January 2012

Conko letter in FT: “Nationalising healthcare flaws”

by Gary Howard on July 17, 2009

in Economy, Precaution & Risk

In today’s Financial Times, CEI Senior Fellow Gregory Conko responds to Clive Crook’s criticism of employer-sponsored health insurance.  Read the original here or see below.

Nationalising healthcare flaws

Published: July 17 2009 03:00 | Last updated: July 17 2009 03:00

From Mr Gregory Conko.

Sir, It is ironic that Clive Crook condemns employer-sponsored health insurance for encouraging over-consumption of medical services while simultaneously touting publicly provided or publicly subsidised universal healthcare coverage (“Two cheers for US health reform”, July 13).

It is true that the “link between consumer and cost is broken” when healthcare services are subsidised by one’s co-workers and when insurance premiums are paid largely by one’s employer. But why does Mr Crook imagine that link will be repaired when costs are subsidised by taxpayers and insurance “premiums” paid largely by government?

Of course there are flaws with a tax code that subsidises the purchase of health insurance and, worse still, only that purchased by employers. Among these is the incentive for over-consumption of arguably unnecessary health services. But, nationalising these flaws of subsidisation will exacerbate that problem, not correct it.

Gregory Conko,
Senior Fellow,
Competitive Enterprise Institute,
Washington, DC, US

Copyright The Financial Times Limited 2009

The World’s Greatest Deliberative Body

by Ryan Young on July 16, 2009

in Odds & Ends, Politics as Usual, Zeitgeist

For fun, try reading this out loud as fast as you can. From p. 26 of the March 1995 issue of Ultralight Flying Magazine (article not online, unfortunately; hat tip to Wayne Crews):

[I]n 1975, U.S. Senators fought aggressively with obfuscation as they voted on the following resolution: “A motion to table a motion to reconsider a vote to table an appeal of a ruling that a point of order was not in order against a motion to table another point of order against a motion to bring to a vote the motion to call up the resolution that would institute a rules change.”

George Will on the UPS/Teamsters Campaign against FedEx

by Ivan Osorio on July 16, 2009 · 2 comments

in Bailout Watch, Economy, Labor

Kurt Vonnegut’s short story, “Harrison Bergeron,” describes a world in which the utopian dream of equality has been achieved beyond anyone’s wildest imaginings: “Nobody was better looking than anybody else. Nobody was stronger or quicker than anybody else.” This strict equality is enforced by the U.S. Handicapper General through a regimen of artificial “handicaps,” like disruptive ear transmitters for the highly intelligent and weights for the athletic.

Equality taken to that extreme strikes nearly everyone as absurd. Unfortunately, when it comes to business, such across-the-board kneecapping enjoys some undeserved acceptability. Consider the ongoing controversy between shipping giants UPS and FedEx over their differential labor law status. As George Will notes in his Washington Post column today, organized labor helped Democrats considerably in taking control of Congress in 2006 and the White House in 2008, so now, “Congress might change labor law to assist UPS, a Teamsters stronghold, by hindering its principal competitor, FedEx.” Here’s how:

The growth of railroads had put America’s increasingly integrated economy at the mercy of local strikes. “Brakemen in Altoona, signalmen in Wichita,” says Fred Smith, could cripple the transportation network [no relation to CEI President Fred Smith]. Smith, FedEx’s founder and chief executive, says that in 1926, to protect the arteries of commerce, Congress passed the Railway Labor Act (RLA). It ensured that any bargaining unit for workers must be systemwide so that no local unit could hold the railroads hostage.

In 1935, the National Labor Relations Act (Wagner Act), which covered everyone except railway workers, allowed organizing and bargaining based on localities. The path to unionization is steeper under the RLA, which requires a nationwide vote by all workers.

In 1936, airlines were brought under the RLA. FedEx, which began as an air freight company and created the modern express business, is precisely the sort of integrated system for which the RLA was written. This matters: 53 percent of all U.S. exports by value travel by air, and virtually all priority and express U.S. mail is carried by FedEx.

In 1981, UPS began air services, and in the 1990s it tried, legislatively and judicially, to be put under the RLA. In 1993 UPS said all of its operations, “including ground operations,” are properly subject to the RLA “because the ground operations are part of the air service.” FedEx supported UPS’s efforts, even though the vast majority of UPS parcels never go on an airplane, whereas FedEx’s trucking operations exist to feed its air fleet and distribute what it carries.

FedEx characterizes itself as the “world’s most effective airline” and UPS as “a 100-year-old trucking company.” FedEx, Smith insists, is not anti-union; its pilots are unionized. He says that the pay and benefits for its drivers are, on average, higher than those of UPS drivers and that new FedEx drivers must wait only three months to be eligible for benefits whereas UPS drivers must wait a year. Nevertheless, today’s Democratic majority in Congress, with UPS now aligned with the Teamsters, wants to put FedEx’s ground pickup and delivery operations under the NLRA, thereby making FedEx’s entire integrated system susceptible to disruption by local disputes.

