Voice For Liberty

Tag: Regulation

  • Who benefits, loses from regulation?

    A Powerline post discusses the Upton-Imhofe bill, which would bar the EPA from regulating carbon dioxide emissions. The article quotes Ranking Democrat Henry Waxman of the House Committee on Energy and Commerce as stating this bill benefits “big polluters like Koch Industries.”

    But who really benefits from the regulation of greenhouse gases? First, large companies do. They are better able to absorb the costs of regulation than their smaller competitors. This is why we often see big business promoting increased regulation. It places their smaller competitors at a disadvantage. As Koch Industries is a large company, it is in a position to benefit from the proposed regulations relative to their smaller competitors. But, the company does not support the regulations.

    Who will lose from increased regulation of greenhouse gases? Ultimately consumers will, but business is harmed, too. The cost of regulation causes a loss of income, which leads to less of the product (energy) being produced, and a corresponding rise in price. As energy becomes more expensive, it is low-income people that are hurt the most.

    Aside from these market effects, the Powerline piece explains an entire industry that has developed to benefit from government subsidy of green energy sources and producers:

    But there are, in fact, some companies that would benefit from the imposition of CO2 regulations on power plants, refineries and so on. Those companies are the ones that peddle inefficient forms of energy that cannot compete with fossil fuels absent government subsidies. Those subsidies come in two forms. The government can give money and tax breaks to inefficient energy producers like solar and wind, and it has indeed done that. However, those subsidies are relatively transparent and controversial. The second way in which government can help producers of inefficient energy is, therefore, actually better: it can make energy produced with fossil fuels more expensive by imposing needless regulations. And that is exactly what “green” — i.e., inefficient — energy producers lobby for.

    And who are the green energy subsidy-seekers that benefit from increased regulation? Powerline identifies one: Thomas Steyer, a west coast hedge fund manager with investments in green energy companies. He has a personal financial motive, as Powerline describes: “As an investor who has placed a big bet on non-fossil energy, he has an obvious personal interest in the government imposing regulations that make his competitors — producers of fossil fuel energy — more expensive. In fact, without such government action, the ‘green’ projects in which he has invested are likely worthless.”

    It should not be surprising that Steyer makes large campaign contributions to Democrats and is a board member of Center for American Progress, a left-wing think tank closely associated with the Obama Administration.

    A case study in liberal hypocrisy

    By John H. Hinderaker

    On Monday, the House Committee on Energy and Commerce began its consideration of the Upton-Imhofe bill, which would bar the EPA from regulating carbon dioxide emissions. Upton-Imhofe is critical to any effort to restore our economy, so the Democrats are against it. Ranking Democrat Henry Waxman went on a hysterical rant against the legislation:

    This is dangerous legislation. Climate change is real; it is caused by pollution; and it is a serious threat to our health and welfare. We need to confront these realities, not put our head in the sand like an ostrich.

    We have written about this issue many times. Climate change is “real” only in the sense that the climate is always changing. That has been true for millions of years. Climate change is not caused by pollution; history proves that the level of carbon dioxide in the atmosphere does not control worldwide temperatures. Nor is global warming a serious threat to our health and welfare. Humanity has consistently thrived during warmer periods and suffered during colder ones. The Dark Ages were dark largely because they were cold.

    Waxman continued:

    Yet instead of promoting a clean energy future, we are pursuing this partisan bill that benefits no one except big polluters like Koch Industries.

    I suppose Waxman thought he was punching his liberal ticket by mouthing the Democratic Party talking point du jour. Evidently he didn’t get the memo, and hadn’t heard that the Left has backed off on its daily attacks on Koch because those attacks were so over-the-top and so factually deficient that they made laughingstocks of the lefties who asserted them.

    Continue reading at Powerline.

  • Speculators selfishly provide a public service

    Speculators are selfish people, acting only to make as much profit as possible for themselves without concern for the welfare of others. By doing so, they provide a valuable public service.

