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InsiderOnline Blog: June 2009

Now Public: EPA Report Skeptical of Global Warming

“We have become increasingly concerned that EPA and many other agencies and countries have paid too little attention to the science of global warming. EPA and others have tended to accept the findings reached by outside groups, particularly the IPCC and the CCSP, as being correct without a careful and critical examination of their conclusions and documentation.” So begins a report written not by an outside critic, but by two employees at the Environmental Protection Agency itself: Alan Carlin and John Davidson, researchers at EPA’s National Center for Environmental Economics. Yes, there are environmental skeptics who work at the EPA, and we know it thanks to the Competitive Enterprise Institute. Last week CEI obtained a series of e-mails showing that in mid-March Carlin’s bosses put a gag order on him and attempted to bury a report by Carlin and Davidson. The e-mails show that Carlin’s bosses were afraid of forwarding the report because it would undercut the case for regulating greenhouse gas emissions. At the time, EPA was finishing work on a finding that called for regulating greenhouse gases emissions under the Clean Air Act.

Now the 98-page report by Carlin and Davidson has also been revealed to the public, too. A good rule of thumb is if the government doesn’t want you to know something, it’s probably worth knowing. Before the Senate considers the costly global warming legislation just passed by the House (which would supplant any regulations under the Clean Air Act), senators should take the time to read what Carlin and Davidson wrote.

Posted on 06/30/09 04:59 PM by Alex Adrianson

A Question for Sotomayor

The Supreme Court’s decision in Ricci v. DeStefano runs to 93 pages. That’s about 93 pages more than it took the Second Circuit Court of Appeals to dismiss it last fall. The case raises the question of when race-conscious hiring practices are permitted under the Civil Rights Act of 1964. In Monday’s decision, the Court overturned the Second Circuit by holding that the city of New Haven did in fact violate the Civil Rights Act when it threw out the results of promotion exams given to city firefighters. New Haven threw out the tests because not enough African-Americans scored well. The Court ruled against New Haven without even reaching the constitutional question of whether provisions in the Civil Rights Act that require race-conscious hiring (in order to avoid a disparate impact on minorities) violate the 14 Amendment’s equal-protection clause.

Still, the Court devoted 93 pages to deciding the case. Apparently, the Court thinks there are important issues raised by the practice of reverse discrimination (AKA discrimination). By contrast, the Second Circuit decision dismissing the case took the form of an unpublished summary order. Supreme Court nominee Sonia Sotomayor, who heard the case as a member of the Second Circuit, may want to explain whether she really thinks the issues in this case were so unimportant that they merited no contemplation at all. If not, the Senate may want to ask. (See also, “Morning Bell: The Sotomayor Pattern,” by Robert Alt, June 30, 2009.)

Posted on 06/30/09 03:00 PM by Alex Adrianson

Tea Party Tuesday Tip: Tweet Well

Chances are you are at least dimly aware of the existence of Twitter, one of the many social networking platforms that can help you build a following and get the word out about events you are organizing. For those who want to become really effective users of Twitter, we recommend the Twitter 101 Guide (now revised and expanded) published by the David All Group. The Twitter 101 Guide covers the basics for those just getting started on Twitter, provides ideas on how to personalize your account, and showcases how some of the best Twitter users have made Twitter an integral part of their communications effort. Just visit the Twitter 101 Guide download page ( to get a free copy.

Posted on 06/30/09 10:12 AM by Alex Adrianson

How Timely Is the Stimulus?

Bruce Bartlett reports:

According to [CBO Director Douglas] Elmendorf, by the end of fiscal year 2009, which ends on Sept. 30, about a third of the least stimulative spending will have been spent vs. only 11% of the highly stimulative spending. Even at the end of fiscal year 2010, we will have spent only 47% of the highly stimulative spending. By the end of fiscal year 2011, more than a quarter of the stimulative spending will still remain unspent.

If stimulus spending proves to be unnecessary in 2011, will Congress cut spending to avoid inflation?

Posted on 06/29/09 04:07 PM by Alex Adrianson

The Facts about Cap-and-Trade

Things you might not know about the cap-and-trade plan to fight global warming:

Posted on 06/26/09 10:12 AM by Alex Adrianson

Is Government Health Care Constitutional?

