If politicians want to destroy health care this badly, why not just ban it? You’d best hope doctors of the future aren’t people who’d put up with this.
January 2012
The potential specter of federal carry-on bag size restrictions has not deterred me from flying. But my jaw nearly hit the floor recently when I saw that I had paid more in taxes and fees than for actual airfare for an international flight.
Click here to see a list of 17 taxes we pay for flying. The September 11th Fee. International Departure Tax. International Arrival Tax. And those are just the direct taxes.
Indirect taxes are also legion. They’re harder to see. But they’re still there. And they, too, increase the price of flying. Airports have to pay an electricity tax to keep the lights on. Airlines have to pay a corporate tax on any profits. Pilots and crew have to pay income taxes. All these also affect the price of airfare. There is far more to taxation than meets the eye.
The web is all aflutter in the debate over handset exclusivity. Harold Feld of Public Knowledge describes in a recently posted video how exclusive deals prevent competition between handsets and raise prices. Wayne Crews and Ryan Young of CEI have fired back, pointing to a handset market with literally dozens of competing devices.
The notion that exclusivity necessarily precludes competition is simply absurd. Apple’s deal with AT&T is precisely the opposite of monopoly. Far from cornering the market on smartphones, Apple has openly refused to sell the iPhone to most of its potential customers. If anything, nonexclusive sales would have discouraged competing handsets, undercutting the incentive for Verizon and Sprint to pay for their exclusive rights to the Blackberry Storm and the Palm Pre. Mr. Feld bemoans that these top-tier phones aren’t competing within any single provider, but this is just like stating that Coke and Pepsi don’t compete because they are sold in separate vending machines.
On the second point, though–that exclusive deals raise prices–Mr. Feld and other pro-regulation advocates have a point. AT&T pays Apple a hefty sum not to make the iPhone available to customers of other providers. That means the phones cost AT&T more than they would’ve otherwise, and customers in turn pay more for them. High prices are a signal to new entrants, of course, but Mr. Feld would certainly push the point. Could Congress really lower prices for consumers, without price controls or their attendant shortages, in one stroke of the regulatory pen?
Well, yes and no. It is likely that the price of the iPhone would fall if government forced Apple to abandon its agreement with AT&T. Prices would fall further still if regulators subpoenaed Apple’s schematics and source code and revoked its patent claims. But while critics attack exclusivity in the margins of Apple’s profits, no one questions the the very core of those profits: the intellectual property and corporate secrets that make the the iPhone so valuable. Why such different reactions to essentially the same business practice? Because novelty is scary. Apple’s sole production rights to the iPhone are nothing special, but its deal with AT&T is somewhat new.
We’re not used to seeing exclusive monopolies in established products, and for good reason. A monopoly is extremely difficult to maintain, and usually only possible with the help of government. It would certainly be unusual if steel, bananas, or personal computers were controlled by a single manufacturer, and it was terrible for consumers when Ma Bell—with great help from the FCC—owned the entire American telephone industry. On the other hand, there’s nothing unusual at all about Scholastic’s sole publishing rights to Harry Potter, or Amazon’s exclusive ownership of the Kindle. Why are we so accustomed to monopolies in some sectors, but wary of them in others?
The answer is that exclusivity can be perfectly natural, and sometimes even essential, for new and innovative products. Every invention starts out exclusive to its creator. Only by leveraging that exclusivity can the creator make a profit. Once a product is well-established, only an act of government can restrict its supply. It took several acts for the FCC to entrench the Bell monopoly, and it would take another to stop Apple’s competitors from building a better smartphone. Good things come to those who wait.
Ultimately, what Mr. Feld is advocating is a textbook case of the broken window fallacy. Whenever a new product is invented, society can always gain by revoking the creators exclusive rights, if we look only at that product in isolation. But it’s like cheating at poker: eventually your friends learn not to play. Prohibitions on exclusivity create shortages just like any other price control, even if these innovation shortages don’t make the evening news. Prominent benefits and hidden losses are a magnet for bad policy, and they can fool even economically literate folks like Mr. Feld who should know better.
Today, Denver Post columnist David Harsanyi shines a light on Obama “science czar” John Holdren’s disturbing past pronouncements — which Marc Scribner wrote about here just yesterday. Holdren, as Harsanyi notes, participated in the famous bet between eco-doomsayer Paul Ehrlich and Julian Simon, over whether the price for five selected metals would rise or fall. (The bet is the foundation for the design of CEI’s Julian Simon Award.)
