Out of the Storm News
Just when it seemed that Republicans might take the plunge in reforming outdated retransmission consent laws, it sounds like they found the water colder than expected and have settled on just a few tweaks around the edges in a bill reauthorizing STELA, the Satellite Television Extension and Localism Act. This all played out rather quickly and to the surprise of many, as House Communications and Technology Subcommittee Chairman Greg Walden , R-Ore., had previously signaled that he’d pursue a “clean” STELA reauthorization without changes to retrans.
You might remember some of my previous writing on an effort by Rep. Steve Scalise, R-La., to dismantle our archaic television regulatory structure piece by piece. His excellent Next Generation Television Marketplace Act would have repealed entirely retrans and related preferences while also eliminating compulsory licensing and ownership restrictions for broadcasters. This bill, in my view, takes the right approach of substantially reforming the ill-fitting rules that impact both sides of television negotiations: content and service provider. By getting rid of most of the relevant regulations that distort the market, the Scalise bill would have freed carriage negotiations of government meddling, thus turning them into truly private negotiations between private entities.
The most obvious vehicle to which such reform would be attached is STELA, the satellite TV law that’s coming up for reauthorization this year. And while full-scale retrans and licensing reform didn’t make it in, early reports did indicate that a few significant related changes would be made, most notable among them elimination of the rule forcing service providers to carry stations that elect retransmission consent on the so-called “basic tier” of programming that all subscribers must buy.
As recently as Monday, the word was that this provision was in the STELA draft, but what a difference a few days of concerted lobbying and expensive PR can make! Word today is that the basic tier provision is no longer in the draft after broadcasters cried foul. What is still in, however, as best we know is elimination of a regulation preventing service providers from blacking out signals during the “sweeps” period where ratings are measured. In addition, a provision of the draft will allow service providers to negotiate retransmission agreements jointly with certain stations.
These changes would be significant because the current regulations artificially reduce a service provider’s bargaining power. The retransmission consent regime ensures that Uncle Sam is a central player in these negotiations and the other rules that help govern the process essentially place government’s thumb on the scale between the two parties. The basic tier and “must carry” rules reduce their ability to choose which content to distribute, or not, and how that content is structured for customers. The sweeps rule prevents them from dropping a signal for fully one-third of the year, while broadcasters are allowed to pull theirs whenever they choose (like, say, right before the World Series). “Network non-duplication” rules prevent them from cutting deals with broadcasters outside their local area.
The result of this meddling is likely making service more expensive and less efficient for consumers, as some negotiations lead to blackouts or exceptionally high retransmission fees. That’s why it’s encouraging to hear House leaders begin talking about reforms that would repeal outdated rules in service of getting us closer to the kind of free market negotiations that should reign in television service (and just about everywhere else). Though they’ve scaled back their ambitions somewhat, this is at least a worthwhile start to address a known issue on a relevant bill that’s moving through Congress this year. I would very much like to keep peeling the onion of misguided regulations to get to the center, but you’ve got to start somewhere and the crusty brown stuff on the outside seems as good a place as any.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
WASHINGTON (Mar. 6, 2014) – The R Street Institute today announced the launch of Unfair By Design, a project seeking to make the design patent system more transparent and less susceptible to frivolous lawsuits.
Recent legislation in Congress has focused on creating a more open and harmonized patent system, but these bills do little to address flaws in the design patents system, which has been growing rapidly in number of applications and grants. Under current infringement standards, if one design element is substantially similar to a patented competitor, one can be held liable for potentially hundreds of millions in damages, even if the element is something as simple as rounded edges on a smartphone.
“The application system for design patents has long been deeply flawed and opaque, a fact which has become more disconcerting in recent years as courts have significantly expanded the definition of what counts as infringement. Serious questions can be raised about whether design patents are needed at all, but at the very least, the process should be changes to ensure fewer frivolous and anticompetitive patents are granted,” said Zachary Graves, digital marketing director at R Street. “We’re excited about the formation of this project and hope to welcome new partners on board.”
Graves went on to describe how Congress could affect real change with to the patent system and named three principles for design patent reform: More transparency in the application and publication process, curbing abuse and “evergreening” of design patent applications and education about the design patents process for lawmakers.
“We are heartened that Congress and the Federal Trade Commission are addressing this important issue. These are steps in the right direction, but we must ensure that design patent reform is not overlooked,” Graves said.
