January 2012

Immelt Has Some “Thought Bullets”

by Fran Smith on September 23, 2010

in Energy, Environment, Global Warming

Mr. “Ecomagination” — GE’s CEO Jeffrey Immelt — called on the U.S. to put a long-term price on carbon so this country could compete with China in being “green, green, green, green – four greens,” according to a news article today in Bloomberg.

In his speech, the article notes, Immelt said that a carbon pricing scheme would create jobs:

The U.S. needs to establish a “long-term price signal” on carbon emissions, in order for companies to provide “appropriate funding for innovation” regardless of fuel, as well as revive nuclear energy. Such moves would create jobs rather than shift them overseas, Immelt said.

So taxing energy use — raising the price of energy — will be a job stimulator.  Doesn’t sound like it, if he has in mind a cap-and-tax scheme. (Here’s also a useful primer on costs of global warming policies.)

Immelt seems to be emulating the fictional “thought bullet” leader Martin Lukes, who plunged to his death recently in the Financial Times. Lukes’ most notable contribution to corporate management was “creovation”-combining creativity and innovation, which, according to Lukes’ obituary (registration required) was the basis for GE’s “ecomagination” emphasis. (Satire, of course.)

According to some reports, Immelt may be a candidate to replace Larry Summers as chief economic advisor to President Obama (not a satire).  If so, expect lots of “thought bullets” a la Lukes.

Obama Financial Czar Appointment Is Unconstitutional, Liberal Law Professor Says

by Hans Bader on September 23, 2010 · 1 comment

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

Obama has appointed controversial Harvard Law Professor Elizabeth Warren to informally run the powerful, newly-created Bureau of Consumer Financial Protection that will regulate the banking industry and consumer lending.   To avoid having the Senate vote on her nomination (as the Constitution’s Appointments Clause clearly requires for such presidential appointees), which might result in her nomination being defeated, the administration has formally appointed her not to be Director of the Bureau (the position she will in fact be exercising), but rather to two other White House and Treasury Department positions that did not historically require Senate confirmation — positions from which she will informally control the Bureau.  In essence, President Obama is circumventing constitutional checks and balances, as Yale Law Professor Bruce Ackerman, a staunch liberal, notes today in The Wall Street Journal.

The economically-destructive Dodd-Frank law that sets up the new Bureau of Consumer Financial Protection itself has constitutional problems.   For example, Dodd-Frank sets up a Financial Stability Oversight Council that includes four members picked not by the president, but rather by associations of state officials such as banking regulators and insurance regulators.  That seems to violate the Constitution’s Appointments Clause under cases like FEC v. NRA Political Victory Fund, 6 F.3d 821 (D.C. Cir. 1993), which say that even non-voting members of independent agencies generally have to be picked by the president, and can never be picked by people outside the executive branch. (The Council members picked by state associations are non-voting, which does not mean that they will not have influence or be excluded from important deliberations.)  The Dodd-Frank law also contains provisions that could spawn another mortgage crisis, and are backfiring on consumers.

Motion to Stay Makes Strong Case Court Should Overturn EPA Global Warming Rules

by Marlo Lewis on September 22, 2010 · 3 comments

in Global Warming, Legal

Last Thursday (September 16, 2010), three groups, each led by the Coalition for Responsible Regulation (CRR), filed motions with the D.C. Circuit Court of Appeals to “stay” (put a hold on) the Environmental Protection Agency’s recently finalized greenhouse gas regulations.

The EPA regulations at issue are:

  1. The Endangerment Rule, which finds that greenhouse gas (GHG) emissions endanger public health and welfare, thereby obligating EPA to develop and adopt GHG emission standards for new motor vehicles.
  2. The Tailpipe Rule, which, per the Endangerment Rule, establishes first-ever GHG emission standards for new motor vehicles.
  3. The Triggering Rule, which holds that when the Tailpipe Rule takes effect (Jan. 2, 2011), “major” GHG emitting facilities will be “subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program and Title V operating permits program.
  4. The Tailoring Rule, which amends the PSD and Title V definitions of “major emitting facility” to avoid the “absurd result” of EPA and State environmental agencies having to process an estimated 41,000 PSD permits and 6.1 million Title V permits every year.

