January 2012

Nike quits the Chamber. When will the sanctimony end?

by Marlo Lewis on September 30, 2009 · 1 comment

in Global Warming, Sanctimony

Today’s Greenwire (subscription required) reports that Nike, the sports shoe king, is resigning its position on the U.S. Chamber of Commerce’s Board of Directors. Nike supports cap-and-trade legislation, a national renewable portfolio standard, a moratorium on new coal power plants lacking carbon capture and storage, and EPA regulation of CO2 under the Clean Air Act. The Chamber opposes all of the foregoing.

Although the Greenwire story is not slanted, neither is it particularly informative. The reporter makes no effort to ascertain what bottom line interest might account for Nike’s decision to quit the Chamber, or for the company’s decision to join the Business for Innovative Climate & Energy Policy (BICEP) coalition, a project of Ceres, the Gorethodox investor network.

The vast majority of Nike’s production facilities are in China and other Asian developing countries such as Thailand, Indonesia, and Vietnam. (I can’t find exact numbers — Nike appears to be coy about the details.) Nike factories in developing Asia would not be subject to CO2 controls from either Waxman-Markey or EPA regulation under the Clean Air Act.

What’s more, if the G-77 Plus China hang tough at the Copenhagen climate conference, and the successor treaty to the Kyoto Protocol continues to exempt developing countries from legally binding emission limits, then the comparative advantage (lower energy costs) those countries already enjoy under Kyoto will increase, making Nike factories even more profitable to invest in.

Here’s what an honest Nike press release might say: 

Nike believes U.S. policymakers should use law, regulation, and the Copenhagen treaty to hobble domestic firms in favor of the Asian economies where our facilities are located. In contrast, the U.S. Chamber opposes policies that would offshore more U.S. jobs and investment to China and developing Asia. A truly carbon-constrained world would destroy jobs and growth in Asia, too. However, that’s years away, and Nike cares only about its short-term bottom line. Therefore, we are pulling out of the Chamber. 

Instead, Nike tut-tutted about the need for “urgent action” on climate change. When will the sanctimony end?

Overpaid Bureaucrats Expand in Number and Pay

by Hans Bader on September 30, 2009

in Labor, Politics as Usual, Stimulus to Nowhere, Trade

Thanks to the $800 billion stimulus package, and other huge government spending increases, the number of federal and state employees is projected to increase massively. The federal government’s payroll may grow by more than 200,000, and perhaps as much as 600,000, over the course of the Obama administration. Obama’s budgets, which would result in record deficit spending of $9.3 trillion, would add at least 100,000 additional bureaucrats during just his first budget, and perhaps as many as 250,000.

This is going to be enormously costly, because federal employees are paid much better than private-sector employees, especially for unskilled jobs and jobs requiring only a liberal arts degree. (On the other hand, there are a few highly-skilled professional jobs that are paid lower in the federal government than in the private sector, but that’s rare).

State and local government employees are even more overpaid.  “More than 40% of city employees In Vallejo, California, had salaries greater than $100,000 in 2008. In May 2008, Vallejo filed for bankruptcy. Taxpayers support some hefty teacher salaries in Illinois. For example: a physical education teacher earning $163,000 (more than 400 earn in excess of $100,000); an English teacher earning $164,000 (more than 300 earn in excess of $100,000); a driver education teacher earning $170,000 (94 earn in excess of $100,000). In New York, state agency workers collected more than $459 million in overtime, with one aide clocking in 2,455 extra hours, nearly tripling her base salary from $38,500 to $110,841.”

Government employees have radically better benefits and pensions than private sector workers. “When wages and benefits are combined, federal civilian workers averaged $119,982 in 2008, twice the amount of $59,909 which workers in the private sector averaged for wages/benefits. The value of benefits for federal civilian workers averaged $40,000/year, four times the value of benefits that the average private sector employee receives. Only 12% of retirees from the private sector have defined benefit pensions to supplement Social Security. Their average annual pension is $13,083, and they are not eligible for full Social Security benefits until their late 60s. But the majority of public sector workers have pension plans that allow them to retire 10-25 years earlier with benefits many times the retirement payout that Social Security would provide. In San Jose, California, 256 retired officers and firefighters and 34 other city workers collect $100,000+ pensions, and all city retirees get free healthcare.”

Pay in the public sector rises faster than in the private sector even during Republican administrations. Pay for federal workers rose 53.7% between 2000 and 2008, compared to 28.5% for private sector workers.

