May 2012

Apparently California attorney General Jerry Brown believes that bureaucracy is the answer to alleged environmental woes. He and ten other state attorney generals have launched a lawsuit against the Bush Administration for trying to cut a little bit of bureaucratic red tape for America’s small business. At issue is Environmental Protection Agency’s attempt to reduce paperwork for small companies that contribute a total of less than 1 percent of “releases” under the Toxics Release Inventory. Jerry Brown complains in today’s in The Los Angeles Times about such changes, whining: “As we swim in this chemical soup that modern society serves up, we certainly have a right to know what we are encountering.”

What a bunch of bunk! As pointed out before on the Open Market Blog and in CEI publications (see pages 179-182 of this document), this reporting mechanism had no real impact on public health. Instead it simply serves the agenda of the greens–and public officials like Jerry Brown–to needless hype risks about chemicals.

The Financial Times today has a very perceptive article, “Too much safety in America’s playrooms,” by Patti Waldmeir. Waldmeir points to the current issue of Chinese toy recalls, and American parents’ search for perfect safety:

Americans will never admit it, but there can be such a thing as too much safety – even when it comes to toys from China. At the best of times, America’s attitude to its children borders on saccharine sentimentality (I should know: I have two of them). But after this year’s bumper crop of Chinese toy recalls, parental hysteria has hit new levels – with emotion and politics threatening to pollute rational debate on how best to solve the toy crisis.

Waldmeir notes that in the real world, searching for “perfect safety” has some trade-offs — a point often neglected by nanny state advocates:

In the best of all possible worlds, every American child would be tested to see if their toys had harmed them. But in the real cost-benefit world we all live in, perfect safety costs money. The heart says that one child harmed is one too many. But the question is: how much we are prepared to pay to make sure that not even a single child is injured?

She points to the massive number of lawsuits that have been filed against Mattel on behalf of children who had been exposed to some recalled toys, and notes that the market is punishing Mattel for its apparent lapse in not vetting its suppliers and allowing unsafe toys to be sold under its brand: People are buying other manufacturers’ toys from other developed countries.

Her column concludes:

“We need to strike a balance between protecting our kids and protecting the capacity of corporate America to employ people so they have money to pay for the toys,” says Mike Lyle, a product liability expert at law firm Weil, Gotshal & Manges. “It’s a balancing act”.

There is no such thing as perfect safety – even in America.

A new bill proposed in Massachusetts would make it illegal for parents to spank their children. Much of the discussion centers on spanking and how harmful or effective it is. Toddlers don’t have the ability to reason as adults can, and they cannot comprehend why certain behavior should be avoided (often for their own safety). Spanking is a visceral tool parents can use to teach their children which actions are unacceptable.

This line of reasoning however, neglects the bigger issue at the heart of the debate: Regardless of whether or not spanking a child’s gluteus maximus is effective, the government does not have the right to interfere in this matter. Kathleen Wolf, the nurse who penned the bill, cites the fact that domestic violence laws apply to everyone in the house but children. She fails to note federal and state child abuse laws already exist across the nation. For domestic abuse, authorities can intervene only after the victim files charges or police find enough evidence to file their own charges. For child abuse, again, enough evidence must be present before the authorities can step in.

If it is child abuse, why does Massachusetts need a separate law to address spanking? The answer is, that it isn’t physical abuse. The reasoning seems to be that spanking is mentally abusive to children, therefore there wouldn’t be any evidence. Trying to regulate mental abuse is dangerous new territory for lawmakers. Ask any psychiatrist and they will probably tell you that in order to avoid mental abuse, the government would have to prohibit a good 90 percent of parental behavior (or they wouldn’t say anything to avoid losing customers).

How far can legislation like this go? There really is no limit. Will the state eventually try to regulate how hard parents can hug their children or what games they can play? Once they have a foot in the door, like nosy relatives you can’t avoid, regulators can interfere in any part of our “private” lives.

At CEI, we like to celebrate inventors, innovators, and those bold souls whose unyielding curiosity help make the world better. Such a person was Dr. Robert Cade, who passed away yesterday. His invention is one so ubiquitous that today it’s hard to think of the world without it: Gatorade. Reports The Gainesville Sun:

Cade, a former professor of nephrology at the University of Florida’s College of Medicine, was something of a Renaissance man. When he wasn’t concocting the strange brew that would become the world’s best-selling sports drink, Cade was reciting the poems of Alfred Tennyson and playing the violin.