In the drive to single-payer health care, liberals may end up hoisted with their own petard. At the very least, say David Rivkin and Lee Casey, anything like a single-payer system or any sort of government-imposed standards on medical practice will elicit significant constitutional challenges. Why? Because in a series of cases that includes Roe v. Wade, the Supreme Court has established a constitutional right to privacy. Rivkin and Casey write:

 … when the overwhelming moral issues that surround the abortion question are stripped away, what is left is a medical procedure determined to be “necessary” by an expectant mother and her physician.

If the government cannot proscribe – or even “unduly burden,” to use another of the Supreme Court’s analytical frameworks – access to abortion, how can it proscribe access to other medical procedures, including transplants, corrective or restorative surgeries, chemotherapy treatments, or a myriad of other health services that individuals may need or desire?

Of course, government refusal to pay for a procedure does not amount to proscribing that procedure—as long as people are free to buy it with their own money from a willing provider. But the great open question about health care reform is whether a public health insurance option would morph into a subsidized program that drives private insurers from the market and effectively makes doctors agents of federal policy. If so, say Rivkin and Casey, the right to privacy in health care would become a salient constitutional question.

Posted on 06/25/09 05:39 PM by Alex Adrianson

Global Warming Doubts at the EPA?

The Competitive Enterprise Institute has uncovered a series of e-mails suggesting that in mid-March EPA managers buried a report raising doubts about the scientific basis for EPA’s decision to regulate carbon dioxide as a pollutant under the Clean Air Act. CEI submitted the material as part of a public comment to the EPA on Tuesday, just ahead of the deadline for submitting comments. CEI wants EPA to release the report to the public.

In one e-mail, dated March 12, 2009, Al Gartland, director of EPA’s National Center for Environmental Economics, instructed researcher Alan Carlin to refrain from discussing his research with anyone outside of the NCEE. Carlin then urged Gartland to reconsider his decision not to send his report to the Office of Air and Radiation, which directs EPA’s climate programs, and Gartland answered on March 17:

Alan, I decided not to forward your comments. The time for discussion of fundamental issues has passed for this round. The administrator and the administration has decided to move forward on endangerment, and your comments do not help the legal or policy case for this decision. … I can only see one impact of your comments given where we are in the process, and that would be a very negative impact on our office.

Gartland sent a follow-up e-mail seven minutes later:

With the endangerment finding nearly final, you need to move on to other issues and subjects. I don’t want you to spend additional EPA time on climate change. No papers, no research etc, at least until we see what EPA is going to do with Climate.

Why were EPA researchers not allowed to share their findings with the people making decisions about significant environmental regulations? What was in Carlin’s report?

Posted on 06/25/09 04:17 PM by Alex Adrianson

About Those CBO Estimates on Cap-and-Trade Costs

Some now say we can save the planet for only $175 per family. They’re citing the Congressional Budget Office’s recent estimates of the costs of the Waxman-Markey cap-and-trade bill. Actually, the $175 figure is just a one-year cost—the estimate for 2020. More fundamentally, as Karen Campbell & Co. from The Heritage Foundation explain, the CBO report is just a cash-flow analysis that assumes a large portion of the allowance revenues will be recycled back into the pockets of taxpayers via rebates. In other words, more government spending reduces the “cost” of the program, the CBO says.

Left out of the CBO estimate is that the plan will still force higher energy prices which will have real economic consequences. The CBO even acknowledges it isn’t counting these costs (see footnote 3 on page 4). According to Heritage estimates, for the period 2012-2035, the cap-and-trade part of Waxman-Markey will reduce gross domestic product by $393 billion per year. In 2035, the annual cost per family reaches $6,790 (in 2009 dollars).

