Out of the Storm News
Tennessee recently passed a law limiting any company from owning more than two liquor-store licenses. Why? Well, current holders of liquor licenses don’t want out-of-state grocery chains to enter the market and, gasp, sell more brands of liquor at lower prices.
Would that this were an egregious exception, but such consumer-unfriendly policies are the norm. Consider some examples from around our great nation:
- In Ohio, the only liquor that gets sold are brands approved by the government. If you are a distiller, you need to ask the state to allow your hooch to cross Ohio’s borders, and you need to ask that the state liquor authority purchase your product and stock it in the state-run stores. If the bureaucrats don’t think consumers want your booze, well, you’re out of luck. Ohio, it should be noted, is but one of the 17 control states.
- The Texas Legislature has banned corporations from obtaining liquor licenses. Why? Well, as in Tennessee, the concern is that out-of-state grocers will outcompete current retailers. Texas, hypocritically, nonetheless permits in-state liquor chain stores to form by permitting family members to pool their liquor licenses.
- Most states retain rat’s nests of rules that limit consumers’ ability to buy wine from wineries in other states.
- Four states allow consumers to purchase wines made out of state directly only if their home state has a “reciprocal agreement” with the state where the winery is located.
One could go on. Plainly, all these policies have nothing to do with public safety or well-being. Such protectionist measures are designed to enrich entrenched interests.
The 21st Amendment is the well-spring for all this bad regulation. It has imposed huge costs and hassles and consumers and fostered all sorts of corruption.
Done properly, the 1933 amendment should have struck down the 18th Amendment (Prohibition) and left it at that. But no. The amendment also decreed:
The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.
At first glance, this looks like federalism. It isn’t. This is an invitation to mischief that has allowed states to erect all sorts of rules that inhibit the commercial drinks trade.
This provision also is offensive to the Constitution on two counts. First, it runs directly contrary to the Commerce Clause (Article 1, Section 8, Clause 3), which assigns the federal government –not states—the authority regulate commerce among the states. There’s a massive corpus of constitutional law that greatly curtails the authority of states to interfere in commerce. A state –say, Ohio – cannot protect its domestic manufacturers by forbidding out-of-state manufacturers from selling their gewgaws and widgets in Ohio.
Second, the Constitution is wholly silent on the specifics of trade, leaving the regulation of specific goods and services to Congress to decide on a case-by-case basis. Quick civics quiz: what two types of commercial trade does the Constitution explicitly limit? Guns and drugs? Nope. Illicit drugs and prostitution? No. The correct answer is: the slave trade and the alcohol trade. How’s that for a moral equivalence?
When the Supreme Court took up the matter of state policies inhibiting out-of-state alcohol shipments to consumers, it split five to four. The 2005 Granholm case curbed some of the most egregious state policies, but the justices could not wish away the 21st Amendment. The text is the text.
Ideally, we would wipe the 21st Amendment’s offending provision from Constitution. This would remove any ambiguity about the extent of the Commerce Clause. Amending any part of our national charter is a heavy lift, but that does not mean it is not worth doing.
The internet is making it tougher for states to maintain indefensible liquor traffic. Sites like InternetWines.com and others have ways to ship drinks licitly. Consumer expectations have risen, and states are going to have a hard time telling the public, “No you can’t have that beverage. Because.” Over time, more of these bad policies to will crumble, so long as voters keep telling state legislatures that we want better.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
From New Republic
Second, Warren endorses the idea of making benefits portable—an idea endorsed byNick Hanauer and David Rolf on the left and Ian Adams of the R Street Institute on the right. The Affordable Care Act does some of this work already; a freelancer can take that individual insurance coverage with them regardless of their job. Warren called on Thursday for “enhancing portability” in the ACA, a nudge toward putting employer-sponsored health care on the exchanges.
A revised bill to address the intertwined debt, fiscal and economic crises of Puerto Rico has just been introduced in the U.S. House. H.R. 5278 proposes “to establish an Oversight Board, to assist the Government of Puerto Rico…in managing its public finances.”
This “assistance” (read, “supervision”) is needed intensely. If all goes well, the House Natural Resources Committee will report the bill out promptly and it will proceed to enactment.
As is well-known, the government of Puerto Rico is broke and defaulting on its debt. At $118 billion, by the committee’s reckoning (which rightly includes unfunded government pensions), that debt is six times the total debt and unfunded pensions of the City of Detroit as it entered bankruptcy. This is a truly big insolvency, which reflects long years of constant fiscal deficits filled in by excess borrowing. Moreover, as the committee points out, Puerto Rico’s “state-run economy is hopelessly inefficient.”
There are three fundamental tasks involved in the complex and massive problems, and the bill addresses all three. These are:
- To establish an emergency financial control board to determine the extent of the insolvency, develop fiscal and operational reforms and put the government of Puerto Rico on a sound financial basis. The bill uses the more politic title of “Oversight Board,” but the tasks are the same. They will not be easy and are sure to be contentious, but are necessary.
- To restructure the unpayable debt and settle how the inevitable losses to creditors are shared among the parties. The bill gives the Oversight Board the authority, if necessary, to put forth a plan of debt reorganization and the legal framework to reach settlement.
- To move Puerto Rico toward economic success – that, is toward a market economy and away from its failed government-centric economy – and thus to give it the potential for future growth. These reforms will not be easy, either, but the bill sets out a process to start the required evolution.
The discussion of the necessary steps has been long and full. Now it’s time for Congress to vote in the new bill.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
There’s only one time I recall California officials significantly reducing regulations on anything. That was in 2012, when legislators voted to let physician assistants, midwives, nurses and plumbers provide “routine” abortions. I’m joking about the plumbers, but abortion clinics — and perhaps craft breweries — are the only areas where legislators favor taking a step back out of our lives, even minimally.
There’s virtually no area of our lives where California legislators won’t insert themselves and tell us — usually in the most excruciating detail — how we must behave. If we don’t do as instructed, the state government has a plethora of enforcement agents at the ready.
You’d think a group so capable of managing society would be a model for probity, I write with a chuckle. Yet over the past few years, the state Capitol has been awash in scandal. Some are garden-variety, but others would be unbelievable if they were in a work of fiction. The “best” one involves ex-Sen. Leland Yee, one of the Capitol’s most ardent champions of gun control, who is now serving a five-year prison term after pleading guilty to a corruption charge. He was accused, among other things, of being involved in a plot to traffic in arms.
The San Francisco Democrat was running for secretary of state when he was caught up “in charges alongside some of the city’s most notorious characters, notable among them Chinatown gangster Raymond ‘Shrimp Boy’ Chow,” wrote the Washington Post. “It was one thing for the public to learn that Chow, a known convict, may have become embroiled in more objectionable schemes. But it was quite another to hear that Yee, a respected public figure… was being accused through the same undercover FBI investigation.”
Yes, it was quite a thing. And it wasn’t the only thing going on in the state Senate. Sen. Rod Wright was found guilty of perjury and seven other felonies related to his place of residence. Unlike with U.S. congressional districts, California legislative seats must be held by people who actually live in the district. Prosecutors said the Los Angeles-area Democrat didn’t really live in down-market Inglewood, but in tony Baldwin Hills. The 62-year-old lawmaker received a 90-day sentence and was banned from public office for life.
