January 2012

Unfunded Mandates

by Ryan Young on November 5, 2009

in Deregulate to Stimulate, Economy, Politics as Usual, Regulation

Today’s American Spectator Online has a piece by CEI VP Wayne Crews and I on curbing Congressional abuse of unfunded mandates. If the term is new to you, unfunded mandates are basically an accounting gimmick that lets government understate how much it costs taxpayers:

rather than fund a new federal job training program through a Department of Labor appropriation, Congress could mandate that all Fortune 500 firms provide, and pay for, such training. The first appears on the federal budget, the second does not. For politicians, it’s the perfect scheme. The government can spend — or, rather, force other people to spend — as much as it wants without adding to the deficit.

Decency demands this trickery stop; fortunately, a bill from Rep. Virginia Foxx looks like it would do some good on that front.

Just what IS in those enormous health care bills?

by Michael Fumento on November 4, 2009

in Healthcare

With the House version stacked bigger than Dolly Parton at about 2,000 pages, anybody who says they know for certain is lying. It’s not just the verbiage but how it will be interpreted in the years to come. Still, there’s more than enough to be alarmed enough to want to kill the bills off.
“Rather than overwhelm you with arcane details of each bill,” writes Robert Bidinotti in an engaging and highly annotated essay, “it is more important that you understand in principle what ObamaCare will mean for you and your family.” Going into detail (but not too much), he says they include:

  • Outrageous Costs.
  • Soaring Taxes.
  • Perverse Incentives.
  • Government rationing.
  • Broken promises.

He states:

A single-payer, government-run program of socialized medicine is the stated objective of those who designed this legislative monstrosity—from President Obama, to the vast coalition of unions and advocacy groups, to the congressional leaders who drafted these bills. They explicitly intend to bankrupt the private-insurance marketplace, so that only the government option remains. Far from adding “choice and competion,” then, ObamaCare aims at imposing on us a government health-care monopoly.

Urge your congressman to vote for Dolly Parton instead.

NY Attorney General Files Antitrust Suit Against Intel

by Wayne Crews on November 4, 2009 · 1 comment

in Features, Legal, Regulation, Tech & Telecom, Zeitgeist

A statement from New York Attorney General Andrew Cuomo this morning announces the launch of an antitrust lawsuit against chipmaker Intel. Intel supposedly is “bribing” and “coercing” computer manufacturers like Dell, HP into using its chips.

Intel gives them money and rebates to use Intel chips. Think about that; they don’t have to pay as much, and get paid themselves, to use Intel chips rather than AMD ones.

I like it when I get rebates and cash, myself, but I’m just crazy.

Let’s remember what abusive monopoly power is supposed to mean: reduced quantity sold, higher prices, suffering consumers. They’re “suffering” all right, with a plethora of wildly popular sub-$400 netbooks, thanks to a complex and efficient marketplace in which Intel plays an important role, along with all its business partners.

Intel does not enjoy government protection of its market share, nor does it operate in a vacuum, immune from discipline if if its rebates and “bribes” (note the language used by enforcers!) are somehow bad deals for consumers or computer makers. Intel has upstream suppliers, and downstream business customers that can revolt against and thereby discipline any monopolistic behavior, or exclusive arrangements that are unsatisfactory. If the downstream partner doesn’t make a sale, neither does Intel. If the downstream partner’s hardward sales suffer because of Intel, it can retaliate. Thus as far as abusive behavior is concerned, the market is self policing. The only thing that could prevent computer makers themselves from ganging up against Intel abuses would be the antitrust laws themselves.

Antitrust, more often than a consumer-protection phenomenon, is often protectionism. In this case, government bodies are deciding we have to buy from AMD and not Intel, and AMD gets protected from the ravages of competition. Consumers lose.

As far as competing chipmakers are concerned, they of course have no fundamental right to Intel’s customers. However they do have a right to make their own deals with computer makers more satisfactory than Intel’s. Opportunities abound in PCs, laptops, and netbooks; and moreso in handhelds that are gaining appeal and yet don’t rely on Intel.

Furthermore, why should AMD be the beneficiary of antitrust interference? Most chips are not found in PCs at all, but in vehicles and in appliances and handheld devices and gadgets of all sorts. You’ll find chips in new automobiles, coffeemakers, rice cookers, cell phones, watches, calculators, the pump at the gas station. They flush the toilet for you at the airport and turn on the sink; you don’t have to touch a thing thanks to the microchip. These might want a piece of the PC action; it’s a rhetorical and nonsense question, but why not forbid AMD from getting the market share and give it to these guys?

As particle physicist Michio Kaku noted in his remarkable book Visions, “By 2020, microprocessors will likely be as cheap and plentiful as scrap paper, scattered by the millions into the environment, allowing us to place intelligent systems everywhere.” Chips in “Wintel” desktop computers increasingly constitute just one subset of a vast semiconductor market. And guess what; fewer and fewer of the chips in non-PC devices are Intel’s. The trajectory of the marketplace is hyper-competitive, and there is no need for this antitrust action to warp things.

