[youtube:http://www.youtube.com/watch?v=mqm5RRBCmiw 285 234]
January 2012
Should labor unions pay their protesters the wages and benefits that the unions demand of other employers? CEI labor policy attorney Vincent Vernuccio crashed a union protest in Washington, DC this week and questioned several people involved in the protest. The protesters – hired by a union, the Mid-Atlantic Region of Carpenters – appeared to not be compensated with the level of wages and benefits that the union itself demands of other employers – the protesters evidently lacked health insurance, for example (see 3:52).
Nor is it clear the protesters were union members (see 2:59). So, how could they even hope to benefit from any prospective wage or benefit concessions won from the business targeted by the protest? No one could (or would?) say what local union chapter they belonged to and seemed to even be confused by the question (see 1:28).
› View the video on YouTube, Unions hire non-union protesters?
The Obama Administration’s EPA and National Highway Traffic Safety Administration (NTSHA) are proposing new rules “labeling each passenger car with a government letter grade from A to D based on its fuel efficiency and emissions,” the Wall Street Journal reports. The new rules “would be the most substantial changes in 30 years to the familiar price and mileage labels afixed to new cars on sale at dealership,” the article continues. Only in the make-work world of bureaucrats would the addition of the letters A, B, C, or D to product labels be considered “subtantial changes.”
The WSJ goes on to point out the obvious: “Currently the labels must show how many miles per gallon a car gets and its estimated annual fuel costs. Under the rules proposed Monday, new labels would carry a letter grade assigned by regulators.” Electric vehicles and hybrids would get the highest grades while big, heavy, gas-guzzling SUVs would get the lowest grades. “We think a new label is absolutely needed to help consumers make the right decision for their wallets and the environment,” explained Gina McCarthy, EPA’s assistant administrator for air and radiation.
“Absolutely needed” — as in, we’d be lost without them.
The proposed rules imply two judgments about Americans. One is that we’re too stupid to understand how miles-per-gallon and estimated annual fuel costs affect our wallets. Our math skills are so poor that quantitative information must be supplemented with letter grades labeling “this car good, that car bad.”
The second judgment, closely related to the first, is that Americans are school children and EPA/NHTSA are the Nation’s teachers. The agency folks apparently think that no matter how old we get, we still want to be teacher’s pet.
I propose an alternative rule — a “substantial” change in the titles of both agencies to ”School Marms R Us!”
Am I going to comment on the proposed rule? Maybe I’ll just submit a bumper sticker with the words: “Honk if you’ve outgrown school marms.”
Few observers were shocked when the Federal Emergency Management Association (FEMA) asked for a nearly $20 billion bailout of its National Flood Insurance Program (NFIP). For years groups and individuals have warned that NFIP was underfunded and increasing its liability each year by not encouraging consumers to move or alter their homes in a way that would limit future losses. The availability of government provided insurance allowed people to continue building in at-risk areas like Florida’s coastline. The big problem? Government run insurance providers are not motivated to charge adequate rates, keep costs down, or encourage consumers to alter their homes to prevent further damage. As this USA Today article cites a notable anecdote that, unfortunately, isn’t all that uncommon:
In Wilkinson County, Miss., a home has been flooded 34 times since 1978.Extraordinary as the damage may be, even more extraordinary is that an insurer has paid claims every time, required no flood proofing, never raised premiums after a claim and vowed to continue insuring the house. Forever.
The home’s value is $69,900. Yet the total insurance payments are nearly 10 times that: $663,000.
It’s no surprise that the insurer faces huge financial problems.
The insurer? The federal government.
Government run programs fail to send the appropriate “safety” signals about consumer behavior, but their presence in the market also makes it more difficult for private insurance companies to compete. In Florida, for example, the state-run wind insurer (Citizens Insurance Corp.) was meant as a “last resort” for consumers who could not find coverage anywhere in the market. Eventually, the company charged rates that were so low that private insurance companies could not compete and chose to leave the state, resulting in more people becoming reliant on the government-backed programs.
For these reasons, CEI along with a diverse coalition of consumer, taxpayer, and environmental groups vehemently opposed proposals to expand the National Flood Insurance Program to include other perils, like wind.
Back in 2008, former CEI Senior Fellow Eli Lehrer had this to say about plans to expand the National Flood Insurance Program:
“…America’s most important flood control program-the none-too-creatively named National Flood Insurance Program (NFIP)- faces serious troubles. In its current state, it drains the Treasury, damages the environment, and encourages unwise development. At minimum, it needs a restructuring that puts environmental and fiscal responsibility ahead of the questionable short-term desire of some for lower insurance rates in flood-prone areas.
Given that it sells insurance for less than any private company would, the program is a fiscal disaster. Although it theoretically, “borrows” money from the Treasury rather than actually raiding it, its fiscal state doesnt really make it possible for NFIP to pay back its debts. Right now, it owes the Treasury almost $18 billion and has no practical way to pay it back.”