For more information, please visit www.unfairbydesign.org
As the lengthy Hollywood awards season has shown us, fashion – especially red carpet fashion – is rife with faux pas, but none so great as “stealing the look.” It is considered terrible form to shop for your own paparazzi-ready gown in the pages of In Style magazine’s party circuit coverage, and worse form to look better than the original wearer. It doesn’t stop most rising starlets — especially the ones interested in making a name for themselves in a “who wore it better?” piece — but it never quite improves anyone’s situation.
Fashion itself is no different. Designers strive to inject fantasy and innovation into their fall ready-to-wear and couture lines, featured weeks ago in New York, last week in London and this week in Paris. The major fashion houses set the stage for style in the seasons to come. And then, consumers interested in being wallet-friendly fashionistas have created an ever-expanding market of “knockoff” fashion, allowing them to duplicate runway looks for a fraction of the price, shopping in their local mall instead of on Fifth Avenue. In an economy as unpredictable as ours, the market for consumer-driven fashion from stores like Forever 21, Zara, H&M, TopShop and ASOS seems nowhere near fading. (Although Forever 21 has faced a bevy of lawsuits, accused of copying the work of Anna Sui, 3.1 Phillip Lim and others.)
So how do designers, who work all year long in their chosen artistic field, protect the designs they create and preserve their own luxury? At least one group of designers has suggested expanding the scope of design patents — those patens given out to protect a product’s new and novel utility — into the realm of fashion, with the intent to protect their spin on age-old products, ready-to-wear and accessories, as a tech company would a new cell phone design.
The idea is, at least on its face, complex. Fashion rarely makes a leap forward in technology. Although there are firms working to make clothes more responsive to the human body, and even working to provide a healing and developing aspect to what you wear, most designers are merely building off basic constructions available to them since humans began crafting the first rudimentary clothing from fig leaves and animal skins (of course, fashion designs with a novel utility would already be eligible for utility patents, rather than design patents).
While a few designers have managed to invent a new clothing option – Diane von Furstenberg’s wrap dress comes to mind, celebrating it’s 40th anniversary at this year’s fashion week – those designers have often seen their work copied not by discount fashion retailers but by other high-end designers. Just last week, Roberto Cavalli had a small meltdown over Michael Kors’s Fall 2014 collection, accusing the Project Runway mentor and his million-dollar commercial fashion operation of “stealing” the works of other brands, including Cavalli’s, Celine, Hermes, Louis Vuitton and Tory Burch.
And designers who would most need to protect their work — upcoming and independent labels whose clothes are knocked off most often by consumer-driven fashion entities — would hardly be able to afford the time and fortune that initial paperwork and follow-up litigation would cost; no designer can afford to wait months for a single design to pass through a government initiation process, when runway shows are a bi-annual staple.
There are, of course, already means at a designer’s disposal, namely copyright protections, that can afford some measure of control over who gets to sell a knockoff of your design. While design patents have been and would be notoriously difficult to prove, copyrights – which protects an artist’s control over their work in print – have been litigated successfully, including against discount fashion retailers. Forever 21, often the victor in suits leveled by top brands seeking to prevent the store from selling “designer inspired” garments (such a regular occurrence they’ve noted that it’s part of their business strategy and a budgeted expense), was easily on the losing end of a lawsuit involving a perfectly copied fabric pattern, swiped from indie fashion house Feral Childe.
Copyright also has more lenient boundaries than the existing patent structure. As the world of digital media expands, so has the world of copyright, as musicians, writers and photographers look to harness the power of its protection on the Internet. Visual works, like Feral Childe’s textile designs, logos like Louis Vuitton’s eponymous “LV” and Burberry’s iconic tartan have all earned copyright protection alongside their luxury status, a protection that has served to preserve their status as luxury brands. Considering fashion designs “visual works” for the purpose of copyright protection could do the same for up-and-coming labels looking to make a unique mark on the field, while also preserving fashion’s process of marketing and innovation, even to discount markets.
Slight changes, derivative products and unique takes inspired by iconic designs are still available to designers looking to build on fashion’s storied history. After all, the future of fashion would not look the same without modern touches to Givenchy’s little black dress, Dior’s cinched-waist feminine suit or Diane von Furstenberg’s wrap dress, even as those fashion houses look to the seasons ahead.
