They are all big fans of the built-in-“Stimulus” CRs – so they for years helped blow up the budget process.
But that doesn’t explain this year. We the People delivered the Republicans the House majority in 2010 – and we delivered them the Senate last November. Why then are we yet again mere days away from the government running out of spending authority? Barring action, the government runs out of walking around money on October 1.
This futility budget brinksmanship is pathetic. And of course prevents any actual discussion of on what we’re spending – and possibly curtailing some of it. And when a $4-trillion-a-year federal government does this – a lot of important things are left twisting in the wind.
Like the Internet Tax Freedom Act (ITFA). Which: “Bars federal, state and local governments from taxing Internet access and from imposing discriminatory Internet-only taxes such as bit taxes, bandwidth taxes, and email taxes. The law also bars multiple taxes on electronic commerce.” That’s a lot of different taxes from a lot of different directions. Think governments of all levels aren’t licking their chops at the prospect of getting their money-grabbing mitts on the Web? Well, unless the Feds act before October 1 – they’ll all have their chance. That’s when the last brinksmanship-induced ITFA extension expires.
It wasn’t always thus. For over a decade, ITFA was easily extended for years at a time – in overwhelmingly bipartisan fashion. Then came the Age of Obama. Last year, it was on-the-brink extended on September 19 – to December 11. Then on-the-brink-extended again – until this Thursday.
To their credit, the Republican House in June passed the Permanent Internet Tax Freedom Act (PITFA). Just as the Republican House did last year. Thus would we finally end this particular brand of cliffhanger governance. What has the Senate done with it? Enter Nevada Democrat Sen. Harry Reid (D-NV).
Senator Reid won’t allow PITFA up for a vote in the Senate. Unless he can tether it to a whole new Internet tax scheme – the woefully misnamed, incredibly destructive Marketplace Fairness Act (MFA). A bill that would require online retailers to collect tax on sales they make to out-of-jursidiction consumers. Get that? Under the MFA, uber-tax-happy places like California would no longer be confined to taxing into oblivion just Californians. They’d have access to the wallets of every business – every person – in all fifty states. Taxation without representation – on stilts. From every level of government – about a thousand different taxing jurisdictions nationwide. This is absolutely no bueno.
The horrendous MFA should be a discussion for another day – but Reid won’t allow that. His tethering it to PITFA is creating even more government brinksmanship. For no reason, other than government doesn’t want to give up one vein to bleed – unless it can open another.
So DC’s denizens this week address their latest self-inflicted “crises.” There’s not much we can do about yet another debt-exploding CR. But they absolutely should extend ITFA. And once this latest cliff is avoided, they should pass PITFA – free from ridiculous, unrelated new taxes attached thereto. This used to be a bipartisan simplicity. But nothing in DC is simple anymore.
DC’s imposed private sector uncertainty is now omni-directional and omni-present. PITFA is one chance to roll back a bit of the inanity.
Five federal employees were charged in August with theft and fraud for falsifying documents to qualify their children for free lunch at Prince George’s County, Md., public schools. The alleged fraudsters — all employees of the Government Accountability Office — were discovered after an audit into the National School Lunch Program by the very federal agency for which they work.
One employee was also a member of the Prince George’s County, Md., school board and has since resigned. Officials believe another 300 federal workers may be involved.
The case is not an isolated incident; in the past few years, top administrators for the Chicago Public Schools and several New Jersey state employees have also been caught lying on applications so their children could receive free school lunch.
But public employees aren’t the only ones trying to game the system. The program, which provides free and reduced-price meals for 20 million kids every year, is rife with fraud and waste. Some audits estimate billions of dollars are wasted each year due to improper payments to unqualified recipients.
But thanks to a massive expansion of the program, there’s likely to be a lot less waste and fraud. Why? Because families who live in low-income school districts will no longer need to submit individual applications and show financial need. Instead, entire school districts can qualify based on fuzzy numbers tied to the number of families in the district receiving other forms of government assistance. No applications — no fraud. Problem solved, Washington-style.
The new free meal program — called the Community Eligibility Provision — is part of the Healthy, Hunger-Free Kids Act that Congress must reauthorize this month. Under the CEP, school districts can provide taxpayer-funded meals to all students even those who wouldn’t have qualified in the previous year, such as the children of federal employees. The Department of Agriculture, the agency in charge of all child nutrition programs, is heavily promoting the CEP to reduce paperwork at local schools and eliminate the “stigma” of someone eating a free lunch.
Here’s how it works: A school district qualifies if 40 percent of the students receive government subsidies such as SNAP, Temporary Assistance for Needy Families or they are foster, runaway or migrant children. To boost the eligibility numbers even more, the USDA applies a “claiming factor” that adds another 60 percent to that figure based on the assumption many more students qualify but don’t apply. Once a district signs up for the CEP, every student, regardless of need, receives a taxpayer-subsidized breakfast and lunch for four years.
The free meals are reimbursed by the USDA at varying rates, but most districts will get paid about $4.50 per day, per student. The cost to federal taxpayers is roughly $16 billion per year and Agriculture Secretary Tom Vilsack anticipates the CEP will be the “main driver” behind a 10 percent jump in the budget for next year. Vilsack also stated that only about half of the eligible districts now participate. This means the school breakfast/lunch budget could also double, costing taxpayers upward of $32 billion in just a few years.
This is the second year that schools nationwide can apply for CEP status and thousands of districts are expected to sign up. Not surprisingly, several Prince George’s County public schools are now under the CEP for this coming school year: “All enrolled students will receive free meals, and their families will not have to complete an application,” according to a statement by the district. If only those GAO employees had waited a few more years — they wouldn’t be accused fraudsters, they would be “customers.”
It’s a noble and worthy national goal to make sure poor, hungry kids are fed. It’s quite another to extend government benefits to families who don’t need it. We don’t believe this is an effort to actually reduce fraud or tease paperwork. Instead, the massive expansion of the program is a cause for celebration among those who believe that the more kids eating government-procured food, the better. Free school meals for families who don’t need it only empowers federal bureaucrats and lessens the role of the parent, while sending taxpayers the bill.
Congress should put the USDA on a diet and eliminate the CEP before it becomes another unjustifiable, but irreversible entitlement program.
Julie Kelly is a cooking teacher, food writer and food policy adviser for the Heartland Institute in Orland Park, Ill. Jeff Stier is a senior fellow at the National Center for Public Policy Research in New York City.
Oil prices have plummeted to six-year lows, with the price for West Texas Intermediate crude briefly dipping below $39 per barrel. But oil production in the United States has not plummeted the way some had expected.
Conventional wisdom had pegged the break-even cost for oil wells using horizontal hydraulic fracturing, aka “fracking,” to be between $65 and $85 dollars per barrel. Many expected smaller American producers to go belly-up as a result of low prices.
However, advances in drilling and well-completion technology, such as multi-well drilling pads and walking rigs, have made oil and natural gas production far more efficient. The walking rigs have essentially kept frackers far from “dead.”
Multi-well drilling and walking rigs have become important because the fracking revolution has dramatically changed the way we produce oil and natural gas over the past 10 years. Unlike conventional oil and gas production, which takes place in permeable rock formations such as sandstone, fracking develops oil and gas from shale, which requires fracking. Multiple wells must be drilled in different directions to tap these resources from the rocks below.
As a result, multi-well pads quickly have become more prevalent in nine major shale formations, increasing from 5 percent of wells drilled in 2006 to 58 percent in 2013. Through this process, six, 10 or even 51 wells can be drilled from a single compact drilling pad.
Drilling multiple wells from the same pad lets oil and gas producers develop more resources. But doing so using traditional, stationary drilling rigs is inefficient and costly, because the rigs must be disassembled, moved to the next well location and reassembled in order to drill the next well, a process that can take as long as a few days and cost up to $1 million.
The inefficient nature of these rigs spurred the development of walking rigs, which dramatically cut costs and the time required to move a rig.
Although the “walking” of these rigs looks more like a sea turtle awkwardly crawling across the beach, these rigs do not have to be disassembled and can move as far as 30 feet in less than an hour. This can save drillers as much as 30 percent of the cost of drilling a well.
These savings are a key reason why walking rigs now outnumber traditional rigs by a count of about 650 to 500.
Moving drilling rigs in a matter of hours, instead of days, has also let oil and gas producers drill more wells with fewer rigs. The oilfield services company Baker Hughes reported a 9 percent increase in the number of wells the average U.S. land drilling rig produced in the fourth quarter of 2014 compared to the same period in 2013.