    That’s not what we hear in this moment of rising oil and gasoline prices. News commentators from across the political spectrum condemn speculators, blaming them for rising gasoline prices.

    The mechanism of the speculator is to buy something like oil when prices are low, then to sell it when prices are high. By doing so he earns a profit. (An alternative is to sell things he does not yet own when prices are high, and then buy to fulfill his obligation when prices are low.)

    The speculator, in this definition, does not hope to profit by processing and distributing the commodity he is buying and selling, as does an oil company or flour miller. He simply hopes to make a profit based on the changing prices — up or down — of oil or wheat.

    It is said that speculators are buying oil now and therefore driving up the price. That’s probably true, and it illustrates one of the beneficial services that speculators provide: they reduce volatility in prices. If speculators are correct and the price of oil spikes sometime soon, the present buying by speculators makes the spike less steep. It also induces consumers to conserve.

    Writing about speculation in food markets, Walter Block explains the beneficial effects:

    First, the speculator lessens the effects of famine by storing food in times of plenty, through a motive of personal profit. He buys and stores food against the day when it might be scarce, enabling him to sell at a higher price. The consequences of his activity are far-reaching. They act as a signal to other people in the society, who are encouraged by the speculator’s activity to do likewise. Consumers are encouraged to eat less and save more, importers to import more, farmers to improve their crop yields, builders to erect more storage facilities, and merchants to store more food. Thus, fulfilling the doctrine of the “invisible hand,” the speculator, by his profit-seeking activity, causes more food to be stored during years of plenty than otherwise would have been the case, thereby lessening the effects of the lean years to come.

    If the spike in prices does occur, what will speculators do? They will sell their oil, and that action will drive down prices, making the spike less steep. Here the speculator makes a profit by providing the service of making the oil shortage less severe. His hoarding of oil, bought when prices were low, makes it available in times of need, and less expensive, too. The speculator is rarely given credit for that in public, although this is how the speculator earns a profit.

    It is possible for speculators to do harm, however. If the speculator buys, he drives up prices. Then suppose the price of oil falls, and the speculator is forced to sell. His actions have increased the volatility of oil prices and have sent false price signals to the market. Citing again Block’s food example: “What if he is wrong? What if he predicts years of plenty — and by selling, encourages others to do likewise — and lean years follow? In this case, wouldn’t he be responsible for increasing the severity of the famine? Yes. If the speculator is wrong, he would be responsible for a great deal of harm.”

    In these cases, the speculator has suffered financial losses. These loses are a powerful market force that drives “bad” speculators — meaning those who guess wrong about future prices — out of the market.

    The real danger is when government attempts to speculate. That’s a possibility at the current moment, as many are recommending that the U.S. government sell oil from the strategic petroleum reserve in an effort to lower the cost of oil. That’s speculation — the oil was bought at a time when the price was lower, and is now contemplated being sold at a higher price.

    The problem with government speculation is that government does not face the market discipline that private-sector speculators face. When they are wrong, they lose their capital. They go out of business. Government faces no such discipline. When government is wrong, it goes on.

    Government attempts at regulating speculators are certain to fail, too. Almost any such regulation will seek to reduce the profit potential of speculation. But that is what drives the speculators and makes the system work. Without the potential for profits, speculators will not take the risk of losses, and they will not perform their beneficial function.

  • Kansas auto dealers have anti-competitive law on their side

    In Topeka, a new car dealer wants to add the Buick and GMC lines to its dealership. In Wichita, an RV dealer wants to add an additional location. But if a privileged class of people are able to persuade the Kansas director of vehicles, these actions won’t be allowed.

    In Kansas, like many states, existing new car dealers are able to weigh in as to whether competition will be allowed into their market areas. In Kansas, the statue is 8-2430, captioned “Establishment of additional or relocation of existing new vehicle dealer; procedure; relevant market area.”

