This means one of two things: either grandmothers with snow globes in their carry-ons are the biggest terrorist threat facing the country, or the TSA is doing something wrong.

The way to prevent terrorism is to make terrorism difficult. Banning snow globes doesn’t make terrorism any more difficult.

Yes, larger snow globes probably violate the TSA’s three-ounce limit for liquids. But they are not bombs. They are, in fact, snow globes.

In 2005, a paltry 7,218 medical and health-care professionals earned H-1B visas, while many were denied. A cap on the number of doctors and medical professionals entering the U.S. discourages health-care access and raises costs. The H-1B visa cap should be removed along with other barriers to the migration of foreign-born doctors and medical professionals. Training more American doctors is important for tomorrow, but looking abroad can help lower medical costs and improve access today.

Also worth noting is the succinct letter following Alex’s by Harry Deloidian:

Convert all law schools to medical schools. That would solve more than one problem.

Car companies are responding to the concern by voluntarily outfitting their hybrid models with fake digital vrooms so pedestrians can hear them as well as conventional cars. There’s a reason car companies were so quick to respond to their customer’s wishes: it’s good for business. One more safety feature is one more selling point to entice potential customers.

Regulators, behind the curve as usual, have introduced the Pedestrian Safety Enhancement Act of 2009. If passed, it would make fake vrooms a federal matter. This policy of making mandatory what companies are doing anyway probably originated with the Department of Redundancy Department.

Yet the Obama administration wants airline security and Amtrak to become more like Washington’s inefficient Metro, by increasing the power of unions and making it harder to get rid of problem employees.

As Radley Balko notes at Reason magazine’s Web site,

“Washington, D.C.’s Metropolitan Area Transit Authority fired Metro bus driver Carla A. Proctor this week after Proctor struck a jogger earlier this month. The jogger was just released from intensive care at a local hospital.

It’s good to know nearly killing someone was—finally—enough to get Proctor out from behind the wheel of a public bus. Her record to that point:

• Proctor had five off-the-job traffic tickets in January alone, including driving an unregistered, unlicensed vehicle.

• In 2003, Proctor got off a bus she had been driving to check a sticky door without first assuring the bus was parked. The bus rolled down a hill without her, damaging eight vehicles, including the bus. Metro paid out $27,000 in damages.

• Also in 2003, Proctor turned into oncoming traffic, at which point her car was struck by another vehicle. Proctor’s car went flying into a fast food restaurant, injuring two women.

• In 2004, Proctor crashed another Metro bus, this time into a parked vehicle, injuring a 72-year-old pasenger.

Given the impressive record of the Metro workers union in helping scofflaws avoid discipline, it wouldn’t be all that surprising to see Proctor back on the job.”

Rather than try to improve or privatize metro, officials in the D.C. government have tried to restrict the growth of competing private buses.

A left-wing union is about to unionize the Transportation Security Administration, which is in charge of airline security. Thanks to the Obama administration, the union will now be able to demand job rules that make it harder to get rid of lazy, incompetent, and careless employees.

The Washington Times reports that the unions want to get rid of basic skills tests for employees, and to destroy records of poor job performance.  The unions have “urged TSA Acting Administrator Gale D. Rossides to suspend use of the agency’s skills test for screeners. Failure rates this year reached more than 50 percent and were as high as 80 percent at some airports. The skills test shows that large numbers of airport screeners are failing at jobs that are intrinsic to keeping our airports and commercial airplanes secure, and the union’s response is to get rid of the test. The government employees union is also pushing to have failed screeners’ records cleared because pay and bonuses are tied to performance and unsatisfactory employee records prevent those who were fired for poor performance from being reinstated. So much for worker accountability.”

In the aftermath of 9/11, a foolish Congress shifted airline security screening to the inept Transportation Security Administration (TSA), which fails to detect explosive ingredients and fake bombs, in performance tests.   Now, the Obama administration is making matters even worse by undermining both airline security and railroad safety.

A study found that the TSA is more than twice as likely to fail to detect a bomb as the private security firms it replaced. And TSA’s failure rate is three or four times as high as the few remaining private firms still allowed to handle airline security.