Some designers have, of course, headed off the trials of consumer-driven discount fashion by inking deals with large-scale retailers. Chanel’s Karl Lagerfeld, for example, has embarked on partnerships with discount fashion retailer H&M and retail powerhouse Macys. Missoni cemented a record-breaking partnership with Target with products that sold out across the globe, and ready-to-wear staples like Nanette Lepore and Vera Wang are now working with JCPenny and Kohl’s respectively. Market-friendly strategies that anticipate consumers’ needs and wants, while preserving the good name of the fashion house and building consumer demand for the same designers’ works at higher price points. By embracing the free market, some designers have bypassed the need for litigation altogether.
In short, the cumbersome, complicated and time-consuming nature of design patents makes them a poor match for the fashion industry. Between an existing litigation rubric that uses copyright law to preserve the most iconic aspects of fashion design and being as innovated in marketing as they are on the runway, designers can adapt to the future, meet consumer demand and build buzz for their brands without resorting to the very un-modern federal government.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
With legislation passed in the House, the U.S. Senate is set to move forward on multiple bills to combat the costly problem of patent trolls. While current proposals address issues with transparency, patent quality and litigation procedure, they do little to address growing problems with “design patents.”
What most people imagine when they think of patents are “utility patents,” which offer protection for new technologies as a way to foster innovation. But intellectual property law also extends protection to the non-functional elements of a product’s design. This can include the shape of a camisole or generic-looking fuzzy slippers. In practice, an item’s shape and ornamentation often is patented to restrict competition, rather than to protect genuine innovation.Moreover, these design patents have an application process that differs from utility patents in ways that are sometimes problematic. Where utility patent applications allow lots of time for public comment and input, design patent applications are not published before they are granted and have no mechanism for feedback about prior art.Where the terms of utility patents are dated to the day the application was filed, design patents are dated to the day they are issued. This quirk creates a loophole that allows a design patent applicant to enjoy perpetual protection by simply filing a series of “continuations” in conjunction with the patent application.Design patents once were considered fairly unimportant, but circumstances have changed. In addition to the Hague agreement that took effect last year, the 2008 decision in Egyptian Goddess vs. Swisa did a lot to strengthen design patents. That decision made design patent infringement much easier to prove by replacing the “point of novelty” test with a test that finds, if an ordinary observer would find the designs of two products to be substantially the same, then the patent is infringed. Design patents also are cheap, easy to procure and, unlike utility patents, require no maintenance fees, making them attractive to firms who wish to bolster their patent portfolios.
Under current infringement standards, if your fuzzy slippers, your camisole or – more crucially — the rounded edges on your smartphone are substantially similar to some patented competitor, you can be held liable for potentially hundreds of millions in damages. This is particularly problematic when there is no effective process to raise the objection that certain patented designs are not novel, and may have already existed for decades.
These differences also pose a problem for Congress as it drafts patent reform legislation. At The Faculty Lounge, professor Sarah Burstein highlights some unintended consequences of current patent reform proposals, which overlook how design patents work. The House’s patent bill, for instance, requires putative patent trolls to do things that either aren’t possible or don’t make sense in design patent cases.
Bringing design patent applications out into the open, like their utility patent cousins, would do a lot of good. It would bring down the number of lawsuits by exposing frivolous patent applications. In turn, this would enable more businesses to invest in jobs and development, rather than being forced to pay settlements for infringement.
Congress should look to address these problems as it moves forward with efforts to reform the patent system. To help organize these efforts, my colleagues at the R Street Institute have launched a new coalition called Unfair by Design. Check it out at unfairbydesign.com.
From the Greenville News:
“Everybody we talked to, virtually without fail, recognize that these delay and repeal efforts are damaging and counterproductive,” said Andrew Moylan, a senior fellow at the R Street Institute. “Rushing a vote the way that they are is an indication that in their heart of hearts, they know it’s the wrong thing to do.”
President Obama’s new budget for fiscal year 2015 is almost entirely free of surprises. The Obama administration supports a number of large tax increases, most but not all of which target high-income households, and so the budget assumes that revenues will grow faster than expenditures over the coming decades and that debt levels will decline. One key reason the White House is able to paint so rosy a picture is that its economic assumptions are different from those of the more buttoned-up Congressional Budget Office. Specifically, the Office of Management and Budget, which is responsible for crafting the president’s budget proposal, maintains that the U.S. economy will be 2 percentage points bigger in 2024 than it will be in the CBO’s projection.
This might not sound like a huge difference. But it matters more than you might think. The CBO has devoted considerable time and effort to understand why its 2010 prediction of a robust economic recovery failed to materialize, and it found that the post-crisis recovery really has been as dismal as it feels. Sluggish capital investment has contributed to sluggish productivity growth, and the labor market recovery hasn’t been strong enough to draw the long-term unemployed back into steady jobs.