    Examination of this statute lets us learn of its anti-competitive nature. A person proposing a new dealership must state in writing why the new dealership should be allowed to be formed. The law requires that the applicant provide “a short and plain statement of the evidence the licensee, or proposed licensee, intends to rely upon in meeting the burden of proof for establishing good cause for an additional new vehicle dealer.”

    If the director of vehicles holds a hearing and finds that “good cause has not been established,” the director shall deny the application, according to the statute. The burden of proof is on the applicant for the new license, and must be proved “by a preponderance of the evidence presented.”

    The statute says that in determining whether there is good cause for a new dealer, the director of vehicles shall consider:

    • “permanency of the investment of both the existing and proposed new vehicle dealers”
    • growth in population
    • “effect on the consuming public in the relevant market area”
    • “whether it is injurious or beneficial to the public welfare for an additional new vehicle dealer to be established”
    • whether dealers of the same make of cars are “providing adequate competition and convenient customer care”
    • whether the proposed new dealer would increase competition and if that increased competition would be “in the public interest”
    • the effect of a new dealer on existing dealer(s)

    The decision of the director is not limited to these considerations, says the statute. Some of these factors are so vague and open-ended that they give the director reason to deny a new license virtually at his discretion. Will a new dealer have an effect on an existing dealer? Sure. Licensed denied.

    These laws that restrain trade and competition are harmful to the consumer. In his recent book The Right to Earn a Living: Economic Freedom and the Law, author Timothy Sandefur discusses the Illinois Motor Vehicle Franchise Act, which has language similar to the Kansas law. He writes:

    Although cloaked in the language of public benefit, such laws are really private-interest legislation designed to allow the government to choose each company’s “fair share” of the trade. But the only way of determining what share of the trade is “fair” for any business is its success with consumers who are free to choose. If bureaucrats, rather than consumers, decide what amount of economic success is “fair,” businesses will devote their time not to providing quality products at affordable prices but to wooing government officials to give them special favors. … Consumers, again, are victims of anti-competitive laws of which most of them are not even aware.

    Sandefur cites studies that show that states with laws like Kansas’ have fewer new-car dealerships, and higher prices for new cars. “This price difference means that consumers are forced to pay more for cars without getting any increased value; the extra money is merely transferred into the pockets of politically influential car dealers.”

    This law is bad for all Kansans except those who own automobile dealerships. It ought to be repealed.

    Ironically, the notice of the two dealers’ proposals is contained in this week’s issue of the Kansas Register. The very next page holds the text of Kansas Governor Brownback’s Executive Order 11-01, which creates the “Office of the Repealer.” In its preamble, the order recognizes the administration’s priority to promote “growth of liberty and economic opportunities for the citizens of Kansas and for Kansas businesses” and our state’s “mutual interest in a system of government, laws, regulations, and other governing instruments that are reasonable, comprehensible, consistent, predictable, and minimally burdensome.”

    I suggest to the repealer — Dennis Taylor is his name — that we’ve found the law that should be first to go by the wayside.

  • Kansas and Wichita quick takes: Thursday February 3, 2011

    Wichita-area legislators to meet with public. From Rep. Jim Ward, South-Central Delegation Chair: “Public comment about the proposed state budget, health care reform, voter eligibility and other major issues will be heard by local legislators at 9:00 am Saturday, Feb. 5, at the Wichita State University Metroplex, 29th and Oliver. The forum is the first of the 2011 legislative session and is hosted by the South-Central State Legislative Delegation. … Delegation members will take written and spoken questions from the public during the two-hour session. ‘Legislators need to hear from the people who are affected by these important issues,’ said Rep. Jim Ward, delegation chair. ‘Better decisions are made when the public participates in the process.’ … For further information, contact Rep. Ward, delegation chairman at 316-210-3609 or jim.ward@house.ks.gov.”