As a result, oil production continues to increase despite a drop in the number of rigs.
Technologies such as walking rigs and other drilling and well completion innovations have increased the output of drilling rigs by 600 percent, on average, over the past several years and have slashed production costs.
That’s a key reason why the Energy Information Administration estimates U.S. oil production increased by about 300,000 barrels per day in the first half of 2015, despite oil prices falling to about one-third of the price paid for oil in June 2014.
Despite the wishes of the Organization of Petroleum Exporting Countries, American ingenuity means fracking is here to stay.
The American Civil Liberties Union (ACLU) of Nevada filed a lawsuit on August 27 challenging the constitutionality of Nevada’s education savings account (ESA) program. The ACLU claims the Nevada ESA program furthers a religious and sectarian purpose by allowing parents to choose religious educational options for their children.
Reality is not on the ACLU’s side. Not a single dollar has been set aside for the purpose of religious education. The Nevada education savings account program was set up to give parents better educational options for their children.
Gov. Brian Sandoval signed the ESA program into law on June 2. The program will allow parents to opt their children into the program and use funding for a variety of approved educational options, including private school tuition, tutoring, textbooks, and therapies.
Most students would receive 90 percent of the annual per-pupil funding allotted to public schools statewide, a little more than $5,000. Low-income and special-needs students opting in would receive 100 percent of the state’s per-pupil funding. To be eligible for the ESA program, a child must have attended public school, including either traditional public schools or charter schools, for at least 100 days.
Children need to be opted into the ESA program by their parents, who then make the choice of how to spend the money allocated for their child. Nowhere along the way would religion be forced on anyone. Religion need not ever enter the picture. By the same flawed logic of the ACLU, college students who receive financial aid should not be allowed to attend religious colleges and universities, even if they choose to and even if it means a better education.
Pro-liberty groups, including the Nevada Policy Research Institute and The Heartland Institute, have been working diligently to explain the truth about the ESA program through news stories, op-eds, and press releases for months. The Institute for Justice will help defend the legality of the program.
“The ACLU claims the ESA program unconstitutionally furthers a religious or sectarian purpose because it allows parents to choose religious educational options for their children,” Keller explained. “But it is precisely the independent decision-making by parents that severs any link between church and state. As with all constitutional educational choice programs, parents — and not the government — decide the best educational setting for their child.”
The Institute for Justice has already successfully defended educational choice programs across the country, including Arizona’s ESA program, which served as a model for Nevada’s.
The ACLU is fighting against freedom, fighting against the right of a parent to decide which educational option is best for his or her child, and ignoring the fact Nevada’s traditional public schools have been failing students for years.
The ACLU of Nevada’s lawsuit is nothing but a poorly veiled attempt to stifle choice.
Right now, the EPA is tasked with cleaning up the mess it made in Colorado, after its heavy machinery unleashed a deluge of waste water into the Animus river. But they’ve also been cutting down trees, as the Washington Times notes – for furniture.
According to a report, released this week, the EPA has spent tens of millions on high-end furniture to furnish their offices, approximately $6,000 per employee.
The federal agency that has the job of protecting the environment doesn’t seem to have too much concern for trees, at least the ones cut down to make furniture.
The Environmental Protection Agency over the past decade has spent a whopping $92.4 million to purchase, rent, install and store office furniture ranging from fancy hickory chairs and a hexagonal wooden table, worth thousands of dollars each, to a simple drawer to store pencils that cost $813.57.
The furniture shopping sprees equaled about $6,000 for every one of the agency’s 15,492 employees, according to federal spending data made public by the government watchdog OpenTheBooks.com.
Six thousand can buy a lot of furniture, but not the way the EPA spends it. According to the report, the EPA went shopping at very high end retailers, including Herman Miller furniture company (where an office chair can run you upwards of $730), and at Knoll, Inc., whose designs, are, according to the Times, on display in New York’s Museum of Modern Art.
The EPA claims that it needed the furniture after it moved buildings and expanded its workforce, but it’s hard for the EPA to justify a $4,047 chair, which was part of its massive order. It’s also hard to justify the $73,000 the office spent to replace carpeting after it moved out of its office space. Certainly, budget-minded consumers could find friendlier and less expensive options.
GOP Presidential candidate Donald Trump endorsed the idea of universal health coverage – socialized medicine – for all Americans, and promised to repeal Obamacare and replace it with his own complete coverage program if elected in 2016. The remarks came during a TV interview which aired this weekend.
“I am going to take care of everybody. I don’t care if it costs me votes or not. Everybody’s going to be taken care of much better than they’re taken care of now,” said Trump during the chat with 60 Minutes on CBS. “They’re going to be taken care of. I would make a deal with existing hospitals to take care of people. The government’s gonna pay for it. But we’re going to save so much money on the other side. But for the most it’s going to be a private plan and people are going to be able to go out and negotiate great plans with lots of different competition with lots of competitors with great companies and they can have their doctors, they can have plans, they can have everything.”
As the fictional business tycoon Gordon Gekko said in the 1980s classic, Wall Street – and who is Trump but a real-life version of Gekko – this idea is a dog with fleas. Socialized medicine? That’s his policy prescription to fix Obamacare? How can everybody receive free coverage for health care and there still be room for “private plans?” This makes little sense.
… the bad news is the AP will also stop identifying as “skeptics” those who look at the supposed evidence of a human-caused climate crisis and find it wanting.
We have reviewed our entry on global warming as part of our efforts to continually update the Stylebook to reflect language usage and accuracy.
We are adding a brief description of those who don’t accept climate science or dispute the world is warming from man-made forces:
Our guidance is to use climate change doubters or those who reject mainstream climate science and to avoid the use of skeptics or deniers.
So, half a loaf. It could have been worse, considering AP Science Writer Seth Borenstein apparently had a lot of input in the policy. Borenstein is not a “straight” reporter, but hopelessly biased towards climate alarmism. Read more about Borenstein’s controversial coverage and public statements at this entry on him at LeftExposed.org.
Barbara Kay, a columnist for the National Post in Canada, has a sunnier outlook on this news because she is looking a decade hence. In a piece titled “AP Offers a Victory to Us ‘Doubters’ of Climate Change,” Kay writes:
This is welcome news, for it releases people like me from implicit mental alignment with conspiracy theorists and anti-Semites. It may even reflect a glimmer of hope that the honchos at AP are beginning to realize that the “doubters” might actually be on to something, and that it won’t look good for AP 10 years from now when the doubters turn out to be right after all. …
To be clear about my self-description as a “doubter,” that is really just a shortcut for saying I am a supporter of the real doubters – and by those I mean not doubters of climate change (the climate is always changing and always has), but doubters that changes caused by man are significant – that is, the scientists and those who have actually done deep research on the science around climate change. …
There is certainly more than one scientist and more than one investigative journalist pushing back against climate-change mantras. And they simply can’t be waved away as outliers or weirdos. Although God knows, a biased media trys to.
I have not done Kay’s excellent piece justice in the excerpts above, so please read the whole thing. It’s compelling, and cites the work and public statements of Heartland Institute Policy Advisor Bob Carter — who was the winner of the 2015 Winner of the Lifetime Achievement in Climate Science.
Watch Dr. Carter’s acceptance speech for his Lifetime Achievement Award at the Tenth International Conference on Climate Change in June 2015 below:
In today’s edition of The Heartland Daily Podcast, H. Sterling Burnett, managing editor of Environment & Climate News speaks with E. Cal Beisner of the Cornwall Alliance. Beisner joins Burnett to discuss the nexus between ethics and environment issues and where he believes Pope Francis has gone wrong.
The Cornwall Alliance is “a coalition of theologians, pastors, ministry leaders, scientists, economists, policy experts, and committed laymen,” who are dedicated to promoting environmental stewardship and economic development built on Biblical principles.
Beisner discusses where he believes Pope Francis has gone wrong so far concerning the proper response to global warming, and his hope that the Pope will come to recognize the necessity of fossil fuel use as a means of raising the poor out of poverty.
Celebrity climate activist Leonardo DiCaprio stunned fans last week when he revealed that he had investments in the fossil fuel production and utilization industries, and that he plans to divest himself of them in the coming year.