The groups filing the motions are: (1) a coalition of business associations led by the National Association of Manufacturers; (2) the State of Texas; and (3) a coalition of public policy advocates. The industry group is asking the Court to stay the Endangerment Rule, the Triggering Rule, and the Tailoring Rule, although not the Tailpipe Rule. Texas and the advocacy groups ask for a stay on all four regulations pending the Court’s review and decision to uphold or vacate the rules.

One point the motion makes is unarguable. Granting a stay can cause no harm to public health, even if one assumes global warming is a big problem. After all, EPA itself estimates that the Tailpipe Rule — the only rule for which environmental effects are estimated — would avert less than 1/100th of a degree Fahrenheit of global warming by 2100. Thus, if the Tailpipe Rule survives judicial scrutiny, delaying its implementation by six months to a year would have no discernible environmental impact. Besides, the stay would not affect the National  Highway Traffic Safety Administration’s (NHTSA) recent revision of fuel economy (CAFE) standards, and the overwhelming lion’s share of emission reductions required by the Tailpipe Rule actually comes from the new fuel economy regulations.

In contrast, the motions argue, EPA’s rules are already harming the economy. The dubious legal basis of both the Tailoring Rule and EPA’s efforts to bully States into immediately amending their permit programs ”now impose a terrible uncertainty tax on our struggling economy, as no business is able to make plans or investments in reliance on a regulatory scheme so clearly at odds with the plain language of the Act.” Businesses and State permitting agencies will incur additional losses if they make investments based on EPA’s rules and the rules are subsequently overturned. Best to put the regs on hold until the Court rules on their legal bona fides.

The Competitive Enterprise Institute (CEI) is a party to the advocacy group motion, which makes a powerful case that the regulations should be stayed and, ultimately, overturned. Lest anyone suspect that I’m tooting my own horn, I had absolutely no role in either developing or drafting the motion.

Big Picture

As can be surmised from the description above, EPA’s four rules are interdependent. The Endangerment Rule authorizes and, indeed, compels EPA to establish GHG emission standards for new motor vehicles. The emission standards, promulgated via the Tailpipe Rule, make GHGs subject to regulation under PSD and Title V, according to the Triggering Rule. To avoid administrative paralysis, economic disruption, and political backlash, the Tailoring Rule exempts all but the largest GHG emitters from PSD and Title permitting requirements over the next six years, raising from 100/250 tons per year to 75,000/100,000 tons per year the cutoff for regulation as a “major” emitting facility.

This custer of regulations is a classic case of bureaucratic self-dealing. As discussed elsewhere, EPA has positioned itself to determine the stringency of fuel economy standards for the auto industry, set climate policy for the nation, and even amend provisions of the Clean Air act—powers Congress never delegated to the agency. The Endangerment Rule is both trigger and precedent for sweeping policy changes Congress never approved. America could end up with a pile of greenhouse gas regulations more costly than any climate bill or treaty the Senate has declined to pass or ratify, yet without the people’s representatives ever voting on it. Overturning EPA’s GHG rules is a constitutional imperative.

The Arguments

The motion to stay advances new arguments — or improved versions of familiar arguments — for overturning each of the four EPA rules. The following sections summarize and excerpt some of the motion’s key insights.

EPA Outsourced Its Endangerment Judgment

Section 202 of the Clean Air Act requires the Administrator to determine the dangerousness of air pollution from motor vehicles based on her “judgment.” Instead, the motion points out, quoting EPA’s Endangerment Rule:

“the Administrator … rel[ied] on the major assessments of USGCRP, IPCC and NRC as the primary scientific and technical basis of her endangerment decision.” 74 Fed. Reg. at 66,510.14
EPA specifically declined to undertake “a new and independent assessment,” id. at 66,511, preferring to “plac[e] primary and significant weight on these assessment reports in making her decision on endangerment.” Id.