    Fairness issue. A letter in the Topeka Capital-Journal: “The Capital-Journal recently published a lengthy feature, headlined ‘Cuts to arts hit sour note,’ about the Kansas Arts Commission. Abolition of the commission may be a legitimate policy move for budgetary reason. However, there is a caveat. If it’s eliminated for budgetary considerations, all comparable departments, agencies, services, programs, etc., must too be abolished or separated from the state into a nonprofit or for-profit corporation — unfunded by Kansas taxpayers, either directly or indirectly.” After running through a number of agencies, the writer concludes: “Thus, artists pay for their own canvasses, hunters fund their own preserves, tourists find the Flint Hills on their own, students come to college to study, farmers show off their fancy ears of corn in their own barns and concert-goers go to New York for entertainment. Honor dictates that all be treated the same, be it sports or tourism or the arts.” … While the tone of the entire letter is sarcasm, the writer almost has everything correct, if taken literally. But it’s not honor that dictates all the treated the same, it’s morality that requires such treatment.

    Twenty regulations to eliminate. From the Heritage Foundation: “As the new Congress assembles, many legislators are considering how to lessen the regulatory burden on Americans. President Obama, too, now says that he wants to root out unnecessary government rules. With regulatory costs at record levels, relief is sorely needed. But it is not enough to talk about fewer regulations. Policymakers must critically review specific rules and identify those that should be abolished. This paper details 20 unnecessary and harmful regulations that should be eliminated now. … At every level, government intrudes into citizens’ lives with a torrent of do’s and don’ts that place an unsustainable burden on the economy and erode Americans’ most fundamental freedoms. In fiscal year (FY) 2010 alone, the Obama Administration unleashed regulations that will cost more than $26.5 billion annually, and many more are on the way.” The report is available at Rolling Back Red Tape: 20 Regulations to Eliminate.

    Kansas considers major change in state pension plans. “Kansas legislators looking for ways to close a nearly $8 billion gap in state pension plan funding heard how Utah plans to heal its pension wounds by switching to a plan similar to one that most private businesses offer. … Utah state Sens. Dan Liljenquist, of Bountiful, and Curt Bramble, of Provo, both Republicans, outlined to the Kansas House Pensions and Benefits Committee how Utah intends to close a somewhat smaller gap than Kansas’ by switching its traditional defined benefits pension plan to a modified version of a defined contribution 401(k) plan, the predominant retirement savings plan offered by U.S. businesses.” More from Kansas Reporter.

    Politics and city managers to be topic. This Friday (February 4) the Wichita Pachyderm Club features as its speaker H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs, Wichita State University. His topic will be “The Political Roots of City Managers in Kansas.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Funny campaign websites. Steve Harris, a candidate for Wichita City Council district 2, has a post on his website extolling the virtues of government funding for the arts, invoking the words of George Washington, Franklin Roosevelt, and Lyndon Johnson. What’s funny is where he quotes John Adams. The blog post states “John Adams said: ‘Diversity is a good man’s shining time.’ I would argue that we need to reflect on the thoughts of great leaders from the past who faced diversity we can’t even imagine today.” … When Harris quotes Adams, I think he meant to say adversity rather than diversity. Diversity is not something we have to “face” and struggle against. Adversity is. But even then, he gets the quote incorrect. The first word in the quotation from Adams is “Affliction.” … Plus, I don’t think he’s going to get a lot of agreement on LBJ being a great leader.

  • Regulation helps big business, not free enterprise

    Over and over we see how the conventional wisdom is wrong: that Republicans and conservatives are in bed with government, seeking to unshackle business from regulation — but Democrats and liberals are busy crafting effective regulations to protect the common man from the evils of big business. As it turns out, both Democrats and Republicans love creating regulations, and big business loves these regulations.

    How can that be? In the following excerpt from his book The Big Ripoff: How Big Business and Big Government Steal Your Money, author Timothy P. Carney explains that big business is able to use regulation as a blunt tool against competitors, and as a way to improve its image.

    How does regulation help big business?

    Excerpt from The Big Ripoff: How Big Business and Big Government Steal Your Money, by Timothy P. Carney

    If regulation is costly, why would big business favor it? Precisely because it is costly.