Leonardo DiCaprio is saying goodbye to fossil fuels
The actor and noted environmental activist, 40, is joining a campaign that uses their investment decisions as a means to fight global warming. DiCaprio, 40, along with over 2,000 individuals and 400 institutions, has committed to eliminating fossil fuel investments via the Divest-Invest Coalition in New York on Tuesday…
He continued: “Now is the time to divest and invest to let our world leaders know that we, as individuals and institutions, are taking action to address climate change, and we expect them to do their part this December in Paris at the UN climate talks.”
“Divestment” has long been a buzzword among environmental activists, stemming from 350.org’s campaign to begin the “divestment process” from the fossil fuel industry, encouraging companies, through grassroots effort, to pull investments from their portfolios that might benefit carbon producers. The movement has taken flight, mostly among campus environmentalists, who have actively challenged their colleges and universities to analyze and reconfigure their retirement and investment funds so as not to incidentally harm the planet.
The movement has also become an opportunity for foundations and organizations looking to minimize their hypocrisy on the environmental issue to declare their investments “completely green.” Celebrities like Leonardo DiCaprio and foundations like Rockefeller, use the divestment movement to clear their own consciences. Divest/Invest estimates that, this year, $2.6 trillion in investments to fossil fuel industries will halt.
But divestment can only do so much. According to an Associated Press report, while “divestment” might make celebrities like Leo feel good about themselves, it does little in practice to stem the flow of real investment to energy companies and other fossil fuel power players, because energy and infrastructure are surprisingly good investments (just ask activist Tom Steyer, whose hedge fund maintains millions in foreign fossil fuel investments).
And while the divestment movement maintains that it achieves high numbers, it bases its “divestment” totals on assumptions: according to organizers, they suspect that each organization or foundation that commits to divestment has a portfolio which is 3-8% fossil fuel industry investments, but they can only speculate as to how much has actually been dropped, if any. There’s no proof, as with DiCaprio, that many of the organizations had fossil fuel investments in their portfolio to begin with.
As for DiCaprio, his commitment is only to divesting from fossil fuels, not refusing to use them. After all, how would Leo get back and forth to LA six times in six weeks without the aid of a private jet that burns thousands of gallons of fossil fuel every time it carries him from a movie set and back home? You can’t expect him to drive his electric car, after all! And you certainly can’t expect him and his closest, A-list, ecologically minded friends to take boats to Leo’s Saint-Tropez charity gala to protect the environment. That’s simply unheard of!
Renee Descartes, Francis Bacon, and Aristotle are all famous names in science. Countless students have learned of their works for centuries. But apparently, for liberals, these eminent scholars, and their work on science relevant to today’s climate change debate, is unknown. They are, after all, dead white males, so from the progressive perspective, they are nary worth the worry.
Knowing about Descartes, Bacon and Aristotle would have helped a lawyer/professor and blogger who on September 24 published an intriguing, if odd, item. “Antarctic sea ice has grown to a record large extent for a second-straight year,” wrote Ann Althouse, of the University of Wisconsin School of Law, where she has been on the faculty since 1984, at Althouse.Blogspot.com. “baffling scientists who seek to understand why this ice is expanding, rather than shrinking, in a warming world.”
Althouse goes on to quote Climate Central’s Michael Lemonick, and then concludes that climate science is “so complicated, it is no wonder they can’t understand it.”
Complicated, indeed. Descartes, Bacon and Aristotle all studied why warm water freezes faster than cold water generations ago. This is not something Althouse and her intellectual cohort would understand, however, as it would require a knowledge of the history of science, as well as some modern science.
So we’ve found an even more modern citation on the ice challenge to save Althouse from the trouble of having to read the dead white males of science.
Physicists report on the phenomenon, which you have probably observed yourself when putting a tray of warm water into the refrigerator to make ice cubes.
“Now a team of physicists from the Nanyang Technological University in Singapore, led by Xi Zhang, have found evidence that it is the chemical bonds that hold water together that provide the effect. Each water molecule is composed of one oxygen atom bonded covalently to two hydrogen molecules. These bonds involve atoms sharing electrons and are well understood. The separate water molecules are also bound together by weaker forces generated by hydrogen bonds. These forces occur when a hydrogen atom from one molecule of water sits close to an oxygen atom from another.
The team now suggest it is these bonds that cause the Mpemba effect. They propose that when the water molecules are brought into close contact, a natural repulsion between the molecules causes the covalent bonds to stretch and store energy. When the liquid warms up, the hydrogen bonds stretch as the water gets less dense and the molecules move further apart.
The stretching in the hydrogen bonds allows the covalent bonds to relax and shrink somewhat, which causes them to give up their energy. The process of covalent bonds giving up their energy is essentially the same as cooling, and so warm water should in theory cool faster than cold.”
Just short years ago, climate alarmists were announcing, global warming meant the end of winter — with one scientist/pundit predicting school children would, within a decade, only experience snow from pictures in school text books.
Tell that to people in Alaska (and likely Europe shortly if predictions prove true).
Wood.tv out of Grand Rapids Michigan is reporting Alaska was hit with below average temperatures in early September. “Alaska’s a big state and all but one of the first order climate stations here is reporting colder than average temps. so far this Sept: Nome -2.6, Anchorage -2.0, Bethel -2.0, Fairbanks -1.9, Barrow -1.9, King Salmon -1.9, Kotzebue -1.7, McGrath -1.6, Annette -1.2, Yakutat -1.1, Kodiak +0.2.”
Its not just Alaska, however, as the Canada’s Yukon and arctic region is Russia is also getting hit with below normal cold weather. And along with the cold, record amounts of snow are falling in the region. Wood TV reports, “A major early snowstorm hit Northern Alaska. Fairbanks had 6.7″ yesterday (Fri.). That obliterated the previous daily snowfall record of 0.8″. Just north of Fairbanks, 9″ was recorded. Here’s more snowfall totals. A record low was set at Kodiak AK at 29 and small hail fell at Annette. Barrow reported 1″ of snow on the ground and Bettles had 3″. Gulkana had a low of 17. Arctic Village reported a temp. of 19 and a wind chill of +9. The high temp. of 34 in Fairbanks was 15 deg. cooler than the average high of 49 for 9/25. Alaska temperature anomaly is often the opposite of the Great Lakes. When there is a ridge over Alaska, there is often a trough over the Great Lakes and vice versa.”
But its not just the arctic that’s in old man winter’s cross hairs. The UK’s Sunday Express is reporting, scientists are warning that Britain could suffer its coldest winter in more than 50 years due to shift in due to plunging temperatures in the Atlantic ocean. In making their predictions, Meteorologists and oceanographers point to the fact,
Temperatures in the Gulf Stream have plummeted over the past year. The stream merges into the North Atlantic Drift which normally pushes warm water towards the west coast of the United Kingdom. However a drastic reduction in speed and temperature of the current has left Britain without any buffer to a bitter Arctic influx. Experts fear a repeat of the worst winter in history which saw temperatures plunge to near -20C in January 1963 causing the sea to freeze off the Kent coast.
Only time will tell whether record cold engulfs England, but what we can say for now is, at least, scientists are looking at nature once again, not carbon dioxide emissions, the dominate factor driving seasonal temperatures.
Both in the United States and internationally, some scientists and lawyers are advocating courts settle climate science disputes and punish climate skeptics. The Guardian (UK) reports Phillipe Sands, director of the Centre on International Courts and Tribunals at University College London, recently told an audience that the United Nations should request the International Court of Justice to settle the scientific dispute over the human cause and consequences of climate change, thus paving the way for future legal cases to force governments to act to prevent catastrophic climate change. According to Sands, since bodies such as the United Nations Intergovernmental Panel on Climate Change (IPCC) have concluded climate change is underway and caused by humans, “One of the most important things an international court could do – in my view it is probably the single most important thing it could do – is to settle the scientific dispute,” Sands said. “A finding of fact on one or more of these matters [such as whether climate change is man-made], or indeed on other pertinent matters, would be significant and authoritative and could well be dispositive on a range of future actions …”
Meanwhile in the U.S. on September 1, a group of 20 climate scientists signed a letter addressed to President Barack Obama, Attorney General Loretta Lynch, and Office of Science and Technology Policy Director John Holdren requesting they use the Racketeer Influenced and Corrupt Organizations Act (RICO) to investigate corporations and other organizations “that have knowingly deceived the American people about the risks of climate change, as a means to forestall America’s response to climate change.” The list of signatories includes several members of the National Academy of Sciences and numerous IPCC authors.