Which means:

. . . the only “judgment” EPA really made is that IPCC can be trusted to have made the endangerment assessment required by the Act. But the Act does not authorize entities other than EPA to make that assessment. See, e.g., U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 565 (D.C. Cir. 2004) (“[F]ederal agency officials … may not subdelegate to outside entities—private or sovereign—absent affirmative evidence of authority to do so.”).

In effect, EPA asks the Court and the American people to trust that the IPCC did its job objectively, adhering to U.S. Government standards of scientific integrity. “But neither this Court nor the interested public can determine whether IPCC in fact did so, because the innumerable choices made by its many authors are not in the record.” The Climategate emails reveal instances of behavior inconsistent with U.S. information quality standards, such as Climatic Research Unit Director Phil Jones vowing to keep peer-reviewed research contrary to his views out of the next IPCC report “even if we have to redefine what the peer reviewed literature is.”

Bottom line: The Endangerment Rule embodies “a scientific judgment made by IPCC, and then adopted by EPA, not supported by any record that this Court can review. This is error.”

EPA Fails to Make the Judgment Required by Sec. 202

“Endangerment,” the motion observes, “is not a scientific term with defined endpoints. It is not an objective measure, like the boiling point of water, but a value judgment, like ‘bad.’ And so before EPA finds ‘endangerment,’ it first must define it.” In other words, EPA must explain its judgment in terms of climate-related metrics like temperature, precipitation, or wind speed, such that the public can understand which changes in climatic variables constitute endangerment, and which do not. “EPA has failed to do so.”

To clarify this point, the motion compares EPA’s  endangerment finding for motor vehicle GHG emissions with the agency’s 1973 endangerment finding for vehicular lead emissions. In the earlier rule, EPA provided quantitative information relating lead emissions to atmospheric concentrations, the latter to blood lead levels, and blood levels to brain function. In addition, EPA analyzed how regulation of lead in gasoline would reduce atmospheric concentrations, reduce lead levels in blood, and, thus, improve public health. Thus, “By the end of the rulemaking, EPA had fully explained all of the choices it made along the path of converting available scientific knowledge about lead toxicology and exposure into a policy-based finding of endangerment from automotive lead emissions sufficient to justify regulation, and allow—and survive—judicial review.”

In contrast, EPA “jumps from the tautology that ‘greenhouse gases cause a greenhouse effect’ to ‘greenhouse gases endanger public health and welfare’ sufficient to warrant exactly the level of GHG reductions that happen to result from NHTSA’s imposition of the CAFE standards required by the Energy Policy and Conservation Act.” The motion continues:

It is as though EPA, in Ethyl [Corp. v. EPA, 541 F. 2d1, 1976], were defending a rule to ban leaded gasoline because lead is a poison at some unknown dose; cars burning leaded gasoline can emit lead, which has some unknown effect on atmospheric lead concentrations; and banning leaded gasoline would yield some unknown but trivial reduction in atmospheric lead levels, possibly mitigating by some unknown (but at best trivial) degree the unknown adverse effects that may result from atmospheric lead, although it is very, very possible that the ban would accomplish absolutely nothing at all.

“If anything,” the motion comments, “EPA should face a far greater burden to explain its policy choices here than it did in Ethyl. Lead is strictly a poison, whereas carbon dioxide is a natural component of clean air, ingested by all plants and exhaled by all animals. Life on Earth depends on the very ‘danger’ that EPA is trying to prevent.” Carbon dioxide is not only plant food, it also helps keep the Earth habitably warm.