Holdren was asked by Ehrlich to pick five natural resources that would experience shortages due to human consumption. He lost the bet on all counts, as the composite price index for the commodities he picked, like copper and chromium, fell by more than 40 percent.
Then again, it’s one thing to be a bumbling soothsayer and it’s quite another to underestimate the resourcefulness of mankind enough to ponder how “population-control laws, even including laws requiring compulsory abortion, could be sustained under the existing Constitution . . .,” as Holdren did in “Ecoscience” in 1977.
The book, in fact, is sprinkled with comparable statements that passively discuss how coercive population control methods might rescue the world from … well, humans.
When I called Holdren’s office, I was told that the czar “does not now and never has been an advocate of compulsory abortions or other repressive measures to limit fertility.”
If that is so, I wondered, why is his name on a textbook that brought up such policy? Did he not write that part? Did he change his mind? Was it theoretical?
Harsannyi presents one possible explanation, which is hardly satisfactory in any morally sensible way.
When, during his Senate confirmation hearing, Holdren was asked about his penchant for scientific overstatements, he responded, “The motivation for looking at the downside possibilities, the possibilities that can go wrong if things continue in a bad direction, is to motivate people to change direction. That was my intention at the time.”
“Motivation” is when Holdren tells us that global warming could cause the deaths of 1 billion people by 2020. Or when he claimed that sea levels could rise by 13 feet by the end of this century when your run-of-the-mill alarmist warns of only 13 inches.
“Motivating” — or, in other words, scaring the hell out of people — about “possibilities” is an ideological and political weapon unsheathed in the effort to pass policies that, in the end, coerce us to do the right thing, anyway.
For more on Holdren, see here.
It has been almost 20 years since the end of the Cold War yet the agenda of the U.S.-Russia summit remains unchanged. In the middle of a global economic crisis, the two leaders discussed many important military matters, but neither broached the subject of the economy. Presidents Obama and Medvedev have signed no less than six different documents, none of which addressed economic cooperation and development. No trade agreements or investment initiatives were even discussed.
Unsurprisingly, U.S.-Russia trade relations are much worse than U.S. relations with other, less developed countries. For their next meeting, Presidents Obama and Medvedev should make time to consider worthy economic initiatives like reducing trade barriers and eliminating visas to encourage tourism in both countries. It’s time to change the tone of negotiations and turn our backs on our Cold War past.
Newt Gingrich’s new “Strategy Memo: Time for a Real Stimulus Bill” is helpful on highlighting tax cuts that could stimulate business’ capacity for job and wealth creation–but it needs a vastly more developed vision of limited government than it contains.
When I first read the piece today I didn’t’ think he had any government spending cuts or reductions in scope of govt at all, then noticed some welcome liberalization of offshore drilling, and some privatization. But apart from that, the Strategy outline doesn’t seem to contain much apart from rolling back some of the spending insults of the past 10 months to pay for tax cuts. Those make some sense; but along with no overarching vision of limited government–that is, the bounds of what Washington can and should do in our lives in our modern economy–there’s no “deregulatory stimulus.”
We do need tax reforms like we see in the Strategy outline, but also need to reduce the scope of government that leads to the calls for taxes in the first place. We haven’t even bugun to properly talk about the kind of sweeping spending cuts actually needed. We also need to “liberate to stimulate,” and at CEI have proposed numerous options in that regard. These include:
–A freeze on government regulation;
–A “Regulatory Reduction Commission” to weed out decades of bad rules;
–A radical abandoment of so-called “antitrust” law, a step essential to getting government off the backs of our economy’s greatest wealth-creating sectors
–Limiting the scope of meddlesome, turf-expanding agencies like the Federal Communications Commission
–A more ambitious “R3″ program at the Small Business Administration’s Office of Advocacy to give entrepreneurs an avenue to protest onerous rules pouring out of more than 60 agencies;
–The beginnings of “regulatory budgeting”;
–Ends to unfunded mandates on lower-level governments;
–Requiring congressional approval of any major or controversial new agency rule, henceforth.
There are many more steps to be taken, but the point is, any attempt to stimulate the economy today requires a vastly more radical commitment to rooting out statism’s underbrush than in this new Memo by Newt.
