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InsiderOnline Blog: November 2011

War Against the Internal Combustion Engine Going up in Flames

General Motors, partly owned by a government that wants automakers to discontinue the internal combustion engine, has a problem, writes Ken Green:

Several crash tests have suggested that the plug-in hybrid Volt, the flagship vehicle at Government Motors, has a bit of a problem: when hit or badly disturbed in accident tests, the Volt's Lithium-Ion (Li-ion) battery packs have been seen to spark, or burst into flames afterward. […]

While few may remember it now, GM’s EV-1 also had battery-related problems. In the case of the EV-1, fires, euphemistically known as “thermal incidents” were happening when people plugged the cars in to recharge. GM had to recall 600 of its first-generation electric cars after 16 such “thermal incidents” including one where the vehicle was engulfed in fire.

What is surprising here is that people are surprised. After the rash of exploding notebook computers a few years back, people might have thought about the wisdom of trying to run a car on the same kind of batteries that can detonate your laptop. As John Hockenberry wrote in a Wired article in 2006, “The technical term for these bizarre incidents is thermal runaway. It occurs when the touchy elements inside a Li-ion battery heat up to the point where the internal reaction accelerates, creating even more heat. A sort of mini China Syndrome of increasing temperature builds until something must give. In the case of a laptop flameout, the chemicals break out of their metal casing. Because lithium ignites when it makes contact with the moisture in the air, the battery bursts into flame.” Hockenberry predicted that things would only get worse, as more is demanded of a battery technology that is at its practical limits.

See: “The Failed Chevy Volt that Just Won’t Go Away,” Real Clear Politics, November 30, 2011.

Posted on 11/30/11 07:30 PM by Alex Adrianson

Bailouts Should Be Fought in Washington, D.C., not Wall Street

A reality check for the Occupy Wall Street Movement: If you don’t want big corporations getting bailouts, then the problem lies with government not capitalism. Focus on the rules of the game, not the players. Or as George Mason University professor Chris Coyne puts it, putting different people in charge of government without reducing its power just means a different fox is in charge of the henhouse:

Posted on 11/28/11 07:01 PM by Alex Adrianson

Wall Street Isn’t a Product of Free Markets

Special privileges to the financial industry “are so embedded in our system, they never occur to us,” write Marc Joffe and Anthony Randazzo:

Perhaps the most distortionary of these is banking licenses that offer limited liability. Without such licenses, bank owners would have to use their personal assets to redeem deposits if borrowers default. […] The large number of state banking licenses granted during the nineteenth century allowed “one-percenters” of that era to profit from borrowing and lending, without worrying about large losses. They could also grow their institutions by making loans to less creditworthy borrowers, thereby creating systemic risk.

This risk was usually shouldered by depositors, who often lost money during bank runs. During the Depression, the federal government solved this problem by creating deposit insurance. FDIC insurance enabled banks to grow even more, and it also freed them to take on even greater risks, since depositors no longer worried about how their funds were being deployed. […]

Instead of adding to the quantity of regulation, thereby creating more opportunities for the financial industry to game the system, we should tame the financial beast through greater accountability. One way to do this is to add a 10 percent co-insurance feature to FDIC insurance for deposits above $10,000. Depositors with $11,000 in a failed bank would receive $10,900; while those with a $250,000 balance would get $226,000.

Depositors would not be wiped out in the event of a failure, but they would have an incentive to select banks that are more careful with their money (while the poorest are still fully protected). Banks would then have to compete for depositor business, in part, by demonstrating that they have strong risk management.

See: “How Government Props Up Big Finance,” by Marc Joffe and Anthony Randazzo, Real Clear Markets, November 22, 2011.

Posted on 11/23/11 10:17 AM by Alex Adrianson

Patients Are Not the Customer When Someone Else Pays

The people who get paid by Medicare will always be able to figure out how to maximize their revenue, regardless of what’s good for the patient. Or so it seems, judging from this slice of gaming-the-system life, from Kaiser Health News:

A lawsuit filed in Dallas against one of the nation’s largest hospice companies identifies how Medicare’s payment methods can offer unintended financial incentives to inappropriately move patients from HMOs into hospice programs and then into hospitals. […]

Here’s how the complaint alleges the arrangement worked: Since Medicare Advantage pays HMOs monthly per-patient fees, the HMOs had a financial incentive to avoid chronically ill patients, who need lots of treatments. So the HMOs referred many of their chronically ill patients for hospice care at Vitas [a hospice], which accepted them even though their conditions weren’t considered terminal.