In tests, TSA failed to detect fake bombs 60 percent of the time at Chicago’s O’Hare airport, and 75 percent of the time in Los Angeles. Yet the Obama administration plans to make TSA even more bureaucratic by introducing collective bargaining, which will make it even harder to get rid of lazy employees and demand high performance.

Rather than having the federal government take over airline security screening, the Feds should have stepped up policing and monitoring of the private companies that performed it, to weed out bad companies and promote the best.

Bush initially objected to congressional demands for a federal takeover, but then knuckled under for political reasons.  Ironically, even in European countries governed by socialist parties, airline security and screening is generally in the hands of private companies, because private companies are usually more diligent and innovative and less bureaucratic and inefficient.

The Obama administration is also undermining the security of railroad passengers by gutting an expert, highly-rated, anti-terror agency at Amtrak, which Amtrak’s unions hate, despite its efficiency, because it is not unionized.  Political cronyism is also playing a role in the gutting of Amtrak’s Office of Security Strategy and Special Operations (OSSSO).  Ultimately, OSSSO’s “highly-specialized officers” will likely be replaced by unionized employees with ”alarmingly low pass rates” in “basic” classes.

This cannot but help remind me of the happy conclusion of CEI’s dinner video this year, “It’s a Wonderful Institute.” To paraphrase: The money was in the chief of staff’s proverbial basement!

I’ve used car services and have found them a good solution for getting around Brooklyn quickly, but having to call for a car and wait for it is nowhere near as fast or convenient as simply flagging down a passing taxi. Gypsy cabs face a competitive disadvantage in that they have to operate more discreetly than do licensed cabs, which can pick up passengers at high-traffic points like hotels, airports, and train stations. This all makes a New York taxicab medallion highly desirable, but acquiring use of one can be extremely expensive.

Taxicab medallion restrictions result in artificially high entry costs for new drivers and lower quality service for passengers. Yet, two District of Columbia city council members, Jim Graham and Muriel Bowser, are trying to impose a similar system in the nation’s capital. The idiocy of such a proposal almost defies belief. The only sensible explanation for it would be that cab drivers who face less competition would support medallion proponents. But yesterday, the cabbies said, “No, thanks.” The Washington Post reports:

About 1,000 taxi drivers went on strike Tuesday in response to a D.C. Council bill aimed at establishing a taxi medallion system or a taxi vehicle certificate system, organizers said. If passed, cabdrivers fear, the bill could substantially increase the cost of operating a taxi in the District.

And for what? The Washington Examiner reports:

“The problem we’re facing right now is the increasing number of people trying to enter this system,” said D.C. Councilman Jim Graham, D-Ward 1, who chairs the Public Works and Transportation Committee.

I’ve long been accustomed to hear politicians utter economically illiterate statements, but to describe supply arising to meet demand for a service as a “problem” is astounding even by that sorry standard. As Reason’s Ron Bailey comments:

Just exactly why would DC residents want to have fewer taxis? If more drivers are entering the market doesn’t that suggest strongly that supply has not yet equalled demand?

That’s a good question; I’d like to hear Graham’s and Bowser’s answers. The costs of their proposed scheme would be huge indeed. According to the Examiner:

Medallions in some major cities cost tens of thousands of dollars, and can be auctioned off for hundreds of thousands if there’s a limit on the number of cab drivers in the area. Because of the moratorium on the number of cabs in New York City, medallions there sell for more than half of a million dollars.

In fact, New York taxi medallion are so valuable, that, as CEI’s Eli Lehrer has pointed out, they are often used as collateral for loans. Leave it government to give value to something that should be completely unnecessary.

 “Obama challenges Wall Street to support his regulations,” reads the headline of a story from McClatchy Newspapers on Obama’s Monday speech at Federal Hall, opposite the New York Stock Exchange. In the address, Obama asked the audience of Wall Street traders ”to embrace serious financial reform, not fight it.”

But “embracing” Obama’s planned regulation may be easier for the Wall Street audience than meets the eye. This is beause a closer look at new rules Obama is proposing shows that the bulk of them do not go after the Wall Street culprits, but instead Main Street entrepreneurs that had nothing to do with the crisis.

The regulatory “white paper” issued by the Obama administration in June would shower mounds of red tape around job-creating venture capital firms, discount brokerages and the small investors who use them, and the limited banking operations of everyday businesses from discounter Target Stores to motorcycle maker Harley-Davidson.
 