With this sobering picture in mind, the CBO has lowered its estimate for America’s economic growth potential over the next decade to a mere 2.5 percent, far lower than the 3.3 percent that’s been the average growth rate for the U.S. economy since 1950. CBO projects that real GDP growth will actually fall to 2.2 percent in the second half of the next decade, which is to say they assume things will get worse rather than better. It turns out that even quite small changes, on the order of a 0.1 percentage point difference in the average annual growth rate, can have enormous fiscal consequences. So it’s very noteworthy that between 2010 and 2014, the CBO’s forecast for average real GDP growth over the next decade has gone from 3 percent to 2.5 percent.
How does the White House justify its more optimistic assessment? It seems that the Obama administration is counting on comprehensive immigration reform to deliver large economic benefits. The CBO has estimated that immigration reform could increase the size of the U.S. economy over the next decade by as much as 3 percentage points. It remains to be seen if the benefits of the immigration reform favored by the president will outweigh the benefits. I’m skeptical. It is easy to imagine that a more selective, skills-based immigration policy could be an enormous boon to the U.S. economy, as the economists Xavier Chojnicki, Frédéric Docquier and Lionel Ragot have suggested. Yet the president favors a substantial increase in less-skilled immigration that could prove quite expensive in an era of rapid technological change.
Regardless, there is no question that factoring in the potential benefits of immigration reform is a new development in presidential budgeting. It could speak to the fact that realistic estimates of America’s growth potential have fallen so much over the course of the Obama presidency that the president’s staffers felt an obligation to get creative.
There is, however, one very promising new initiative in the president’s budget proposal. He calls for a large expansion of the earned income tax credit (EITC), a program that greatly increases the incomes of poor households headed by a working adult. As it currently stands, the EITC is far more generous to parents than it is to childless workers. The unfortunate result is that the wages on offer to many childless adults, and in particular to childless men, are not high enough to draw them into entry-level jobs that can serve as a stepping stone toward economic independence. A number of activists, on the left and on the right, have suggested that an EITC that is more generous to childless workers might make work attractive to men with modest skills, and this might, in turn, make them better marriage partners and, eventually, better parents.
Unfortunately, the Obama administration has also vocally championed a substantial increase in the minimum wage that, unlike its proposed expansion of the EITC, is actually very poorly targeted. The CBO has found that while 19 percent of the income gains associated with increasing the federal minimum wage to $10.10 would go to households earning less than the poverty level, 29 percent would go to households earning more than three times the poverty level. The benefits of President Obama’s EITC expansion, in contrast, would flow almost entirely to the very poor, who need it most.
If anything, the president’s budget proposal is a reminder of the weakness of the U.S. economy. If America’s growth potential were even slightly higher — if it even came close to what the CBO assumed it would be at the start of the Obama years — it would be far easier to carry the growing burden of caring for older Americans and far easier to shrink our public debt.
From the Miami Herald:
Andrew Moylan, a senior fellow at the R Street Institute, a libertarian group, said his group’s goal was to move from a government-run flood insurance program to the private market. But until that happens, there should be a means test so that people who can’t afford the insurance get help and the wealthy pay their own way, he said.
WASHINGTON (Mar. 4, 2014) – The R Street Institute is deeply disappointed by today’s passage of HR 3370 in the House of Representatives. The bill represents a significant step backward from the much-heralded Biggert-Waters Flood Insurance Reform Act of 2012, which was meant to move the National Flood Insurance Program toward financial solvency.
HR 3370 undermines the current law’s goal of ending taxpayer subsidies for the roughly one-fifth of NFIP policyholders who receive them. It would extend into perpetuity subsidies for roughly 700,000 older primary homes, even if they are resold by the current owner. The measure also rolls back rate increases for properties that have been resold since the law was passed in mid-2012.
The bill as passed also repeals entirely the section of the flood insurance reform law that calls on FEMA to update its maps. For most NFIP policyholders, this bill, along with legislation already passed by the Senate, will result in higher rates than they would otherwise pay, as increases for remapped properties that were paying insufficient rates would be offset by reductions for other properties in the program.
Complying with these changes will keep FEMA from ever being able to charge actuarially sound rates for flood insurance, which in turn will keep the NFIP in significant debt to the taxpayers as more bailouts are needed to deal with destruction from major storms similar to Hurricane Katrina and Superstorm Sandy.