Although expensive for the HMOs, these patients made money for Vitas, the complaint alleges. That’s because Medicare reimburses a hospice with a flat fee for each day a patient is enrolled. Long-stay hospice patients tend to be more profitable since the big costs in hospice care come when patients first enter the program and need to be evaluated and at the end, when they are dying and require more care, according to the Medicare Payment Advisory Commission, a congressional agency that has faulted Medicare’s payment formula.

On top of that, the lawsuit claims that when the health of Vitas patients required expensive hospital services, the company kicked them out of the hospice program “in order to shift the high costs of hospital procedures and prescription medications” away from the hospice and onto Medicare’s traditional fee-for-service program.

H/t: “Ripping Off Medicare,” John Goodman’s Health Policy Blog, November 22, 2011.

Posted on 11/22/11 05:47 PM by Alex Adrianson

There’s No Place Like Somewhere Else

Colleges seem to be teaching students that, wherever they’re from, some other place is the best.

According to a recent Pew Research Center report Americans, while more likely than Europeans to agree that their culture is superior to others, are less likely to think so today than they did in 2002. The split for Americans is 49 percent agree to 46 percent disagree, down from 60 percent agree in 2002. France seems to be the country with the lowest self-esteem. Only 27 percent of the French agree that their culture is superior to others.

The more college education one has, according to the report, the more likely one is to think one’s own culture is not superior to others:

In the four Western European countries and in the U.S., those who did not graduate from college are more likely than those who did to agree that their culture is superior, even if their people are not perfect. For example, Germans with less education are twice as likely as those with a college degree to believe their culture is superior (50% vs. 25%); double-digit differences are also present in France (20 percentage points), Spain (18 points) and Britain (11 points), while a less pronounced gap is evident in the U.S. (9 points).

As Brian Wesbury and colleagues at First Trust put it: “[A]ll those college loans that some lack the desire to repay seem to have been used to pay teachers who teach many young Americans, not about what makes America great, but all the reasons America should feel guilty or shameful.”

For more, see “The American-Western European Values Gap,” published by the Pew Research Center, November 17, 2011.

Posted on 11/22/11 05:25 PM by Alex Adrianson

Get Your Nominations in for a Fisher Award

Nominating your institute’s publications for a Sir Antony Fisher award could win your organization $10,000. Every year, the Atlas Economic Research Foundation puts on the Fisher awards to recognize the publication that makes the greatest contribution to public understanding of the free society. Books, magazines, reports, monographs, and studies can all be nominated. Last year, The Canadian Century: Moving Out of America’s Shadow by Brian Lee Crowley, Jason Clemens and Niels Veldhuis won the Fisher award.

Antony Fisher was the founder of the Atlas Economic Research Institute, which works to develop freedom-promoting research institutes around the world.

Nominations need to be in by December 1. The award will be presented at The Atlas Experience event in April, 2012. Check out all the rules at Atlasnetwork.org, and then enter.

Posted on 11/22/11 04:55 PM by Alex Adrianson

The Candidates Talk Defense

A lot of work went in to setting up Tuesday night’s GOP presidential debate on national security hosted by The Heritage Foundation, the American Enterprise Institute, and CNN. Check out this video for a look behind the scenes:

So who won the debate? That’s for you to decide, dear voter. We’re just here to help you understand the issues better. James Carafano, who’s not running for anything but is a Heritage expert on defense policy, gets the last word for now:

One thing that should be abundantly clear after listening to all the issues raised in the debate is that America can’t be defended on the cheap. Regardless of what the candidates said tonight, the reality is that if one of them takes office, he or she will be commander in chief of a military that is under-funded and under-powered. President Obama has already put enough cuts on the table to leave the military smaller and less capable than when he took office.

Changing the trajectory of the U.S. military will require investing in the military and dealing with our fiscal crisis. This debate gave each candidate an opportunity to make a case for being up to the job.

More: “Reaction Roundup: GOP Presidential Debate on Foreign Policy,” The Foundry, November 22, 2011.

Posted on 11/22/11 03:01 PM by Alex Adrianson

Defense Isn’t Driving Deficits

The chart below, from the Heritage Foundation and the American Enterprise Institute, shows that domestic spending, typically rising, has spiked in recent years. Defense spending has been relatively flat.

(The blue line is federal domestic spending, and the red line is national defense spending.)