Judith Curry responded strongly, pointing out the material cited as evidence of a criminal conspiracy between skeptical scientists and industry, including the movie/book Merchants of Doubt, has been widely discredited. Curry notes there is no consensus concerning the causes of climate change, the dangers it poses, or the appropriate responses to it. Curry concludes by condemning the scientists signing the RICO letter: “What you have done with your letter is the worst kind of irresponsible advocacy, which is to attempt to silence scientists that disagree with you by invoking RICO. It is bad enough that politicians such as Whitehouse and Grijalva are playing this sort of political game with science and scientists, but I regard it as highly unethical for scientists to support defeating scientists with whom you disagree by such methods.”
Curry closes saying climate scientist Peter Webster did not exaggerate when he wrote an email to one of the letter’s authors, “‘You have signed the death warrant for science.’”
A progressive hack writing under the byline Hrafnkell Haraldsson last week fabricated a fact in his report on a Heartland Institute press conference. Haraldsson falsely claimed that it was stated by a Heartland speaker that Pope Francis was a pagan. This is false. This was not said at the press conference in Philadelphia on Sept. 17. A review of the video of the press conference proves this.
What was said, paraphrasing here, was that in the history of religion, there are many forms used in spirituality, and paganism is one form of spirituality. Scholarly citations from The University of Chicago and from psychiatrist and religion scholar C.G. Jung were used to support the academic argument. Orthodox Catholics and Christians have fought since the first days of the church to keep false gods, paganism, out of the church. This is a constant struggle, and man has an inherent need to worship God, but often goes afoul and worships false gods.
Flowing from this argument, was a related argument that environmental radicalism is a form a paganism as it worships creation, the earth, not the Creator. The Philadelphia Inquirer quoted the remarks from the press conference accurately; the unethical hack at PoliticsUSA.com did not, nor did the ethically challenged scrivener at Mother Jones online. A hackette at another site, whose name is best, like that of the undead Beetlejuice, left unsaid, also fabricated evidence for her report on the presser.
Let’s not forget that the progressives in the Democratic Party in 2012 tried to remove the word “God” from the DNC platform as they found His name offensive. But to advance their corrupt eco-agenda, the progressive thugs will pretend, today, that they are friends of the church. As a libertarian conservative, and a Catholic, like William F. Buckley, I find this deceptive conduct offensive.
The juxtaposition of Google tacitly accusing the EU with “digital protectionism” and “discrimination” as the EU’s Digital Chief, Günther Oettinger, visits D.C. and Silicon Valley, while the Google-created Internet Association this week asks for U.S. protection from ISP “discrimination” in an appeals court brief in support of the FCC’s Open Internet order – exposes exceptional hypocrisy.
Antitrust and privacy regulators around the world weren’t born yesterday. They know Google and its online platform allies want it both ways – manipulating policy to advantage them and disadvantage their potential competitors.
Google et al currently enjoy the benefits of a lavish U.S. industrial policy that spoils them with national-champion-like special treatment via effective antitrust and privacy passes from the FTC and multi-billion-dollar pricing-subsidies from the FCC, while they colonially expect others to subordinate their sovereign laws and interests to their domineering corporate interests.
Consider the exceptional hypocrisy in Google’s legal stance on the FCC’s Open Internet order.
By way of background, Google’s Internet Association’s brief “urges this court to uphold the FCC’s order in its entirety.”
Let’s examine the three big ways Google et al are being exceptionally hypocritical with the EU in particular on: 1) government restraint of market power; 2) privacy regulation; and 3) implicit government price subsidies.
Government Restraint of Market Power
Google’s Internet Association asserts to the court that ISPs have unique Internet gatekeeper market power. “ISPs have absolute control of the physical layer of their networks. That control, coupled with the fact that “all end users generally access the Internet through a single broadband provider,” places them in the unique position of “‘gatekeeper’ with respect to edge providers that might seek to reach its end-user subscribers.” This power “distinguishes broadband providers from other participants in the Internet marketplace . . . who have no similar ‘control [over] access to the Internet for their subscribers and for anyone wishing to reach those subscribers.’”
The first problem here is that the U.S. ISP market is much more competitive than the most important online platform markets are.
Most all U.S. consumers have 5+ facility-based, wireline/wireless, competitive choices for broadband access platforms.
In stark contrast, there is one dominant (90%) global mobile operating system platform – Google Android; one dominant global video distribution platform – Google-YouTube; only two choices of search platforms Google and Bing; only two dominant social network platforms – Facebook and Google-YouTube; and only two dominant app store platforms – Google Play and Apple’s App Store. Those in glass houses should not throw stones.
The second problem here is that ISPs are not unique in the Internet ecosystem. For example, Google’s 2.2 billion users are more than twenty times that of any U.S. ISP. Thus under Google’s theory of market power, Google enjoys dramatically more real originating and terminating access market power than any ISP globally. Claiming that ISPs are the only part of the Internet ecosystem with potential gatekeeper power is self-serving and patently false.
Antitrust authorities from the EU, India, Russia and Brazil can plainly see that Google is leading the net neutrality charge to declare that U.S. ISP “gatekeepers” with at most <30% market share, deserve the “strongest possible” price regulation in the U.S., while Google completely denies, “as a matter of fact, law and economics” that Google is a dominant Internet gatekeeper when it has >90% share of Internet search in the EU, India and Brazil.
Meanwhile, antitrust authorities in Russia, the EU, India, and Brazil have seen Google’s search dominance already extend to mobile OS dominance, and is rapidly extending its coredominance into video, maps, email, browser, apps, etc.
As Google forcefully rejects any EU privacy regulation that empowers consumers to own and control their own private data, Google’s support for the “FCC’s order in its entirety” includes support for common carrier privacy regulations that give users the right to strongly control how their private identifying customer information is used.
If Google fully support the need for strict privacy regulation for those that they allege have Internet market power, how can they, with vastly more market power, justify their refusal to respect EU law that gives consumers the right to control the use of their private data?
Implicit Government Price Subsidies
Classic protectionism is when a country subsidizes an industry to give it a powerful advantage in international trade.
Google’s support for the “FCC’s order in its entirety” also includes support for the FCC’s ban on “paid prioritization” which is an intentionally deceptive euphemism for permanently setting a price of zero for all downstream Internet traffic.
Since Google-YouTube and the other American dominant online and cloud-computing platforms are the biggest generators of downstream Internet traffic in the world by far, the FCC is non-transparently trying to establish a de facto protectionist industrial policy that forces ISPs and consumers to subsidize Google-YouTube and other online platforms’ distribution costs – permanently, both inside and outside the U.S.
Tellingly, Tim Wu, the professor who coined the term “net neutrality” made clear that net neutrality is all about subsidies by design in his white paper: “Subsidizing Creativity through Network Design: Zero Pricing and Net Neutrality.”
It is one thing for Google and online platforms to support reclassifying Internet traffic to be “telecommunications” in order to force U.S. ISPs and consumers to subsidize America’s Web national champions. It is quite another to try and force the rest of the world, under the deceptive guise of “net neutrality,” to permanently agree to a “receiving party pays” economic model that fosters, subsidizes and entrenches the dominance of America’s Web national champions as a matter of policy.
Ironically, President Obama’s call for the FCC to reverse U.S. Internet policy to reclassify Internet traffic to be “telecommunications” revives a UN-ITU treaty that promotes a “sending party pays” economic model for communications traffic.
Thus if Google and online platforms support the FCC’s new policy that Internet traffic is “telecommunications” for their national subsidy benefit, then it is harder for Google and online platforms to object to sovereign nations asserting their UN-ITU treaty rights to adopt a “telecommunications” “sending party pays” model for the biggest generators of downstream traffic.
It is hard to see how an EU Digital Single Market can fully succeed long term if it implicitly submits to massively subsidize and further entrench Google and other online platform’s digital dominance going forward via net neutrality.
In sum, just like Google has successfully tricked many that they work for users and care about user privacy when users’ privacy is the product that Google sells to advertisers, and just like Google and some of its platform allies have tricked countries out of billions of dollars in taxes on revenue earned in their country, it should be no surprise that Google is leading the latest scheme to persuade countries that Google-bankrolled net neutrality policy is good for them when it’s mainly about tricking them to protect, subsidize, and entrench Google and its online platforms allies.
It is supremely ironic and sad that America has lost the high ground in promoting free trade and guarding against protectionism, by brandishing such an exceptionally hypocritical protectionist Internet industrial policy.
