[youtube:http://www.youtube.com/watch?v=PeGlzEavpTM 285 234]
January 2012
Rent-seeking–the whoring after market-rigging rules and subsidies–is a true addiction, an appetite that grows with feeding. For the ethanol lobby, it’s not enough that government props up their product with Soviet-style production quota, protective tariffs, a 45-cent-per-gallon blenders tax credit, R&D handouts, and other support. Like the Johnny Rocco character portrayed by Edward G. Robinson in the Bogart and Becall classic Key Largo, the ethanol lobby always wants “more.”
And there are always well-meaning politicians happy to oblige. Rep. Eliot Engel (D-NY) and Sen. Sam Brownback (R-KS) have introduced bipartisan legislation (HR 1476, S. 835) requiring each automaker to ensure that at least 50% of the vehicles it manufactures or sells are flex-fuel by 2012 and at least 80% by 2015. A flex-fuel vehicle is one that can run on either regular gasoline or E-85 (a blend containing 85% ethanol), or anything in between.
Supporters acknowledge that flex-fuel technology will add about $100 to the purchase price of a new car. But, they claim, this expense will be more than offset by the reduction in fuel costs. That’s an interesting theory. However, according to www.fueleconomy.gov, a Web site jointly administered by DOE and EPA, it costs hundreds of dollars more annually to fill up a flex-fuel vehicle with E-85 than with regular gasoline. No wonder so few people buy flex fuel vehicles!
When will mandatists learn? If the combination of flex-fuel vehicles and E-85 is such a great bargain, consumers will demand them, and profit-seeking companies will produce and deliver them for sale, all without regulatory coercion. Alternatively, if the flex-fuel/E-85 package is not a good buy, no amount of government meddling can make it so.
For further discussion, see my post today on www.Masterresource.org.
How is little Ecuador going to collect from big Chevron?
In 2007, investigative reporter Greg Palast posed the question to Ecuador’s president Rafael Correa regarding the $27 billion environmental remediation lawsuit against the American oil giant. The president’s answer: “The international community should impose upon Chevron-Texaco the moral duty to pay this money,” he said while showing his support to a group of indigenous Amazonian Ecuadorians suing Chevron in a national court. Go to Correa’s Interview
The Chevron-Texaco case made headlines in the American media in recent weeks and became a hotter issue last Sunday when CBS ran a story segment on its 60 Minutes news program. Watch 60 Minutes segment on the Chevron case
No matter how or from where you learn about this story, it plays like a David and Goliath tale. Who David and Goliath depends on public perception, however. On the one hand, it is easy to believe that Chevron is Goliath because it is the second-largest oil company in the United States after Exxon-Mobil. But “little Ecuador” recently re-elected an aggressive and powerful leftist populist president who enjoys a 70 percent approval rating—and a supermajority in the unicameral congress.
As I noted today in a letter to the Washington Post titled Ecuador’s Attack on Foreign Companies:
Chevron is correct to argue that it won’t be treated fairly as long as Mr. Correa runs Ecuador. In fact, fewer and fewer firms will. Mr. Correa has halted foreign mining operations, raised telecommunication firms’ fees, attacked the media and defaulted on the country’s external debt. His recent reelection should allow him to put aside his “permanent campaign” style and play fair with foreign companies. Whether he actually will do so remains to be seen.
Nonetheless, Chevron’s Global Issues and Policy manager, Silvia Garrigo, seems to be aiding public perception that Goliath is, in fact, the oil giant.
“I have makeup on my face and there’s naturally occurring oil in my face. That doesn’t mean I’m going to get sick from it,” she said on 60 Minutes, mocking the suit that argues for damages caused by three decades of environmental pollution.
Garrigo aims and scores quite low comparing her makeup with the oil disaster in a rural area in Ecuador’s Amazon region, where poverty reaches 90 percent and no running water save for rivers is available. Was she really talking about her makeup?
Chevron’s representative was of little help to her company, losing her composure and asserting that “…corruption and fraud is perpetrated against an American company in Ecuador in this corrupted and politicized judicial system.”
Garrigo is fortunate that 60 Minutes airs in America, a country where the first amendment protects freedom of speech. The same charge made in Ecuador would have meant trouble for her. President Correa often attacks his country’s media establishment and imprisons journalists when he believes they have committed libel. The most recent victim – who is in hiding – is columnist Romulo Lopez Sabando. Lopez, a free market analyst and commentator, faces a warrant for speculating about Correa de-dollarizing Ecuador’s economy. Read FreeMarketeros’ Correa Calls for Arrest of Journalist and CATO’s Freedom of Speech Under Attack in Ecuador
Ms. Garrigo’s performance in 60 Minutes may be steering public opinion in the direction of Ecuador being little David, deserving a $27 billion windfall from Goliath Chevron, and actually aiding environmentalist NGOs to satire the oil giant. Read Chevron Lawyer Stumbles in 60 Minutes Interview over Ecuador Oil Contamination
Jack Kemp played many roles after leaving professional football—congressman, presidential candidate, foot soldier of the Reagan revolution, vice presidential candidate, conservative activist, and Distinguished Fellow at the Competitive Enterprise Institute. Naturally, it was in this capacity that I knew him best.