Posted on 11/18/11 12:37 AM by Alex Adrianson

Social Security Deceives

There is, indeed, as in a Ponzi scheme, an element of fraud in the Social Security set-up, writes Michael Tanner:

One only has to listen to any So­cial Security debate where seniors assert that they are “getting back what they paid into the system” to realize that many recipients are not clear on the program’s financing. Social Security’s use of terminology, such as “Trust Fund,” has perpetuated much of this misunderstanding. Again, witness how many Americans believe that Social Security is in trouble because the government has spent, borrowed, or “looted” the money that should be in the Trust Fund. According to a recent Rasmussen poll, just 10 percent of voters know that Social Security taxes are not reserved for Social Security payments.

More significantly […] Social Security does promise benefits that the gov­ernment knows it cannot deliver. For ex­ample, if a worker uses the Social Security Administration’s “Benefit Calculator,” he or she will receive an estimate of his or her Social Security benefits under current law. However, given current levels of financing, the Social Security system cannot pay those benefits in full after 2037. In fact, by law, benefits would have to be reduced by 24 per­cent after that date.

But:

[U]nlike Charles Ponzi’s scheme, Social Security will never go broke as long as the government can force people to pay more taxes and accept fewer benefits. […] Social Se­curity is not a Ponzi scheme because Charles Ponzi didn’t have a gun.

For more, see “Social Security, Ponzi Schemes, and the Need for Reform,” by Michael Tanner, published by the Cato Institute, November 17, 2011.

Posted on 11/18/11 12:26 AM by Alex Adrianson

FDA Kills Smokers

The Food and Drug Administration, defenders of the public health, may end up killing smokers. John Stossell explains:

[T]he FDA now talks about banning electronic cigarettes, or e-cigarettes. It sent threatening letters to manufacturers of the product.

E-cigarettes look like cigarettes, but instead of burning tobacco, they vaporize liquid nicotine when users puff on, or “vape,” them. The resulting aerosol mist satisfies “smokers” without their inhaling tars and the most dangerous of tobacco’s chemicals into their lungs. What could be wrong with that? Well, the FDA says e-cigarettes contain trace chemicals that “may” be “toxic.”

But most everything “may” be toxic. New York Times science columnist John Tierney writes: “The agency has never presented evidence that the trace amounts actually cause any harm, and it has neglected to mention that similar traces of these chemicals have been found in other FDA-approved products, including nicotine patches and gum. The agency’s methodology and warnings have been lambasted in scientific journals.” […]

[A]s Tierney points out, e-cigarettes not only pose merely a hypothetical risk compared to real “cigarettes containing thousands of chemicals, including dozens of carcinogens and hundreds of toxins,” e-cigarettes also have been shown to be unusually successful in helping smokers quit. A new study from Italy found that after 24 weeks, half of all smokers using the e-cigarettes reduced their consumption of the real McCoy by 50 percent. A quarter gave up smoking altogether. […]

Britain’s Royal College of Physicians found that “if nicotine could be provided in a form that is acceptable and effective as a cigarette substitute, millions of lives could be saved.” The American Association of Public Health Physicians wrote that e-cigarettes might “save the lives of 4 million of the 8 million current adult American smokers.”

Stossel’s article is “The FDA Kills Smokers,” Reason, November 17, 2011.

Posted on 11/18/11 12:16 AM by Alex Adrianson

Even More Taxpayer Liabilities Coming

Taxpayers might not be finished bailing out bad mortgages. Congress seems to think people who can afford houses worth $729,750 can’t get a good enough interest rate. So, in the HUD/Agriculture/Commerce/Justice appropriation bill they’re working on, lawmakers want to raise the limit on the sizes of mortgages that the Federal Housing Administration insures to $729,750 (where it had been before a previous law took effect lowering it to $625,500). This move, as David John notes, comes just when the FHA is running low on reserves:

The agency’s latest annual report shows that it has about $2.6 billion in capital to pay for possible losses in its $1.1 trillion mortgage portfolio. This equals about $1 for every $400 of insured mortgages and is far below the legally required $1 of capital for every $50 of insured mortgages. In the past year alone, the report notes that the agency saw its capital drop by $2.1 billion, and there is a 50 percent likelihood that the agency will need as much as a $43 billion bailout as soon as next year. [Internal citations omitted.]

Meanwhile, the Los Angeles Times reports a new study has found that jumbo mortgage holders pose the highest risk of strategic default—i.e., walking away from a mortgage not for lack of ability to pay but because the borrower’s equity in the house has become negative.

High loan limits, says Anthony Randazzo, prop up house prices artificially, delaying foreclosures that will eventually have to happen, anyway. Until they do, he says, the housing market won’t have real recovery.