    Regulation adds to the basic cost of doing business, thus heightening barriers to entry and reducing the number of competitors. Thinning out the competition allows surviving firms to charge higher prices to customers and demand lower prices from suppliers. Overall regulation adds to overhead and is a net boon to those who can afford it — big business.

    Put another way, regulation can stultify the market. If you’re already at the top, stultification is better than the robust dynamism of the free market. And according to Nobel Laureate economist Milton Friedman:

    The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.

    There is an additional systemic reason why regulation will help big business. Congress passes the laws that order new regulations, and executive branch agencies actually construct the regulations. The politicians and government lawyers who write these rules rarely do so without input. Often the rule makers ask for advice and information from labor unions, consumer groups, environmental groups, and industry itself. Among industry the stakeholders (beltway parlance to describe affected parties) who have the most input are those who can hire the most effective and most connective lobbyists. You can guess this isn’t Mom and Pop.

    As a result, the details of the regulation are often carefully crafted to benefit, or at least not hurt, big business. If something does not hurt you, or hurts you a little while seriously hindering your competition, it is a boon, on balance.

    Another reason big business often cries “regulate me!” is the goodwill factor. If a politician or bureaucrat wants to play a role in some industry, and some executive says, “get lost,” he runs the risk of offending this powerful person. That’s bad diplomacy. Bureaucrats, by their nature, do not like to be told to mind their own business. Supporting the idea of regulation but lobbying for particular details is usually better politics.

    Finally there is the principal-agent problem. In a business, who is doing the actual lobbying for or against a regulation? It is typically the company’s government relations person. His or her job is to work with regulators and help the company find its way through the maze of regulation. To the extent government gets out of his or her company’s hair, the government relations executive becomes less important.

  • Prospects for successful deregulation in Kansas

    In the following short piece from the Wall Street Journal, Paul Rubin tells how difficult it was to battle regulation during the Reagan Administration, and therefore offers little hope that President Obama’s recent initiative to curb regulation will have any success.

    In Kansas, Governor Brownback has created the “Office of the Repealer” and has appointed Secretary of Administration Dennis Taylor to serve as the “Repealer.” Will this initiative be successful in Kansas? Based on Rubin’s experience in the Reagan Administration, I will be pleasantly surprised if any meaningful repeal or reform of regulation is achieved.

    Can Deregulation Work?

    It was hard under Ronald Reagan. It will be impossible under Barack Obama.

    By Paul H. Rubin

    How successful is the president’s recently announced deregulatory initiative likely to be? Based on my experience at two regulatory agencies (the Federal Trade Commission and the Consumer Product Safety Commission) during the Reagan years, I am not optimistic.

    President Reagan was serious about deregulation and appointed agency heads — Jim Miller at the FTC, Terry Scanlon at the CPSC — who were also serious. In turn they appointed determined managers like me, and they backed us up.

    We did some good, but it was not easy. The permanent staffs of the agencies were always interested in more regulation, either because of self-selection or because promotions and power increase in a larger agency. It also helped that we deregulators (generally economists) were not usually interested in permanent government positions, because reducing the power of the agency is a sure way to make enemies.

    Although my mandate was to cut back, I spent more time fighting new proposals than getting rid of old ones. The staffs wanted more, not less. Whenever I met acquaintances from other agencies the invariable comment was “You won’t believe what they want to do now.” (“They” were the permanent staffs.)

    The current regulatory agencies are not going to hire or promote people like me. Without managers with a strong interest in deregulation and with the backing of senior administrators, there will be no serious power to buck the staffs. The current executive order seems to impose cost-benefit analysis, but it has enough loopholes (“equity, human dignity, fairness”) so that agencies will be able to do whatever they want.

    Deregulation was hard even under Reagan. I am afraid it will be impossible under Mr. Obama.

    Mr. Rubin is a professor of economics at Emory University.