“This bill as passed does severe damage to the goal of making the NFIP financially solvent,” said R Street Senior Fellow R.J. Lehmann. “With the program in debt to the taxpayers to the tune of $25 billion, this bill makes clear that members are unwilling to stand behind the free-market principles and fiscal responsibility that the House leadership claims to embrace.”
Lehmann added that the outcry to undo Biggert-Waters has been driven by wildly inaccurate or exaggerated claims about the impact of rate increases. For instance, the phase-out of subsidies for older properties – which see premium increases of 25 percent a year until they reach risk-based rates – currently only affects second homes, business properties and about 9,000 properties that have been completely destroyed more than once. It does not affect primary homes unless the owner resells the property or allows his or her policy to lapse.
Moreover, according to FEMA data, as of July 31, 2013, 97.9 percent of the 5.6 million policies within the NFIP paid rates that were less than $5,000. Only seven properties in the entire United States had rates that were greater than $20,000.
“In this environment of budget cuts and growing deficits, the Biggert-Waters Act demonstrated a commitment to fiscal responsibility for a program that has been operating in debt since 2005. Gutting those reforms will taje us further into the debt that House members always claim to want to reduce.”
The bill now moves to conference with similar legislation passed by the Senate.
Dear Speaker Chopp,
In the next few days, you and your colleagues will again consider measures that impose significant new taxes on e-cigarette products and will serve to make their use nearly as costly as those of cigarettes. I urge you to approach these proposals with extreme skepticism.
E-cigarettes are addictive and their use is certainly not good for one’s health. Measures to restrict their availability to children and place other limits on their sale are certainly justified. But a huge increase in their taxes may well do more harm than good for public health.
As the attached paper by Dr. Joel Nitzkin demonstrates, they hold significant potential to improve public health if current smokers switch from tobacco cigarettes. As he writes in the included paper:
“A flood of new scientific papers relating to these products suggest the possibility that e-cigarettes may be the greatest advance in reducing tobacco-attributable illness and death in decades. Hugely higher taxes on e-cigarettes could, for all intents and purposes, urge people to continue using vastly more harmful tobacco cigarettes. “
Dr. Nitzkin, a long-time anti-tobacco crusader, is a senior fellow of the R Street Institute and a former public health commissioner of the State of Louisiana. His opinions, and the findings in the scientific literature that he reviews, are certainly worth your attention.
The regulation and control of e-cigarettes is an important issue. I urge you to read the attached paper and reach your conclusion about e-cigarettes based on the best available evidence.
R Street Institute
WASHINGTON (March 4, 2014) – The R Street Institute today expressed concern about a plank in the White House’s proposed 2015 budget that would impose protectionist taxes on legitimate reinsurance transactions made by affiliates of non-U.S. companies.
The proposal, which the White House estimates would raise $7.57 billion over the next decade, would disallow the deduction for certain reinsurance transactions between domestic insurers and reinsurers and affiliates that are based offshore.
“This proposal violates the fundamental principle that, in a free and open society, similar parties and similar transactions should be treated equitably, regardless of where a person is from or where a company is headquartered,” R Street Senior Fellow R.J. Lehmann said.
The proposal – and similar legislation from Sen. Bob Menendez, D-N.J. and Rep. Richard Neal, D-Mass. – would particularly impact states like Florida and California, which face significant natural disaster risks and depend on insurance and reinsurance capacity from firms headquartered outside of the United States. A report from the Cambridge, Mass.-based Brattle Group estimated taxing such transactions would cost consumers between $110 and $140 billion over the next decade.
Earlier this year, R Street joined with seven other taxpayer and free-market groups – including Americans for Tax Reform, National Taxpayers Union and Americans for Prosperity – to send a letter to the Senate Finance Committee opposing these sorts of protectionist tax proposals.
From the Times-Picayune:
Landrieu lashed out at a statement last week by a leader of the conservative R Street Institute, that congressional leaders are moving away from the Biggert-Waters Act for political reasons, with Democrats wanting to help Landrieu’s re-election efforts and Republicans wanting to assist her main GOP challenger, Rep. Bill Cassidy, R-Baton Rouge. A lot of the credit, Landrieu said, goes to influential groups representing homeowners, real estate agents, homebuilders, banks and others who worked hard to convince lawmakers to take action. All acted to “represent their industries,” and interests — their goal wasn’t to try “to get me elected or Bill Cassidy elected,” Landrieu said.