Read more: “Raising the FHA Loan Limit: A Step in the Wrong Direction,” by David John, The Heritage Foundation, November 17, 2011; and “The Impact of Fannie and Freddie’s Loan Limts,” by Anthony Randazzo, The Reason Foundation, November 7, 2011.

Posted on 11/17/11 11:52 PM by Alex Adrianson

Public Employee Unions Sinking Detroit

Detroit will be bankrupt by April, said Mayor Dave Bing on Wednesday night. Detroit’s tax base has been declining for years, and it has failed to adjust the level of its services accordingly. But excessive employee compensation is part of the story, reports the Detroit Free Press:

Bing, the City Council and restructuring experts said the financial bleeding won’t stop until unions accept major concessions to pension and health care benefits. If the unions don’t make concessions to save the city about $100 million a year, Bing said, the state would inevitably appoint an emergency manager with the authority to unilaterally cut union benefits. During the past four years, health care and pension costs have jumped from $266 million a year to $391 million. […]

The cost of pension obligations is on the rise, as retirees far outweigh the number of employees paying into the retirement system. In 1975, about a third of current and past employees collecting benefits were retired. Now, the city has more than 20,000 retirees, compared with about 11,000 active workers. City officials hope to curtail those costs by creating 401(k)-like plans that require more employee investment.

Even those plans, don’t go far enough, say both the Detroit News and the Detroit Free Press.  

Excessive compensation for public employees is a problem throughout Michigan, as the Mackinac Center documented earlier this year in its report “Benefits in Balance: How to Save Michigan $5.7 Billion Annually.” Here’s one telling graphic from that report:

Posted on 11/17/11 09:44 PM by Alex Adrianson

Those Government “Transparency” Guys Can Be Opaque

The folks running the Illinois Transparency and Accountability Portal appear to have decided that some information on the Web site need not stay on the site—for instance, employee salaries from previous years.

The Illinois Policy Institute has discovered that the listing of employee salaries for 2008 and 2009, which had been available as of August 2009, has now been removed. The site currently shows options to search salary information for years 2010 and 2011 only. Why? The Institute speculates that there may be a flaw in the writing of the law, which “requires the state to maintain all current state employee salary and agency expenditure information.” What about the non-current data? The institute notes: “The law is silent on whether previously posted information must be kept on the website.” Obviously, as the institute also points out, the value of salary information is seriously compromised without the ability to track trends over time.

Lesson: Don’t expect the government to abide by some idealistic notion of transparency. Spell it out in the law. See the institute’s report: “Now You See It, Now You Don’t,” November 16, 2011.

Posted on 11/17/11 02:17 PM by Alex Adrianson

EPA Does Think Its Rules Might Reduce Grid Reliability

The Environmental Protection Agency appears to have buried concerns that draconian new rules on emissions from power plants could compromise the reliability of the nation’s electricity supply—i.e. induce rolling blackouts here and there. Congressional and industry investigators, reports the Wall Street Journal, have discovered in EPA’s rule-making docket an EPA draft that expressed concerns the new rules could force too many coal-fired power plants to shut down:

In a “What are the energy impacts?” section, the EPA concedes that it “is aware that concerns have been expressed by some, even in advance of this proposed rule, that this regulation may detrimentally impact the reliability of the electric grid.” The agency admits that what it calls “sources integral to reliable operation” may be forced to shut down—those would be the coal-fired plants the EPA is targeting—and that these retirements “could result in localized reliability problems.” The EPA insists that it knows how to balance “both clean air and electric reliability,” but all along in public it has denied that reliability is in any way at risk.

The draft document also “strongly encourages” the people who run the grid, like regional transmission operators and state regulators, to start planning “as soon as possible” for “potential retired units.” The EPA recommends “transmission upgrades, targeted demand side management strategies, and construction of new generation.” This helps to explain why even the EPA admits the utility rule is the most expensive it has ever proposed.

But here’s the kicker: This reliability section was gone when the EPA released its utility rule proposal in May 2011. Why did it vanish? Where did it go?

Posted on 11/16/11 03:42 PM by Alex Adrianson

Finally, Somebody Asked the Students

There are lots of ways of assessing schools, but you rarely see surveys of the students themselves. A local taxpayer group in Redding, Conn., decided it was time to ask the students. In June, the group, Non-partisan Action for a Better Redding, commissioned a survey of graduates of Joel Barlow High School to gauge how well they thought the school had prepared them for life beyond high school. The survey, whose results have just been published, found the students were generally satisfied with the school, but students did indicate that instruction in math, study skills, and time management could use improvement.