UPS is right to decry the fact that its workforce is treated differently from that of FedEx in terms of the law. But the solution it is pursing is the wrong one. Rather than try to weigh FedEx down, UPS should strive to see itself as the ballerina in Vonnegut’s story who sheds her “handicap” weights and then dances free. And other firms, including FedEx, should help UPS and others extricate themselves from this unfair burden.

Regulation of the Day: The Color of Stitches

by Ryan Young on July 16, 2009 · 1 comment

in Deregulate to Stimulate, Healthcare, Precaution & Risk, Regulation, Regulation of the Day

The fifteenth in an occasional series that shines a bit of light on the regulatory state.

Today’s Regulation of the Day comes to us from the Food and Drug Administration ($2.3 billion 2008 budget, 9,300 employees).

In §70.5(c) of Title 21 of the Code of Federal Regulations, the federal government reserves the right to regulate which colors may be used in surgical stitches.

Conko to Surgeon General pick: “Focus on Private Initiative, Not Government Controls”

by Gary Howard on July 16, 2009

in Politics as Usual, Precaution & Risk

CEI Senior Fellow, Gregory Conko, talks about the nomination of  Surgeon General to be, Regina M. Benjamin. Read the statement here or read it below.

Statement of Gregory Conko, CEI Senior Fellow, on the nomination of Regina M. Benjamin to be Surgeon General

President Barack Obama announced this week that he would nominate Alabama physician Dr. Regina M. Benjamin to be the next Surgeon General of the United States. Dr. Benjamin has been widely praised for her professional accomplishments and her dedication to providing much needed health care services to impoverished rural families in the Gulf Coast region of Alabama. She has been appropriately commended for founding and running a rural health clinic in the small town of Bayou La Batre, Alabama, providing free or low-cost health services to the estimated 40 percent of residents without health insurance.

But, what arguably led President Obama to choose Dr. Benjamin for the Surgeon General post is her long-running advocacy for a restructuring the American health care system that would include greater government regulation of private insurance plans, and an expansion of public health care programs such as Medicare and Medicaid.

We hope that Dr. Benjamin will take a lesson on the appropriate role of government from one of her own seminal experiences: the destruction and re-building of her health clinic after Hurricanes Georges in 1998 and Katrina in 2005. According to news accounts, Dr. Benjamin relied primarily on her own initiative and personal funds—mortgaging her home and maxing out credit cards—to rebuild the clinic after both storms.

In the aftermath of Hurricane Katrina, hundreds of thousands of Gulf Coast residents waited in vain for disorganized and ineffective relief assistance from federal, state, and local governments. A maze of often contradictory rules and confusion over which government agency was in charge of which projects left many Gulf Coast residents stalled in uncertainty for many months after the disaster. On the other hand, millions of other affected residents did not wait for government assistance. Instead, like Dr. Benjamin, they used their own initiative and a combination of private markets and civil society organizations to solve their own problems and begin rebuilding their lives.

The question now confronting Dr. Benjamin is whether America would be better off with more ineffective government programs and bureaucratic entanglement or with greater individual initiative and the services of dedicated and caring health professionals? Do we want more top-down mandates that make the practice of medicine more rigid, or fewer controls and greater freedom for innovation and change? The American health care system does need reform, but an expansion of governmental control and restrictions on private initiative will make it harder, not easier, for Americans to obtain the quality health services they need.

America’s Worst Idea?

by Iain Murray on July 16, 2009 · 2 comments

in Culture, Environment, Private Conservation, Zeitgeist

I’m very sorry to see that Ken Burns’ new film series is to be entitled The National Parks: America’s Best Idea. As I detail extensively in my book The Really Inconvenient Truths, the nationalization of so much wonderful scenery has led to appalling mismanagement and environmental degradation.  When the Parks Service and Forest Service spent hours in 1988 debating whether or not a fire counted as “natural” because it started from a lighning bolt striking a telegraph pole, large areas of Yellowstone National Park burned to ashes.  Another park service biologist, Don Despain, saw the flames raging towards his research area and urged them on with the words, “Burn, baby, burn.”  These are the tales I can’t imagine you’ll see in Burns undoubtedly beautiful film, but they’re as much a part of the National Park story as the scenery.

For more detailed critique of the National Parks idea, see work by RJ Smith, such as this testimony, where he says:

For decades we have known about the deplorable fact that the National Park Service was far more interested in following a path of ever more land acquisition, and that caring for the lands they had was at best an afterthought. The administration of President Ronald Reagan and Interior Secretary James Watt attempted, mainly unsuccessfully, to stop additional land acquisition until the government could demonstrate that it could be a good steward of the lands it already owned.

Despite their beauty, the National Parks have not been an unalloyed good.  For the very reason that they explicitly reject private stewardship, they may even count as one of America’s worst ideas.

Making Regulation Transparent

by Ryan Young on July 16, 2009

in Odds & Ends

Regulations.gov is the federal government’s main outlet for making regulations public. It is also less than user-friendly. Finding what you’re looking for is next to impossible.