Meanwhile, many of the flawed government policies at the root of the crisis from government-sponsored enterprises Fannie Mae and Freddie Mac to mark-to-market accounting mandates still have not been fully addressed. He should go after these reforms rather than putting in rules that would burden legitimate investors and entrepreneurs.
 
Among the mandates in Obama’s regulatory reform that would hit Main Street are.
 
1.    The forcing of businesses such as Target and Harley-Davidson to sell off their limited banking operations, or industrial loan corporations
 
For decades, nonbank businesses have been able to set up limited banking operations to issue credit cards and make loans to consumers. These operations, called industrial loan corporations (ILCs) are subject to most of the same as well as some more stringent rules for safety and soundness. Some of the most respected businesses, including Target Stores, Harley-Davidson and Toyota Motor, have set up these ILCs to help lower costs for consumers. Even House Financial Services Chairman Barney Frank recently told Bloomberg News that these weren’t a factor at all in the financial crisis — rather the big banking conglomerates were.

Yet Obama’s plan not only continues the unwise moratoriums on new ILCs it would force the existing one to be dissolved or sold off. As Coleman Drake and I write in the Washington Times, such a drastic action could have a dramatic effect in reducing access to credit and jobs in a still fragile economy.
 
2.    Putting an “investment adviser” fiduciary duty on discount brokerages that serve self-directed investors.
 
The Obama plan would put a “fiduciary liability” on many brokerage firms equivalent to the current standard on investment advisers. Many brokers would have to guarantee that investments are “suitable” for certain types of investors and be sued if they are not. But the hallmark of many discount brokers such as Fidelity and Charles Schwab Corp is that many of its customers don’t really want investment advice. They are self-directed investors make their own decision what to buy and sell, and then trade and click on their laptops.
 
Yet the fiduciary standard of care in Obama’s plan could apply even to advice incidental to trading – such as discount brokerage call centers. Charles R. Schwab, the founder of the firm that bears his names and has taken on old-line brokerages to provide discounted trading to individual investors, warned in a Wall Street Journal op-ed that the logical outcome of this mandate “would be that individual investors would be constrained to a small set of plain-vanilla investments – Treasuries for all – or would be forced to pay us a fee to manage their account.”
 
This rule would also miss the mark in terms of preventing fraud. It does not go after those who clearly offer investment advice. Bernie Madoff was a registered investment adviser, yet he passed SEC examinations with flying colors. This could also have the unintended effect of investors doing less due diligence on their investments, which could leave them at greater risk.
 
3.    Venture capital firms could be subject to mounds of regulation for the “systemic risk” they have not been shown to contribute to:
 
Under broad regulations proposed for hedge funds, other investment pools for sophisticated investors could be burdened with red tape. Among these are venture capital firms of the type that gave the crucial seed money to Apple, Google and other Silicon Valley startups that are now among today top tech firms. And these pose less risk than many other investment vehicles.

As James Freeman has written in the Wall Street Journal, “Even if one wishes to be paranoid about systemic risks, it’s hard to imagine how tiny tech companies could be ground zero in a future credit bubble. Fannie Mae and Freddie Mac don’t provide cheap financing to VCs.”
 
Conclusion: Wall Street deserves a lot of blame, but so do outdated big-government policies from Washington that were going strong despite the myth of the era of deregulation (I’ve outlined the main factors in this article that ran in Stocks, Futures & Options magazine.).

As CEI President Fred Smith has long urged, President Obama and Congress should sell off and break up the government-backed Fannie and Freddie, which new research shows were not only buying subprime mortgages directly but labeling other subprime mortgages as prime.

They should continue the progress in reforming mark-to-market accounting, which exacerbated the crisis by forcing financial firms to mark down even performing loans and lose capital to lend with. The small mark-to-market reforms put in place in April of this year have helped bring stability back to the banking sector, but the quasi-private Financial Accounting Standards is threatening to re-impose the flawed standard, something lawmakers need to stop.

Also, policymakers should pare back the costly Sarbanes-Oxley Act of 2002, the accounting mandates of which did virtually nothing to prevent the financial crisis and are now preventing smaller firms from going public to get the financing they need to build new businesses and new jobs.
 