Lewis Andrews is the President of Non-partisan Action for a Better Redding and also a senior policy analyst at the Yankee Institute for Public Policy Research. Andrews tells us that this project was supported by parents and received favorable coverage from the local newspaper—a welcome flip from the usual script in which PTA groups and journalists view skeptically local taxpayer groups that try to get involved in school issues (because they think all the taxpayer group wants to do is cut funding). So maybe surveying the students is a way for concerned taxpayers in other areas to promote school reforms.

Posted on 11/15/11 06:15 PM by Alex Adrianson

Host a Party, Watch the Debate, Give Your Feedback

Foreign and defense policy will be the topic of the presidential debate coming up on November 22, and you can help get the conversation going by hosting a debate watching party and by participating online.

The Heritage Foundation, the American Enterprise Institute, and CNN will host the debate, which starts at 8 p.m. at DAR Constitution Hall in Washington, D.C.

Just sign up online to host a debate watching party, and The Heritage Foundation will send you a free debate watch party kit that includes invitation templates; a guide to the issues; a copy of Heritage’s documentary on missile defense, 33 Minutes (which would make good pre-debate viewing); and other materials.

You and your guests can also participate online during the debate. The debate will be livestreamed at blog.heritage.org/debate, where you can also find running commentary and analysis from Heritage experts. And be sure to tweet your own comments during the debate using the hashtags #CNNDebate & #Heritage. Heritage will retweet the best comments to its thousands of Twitter followers. Also, check Heritage’s Facebook page prior to the debate to participate in a poll on the top national security and foreign policy issues.

Posted on 11/15/11 04:34 PM by Alex Adrianson

You Can Help the Environment by Using Plastic

Banning one-use products like foam cups and plastic bags, as some local governments around the country have done, isn’t any kind of environmental solution, says Angela Logomasini. Yes, those products can become litter, but litter can be reduced by enforcing penalties against littering, educating the public, and improving government management of its own properties and trash collection operations.

Meanwhile, points out Logomasini in a new paper for the Competitive Enterprise Institute, foam and plastic products provide environmental benefits that often go unrecognized. For instance, making a plastic bag requires 6 percent less water and 71 percent less energy than making a paper bag, and produces only one-fifth of the solid waste as a paper bag. Reusable cloth bags require even more resources to make, so much more that they have to be reused 103 times in order to achieve any environmental benefits. But a study by the Environmental Agency in the United Kingdom found that cloth bags are reused only an average of 51 times before being discarded. And that doesn’t even count the energy and water needed to wash a cloth bag to prevent bacteria from building up. Studies have also found, notes Logomasini, that foam cups are more energy-efficient than both paper cups and ceramic cups used less than 1,006 times.

Logomasini’s paper is “Plastic Bag Bans Are Bad for the Environment,” November 8, 2011.

Posted on 11/14/11 06:48 PM by Alex Adrianson

Remember Why We Honor Veterans

Watching this video is one way to remember:

Posted on 11/10/11 01:30 PM by Alex Adrianson

Tax Hikers Have Promised Spending Cuts Before

The so-called “balanced” approach to deficit reduction probably won’t be balanced:

In 1982, President Ronald Reagan was promised three dollars of spending cuts for every dollar of tax hikes. The tax hikes were real. But spending — in real dollar terms — went up, not down. In 1990, the same trick was played out — this time at the expense of President George H.W. Bush and the American people. A two-to-one promise brought higher taxes and higher spending. When tax hikes are on the table, the talk about spending cuts evaporates. Oddly enough, the tax hikes remain.

For more discussion of unserious arguments for tax increases from the “Super Committee,” check out the Politico article by Grover Norquist, Mike Needham, Phil Kerpen, Al Cardenas, Duane Parde, and Daniel J. Mitchell: “The Answer Is: Spend Less. Period.

Posted on 11/10/11 01:26 PM by Alex Adrianson

Remember Checkpoint Charlie

Rainer Hildebrand’s museum at Checkpoint Charlie helps the world remember the outrage against human freedom called the Berlin Wall, which went up 50 years ago this fall. As Thor Halvorson writes, Hildebrand began his work nearly that long ago:

On Oct. 19, 1962, a mere 13 months after the barrier was formed, Hildebrandt hosted his first exhibition in a modest two-room apartment on the infamous Bernauer Straße.