When comparing different estimates of costs, keep in mind that the cost of a policy to taxpayers is not the same thing as the society-wide cost of a policy. A critical consideration is how a policy impacts the allocation of resources and whether the new allocation gives us a higher or a lower standard of living. Recycling government revenues back to taxpayers won’t change the reality that under cap-and-trade artificially higher energy prices will send false signals to consumers about the costs of their energy consumption. Consumers will respond by forgoing some amount of energy consumption. Even though they may shift their consumption to items that require relatively less energy to produce, consumers are not better off, since they would have preferred other products and services had relative prices not changed. These are the real costs that are often difficult to see.

(See “CBO Grossly Underestimates Cost of Cap and Trade,” by David Kreutzer, Karen Campbell, and Nicolas Loris, Heritage Foundation, June 24, 2009.)

By the way, if supporters of cap-and-trade really want to assure folks that the allowance revenue will end up back in the hands of taxpayers, then they should just adopt Martin Feldstein’s suggestion of giving the allowances directly to taxpayers and letting taxpayers sell them to the emitters.

Posted on 06/25/09 02:02 PM by Alex Adrianson

The Trojan Horse’s Trojan Horse

What should we make of the idea of creating health insurance co-ops, now being pushed as an alternative to a government-designed public health insurance option? According to Cato’s Michael Tanner, the proposal is either meaningless or it is a deception that will bring about the same result as a public plan: a tilting of the playing field that destroys real competition. It would be meaningless because states already have the power to charter health insurance co-ops, which are simply insurance companies owned and operated by those who are insured. In fact, writes Tanner, co-ops already exist: “Health Partners, Inc. in Minneapolis has 660,000 members and provides health care, health insurance and HMO coverage. The Group Health Cooperative in Seattle provides health coverage for 10 percent of Washington State residents. PacAdvantage, a California co-op, covers 147,000 people.”

If such entities are already free to compete in the marketplace with other insurance companies, then what change is Congress proposing? Sen. Charles Schumer (D-N.Y.), notes Tanner, has said he wants a single, national co-op with officers and directors appointed by the president and Congress. And Sen. Max Baucus (D-Mont.) has said of the co-op idea: “It’s got to be written in a way that accomplishes the objectives of a public option.”

In other words, for these senators co-ops are just another name for a government health insurance plan. As Tanner says: “If it looks like a duck, walks like a duck, and quacks likes a duck, it’s probably a duck.”

Posted on 06/24/09 04:03 PM by Alex Adrianson

Lots of Cost, No Benefit

Jim Manzi at The Corner, Ben Lieberman at The Foundry, and Pat Michaels and Sallie James at Planet Gore, each have worthwhile reads today on the global warming legislation that now appears headed for a vote in the House on Friday.

According to Manzi’s analysis, the Waxman-Markey cap-and-trade plan “would impose costs at least ten times as large as its benefits, would not reduce the deficit, and doesn’t even really cap emissions.”

Lieberman notes Heritage Foundation estimates that the higher energy prices that would be forced by the bill amount to a tax increase of $3,000 per year per household for the period 2012-2035—“and even assuming a few hundred more pages are added tomorrow or the day after, this remains a massive energy tax.”

Meanwhile, Michaels and James report that the new bill increases the likelihood that the United States will impose carbon tariffs on countries that don’t have similarly restrictive emissions policies. “Economy-killing climate policies and a trade war — together at last!”

Posted on 06/24/09 12:50 PM by Alex Adrianson

Tea Party Tuesday Timeless Text: The Essential Role of Business Failure

Any given firm or industry can always be rescued by a sufficiently large government intervention, whether in the form of subsidies, purchases of the firm’s or industry’s products by government agencies, or by other such means. The interaction that is ignored by those advocating such policies is that everything the government spends is taken from somebody else. The 10,000 jobs saved in the widget industry may be at the expense of 15,000 jobs lost elsewhere in the economy by the government’s taxing away the resources needed to keep those other people employed.

We need only imagine what would have happened if the government had decided to “save jobs” in the typewriter industry when personal computers had first appeared on the scene and began to take away customers from the typewriter manufacturers.

That’s from Thomas Sowell’s Basic Economics: A Citizen’s Guide to the Economy (2004). We recommend this book to anyone who wants to learn where economic growth comes from and how government intervention often makes us all poorer. This book does a great job of debunking common but very damaging economic ideas.