Jack’s voice was always optimistic and inclusive, one that reached out to all elements of America. At CEI, he defended free trade and an open world economy, and argued against burdensome regulation that could hinder entrepreneurship.
He believed—as we do at CEI—that the American people were not predisposed to favor the growth of Leviathan. He worked throughout his career to promote free market ideas to progressives, minorities, and traditional liberals. Jack was a conservative who believed that a more just and egalitarian society could best be achieved by free market policies. Firm in this belief, Jack was a happy warrior, always eager to speak to all and sundry with respect and grace. He will be missed.
Don’t let the bed bugs bite was always a frightening thought when I was a kid. But today, it’s even scarier since bed bugs are back. The origin of this phrase is grounded in history, going back to a time when tiny bugs would live in wooden bed frames ready to feed on unsuspecting humans as they sleep. Many believed that bed bugs were thing of the past having been brought under control—and essentially eradicated in the U.S.—in part to the pesticide DDT. But now that DDT has been banned for more than three decades bed bugs are making a resurgence absent pesticide effective enough to zap them and thanks to increased global travel. The bugs can travel in your suit case, and apparently are even more creative as they recently have been reported to be found living in a cell phone.
The U.S. Environmental Protection Agency has recently held a summit to discuss on what to do about the bed bug resurgence. And they should. This is a very good time to reconsider our approach to pesticide regulations. Not only is DDT gone, but many other useful products have been regulated out of existence without weighing the risks of not having them. And bed bugs are not the only pests that are re-surging and wreaking havoc.
Liberal Supreme Court Justice David Souter is retiring. On social issues, this makes little difference: whoever replaces him will satisfy liberal litmus tests, like supporting racial preferences and partial-birth abortion the way Souter did.
But on economics, where Souter was more moderate, it will matter a lot: Souter was willing to occasionally overturn excessive punitive damage awards, and overturn state regulations that were preempted by federal law (like in Watters v. Wachovia (2007), where I filed a brief on behalf of economists and law professors). Some of his potential replacements, like Judge Sonia Sotomayor and especially Deval Patrick, will be less likely to do that.
Business will miss Souter, even though social conservatives won’t. Obama is more likely to nominate a justice hostile to taxpayers, business, and property owners, since he has expressed regret that the Supreme Court “didn’t break free” from legal constraints in order to bring about “redistribution of wealth” during the Warren Court.
Souter’s colleagues will probably miss the unassuming Souter, who did not (unlike some past justices, such as William O. Douglas) lord it over other people. He once lived in a waterfront apartment building in Washington, D.C.’s Southwest quarter right near my wife. We would sometimes see Souter quietly doing his own laundry. Unlike many limousine liberals, who live in wealthy, lily-white, gated communities (even as they advocate forced busing of working-class students between predominantly-black schools and predominantly-white schools), Souter chose to live in a middle-class, racially-mixed community.
A potential replacement for Justice Souter is Massachusetts Governor Deval Patrick, a vociferous advocate of censorship and racial quotas who helped spawn the mortgage crisis while serving in the Justice Department.
Another candidate for Souter’s seat is “Second Circuit judge Sonia Sotomayor,” who also avidly supports racial quotas. Sotomayor’s “shenanigans in trying to bury the firefighters’ claims in Ricci v. DeStefano triggered an extraordinary dissent by fellow Clinton appointee José Cabranes (and the Supreme Court’s pending review of the ruling).”
Yet another is the tax-and-spend former governor of Michigan, Jennifer Granholm, a big fan of racial preferences (forbidden by her state’s constitution) who helped drive her state’s economy into the ditch.
Two other candidates also are mentioned who may not be wacky enough to be considered by Obama, even though they both satisfy liberal litmus tests on abortion, affirmative action, and gay rights, and are both women (the conventional wisdom is that Obama will pick a woman, perhaps a Hispanic woman, as the next Supreme Court justice). Those two candidates are Seventh Circuit judge Diane Wood and Ninth Circuit judge Kim Wardlaw, a Hispanic. Neither of these two judges is unusually anti-business, or unusually prone to the “redistribution of wealth” Obama has applauded.