“We suggested that tourists be thankful to those border guards who do not shoot to kill: ‘See through the uniform!’ we would tell them. Some guards saw that we understood, and after their own escapes came to work with us,” wrote Hildebrandt. “The large number of visitors encouraged us to look for new premises.” A year later, Hildebrandt opened Haus am Checkpoint Charlie, also known as Mauermuseum, a collection of photos, stories, and miscellaneous items documenting the damage the wall had caused. In a stirring testimony to the irrepressible spirit of liberty, the museum today documents the daring successful escapes — most of them involving ordinary people with nothing at their disposal except courage and creativity. Home-made submarines, military disguises, secret compartments in cars, home-made airplanes, human catapults, identity theft — the museum contains information and objects detailing the most breathtaking of escapes.

Located next to the prominent border-crossing checkpoint from which it took its name, the museum also became a sort of safe haven for escapees and a place from which escape-helpers monitored movement at the borders. Hildebrandt’s dogged fervor for this cause culminated in the creation of an exhaustive repository of GDR memorabilia that to this day remains open every day of the year at its original location near Checkpoint Charlie.

The Wall came down 22 years ago this week. Read Halvorson’s article at National Review Online: “Checkpoint Charlie Museum,” November 9, 2011.

Posted on 11/10/11 01:10 PM by Alex Adrianson

Get Your Action Activated

Your 501(c)(3) nonprofit might want to set up a 501(c)(4) so it can lobby or organize a grass roots campaign on legislation. That way, you can have an affiliated organization do the lobbying while still preserving your tax exempt status for your non-lobbying activities. But there’s a way to do it without going through the rigmarole of setting up a separate legal entity. Tax-exempt nonprofits can do lobbying by electing to be governed by the Internal Revenue Service’s 501(h) expenditure test. Just have your president or treasurer complete and sign IRS form 5768. Electing to be governed by the 501(h) test provides organizations clearer guidelines and higher limits on lobbying activity than the “insubstantial part test” of the 501(c)(3) code. And, under 501(h), there’s less risk of having your tax exempt status revoked. If the IRS finds you exceeded your limits, you just pay a 25 percent excise tax on the excess.

For more on deciding whether to start a 501(c)(4), see the State Policy Network’s article “The Practical Implications of Affiliated 501(c)(3)s and 501(c)(4)s,” in its  Leadership Training Series. Also check out the Alliance Defense Fund’s fact sheet, “Electing the 501(h) Expenditure Test.”

Posted on 11/10/11 11:12 AM by Alex Adrianson

Mississippi Voters Approve anti-Kelo Property Protections

The backlash against the Supreme Court’s 2005 Kelo decision has now reached 44 states. Yesterday, Mississippi voters approved an amendment to the Mississippi Constitution that restricts the ability of local governments to use eminent domain for economic development purposes. The measure was approved by a margin of 73 percent to 27 percent.

The law requires the government to own and operate any property it seizes through eminent domain for a minimum of 10 years. This requirement prevents the government from simply seizing property and then turning it over to a private developer, as happened to Suzette Kelo’s New London, Conn., neighborhood in 2000.

Ilya Somin points out (at Volokh Conspiracy) that the Mississippi measure avoids the pitfall of other attempts to restrict eminent domain that allow an exception for fixing blight, which in some states is so broadly defined that it could put any neighborhood at risk. Somin also points out (again, at Volokh Conspiracy): “No anti–Kelo referendum initiative has ever been defeated except in cases where a ban on Kelo-style ‘economic development’ takings was packaged with some other, much less popular measure […] .”

Posted on 11/09/11 06:58 PM by Alex Adrianson

Tell Cato Who Should Win a Friedman

Get your nominations in for the Milton Friedman award, The Cato Institute’s biennial award given to the person who has made a significant contribution to human freedom. Akbar Ganji won the 2010 Milton Friedman award for his reporting that uncovered the Iranian government’s involvement in assassinating dissident intellectuals. The deadline for submitting nominations for the 2012 award is December 31, 2011.

Posted on 11/09/11 06:16 PM by Alex Adrianson

The Super Committee Needs to Know You’re Watching

Liberals want the Joint Congressional Committee on Deficit Reduction—aka, the Super Committee set up by the deal to raise the debt ceiling—to propose revenue enhancements—aka, tax increases. The committee is due to give its recommendations to Congress by November 23. Heritage Foundation President Ed Feulner, writing at the Foundry, gives them some straight talk about why tax increases are a bad idea. Go read his open letter on the Committee, and if you agree with it, sign it yourself: “Morning Bell: Straight Talk for the Super Committee.”