In short, “An endangerment finding under Section 202(a) does not simply identify a health and welfare risk, as EPA contends; it also establishes the criteria that will inform whether the emission standards adopted to address that risk are rational. . . . EPA here failed to do so, first by rubber-stamping the IPCC’s findings instead of making its own assessment of the evidence, and then by disavowing any obligation to explain the various policy choices it made to reach its ultimate judgment and regulatory response.”

EPA’s Assessment of the Scientific Record Is Logically Flawed

Quoting (or parroting) the IPCC, EPA argues that it is “extremely unlikely” (less than a 5% probability) that the warmth of recent decades can be explained without “external forcing” by greenhouse gas emissions. But this conclusion is inconsistent with other IPCC statements. The IPCC acknowledges three potential drivers of climate change: (1) changes in incoming solar radiation (e.g. due to changes in the Earth’s orbit or the Sun); (2) changes in reflected solar radiation (e.g. due to changes in low-level cloud cover); and (3) changes in outgoing longwave radiation (e.g. due to changes in greenhouse gas concentrations). According to the IPCC, scientific understanding of the Sun’s role in climate change is “low” and there is “significant uncertainty” with regard to cloud behavior and reflectivity. If there is significant uncertainty about two of the three main drivers, it is impossible for EPA — or the IPCC — to be 95% certain which is in the driver’s seat. In the motion’s words:

EPA cannot, and does not, explain how its 95% certainty is justified on the record. There cannot simultaneously be both “significant uncertainty” about primary climate drivers and 95% certainty that anthropogenic GHGs are causing any observed warming, yet EPA concludes there is. This fails even minimal standards of rationality.

EPA’s Administrative Record Fails to Establish Any Non-Trivial Benefits from the Tailpipe Rule

Citing Ethyl Corp. (541 F.2d at 31 n. 62), the motion argues that an administrative agency’s regulatory actions should “fruitfully” attack the problem being addressed. Yet, by EPA’s own admission, the Tailpipe Rule would produce imperceptible benefits, reducing projected global warming by 0.006-0.015°C and projected sea-level rise by 0.06-0.14 cm in 2100.

EPA’s GHG Tailpipe Limits Accomplish No Public Benefit (If Any) that NHTSA’s CAFE Standards Do Not Already Accomplish

About 95% of all GHGs emitted by motor vehicles is carbon dioxide (CO2) from fossil fuel combustion. As EPA’s Tailpipe Rule acknowledges (p. 25327), there is a “single pool of technologies . . .  that reduce fuel consumption and thereby reduce CO2 emissions as well.” Unsurprisingly, the motion argues, “The [new] CAFE standards and EPA’s Tailpipe Rule are virtually identical, with irrelevant differences in how the two standards address air conditioning.”

The case law is not favorable to agencies duplicating the regulations of other agencies. Alas, the Tailpipe Rule is not merely redundant, it also has “profound and pernicious effects” on the economy, if, as EPA contends, it subjects  millions of small stationary sources to Clean Air Act permitting requirements. In sum:

There is no rational basis for EPA to promulgate mobile source rules that do nothing more than reiterate other, independently effective legal requirements, and that offer no added environmental benefit but impose far-reaching and unintended costs on a source population (stationary sources) not even considered in the Endangerment Finding assessment.

The Tailoring Rule Is an Illegal Solution to a Legal Problem of EPA’s Own Creation

This is the most original part of the motion’s argument. To obtain a PSD permit to build or modify a “major” stationary source, the applicant must demonstrate the facility’s compliance with “best available control technology” (BACT) standards. EPA reads Section 165(a)(4) of the Clean Air Act as requiring BACT compliance and PSD permitting for major sources of almost any regulated air pollutant.** Since the Tailpipe Rule makes GHGs regulated air pollutants, major stationary sources of GHGs are subject to PSD and BACT, EPA reasons.