“He was a man with one of those unique minds,” said Dr. Dana Shires, who helped Cade develop Gatorade.

Cade, who had long suffered from heart and kidney disease, died at Shands at UF around 10 a.m. Tuesday.

It was Cade’s unique mind, combined with the needs of the Gator football team, that led to the creation of Gatorade and the beginnings of a multibillion dollar sports drink industry. As the now legendary story goes, the Gatorade saga began in 1965 with a seemingly silly question posed by then-assistant UF Coach Dwayne Douglas.

“Doctor,” Douglas asked, “why don’t football players wee-wee after a game?”

“That question changed our lives,” Cade told the Associated Press in 2005.

And it changed sports forever, as Dr. Cade’s invention became the favorite means to rehydrate athletes of every major major American sports league.

Of course, as a UF grad myself, I’m glad he lived long enough to see his drink put to a use he probably never envisioned — to celebrate his drink’s namesakes winning the national championship by the now-traditional Gatorade soaking of the coach. RIP

The Seattle School District says that celebrating Thanksgiving is racially insensitive.  This is the same school district that claimed for several years that “individualism” is a form of “cultural racism,” that only whites can be racist, and that planning ahead is a white characteristic that is racist to expect minorities to exhibit.  Those claims were mocked in Supreme Court opinions.  The Seattle Schools now tell parents that Thanksgiving is a “time of mourning” and a “reminder of 500 years of betrayal” of Native Americans.

Glenn Singleton, the Seattle Schools’ “diversity” consultant, has recently been hired by California Superintendent of Public Instruction Jack O’Connell (D), as well as several school districts, such as Arlington, Virginia, and Greenwich, Connecticut.   So this politically-correct nonsense may soon be coming to your own child’s school. Maybe the celebrated author Mark Twain was right when he questioned the wisdom of school boards. (Singleton, by the way, claims that Mark Twain was a racist).

Writing from Beijing, New York Times columnist David Brooks in his column today notes how American sentiment is increasingly against trade and globalization and points to reasons why the Dobbsians are wrong.

Brooks says that among politicians this trend is also prevalent — different from earlier periods:

Once there was a bipartisan consensus behind free trade, but that’s not true anymore, either. Even Republicans, by a two-to-one majority, believe free trade is bad for America, according to a Wall Street Journal/NBC poll.

Once upon a time, the fact that hundreds of millions of people around the world are rising out of poverty would have been a source of pride and optimism. But if you listen to the presidential candidates, improvements in the developing world are menacing. Their speeches constitute a symphony of woe about lead-painted toys, manipulated currencies and stolen jobs.

As Brooks points out, those opposing trade are blaming all manufacturing job losses on increased trade, but that is scarcely the case, as technological changes have more to do with job losses. And trade also creates jobs:

. . . not every economic dislocation has been caused by trade and the Chinese. Between 1991 and 2007, the U.S. trade deficit exploded to $818 billion from $31 billion. Yet as Robert Samuelson has pointed out, during that time the U.S. created 28 million jobs and the unemployment rate dipped to 4.6 percent from 6.8 percent.

That’s because, as Robert Lawrence of Harvard and Martin Baily of McKinsey have calculated, 90 percent of manufacturing job losses are due to domestic forces. As companies become more technologically advanced, they shed workers (the Chinese shed 25 million manufacturing jobs between 1994 and 2004).

Meanwhile, the number of jobs actually lost to outsourcing is small, and recent reports suggest the outsourcing trend is slowing down. They are swamped by the general churn of creative destruction. Every quarter the U.S. loses somewhere around seven million jobs, and creates a bit more than seven million more. That double-edged process is the essence of a dynamic economy.

An interesting article in today’s Washington Post highlights the trade-offs and market realities associated with green products. It addresses the packaging challenges faced by organic ice tea maker, Honest Tea. The company employs a variety of measures to keep energy costs and environmental impacts of its packaging low. As a result, Honest Tea comes in plastic bottles.

While most people simply assume that plastic packaging is worse than allegedly more recyclable glass when it comes to environmental concerns, this piece shows that even the greenest of companies find plastic is better in many cases. Indeed, it’s lighter and easier to transport, which saves energy. Plastic is also cheaper because it takes less energy to make. And, of course, retailers like plastic because it doesn’t break as easily and, hence, it is less of a hassle to stock.