This hardly amounts to an arms-trafficking scheme. But legislators should know the rules about their “domicile.” A number of legislators were also open to questions about where they actually live, which made the legislative response embarrassingly self-serving.
Wright was one of the Senate’s most-popular members, so the leadership portrayed the charges against him as a great affront to justice. It was nice to see then-Senate Majority Leader Darrell Steinberg, D-Sacramento, find something that sparked concern about overly oppressive government. (Steinberg now is running for Sacramento mayor. Its current mayor, Kevin Johnson, isn’t seeking re-election following sexual-related allegations.)
Also that year, Sen. Ron Calderon, D-Montebello, “surrendered to authorities after being indicted on bribery charges,” as the San Jose Mercury News put it. Calderon pleaded not guilty in a case that awaits trial. Steinberg assured the Mercury News the three men’s alleged actions were aberrations. The Senate voted 28-1 to suspend all three men from the Senate.
The problem, however, was they were suspended with pay. Steinberg refused to hold a vote on whether to expel the three senators. Unlike a suspension, expulsion would be permanent. Legislators said it undermined due process to expel members until their cases were complete. Given the time it takes for criminal cases to wind through the appeals process, this means these legislators could potentially hang on until term limits forced them out.
The one “no” vote was Sen. Joel Anderson, R-El Cajon. The San Diego-area lawmaker complained the suspended legislators’ constituents would have no representation in the meantime. It’s a fair point. Instead of stepping up ethics training, Anderson said the Senate should start by removing all members convicted of felonies. He mysteriously found himself removed from a plum committee — a coincidence, according to leadership.
Steinberg also introduced a face-saving statewide initiative that presumably would help the Legislature deal with future bad behavior. Proposition 50, which will appear on the June primary ballot, would assure that when similar instances occur, the Legislature can suspend members and force them to forfeit their pay. Such a suspension would require a two-thirds vote.
It is the “weirdest measure on the ballot” given there’s no one spending any money supporting or opposing it, according to CALmatters. It has a no-brainer populist appeal, which earned it some editorial backing. “What the option of docking pay does is allow lawmakers to remove an element of public outrage when corruption is alleged,” opined the Mercury News. “Lawmakers should have the authority to suspend without pay.”
Unfortunately, though, the measure reminds the public about why we should always look carefully at any of this Legislature’s ethics reforms. Anderson believes nettlesome political foes are more likely to be targeted by the new power, rather than legislators facing legal problems. “The people didn’t put this on the ballot, the Legislature did,” he said. “The Legislature doesn’t have a great record of putting things on the ballot that will hurt them. … Now, (the leadership) can take people like me and suspend (us.) … It’s given them the ability to steal my pay.”
That may seem unduly cynical, but consider what current Senate Majority Leader Kevin De Leon, D-Los Angeles, did this month. Following the above-mentioned scandals and a separate one involving a lobbyist, the Senate instituted a blackout period for fundraising during budget negotiation. De Leon just eliminated that rule, given that it is putting one of his favored senators at a political disadvantage this election season. That senator faces a challenge from a current member of the Assembly, where the blackout rule is not in force.
That’s par for the course. Only the naïve would expect anything different. Meanwhile, other scandals fester. Democratic Assemblyman Roger Hernandez of West Covina, now running for Congress, faces domestic-violence allegations as part of a divorce. He denies the allegations. Even Gov. Jerry Brown was embroiled in a scandal, after the Associated Press reported he “directed state oil and gas regulators to research, map and report back on any mining and oil drilling potential” at his family ranch. In response, the department laughably claimed that service would be available to any Californian.
It’s all the usual shenanigans in Sacramento (and every other capitol, too). I’ve read enough Menckento expect elected officials to behave this way. But I can’t understand why the public is so willing to let these folks try to run our lives, too.
Today’s announcement from Google that the company will appeal a French agency’s order to abide by France’s version of the so-called “right to be forgotten” all over the world doesn’t just represent Google’s principled commitment to support the rule of law. It also signals to the world served by Google’s search and other products that the company supports the rights of ordinary users to read lawful content and know lawful facts.
What’s the “right to be forgotten”? Sometimes called “the right to delisting,” it’s a right articulated by the European Court of Justice in a 2014 case called Google Spain SL, Google Inc. v Agencia Española de Protección de Datos, Mario Costeja González (we can call it “the Costeja decision” for short). In that case, the European court found a Spanish attorney had the right to demand that Google remove links to a newspaper account of a government-forced sale of his property to pay debts. His argument was not that the newspaper story was false; instead, Costeja’s complaint was that search results including that newspaper story, “appear to be inadequate, irrelevant or no longer relevant or excessive in the light of the time that had elapsed.”
In effect, the decision created an obligation for Google and other search engines to suppress access to factually accurate newspaper stories, at least within the European Union. That obligation also has been codified in the updated General Data Protection Directive passed by the European Parliament last month.
Despite disagreeing with the Costeja decision, Google has since 2014 taken steps to bring its Europe-facing services into compliance with the “right to be forgotten,” as it’s being applied in Europe. The company developed a straightforward method for complainants seeking “delisting” of webpages, and it has taken pains to respond to those demands thoughtfully, rather than reflexively, by evaluating whether a demand is consistent with European law. As a first step, Google complied with requests for its services with EU Country Code Top Level Domains (e.g., google.fr, but not google.com). This year, it has done even more, as Google General Counsel Kent Walker describes in an op-ed printed today in the French newspaper Le Monde:
Following feedback from European regulators, we recently expanded our approach, restricting access to delisted links on all Google Search services viewed from the country of the person making the request. (We also remove the link from results on other EU country domains.) That means that if we detect you’re in France, and you search for someone who had a link delisted under the right to be forgotten, you won’t see that link anywhere on Google Search – regardless of which domain you use. Anyone outside the EU will continue see the link appear on non-European domains in response to the same search query.
This means that if you’re in Paris or Berlin and using Google.com to search, you won’t see websites that have been delisted by Google under French law, as interpreted by CNIL.
Unsurprisingly, however, the French privacy regulator, CNIL Commission Nationale de l’Informatique_et_des_Libertés, has decided that Google’s painstaking efforts to comply with lawful invocations of the “right to be forgotten” are not enough. As I wrote last year in Slate, CNIL’s ambitions are global. The French agency wants to compel “delisting” of content a French resident has demanded be removed in any country in which that content might appear.
The Costeja decision itself did not find that an EU citizen could demand delisting of true material everywhere it might lawfully appear in the world. And it wouldn’t make sense to do so. The internet may connect us globally, but we still have nation-states. It’s generally (although not quite universally) understood that there are still limits on what the government of any nation can demand from the rest of the world.
Google’s argument in its appeal focuses partly on the precise language of the Costeja decision—that only a listing whose “processing” is “inextricably linked” to an EU member state (by being associated with advertising and/or search results displayed within the member state) can be subject to a demand like CNIL’s. It also relies on a generally accepted interpretation of France’s data-protection law; if the search results and the display results take place outside of France, the French data-protection law should not apply.