Posted on 06/23/09 03:24 PM by Alex Adrianson

Tea Party Tuesday Talking Point: The Plan to Put Tax Increases on Auto-Pilot

A cap-and-trade plan for fighting global warming is a plan for automatic tax increases every year such a plan is in effect. Under the version outlined in the Waxman-Markey legislation, Congress could expect to see increasing federal revenues every year for 40 consecutive years without ever having to take a vote to increase taxes.

In a cap-and-trade system, businesses must buy permits for their emissions and the permits become gradually scarcer—and thus more expensive—as the target for emissions reduction is ratcheted up. The costs of those permits are passed on to consumers. It is, in effect, an energy tax designed to reduce energy consumption, and thus emissions. According to the Congressional Budget Office, reducing the level of CO2 to just 15 percent less than the total level of U.S. emissions in 2005 would require permit prices that would increase the cost of living of a typical household by $1,600 per year. For a typical family of four earning $50,000 per year and paying an annual income tax of $3,000, cap-and-trade amounts to a 50 percent tax increase.

And that’s just for starters: Under Waxman-Markey the target for emission reductions rises to 83 percent below 2005 levels by 2050. According to the Brookings Institute, by 2050 the government’s carbon revenues would be equivalent to $200 billion in today’s economy. What do the voters of 2050 think about such a tax burden?

For more problems with the Waxman-Markey bill, see “The Exploding Carbon Tax,” by Martin Feldstein, The Weekly Standard, June 13, 2009.

Posted on 06/23/09 12:35 PM by Alex Adrianson

Tea Party Tuesday Tip: Connect with Your State-Based Think Tank

If you’re looking for intellectual ammunition to help bolster your arguments for less government spending and taxing, you should start by checking out the work of a think tank near you. Every state now has a think tank dedicated to promoting state policies based on limited-government, free-market ideas. Check the State Policy Network’s directory to identify your state-based think tank.

These think tanks produce great work, especially when it comes to identifying ideas for reducing wasteful, unnecessary spending at the state level. See, for example, “The Best Courses in Self-Help Are Found at Your Local State-Based Think Tank,” Insider Online, March 5, 2009.

State think tanks are also especially attentive to the problem of an overweening federal establishment. In some cases, your state’s free market think tank is likely to be the only major voice against reliance on federal bailouts to fix state budget troubles. A great discussion of this problem can be found in the Goldwater Institute report, “Arizona’s Struggle for Sovereignty: The Consequences of Federal Mandates,” by Benjamin Barr.  

Finally, many of the state-based think tanks are reaching out to the Tea Party movement, too. The Mackinac Center in Michigan, for instance, has produced a Tea Party Activist Toolbox that contains a lot of great ideas.

Posted on 06/23/09 12:31 PM by Alex Adrianson

The Missing Element in Health Care Reform

In a recent blog post, we reported that since 1970 Medicare’s per-patient spending has grown 34 percent more than that of privately purchased health care, suggesting that creating a public health insurance option is not a reform strategy that will succeed in arresting the growth of health care expenditures. That finding, from a report by Jeffrey Anderson for the Pacific Research Institute, is displayed nicely in a graph from Friday’s Investor’s Business Daily:

One of the really interesting things about Anderson’s report is what it reveals about private insurance, which other studies have shown to do a poorer job of controlling costs than Medicare. The cost advantage of private spending, says Anderson, comes entirely from the slower rate of growth of the non-insurance portion of private per-patient spending—out-of-pocket expenditures. That suggests rather strongly that the reforms that have the best chance of moderating the growth of health care expenditures are those that bring consumer consciousness (i.e., people spending their own money) back into the health care marketplace.

Further support for this notion can be found in a recent report of the American Academy of Actuaries that summarizes the findings of a number of studies on consumer-directed health plans (i.e., plans that combine high-deductible health insurance with a tax-free health savings account for out-of-pocket health care expenses). Those studies find that consumer-directed plans have yielded cost savings of between 12 percent and 20 percent compared to traditional health insurance.