When President Barack Obama was working to “sell” the Affordable Care Act (ACA), also known as Obamacare, one of the primary claims he made was that the costs associated with providing some 30 million Americans with health insurance could be offset by reducing government mismanagement and fraud. But the more time Americans have had to experience the health care reform legislation first-hand, the more obvious it has become that, like virtually all government-controlled social experiments, Obamacare’s waste of taxpayers’ money has grown to epic levels. And there’s no sign the poorly managed program is improving.
According to Whitehouse.gov, an official website of the Obamacare administration, the ACA “reduces health care costs,” in part, “by … cracking down on waste, fraud, and abuse.”
A new government audit of the Centers for Medicare and Medicaid Services’ (CMS) management of contracts made with eight companies that helped to build the Healthcare.gov website, shows the 20 contracts “most critical to the website’s operation” – worth roughly $600 million in total – were incredibly mismanaged. According to the report, millions were wasted in cost overruns, shoddy practices, and poor business practices.
John Tozzi of Bloomberg Business reports the primary reason for the mismanagement is that government employees managing the contracts were completely unprepared for the responsibilities given to them.
“In January 2012, for example, new federal rules required employees overseeing contracts worth more than $10 million to undergo 96 hours of training meant to prepare them to manage complex projects,” reported Tozzi. “CMS disregarded this requirement and allowed less qualified employees to oversee contracts worth as much as $50 million, according to the audit. One employee, who isn’t named in the report, oversaw a $130 million contract for at least 15 months without even the lower-level certification that the government requires for managing contracts worth more than $25,000.”
The reckless treatment of taxpayers’ hard-earned money is hardly a novel problem for government or Obamacare. Estimates released in 2014 found the failing state health insurance exchanges in Maryland, Massachusetts, Nevada, and Oregon wasted $474 million. Phil Kerpen at The Federalist, however, says the figure should be much closer to $1.2 billion.
Vermont wasted millions of federal and state tax dollars trying to build a single-payer health insurance system, dubbed Green Mountain Care, but after years of heated debate, even the far-left lawmakers of deep-blue Vermont couldn’t justify the massive tax increases that would have been needed to cover the program’s costs. Vermont Gov. Peter Shumlin (D) pulled the plug indefinitely on the program in December 2014, and there’s no clear sign the flat-lining Green Mountain Care will recover.
It would be easy to point to all of these examples of waste and accuse the Obama administration and Democrats of devising a terrible government program, but the reality is whenever government gets involved in the free market, there will be waste, fraud, and corruption. Some programs are worse than others of course, but as a general rule, the more power the government is entrusted with, the more taxpayers end up paying in unnecessary costs.
Politicians often say, as Obama did in 2009 when he was running around the country desperately trying to convince Americans to support the Affordable Care Act, government can pay for additional services and programs by cutting fraud and waste. History has proven over and over this is almost never the case. Government may clean up waste in one area, but whenever a new program is implemented, more waste is sure to follow.
The free market will always operate more efficiently than government-created programs because free-market businesses must be more efficient to survive. Unlike the national government, private businesses and entrepreneurs cannot simply print their own money when things don’t go as planned, and they certainly can’t go to China and other foreign powers to beg for billions of dollars, as the United States has done countless times over the past decade to cover growing costs.
Businesses have to budget their costs and make difficult decisions to keep spending from getting out of control. If they don’t, they go bankrupt. If the national government fails to make smart business decisions, they just take more money from the American people.
This unsustainable strategy must stop, and a good place to start is by repealing and replacing Obamacare with commonsense and compassionate reforms, such as allowing customers to purchase health insurance across state lines, giving more power to the states to manage Medicaid and other government health programs, and increasing the number of doctors. These solutions, and many more, empower consumers and businesses alike to make smart, cost-effective decisions that benefit everyone while providing quality medical care.
Last year (2014), China overtook the United States in gross domestic product adjusted for purchasing power (GDP-PPP, see point 4 for explanation), according to both the International Monetary Fund (IMF) and the World Bank (Note 1). It may come as a surprise, but this is really a matter of China simply reasserting its position as the world’s largest economy, which it had lost around 1890 to the United States. This is based on estimates developed by the late legendary economist Angus Maddison of the Organization for Economic Cooperation and Development (OECD).
Over the 515 years from 1500 to 2015, the available data seems to suggest that the largest economy in the world almost always been either China or the United States. The one exception indicated was in 1700, when India had the highest GDP (for most years there is only incomplete data). This article provides highlights of GDP PPP data in US$2015 (Note 2), beginning less than a decade after Columbus “discovered America” and less than 70 years after the last great pre-Columbian Chinese sailing expedition, led by Admiral Zheng He. Maddison’s data is used and adjusted to 2015$ through 1970, with IMF data used for 1980 to 2015.
Further, in the earlier years, virtually all nations had very low GDPs per capita. This was to begin changing with the industrial revolution. Thus, the early data can be characterized as being strongly related to population, because there was much less difference in GDP per capita based on level of development.
1500: In 1500, China was the largest economy in the world, followed closely by India, both with estimated GDP’s of approximately $100 billion. France was a distant third at approximately 18 billion, followed closely by Italy and Germany. What is now the United Kingdom ranked 10th, at barely one quarter the output of France (Figure 1).
1700: This was the only reported year between 1500 and 2015 that China or the United States did not lead the world. India had the strongest economy in 1700, closely followed by China. Throughout the entire period to the middle of the 20th century, China’s economy was larger than India’s by a relatively small margin. At the same time “the great powers” of the West were still well behind China and India, with France retaining third-place with a GDP less than one fourth that of China and 1/6 that of India. The United Kingdom was yet to break into the top five, ranking eighth (Figure 2).
1820: By 1820, the next year for which full data is available, China resumed its lead and by a larger margin. India was second, slightly more than one half that of China. The United Kingdom finally appears, in third-place with a GDP one sixth that of China and only slightly ahead of France (Figure 3). The available data shows China to have retained the top position through 1870.
1890: By 1890, the United States had emerged as the world’s largest economy, opening up an approximately five percent lead over China. India ranked third, followed by the United Kingdom and Japan (Figure 4).
1930: By 1930, the ascendancy of the United States was clear. China, then reeling from social disorder and civil strife, still remained the second largest economy, but trailed the United States by approximately two thirds. There was little difference between China and the next three largest economies, Germany, the United Kingdom and India (Figure 5).
1980: Half a century later, in 1980, the United States retained a similar lead, but now over second-ranked Japan. Germany was a close third, followed by Italy and France. India ranked ninth, approximately 30 percent ahead of 10th ranked China. Then the Deng Xiaoping era was getting underway (Figure 6), leading to China’s resurgence back towards the top.
2010: China’s ascendancy was obvious by 2010, reaching within 20 percent of the United States, which remained number one. This had been a dramatic reversal, since China’s GDP had been little more than one tenth that of the United States only 30 years earlier (1980). India was also restored to a leadership position, ranking third. Japan was fourth and Germany was fifth (Figure 7).
2015: The 2015 IMF projections show China to have recovered first-place after at least a 125 year hiatus. The United States was second, approximately four percent behind China. India, Japan and Germany remained in third, fourth and fifth place (Figure 8). The BRIIC developing nations are in the top 10, with Russia, Brazil and Indonesia ranking sixth through eighth (in addition to China and India in first and third place). Two other powers of Europe round out the top 10, the United Kingdom and France.
The impact of China’s difficult 19th century is indicated by a 10% GDP decline, despite an increasing population. It seems likely that this is at least partially attributable to the Opium Wars, treaty ports and related extraterritorial jurisdiction by external powers. China’s GDP in 1900 had fallen 10 percent from its 1820 level.
It is notable that through much of their empire-colonial relationship between the United Kingdom and India, the colony had the larger GDP. This was the case from 1820 through 1900. This is principally due to the larger population of India. For example, in 1870, India’s GDP was one-third larger than that of the United Kingdom. In the same year, however, the UK GDP per capita was six times that of India.
Similarly, while China’s GDP is larger than that of the United States in GDP, its GDP per capita is about one-fourth that of the US.
GDP projections produced for 2050, by PWC (Price Waterhouse Coopers) indicate that even more significant changes could be ahead. PWC expects China to have GDP of $61 trillion (US$2014). India is projected to be restored to its previous second place, at $42 billion, just ahead of the United States ($41 billion). BRIICs members Indonesia and Brazil would be 4th and 5th, while BRIICs Russia would be 8th. Mexico and Japan would follow Brazil, with Nigeria and Germany rounding out the top ten.