Posted on 11/09/11 05:25 PM by Alex Adrianson

Human Dignity Requires Free Choice

James Otteson explains in this video from the Institute for Humane Studies:

Posted on 11/08/11 07:49 PM by Alex Adrianson

Budget Control Act—Neither a Budget Nor a Control

If you thought the Budget Control Act—aka, the law that raised the debt ceiling and set up the “Super Committee” process to find additional deficit reduction—limits federal spending to $1.043 trillion in fiscal year 2012, you were wrong.

The law grants Congress authority to spend $11.3 billion above that cap for disaster relief. That amount is the annual average of the last 10 years of spending on disaster relief.

But don’t confuse this “disaster relief” spending with “emergency” spending. Senate appropriators are already planning to spend $8.6 trillion of the disaster relief authority. As Heritage Foundation analyst Patrick Louis Knudsen notes, the spending is intended “to remedy damage and loss from episodes that already have passed.” He continues: “These include Hurricane Irene and, yes, even Hurricane Katrina (which was six years ago), as well as this year’s Missouri floods.”

Natural disasters that happen in 2012 can still be addressed with “emergency” spending, explains Knudsen. “In addition to the ‘disaster’ funds, the BCA still retains the uncapped ‘emergency’ credit card. So Congress could obligate all the $11.3 billion for ‘disasters’ and still spend without limit later in the year on other ‘emergencies’—making a total mockery of the BCA spending caps.”

See Knudsen’s post at The Foundry: “Courting Disaster: Two Gaping Loopholes in the Debt Deal That Will Drive Up Spending,” November 7, 2011.

Posted on 11/07/11 06:32 PM by Alex Adrianson

Most of the 1 Percent in 1996 Are Now Part of the 99 Percent

The facts on inequality are not what they’re made out to be, reports John Merline:

The wealthiest 5% of U.S. households saw incomes fall 7% after inflation in Bush’s eight years in office, according to an IBD analysis of Census Bureau data. A widely used household income inequality measure, the Gini index, was essentially flat over that span. Another inequality gauge, the Theil index, showed a decline.

In contrast, the Gini index rose—slightly—in Obama’s first two years. Another Census measure of inequality shows it’s climbed 5.7% since he took office.

Meanwhile, during Clinton’s eight years, the wealthiest 5% of American households saw their incomes jump 45% vs. 26% under Reagan. The Gini index shot up 6.7% under Clinton, more than any other president since 1980. […]

Of course, all this assumes there’s a problem at all. As University of Michigan economist Mark Perry notes, while the income gap has grown since 1979, almost the entire increase occurred before the mid-1990s: “There is absolutely no statistical support for the commonly held view that income inequality has been rising recently.”

A similar analysis found that income inequality has fallen among individuals since the early 1990s, but risen among households due to factors such as more marriages of people with similar education levels and earnings potential.

Others argue that income mobility matters more than equality.

One study found that more than half of the families who started in the lowest income bracket in 1996 had moved to a higher one by 2005. At the other end of the spectrum, more than 57% of families fell out of the top 1%. [“Income Inequality Rose Most Under President Bill Clinton,” Investor’s Business Daily, November 3, 2011.]

Posted on 11/04/11 03:10 PM by Alex Adrianson

The “Occupy” Movement Refuses to Learn Economics—Literally

A group of students walked out of an introductory economics class at Harvard yesterday. The students said their protest is part of the global “Occupy” movement. Here’s an excerpt of their open letter to professor Greg Mankiw:

A legitimate academic study of economics must include a critical discussion of both the benefits and flaws of different economic simplifying models. As your class does not include primary sources and rarely features articles from academic journals, we have very little access to alternative approaches to economics. There is no justification for presenting Adam Smith’s economic theories as more fundamental or basic than, for example, Keynesian theory. […]

Harvard graduates play major roles in the financial institutions and in shaping public policy around the world. If Harvard fails to equip its students with a broad and critical understanding of economics, their actions are likely to harm the global financial system. The last five years of economic turmoil have been proof enough of this.

We are walking out today to join a Boston-wide march protesting the corporatization of higher education as part of the global Occupy movement.

Guess they want a teacher who will teach them what they already believe. Mankiw, for his part, noted yesterday:

Ironically, the topic for today’s lecture is the distribution of income, including the growing gap between the top 1 percent and the bottom 99 percent. I am sorry the protesters will miss it.