Many of the new bureaucrats are being hired as a result of Obama’s welfare-filled stimulus package, which largely repealed welfare reform.

Obama claimed the stimulus package was needed to prevent the economy from suffering from “irreversible decline,” but the Congressional Budget Office admitted that the stimulus package would shrink the economy “in the long run.” The stimulus package has since destroyed thousands of jobs in America’s export sector, and subsidized countless examples of government waste and corruption.

Earlier this year, Obama fired an inspector general, Gerald Walpin, who uncovered millions of dollars of waste and fraud in the AmeriCorps program, including by a prominent Obama supporter, endangering the Obama supporter’s ability to administer federal stimulus spending in Sacramento.

The stimulus package also imposes on states racial set-asides and prevailing-wage requirements, which increase the cost to taxpayers of government contracts. The prevailing-wage requirements will increase states’ costs by at least $17 billion. Racial set-asides also are very costly.

The Democratic Party is closely tied to the government employee unions, which consistently endorse its candidates.  This poses a political risk, since the Democrats are already viewed by some “working-class voters” as “the party of the undeserving rich.”

The $9.3 trillion in deficits under Obama’s budgets is twice the $4.4 trillion baseline left behind by Bush, despite at least $1.9 trillion in tax increases projected under Obama.

The Magic of Numbers

by Tatiana Kryzhanovskaya on September 30, 2009

in Politics as Usual, Trade

Is it really easier to work in groups or is it just a way to shift responsibility?

This question is relevant after the recent summit in Pittsburgh, where the G-8 has sort of transformed into the G-20. And even though the G-8 will be still meeting annually as well as the new G-20 format, the world leaders have announced that G-8 is not capable to solve world economic problems alone anymore. Maybe there is a similar reason for Russia to insist on joining the WTO as a union with Belarus and Kazakhstan? It is still not clear why Russia has taken this course of action.

It looks like WTO membership is an Achilles’ heel for Russia. And recently, the Russian government appears to be searching for new WTO membership obstacles. In June, Prime Minister Putin declared that entering the WTO for Russia is possible only if it were to enter as a trade union with Belarus and Kazakhstan. He pointed out that partnership with neighboring countries has been much more important for Russia than WTO membership. In September, President Medvedev said that his colleague Mr. Putin was misunderstood. Of course, there is no need to enter the WTO as a union.

Whether Russia will ever join the WTO is still a big question. But it is certain that the customs union between Russia, Kazakhstan, and Belarus will take effect in July 2011, which was announced earlier this week.

Big Labor’s Big Prize in Health Care “Reform”

by Ivan Osorio on September 30, 2009 · 1 comment

in Healthcare, Labor, Regulation

In his Wall Street Journal column today, Holman Jenkins highlights one of the prizes at stake for organized labor in the current health care debate.

Union members not only like the tax-free, open-ended health -care benefits they’re used to getting. More important and often overlooked, organized labor itself is increasingly made up of health-care workers who benefit from an incentive system that artificially force-feeds great gobs of GDP into the industry’s maw.

Their long retreat elsewhere in the economy may continue unabated, but unions are steadily growing their clout in government and health care, two sectors that increasingly overlap and would become even more overlapped under the bills in Congress. Consider a scheme being test-driven in Missouri, where Democratic Gov. Jay Nixon, AFSCME and SEIU last year backed a ballot proposition to create a “Missouri Quality Homecare Council.”

As the A.P. matter-of-factly reported: “The ballot summary shown to voters said nothing about making it easier for in-home care providers to unionize.” But that was precisely the function. Now some 13,000 home health workers hired by patients but paid for by Medicaid are on the verge of being recognized as a union.

But won’t collective bargaining inevitably mean higher Medicaid costs for Missouri taxpayer? Gov. Nixon, whose campaign reportedly received $650,000 from SEIU and AFCSME, obviously has other priorities.

In Canada, where health care is largely government controlled, 61% of health-care workers are unionized. In the U.S., it’s only 11%. Democrats are bent on changing that and the bills floating around Capitol Hill are rife with provisions to replicate the Missouri scheme nationally.

As my co-authors and I point out in a new Cato Policy Analysis (“Vallejo con Dios: Why Public Sector Unionism Is a Bad Deal for Taxpayers and Limited Government”), organized labor has been pursuing this strategy for some time now.