Not only was this fiscal head-on-collision ignored by many in congress, some wanted to increase the liability it owed by adding wind coverage-that is, allowing the federal government to cover hurricane damage. With states like Florida getting hit hard nearly every season the potential liability would be enormous.
“Findings by research firm Towers Perrin predicted losses up to $200 billion if a federal program replaces private sector catastrophic wind insurance.”
If Americans want to avoid these fiscal catastrophes in the future, we must get the government out of the business of private enterprise and allow profit-motivated companies offer rates that actually reflect the risk of certain behavior. If consumers don’t like the cost of insurance for a potential home on the beach then they might consider buying a home far away from the dangers of hurricane winds, rather than relying on US taxpayers to bail them out after their home is damaged year after year.
Through June, the government spent about $620 billion of stimulus money. The Obama administration claims that the spending has saved or created 2.3 to 2.8 million jobs.
For the sake of argument, let’s assume those job creation numbers are true. In fact, let’s pick the rosiest number — 2.8 million jobs.
At a price of $620 billion, that comes out to $221,428.57 per job. Startlingly inefficient.
Now consider that that $620 billion had to come from somewhere else. Some of that money came from taxes. That leaves less money left over for consumers and businesses to spend. Some of the stimulus money was borrowed. That leaves less capital for private companies borrow.
The private sector tends to spend less than the government to create a job. Since stimulus spending is spending more money to create fewer jobs than the private sector, it is actually causing net harm to the job market.
In place of the spending stimulus, I humbly offer a deregulatory stimulus. CEI VP Wayne Crews and I offer some specific proposals here.
CEI Weekly is a compilation of articles and blog posts from CEI’s fellows and associates sent out via e-mail every Friday. Also included in the weekly newsletter is a brief description of CEI’s weekly podcast and a feature on a major CEI breakthrough made during the week. To sign up for CEI Weekly, go to http://cei.org/newsletters.
CEI Weekly
August 27, 2010
>>Post-Spill, it’s Still ‘Drill, Baby, Drill!’
Gulf Coast residents are fed up with the politicization of the Deepwater Horizon spill. As Associate Fellow Ben Lieberman writes in The New York Post, it’s quickly becoming apparent to those most affected by the spill that “the biggest threat to the Gulf region economy isn’t the spill itself but Washington’s reaction to it.” Read Lieberman’s op-ed here.
>>[Video] Greg Conko Discusses Salmonella on Fox News
>>Shaping the Debate
Seeking Food Safety, Getting Human Harm
Angela Logomasini’s op-ed in The Washington Times
What They’re Up Against
Chris Horner’s op-ed in The American Spectator
Uncle Sam Wants to Cuddle
Iain Murray and Anne Sutherland’s op-ed in The Washington Times
>>Best of the Blogs
Privacy Isn’t Dead, It’s Evolving
by Ryan Radia
Biofuels and Tax Expenditures
by Brian McGraw
National Security Risks of Biofuel Mandates
by Marlo Lewis
>>CEI Podcast
August 23, 2010: The Salmonella Egg Scare
CEI Senior Fellow Greg Conko talks about the salmonella scare that has led to the recall of 550 million eggs 22 states. He believes that the hype is overblown, and that regulators should take an incentives-based approach to food safety issues. The current command-and-control model needs reform.
>>Support CEI
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No wonder people are confused about the trade issue when they read mercantilist articles like the front-pager by Howard Schneider in the Washington Post today – “Economic growth slowed by trade gap.”
According to this article’s premise, it sounds like we would all be better off if we just exported and didn’t import any goods and services. Here’s the article’s lead sentence:
A widening U.S. trade deficit has become a substantial drag on economic growth as the country’s exports struggle to keep pace with the swelling sums that Americans are again spending on imported goods.
And then it goes on to say:
But the spike does raise fresh concerns about whether some of the same factors that led to the economic crisis, including U.S. overconsumption, are beginning to reemerge. The yawning deficit may also prove frustrating for the Obama administration as it seeks to create jobs by boosting U.S. exports.
But what about choices? Does the U.S. produce everything we consumers – and producers — want and need at prices we can afford? Of course not. And therein lies the confusion, as with this assertion:
At a basic level, trade deficits represent a loss of wealth for a country – money flowing abroad for goods and services produced elsewhere, supporting businesses and workers in other countries.
I would offer that the lack of imports would also “represent a loss of wealth” for consumers and producers.
Cato’s Dan Griswold points out a major oversight of the Post writer – he ignores the fact that many of those “overconsumed” imports actually provide inputs for producers to use to produce goods for export!
That view neglects the supply-side role of imports. More than half of what we import consists of goods consumed by producers-capital machinery, raw materials, parts and other intermediate inputs. Those imports help us produce more, not less. The Keynesian view also confuses cause and effect: Imports usually grow in response to RISING domestic demand. Consumers more eager to spend “swelling sums” on imports typically buy more domestically produced goods as well.