  • Kansas and Wichita quick takes: Wednesday January 26, 2011

    Kansas legislature website. The Kansas legislature’s website is improving. Today the calendar is available for today’s session of the House, although yesterday’s journal is not. The Senate is better, with both today’s calendar and yesterday’s journal available. These documents are now presented in the preferred pdf format, although the unconventional and inconvenient viewing window is still being used. … Contact information for members seems to be fairly complete, even for the newest member who was elected just last week. … Bills seem to be more up-to-date, with history available for some. But so far I’ve not seen any bill’s fiscal note. … The search feature, which uses a Google site search, seems to be able to include recent material. … Too much to ask for? The website doesn’t have a mobile version, at least not for the Iphone.

    Warden to speak. This Friday’s meeting (January 28th) of the Wichita Pachyderm Club features Sam Cline, Warden of the Hutchinson Correctional Facility. His topic will be “An Overview of the Programs Offered at the Hutchinson Correctional Facility.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    The plain truth about who owns the Democratic Party. The Washington Examiner is in the midst of a series of articles comprising a special report about the Democratic Party and who it serves. Writes editor Mark Tapscott: “The lawyers and three other special interests — Big Labor union leaders, Big Green environmentalists, and Big Insiders with billions of dollars in personal wealth and foundation grants — together essentially dictate what Democrats can and cannot support on many key public policy issues. Call them the Four Horsemen of the coming Democratic apocalypse.” The “home page” for the series is The plain truth about who owns the Democratic Party.

    Why have your own state if you’re not special? Mike Hall in the Topeka Capital-Journal: “What makes Kansans different from people living in the other states? There must be some differences, or why mark us off inside our own boundaries? I have been intrigued with that question for years and have amassed a collection of observations by other Kansans also trying to describe the uniqueness of the geography and people of Kansas.” Hall goes on to list a few examples of “You Know You Grew Up in Kansas When.” Such as: “You know that the halves of the state are based on US-81 highway.” Actually, I had thought the dividing line between eastern and western Kansas was Wanamaker Road in west Topeka.

    Kansas repealer. Kansas now has a repealer, according to Kansas Reporter: The job of repealing burdensome regulations and laws will fall to Secretary of Administration Dennis Taylor. … He’ll be tasked with establishing a system that allows Kansans to point out laws that might be eligible for repeal, investigating Kansas laws to determine which ones aren’t needed, and making recommendations of repeal to the authority that has the power to do away with the regulation.” Hopefully this office will produce tangible results soon.

    School choice in Kansas. “At some point in most school funding debates, someone will justify their position by saying ‘it’s all about doing what’s best for the kids.’ It’s not a partisan thing; I’ve heard it from people with opposite opinions on whether schools need more money. And that’s what should drive every education discussion — doing what’s best for kids, not the adults in the system. This week is National School Choice Week and there’s no better way to show that it really is about the kids than to support school choice. That’s not an attack on public schools. Public schools work very well for many students, but not all. Granted, that may be a subjective position, but who should decide whether a particular school or district is best for a child — the government or a parent?” More from Kansas Policy Institute President Dave Trabert at Zip Code Shouldn’t Matter — Delivering An Effective Education For Every Child.

    Kansas Days this week. This weekend marks the annual Kansas Days event, a gathering of Republicans in Topeka. More information is at Kansas Days Club.

  • Kansas and Wichita quick takes: Thursday January 20, 2011

    Pompeo to host first district event. This Saturday (January 22nd) newly-elected Kansas fourth district Congressman Mike Pompeo will hold an event billed as “Mike Pompeo’s Conversation with the Congressman.” It well be held Saturday, January 22, 2011 at 10:00 am, at the WSU Hughes Metropolitan Complex Sudermann Commons, 5015 E. 29th Street (at Oliver).