Now some unions are trying to expand the definition of “public” by trying to organize government contractors. Washington state provides a good example of this. There, the trend began in 2001, when voters approved a ballot measure, Initiative 775, to allow independent long-term health care providers to unionize and bargain collectively over hours, compensation, and working conditions.39 Then in 2007, Washington state authorized collective bargaining for adult-home-care providers who receive Medicaid and other state aid.40 Stretching the definition of “public employee” to any home-care provider who may contract with the state can give a public employee union a foothold in the private sector. Further, under such an arrangement, union fees can be deducted from state compensation checks before the recipients ever see them, so the care providers never miss money they never see.

For more on labor, see here.

For more on SEIU, see here.

For more on health care, see here.

Rowdy Unionists Shout Down Opponents

by Ivan Osorio on September 30, 2009

in Economy, Employment, Labor, Regulation

Yesterday in Harrisburg, rowdy unionists disrupted a rally held by two Pennsylvania state legislators to promote legislation to end project labor agreements (PLAs), which put nonunion contractors at a sever disadvantage, on state construction projects.  Under a PLA, an open shop contractor could be required to employ workers from union hiring halls, acquire apprentices from union apprentice programs, and require employees to pay union dues. The Philadelphia Inquirer reports that “testy exchanges and pushing and shoving followed” the press conference. Meanwhile, the Commonwealth Foundation’s Adam Cole says that he and his colleagues “overheard union members mentioning that they were being paid $26 an hour to protest.“

For more on project labor agreements, see here.

Wishing for a Regulatory Monster?

by Angela Logomasini on September 30, 2009

in Environment

Be careful what you wish for because sometimes you might not like the result. And big-government advocates should be particularly careful since government rarely meets the goals it sets. That’s what some leftists are learning about the European Union’s chemical law called REACH, which stands for “registration, evaluation, and authorization of chemicals.” It sounds bureaucratic because it is. In fact, even its supporters are learning that it is a green regulatory monster. And Animal rights activists, which relinquished their opposition to appease left-wing allies, are now learning that the law has become a gratuitous lab-rodent extermination program. And despite all the problems with this law, U.S. lawmakers are looking at this law as a model to emulate!

Read all about this in my recent piece for National Review.

Image Attribution:  Sukanto Debnath on flickr.

Swinenewsflash! 21,000 college students missing!

by Michael Fumento on September 30, 2009 · 1 comment

in Odds & Ends, Precaution & Risk

“Twenty-one thousand college students are sick,” begins a Fox online news report titled: “H1N1 Picks Up Steam One Week Before Vaccine Becomes Available.” Wow! That’s a lot of sick kids! Tell us more!

But there is nothing more on those 21,000. Lots of talk about people swamping emergency rooms and school closings, yet not a single number regarding actual flu cases in a 765-word article.

What if it began “Flying saucers land on the White House lawn” and no flying saucers were mentioned again? And no, Fox fans, I’m not picking on your favorite network. Lots of people are tossing that number around; I just stumbled upon the Fox piece first.

Turns out the data are from the American College Health Association (ACHA) and are cumulative since August 22. So unless we assume that everybody who got the flu five weeks ago still has it, it’s hardly the snapshot implied by the present tense “are” and is worthless in determining whether the bug is “picking up steam” or “petering out.”

And the truly nifty thing about cumulative cases is they never go down. So next week they can use a higher figure and the week after a still higher one. Let’s play that with other diseases. “100 million Americans have cancer!” Or maybe, “10 million kids have polio!”

Cumulative figures are also useless for determining what’s happening right now – which is what this article and all the other scare stories are supposedly about. Nevertheless, the ACHA figures for the latest week at this writing show a 15% increase. Not exactly the end of the world, and in part it reflects that more institutions were reporting than the week before. Still, the increase for this week may prove much higher.

This is how you play the game, kids. But I’m guessing there are a lot of exhausted emergency room workers, along with truly ill patients being pushed aside by the worried well, who don’t really enjoy it.

Senate Finance Committee Rejects Public Option

by Greg Conko on September 29, 2009 · 1 comment

in Culture, Features, Healthcare, Regulation, Zeitgeist

The Senate Finance Committee, by a 15 to 8 vote, rejected an amendment proposed by Sen. Jay Rockefeller (D-W.V.) to Committee Chairman Max Baucus’s (D-Mt.) health care bill that would have added a government-run, or ”public,” health insurance option to the overhaul proposal.  Joining all ten of the committee’s Republicans in voting “no” were five Democrats, including Baucus himself, Bill Nelson (Fla.), Kent Conrad (N.D.), Blanche Lincoln (Ark.), and Thomas Carper (Del.).  A second, and slightly less bad ”public option” amendment, sponsored by Sen. Charles Schumer (D-N.Y.) was also rejected by a 13 to 10 vote, with Sens. Nelson and Carper switching sides.