CNN’s political ticker also lists the veteran moderate Judge Jose Cabranes. I don’t think Obama is in any mood to pick a moderate male judge, even a well-respected Hispanic like Cabranes who is well-liked by his home-state Democratic senators, Dodd and Lieberman, and who would easily sail through the Senate. Cabranes may be pro-choice, pro-gay rights, and pro-voting-rights, but he is also anti-crime and pro-free-speech. And he was unwilling to use judicial shenanigans to bury the reverse-discrimination claim in the Ricci case, as Judge Sotomayor did (although it’s worth noting that even the Obama Justice Department reluctantly agreed with Cabranes in that case, urging the Supreme Court to remand the case back down to the lower courts for a proper reconsideration, rather than totally avoiding the issues raised by the aggrieved white employees).
Having solved all of America’s other problems, Congress is turning its attention to how college football’s national championship is decided.
In a bit of unintentional comedy, Rep. Joe Barton literally compared the current system to communism.
I love it. Yes, Congress has no business here. But any time wasted on issues like this is time that Congress can’t spend further ruining the economy.
There are worse trade-offs than that.
There are only seven months until the global community plans to adopt a successor climate treaty to the failed Kyoto Protocol in Copenhagen, but negotiators are far apart on the most important issues-binding emissions cuts and paying for a global green energy revolution. Here’s a quick run down of the stakeholders bargaining positions.
On binding emissions reductions:
- Developing countries refuse to reduce emissions. They want developed countries to commit to 40% cuts by 2020.
- The European Union wants developed countries to commit to 30% cuts by 2020.
- The Obama administration proposes 18% cuts by 2020, but it wants significant participation from rapidly growing developing countries such as India and China.
- In the United States Congress, Reps. Henry Waxman (D-California) and Edward Markey (D-Massachusetts) have proposed a draft of a legislation calling for the United States to reduce emissions 20% by 2020, although they are meeting heavy resistance from both within their own party and Republicans.
On financing a global green energy revolution:
- Developing countries demand.5%-2% of developed nations’ aggregate GDP, annually, to facilitate climate change mitigation.
- The European Union believes that developed nations need to raise and distribute $230 billion a year through 2020, but it refuses to discuss burden sharing until the U.S. submits a proposal.
- The Obama administration has yet to address climate change mitigation aid to developing countries.
- The Waxman-Markey draft bill does not address climate aid, but it is highly unlikely that the Congress would agree to pay scores of billions of dollars every year for clean energy in China.
It is my strongest hope that this deadlock persists, so that we all may be spared the burden of an ill-conceived, economically ruinous climate change mitigation treaty.
Not many details have appeared, but the Atlantic reports on a speech given by the administration’s Melissa Hathaway in McLean, VA:
In her speech, Hathaway did not say much about the administration’s policy changes, although published reporters indicate that Obama plans to create a powerful national cybersecurity directorate that would work through the Department of Homeland Security, establish a national cybersecurity recovery plan and resolve longstanding conflicts between agencies.
I remain suspicious of collectivizing and centralizing risk in governmental bodies, and of creating the impression that governments can protect private networks and infrastructure. We do need police forces (gov’t) but we also need the barbed wire and doorlooks that private enterprise provides in a competitive environment. When government assumes too much authority over the latter, we become less secure, not more. And some reports have indicated that both the administration and Congress are seeking complete government authority over private networks like power grids and computer network in the event of breaches. The privacy concerns are a separate matter that we address elsewhere, but in a CEI report called Preventing Identity Theft and Data Security Breaches: The Problem with Regulation, we put it like this:
Policymakers should recognize that data security requires not one-size-fits-all solutions, but the tailored answers that private actors can deliver. Every firm’s upstream suppliers and downstream customers increasingly demand better security. Like any other technology, security technologies, from biometric identifi ers to firewalls to encrypted databases, benefit from competition. Likewise, cybersecurity services, from consulting to insurance to network monitoring, benefit from competition. To reduce the impact of any given attack, policy makers should adhere to policies that, to the extent possible, “privatize” rather than collectivize.
The need to preserve a dynamic market role can be summed up in a single Cybersecurity Commandment:
Do not take steps in the name of security that make it:
(1) impossible to liberalize or deregulate infrastructure and networks or
(2) impossible or undesirable to self-regulate.Government should not assert authority in ways that would make private sector assumption of security responsibility impossible in the future as technology advances or conditions change. And policy makers should be extremely careful not to create disincentives to self-regulation. If government ignores either aspect of the Cybersecurity Commandment, it will lead to both subpar information security and economic inefficiencies. Interference could also roll back important advances that have been made in the privatization of infrastructure and services over the past decades.
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