Policymakers should observe the anniversary of the meltdown on Wall Street by pursuing pro-growth policies that will lead to a rebirth of entrepreneurship on all American streets.

1: Make better tires for less money. Give consumers a reason to buy American tires rather than Chinese. Compete, in other words.

2: Don’t compete. Too much hard work. Instead, persuade some politicians to place a 35 percent protective tariff on competitors’ tires. Price them out of the market. Then keep making the same old tires that people don’t want. If the tariff is large enough, you may even be able to raise your prices, even without raising quality.

This is a choice between raising the bar and lowering it. Unfortunately, U.S. tire firms and allied politicians have chosen to lower it. China, by putting up its own barriers to retaliate, is lowering the bar even further.

The really audacious part is that tire tariff supporters think they are really helping the economy. Raising that bar. Saving American jobs!

There is something very unsettling about the notion that an American job is intrinsically more valuable than a Chinese job. We are all human beings, are we not?

This is an ugly, ugly mindset. And it is one that politicians and tire companies have explicitly adopted. The burden is on them to explain why they think people who live in one country are more deserving of economic opportunity than people who live in another.

Now the Obama Administration is making matters even worse by undermining both airline security and railroad safety. A study found that the TSA is more than twice as likely to fail to detect a bomb as the private security firms it replaced. And TSA’s failure rate is three or four times as high as the few remaining private firms still allowed to handle airline security.

In tests, TSA failed to detect fake bombs 60 percent of the time at Chicago’s O’Hare airport, and 75 percent of the time in Los Angeles. Yet the Obama administration plans to make TSA even more bureaucratic by introducing collective bargaining, which will make it even harder to get rid of ineffective employees.

Rather than take over airline security screening, the federal government should have stepped up testing of the private companies that performed it, to weed out bad companies. President Bush initially objected to Congressional demands for a federal takeover, but knuckled under for political reasons.  Ironically, even in European countries run by Socialist parties, airline security and screening is generally in the hands of private companies, which are are usually more diligent, innovative, and efficient, as well as less bureaucratic.

The Obama administration is also undermining the security of railroad passengers by gutting an expert, highly-rated, anti-terror agency at Amtrak, which Amtrak’s unions hate, because it is not unionized.  Political cronyism also appears to be playing a role in the gutting of Amtrak’s Office of Security Strategy and Special Operations (OSSSO). Ultimately, OSSSO’s “highly-specialized officers” will likely be replaced by unionized employees with ”alarmingly low pass rates” in “basic” classes.

Feehery’s line of thinking is that the office deserves respect. Holding one’s tongue is a matter of decorum. “The president is the commander-in-chief, the leader of the country, and in many unspoken ways treated as a king.”

Technically, the president is commander-in-chief of the armed forces, and of nothing else. The rest of his job consists of humbly executing the laws given him by the Constitution and the legislature. That’s why it’s called the executive branch.

Feehery, a partisan Republican, here manages to out-conservative Edmund Burke. Royal rhetoric pervades his piece – evidence of how far the presidency has strayed from its intended purpose. The cult of the presidency endures.

Don Boudreaux’s approach to the presidency is more realistic, if less romantic:

[T]he notion that the U.S. presidency is lofty or respectable in any ethically significant sense is ludicrous. As Saul Bellow said about politicians, “they’re a bunch of yo-yos. The presidency is now a cross between a popularity contest and a high school debate, with an encyclopedia of clichés the first prize.”

Hence the real reason to let the president have his say without being heckling him: politicians make themselves look bad far more effectively than any heckler could. He doesn’t need the help. Just take his ideas seriously:

-We can save money by spending $900,000,000,000.

-We can contain costs by isolating people from the costs they incur.

-The Medicare/Medicaid model works. Expand it.

Presidents are unremarkable creatures. Borne of much talent for campaigning and little for governing, more love for power than for principle, and the unyielding belief that they know best, presidents have the worst kind of hubris. This is perhaps their only regal trait.

President Bush thought he could win two simultaneous land wars in Asia, and use military might to build a new nation in Iraq. Hubris.

President Obama thinks he can run the auto, financial, and health care industries at the same time, all while controlling global climate patterns. Hubris.