Some of us might be more impressed if Cuomo presented a thoughtful critique of governmental licensing and protection in his own legal industry, so that paralegals and other professionals could compete with monopoly lawyers. Now there is a realm of genuine monopoly power.

Nvidia Rumored to Compete in Supposedly Uncompetitive Market

by Elizabeth Jacobson on November 4, 2009 · 6 comments

in Tech & Telecom

Rumors abound that graphics chip maker Nvidia is getting set to enter the x86 processor market. Recall that, according to AMD’s lawyers, the processor market is uncompetitive and being unfairly monopolized by Intel.

Now, if the antitrust lawyers are correct, and the CPU market is uncompetitive and needs government intervention, then there must be some barriers to entry that are keeping other competitors out of the market, allowing Intel to reap outrageous profits. However, if Nvidia can and does enter the processor market and supply an alternative processor product line, where would that leave the antitrust argument?

Regulation of the Day 69: Owning More than Three Cats

by Ryan Young on November 4, 2009

in Deregulate to Stimulate, Economy, Nanny State, Personal Liberty, Regulation, Regulation of the Day

A new ordinance in Dudley, Massachusetts makes it illegal to own more than three cats without government consent. (Hat tip: Drudge)

Having solved all of the community’s other problems, regulators now have the time to turn their attention to what is apparently a spat between neighbors. One resident is upset that the 15 cats (!) owned by a neighboring woman have been sullying his yard.

I might suggest that Coaseian bargaining might be a better solution than a law.

A fiat decision in favor of one party will leave at least one disputant dissatisfied. In this case, the cat lady is looking to move to a different town. Why not treat both parties as equals with rights to need to be respected? That approach is far more likely to generate an outcome everyone is happy with.

Presumably the offended neighbor is willing to pay some amount to keep the cats off of his yard. The cat lady is also willing to pay some price to keep her cats. Let them bargain, then. Maybe they can split the cost of building a fence. Whatever they agree on. The point is that there is a missing market here.

Allowing the parties to bargain creates that missing market. It allows the neighbors to come to a peaceful, mutually agreeable solution. Passing a law favoring one over the other is simply unfair.

MPAA: Net Neutrality Will Kill Film Industry

by Elizabeth Jacobson on November 3, 2009

in Tech & Telecom

The Motion Picture Association of America has come out against net neutrality… sort of. In its filing with the FCC[PDF] late last week, the MPAA reminded the commission of the importance of content companies in driving new infrastructure technologies, and claims that protecting these content companies (i.e. forcing ISPs to filter out file-sharers) is vital for the future health of the internet.

It would seem fair to speculate that file sharing, contrary to the both the MPAA’s and the RIAA’s earlier claim, has actually helped to drive the growth of the internet, although that’s beside the point. While it’s great to see a big content industry on our side of the Net Neut debate, the MPAA’s stand is little more than a thinly-veiled attempt at regulatory capture. The MPAA’s history of rallying against new technology (“the VCR will destroy the industry!”) is evidence enough of their insincerity. Unfortunately, there are real arguments to be made against government regulation of the pipes and the airwaves, and the phony arguments put forth by the film and music studios will only cause Neutrality supporters to conflate economic reasoning with sheer nonsense.

Obama One Year Later — A Legacy of Lies and Broken Promises

by Hans Bader on November 3, 2009

in Agriculture, Economy, Energy, Environment, Ethanol, Global Warming, Healthcare, Insurance, International, Legal, Natural Resources, Personal Liberty, Politics as Usual, Precaution & Risk, Sanctimony, Stimulus to Nowhere, Trade

It’s been a year since the president was elected, and he’s already piled up an impressive list of lies and broken promises.

The broken promises include his pledge to enact a “net spending cut,” his promise not to raise taxes on anyone making less than $250,000 a year, and his promise not to sign bills without first giving the public five days of notice.

The Congressional Budget Office says that Obama’s proposed budgets will explode the national debt through massive spending increases, increasing the already large deficits left behind by the Bush administration from $4.4 trillion to $9.3 trillion. His record-setting budgets flagrantly violate his promise to propose a “net spending cut.”

Obama broke his campaign promise not to raise taxes on anyone making less than $250,000 a year by signing into law a regressive excise tax increase to expand the SCHIP program, and by proposing a cap-and-trade energy tax that could charge up to $2 trillion, a massive cost that Obama himself has said will be passed “on to consumers,” as well as homeowners and motorists. (In 2008, Obama privately admitted to the San Francisco Chronicle that if he was elected, electricity bills would “skyrocket” under his administration, but it didn’t report that.)

He also broke his promise not to raise taxes by backing health-care bills that would impose a laundry list of new taxes on the middle class, including a tax on uninsured people.  Americans for Tax Reform earlier summarized the tax increases in ObamaCare: an individual mandate tax of $900 per individual or $3800 per family (if you don’t have health insurance); an employer mandate tax of $400 per employee if health coverage is not offered; an “excise tax on high-cost health plans”; a “medicine cabinet tax”; capping Flexible-Spending Accounts (FSA’s); abolishing most HSAs; and increasing tax penalties for HSAs.