If PWC is right, the dominance of China and the United States might be supplanted by the historically dominant duo of China and India. Of course, no one knows for sure. Forecasting economics is even harder than forecasting population.
Note: All data is converted into 2015 international dollars using the US GDP implicit price deflator. US dollars are the basis of international dollars.
Wendell Cox is Chair, Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), is a Senior Fellow of the Center for Opportunity Urbanism (US), a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California) and principal of Demographia, an international public policy and demographics firm.
He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.
Heartland Weekly Email: Turning Point USA’s Charlie Kirk Joins Speaking Lineup at Heartland Benefit Dinner
If you don’t visit Somewhat Reasonable and the Heartlander digital magazine every day, you’re missing out on some of the best news and commentary on liberty and free markets you can find. But worry not, freedom lovers! The Heartland Weekly Email is here for you every Friday with a highlight show. Subscribe to the email today, and read this week’s edition below.Pope Francis Misses the Mark on Economics James Taylor and Jim Lakely, U.S. News & World Report The pontiff’s heart is in the right place when it comes to his concern for the world’s poor and for God’s creation, but Pope Francis’s special knowledge and insight pertain to matters of faith, not science. The best available information indicates Francis’s prescribed agenda on climate change would dramatically worsen economic well-being, achieve few environmental benefits, and assign the poorest of the world to greater poverty and misery. READ MORE Democrat Candidates Aim for Single-Payer Health Care Justin Haskins, Consumer Power Report Obamacare was designed from the very beginning to slowly move the nation toward a government-controlled health insurance system, but President Barack Obama and his allies in Congress understood at the time the Affordable Care Act was being debated that the American people strongly opposed a single-payer model. Hillary Clinton’s proposals are just another step in that direction. READ MORE Turning Point USA’s Charlie Kirk to Introduce Angelo Codevilla at Heartland’s Benefit Dinner Charlie Kirk, founder and executive director of Turning Point USA, will join us on Thursday, October 8 to celebrate the 31st anniversary of The Heartland Institute. Turning Point USA is a national student movement dedicated to educating, empowering, and mobilizing young people on behalf of the principles of fiscal responsibility, free markets, and limited government. READ MORE Featured Podcast: Niger Innis: Why Anti-Fossil-Fuel Policies Harm the Poor Most Niger Innis, national spokesperson for the Congress of Racial Equality (CORE), joins Environment & Climate News Managing Editor H. Sterling Burnett to discuss how President Barack Obama’s anti-fossil-fuel energy policies disproportionately harm minorities, the poor, and persons on fixed incomes. LISTEN HERE Our October 8 Benefit Dinner: The Heartland versus The Ruling Class! The Heartland Institute’s 31st Anniversary Benefit Dinner will take place Thursday, October 8 at The Cotillion, 360 South Creekside Drive in Palatine, Illinois. This year’s theme is “The Heartland versus The Ruling Class,” featuring keynote speaker Angelo Codevilla, Ph.D., author of The Ruling Class: How They Corrupted America and What We Can Do About It. Donald J. Devine, Ph.D., will receive this year’s Heartland Liberty Prize. Join us for dinner, drinks, great conversation, and fellowship in liberty! MORE INFO HERE ACLU Attacks School Choice Program in Nevada Heather Kays, Reno Gazette-Journal The American Civil Liberties Union (ACLU) of Nevada, once again subordinating its professed devotion to civil rights to the agenda of public teachers unions, has filed a lawsuit challenging the constitutionality of Nevada’s education savings account (ESA) program. The ACLU claims the Nevada ESA program furthers a religious and sectarian purpose by allowing parents to choose religious educational options for their children. The truth, however, is not on the ACLU’s side. READ MORE Walking Rigs Keep U.S. Oil Production Rising Isaac Orr, Grand Forks Herald Conventional wisdom had pegged the break-even cost for oil wells using horizontal hydraulic fracturing, aka “fracking,” to be between $65 and $85 per barrel. However, advances in drilling and well-completion technology, such as multi-well drilling pads and walking rigs, have made oil and natural gas production far more efficient. READ MORE
‘Right to Work’ Laws Empower Workers, Spur Economic Growth Jesse Hathaway, Washington Times Research by Ohio University economics professor Richard Vedder suggests right-to-work (RTW) laws remove a significant impediment to the growth of state economies and individuals’ incomes. In a 2014 study, Vedder modeled the economies of states with and without RTW worker protections and found “the overall effect of a RTW law is to increase economic growth rates by 11.5 percentage points. … [The effect] is significant at the 99 percent confidence level.” READ MORE In the Tank Podcast ep4: Miniskirt Bans, U.S. Dropping in Economic Freedom, and the GOP Debate Hosts Donny Kendal and John Nothdurft return in Episode 4 of “In the Tank,” a weekly podcast featuring interviews, debates, roundtable discussions, stories, and light-hearted segments on current events from Heartland’s libertarian perspective. In this edition, featuring Heartland investigative reporter Emily Zanotti, Donny and John talk about bans on miniskirts, the U.S. fall in rankings of economic freedom, and the second GOP debate. READ MORE Reforming Civil Asset Forfeiture Laws in Wyoming Matthew Glans, Research & Commentary Wyoming’s civil asset forfeiture laws give law enforcement agencies significant financial incentives to seize people’s property. The Institute for Justice argues Wyoming’s civil forfeiture laws are particularly bad because they allow the government to seize and keep property merely by establishing probable cause to suspect the property was connected to a crime. READ MORE GOP Presidential Hopefuls Emphasize Choice at Education Summit Ashley Bateman, The Heartlander “A bureaucracy by nature will standardize and systematize,” said presidential candidate Carly Fiorina. “They won’t standardize goals; they will standardize methods. … Common Core may have started out as a set of standards, but what it has turned into is a program that honestly is being overly influenced by companies that have something to gain – testing companies and textbook companies.” READ MORE Invest in the Future of Freedom! Are you considering 2015 gifts to your favorite charities? We hope The Heartland Institute is on your list. Preserving and expanding individual freedom is the surest way to advance many good and noble objectives, from feeding and clothing the poor to encouraging excellence and great achievement. Making charitable gifts to nonprofit organizations dedicated to individual freedom is the most highly leveraged investment a philanthropist can make. Click here to make a contribution online, or mail your gift to The Heartland Institute, One South Wacker Drive, Suite 2740, Chicago, IL 60606. To request a FREE wills guide or to get more information to plan your future please visit My Gift Legacy http://legacy.heartland.org/ or contact Gwen Carver at 312/377-4000 or by email at firstname.lastname@example.org.
It is timely to fact check the Federal Government’s storyline that broadband is a ‘core utility,’ given a new White House report that directs municipalities that broadband is a “core utility… like water, sewer and electricity;” and given that a senior FCC official recently encouraged local municipalities at the NATOA conference to build their own local broadband infrastructure with the FCC’s backing now that the FCC has claimed the legal authority to preempt State laws limiting municipal broadband.
If municipalities are fair, thorough, and fact-based in their decision making, they can’t help but conclude that broadband service has none of the relevant factual characteristics that public utilities like water, sewer or electricity do.
Only broadband technology enables interoperability. The simple binary ones and zeros of digital computer technology inherently enable many different technologies and physical mediums to interoperate as one integrated service/inter-network. Water, sewer, and electricity utility distribution networks are inherently non-digital and thus not interoperable or interchangeable like broadband networks inherently are. Simply, broadband data, text, voice, and video mix; whereas utility water, sewage and electricity don’t mix.
Only broadband technology enables different delivery speeds. Competitive broadband networks are all about constantly improving the speed of delivery and offering the choice of differentiated speeds by price based on consumers’ ever-changing needs, wants and means. Public utilities like water, sewer, and electricity, are designed to deliver a set and uniform delivery speed to everyone — that is never expected to change.
Only broadband technology enables rapid innovation. Competitive broadband services are characterized by continuous change, diversity, and differentiation – preconditions for rapid innovation. In contrast, public utility services like water, sewer and electricity are characterized by strictly-enforced standard uniformity and glacial rates of change.
Only broadband physics enable competitive facilities. The physics of broadband delivery facilitate competition while the physics of water, sewers and electricity delivery facilitate monopoly. Water, sewers and electricity can only be delivered in one basic physical manner unique to that service. In stark contrast, broadband can be delivered electrically over many kinds of metal wires, optically over fiber optic cables, and wirelessly in a wide variety of ways.