Feehery is right that President Obama should not have been heckled. If not for the sheer harm his office causes, it would not merit the attention.

But for a brief, shining moment, in the mid to late 1970s, Kennedy viewed smaller government as the most compassionate answer in one area of economic life: transportation. Kennedy was the prime mover in Congress behind the airline and trucking deregulation bills that were signed by President Jimmy Carter. He saw the impact of regulation in these industries as protecting entrenched companies from competition, and decided that the liberal, compassionate thing to do was to deregulate to give consumers lower prices and more choices. As the news stories search for all the ways Kennedy’s impact is felt by everyday Americans, one obvious impact is reflected in this headline today on AOL news, “Fall Airfares Starting at $59.”

From the 1930s to the 1970s, the federal government treated interstate airlines as a public utility, setting routes, schedules and fares through the Civil Aeronautics Board. The incumbent carriers had learned to like the system because they were protected from competition on their routes, and the price-setting operated as more of a price floor than a price ceiling. Low-cost carrier Southwest Airlines, which is offering the aforementioned $59 one-way fare and now dominates the airline industry, was confined to intrastate flights within Texas – where the federal government couldn’t reach – for the first eight years after its founding in 1971. (See this tribute to Kennedy today in Southwest Airlines’ blog.)

Some folks may have fond memories of the linen napkins and china plates on airlines in the “good old days” before deregulation when airlines aggressively competed on service because they couldn’t do so on price. But millions of middle-class families and small businesses were locked out of flying because of the high fares and limited service.

Think tanks, academics, and even consumer advocate Ralph Nader began to argue in the 1970s that airline deregulation was a good idea. In addition to problem of high consumer prices, deregulation was also advocated out of a kind of “systemic risk” concern. Railroads such as Penn Central were going bust and being bailed out, and observers feared that airlines would suffer the same fate and cause the same drain on taxpayers if they were not allowed to become competitive and self-sustaining.

But the aviation industry fought against repealing these controls that had long protected it from real competition (And, contrary to popular narrative, this instance of businesses championing regulation out of self-interested motives is not unique. Read Washington Examiner columnist and former CEI Warren T. Brookes Fellow Timothy P. Carney’s brilliant book, The Big Ripoff: How Big Business and Big Government Steal Your Money.). There were other businesses that supported deregulation, notably retailers like Sears that correctly saw that airline and trucking deregulation – which would lower their shipping rates – were part of a package. But the airlines fought hard and had a staunch ally in fighting deregulation in Sen. Howard Cannon (D-Nev.), chairman of the powerful Subcommittee on Aviation of the Senate Commerce Committee.

But deregulation advocates found an ally of their own in Kennedy, who, with the help of young policy aides like now-Supreme Court Justice Stephen Breyer, began to see the egalitarian case for deregulation. Beginning in 1975, Kennedy held hearings on airline and trucking deregulation as chairman of the Senate Judiciary Committee’s Subcommittee on Administrative Practice and Procedure and later the Subcommittee on Antitrust and Monopoly. Kennedy’s opening statement for one of these hearings sounds positively CEI-esque on the detriments of regulation and the benefits of the free market. The senator said, “Regulators all too often encourage or approve unreasonably high prices, inadequate service, and anti-competitive behavior.  The cost of this regulation is always passed on to the consumer.  And that cost is astronomical.”

Scholars Martha Derthick and Paul J. Quirk write in their book The Politics of Deregulation (published by the Brooking Institution – read excerpts here): “Kennedy’s lack of jurisdiction over regulatory legislation may have tended to limit the effect of his activities, but if so this limitation was amply offset by his ability to attract the press and exert pressure on the Senate subcommittees that did have jurisdiction.” The author write that “with Kennedy showing so much interest in pro-competitive regulatory reform, it became very hard for [Cannon] to show none.”