I’m grateful that Google is committed to challenging CNIL’s global (one is tempted to say “imperialistic” assertion of authority). If France’s privacy regulator has its way, this French regulatory agency will have unilateral authority to limit content that is lawful in the Philippines or Chile or the United States from being seen in those countries. As Google’s Walker puts it:
The CNIL’s latest order, however, requires us to go even further, applying the CNIL’s interpretation of French law to every version of Google Search globally. This would mean removing links to content – which may be perfectly legal locally – from Australia (google.com.au) to Zambia (google.co.zm) and everywhere in between, including google.com.
Walker goes on to make the same argument that every thoughtful observer has made with regard to any country’s assertion of extraterritorial authority to remove content:
But if French law applies globally, how long will it be until other countries – perhaps less open and democratic – start demanding that their laws regulating information likewise have global reach? This order could lead to a global race to the bottom, harming access to information that is perfectly lawful to view in one’s own country. For example, this could prevent French citizens from seeing content that is perfectly legal in France. This is not just a hypothetical concern. We have received demands from governments to remove content globally on various grounds — and we have resisted, even if that has sometimes led to the blocking of our services.
This is the argument every democratically oriented citizen and government must make. Even as we are increasingly globally interconnected through the internet, we still live in a world of nation-states that reasonably expect to have their national sovereignty respected and protected. As a nation, we may choose, through our governments and representatives, to agree to be bound by international treaties. But the rest of the world has not yet agreed to the expansive, grandiose assertions of authority from France’s officially officious privacy regulator.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
From Houston Chronicle“Other groups, including Friends of the Earth, called on Moniz to suspend all clean-coal projects. The Department of Energy would do better to concentrate on funding basic research, said Catrina Rorke, director of energy policy at the R Street Institute, a conservative think tank.
“This administration has prioritized an elusive breakthrough in developing carbon capture and sequestration over their commitment to the taxpayer,” she said.”
Shortly after the Bipartisan Budget Act of 2015 was unveiled, text of the legislation, which promised to raise the nation’s debt limit and set spending levels through September 2017, prompted mayday sirens from both the House and Senate Agriculture committees. Much to the committees’ chagrin, the bill’s negotiators targeted changes in the U.S. Department of Agriculture’s Standard Reinsurance Agreement for federally supported crop insurance as a potential source of budget savings.
The SRA sets the target rate-of-return for insurance companies that participate in the federal crop insurance program, as well as payments to the companies for administrative and operating costs, such as agent commissions. It previously was exempt from being touched by congressional appropriators thanks to a provision in the 2014 farm bill. The Bipartisan Budget Act ordered USDA’s Risk Management Agency to renegotiate the agreement with participating insurers and find $3 billion in savings, an order members with agricultural constituencies found far too tall.
The House and Senate Agriculture committees almost immediately issued a harshly worded joint release. According to Senate Agriculture Committee Chairman Pat Roberts, R-Kan.: “Farmers and ranchers have done more than their fair share to reduce government spending.” Ranking Member Debbie Stabenow, D-Mich., further chimed in:
I oppose any efforts to cut or reopen Farm Bill programs… The Farm Bill made meaningful reforms to help reduce the deficit. Any attempts to reopen any part of the Farm Bill to more cuts would be a major set-back for rural America and our efforts to create jobs.
In the words of House Agriculture Committee Ranking Member Collin Peterson, D-Minn.: “We made major cuts when we wrote the Farm Bill. It is not appropriate to cut agriculture again. The Farm Bill should not be raided. I oppose any cuts.” For House Agriculture Committee Chairman Mike Conaway, R-Texas, the prognosis was even direr: “Make no mistake, this is not about saving money. It is about eliminating Federal Crop Insurance.”
Unfortunately, these overblown warnings were too powerful for Congress to resist; the directive to negotiate more taxpayer-friendly reinsurance deals with private crop insurers was reversed in the highway bill passed in November 2015. But in fact, the arguments made by crop-insurance-subsidy proponents are misleading. Giving in to the committee leaders’ line of thinking sets a dangerous precedent, not just for those dedicated to ensuring farm programs are accountable to taxpayers, but also for those dedicated to transparency and accountable spending in all programs.
Beyond the question of whether the federal government should support any large, established industry, or the more specific question of whether that industry could withstand having its taxpayer-supported rate of return lowered from 14.5 percent to 8.9 percent, it’s just simply not true that “farmers and ranchers have done more than their fair share to reduce government spending,” or that “it is not appropriate to cut agriculture again” (emphasis added).
Part of the disagreement stems from discrepancies between the spending that was projected at the time the 2014 farm bill was passed and the actual spending by the USDA over the past two years. While it’s true that lawmakers passed legislation that was projected to achieve savings, spending todate has far exceeded those projections, erasing much of the promised progress. If Congress wants to ensure the nation’s agriculture programs don’t become unwieldy, ever-growing budget items, understanding the current state of these programs is an important first step.
Last year, Margarete Kulik and Stanton Glantz proclaimed in Tobacco Control that there is no public-health basis for telling smokers about smokeless tobacco and e-cigarettes as safer cigarette alternatives, because the smoking population in the U.S. was “softening,” i.e., becoming more likely to quit.
Kulik and Glantz based their conclusion, in part, on an analysis of public survey data from the Tobacco Use Supplements of the Current Population Survey. They had information on the percentage of smokers (prevalence); the percentage of smokers who made a quit attempt in the past 12 months; the proportion of former smokers among ever smokers (also called the quit ratio); and daily cigarette consumption (cigarettes per day, or CPD) for each state and for several survey years from 1992 to 2011. Using linear regression, they found that a 1 percent decline in smoking prevalence is associated with a 0.6 percent increase in quit attempts, a 1.1 percent increase in the quit ratio, and a reduction in consumption of 0.3 cigarettes per day.
The analysis was seriously flawed, as the authors failed to consider other factors that may significantly affect smoking. For example, Kulik and Glantz should have considered data on the percentage of smokers who faced workplace or home smoking bans – information that was available in the survey datasets. The effect of state cigarette excise taxes should have been weighed. Additional factors, such as differences in smoking norms and anti-smoking sentiments in the various states, are commonly analyzed through the use of a standard fixed effects variable. They did none of this.
My research group has recreated the Kulik and Glantz analysis and taken into account the missing variables. Our results have now been published in the journal Addiction. We found that the “results are not robust…The inclusion of state fixed effects and state-level policies led to a large drop in the coefficients…and became statistically non-significant…the omitted state-level characteristics are most likely responsible for…[Kulik and Glantz]’s results.”
We also note:
One further point needs to be made. [Kulik and Glantz] claim that their study bears on the question of whether smoke-free tobacco products have a contribution to make to tobacco control. They claim that much of the argument for smokeless tobacco and e-cigarettes is dependent on the assumption that the smoking population is hardening. This is not the case. The argument for these considerably safer products e-cigarettes is simply that they may be short-term aids to cessation or permanent substitutes for tobacco cigarettes. In a population such as that in the US, that argument is relevant as long as there are substantial numbers of smokers who will use them.