Only broadband economics are competitive. Being digital, broadband provider facilities inherently have dramatically better economics because of multi-use-facilities, service bundles, rapidly declining digital equipment costs, and lower capital-cost intensity via wireless. Public utilities are based on single-use, high-capital-intensity, “natural monopoly” utility economics, where economies of scale and scope preclude the possibility of competitive facilities and services being economic.
Only broadband enables consumer choice: In broadband Internet access, the vast majority of Americans have a diversity of choices of broadband technologies, providers, services and features; i.e. free WiFi or pay-for-service via cable modem, DSL, fiber, wireless, or satellite. Consumers can also choose between stationary, mobile or hybrid access services and select from a wide variety of speed and price offerings. As one of the top-advertised services in America, most all American consumers know they can get broadband from their local cable company, local phone company, four national wireless broadband companies (Verizon, AT&T, T-Mobile, & Sprint), and two national satellite companies. (Only a few percent of Americans in expensive-to-serve-areas, and where no private broadband provider is providing service, warrant a municipality filling the void. Public utilities exist for services where consumers generally would otherwise have no viable economic alternative or choice.)
Only competitive broadband maximizes investment. Private investors invested over one trillion dollars of long-term risk capital in competitive broadband facilities in the U.S. over the last decade under the assumptions that broadband is a competitive service with growth potential and no prospect of utility regulation. This massive and unparalleled infrastructure investment, prior to the FCC deeming the Internet a Title II, common carrier, utility, was incontrovertible economic evidence that broadband service is not a “natural monopoly,” or likely to become one.
In sum, if broadband is not a “natural monopoly,” it is unnatural to subject broadband to monopoly utility price regulation, and for a municipality to force a government subsidized, favored, and advantaged broadband network on a competitive broadband marketplace.
Any fair and fact-based analysis by a municipality will confirm that broadband networks do not have any of the natural physical or economic characteristics of public utility services.
The relevant facts here are clear: competitive broadband service is nothing like water, sewer or electricity utilities.
As the adage goes, if it doesn’t look like a duck, walk like a duck, fly like a duck, swim like a duck, sleep like a duck, eat like a duck, or quack like a duck – it’s not a duck!
Under consideration in Washington, D.C. is legislation that will fundamentally transform our patent system. It will render this Constitutionally protected intellectual property product – dramatically less protected. The bills to which I refer are the Innovation Act (House) and the Patent Act (Senate). There are many, many reasons to oppose them.
The reason given for why this legislation is allegedly necessary is to undo the “patent troll.” Their definition: Patent “trolls” are abusing ridiculously broad patents to shotgun lawsuit letters all over the place. Demanding money for the use of their ridiculous patents – or they’ll sue. Our definition: Their definition misses several important things. Let’s look at but a few.
If a patent is ridiculously broad – but approved by the United States Patent and Trademark Office (USPTO) – it’s a legal patent. On which lawsuits can be based. Undermining patent protection in response to this is like responding to a guy robbing stores by forcing store owners to remove the locks from their doors. The problem is government. Fix how the government approves patents – and craft a better way to review the ridiculous patents in circulation.
Because patent “trolls” are suing, this terrible legislation is being pitched as “lawsuit reform.” (At least) two problems here. One: Many, many legitimate patent holders – in possession of legitimate, rightly-approved patents – have to sue to protect their property from thieves. Legislation delineating between these two groups – the legit patent holders and the “trolls” – is micro-surgery. Government doesn’t do micro-surgery – it slams with hammers. In trying to address the “troll” subset, DC is poised to bludgeon the entire patent system.
These “reformers” are also considering another really, REALLY TERRIBLE idea. That sets the stage for near-limitless government-caused damage to not just patents – but the entire private economy. Via, in large part, an explosion in the number of subsequent lawsuits – exactly the opposite of the “reformers’” intended outcome. They want to “pierce the corporate veil.”
(A) legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood….
So why is DC looking to end this protection?
One of the discussion points about the new PATENT Act reform proposal making the rounds is the “reach through” that pierces the corporate veil for those entities….I’m left scratching my head and wondering whether this is where we want to make our stand, heading down the slippery slope of corporate veil piercing….
And it is indeed a very slippery slope. If government shreds the corporate veil here – the precedent is set. Of COURSE the Democrat Party – an operational partner of the trail lawyers bar – will seize on it to dismantle this lawsuit bulwark everywhere they can.
Which yet again begs the question: Why are Republicans giving Democrats this litigious impetus? And doing so in the name of “lawsuit reform?” Unless by “reform” they mean exponentially increasing the number of lawsuits to come. Which seems to not be what they have in mind. We certainly hope it isn’t, anyway.
When is the price of some marketable good or service at or near zero? When either the supply of it is so plentiful that virtually any demand, no matter how great, can be satisfied. Or when no matter how large or small the supply of it may be, people’s demand for it is so low that nobody is willing to practically pay anything for it.
On Thursday, September 17, 2015, Federal Reserve Chair, Janet Yellen, announced that, once again, America’s central bank was leaving a key interest rate – the Federal Funds rate at banks lend money to each other overnight – at barely above zero. The Federal Reserve has manipulated and maintained this interest rate near zero for almost seven years, now.
Fed Policy Has Created Zero and Negative Interest Rates
When adjusted for inflation, the Federal Funds rate and the yield on one-year U.S. Treasury securities have been negative for almost all of the time since 2009. In real buying terms borrowed money has been either costless or actually given away with a positive real return to the borrower!
In other words, imagine that you borrowed $100 from someone with the promise that in one year you would return the $100 plus $2, or a two percent return on the lender’s money. But suppose that in a year’s time, you pay back the lender only $98.
That is what a negative real rate of interest means. After adjusting for inflation, the lender has less real buying or purchasing power than he did before with the principle of his loan. If you have lent that $100 but over the year price inflation has been, say, four percent, then when you get back $102 from the borrower (your $100 of principle and $2 of interest), this is not enough to buy at higher prices what the $100 had bought in the market before you lent that sum of money a year earlier.
As a reflection of this, the prime rate of interest – the rate of interest normally charged by banks to most “credit worthy” borrowers – has been around 3.35 percent since 2009. Even with price inflation (as measured by the consumer price index) relatively low since 2008, averaging in the range around 1.5 to two percent for the last seven years, this means that when adjusted for inflation, such borrowers have been paying a real rate of interest of barely two percent for most of that time.
At the same time, mortgage rates on 30-year conventional loans have been between 3.5 to 4.5 percent since 2011, so again when adjusted for price inflation, real mortgage costs for a homeowner has been between 1.5 and three percent.
By historical standards, it has cost little or almost nothing to borrow funds in the American financial markets, courtesy of the former chairman Ben Bernanke and current chairwoman Janet Yellen and the other members of the Board of Governors of the Federal Reserve, who possess the monopoly manipulation authority over the quantity of money in the banking system.
This interest rate manipulation has also served the U.S. Treasury’s purposes, considering that the Obama Administration has added $8 trillion to the federal government’s accumulated debt, from $10.6 trillion when Barak Obama took office in 2009 to $18.4 trillion today. The cost of U.S. government debt payments would be far greater if the Federal Reserve had not kept interest rates artificially low and created the illusion that the interest cost of government borrowing can be almost ignored.
The Fed Pays Banks Not to Lend with Created Money
Nominal and real Interest rates would have been even lower and price inflation, no doubt, significantly higher if the Federal Reserve during this time had not played an interesting game. While keeping the Federal Funds rate at barely above zero due to the vast amount of money that has been infused into the banking system since 2008 through its “quantitative easing” policy – around an additional $4 trillion in the banking system – the Federal Reserve has paid banks a rate of interest slightly above the Federal Funds rate for those banks not to lend this created money to other banks or to the borrowing public.
Thus, over $2.8 trillion of this Federal Reserve created money has sat in the banks as unlent “excess reserves.” But even with this benching of much of the money created by the Fed, the huge amount has nevertheless, no doubt, worked it usual effect of distorting financial markets, misbalancing the relationship between savings and investment, and generated misdirection of resources and labor, and malinvestment of capital that will show themselves when the current economic recovery ends. It will be seen to have been at least partly built on the shifting sands of monetary wizardry having little to do with sustainable economic balance and growth.