To reach this conclusion, however, EPA had to ignore statutory context. Sec. 165(a)(4) states:

No major emitting facility on which construction is commenced after August 7, 1977, may be constructed in any area to which this part applies unless . . . — the proposed facility is subject to the best available control technology for each pollutant subject to regulation under this chapter emitted from, or which results from, such facility [emphasis added].

In the foregoing, “this chapter” means the Clean Air Act. EPA reads the phrase “each pollutant subject to regulation under this chapter” apart from the qualifying and limiting phrase, ”in any area to which this part applies.” The “part” in question is Part C (Prevention of Significant Deterioration of Air Quality), and the “area” to which it applies is an attainment area. Part C is clearly distinguished from Part D, which addresses permitting requirements in non-attainment areas.

The distinction between attainment and non-attainment areas presupposes, and has no meaning apart from, the adoption of national ambient air quality standards (NAAQS) for the pollutant of concern. Properly construed, Sec. 165(a)(4) creates BACT and PSD obligations only in attainment areas based on a prior NAAQS rulemaking. Since there are no NAAQS for GHGs, there are no GHG attainment areas, hence no areas where Part C BACT and PSD requirements apply to GHG emitting facilities.

Since the Tailpipe Rule does not trigger BACT and PSD for stationary sources, there is also no need for EPA to play lawmaker and “tailor” — that is, amend– the PSD applicability thresholds. Similarly, because “Title V is intended solely to codify otherwise applicable requirements in permits issued to stationary sources,” and stationary sources have no new obligations as a consequence of EPA’s decision to regulate mobile source GHGs, there is no necessity to amend the Title V applicability threshold.

The motion sensibly concludes:

Having applied the Act to a “pollutant” under programs never intended for that “pollutant,” EPA is confronted with the need to undo the “absurd” results that follow by outright defiance of crystal-clear provisions of the statute, those setting forth the applicability thresholds. The far better—and only legal—choice instead is to avoid manufacturing overbreadth in the first place.

(If this argument is correct, then EPA bears a greater responsibility for Massachusetts v. EPA’s “legacy of absurd results” than I previously supposed.)

The Triggering and Tailoring Rules Treat the States as Vassals, Not As the Equal Sovereigns Contemplated by the Clean Air Act

EPA assumes it can simply command States to incorporate PSD permitting for GHGs in their State Implementation Plans (SIPs), or face imposition of an EPA-crafted Federal Implementation Plan (FIP). Not so, the motion argues:

Section 110(a)(2)(C) requires each State’s permit program to mandate permits only for “modification and construction of any stationary source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as required in parts C and D….” 42 U.S.C. § 7410(a)(2)(C). EPA has no basis, then, to disapprove a State’s permit program for failing to govern emissions of a pollutant for which there is no NAAQS.

EPA assumes that the Tailpipe Rule and Tailoring Rules will or at least should automatically revise State permitting programs and the SIPs governing them.  In so doing, EPA erroneously views the States as vassals, because “no sovereign can delegate to another the ability to make its laws. The State must by some affirmative act ratify any changes in pollutants and applicability thresholds incorporated from federal laws before they become effective.”

EPA’s rush to incorporate GHGs into State permitting programs also runs afoul of procedural requirements. Section110 of the Clean Air Act “allows at least 18 months after proper adoption of new SIP expectations before requiring their implementation by the States.” In addition, Section 166 allows States 21 months to submit a plan revision following an EPA rulemaking calling for the addition of new pollutants in the PSD program. “EPA, of course, has undertaken no such rulemaking, nor allowed any time for each State to respond.” Indeed, one of the rules EPA recently proposed to bypass the normal SIP revision process would “give States perhaps three weeks in December to respond to a call for revisions to their SIPs, or face a construction ban on January 2, 2011.”

