January 2012

Higgs and the Expanding State

by Brian McGraw on April 14, 2010

in Odds & Ends, Personal Liberty, Zeitgeist

Robert Higgs, author and fellow of the Independent Institute has two excellent posts (here and here) on the underhanded creep of government. He asks, “What of any consequence remains beyond the state’s reach in the United States today? … We verge ever closer upon the condition in which everything that is not prohibited is required. Yet, the average American will declare loudly that he is a free man and that his country is the freest in the world.”

Part one of his two post series compares public perception of our freedoms to those under Mussolini and Hitler. Note that he is NOT implying that the United States government is like that of Mussolini or Hitler but that people react similarly (with indifference) as freedoms are eroded away in piecemeal. The post links to an excerpt of Milton Mayer’s They Thought They Were Free:

This separation of government from people, this widening of the gap, took place so gradually and so insensibly, each step disguised (perhaps not even intentionally) as a temporary emergency measure or associated with true patriotic allegiance or with real social purposes. And all the crises and reforms (real reforms, too) so occupied the people that they did not see the slow motion underneath, of the whole process of government growing remoter and remote

The slope is indeed slippery.

Higgs is well qualified to discuss government creep, having published numerous books on government expansion. His thesis is that crises allow for “temporary” increases in government authority that never reach their previous levels post crisis. This has certainly held true for the current financial crisis.

The public discourse rarely covers this side of the debate. New laws, regulations, and mandates are discussed as necessary solutions to newfound ills. Supporters of free-market, bottom-up solutions are caricatured as puppy-killers, in cahoots with big business. The reality is that they believe, as Russell Meade writes, “humanity’s most efficient method of solving problems is to nibble them to death rather than swallow them whole.”

Higgs’s second post contains anecdotes that cover the arcane complexity of the federal code — all 24,000 pages of it. A separate document, the Federal Register, contains over 10,000 federal regulations. CEI’s Wayne Crews covers this here.

Do we really want to be like Europe?

USDA may increase sugar quotas

by Fran Smith on April 14, 2010

in Agriculture, International, Trade

The Wall Street Journal reported today that the U.S. Department of Agriculture may increase the import quotas for sugar to address a tightening supply and possible shortages.  Currently, about 40 countries can export a specified quantity of sugar to the U.S. under what’s called a tariff rate quota (TRQ).  TRQ sugar has low or no tariffs, while above those amounts, sugar is subject to stiff tariffs. Only one country, Mexico, under the North America Free Trade Agreement, is not under the quota system.

Under the 2008 Farm Bill, the USDA had to wait until April 1, 2010 to decide whether to increase the quotas.  Last week, the U.S. Trade Representative announced that it was reallocating some of the 2010 quota amounts that hadn’t been used by certain countries to quota-holding countries that are exporting sugar to the U.S.   Brazil, the Dominican Republic, the Philippines, and Australia received the bulk of the reallocations.

The TRQ system is part of the U.S. sugar program that keeps the price of U.S. sugar generally twice as high as the world price through domestic supply constraints, import restrictions, and price supports for U.S. producers. It’s a central planning approach that raises the cost of sugar and sugar-containing products for consumers, causes job losses as confectionery firms are hit by higher costs, and harms poor sugar-producing countries that can’t compete with U.S. “subsidized” sugar.  See some CEI ideas for terminating this program.

What’s at Stake for Entrepreneurs?

by Ryan Young on April 14, 2010

in Economy

Everything. Funny how easy it is to lose sight of that. This video by Caleb Brown shows you in less than three minutes just how much one couple put on the line just so that you can enjoy fine coffee and wine. Altruism is great, but it doesn’t convince people to risk losing their house so they can provide tasty beverages to complete strangers.

By the way, this video is part of a contest. The winner is decided by traffic. So if you like what you see, spread it around far and wide.

Value Added Tax? Bad Idea

by Ryan Young on April 14, 2010

in Economy, Politics as Usual

Today’s Daily Caller has an article by Wayne Crews and I making the case against the VAT, which is becoming a popular idea in this age of trillion-dollar deficits. Our main points:

-It would require roughly doubling the size of the IRS. Enough said

-VATs are untransparent. Sales taxes show up on receipts. VATs don’t. Knowing how much we are taxed is a fundamental right that preserves our ability to challenge excess government in a constitutional republic. A VAT would take that away.