Posted on 11/04/11 02:47 PM by Alex Adrianson

Obamacare on the Ropes

In a couple of weeks, the Supreme Court will likely announce it will hear one or more of the cases challenging the constitutionality of Obamacare. On Thursday, The Heritage Foundation hosted a panel featuring some of the legal scholars who were directly involved in crafting the constitutional arguments against Obamacare. The participants examined the government’s counter-arguments and assessed the possible outcomes:

Posted on 11/04/11 02:22 PM by Alex Adrianson

Sure, Hitler Invaded Poland, But How Many Jobs Did He Create?

“Creating jobs”—if it wasn’t already—is certainly now the most over-used and misguided metric of public policy. We know that because item No. 1 on the State Department’s recent fact sheet, “Ten Things You Should Know about the State Department,” is this:

We create American jobs. We directly support 20 million U.S. jobs by promoting new and open markets for U.S. firms, protecting intellectual property, negotiating new U.S. airline routes worldwide, and competing for foreign government and private contracts.

In some sense, it must be true that the State Department contributes to a strong economy. Does anybody think you can have thriving commerce between countries that do not have good diplomatic relations? Maybe next your local police department will describe itself as a jobs program, too, because, after all, crime can’t be good for business.

But speaking of diplomacy and economic growth, here’s what uber-Keynesian Paul Krugman had to say three days after 9/11:

Ghastly as it may seem to say this, the terror attack – like the original day of infamy, which brought an end to the Great Depression – could even do some economic good. […] [T]he driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings.

War, by destroying things, can boost an economy, says a Nobel Laureate. According to that logic, the State Department could create even more jobs by doing its own job poorly. Fortunately, there are nine other items on the State Department fact sheet, including things like “We help to make the world a safer place,” and “We promote the rule of law and protect human dignity.” Good to know that not everything is about creating jobs.

Posted on 11/04/11 12:20 PM by Alex Adrianson

Delve into the History and Ideas of Libertarianism

Libertarianism.org is a new Web site produced by the Cato Institute that explores the rich history, ideas, and people of the libertarian movement.

If you’re a fan of regression analyses on the impact of different tax regimes on long-run economic growth, then this Web site is probably not for you. But if you like exploring topics such as the portrayal of libertarian ideas in science fiction, how capitalism makes us better people, or the growing chasm between the Constitution in theory and the Constitution as practiced, then you will like Libertarianism.org. The site contains a blog, essays, videos, and reading lists.

Lest you think the site is all ivory tower stuff, here’s a video from the site in which Milton Friedman challenges the utopian tendencies of his fellow libertarians:

Posted on 11/03/11 01:09 PM by Alex Adrianson

Teaching Pays

Public school teachers are not underpaid after all, says a new study by Jason Richwine and Andrew Biggs.

Some folks claim they are, citing data showing that public school teachers get paid less than similarly educated private-sector workers. But that’s not a good comparison, explains Biggs:

Most teachers have Bachelor’s or Master’s degrees in education, and most people with education degrees are teachers. Decades of research has shown that education is a less rigorous course of study than other majors: Teachers enter college with below-average SAT scores but receive much higher GPAs than other students. It may be that a degree in education simply does not reflect the same underlying skills and knowledge as a degree in, say, history or chemistry. When we compare salaries based on objective measures of cognitive ability — such as SAT, GRE, or IQ scores — the teacher salary penalty disappears. [“Are Public School Teachers Underpaid?” The Corner]

If public-school teachers really were underpaid, then they should be able to leave teaching and find a better job in the private sector. Richwine and Biggs examined whether that was happening, and found that the opposite was the case:

Workers who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent. Teachers who change to non-teaching jobs, on the other hand, see their wages decrease by roughly 3 percent.

Further, say Biggs and Richwine, when you fully account for the benefits teachers receive, which most pay comparison studies don’t do, public school teachers come out ahead of comparably skilled private-sector workers—by about 52 percent.

Their study is Assessing the Compensation of Public-School Teachers,” published jointly by The Heritage Foundation and the American Enterprise Institute.

Posted on 11/02/11 08:19 PM by Alex Adrianson

The Artists Are Doing OK

Artists tend to have more education and higher salaries than the average worker, according to a new survey produced by a government agency that exists to give the average taxpayers money to artists. The survey, by the National Endowment for the Arts, also finds that most artists work in the private, for-profit sector. Since 1965, the NEA has awarded over $4 billion in grants for artistic projects.

Posted on 11/01/11 11:13 AM by Alex Adrianson

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