The costly cap-and-trade energy bill supported by Obama would lead to big tax increases, administration officials privately have conceded, even though they publicly claim otherwise.  “Officials at the Treasury Department think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents circulated within the agency and provided to The Washington Times” by CEI.  It could raise household taxes by $1761 per year, equivalent to a 15 percent tax increase.   It would also result in “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs.”  (Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”)

Although cap-and-trade backers claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air, as well as harming forests and water supplies.   It would enrich politically-connected corporations, and result in massive destruction of the world’s forests.   By expanding ethanol subsidies and mandates, it would cause enormous “damage to water supplies, soil health and air quality.” Ethanol subsidies have already resulted in forests being destroyed in the Third World, and by diverting cropland to fuel production away from food production, they have already caused famines that have killed countless people in the world’s poorest countries.

Over and over again, Obama has broken his campaign promise to give the public five days of notice before signing bills into law, including his very first law, the trial-lawyer backed Lilly Ledbetter Fair Pay Act. Obama also repeatedly made false claims about the Supreme Court decision that the Ledbetter law overruled, misstating the facts of that case and how long it gives employees to sue over pay discrimination (the Court did NOT say that employees have to sue even before discovering discrimination).

Obama broke seven campaign promises dealing with transparency and clean government in signing the $800 billion stimulus package, much of whose contents were secret until shortly before Congress voted on it, and whose 1400 pages went unread by most Congressmen who voted on it.  (It repealed welfare reform and contained loads of welfare, pork, and waste, while wiping out jobs in the export sector.)

Obama’s broken promises are part of a larger pattern of dishonesty. Obama claimed his $800 billion stimulus package was needed to avert “irreversible decline.” But the Congressional Budget Office concluded before and after its passage that the stimulus package will actually cut the size of the economy in the long run. Obama’s budgets don’t add up, either, piling up $9.3 trillion in red ink, according to the Congressional Budget Office, a staggering $2.3 trillion more than Obama claimed.

Poll shows little faith in government, media

by Michael Fumento on November 3, 2009

in Odds & Ends

A new Harvard poll, in a ranking of 13 leadership categories, found Congress and the media ranked 11th and 12th respectively. They probably would have been even lower had there been a category for used car salesmen.

Smith: Ayn Rand Redux

by Fran Smith on November 3, 2009

in Odds & Ends

In the wake of two new biographies of Ayn Rand, MarginalRevolution’s Alex Tabbarok today reposts and links to some of his and Tyler Cowan’s writings on her 100th birthday in February 2009, and draws attention to her “virtue ethics.” For that same event, CEI’s Fred Smith had an eloquent tribute showing how Rand explored the moral foundations of economic liberty and provided insights into the assault on free enterprise.  Here are some excerpts from Smith’s article that are especially relevant in today’s political climate:

She called businessmen “America’s persecuted minority.” And today-as has been the case at least since the start of the Industrial Revolution-many businessmen and -women feel they are the victims of a special scorn directed at them not because they cheat or steal but, rather, because they grow wealthy through their own honest efforts by producing goods and services that they sell to willing customers. Politicians translate this disdain into higher taxes, regulations, and special criminal penalties on these producers.

On the centenary of her birth, Ayn Rand remains a unique defender of capitalism. She showed in both her magnum opus, Atlas Shrugged-published in 1957-and in her non-fiction essays the disastrous effects of mixing politics with economics. But she went further than other laissez-faire advocates, emphasizing the moral foundations of economic liberty. In this way, she provided an even deeper understanding of how freedom is lost and how it might be protected or restored.

Here’s part of his conclusion on what’s needed to address the attacks on free markets:

Rand offered not only insights into statism but also the ethical antidote to the assault on free markets. Individuals must stand up for their rights. American businessmen and -women must reject unearned guilt and stop apologizing for creating the richest country on Earth. Those who value freedom must offer moral justice to entrepreneurs by celebrating their great achievements and recognizing that they should be proud of themselves. In a culture based on these values, politicians who offer to redistribute wealth or threaten to limit freedom would be treated like pickpockets or bank robbers, and thus would stick to their job of protecting the lives, liberties, and property of the citizens.

Regulation of the Day 68: Ironing Tables

by Ryan Young on November 3, 2009

in Economy, International, Regulation, Regulation of the Day, Trade

Regulation begets rent-seeking. When government assumes the power to regulate imports, domestic firms will lobby to use that fact to their advantage.

Case in point: Home Products International (HPI), an American company, makes ironing tables. So does Hardware, a Chinese company. I personally have no idea which firm makes the better ironing table. That’s for consumers to decide.

Or at least it should be for consumers to decide. But it doesn’t always work that way in practice. HPI seems to have already made that decision for us.

At HPI’s request, the International Trade Administration will continue to add anti-dumping duties to the price of the Chinese-made ironing tables. That way HPI doesn’t have to worry as much about competing. Sorry, consumers.

Is this fair? Of course not. But all too often, it is how regulation works.

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