Cannon would hold his own hearings, and in the end, became a co-sponsor of Kennedy’s Airline Deregulation Act of 1978 that passed Congress and was signed by Carter. Kennedy would go on push the Motor Carrier Act of 1980 that deregulated trucking rates and was also signed by Carter. Kennedy would note these deregulatory accomplishments in his base-rousing “Dream Shall Never Die” speech to the Democratic National Convention in 1980, delivered just after he lost the nomination fight to Carter and considered the greatest speech of his career. “While others talked of free enterprise, it was the Democratic Party that acted and we ended excessive regulation in the airline and trucking industry, and we restored competition to the marketplace,” Kennedy intoned. “And I take some satisfaction that this deregulation legislation that I sponsored and passed in the Congress of the United States.”

Kennedy argued in the speech, “The demand of our people in 1980 is not for smaller government or bigger government but for better government.” Deregulation in the airline and trucking sectors, he implied, was an example of “better government.” Open Market bloggers would argue that smaller government is almost always better government, but Kennedy’s pragmatic case for this specific deregulation holds lesson for the regulatory debates of today. As much as deregulation is almost a dirty word and wrongly blamed for the financial crisis, practically no one would really want to go back to the bad old days when Southwest could only offer its low fares in the state of Texas.

CEI President Fred L. Smith Jr. and scholar Braden Cox point out in an entry of The Concise Encyclopedia of Economics that fares on flights have fallen 45 percent in inflation-adjusted terms since airlines were deregulated in 1978. They also cite research by scholars Robert Crandall and Jerry Ellig finding that even when figures are adjusted for changes in quality and amenities, deregulation still saves $19.4 billion per year in passenger costs, and these savings have been passed on to 80 percent of passengers.

The lessons of airline deregulation’s benefits to the common man in terms of lower prices and more choices apply even to issue on which Kennedy was on the other side. Health care consumers would benefit from competition among insurers across state lines, and a federal government bureaucracy that set rates and mandated what insurance companies could and could not cover – even if there were no “public option” – would likely be as bad for consumers as the old Civil Aeronautics Board that Kennedy fought to depower.

And as Smith and Cox pointed out, we should also fight to finish Kennedy’s job of air travel deregulation by allowing foreign carriers to compete on domestic routes and through privatization of airports and air traffic control, which other countries, including ironically Canada, have gone further than the U.S. in achieving. Completing this liberalization would help resolve lingering problems such as flight delays and passengers stuck on the tarmac for an inordinate amount of time, as the private sector could modernize aviation facilities just as the airline industry has adjusted.

In tribute to Senator Kennedy, Open Market urges all legislators to look at his accomplishments in airline and trucking deregulation, and be Kennedy-esque in applying his insights on these issues to the economy at large.

Disclosure: Like million of Americans, I happily fly Southwest Airlines, and I also own shares of its stock.

Don’t forget to list your current residential address when applying for a knowledge test.

As I noted here in an earlier post, “The car buying site Edmunds.com compared car sales under Cash for Clunkers with typical car sales over a similar period as that of the program’s existence, and found a net increase of only 50,000 cars — at a cost of $20,000 each.”

For more on Cash for Clunkers, see here.

Tawnya is one of 24 people applying for an exemption from the federal ban. Let us wish them all the best of luck as they petition the government for the right to earn a living.

I will be watching for and examining details that are released. Whatever deal is reached, the Obama administration’s conduct in the case, disregarding both privacy interests and the sovereignty of other nations, has been deplorable. It has set a precedent that could endanger U.S. competitiveness as well as civil liberties throughout the world.

As Fred Smith and I had explained in a Washington Times op-ed, after UBS, with the Swiss government’s full cooperation, turned over the names of 250 customers suspected of violating U.S. tax laws, the U.S. government turned around and asked for a whopping 52,000 names. The Swiss government objected to such a fishing expedition as violating the nation’s privacy laws. 

Switzerland rightly argued that such a large volume of names could not be justified by probable cause or “reasonable suspicion,” a condition of the tax treaty Switzerland had negotiated with the U.S. In addition, such a fishing expedition goes against the spirit of the Fourth Amendment of the U.S Constitution, which protects Americans from “unreasonable searches.” A forensic analysis commissioned by UBS from Alix Partners (scroll down the right side of this page to open the PDF) found that many international students, diplomats, and Americans who work in Switzerland – and banked in Switzerland by necessity — could have been swept up in this dragnet.