Most conservatives, and even some liberals of the dwindling “New Democrat” variety, put near-religious faith in the maxim that greater consumer choice would improve nearly every heavily regulated service. They’re usually right. But examining a case where the benefits of consumer choice haven’t materialized as envisioned—in the consumer market for natural gas—may offer lessons to conservatives and liberals alike as they consider further reforms to the far more consequential health care market.
For many products and services, the benefits of choice are obvious. Within living memory, both landline telephone service and cable television were considered “natural monopolies” that couldn’t support more than one provider in any area. When technology and deregulation changed the equation, competing services proliferated and prices dropped steeply. Deregulation of trucking, freight railroads and air travel served to lower prices and increase competition a great deal, while generally squeezing profits for incumbent players.
In the market for home delivery of natural gas, 15 states (including 6 of the 10 largest) now allow consumers to choose their providers and shop for lower prices. But except in Ohio—where one major delivery utility has exited the gas-purchasing business altogether and another actively encourages its customers to buy from other suppliers—more than 85 percent of natural gas customers don’t bother to shop around. And when they do, the choices aren’t impressive. When I looked to switch my provider in Northern Virginia, several companies advertised as offering competitive service didn’t even answer my inquiries. Of those that did, the “best choice” offered me a savings that would amount to less than $5 per month.
This is a pity, because vigorous efforts to get more people to use gas at home would yield significant economic and environmental benefits. Gas heat usually costs less and is almost always more reliable than electric heat. It’s also cleaner by almost every measure than any other fossil fuel. But the percentage of houses in urban areas with natural gas service is actually lower than when it was used for lighting 100 years ago.
Given these facts, one would expect gas providers to be doing blanket advertising on television, sending out mailers and competing with each other to benefit consumers. But outside of the Northeast, the only region of the country where home heating oil is still common and the industry has for years been making a major “convert to gas” push, one doesn’t see this sort of marketing. No single reason can explain why. Indeed, gas industry trade associations I contacted were reluctant to give detailed explanations on the record. Four factors, however, stand out: lack of genuine choice, opaque pricing, generally high satisfaction with current service and the direction of capital investment.
The lack of genuine choice may be the most obvious barrier. Natural gas is a commodity, with prices largely determined in the global markets. Since the companies that sell gas in competition with existing utilities don’t provide duplicate distribution infrastructure, there are few if any “features” they could compete on. Since gas is all the same, they can’t even compete (the way some electric power marketers do in some states) on the environmental benefits of their service.
Pricing is also opaque. Like medical bills, but unlike bills for telephone and credit card services, natural gas bills are subject to few national standards. The electronic bill I get from Washington Gas simply contains an “amount due” with no explanation of how much I am paying for gas service. (I had to call for this information.) Natural gas “deregulation” has, like many other forms of deregulation, affected only part of the equation. While the price of natural gas itself floats up and down, the pipes that distribute the gas are so expensive to build that few property owners can actually choose which company provides them. The infrastructure demands create “natural monopolies.” As such, government bodies set regulations determining how much the companies who own them can charge to carry gas.
Consumer satisfaction with natural gas service is also very high. The system is so reliable that the Federal Energy Regulatory Commission, which monitors electric and gas grid reliability, doesn’t even keep statistics on gas outages. Most Americans probably can’t even name their local natural gas distribution company or they will name their electric utility (often a different entity) when asked.
The direction of capital investment may play another role. While the American Gas Association says its members spend $19 billion a year on infrastructure, the glamour and venture capital go toward efforts that unlock new deposits via hydraulic fracturing, as well as efforts to expand the use of natural gas to replace coal for generating electric power.
Since more and more gas is being used to generate power, the cost and environmental benefits of using gas and electricity are fast converging. For good reasons, much more technology, money, and brainpower go into better ways to get gas out of the earth and use it cleanly for electricity than into finding new ways to pump it into homes for heat and cooking.
A lot of these factors have analogues in the health care market. Just as gas companies generally don’t post their prices prominently, neither do doctors. For all of the political fighting that surrounds health insurance, likewise, most people are happy with what they have. According to a Gallup poll taken last year, among people earning over $75,000, a group that overwhelmingly uses private providers, 92 percent were satisfied with their own coverage. Overall satisfaction was a still quite respectable 69 percent.