Since the goal of health care reform should be to maximize the value we receive for every health care dollar we spend—not just to save money—it’s also worth mentioning this point: Consumer-directed plans achieve savings without sacrificing quality. All of the studies reviewed in the AAA report find that patients in consumer-directed plans receive at least as much necessary care and more preventive care than patients in traditional health insurance.

Posted on 06/22/09 04:00 PM by Alex Adrianson

Grassroots Mobilizing to Preserve Patient Choices

Are you concerned that health care reform will mean more control for bureaucrats and fewer choices for you and other patients? The group Patients United Now is organizing rallies around the country to express support for a health care system that answers to patients instead of Washington, D.C. Here’s a list of the rallies they currently have scheduled:

Anchorage: Thursday, June 25 at 5:30 p.m. at Park Strip on 9th and L Streets

• Mountain Home: Saturday, July 4 at 11:30 a.m. at Bombers Football Field
Rogers: Saturday, July 4
Fayetteville: Saturday, July 4 at the Washington County Fair Grounds

Indianapolis: Tuesday, June 30 at 12 p.m. at the Indiana Statehouse on Washington and Capitol

• Kalispell: Monday, June 29
Billings: Thursday, July 2

South Dakota
Sioux Falls: Tuesday, June 30 at 5 p.m. at Terrace Park Bandshell on Madison Street and Menlo Avenue

Salt Lake City: Wednesday, June 24 at 5:30 p.m. at Veterans Memorial Park, 1985 West 780 South, West Jordan

Also, if you live in Maine you may want to check out one of the Maine Heritage Policy Center’s upcoming lunch seminars examining the pitfalls of giving government more control over health care.

Posted on 06/22/09 02:54 PM by Alex Adrianson

Freedom Serves the Public Good

There’s been a lot of semantic confusion lately about the “public purposes” of “private foundations.” Chief among these confusions is the idea that a foundation’s tax-exempt status gives “the public” the right to direct how that foundation’s assets are used—with “the public” being understood as “government.”

The obvious question is: Why have charitable foundations at all, if they are to be mere subsets of government activity? Indeed, in an important new monograph for the Philanthropy Roundtable, Evelyn Brody and John Tyler argue that a government role in prescribing charitable foundations’ missions runs contrary to four centuries worth of law and public policy. The traditional view, they write, has been that foundations are able to serve the public good precisely because they are autonomous:

Autonomy has been one of the defining characteristics of American foundations and other charities; such entities are free to support and pursue differing and even contrary programmatic visions, strategies, methods, and structures provided that they do not stray from their mandate to serve charitable purposes.   

Observers have credited this pluralism with helping to preserve fundamental American values such as individual choice and initiative; advancing civilization and promoting general welfare; multiplying, rather than concentrating, sources of power; representing society’s preference for reasonable discretion rather than government-imposed uniformity; enhancing the vibrancy of our democracy through their capacity to challenge conventional wisdom; and allowing charities—particularly, but not only, religious organizations—freedom to choose their missions and to make their decisions without government involvement. [Internal citations omitted.]

For more, see “How Public Is Private Philanthropy: Separating Myth from Reality,” by Evelyn Brody and John Tyler, published by the Philanthropy Roundtable, June 19, 2009. And for another voice on the importance of philanthropic freedom, read our interview with Dan Peters in the latest issue of The Insider.

Posted on 06/19/09 12:55 PM by Alex Adrianson

Banned by Tehran

Since everybody’s thinking about Iran these days, we thought we’d mention that there’s a major feature film coming out soon that the Iranian government does not want its people to see. It’s called the The Stoning of Soraya M. and it deals with the shameful practice of honor killings under Islamic law. The movie tells the true story of an Iranian woman who was falsely accused of adultery and stoned to death. Her husband, a powerful man in her village, had arranged false witnesses against her because he wanted a different, younger wife.

Jim Caviezel plays the good guy in this one, a French-Iranian journalist who stumbles onto the story (and whose 1994 book is the basis for the movie). Caviezel is clearly one of the good guys in Hollywood these days, too. Explaining his interest in the project, he recently told World magazine:

In the West we say, “Oh, it’s Shariah law and who are we to impose our religious values on them?” I think that’s an evil deception. Those people are human beings, they have the imprint of God in them, so what does that tell us we should do? What does the Good Samaritan story tell us we should do? Chant some politically correct line so as not to upset anybody? I don’t think that’s the model Christ gives us.