It’s far from clear if the shoe were on the other foot, and a foreign country were to demand the names of 52,000 customers of an American bank, the U.S. would have complied. The United States Model Income Tax Convention of 2006, used as a template by the U.S. to negotiate tax treaties, states that no country should be required to honor “a request in which a Contracting State simply asked for information regarding all bank accounts maintained by residents of that Contracting State in the other Contracting State, or even all accounts maintained by its residents with respect to a particular bank.”

Previous reports had indicated that UBS would surrender 5,000 names, a large amount but still less than a tenth of what the U.S. had originally called for. It will be important to scrutinize if there is indeed “reasonable suspicion” for however large the volume of names that are released. American civil liberties advocates on whatever side of the political fence should be alarmed by the U.S. government’s sweeping disregard of privacy interests in its demands to the Swiss, and should encourage their home country to never treat privacy and another country’s sovereignty so cavalierly again.

Below is a photo of a wreck in Jefferson Parish, LA (near New Orleans ) between two
trucks and a Smart Car. Think Il (sic) pass on the Smart Car.

As with any email circular, especially ones with egregious spelling errors, you should always take it with a pinch of salt.  The goldmine that is snopes.com says the following:

According to a reader who relayed information to us from the Jefferson Parish Sherriff’s Office, the accident pictured above involved a Ford Escape not (as is commonly reported) a Smart Car.  The impact did not occure dead center as apparently shown in the photograph; it was offset to the right, and thus the driver’s side was not nearly as heavily damaged.  the driver of the Ford survived the crash and has since been released from the hospital.

So does this mean that a Smart car is safe and you should be happy if your son or daughter wanted to drive one?  Up to a point:

Ouch.

Here are my previous posts in this series:

• Policy Peril: Looking for antidote to An Inconvenient Truth? Your search is over.
• Policy Peril Segment 1: Heat Waves
• Policy Peril Segment 2: Air Pollution
• Policy Peril Segment 3: Hurricanes
• Policy Peril Segment 4: Sea-Level Rise
• Policy Peril Segment 5: Is the Science Debate Over?
• Policy Peril Segment 6: Cap and Trade

To watch today’s film excerpt, click here. To watch the entire film, click here.

The text of today’s film clip immediately follows. It includes footnotes to additional commentary and supporting information.

Narrator: If stopping new coal is the global warming movement’s top priority, a close second is jump-starting a ‘beyond petroleum’ transport system. They propose to do this by tightening new-car fuel economy standards. Why?

A car that gets more miles to the gallon emits less CO2 per mile [1]. But the federal fuel economy program, also known as CAFE, has serious downsides.

Sam Kazman (General Counsel, Competitive Enterprise Institute): Now there are lots of problems with fuel economy mandates. One thing, they raise new car prices. [2] Secondly, they restrict consumer choice. [3] But the worst thing is an effect you never hear their advocates talking about. Namely, fuel economy mandates kill people. [4]

Narrator: Here’s why. Heavier cars provide more mass to absorb collision forces, and bigger cars provide more space between the occupant and the point of impact. [5] Make a car smaller and lighter, and it will go farther on a gallon of gas.

Kazman: But you also make it less safe. According to the National Academy of Sciences, the current CAFE standard by downsizing cars, contributes to about 2,000 fatalities per year. [6]

Narrator: Legislation Congress passed in December 2007  requires a 40% increase in fuel economy by 2020. [7] In 2007, only two out 1,153 vehicle models met the new standards. [8] So expect more downsizing in the years ahead.

Another ‘beyond petroleum’ policy is to require the sale of alternative fuels. In December 2007 Congress also mandated that motor fuel producers sell 36 billion gallons of ethanol a year by 2022, with 15 billion gallons coming from corn kernals. [9] The result, we’re diverting massive quantities of grain from food to auto fuel. This contributes to the surge in global grain prices that is pushing millions of the world’s poorest people to the brink of starvation. [10]

But at least ethanol cuts down on CO2 emissions, right? Actually, no.

Dr. Dennis Avery (Hudson Institute): As we expand the cropland, then we get into the real trouble, because we release the greenhouse gas that’s stored in the soil as carbon. And with corn, we release twice as much gas as we would have released if we burned gasoline in the first place. [11]

[1] A gallon of gasoline (which weighs about 6.3 lbs.) produces 20 lbs. of CO2 when burned. If a car gets more miles to the gallon, it will emit fewer lbs. of CO2 per mile driven. The relationship between fuel economy (mpg) and lbs. CO2/mile is so strict that EPA bases its fuel economy ratings of vehicle models on tests that measure the carbon content of the emissions, principally CO2.