For the 39 million smokers in the United States, there is no public-health basis to withhold either safer cigarette substitutes or the potentially life-saving facts about such products.
Global 2000, a report published by the Carter administration in 1980, offered a bleak forecast for the human race. It predicted “the world in 2000 will be more crowded, more polluted, less stable ecologically, and more vulnerable to disruption than the world we live in now … Barring revolutionary advances in technology, life for most people on earth will be more precarious in 2000 than it is now—unless the nations of the world act decisively to alter current trends.”
The report spawned neo-Malthusian policy prescriptions to restrict consumption, shrink the birth rate, and bring mankind into balance with the natural world. YetGlobal 2000’s dire projections proved woefully incorrect. Even with rising global levels of population and economic activity, our relationship with the environment has only improved. Consider that U.S. energy needs have grown dramatically since 1970, but our production of dangerous pollutants—including particulate matter, carbon monoxide, nitrogen oxides, sulfur dioxide, and lead—has fallen. A growing population, after all, also yields more of the most important resource at our disposal: human ingenuity.
This has not put a stop to Malthusian speculation. There’s no shortage of voices still suggesting that economic growth necessarily harms the natural environment, that it’s time to start considering an economy centered around economic or ecological justice, or that we need policies to adjust to a zero-growth future. Doomsayers find support for their pessimism in the current locus of ecological concern: a changing climate. Global agreements to reduce emissions start with the assumption that every nation, even the poorest, must untether its economic future from fossil fuels.
These theories are as threatening as they are ill-founded: structuring policies around a low- or zero-growth future will stop global development in its tracks and trap a growing segment of the world’s population in poverty. But rejecting doom-and-gloom forecasts of impending environmental and economic catastrophe is not tantamount to denying the problem of global climate change. The best solution to that problem is in fact more growth and global development—much of which can be fostered with energy sources that do not add to emissions.
The globe is indeed warming, and we are largely responsible. Of the 16 warmest years on record, 15 occurred in the last century. Atmospheric concentrations of greenhouse gases are increasing thanks to human activity; current concentrations of carbon dioxide, methane, and nitrous oxide are higher than at any time since before humans evolved. Models, though notoriously imperfect, suggest these trends will continue.
With enough warming, we may reach a tipping point beyond which irreversible changes are possible. Abrupt shifts in ocean circulation patterns could upend the marine ecosystem. Hydrologic alterations could cause persistent droughts and food and water shortages. The worst consequences of climate change, however unlikely, could create conditions in which the environment would be transformed rapidly and unpredictably.
But climate change, even with these high-risk scenarios, is not the most pressing threat facing global humanity. The near- and medium-term risks of climate change largely just make existing problems worse. Nearly one-fifth of the developing world’s population is undernourished, 13 percent lack access to clean water, and 32.5 percent have inadequate sanitation. World Health Organization data suggest that 8.4 million deaths each year are attributable to the avoidable hazards of malaria, malnutrition, unsafe water, and indoor and outdoor air pollution.
Poverty is a better predictor for mortality risks than climate change. Higher carbon dioxide emissions have even been associated with fewer deaths from extreme weather as nations develop. In the advanced world, our lives are undoubtedly more improved by the economic development that fossil fuels enable than harmed by the threat of climate change.
For some, the conclusion to be drawn from this is that government-led efforts to reduce greenhouse-gas emissions should be abandoned. Under each scenario modeled by the United Nations’ Intergovernmental Panel on Climate Change, people in the future, even in the developing world, will be so much better off with unbridled economic development that it will counteract any negative effects of a warmer and more unpredictable climate.
Fossil fuels are certainly terrific at their job: they’re widely distributed, cheap to produce and refine, easily scaled, and yield power on demand. Technologies to harness these fuels are well-understood, widely available, inexpensive, safe, efficient, and reliable. Coal, oil, and natural gas prices have been dropping, making them more affordable than ever. Yet they do not answer all of the developing world’s needs.
Some 2.8 billion people still don’t have access to safe cooking facilities, and 1.3 billion don’t have access to electricity. At a minimum, households need energy for lighting, cooking, heating and cooling, and communications. Insufficient access makes everything more difficult: food spoils, lamps and stoves demand costlier or foraged fuel, and people are exposed to indoor air pollution, unsanitary conditions, poor nutrition, and avoidable illnesses.
Building sufficient traditional-energy infrastructure to satisfy demand will be a slow process, even under optimistic scenarios, and such infrastructure isn’t necessarily suited to the most immediate needs. Reliance on fossil fuels is a risky proposition for much of the world: many communities with traditional electricity connections grapple with brownouts, rationing, and bills that far exceed a household’s ability to pay. Fuels remain expensive, and supply chains to make them readily available are often underdeveloped.
Energy access is more important than access to any one particular fuel. In this respect, the needs of the developing world and the West’s priority on limiting emissions coincide, up to a point: access can be reliably provided in some places by other forms of energy.
Telecommunications history offers a telling analogy. Landline phones were a democratizing innovation, enabling instantaneous person-to-person communication. But the network infrastructure was limiting. Until the 1980s, having access to a telephone meant being in a service territory with a phone utility and having a wire to your home.
Mobile technology is wholly different. Enabled by distributed infrastructure, entire communities can gain access to phone communication at once. Untethering communications from the old infrastructure has expanded access in places previously untouched by such services. In 1990, there was no access to mobile technology in sub-Saharan Africa; by 2014, 78 percent of people held mobile-phone service.
A fossil-based energy future is dependent on the same type of network infrastructure that quickly grew outdated in the telecom industry. That’s why many developing communities are choosing other ways forward. Solar-energy systems and battery-enabled LED technologies don’t require any new infrastructure. Passive solar heating can generate enough hot water for washing. In some cases, greater efficiency is the answer. Development organizations are working to improve cook stoves so they release less indoor air pollution. Safe perishable food storage can be managed with changes that don’t require access to electricity or refrigeration.
There are similar opportunities in commercial activity and community services. Mechanical wind and hydroelectric technologies offer opportunities for irrigation, agriculture, and small industry. Remote health centers have turned to solar-power systems with battery storage for much of the last decade. With promising price curves, as well as capacity and efficiency improvements, these off-the-grid solutions may work well to power distant communities and encourage more rapid economic development.
Trends favor these investments. Prices for photovoltaic solar, wind, and battery-stored power are coming down quickly, reflecting advances in manufacturing, materials, and installation. If the experience of smaller lithium-ion batteries is any example, prices for large-format battery technology may drop by an order of magnitude in the next decade. Human ingenuity is making renewable energy cheaper to harvest, mobilize, and store for use when needed.
International aid should respond appropriately. In 2013, 97 percent of the $13.1 billion in capital investments for energy access in the developing world went to the electricity sector. Yet established World Bank policy permits financing for coal-power generation only where there are no feasible alternatives, and the U.S. Overseas Private Investment Corp. uses a greenhouse-gas emissions cap to weigh its investments. The West has adopted incoherent policies that respond poorly to the developing world’s needs, putting too much or too little emphasis on fossil fuels. And the resurrection of Malthusian tendencies at the highest echelons of the international policy community is dangerous.