-VATs increase over time. At least they have in 20 of 29 OECD countries that have VATs.

-VATs are prone to special-interest abuse. Politically incorrect goods are easily hit with punitive rates. In Denmark, people pay roughly triple sticker price for cars, for example.

Stern Jumps off Sinking Pension Ship

by Ivan Osorio on April 13, 2010 · 1 comment

in Economy, Employment, Labor

Service Employees International Union (SEIU) President Andrew Stern plans to retire as head of the union that he helped to transform into the most powerful in America. Considering the access he enjoys to the Obama administration — he was the most frequent visitor to the White House last year — the timing of his departure seems odd.

While it could be seen as a case of knowing when to quit so as to go out on top, or of riding into the sunset following SEIU’s huge victory in helping ram Obamacare through Congress, there may be another, much less triumphant reason for Stern to quit now.

He may be getting off the Titanic that is SEIU before it runs headlong into the proverbial iceberg in the form of severely underfunded pensions. As Diana Furchtgott-Roth of the Hudson Institute notes in a 2009 study that compares union-sponsored vs. private pension funds:

On July 11, 2008, in response to an article published in the July 9 edition of the New York Sun by Diana Furchtgott-Roth on the state of union pensions, the Service Employees International Union (SEIU) issued a blistering press release. The article stated “Yet in 2006, the SEIU National Industry Pension Plan, a plan for the rank-and-file members, covering 100,787 workers, was 75% funded. That is, it had three-fourths of the money it needed to pay benefit obligations of workers and retirees. In contrast, a separate fund for the union’s own employees, numbering 1,305, participants was 91% funded. Even better, the pension fund for SEIU officers and employees, which had 6,595 members, was 103% funded.”

The SEIU lambasted the article and claimed that the SEIU National Industry Pension Fund had achieved high funding levels, 92 percent in 2006, and 96 percent in 2008. Now, perhaps the union’s internal calculations showed the SEIU pension plan was in good shape, but in 2009, the SEIU National Pension Fund reported to the DOL that it was in critical status—a sign of serious funding deficiencies that suggests the SEIU’s arguments were ignorant at best, and disingenuous or worse if they were aware of these problems22.

In addition, three of SEIU’s pension funds were in endangered status as of 2008, and this year the 1199 Pension Fund declared critical status.

The Local 32BJ District 36 Building Maintenance Pension and the Local 32BJ District 36 Building Operators Pensions cover together 7,000 people. And the SEIU 1199 Greater New York Pension covers another 29,000, or 36,000 in New York in all.

Whatever the reason for the disparity in funding between rank-and-file pensions and those of SEIU staff and officers, it doesn’t look good. With Stern gone, it’s somebody else’s problem now. That somebody else will most likely be SEIU Treasurer Anna Burger, who has long been considered Stern’s heir apparent, though, as Politico‘s Ben Smith reports, she may be challenged from within the union.

For more on union pensions, see here, here, and here.

For more on SEIU, see here, here, and here.

Green Thumbs and GMOs

by Greg Conko on April 13, 2010 · 1 comment

in Agriculture, Environment, Nano & Biotech, Natural Resources, Precaution & Risk, Regulation

A friend just recommended this op-ed published in the Boston Globe on Sunday.  The title and subtitle say it all: “Green Thumbs: Genetically engineered crops are more environmentally friendly than organic ones.”  The author, Elliot Entis, argues that:

There is a green revolution going on, “doubly green’’ according to ecologist Gordon Conway, but it’s one the organic movement does not want to join. This revolution relies on modern biotechnology to create crop hybrids that can better utilize our scarce resources, and there’s the rub: the science is not trusted by organic farmers, and it plays against their economic interests.

and

The organic movement is largely a romantic ideal, far removed in many ways from science. It believes it is environmentally friendly, but it largely avoids science. True environmentalists look at the facts, and those facts do not support the growth of organic farming as a way to feed the world. However, with few exceptions, environmental organizations do not admit to this publicly. Why? Because they share a constituency: citizens who oppose certain elements of mass production farming, who yearn for a simpler time, when things were more natural. But this constituency is built on a shared belief system about the past, not the future.