A Stay Would Allow for Rational Policy Development

The House passed a cap-and-trade bill in June 2009, but in 2010 cap-and-trade died in the Senate. Senators mounted an unsuccessful effort to overturn EPA’s Endangerment Rule, but all 41 Republicans and six Democrats voted for the resolution of disapproval. “The 111th Congress evidently will adjourn unable to either ratify the current state of affairs or change it, but the 112th may be rather more willing to announce an opinion on behalf of the electorate. A stay would allow for the possibility that Congress finally will state its intentions to regulate GHGs under the Clean Air Act, or not, so that this Court will not have to speak for it.” ‘Nuff said.

** The Clean Air Act prescribes separate and tougher permitting requirements for major sources of toxic air pollutants and criteria air pollutants in areas failing to meet national ambient air quality standards.

Canada’s Green Energy and Jobs Programs Butt Up Against WTO Rules, says Japan

by Fran Smith on September 22, 2010 · 2 comments

in Energy, Environment, Global Warming, International, Trade

Do green energy and green jobs mandates run counter to World Trade Organization rules?  Japan says “yes” in relation to Canada’s program for renewable energy generation and green jobs in Ontario. Japan is complaining to the WTO that Canadian measures that mandate domestic content requirements for renewable energy generation equipment are inconsistent with WTO rules because they discriminate against equipment produced outside of Ontario and also represent a subsidy prohibited by the WTO. The country has asked the WTO for a formal consultation with Canada on the issues it raises in its September 13, 2010 filing. Consultations are often the first step in trying to resolve an issue before a country opens an official case with the WTO’s dispute settlement body.

Primarily Japan’s complaint hits Canada’s domestic content requirements in its “feed-in tariff” (FIT) program for Ontario, which requires that the renewable energy equipment, such as solar panels, wind turbines, biomass, and waterpower generation equipment, be produced in Ontario in whole or in part. (Feed-in tariffs are renewable energy payments that electric grid utilities obligate themselves to pay to purchase electricity generated from renewable sources.)  Under the program guaranteed prices for renewable energy electricity production are provided through long-term contracts.

According to a provincial government backgrounder on FIT, the domestic content requirements are intended to support “new green jobs in Ontario”:

Domestic content requirements for both FIT and microFIT projects are intended to help support the creation of 50,000 new green jobs in Ontario. MicroFIT projects will help create new local businesses and green jobs as demand grows for technologies such as solar panels, wind turbines, biomass and waterpower generation equipment, and for Ontarians who can design, build, install, operate and maintain these technologies.

And the domestic content requirements can be very specific (and somewhat ridiculous).   Here, for instance, is the one for silicon ingots and wafers:

Silicon ingots and wafer, where silicon ingots have been cast in Ontario, and wafers have been cut from the castings by a saw in Ontario.

From my quick review of the Canadian program, Japan seems to have a real cause for its complaint. Other countries looking to follow Canada’s example for green jobs creation should be wary about including their own protectionist measures.

H/T/ Julie Walsh

Many Free Checking Accounts Disappearing Due to Dodd-Frank Financial “Reform” Law

by Hans Bader on September 22, 2010

in Economy, Legal, Politics as Usual, Regulation, Sanctimony, Zeitgeist

The so-called financial “reform” bill that passed Congress — the Dodd-Frank Act — is wiping out many free checking accounts, since many banks can’t afford its red tape unless they either charge a monthly fee, or require a minimum balance of well over $1,000.

Ted Frank’s bank is now charging him a $15 monthly fee and $0.50 per check on his formerly free checking account, thanks to the consumer “protection” red tape in the Dodd-Frank Act, which was recently signed into law by the president.

Earlier, the same thing happened with credit cards, where a law passed by Congress in 2009 had the effect of reviving annual fees and wiping out many cash-back and rewards programs.  Congress passed a law called the CARD Act of 2009 (Credit Card Accountability Responsibility and Disclosure Act) that resulted in some of my wife’s previously-free credit cards charging her an annual fee, or chopping her rebates on purchases (she canceled those cards, and used other cards instead; but some cardholders don’t have other cards without annual fees).  Many, but not all, credit cards have reinstated annual fees or canceled rebates and rewards programs thanks to the CARD Act.  The law effectively forces responsible people to subsidize irresponsible people.  Passed in the name of consumer protection, it actually ripped off many consumers.