But we do not face a choice between improving the lives of billions now and an apocalyptic climate future. Rather, we have an opportunity simultaneously to improve the lives of billions and to make our future world safer. That starts with accepting a few things. There is no morally correct level of atmospheric carbon dioxide. Global prosperity is a necessary precondition for dealing with climate risk. Human ingenuity is an incredible and limitless resource. And our new target as a global community should be to alleviate the threats of climate change by eradicating poverty and building energy access.
For now, that means access to any source of energy. Distributed renewables present great opportunities for rapid availability in areas presently without reliable sources. And to be sure, strengthening fossil-energy infrastructure and supply chains will open access to the most reliable forms of energy in the long run. Policies that distort choices between the two are counter-productive. If we shift away from a focus on aggressive climate-mitigation efforts, we can refocus international cooperation on reducing health and environmental risks, building wealth, and developing innovative solutions. In that wealthier, safer, more adaptable future, reducing carbon emissions will not just be easier, it will be business as usual.
Members of Congress:
On behalf of the undersigned organizations and the millions of Americans we represent, we write to express our strong support for S. 2707 and H.R. 4773, the Protecting Workplace Advancement and Opportunity Act (PWAOA), and all efforts to defund, block, and otherwise nullify the Obama Administration’s effort to change our nation’s overtime rules. The administration’s proposed overtime rule, should it be made final, would threaten flexible work arrangements and paths to success.
The bills, sponsored by Senator Tim Scott (R-S.C.) and Congressman Tim Walberg (R-Mich.), respectively, would nullify the Department of Labor’s proposed overtime regulation. Specifically, the legislation requires the U.S. Secretary of Labor to conduct a thorough economic analysis on how updating overtime rules would affect small businesses and take into consideration cost-of-living differences across the country, among other research before proposing another overtime rule.
The undersigned groups believe workers should receive fair pay for a day’s work, but the overtime rule as proposed is a poor vehicle to do so.
Industries and organizations across the country—from universities to community care providers—would face drastic increases in labor costs as a result of the Obama administration’s new interpretation of the Fair Labor Standards Act. The administration’s proposed overtime rule would make an additional 5 million workers eligible for overtime pay by dramatically increasing the salary threshold exemption from $23,660 to $50,440. By increasing the threshold, many workers will lose salaried employment status and the benefits they depend on, like flexible work arrangements and health benefits.
Public colleges and universities fear the added costs will force reductions to student services, cuts to employee benefits, and limit employees’ work hours that could reduce important labor-intensive research.
Organizations that provide services to the disabled community, primarily funded by Medicaid, would face an estimated $1.05 billion in additional costs, according to analysis performed by health research firm Avalere Health. These workers provide vital services to those in our communities that need help.
The Small Business Administration’s Office of Advocacy, which represent small entities before the federal government, submitted comments that the Department of Labor’s analysis of the rule fails to “inform the public about the impact of this rule on small entities.”
Most concerning, the DOL’s methodology used to analyze overtime costs is unknown. The Obama administration denied the Florida Department of Economic Opportunity’s (FDEO) request to check the methodology used to anticipate the costs. The FDEO performed its own analysis. It found that in Florida alone, the costs would be $1.7 billion from the 195,000 new overtime eligible workers in Florida, while the DOL estimates the direct and indirect costs of the rule would only be $1.8 billion nationwide.
A rule that could negatively affect millions of workers and the futures of numerous small businesses and industries cannot be issued without thorough analysis by the agency.
We encourage members of Congress to do everything in their power to nullify this rule and defund any future efforts to implement the final rule. We support the PWAOA so that any update to overtime regulations is vigorously vetted and serves the interests of all Americans. In response to the final rule, we also support Senate and House members pursuing a resolution of disapproval under the Congressional Review Act to block the overtime rule and its devastating consequences for small business owners and workers across the nation.
Thank you for your consideration.
Competitive Enterprise Institute
Americans for Prosperity
Americans for Tax Reform
Campaign for Liberty
Center for Individual Freedom
Center for Worker Freedom
Council for Citizens Against Government Waste
Frontiers of Freedom
James Madison Institute
John Locke Foundation
National Taxpayers Union
R Street Institute
Taxpayers Protection Alliance
From Inside EPA
“This administration has prioritized an elusive breakthrough in developing carbon capture and sequestration over their commitment to the taxpayer. A successful innovation strategy is driven by filling the basic research gaps the market can’t meet, not chasing preordained solutions with wasteful spending,” Catrina Rorke, director of energy policy at the R Street Institute, a free-market group, said in the statement.
Green Scissors coalition urges U.S. Department of Energy to withdraw funding from the Texas Clean Energy Project
Dear Secretary Moniz:
The Green Scissors coalition is deeply concerned by the U.S. Department of Energy’s ongoing support for the Texas Clean Energy Project. As a coalition of free-market, taxpayer and environmental groups dedicated to eliminating wasteful and environmentally harmful government spending, we urge you to withdraw funding from this facility permanently.
A recent special report from the DOE Inspector General’s Office reveals a number of alarming actions taken by the department. The report indicates that, after making a $450 million commitment to the project, the DOE prudently established caps for how much money could be disbursed during each of the project’s four phases. However, the report states that, after hitting the $15 million cap it had created for phase 1, the department “circumvented” its own controls and improperly shifted an additional $100 million to the project ahead of schedule, even as the project’s owners made no headway to secure private financial backing.
It now appears inevitable that the Texas Clean Energy Project is going to go the way of FutureGen2.0 and Hydrogen Energy California—projects that managed to secure millions in largesse from taxpayers before collapsing. While $116 million already has been lost to the facility, it’s not too late to protect taxpayers from further waste. Temporarily suspending additional funding in February was a step in the right direction, but the DOE must now permanently withdraw the remaining $220 million earmarked for the project.
Subsidies for carbon capture and sequestration are neither a solution to climate change nor a wise use of tax dollars. The DOE now has the opportunity to pursue a course of action that is both fiscally and environmentally responsible—withdraw the funds for the Texas Clean Energy Project.
The Green Scissors coalition
Friends of the Earth
Taxpayers for Common Sense
The R Street Institute
I like to quote H.L. Mencken’s definition of Puritanism: “The haunting fear that someone, somewhere, may be happy.” It often applies in the Capitol, with one of the latest anti-tobacco bills – five of which were signed into law by Gov. Jerry Brown earlier this month – being an obvious example of what Baltimore’s favorite cynic was talking about.
Most attention has focused on the law raising the smoking age from 18 to 21. It may ramp up black markets and criminalize personal behavior, but at least the law has reasonable science behind it. Basically, people who start smoking in their teen years are far more likely to pick up a dangerous habit.
But the most significant new law – the one that evokes Mencken – deals with vaping. S.B. X2-5, by state Sen. Mark Leno, D-San Francisco, “recasts and broadens the definition of ‘tobacco product’ in current law to include electronic cigarettes.” It applies all the current tobacco-related rules and restrictions, including the new age 21 rule, to vaping products.