Likewise, capital investment in medicine emphasizes advanced technology, research, and the discovery of “miracle pills”—all areas in which the United States undoubtedly leads the world—rather than the low-margin, low-glamour business of improving day-to-day care. Although benefit packages once differed a great deal—from “mini-med” plans that provided little real coverage to so-called “Cadillac” plans that erased all bills—the strict benefit mandates under Obamacare have tended to make health insurance into much more of a commodity.
This offers lessons for both liberals and conservatives intent on health care reform. For all its abundant flaws, Obamacare does offer more choices to small businesses and sicker individuals, who now can buy their coverage through the exchanges and choose between plans (at least when the websites are up). Employees of small businesses, who previously were stuck with whatever plan their employer chose, now have a menu of options in many cases. This hasn’t produced much in the way of lower premiums, at least in part because the health market now looks a lot like the natural gas market.
But this also provides reason to think that conservative health reform plans that emphasize choice and consumer empowerment won’t produce vastly better results, either. The old system with fewer benefit mandates wasn’t a great deal better than the new system with more mandates. Likewise, unless pricing becomes more transparent, there’s little reason to think that simply offering consumers more choices—absent some way for them to parse the differences and weigh the costs—will make a big difference.
The natural gas market and the health care market, of course, aren’t mirror images. Gas is truly a commodity, while health care quality can differ a great deal between providers, insurers, and regions of the country. But choice alone is not a panacea.
Remember the video that President Barack Obama cited as the reason behind the attacks in Benghazi? The 9th Circuit Court of Appeals has voted 2-1 to order the video be taken down from YouTube – though not for the reasons you may expect…
From Greentech Media:
Some recent history: in 2011, the environmental advocacy groups Friends of the Earth and Public Citizen partnered with climate deniers at the Heartland Institute (which received funding from the Koch Brothers) under the watchful eye of the Taxpayers for Common Sense to produce the non-partisan Green Scissors report. It outlined wasteful government subsidies totaling $380 billion over the next five years
In 2012, the free-market R Street Institute contributed to the Green Scissors report and identified wasteful and environmentally harmful programs that could cost taxpayers almost $700 billion over the next decade. This does not include Department of Defense expenditures that are for protecting global oil trades — something we don’t do for coal.
From the Tampa Bay Times:
“We’re taking away the people’s hard-earned money,” said Christian Camara, Florida director of the R Street Institute, an ardent supporter of Biggert-Waters.
News that there is a Duke University freshman who acts in pornographic films was always going to make the Internet catch fire. But the recent revelations, which have taken every site from Jezebel to Reason to the Huffington Post by storm, also have offered a frightening picture of the economic choices faced by an entire generation of Americans.
The student in question, calling herself “Lauren” for the sake of protection, told RealClearEducation:
People have this perception that if you cannot pay for college, financial aid will take care of you, and that perception is wrong. If you are very low income, you can get a full ride to Duke, no problem. If you are middle- or upper-middle class, you will get screwed in the process. So many middle-class students have not gotten sufficient financial aid because, on paper, their families look like they have money. Just because I’m not poor doesn’t mean I can afford $60,000 a year for college. Other students from middle- and upper-middle class families have said the same thing.[…]
I think it’s very poignant that, nowadays, if you’re middle class, the only way to pay for college is to take out hundreds of thousands of dollars in loans. We need to provide a better financial future for our students. I shouldn’t have to go broke, I shouldn’t have to go into debt at 18 years old to pay for an education.
Lauren is eminently correct, and it’s sad that it took her being a tabloid curiosity for this narrative to be heard.
We are talking about a girl who made what, from any perspective, is a heroic and responsible choice by refusing to settle for an education that was less than what her academic achievements merit. She got into Duke and, therefore, had every right to go. Some have treated her means of paying for the experience as a scandal. The real scandal is that we have permitted elite educational institutions, which are supposed to be based on merit, to price themselves into luxury goods for anyone who isn’t either extremely rich or extremely poor.
Lauren’s experience could well count as a metaphor for the experience of the millennial generation and the predatory loan bubble that has so damaged them. The world is full of women’s studies majors with elite degrees who end up hundreds of thousands of dollars in debt and confronted by disappointing job prospects. This one happened to avoid the last bit by having sex on camera for money. Lauren herself apparently feels empowered by the experience, and therefore I won’t presume to lament her fate, but there are plenty of co-eds who wouldn’t have the same reaction. A career in porn should not be the prerequisite for joining what Charles Murray calls “the cognitive elite.”
How did it get this way? Several answers present themselves.