Unfair ‘Paycheck Fairness Act’ Shafts Workers With Hazardous Jobs

by Hans Bader on September 22, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Labor, Legal, Politics as Usual, Regulation, Sanctimony, Zeitgeist

We wrote earlier about the Paycheck Fairness Act, a bill of Orwellian deception that would result in employees unfairly receiving equal pay for unequal work.  It would force some employers to pay employees with dangerous or unpleasant jobs as little as employees with safe and pleasant jobs — as long as the different jobs have different gender breakdowns (that is, if one job is performed mostly by men, and the other job mostly by women — even if the employer does not discriminate in hiring at all, and eagerly hires qualified applicants of both sexes).

Now, it turns out that a lobbyist pushing this disturbing bill met with Senate Majority Leader Harry Reid on September 21, suggesting that the bill may be brought to the Senate floor in the next few days — and that there may be a major push to pass it.  (The Obama administration misguidedly supports the bill; the administration often gets the most basic facts wrong about discrimination and Supreme Court rulings dealing with sex discrimination.)

Labor economist Diana Furchtgott-Roth explains why this bill is a bad idea in The Washington Post.

Study: Regulations Cost $1.75 Trillion in 2008

by Ryan Young on September 21, 2010

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

The Small Business Administration released a new study today. “The Impact of Regulatory Costs on Small Firms,” by Nicole V. Crain and W. Mark Crain, updates previous studies of the same title from 2005 and 2001.

From the introduction (p.6):

The findings in this report indicate that in 2008, U.S. federal government regulations cost an estimated $1.75 trillion, an amount equal to 14 percent of U.S. national income. When combined with U.S. federal tax receipts, which equaled 21 percent of national income in 2008, these two costs of federal government programs in 2008 consumed 35 percent of national income.

And keep in mind that those numbers are for 2008. With government spending now closer to 24 percent of GDP, the federal government’s current share of the economy is around 38 percent.

State and local spending and regulations, of course, cost extra.

America: Land of the Free?

by Robert de l’Escaille on September 21, 2010

in Culture, Health and Illness, Legal, Nanny State, Personal Liberty, Politics as Usual, Regulation, Zeitgeist

Prior to arriving in America I imagined this country as being the land of the free. But somehow, it turned out this was a wrongly held reputation. Social restrictions and legal pressures have transformed the free Wild West into a regulated state. It seems like good things are banned. How can limiting alcohol consumption to those at least 21 years old protect teenagers when we know that in Europe alcohol related accidents are far more frequent in countries where the drinking age limit is high and strictly enforced? Where does this American rule come from?

Everyone has heard of bootleggers Al Capone and Lucky Luciano — big faces during the Prohibition period. Both built their empires on the prohibition of alcohol. Prohibition lasted for 13 years, bringing an era of gangsters and mob wars, underground activities and crime. It is widely acknowledged that alcohol is a part of Western societies, and that societies’ efforts to regulate its consumption are futile and disastrous.

Coming out of the Prohibition America’s mechanism of “laboratory states” was alcohol regulation. The concept of laboratory states is fundamental to the good functioning of the United States. It implies that every state can test-run a regulation in its own way (e.g., taxes, speed limits, etc.) in order to see what works best. In 1984, this privilege was restrained through the National Minimum Drinking Age Act. The law put restrictions on highway funding set up under the Federal Aid Highway Act (which created the Interstate system in 1956). The states could enjoy these funds if they adopted specific laws on alcohol sale and consumption.