Leno says the new law closes a “loophole” that allowed e-cigarettes to be treated differently than tobacco. But there was no loophole. E-cigarettes heat a liquid and create vapor, not smoke. They are not tobacco. Many of the smoking solutions have nicotine in them, but others do not. Experts estimate vaping presents no more than 5 percent of the risk of smoking real cigarettes.
Why would the state classify a non-tobacco product as tobacco? It’s part of an ideological war on tobacco. There’s no reason to cut tobacco companies any slack, given the inherent dangers of the products they sell. But it’s disturbing when the state, succumbing to the influence of public-health activists, decides to embrace a crusade mentality that could cause serious harm to public health.
Study after study find vaping is a safer – note the word safer, not safe – alternative to smoking cigarettes. The United Kingdom’s well-respected Royal College of Physicians recently released a study that acknowledges what anti-smoking activists say: “Smoking is the biggest avoidable cause of death and disability, and social inequality in health, in the UK.” It notes quitting smoking is difficult for most people, who are addicted to nicotine. But it finds “in the interests of public health it is important to promote the use of e-cigarettes.”
Although anti-smoking activists may promote the use of nicotine patches and other such treatments to help people break their bad habit, e-cigarettes “appear to be more effective when used by smokers as an aid to quitting smoking,” according to the study. That’s because it’s more enjoyable to take a break and puff on an e-cigarette than to chew nicotine gum, wear a patch or use nasal spray. I think it’s the enjoyment factor that sets off these anti-vaping zealots.
State and federal officials counter that vaping may be a gateway to tobacco use. That sounds plausible, except it doesn’t appear to be true.
“There are concerns that e-cigarettes will increase tobacco smoking by renormalizing the act of smoking, acting as a gateway to smoking in young people,” reported the study. “To date, there is no evidence that any of these processes is occurring to any significant degree in the UK. Rather, the available evidence to date indicates that e-cigarettes are being used almost exclusively as safer alternatives to smoked tobacco, by confirmed smokers who are trying to reduce harm to themselves or others, or to quit smoking completely.”
The U.S. Food and Drug Administration is taking an anti-vaping approach with its new regulations, which led my R Street Institute colleague Cameron Smith to conclude the agency apparently “wants more people to die of lung cancer.” Without vaping, more people will keep smoking a deadly product. Nothing is assuredly 100 percent safe. The question is about harm reduction. Vaping clearly reduces harm, but it does so in an enjoyable manner. The enjoyment factor probably explains why it’s so successful. What’s wrong with that?
I’ve experienced such nanny-ism when I sought information about the risks of puffing on a cigar every now and again. Most of the government information portrayed cigars as the equivalent of cigarettes, even though cigar smokers tend to smoke on occasion and rarely inhale. It’s easy to discount literature that has a “reefer madness” ring to it.
As with vaping, officials seem more interested in stopping something they don’t like than honestly evaluating the risks. It’s too bad, given the likely health benefits of this product. Maybe the best approach to satisfy the Puritans would be if people who use e-cigarettes stopped behaving as if they enjoyed them.
From E and E News
“The RICO stuff touches a sore spot with conservatives,” he wrote. “Andrew Moylan, the executive director of R Street stood up at Whitehouse’s [American Enterprise Institute] event and said something like, ‘how do you ever expect us to trust you when you’re out there threatening RICO…’ And he’s for a carbon tax.”
“[This] shows that shareholders are starting to think a little clearer about proxy access even though there is still a lot more work to be done in informing shareholders about the pros and cons of proxy access,” says Bernard Sharfman, adjunct professor of business law at George Mason University School of Business, associate fellow at the R Street Institute and an outspoken critic of proxy access.
“It also shows that boards are starting to get on top of the issue,” says Sharfman.
“The preemptive implementation of proxy access may simply have been a necessary evil in order to keep other, more harmful corporate governance issues off the table,” Sharfman adds.
From Business Insurance
Ray Lehmann, senior fellow at free-market advocacy group R Street Institute in Washington, which is a member of SmarterSafer, called the bill a “step toward a private market.”
He noted that one potential source of opposition has not materialized.
“The lending community is where there would be objections, and the bankers and other groups have not raised any serious concerns,” Mr. Lehmann said. “It has support from the Realtors. Most of the organizations that are interested are either neutral or positive.”
Did you see the one in which the terrorist organization recruits a kid to destroy a government facility, killing millions of innocent bureaucrats in the process? What about the one with the lonely computer programmer who spends the majority of his life absorbed in a massively multiplayer online roleplaying game? Or the one in which the eccentric billionaire is fearful of an immigrant and willing to do anything to put an end to the situation?
As various online discussions have demonstrated, ranging from Twitter to reddit, a writer’s choice of phrasing can dramatically impact a reader’s impression of any given topic. For instance, the films Star Wars, The Matrix and Batman vs. Superman (I also would have accepted “the 2016 presidential election”), respectively, would have certainly enjoyed different receptions had the above descriptions been used to promote them, despite the fact that the summaries are technically accurate.
Used correctly, biased phrasing is a powerful tool. Consider Arizona’s recent move to intervene, with a bill signed yesterday by Gov. Doug Ducey, after numerous localities sought to prevent Arizonans from listing their properties on services like Airbnb. The measure, which takes effect Jan. 1, 2017, bars localities from banning spacesharing services, but allows them to set other regulatory guidelines and to collect taxes.
Now, if you’re a left-leaning blogger, you might choose to get a bit creative with your phrasing in how to characterize this legislation, such that private property owners regaining control over how to best use their property becomes:
Cities and counties are on the verge of losing their authority to keep property owners from renting out their homes for short-term and vacation rentals.
Reframed, it’s no longer about property owners regaining some small measure of freedom, but about victimized localities losing their all-important authority to tell those property owners what they can and can’t do.
This tactic seems to pop-up a fair amount where opponents of short-term rental services are concerned. It’s all about shifting the focus. So if you’re writing an op-ed in The New York Times about how Airbnb is “a problem for cities like New York and San Francisco,” you might write:
…when you have a limited supply of apartments, and unlimited demand for those apartments, turning some apartments into hotels makes the remaining ones even more expensive.
It’s subtle, but the argument hinges on two rather weighty words: “you have.” The “you” in this instance refers to the city itself, which is positioned as “having” all housing within its borders, and distributing it as the city sees fit. Again, the focus has shifted away from increased choice in the marketplace – away from property owners’ ability to use their property reasonably – and back to the city’s vital power to determine how a property owner chooses to rent out his or her property.
Within the same issue of the Times, the deputy director of New York’s Citizens Housing and Planning Council has a similar beef with property owners renting out their properties on a short-term basis:
The type of academic and government data that housing researchers typically rely on doesn’t exist for this issue… But we know that the rise of informal vacation rentals in high-demand cities has an impact on housing supply, even if we can’t quantify it perfectly yet.
While I appreciate the boldness of the argument – I have similarly long-maintained that I am a superhero, even if I can’t quantify it perfectly just yet – a less-biased phrasing might have rendered:
Though I have minimal data that supports my statement, it is nonetheless true, as determined by me, on the grounds that any other possibility would really ruin the premise of this op-ed.