Interest rates are market prices that are meant to provide relevant and meaningful information to market participants about the realities of supply and demand. Income earners choose to set aside a certain percentage of their income in the form of savings. They deposit these sums into various financial institutions that, then, funnel out the pooled savings to interested and credit-worthy borrowers.
Investment Needs Savings and Takes Time
Investment requires the availability and application of real resources – the allocation of raw materials and the use of a portion of the existing labor force to manufacture and at least maintain the capital goods – tools, machinery, equipment, plant and factory structures – with which the finished and final goods and services are produced and made available on the market that consumers desire.
But all this takes time, repeated periods of production, through which goods are not only made once or even twice, but continuously so every day, every week, every month, every year there is a constant flow of those desired goods and services at our disposal when and where and in the quantities and qualities that we are interested in buying.
Consumption and production may appear to be synchronously going on, seemingly without having to wait for the desired good to be available until a period of production has been completed. But this is like the assembly line on which at the very moment the production of some good is beginning the assembling process at one end, a finished product is coming off the conveyer belt at the other end.
But each individual unit of this good must go through the time consuming process of each of the stages of being assembled at the respective production points along that conveyer belt.
If resources, capital equipment, and labor are not put aside and maintained, again and again, to begin the process of assembling the next unit, the production process would in short order come to a halt and there would be no new units coming off the completion end of the assembly line.
It also needs to be remembered that depending on the nature, type and manufacturing requirements of each good from start to finish, the respective periods of production may run from a few weeks to months or even several years.
There must be the necessary savings in the economy to purchase, apply and use the required raw materials, capital equipment and laborers so each of the goods in progress in partly completed sequence can be brought to its final finished, useable form ready to be sold to consumers in the market.
The revenues earned, if consumer demands have been successfully anticipated by the entrepreneurs guiding, directing and overseeing the production process, will recoup the investment costs that have been incurred during the time-consuming periods of production, including the principle and interest of the borrowed money to undertake the projects, plus maybe a net profit as the entrepreneurs’ reward for a job well done.
Of course, particular entrepreneurs, having to anticipate future consumer demands in deciding what to produce and over what time-frame to have a good to sell in that future, may have faulty expectations resulting in losses suffered. If they persist this will see them lose control over their production processes and the businesses will pass into more competent enterprisers’ hands.
New Investments Need More Savings and Often More Time
If new investment projects are to be undertaken, or existing investment activities are to be enlarged or expanded, then more of the society’s resources, capital equipment and labor services must be saved and set aside from earned income rather than being used for immediate consumption goods production purposes.
There is no alternative to these trade-offs between more immediate consumption goods production and longer-term investment goods production to enhance the quantities, qualities and varieties of available goods further in the future. The means at our disposal, as individuals and as members of society, are limited, and they are used either for one purpose or the other. Scarcity is a constraint inescapable under the human condition.
Goods and services of all types are bought and sold through the medium of money. But pieces of paper money, or even minted coins of gold or silver, cannot make the scarcity of real raw materials, capital equipment, or labor services disappear or less constrained. Printing pieces of paper currency does not create out of thin air more coal, iron, or platinum. Such paper money does not result in capital equipment miraculously falling from the sky. Nor do they make materialize more working age laborers ready to be assigned to desired jobs.
Interest Rates Balance Savings and Investment
One essential and crucial function of market-based and generated rates of interest for borrowed savings is that it helps coordinate and confine investment projects undertaken to the limits of the resources freed up to bring them to completion and there after maintained (to the extent to which the investing entrepreneurs have made market-oriented correct decisions concerning the products consumers will want to buy when the production process is completed).
This balancing and coordinating function of interest rates in financial markets is undermined and distorted by central banking “activist” monetary policy that injects more money into the banking system. Since money is the medium through which the savings and investment process is carried out, the additional quantities of money made available for lending purposes creates the false impression that there is more savings to support longer and more time-consuming investment projects than is actually the case. And the artificially lower interest rates make it appear that these new or extended investment projects are more profitable they would seem if higher market-based interest rates prevailed in the financial markets.
To use our earlier imagery, new assembly line production projects are invested in and begun, and some existing production processes are expanded by undertaking lengthier and more time consuming assembly activities involving more stages added to the conveyer belt process to take advantage of greater productivity arising from a more intensive division of labor of specialized steps.
Interest Rate Manipulation and Distorted Investments
But given the actual decisions by income-earners to divide their incomes between consumption spending and savings, the patterns and time horizons of the new or expanded production processes are eventually found to be unsustainable in terms of being completed and-or maintained.
Income earners, as expressed in their consumption-savings choices desire to have more resources, capital equipment, and members of the labor force employed in production processes with short-term time horizons and quicker production turnarounds to have a larger quantity of desired consumer goods closer to the present.
As this point, the investment boom stage of the business cycle comes to an end; investment projects cannot be completed or cannot profitably be maintained if brought on line. The downturn of the business cycle sets in. The imbalances between savings choices and investment decisions, and allocation and use of resources, capital and labor between shorter and longer production processes become visible.
There needs to be a rebalancing of supplies and demands, prices and wages, resource, capital and labor uses among different sectors of the economy to more correctly reflect post-boom realistic market conditions and profitabilities.
Jobs are temporarily lost, the unsustainable and unprofitable investment projects must be written down or written off, and illusionary wealth positions will be found to be not as great or as high as they appeared in the earlier boom phase of the business cycle.
Market Corrections and Central Bank Interference
A healthy restoration of actual market stability and coordination between savings and investment, between supplies and demands, requires an end to the monetary expansion and the reemergence of market-based interest rates that can tell the truth about the availability and cost of borrowing money and the real resources they are supposed to represent, so investments undertaken stay within the bounds or types and time-durations consistent with the saved means of production upon which they are dependent.
For seven years, now, since the financial, housing and investment collapse of 2008, the Federal Reserve has prevented the full and necessary correction process to play itself out due to its huge monetary expansion and persistent prevention of allowing interest rates to tell the truth.
That does not mean that there has not been some degree and form of real market adjustment and correction and return to business profitability and employment opportunities. But overlaid on any reasonable and market-guided economic recovery has been, inevitably, new investment activities and labor and resource misallocations driven by the false signals of manipulated lower interest rates that have been financed not by real savings but by the lure of plentiful money created by the Federal Reserve’s “easy money,” quantitative easing policies.
Indeed, how can anyone know the real availability of savings and the real profitability of various time-consuming investment projects when the market rates of interest that are supposed to serve as the coordinating mechanism for this to be possible have been prevented from working, in fact, even from fully existing?
A near zero set of rates of interest surely are sending out false signals that savings and the resources they represent are available in such plentitude that anything to be invested in is there for the taking.
What has restrained the American investment boom from being as large and misdirected as it otherwise might be, are other Federal Reserve and government policies. Among these are most especially the Fed’s bribing banks not to lend all that the central bank has created as addition loanable reserves in the banking system, and the policies and environment of anti-business and anti-capitalist policies that the Obama Administration has introduced in the marketplace. Higher taxes, heavier and more intrusive regulations, and uncertainties about in what direction will the government’s interventions come next have all brought about their own effects in retarding normal market recovery, growth and job creation.
Business Cycles are Made by Central Banks
What has happened over the last decade is that a housing, stock market and investment boom that was fueled by a Federal Reserve easy money policy beginning in 2003 finally came crashing down in 2008-2009. Then, in the name of preventing the downturn mutating into a feared new deflation-driven “great depression,” the Federal Reserve has opened the monetary spigots for the last six years setting in motion the same type of stock market rise, capital malinvestments, and labor misallocations that its monetary intervention had caused earlier in our century.
Now the Fed authorities want to rein in the monetary expansion and “nudge” interest rates up to prevent a future “overheated” economy as measured by their statistical macroeconomic benchmarks. But if they do, this threatens to shake out and bring down the imbalanced market relationships their own monetary policy has created.
This is how and why the rollercoaster of the business cycle keeps repeating itself, though each phase of the cycle varies in duration and many particular characteristics depending upon the specific historical circumstances of the time. The Federal Reserve’s own expansionary monetary policy sets off the boom that finally turns into a recession that the Fed authorities view themselves as responsible to prevent or ameliorate, which only sets in motion the next unsustainable boom by a new compensating monetary expansion.
So while the Federal Reserve has chosen to keep the Federal Funds rate near zero, it is merely delaying the inescapable and inevitable result of its own monetary policy – another needed economic correction that its actions will have generated but which it will, no doubt, blame on the supposed “failures” of the market economy.