I still wonder whether the 21-year restriction is a simple act of Puritanism or misplaced good intentions. I can understand the point made that adults want to prevent teenagers from falling for the “vices” of alcohol. We all know that there are many problems linked to abusive alcohol consumption, such as binge drinking, alcoholism, accidents, violence, and many others. But having the minimum drinking age set at 21 will not solve them. On the contrary, it will push youngsters into illegal paths.

A person that has broken a law and enjoyed it is very likely to do it again. Now, if a teenager buys alcohol with a fake ID or gets someone of age to buy it for him, what stops him from taking any further illegal action? Simply: laws of this type essentially condition people from a young age to disrespect the law. Isn’t prevention or limitation a way to awaken curiosity? Being told not to do something can in fact drive teenagers, an already high-risk demographic, to engage in more risky behavior. Positioning alcohol as a social “forbidden fruit” will merely get more minors to drink in secret – without the benefit of having parents around to monitor behavior.

Insurers Drop Children’s Health Insurance Due to Obamacare

by Hans Bader on September 21, 2010

in Economy, Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

Insurers have stopped writing children-only health insurance policies due to mandates in Obamacare that ignored basic principles of economics.  So if you’ve got coverage only for you, but not for your kid, your kid may be out of luck.  Suffer the little children!

Earlier, insurers sought and obtained rate increases of up to 20 percent in Connecticut based on mandates in Obamacare that increased their costs.

Major employers like AT&T, Caterpillar, John Deere, and Verizon have already reported massive cost increases due to the new health care law.

These cost increases contradict the president’s claims that Obamacare would cut healthcare costs and are just a few of his many broken promises.

Distracted Driving Kills, But What About Dysfunctional Policy?

by Marc Scribner on September 21, 2010

in Mobility, Nanny State, Personal Liberty, Politics as Usual, Regulation, Zeitgeist

The Obama administration, having succeeded in bringing about economic recovery and having nation-built a democratic Afghanistan, has set its sights on another pressing issue: driving while distracted. Today in Washington, the Department of Transportation is holding its second annual Distracted Driving Summit. This meeting of the minds brings together finger-waving bureaucrats and activists from across the country to devise strategies on how to make another molehill into a mountain. They even have a website, Distraction.gov, which instructs lowly citizen visitors to “Become a fan of [Transportation] Secretary [Ray] LaHood [on Facebook]” (which, of course, I did).

LaHood is currently waging a war on “texting while driving,” as many cities and states continue to ban holding phones behind the wheel. But why the selective hysteria over texting and hand-held cell phones? Research suggests that drivers using hands-free devices are no safer than those using hand-held devices, yet I have heard no calls to prohibit hands-free devices — not to mention fiddling with the stereo or yelling at your kids in the backseat or listening to NPR’s awful cringe-fest “Wait Wait…Don’t Tell Me!,” which are also potentially deadly distractions.

These laws, which have little effect on actual human behavior (particularly among high-risk demographics) given that they are so difficult to enforce, have little basis in reality. Despite the fact that many drivers ignore these laws, distracted driving deaths fell this past year. LaHood and his cronies have no doubt taken credit, despite there being no evidence to support their shameless high-fiving.

The Independent Institute’s transportation guru Gabriel Roth (editor of the indispensable volume on creative, market-based transportation solutions Street Smart) suggests that focusing on distracted driving is a way for transportation officials to avoid addressing real problems because, well, they are the problem.

CEI has long noted that, as they continue to be ratcheted up, Corporate Average Fuel Economy (CAFE) standards will continue to kill thousands of drivers by putting them into smaller, lighter, less-safe cars. Yet because The Environment is spared a trivial amount of damage, that’s okay. A government monopoly over the roads preempts the market-based solution — insurance testing and certification, just like they often do in the shipping industry — with inefficient, expensive, poorly enforced government mandates. Yet this is okay because it keeps politicians and bureaucrats such as LaHood perpetually employed.

Rather than holding summits and engineering new nanny state policies, regulators and their cheerleaders should focus on rolling back deadly and perverse government mandates.

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