A compelling point, to be sure, but not necessarily the ideal basis for prescriptive public policy. In this particular case, the author takes it upon herself to suggest that private property owners should be compelled to take on roommates, rather than renting out spare rooms.
Lackadaisical rhetorical strategies aside, the main problem with ominous claims about the looming Airbnb apocalypse is that they are what the less loquacious among us would call “entirely false.”
Consider a study of the San Francisco housing market commissioned by Airbnb. Even after factoring in a healthy dose of skepticism, given the report’s sponsor, the data surely trumps vague gut feelings based on a confessed absence of any supportive data whatsoever.
The report, released last year, found that “a housing unit would need to be rented more than 211 nights annually on a short-term basis in order to out-compete a long-term rental.” How many units meet that criteria in San Francisco, a city that is supposed to be among the hardest hit by short-term rentals? 0.09 percent, or less than one-tenth of 1 percent. Moreover, the report found that “from 2005 to 2013 the number of vacant units in San Francisco has remained essentially unchanged,” a trend that flies in the face of those who forewarn Airbnb-created housing scarcity.
To its great credit, these facts are not lost on Arizona. In part due to Gov. Ducey’s stated commitment to make the state a welcoming home to innovative, consumer-friendly services like Uber, Lyft, Airbnb and HomeAway, Arizona has been a great example for the rest of the country on issues related to “disruptive technologies.” The state’s three largest cities received some of the highest scores in the nation both on R Street’s annual Ridescore report and its Roomscore report – studies that look at the friendliness of regulatory frameworks governing for-hire transportation and short-term rentals, respectively.
With Ducey’s signing of SB 1350, Arizona deserves credit for shutting out the disingenuous cries of falling skies and sensibly demonstrating to the rest of the country that the relationship between state and local governments and cutting-edge startups does not have to be combative. Indeed, rare though it may be, it’s entirely possible to shut out the misinformation and put citizens first.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Dear Chairman Upton and Ranking Member Pallone:
The undersigned organizations encourage you, as soon as possible, to hold a Committee hearing on the Renewable Fuel Standard (RFS). We believe the RFS is in critical need of immediate attention, and your Committee, as the committee of jurisdiction, is the best venue in which to examine this flawed statute’s numerous failures and to consider legislative solutions.
Due to widespread public concerns with the serious unintended consequences of the RFS mandate, there is growing bipartisan interest among lawmakers in exploring how to fix this broken statute. Indeed, nearly 120 Members have cosponsored legislation in the House of Representatives to either repeal the RFS outright or to reform it significantly, and last year 189 Members sent a letter to EPA requesting a waiver from the statutory volumes.
The growing interest in the RFS is also evidenced by the fact that, between the House and Senate, there have been seven hearings on the law since 2014, six of which were held in committees which do not have jurisdiction over the RFS. These hearings have aired significant concerns with the RFS, from problems with the manner in which the statute has been administered, to the unintended consequences for food costs, conservation, greenhouse gas emissions, consumer engines, fuel costs and competitive markets. Moreover, the RFS’ costs are borne not only domestically, but also globally.
The Energy and Commerce Committee has already undertaken a substantive review of the program through its white papers and hearings in 2013. However, there have been significant events in the past three years, including EPA action to propose and withdraw rules in 2014, EPA’s decision last year to waive the RFS, and EPA’s indication that it plans to increase the volumes in the future. In addition, EPA activity on approving pathways, ongoing fraud in the Renewable Identification Number market, and issues related to post-2022 volumes deserve Congressional attention.
An Energy & Commerce Committee hearing on the RFS in the near future would be timely and welcomed by this broad group of stakeholders. We look forward to working with you on this matter in the coming weeks. Thank you for your consideration.
American Bakers Association
American Frozen Food Institute
American Highway Users Alliance
American Motorcyclist Association
American Sportfishing Association
Association of Kentucky Fried Chicken Franchisees
California Dairy Campaign
Clean Air Task Force
Council for Citizens Against Government Waste
Franchise Management Advisory Council
Georgia Poultry Federation
Idaho Dairymen’s Association
International Dairy Foods Association
Marine Retailers Association of the Americas
Milk Producers Council
National Association of Egg Farmers
National Chicken Council
National Council of Chain Restaurants
National Grocers Association
National Marine Manufacturers Association
National Restaurant Association
National Taxpayers Union
National Turkey Federation
North American Meat Institute
Oregon Dairy Farmers Association
Pennsylvania Food Merchants Association
R Street Institute
South East Dairy Farmers Association
Southeastern Meat Association
Southeast Milk, Inc.
Specialty Equipment Market Association
Taxpayers for Common Sense
Western United Dairymen
It’s been a busy week and a half on the ridesharing front, as legislation setting out statewide rules for transportation network companies moved forward in Iowa and Alabama, while Pennsylvania’s version of legislation is now on the final leg of its trip through the Legislature.
Earlier this week, Iowa Gov. Terry Branstad signed H.F. 2414 into law (the measure goes into effect Jan. 1, 2017). The bill standardizes the definition of transportation network companies like Uber and Lyft and requires such firms to perform background checks on potential drivers. It also proscribes localities from imposing more restrictive terms on driver licensing.
The measure sets out minimum insurance requirements that include liability coverage of at least $1 million for the period from when a driver and potential passenger are matched until he or she is dropped off. During periods when a driver is logged in to the ridesharing app, but not matched with a rider, the law sets minimum coverage requirements of $50,000 per person and $100,000 per accident for death or bodily injury and $25,000 for physical damage. Coverage may be maintained either by the TNC, the driver or a combination thereof.
The final bill did not include a provision sought by lenders, and mulled in some earlier versions of the legislation, which would have required TNCs to ensure drivers with liens on their vehicles also maintain comprehensive and collision coverage.
Although not yet signed by Gov. Robert Bentley (who is perhaps facing bigger issues of his own these days), ridesharing legislation also cleared both chambers of the Alabama Legislature May 4. The bill, S.B. 262, focuses solely on insurance coverage matters. It doesn’t establish a statewide regulator, impose regulatory fees or include any language requiring background checks.
The bill does require TNCs or their drivers to maintain $1 million of liability coverage while engaged in a ride and, like the Iowa bill, requires that drivers must have coverage of $50,000 per-person, $100,000 per-accident and $25,000 for physical damage during any period when they are logged in to the ridesharing app, but not yet matched with a rider. The law will go into effect three months after Bentley signs it, presuming that he does.
Finally, there was a bit of movement in the long-stalled effort to pass statewide ridesharing legislation in Pennsylvania, a topic we’ve covered in this space before. The Commonwealth Senate passed a bill last November, but it has remained hung up in the House, largely over the question of whether and the extent to which state authorities will be permitted to pre-empt regulation by the Philadelphia Parking Authority, which has effectively banned ridesharing.