As a way of leading by example, the Mercatus Center’s Jerry Brito and programmer Peter Snyder have launched Openregs.com. Unlike the government site, it is superbly organized and easy to navigate. Check it out. Keeping track of new regulations just got easier.

Berlau says: “Paulson Must Be Held Accountable for Alleged Bank of America Threats”

by Gary Howard on July 16, 2009 · 1 comment

in Economy, Legal, Politics as Usual

CEI Director of the Center for Investors and Entrepreneurs, John Berlau, released a statement on former Treasury Secretary Henry Paulson’s testimony before Congress (prepared version) on his alledged strong-arming of Bank of America during last year’s bank bailouts. You can read the original release here or see below.

Paulson Must Be Held Accountable for Alleged Bank of America Threats

Statement by CEI John Berlau

Washington, D.C., July 15, 2009—Former Treasury Secretary Henry Paulson is set to testify July 16 before the House Oversight and Government Reform Committee on whether he pressured Bank of America about the bank’s deal to buy Merrill Lynch.  Bank of America (“BofA”) CEO Ken Lewis has testified that he felt pressured to do the deal by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson.

Statement of John Berlau on testimony tomorrow of former Treasury Secretary Henry Paulson before the House Oversight and Government Reform Committee.

As much as President Obama is criticized, legitimately, for federal meddling in business and dictating who should serve on the auto industry boards, conservatives and others must never forget that it was Bush administration Treasury Secretary Henry Paulson that made the federal government go where it had never gone before in its dealing with private corporations. It is heartening that the House Oversight and Government Reform Committee is having a bipartisan hearing tomorrow in which Paulson will testify on these actions

Paulson exceeded his authority as Treasury Secretary on numerous occasions. When the government took over AIG in September, longtime company leader Hank Greenberg was locked out of negotiations, and Paulson replaced AIG’s CEO with Edward Liddy, who Paulson served with on the board of Goldman Sachs when Paulson was CEO.

Reports also indicate that Paulson strongly pressured healthy banks to take government money and give the government ownership stakes in the institutions, implicitly threatening negative regulatory actions if they didn’t take the deal. A set of Paulson’s “talking points” from a meeting with bankers, obtained through a Freedom of Information request by the group Judicial Watch, has him emphasizing to bank CEOs that “if a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance.”

But the most disturbing allegation is the one that the committee will be exploring that Paulson and others including Federal Reserve Chairman Ben Bernanke pressured Bank of America CEO to deceive his shareholders and not report the extent of losses at Merrill Lynch at the time BofA was attempting to acquire it. According to testimony before New York state Attorney General Andrew Cuomo, Lewis was seriously considering backing out of the deal, under a “Material Adverse Change” clause in the merger agreement, because of bigger losses than predicted on Merrill’s balance sheet. According to Lewis, Paulson said, “we would remove the board and management” if BofA did so. So Lewis and the BofA board backed down.

Lewis obviously failed his shareholders by not standing up to Paulson, but Paulson’s alleged actions were the most outrageous. Paulson had no authority to remove a board and CEO of a private company – that’s for shareholders to decide.

According to Cuomo’s report, “Paulson largely corroborated Lewis’s account.” Paulson will have a chance to give his side tomorrow, but his actions, if true, cannot be excused by any counterfactual of what would have happened if the merger had not gone through. The financial crisis was largely caused by breakdown in trust, and fostering mistrust at the government level will only prolong the crisis in confidence.

Paulson and others need to be held accountable, and the rule of law must be honored. If the allegations are true, Paulson probably violated many of BofA shareholders’s constitutional rights, including the 14th Amendment’s guarantees of due process and equal protection under the law.  A Bivens lawsuit, which is filed against government employees who abuse their authority and violate constitutional rights, may be appropriate for BofA shareholders to file against Paulson and others who allegedly threatened Lewis with removal if he didn’t deceive investors.

Health care taxes — devastating effects for NYC

by Fran Smith on July 16, 2009

in Economy, Employment, Healthcare

Lead headline on the Drudge Report today – “Terrifying 57% tax looms for biggest earners in NYC.” It links to a NY Post article that points to the “job-killing effects” of the proposed tax surcharges to pay for the Democrats health care plan. As the Post noted,

That means New York’s top earners, small-business owners and most dynamic entrepreneurs will be facing new fees and penalties.

They’re likely to cut back on hiring and expanding their businesses – likely to deepen the recession. Also, high earners may have alternatives, such as moving to countries with lower tax rates. That’s what happens when states hit their wealthiest residents with higher taxes. Just see what happened in Maryland, which tried to fleece millionaires – many of them moved out of the state.

Yeatman: “A Real Choice on Climate Change: Do Nothing”

by Gary Howard on July 16, 2009

in Environment, Global Warming, International

In today’s RealClearWorld, CEI Energy Policy Analyst, William Yeatman, talks about international attempts at climate diplomacy.  Read the piece here.

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