    Prognosticator Journey to address Pachyderms. Friday’s (January 21st) meeting of the Wichita Pachyderm Club features District Court Judge and former Kansas Senator Phil Journey speaking on the topic “Musings and Prognostications on State and Federal Government.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Feeling too good about our schools. Eric Hanushek looks at the results of U.S. students on the recent international tests and the attempts to explain away our generally poor performance. Is education important to our country’s economy? Absolutely, Hanushek explains: “Research has shown that international performance on these tests is very closely related to the economic growth of nations. Does the difference between 550 points (roughly Finland) and 500 points (roughly the U.S.) make a difference? By the historical record of growth, such a difference is consistent with one percent per year in the growth of per capita income. If we project this out over the lifetimes of children born today, the present value of economic gains from the U.S. reaching the level of Finland would be $100 trillion! These potential economic gains from improved schools should be compared to the huge political fights in the U.S. over a stimulus package of one trillion dollars, or one hundredth of the magnitude of the gains we are leaving on the table from ignoring the achievement in our schools.” Hanushek explains that the relatively free enterprise economy of the U.S. has attracted the “brightest from abroad” and has created an economy that spurs innovation. But our advantage is fading, he says, and the brightest often stay at home. We need to fix this now, or in a decade or two it may be impossible to recover.

    Obama order on regulation seen as ineffectual. The Competitive Enterprise Institute is a watchdog on federal regulation, having published Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State since 1996. On President Obama’s recent order to review the effect of regulations, CEI is not impressed. In a press release, the organization said: “The number of rules in the pipeline at agencies has surged in the past year, from 4,041 at the end of 2009 to 4,225 now, as will be detailed in CEI’s upcoming Ten Thousand Commandments report. ‘Major’ rules, those expected to cost over $100 million annually, have experienced an even greater surge. Indeed, just to get where we were a year ago, many rules would have to be cut. Yet Obama’s Wall Street Journal op-ed today announcing the Executive Order utterly glossed over the EPA CO2 rules, the FCC’s unauthorized net neutrality push, and the torrent of rules yet to come from the health care and financial reform bills.” … CEI notes that an executive order issued by President Bill Clinton, still in effect, already orders what Obama’s order does. CEI asks: “Actually confronting regulation, the crippling extent of which remains unappreciated by both parties, requires going far beyond the words of an executive order.” … Phil Kerpen of Americans for Prosperity is interviewed on this topic and notes the problem of “back door” legislation through regulation. … It should be noted that Obama inherited many regulations, as despite the claims of liberals, President George Bush greatly expanded the scope of the federal regulatory state.

    Massachusetts health care presages Obamacare. Sally Pipes of the Pacific Research Institute, writing in Investor’s Business Daily, notes the promises and the reality of health care reform in Massachusetts. The plan was implemented by Mitt Romney, a Republican, who promised, according to Pipes, “Every uninsured citizen in Massachusetts will soon have affordable health insurance, and the cost of health care will be reduced. And we need no new taxes, no employer mandate and no government takeover to make this happen.” But here’s the reality of what’s happened, again according to Pipes: “The only measure by which Massachusetts can be judged a success is the number of people enrolled in Medicaid and other government-subsidized insurance plans. Of the 410,000 newly insured in Massachusetts, three in four are either paying nothing or very little for their insurance. … Despite the near-universal insurance, the state still spends $414 million on uncompensated care, an expense that Romney and his architects promised would disappear. Emergency-room use has not dropped as predicted. From 2006 to 2008, emergency room use under Mass Care increased by 9%. And private employer insurance costs, far from dropping, have continued to increase.” … Prior to this plan, health insurance premiums in Massachusetts increased at a rate slower than the national average. Now they increase faster than average.

    Sowell on fixing America’s economic problems. Thomas Sowell has published the fourth edition of his now-classic work Basic Economics: A Common Sense Guide to the Economy. Now eighty years young, Sowell appears in an interview on the topics in his book.

  • Stossel on politicians’ promises

    Recently John Stossel produced a television show titled Politicians’ Top 10 Promises Gone Wrong. The show features segments on government programs and why they’ve gone wrong, with a focus on the unintended consequences of the programs. Particularly illuminating are the attempts by programs’ supporters to justify their worth.