However, a compromise version of S.B. 984 passed the House Consumer Affairs Committee May 4 in a 23 to 2 vote. The final bill sets standards for ridesharing in most of the state under the regulatory authority of the Public Utility Commission, whose existing agreements with Uber and Lyft were validated late last month in a Commonwealth Court decision that struck down a legal challenge from taxi companies. The measure sets the usual background check and insurance requirements, as well as rules about the age of vehicles, a minimum age for drivers (21) and requirements to accommodate drivers with disabilities.
It also explicitly legalizes ridesharing in Philadelphia. However, the Parking Authority would retain its regulatory authority and the services would be banned from picking up and dropping off at locations with established cabstands, such as Philadelphia International Airport and 30th Street Station.
All in all, not an ideal piece of legislation, but still a major step forward for the City of Brotherly Love, which received the lowest overall score in R Street’s 2015 Ridescore report card.
Also, be sure to check out our map of state-by-state ridesharing legislation here.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
An awesome 6.7 percent of Iceland’s resident population took to the streets last month to demand the resignation of their prime minister. The rallying cause was his perceived duplicity regarding offshore investments in banking tax havens, as revealed by the “Panama Papers.”
More than a little bit of this anger is no doubt driven by the fact that perceived tax avoidance was discovered while the nation is still recovering from a serious fiscal and financial crisis that was tied to the global financial meltdown of 2008. The savings of 50,000 Icelanders disappeared and 25 percent of the nation’s homeowners fell into mortgage default.
Prime Minister Sigmundur Davíð Gunnlaugsson came to power on a wave of anti-bank sentiment and was widely credited for leading an unbelievable success story in Iceland. The country after letting its three big banks fail, imposing strict capital controls, sending bankers to jail and essentially concentrating its government on social programs. People no doubt felt betrayed when the media reported that Gunnlaugsson had hid millions while the country was collapsing. By introducing a 39 percent tax on creditors of the country’s failed banks and basically guaranteeing deposits of his Icelanders (but not the foreigners who invested in their risky offerings) he could have been a hero at least to his countrymen and women. Instead, he was forced to resign last month over his perceived undisclosed personal gain after he had led the fight for transparency.
Just to put this protest into perspective, if the same percentage of Americans had gone out to protest some malfeasance – or even just to celebrate the 4/20 “holiday” a couple of weeks ago, perhaps at the prospect of Canada legalizing recreational drugs – that would be 21 million people. That is roughly the entire combined population of Nevada, New Mexico, Nebraska, West Virginia, Idaho, Hawaii, Alaska, Maine, Vermont, Rhode Island, New Hampshire, Montana, Delaware, both of the Dakotas, Alaska and Wyoming.
We know other people are mad out there. Widespread public disaffection with those in charge has been pretty much a constant theme in American politics, especially in the presidential sweepstakes, but there also are signs of global discontent.
As I write this, Brazilian President Dilma Rousseff has been suspended from office, as the Brazilian Senate voted 55-22 to put her on trial for breaking budget laws and a corruption scandal. One byproduct of this mess is that Brazil has just sacked its sports minister, who was overseeing preparation for the 2016 Summer Olympics, along with every other minister except the central bank governor. The government will now be led by Vice President Michel Temer, who promises an austerity program, including reform of the unaffordable pension program.
But people don’t seem to be mad about costly pension systems, even though so many jurisdictions around the world that are in fiscal trouble can trace those difficulties to paying public employees greater benefits than the taxpayers themselves are earning. Citizens are clearly mad about “government spending,” according to the polls, but this is apparently spending only on other people they don’t care about.
Puerto Rico is the latest case for public mood regarding reform efforts to fix unsustainable fiscal conditions. As recently as 1998, former Gov. Pedro Rosselló, a dentist and University of Notre Dame graduate with a masters’ degree in public health, was president of the Council of State Governments and simultaneously chair of the Democratic Governors Association and Southern Governors Association. The much-admired governor had proposed an economic model which reduced working families’ income tax rates by 30 percent, while unemployment had been slashed to its lowest level in two decades. The explosive crime rate had been reduced as well. He was the last two-term governor of Puerto Rico.
Luis Fortuño, who came to politics during the Rosselló administration as executive director of the Puerto Rico Tourism Co., teamed up with Rosselló in 2004 to be elected Resident Commissioner and then ran against him in 2008 and was elected governor. A graduate of Georgetown University and the University of Virginia Law School, his background in government had been all about economic development.
As a candidate, Fortuño swore he would not lay off a single government employee, but once elected, he quickly noted that extraordinary measures to confront the $3.2 billion deficit might require the sacrifice of nearly 30,000 government workers. Since the government employs more than a quarter of the workforce, this was to be expected in any kind of fiscal reform. Two months after he was sworn in, Fortuño announced a fiscal and economic recovery plan that included reducing the government’s annual expenditures by more than $2 billion. Workers took to the streets, but Fortuño stuck to the plan.
The cost-containment and revenue-generation measures resulted in a $2 billion structural deficit the first year, which fell to $1 billion the next, $610 million in fiscal year 2011-12 and $332.7 million in 2012-13. Fortuño set out a goal of achieving a structurally balanced budget during the first year of the governor who succeeded him.
But the debt remains. In fact, more debt than any state except California and New York. Heroic attempts to manage the island’s public finances are generally still winning approval and honors from people who care about government, (Fortuño was also president of the Council of State Governments) but mostly opprobrium from the citizens. Current Gov. Alejandro Padilla Garcia, who came to office with a plan to cut another $1 billion of public spending, has a 12 percent popularity rating and announced six months ago that he is not running for re-election. The commonwealth is reportedly dead-ass broke, and can’t pay $2 billion in debt payments due next month.
Puerto Rico doubled its debt in 10 years by selling more than $126 billion in bonds, first to cover budget deficits and then to pay for operating expenses. A 2006 sales tax was enacted to stabilize the local economy because multigenerational “bootstraps” tax breaks had been phased out over a decade. Since that time, the Puerto Rican economy has shrunk every year but one, and the poverty rate is double the poorest U.S. state.
David Walker, the former U.S. comptroller-general, suggests we got to this crisis situation via “the politics of avoidance.” He was, of course, referring to the shopworn metaphor of “kicking the can down the road,” but public officials seem fixated on avoiding public wrath.
Last month, I had a chance to visit with the two top state legislative leaders – the Senate president and House speaker – in a state which had held its primary the weekend before. This was a caucus state, the form of primary that supposedly allows political parties the greatest control over the process. Both leaders were surprised by the result, and both said it’s hard to advise their members how to vote and how to run for election this year. These are both longtime lawmakers who meet with constituents every day to ascertain what mainstream citizens expect from government.
The constituents care about sustainability as practiced by Wal-Mart or ExxonMobil, but not necessarily as attempted by government. Unfortunately, their anger is not always directed at the breach of promises to fix the state, city, commonwealth or country so that it will last a while longer, but it surfaces regularly at any suggestion to curtail continued benefits.
Most people – with certain tea party members as exceptions – don’t seem to be mad at government in general, but furious at those who hold levers of power, particularly when they sense hypocrisy or not delivering on promises to make things better. Even if the objects of this disaffection have strong records of achievement in some areas, it’s all about figuring out what the constituents really care deeply about. Which, it should be noted, is not always well-managed government.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.