At some point the contradiction between what organic farming leads to — more land devoted to farming, higher food prices, less biodiversity — and the goals of environmentalists — sustainability, more biodiversity – will fracture this alliance.

Skeptics, including many in the article’s comment thread, argue that a guy like Elliot Entis can’t be trusted, since he has a financial interest in the success of biotechnology and genetically engineered foods.  But those in the biotech industry aren’t the only ones saying these things.

As I wrote last October here on Open Market, environmental guru Stewart Brand has been saying the same thing for years.  And the UK’s Royal Society, one of the most highly respected scientific bodies in the world issued a report last fall calling for broader use of biotech crops and other technologies to bring about a “sustainable intensification” in global agriculture.

And just today, the US National Academy of Sciences’s National Research Council issued an in-depth study on The Impact of Genetically Engineered Crops on Farm Sustainability in the United States.  The NRC study concluded that “when best management practices are implemented, GE crops have been effective at reducing pest problems with economic and environmental benefits”.  Among the reports more specific findings:

  • “Adoption of herbicide-resistant crops could help improve soil and water quality.”
  • “Targeting specific insect pests with Bt toxins in corn and cotton has been successful, and insecticide use has decreased with the adoption of insect-resistant crops.”
  • “Many adopters of GE crops have experienced either lower costs of production or higher yields, and sometimes both.”
  • “Farmers who previously faced high levels of insect pests that were difficult to treat before insect-resistant crops have particularly benefited from applying lower amounts of or less expensive insecticides.”
  • “More effective management of weeds and insects also means that farmers may not have to apply insecticides or till for weeds as often.”

An overwhelming amount of scientific evidence amassed during the past two decades suggests overwhelmingly that genetically engineered foods have been a huge boon for American farmers, consumers, and the environment.

Do we really want to be like Europe?

by Fred Smith on April 13, 2010

in Culture, Deregulate to Stimulate, Economy, International, Regulation

With the passage of ObamaCare, we’ve taken another giant step towards Europeanizing America. Tragically, our history shows a steady trend in that direction, with government spending as a percentage of GDP steadily increasing from 20% in the 1930s to over 35% in the last two decades. From the first success of the Progressives in the late 19th century, the United States has tended toward the European regulatory-welfare state model. Is this convergence wise?

Certainly European-style governance has many drawbacks. Consider Denmark. There, tax revenues are used to pay for health care expenses, all levels of education, child care, etc. Even students receive support grants while in school! Vacation policies are generous with employers required to grant at least 5 weeks of paid vacation per year. All this may seem great-you pay for nothing and get “free” vacation time. But, of ourse, there are no free lunches.

Danes pay a large price for all this. Minimum tax rates in Denmark are over 45%. In addition, Denmark pays the supra-governmental EU-imposed VAT (value added tax) of 15% on top of the national VAT of 10%. The VAT tax is essentially a sales tax raising the price of everything. Consumer goods are much more expensive with gasoline costing $6-8 per gallon, a beer over $10. European taxation shifts choice away from individuals and limits their ability to enjoy much of the world’s marvels.

Average take home income in Denmark is close to that of the United States, but Danes have a much lower purchasing power given these downstream taxes and the higher prices resulting both from the sales tax and the regulatory burdens. Home ownership in Denmark is more than 10% lower than in the United States.

Personal car ownership is discouraged in Denmark in favor of public transportation. The tax on a new car is over 100% of the sticker price, doubling the cost of car ownership. Danes also pay an annual ownership tax of anywhere from $1000-$4000. As a result, only about 400 individuals per thousand own automobiles in Denmark, compared to over 750 per thousand in the United States.

These aspects of European life are less well known to Americans. American tourists see a “nicer” side of Europe, staying in lovely hotels, enjoying beautiful scenery, and eating wonderful foods The reality of everyday life in Europe is less lovely.