    Now the program is available to view on the free hulu service by clicking on Politicians’ Top 10 Promises Gone Wrong.

    One of the segments on the show explained the harm of Cash for Clunkers, in which serviceable cars were destroyed so that new cars could be sold. The program simply stole sales from the months before and after the program. The mistaken idea that destruction can be a way to create new wealth is held by many who should know better, and Stossel reminds us of the New York Times’ Paul Krugman, who wrote that the terrorist attacks of September 11, 2001 “could even do some economic good” as rebuilding will increase business spending. It’s the seen vs. unseen problem, Stossel and David Boaz of the Cato Institute explain. It’s easy to see people buying new cars. It was reported on television. But it’s more difficult to see all the dispersed economic activity that didn’t take place because of the programs.

    “Living wage” laws, in which people would be paid enough to live on — whatever that means — is next. While increasing wages of low-paid workers is a noble goal, increasing the cost of labor results in an entirely predictable result: less labor is demanded. Fewer people will have jobs. The Grand Canyon National Park, for example, switched to automated ticket machines. Christian Dorsey of the Economic Policy Institute, said that elimination of minimum wage laws would leave employers free to drive down wages as low as possible. But Stossel noted businesses hire employees in a competitive market, and it is that market that sets wages. Only about five percent of workers earn the minimum wage. Why do the others earn more than that? Competitive markets force employers to pay more, not laws.

    A segment on “fancy stadiums” boosting the economy holds a lesson for Wichita and the Intrust Bank Arena in its downtown. The claimed benefits of these venues rarely appear, and the unseen costs are large — “at the local bar there’s one less bartender, there was one less waitress hired at a restaurant, a movie theater that had one less theaterfull. It’s handing money from your right hand to your left and declaring I’m rich.” While Wichita’s arena seems to be doing well, it’s still well within its honeymoon period. Even then, there was a month where no events took place at the arena.

    A segment on the new credit card regulations, intended to protect consumers, shows that the regulations resulted in fewer people being able to get credit cards. Now these people have to go to payday lenders or pawn shops, which are much more expensive than credit cards. Arkansas once capped credit card interest at ten percent. The result was that few people in Arkansas could get a credit card, and the state became known as the pawn shop capital of America.

    Ethanol is the topic of a segment. Promised as a way to solve our energy problem, many politicians of both parties support ethanol. But we’ve come to realize the problems with government support of ethanol: rising price of food, excessive use of fertilizer and fuel to produce corn, and an awareness that ethanol is more harmful to the environment than gasoline. “But it makes us feel good,” Stossel says. In Kansas, Governor Sam Brownback is firmly in favor of government support of ethanol, which Boaz called “pound-for-pound, the dumbest program ever.”

    On the role of government in causing the housing bubble, Howard Husock said “Government exaggerates, rather than minimizes, the age-old impulse to greed. The government made it harder for bankers who wanted to do the right thing.” Stossel explained that bankers who wanted to stay with safe home loans lost out on profits they could earn selling high risk loans to Fannie Mae and Freddie Mac, the government-sponsored agencies.

    At the end, Stossel said: “And that’s the number one promise gone wrong. These guys say they’ll be fiscally responsible. And then we elect them, and they spend more. They’re spending us into bankruptcy. There must be 10,000 harmful programs, and yet they keep creating more. Why can’t we cut them?” Boaz explained: “Every one of those 10,000 programs has a lobbyist in Washington. … They always know when the bill is up before Congress, and they send political contributions, they send people to Washington to lobby. The rest of us don’t do that. … People should be more engaged, people should be better citizens. But the fact is we have lives, and there’s no way that any normal person can know about the 10,000 programs that make up the $3.5 trillion federal budget.”

    And so the programs keep growing, Stossel said, and we must pay their costs and unintended consequences forever — “Unless, there’s a new wind blowing in America. A new attitude, a new expectation that maybe Washington should do less. I hear there is. I sure hope so.”