Imports, when they represent less expensive alternatives, also may put more discretionary funds in the hands of consumers to purchase other goods or services, to save, or to invest.
Maybe some Post editor noticed some of the problems with that article – a different trade article with a coauthor is on the front page of the online edition.
In a classic case of a government solution in search of a problem, Washington has for years set energy efficiency standards for home appliances. By now, refrigerators, air-conditioners, and many other appliances have been subjected to multiple rounds of successively tighter requirements from the Department of Energy (DOE). The Obama administration has taken this pre-existing regulatory blank check and run with it, finalizing standards for over 20 products. As might be expected, such arbitrary government mandates come at a cost — a higher purchase price for regulated appliances, but also compromised performance, features, and reliability. And the downside can easily swamp the often-modest energy savings. The regulations for clothes washers may be the worst of them all.
The clothes washer standards currently in force were promulgated in the final days of the Clinton administration. At the time, DOE estimated that they would raise the cost of a new washer by nearly $250, or 59 percent, and many questions about quality were left unanswered in the rush to regulate. In 2007, when the standard was fully phased in, Consumer Reports magazine noted that that some new models “left our stain-soaked swatches nearly as dirty as they were before washing,” and that “for best results, you’ll have to spend $900 or more.”
Washington’s response to its anti-consumer mistake? Even tougher standards. In 2007, President Bush signed a big energy bill that, among other things, required new clothes washer efficiency regulations by 2011. It also required DOE to consider revising them again — but only to make them more stringent. This has provided a perfect opening for the very aggressive Obama DOE — the same thinking that leads the administration to believe it can design better cars also extends to appliances. Yet another clothes washer rulemaking is in the early stages, this one to take effect in 2015.
Consumers benefit most not from government dictates but from freedom of choice. After all, anybody who really wants a super-efficient clothes washer is free to buy one, and federally-mandated energy use labels provide all the information needed to do so. Government standards simply force that choice on everyone, whether it makes sense or not. And it often doesn’t. For example, senior citizens, who do fewer loads of laundry than families, are even less likely to earn back the higher up-front cost in the form of energy savings.
Don’t expect appliance makers to fight back on behalf of their customers. Many manufacturers support these kinds of standards (while others seem resigned to their inevitability). After all, they skew the market towards more expensive models, and also give dissatisfied buyers little recourse, as non-compliant models are illegal to sell. Of the Clinton clothes washer rule, one appliance lobbyist said “selling it in the marketplace is easy, if there’s a standard in place. It’s not a matter, necessarily, of consumer acceptance.” Appliance makers are among those urging DOE regulators to set new standards for clothes washers, as well as many other appliances.
While some federal regulators are trying to reduce laundry-related energy use in this ham-fisted manner, other regulators may be stifling a better approach. Companies such as Proctor and Gamble, the makers of Tide, are making advances in detergents that work well in cold water. Since a good portion of the energy used in cleaning clothes is for heating the water, further progress that would allow most loads to be satisfactorily cleaned in cold water would likely save more energy — and at far less cost and hassle — than clothes washer efficiency standards. But new Environmental Protection Agency disclosure requirements may mean that the trade secrets behind these new detergents would have to be revealed — and thus could be copied by global competitors. This is a major disincentive to undertaking the cost of developing them in the first place.
Thus, we have one group of federal regulators reducing laundry-related energy use in a dumb way, while another group of regulators is working to thwart what could prove to be a smarter way — just more dirty laundry from Washington.
A man collected 12 years of salary and benefits from his government job in Norfolk, Virginia. Nothing unusual about that… except that he “had not reported to work in years.”
Yes, this is an outrage. But maybe the world would be a better place if more government employees took that approach to their jobs.
Regardless of how one feels about immigration policy in the U.S., allowing immigrants to obtain a driver’s license is clearly beneficial for society as a whole. Insurance News recently highlighted a usually unseen business product that highlights why letting illegal aliens operate within the laws of the U.S. is better than closing our eyes and pretending that making it illegal for illegals to drive will stop them from taking to the roadways.
Three states in the nation still allow residents to obtain driver’s licensing without providing proof of citizenship, though there is a movement to change that. However, few states explicitly require insurance companies to ask for proof of citizenship in order to write policies. Presumably, one reason lawmakers have not yet attempted to require proof of citizenship is because they recognize the benefit of having a greater number of insured drivers on the roads. The reality of the situation is summed up nicely by John Rost, founder and president of Fiesta Auto Insurance Co:
“People would like to believe that an undocumented individual wouldn’t buy a car, or if they had a car and didn’t have a driver’s license, they wouldn’t drive to work,” Rost said. “That’s clearly not the case.”
Yet, most states prevent illegals from obtaining licenses. Does this stop them from driving? No. It only makes it more likely that they will not understand the traffic laws and will be more likely to cause an accident.
At least, when uneducated driver (not necessarily through any fault of their own), they might have insurance.
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