Colleges suffer from a third-party payment problem. Tuition tends to be paid by institutions (the government, banks) that face massive perverse incentives, among them a lack of regard for how much efficiently those funds are actually spent. Rather, these same institutions expect to profit handsomely from bigger loans and to be bailed out if those loans prove toxic. What’s more, because student loan debt cannot be discharged, they are shielded even from concern about students declaring bankruptcy.
What’s more, because colleges don’t face pressure from financial institutions to control rising tuition, they are free to expand in irrelevant areas like hiring more administrative staff without much concern for fiscal prudence. What’s worse, when they do cut costs, it tends to be from parts of the budget that shouldn’t be cut; for instance, by relying on visiting adjunct professors to teach. As Matt Yglesias put it:
The issue is that schools are finding that they can get away with charging high prices. Since colleges are non-profits, ability to charge high prices doesn’t lead to dividend payouts or the acquisition of big cash stockpiles. The money gets spent. And the trend lately has been to spend it on administrators.
Ultimately, colleges are immune from being held accountable for the results they produce. A women’s studies major like Lauren, even from Duke, is not going to be as competitive in today’s job market as a computer science major. But colleges have an incentive to maximize the flow of subsidized loans, not to ensure they provide good returns on investment. Not even appeals to “the value of a liberal arts education” could justify the situation, given how most “studies” departments ignore the Western canon in favor of trendy material that is useless outside the academy.
Most of these sorts of problems could be fixed by a sufficiently hard-nosed approach by federal lenders, along with some sort of relief for current debt holders, but it may take more horror stories like Lauren’s for that to happen. Pornography might have provided one elite college student a way out of debt, but that’s no excuse to sit by and watch while her entire generation gets screwed.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
From National Journal:
“This bill represents a fundamental betrayal of the free-market principles and fiscal responsibility the House leadership claims to embrace,” said R.J. Lehmann, a senior fellow at R Street Institute, which characterizes itself as a “free market” or “libertarian” think tank.
From Roll Call:
And those who benefit most from the continued subsidy are likely those who need help the least. Two-thirds of subsidized policies are for properties in counties where home values are among the top one-third in the nation (while less than 1 in 10 of subsidized polices are for properties in counties in the bottom third of home values). According to the R Street Institute, homeowners in those wealthy counties file nearly four times as many claims and received $1 billion more in claims payments than the poorest counties between 1998 and 2008.
“A lot of them aren’t business people by and large,” said Andrew Moylan. Moylan is a senior fellow at the R Street Institute, a Washington, D.C.-based free-market think tank who spoke with Vermont Watchdog about a government’s ability to create and maintain such a business.
“I don’t know about Burlington in particular, but (in) a lot of municipalities … these are not people who are engaged full time in operating something that has a real bottom line in terms of (having) a business aspect to it,” Moylan said.
“I think it’s really unfair both to ask of them and for them to ask of taxpayers to allow them to run these sorts of businesses when these are high stakes we’re talking about — real large amounts of money that are placed on the backs of taxpayers. From my perspective, it’s the wrong thing to do at public expense when private businesses exist to serve these sorts of demands.”
Moylan said that unlike private businesses, a government has “no direct financial incentive” to get it right.
“A private business has the incentive to get it right because if they don’t, they will go out of business,” he said. “They will cease to exist. That risk is diminished substantially for municipalities because they can always lean on taxpayers for more money to bail out whatever failing project it might be that’s causing a problem.”
LANSING, Mich. (Feb. 27, 2014) – The R Street Institute welcomed today’s passage by the Michigan House of Representatives of HB 5108, which would repeal Michigan’s archaic law criminalizing the resale of event tickets by individuals.
Under a 1931 statute, it is illegal in Michigan to sell any ticket above its written face value without the express consent of the event and venue operators, as well as to resell any season ticket that bears the ticket-holder’s name. R Street Midwest Director Alan Smith praised the legislation as a way of opening up the marketplace to respected secondary sellers that offer consumers redress if they are unhappy with their purchase.
“The purpose of this legislation is to promote free-market principles in the ticket marketplace in Michigan, much like those that exist in many other states,” said Smith. “The added benefit is that consumers would have additional protections against fraudulent tickets that were purchased unknowingly, something that does not currently exist in Michigan.”
He added that the legislation, sponsored by Rep. Tim Kelly, R-Saginaw, would continue to permit venues and promoters to prescribe rights and duties of lessors and lessees using contract law.
“Universities wishing to hold tickets back for use by students and alumni would still be able to do that,” he said.
The legislation will now move to the Senate for consideration.