While America is not perfect, allowing the government to control more aspects of our lives will not yield a better, healthier society. The government cannot wave a magic wand and rid the world of problems. We all want a healthier, safer, and wealthier society. Are free markets or bureaucracy the better path to those hopes? Indeed, if we continue down the current road, what will America resemble tomorrow? France without the good food?

LibertyWeek 88: Facebook Confidential

by Richard Morrison on April 13, 2010

in CEI Projects, Features, Podcast, Zeitgeist

Richard Morrison, Jeremy Lott and Marc Scribner bring you Episode 88 of the LibertyWeek podcast. We take on utility bureaucrats in the Southland, wine freedom in New York, Facebook privacy fears and World Series scandal.

Toyota’s “questionable, evasive, and deceptive legal tactics”

by Michael Fumento on April 12, 2010 · 1 comment

in Nanny State, Regulation

“Toyota has routinely engaged in questionable, evasive and deceptive legal tactics when sued, frequently claiming it does not have information it is required to turn over and sometimes even ignoring court orders to produce key documents, an Associated Press investigation shows.” Or has it? I’m not necessarily challenging their conclusion, I’m really asking.

The point of my Toyota writings so far has been that the company builds great cars and has been falsely maligned. That doesn’t mean it hasn’t engaged in wrongful courtroom antics, though, and the company just doesn’t pay me enough to say otherwise. (Actually for the record they don’t pay me anything. Nor does any PR firm. HOWEVER, for one of these babies, it’s just possible they can buy me off and I think they have nothing to lose in trying. See inset.)

One problem is it is indeed just AP’s review. As my articles have made clear, the media are on a witch hunt and just as witch hunters of yore often believed they were doing the Lord’s work, so do those of today. And just as those witch hunters were often just a bit too quick to see evidence of witchcraft where none was to be found, so too today.

Another problem is that it’s clear from the article that the “experts” upon whom the journalists relied aren’t just lawyers, aren’t just trial lawyers, but are trial lawyers suing Toyota. “Automobile manufacturers, in my practice, have been the toughest to deal with when it comes to sharing information,” one lawyer told AP, ” but Toyota has no peer.” He represents somebody killed in a Toyota crash.

Then we’re told, “Similar claims have been lodged by Dimitrios Biller, a former Toyota attorney who sued the company in August, contending it withheld evidence in considerably older rollover cases.”

To its credit, AP does say, “Attorneys who regularly defend corporate clients say it’s common for plaintiffs’ lawyers to complain they are not receiving the information they need and that Toyota’s tactics do not necessarily indicate nefarious intent.” Moreover, if you pore over enough lawsuits you will find discrepancies. That’s the old rule of “The more you look, the more you find.” It’s pretty much a given that if you analyze every tort case Toyota has been involved in over the last decade or so, you’ll probably find some legal wrongdoing – and the same would be true for Ford or GM.

The jury is still out on this one.

Friday Regulation Roundup

by Ryan Young on April 9, 2010

in Economy, Nanny State, Personal Liberty, Regulation, Stimulus to Nowhere

Some of the stranger governmental goings-on I dug up over the week:

-The federal government is spending $73,000,000 this year on the Agricultural Water Enhancement Program.

-The federal government has 5,647 words of formaldehyde regulations for the workplace.

-The federal government has an Arthritis Advisory Committee. They’re meeting on May 12 if you care to attend.

-Government spends $2,000,000 on phone lines for a town of 80 people, some of whom already own satellite dishes.

-OSHA considers sand a poison because it contains silica.

-Vermont to spend $150,000 to build a tunnel for salamanders to cross a road safely.

-The federal government has a Highbush Blueberry Council.

-A fish hatchery in South Dakota is getting $20,000 in stimulus money for new light fixtures.

-In Virginia, it is illegal in many instances to turn on your air conditioning before May 1. Cato’s Tom Firey has more.

-EPA says that de-icing fluid for windshields is an environmental hazard. Worried airline pilots say the EPA is the real safety hazard.

-It is illegal in Kentucky for anyone under 18 to play pool without photo ID and written parental consent.

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