In a piece in today’s State Journal-Register, noted economist and commentator Walter Williams asks: “Why the rush to OK ‘cap and trade’ in the Senate?” He addresses the major push now under way to pass the Waxman-Markey climate legislation through the Senate since it passed the House a couple of weeks ago. In this quote he lays exactly what is at stake with this issue:
“Cap and trade” is first a massive indirect tax on the American people and hence another source of revenue for Congress. More importantly “cap and trade” is just about the most effective tool for controlling most economic activity short of openly declaring ourselves a communist nation and it’s a radical environmentalist’s dream come true.
He also mentions the EPA cover up story CEI broke just before the bill passed the House. The EPA stifled the release of an internal report by one of its analysts that conflicted with what we have been told about global warming, for what look to be purely political reasons. Take a look at the column, and related links, and see what you think.
President Obama was in the booth during the bottom of the first inning of last night’s Major League Baseball All Star Game in St. Louis. Toward the end of his visit, the Prez was talking to play-by-pay announcer Joe Buck and color-man Tim McCarver about the fact that the National League hasn’t won an All Star game since 1996. One of them (I believe it was Buck) made a joke, asking, “No bail-outs for the National League?” Obama replied, “We’re out of money.”
Well, it’s good to see there’s one industry President Obama doesn’t intend to nationalize.
Tragically, the NL blew an early 3-2 lead to lose to the American League for the 13th straight year.
The Wall Street Journal has a great editorial today on one US industry’s latest attempt to secure some protection against foreign imports, which just may spark a trade war with an important target for American exports. This time, it’s the farmed fish industry, and the imports in question are catfish from Vietnam.
The U.S. catfish farming industry, located primarily in Alabama, Arkansas, and Mississippi, faces tough competition from Vietnamese imports, the value of which rose from $2 million in 1998 to $46 million in 2002, and $77 million last year, all the while chipping in on the US-produced market which fell from about fell from $488 million to $410 million during the same time period. That didn’t sit well with American fish farmers. So, in 2002, they convinced Congress pass a law forbidding Vietnamese catfish, which is a different species than the one farmed domestically, from being labeled as “catfish.” Instead, you’ll see it in supermarkets labeled as “basa” or “tra,” even though taxonomically, the Vietnamese fish are members of the family Pangasiidae within the order Siluriformes, which makes them genuine, authentic catfish.
American consumers seem to like the relatively inexpensive imports, no matter what they’re called. So, in 2003, the US farmed fish industry secured a punitive tariff of up to 64 percent on the Vietnamese fish. And, last year, the federal Farm Bill included a provision introduced by Republican Senator Thad Cochran (Miss.) that would authorize the federal government to shift the inspection of “catfish” from the Food and Drug Administration, which currently oversees nearly all seafood, to the US Department of Agriculture. According to the Associated Press,
“The inspections requirement could be the U.S. producers’ silver bullet, stopping imports in their tracks. Applying to all catfish sold in the U.S., it would require Vietnam to establish a complicated inspection system and demonstrate that it is equivalent to U.S. inspections, a process that could take years.”
Ironically,
“after years of arguing that the Vietnamese fish is not catfish — and winning a federal law saying as much — the U.S. farmers are now trying to have it both ways. Under their latest lobbying strategy, they want the Vietnamese imports considered catfish so that they will be covered by [the] new inspections regime”.
This is reminiscent of a similar dispute between the European Union and South American fishing industry that arose earlier this decade. In an effort to protect the European fishing industry, the EU adopted a rule that forbade Pacific Ocean-caught Sardinops sagax from being labeled as “sardines” despite their taxanomic similarity to Mediterranean-caught Sardinops walbaum. In 2002, the World Trade Organization found that this violated the EU’s GATT obligations and ruled in favor of the complainant, Peru. It’s worth noting that the US sided with Peru and the other South American countries in that dispute, but is now doing exactly what it condemned the EU for doing just a decade ago.
The various US attempts to hobble the Vietnamese farmed-catfish industry is no less underhanded. And, in order to prevent a trade war with Vietnam, it would be wise for Agriculture Secretary Tom Vilsack to reject the pleas of US fish farmers to harm US consumers by making it harder for us to enjoy a good, safe, and inexpensive food.
RSS Updates 
RSS E-Mail Updates 
Twitter 
Facebook 
CEI.org 
WorkPlaceChoice.org 
GlobalWarming.org 
CEI On Demand Video 
Liberty Week Podcast 