Unsurprisingly, virtually all CO2-reduction options for new motor vehicles are fuel-economy-increasing options. See p. 10 of the National Automobile Dealer Association’s comment on EPA’s reconsideration of California’s request for a waiver to establish greenhouse gas emission standards for new motor vehicles. 

[2] There are basically two ways to increase fuel economy–downsizing (making cars smaller and lighter) and new technology. Typically, advanced technology costs more than conventional technology. The Energy Information Administration, for example, estimates that California’s greenhouse gas/fuel economy standards, which President Obama recently adopted, will increase the average price of a new car by $1,860 in 2016. [Obama's program will also impose heavy burdens on the nearly prostrate U.S. auto industry, as economist Keith Hennessey explains.]

[3] The CAFE program all but killed the market for large station wagons, because automakers could not produce millions of these once popular “family cars” and meet the CAFE standard for their vehicle fleets.

In addition, as a general matter, because fuel economy mandates increase vehicle cost, they inevitably price some consumers out of the market for certain vehicle models, restricting their choices.

Ironically, the federal fuel economy program boost the production and sale of gas-guzzling SUVs. Consumers who might otherwise have purchased big station wagons instead bought large SUVs. Congress regulated SUV fuel economy less stringently because (1) SUVs are built on a light-truck chassis and thus are classified as trucks rather than as passenger cars, and (2) most SUVs traditionally were used for farming and business rather than commuting. Fuel economy standards helped create the boom market for low-mpg SUVs–a classic case of the law of unintended consequences.

[4] Sam debates the issue of whether CAFE kills with an analyst from Natural Resources Defense Council (NRDC) here.

[5] I am always amazed when people with scientific credentials deny the safey implications of regulatory-induced vehicle downsizing. How can they claim that size and weight don’t matter? That’s denying the laws of physics. There’s a reason why boxing matches don’t pit lightweights against heavyweights, or why marathon runners don’t play professional football.

Yes, new technology can improve the crashworthiness of small cars. But, as Sam explains elsewhere, a large car with new technology will still be safer than a small car with new technology. To the extent that CAFE constrains the production and sale of larger, heavier vehicles, it limits auto safety.

[6] Sam refers to a National Academy of Sciences/National Research Council (NRC) study, Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards. See pp. 25-29, especially p. 27. The NRC estimates that in 1993, a typical year, downweighting and downsizing of cars contributed to 1,300 to 2,600 auto fatalities, 13,000 to 26,000 incapacitating injuries, and 97,000 to 195,000 total injuries.  

[7] The so-called Energy Independence and Security Act (EISA). Click here to read the Congressional Research Service’s summary of the EISA provisions.

[8] Prior to investigating, I had assumed there must be at least 30-50 models on the road that met the fuel economy standards mandated by the 2007 Energy Independence and Security Act. But EPA’s fuel economy ratings for model year 2008 reveals that only two out of 1,153 models, the Toyota Prius and Honda Civic Hybrid, met or exceeded the standard (35 mpg for both city and highway driving conditions).

[9] Click here to read the Congressional Research Service’s summary of the EISA provisions.

[10] I provide references here on biofuel policy and world hunger. In May 2008, the International Food Policy Research Institute estimated that biofuel demand accounted for 30% of the increase in world cereal prices during 2007-2008. For further discussion, see Dennis Avery’s October 2008 paper for the Competitive Enterprise Institute. 

[11] Dennis’s CEI paper recaps the literature on CO2 increases from biofuel policy-induced land-use changes, including Searchinger et. al. (2008) and Fargione et al. (2008). Additional reviews of these studies are available on World Climate Report and CO2Science.Org.

Massive savings from your own pocket!

Today’s Regulation of the Day comes to us from the U.S. Department of Transportation ( $73 billion 2010 budget, 58,622 employees).

A new set of rules for sliding car doors will come into effect on September 1, 2010.

See pages 35,131-35,135 of the 2009 Federal Register for details.