As I’ve written previously, the public option is not the worst aspect of the various health reform proposals, the purchase mandate is.  Still, these votes should be viewed as a strong positive, signalling broad concern about the extent of the Democratic position.

Of course, Liberal Democrats are fuming.  House Speaker Nancy Pelosi (D-Cal.) and House Commerce Committee Chairman Henry Waxman (D-Cal.) remain committed to a public option.  President Obama signalled his enduring support for it in his September 9 address to Congress, despite White House back-tracking from the public option during the August congressional recess.  And, now, two left-wing advocacy groups, the Progressive Campaign Change Committee and Democracy for America, have launched a television ad campaign condemning Baucus for his decision to move forward without a government-run health insurance option for the non-elderly middle class.

This should serve as a warning to conservative Democrats and liberal Republicans (Yes. I mean you, Olympia Snowe (RINO-Me.).  You may spend months negotiating a compromise with your Senate colleagues.  But, please remember that all that will be torn asunder once a bill is reported out of committee and gets to be amended after debate by the entire Senate, and again when the final Senate compromise goes to conference and has to be reconciled with the House bill.  You may think you’re playing nice with your Senate Finance Committee colleagues and getting as good a deal as can be expected from that nice old Max Baucus.  But, trust me, Henry Waxman is ruthless.

Student Loan Socialism

by Richard Morrison on September 29, 2009

in Video, Zeitgeist

[youtube:http://www.youtube.com/watch?v=LJReAunlOw0 285 234]

7-Eleven serves up Big Gulp of Big Government to credit card consumers

by John Berlau on September 29, 2009 · 2 comments

in Bailout Watch, Culture, Economy, Politics as Usual, Sanctimony, Trade, Zeitgeist

Tomorrow, 7-Eleven Inc. and other big retail chains will hit Capitol Hill to offer Congress members and their staffs a supersize serving of hypocrisy. Retailers, who rightly complain about costly government mandates in health care and other areas, are now calling for Congress slap price controls on the interchange fees they pay to banks and credit unions for services associated with the credit and debit cards of retail consumers.

7-Eleven has fine stores that offer many conveniences to their customers, but in this case, they are trying to force down the throats of American consumers a “big gulp” of big government. If Congress acts on 7-Eleven’s misleading petition to put price controls on interchange fees, consumers will pay the price through the reduction of reward programs such as frequent flier miles, and the possible return of annual fees. Credit unions and community banks will pay the price too in higher costs that will make it more difficult to offer cards to their customers, forcing savers to go to big banks if they want the convenience of credit and debit cards.

Contrary to the spin of the 7-Eleven and other big retailers, interchange fees, also called “swipe fees,” are only levied on merchants, and none of major legislation before the U.S. Congress would require that retailers pass on one penny of their resulting savings on interchange fees to consumers. And Australia’s recent experience with interchange price controls resulted in no tangible benefits and plenty of added costs for consumers down under.

John Simon, a top regulator at the Reserve Bank of Australia, recently told a conference of the Federal Reserve Bank of Chicago, that there was no evidence of retailer savings being passed on to Australian consumers, according to the Credit Union Times. Yet the Australian credit card holders faced plenty of costs to “make up for” the retailer costs in terms of higher fees and fewer rewards such as frequent flier miles, according to a study by the U.S. Government Accountability Office.

Community banks and credit unions, which have lower profit margins on their credit and debit card offerings, would also lose out. In Australia, the Credit Union Times reports, “a cap on card interchange similar to one promoted by some U.S. retailers has turned Australian CU card programs from being contributors to their bottom lines to net money losers.” Similarly, Mike Clayton, head of Champion Credit Union in the small town Canton, North Carolina, says price controls on interchange fees could “put us into a deficit on that card program.”

There are a variety of options for retailers in credit card payment services, such as new online methods of payment, to ensure competitive pricing. CEI also supports expanding the ability of retailers to form their own affiliated banks, or industrial lending companies, to do their own card processing if they so choose.

But lawmakers should also realize that credit and debit card processing is not free, and retailers would not be accepting cards if they did not lead to more purchases in stores and reduce the costs of alternatives such as carrying cash. Before credit cards were so prevalent, expensive armored cars hauling cash from retail stores were a common fixture.

In short, there is no such thing a free lunch, and lawmakers should not enable 7-Eleven and other retailers to soak consumers with more lunch fees.

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