Honest Tea’s story makes one thing very clear. In a market for green products, freedom and flexibility are everything. The company is looking at a variety of factors to meet green needs and customer demands, and they seek solutions via a trial and error approach. Should lawmakers and environmentalists push mandates – as they are currently doing for plastic bottles containing water – such rigid laws will preempt that process, and mandate politically preferred options that won’t serve consumers or the environment.

The FCC today is going to consider expanding its authority to saddle cable TV with many of the same regulations as broadcast. That, to be concise, is a bad idea. Our very own Wayne Crews expands on why:

The Federal Communications Commission’s potential enlargement of its power is a giant step backward for the entire communications realm, not just cable. Chairman Kevin Martin’s job is to safeguard and enlarge economic liberty in the communications sector. His — or someone else’s — leadership is needed to roll back outmoded, pre-satellite, pre-Internet era dictates, and abandon the obsession with arbitrary percentages and thresholds. The desperately needed leadership task is to replace archaic political discipline by paving the way for greater market-driven competitive discipline.

That means the FCC’s only remaining role in today’s era is establishing and liberalizing markets in spectrum; otherwise, hands off. Ironically these constant bureaucratic interferences in the communications market by a grasping, increasingly irrelevant FCC are the macro version of what constant interruptions are to normal face-to-face conversation.

There’s something perverse in waiting until cable is widely available, with competitors arrayed against it, and massive infrastructure projects underway, before exploiting decades-old legislative provisions that conveniently perpetuate Washington’s ability to officiate and meddle. This episode says more about the phenomenon of bureaucracy than it does about the marketplace. Bureaucratic nostalgia for a past era of importance cannot legitimately drive public policy. The FCC may not relent on this and other initiatives; the congressmen who oppose the agency’s non-market endeavors may need to revisit the authority they’ve given the agency.

As the joke goes, there’s good news and bad news. Which would you like to hear first?

Upon hearing no answer from the readers of Open Market, I’ll begin with the bad news. On November 15, the U.S. House of Representatives passed the “Mortgage Reform and Anti-Predatory Lending Act” as an answer to mortgage woes. This “absurdly patronizing government-knows-best bill,” as my colleague Eli Lehrer called it in a CEI press release, goes beyond the goal of improved disclosure to ban mortgages that are, in the bill’s words, “inappropriate” for borrowers.

The borrowers, however, would not be deciding what is “inappropriate.” That is left for the government to decide after the fact, and to punish lenders through penalties or legal judgments. Needless to say, not only would this limit mortgages choices, it would likely make home loans much less available.

As I wrote in National Review the day before it was voted on, this bill “is on a collision course with the principle of economic freedom, that is the aim of so many policies conservatives have pushed” such as school choice and personal retirement accounts. Yet when the bill came to the floor, more than 60 Republicans — no doubt spooked by the word subprime — voted “aye.”

Now for the good news, or silver lining. 127 members of the House — all GOP — stood their ground and voted against the bill. That’s way better than in 2002, when only three voted against the draconian Sarbanes-Oxley Act stampeded through Congress after the Enron scandal. (The three were Rep. Ron Paul,R-Texas; Rep. Jeff Flake, R-Ariz., and then-Rep. Mac Collins, R-Ga.). The 127 were mostly members of the conservative Republican Study Committee (RSC), often the free-market conscience of the Congress. RSC leader Jeb Hensarling, R-Texas, made the case to the Capitol Hill newspaper The Politico that the bill would “outlaw the American dream for many struggling families” and “drive investment away.”

The other good news is that in addition to CEI, many other free-market groups are standing up for consumer choice in mortgages. CEI signed a letter with 13 other groups — including Americans for Prosperity, Americans for Tax Reform, and the Council for Citizens Against Government Waste — requesting that members of Congress neither “reward financial imprudence” with a bailout nor “intervene to prohibit risk-taking that could give some families greater economic opportunity.” The National Taxpayers Union, also a signatory to this letter, now has a page explaining the facts and pitfals of regulatory “solutions” to subprime mortgage woes.

In addition Heritage Foundation land policy expert Ron Utt has a new study on the House bill’s burdens. He makes similar points to CEI on the bills’s paternalism. Utt argues the bill requirement of “appropriate” loans could be especially intrusive for borrowers. Lenders “that fail to require applicants to submit to a complete physical, a session with a marriage counselor, and an employer interview could face uncertain risks in the courts,” he writes.