The Stoning of Soraya M. is on our list to see, but be warned: As you might expect given the subject matter, the film contains portrayals of brutal violence.

Posted on 06/19/09 11:02 AM by Alex Adrianson

New Issue of the The Insider

The new issue of The Insider is out, and it focuses, appropriately, on health care. Here’s the rundown of the articles from the editor’s note:

Have you ever seen a doctor list his prices? Why would you care when your low-deductible, employer-provided insurance—which is encouraged by the federal tax code—is probably covering the services you need? Ever tried to buy health insurance from an out-of-state insurer? By federal law, it’s illegal to sell health insurance across state lines. That arrangement lets states pass all manner of mandates raising the costs of health insurance without having to worry about out-of-state competition undercutting prices.

Government impedes competition, but we’re now told by various health care reformers, including President Barack Obama, that government needs to create competition. They want to create a public health insurance plan to “compete” with private insurers. If the government were to tilt the playing field so as to favor the government plan, wouldn’t that be an anti-competitive practice? Yet those who warn against such an inevitability are now castigated as being opposed to competition. Orwell would surely appreciate this turn of language.

We’re also told that a public plan will achieve “efficiencies” by identifying “best practices” and cost-effective treatments. Here, too, Orwell’s sense of language is helpful. As Sally Pipes, Peter Pitts, and Helen Evans explain in their respective articles, efficiency in a system dominated by government payers does not mean that the patient gets the care he needs. Nor does it mean that patients get the greatest value for the dollars spent. It means the government is very aggressive at limiting expenses to stay within a global budget. If that means denying care that would improve people’s lives—well that’s the government’s definition of efficiency.

In other articles in this issue, we talk with Dan Peters of the Philanthropy Roundtable about the importance of philanthropic freedom, William Schambra explains what makes conservative philanthropy work, and David All provides online fundraising ideas.

Posted on 06/18/09 06:34 PM by Alex Adrianson

Victims of Communism Remembered

June 16, 2009: Wreath-laying ceremony at the Victims of Communism Memorial:

Posted on 06/18/09 02:46 PM by Alex Adrianson

The Journalism that Think Tanks Do

Grant Bosse makes a career out of digging into the nitty-gritty of state government and reporting what he finds. His work can be found in print publications and online. His most recent report focused on how the New Hampshire legislature’s search for budget savings threatened the ability of hundreds of students to continue attending their charter schools. Before his current gig, he reported news for a radio station.

Sounds like he’s a journalist, right? The New Hampshire Senate thought so, too—and then changed its mind. On June 3, Bosse was informed that the Senate president, Sen. Sylvia Larsen, no longer recognized his press credentials and that he would have to leave the Senate floor. The reason for the revocation, he was told, was that he worked for a think tank not a media organization. Bosse does his investigative work for the Josiah Bartlett Center for Public Policy, New Hampshire’s free market think tank.

The distinction might make sense to politicians trying to leverage their control over access into favorable coverage, but it doesn’t match the reality of media these days. There are clearly more people doing journalism than who work for accredited news organizations. Some of those who are called bloggers do work that rises to the level of journalism. Meanwhile, a lot of state-based think tanks like the Josiah Bartlett Center have hired professional journalists to do … well, journalism. Among them are the John Locke Institute (publisher of the exposé-laden Carolina Journal), the Mackinac Center for Public Policy (whose Kathy Hoekstra, a veteran broadcaster, has produced numerous video reports, including a series exposing the false claims of job creation by Michigan’s film incentive program), the Goldwater Institute (which recently hired award-winning reporter Mark Flatten to do investigative work), and the Tennessee Center for Policy Research (Remember Al Gore’s electric bills? That was them.).

(If Sen. Larsen had wanted to stay current on this issue, then she should have read the Summer 2007 issue of The Insider, which featured the article Uncovering the Culture of Corruption: How Investigative Journalism Complements the Work of a Think Tank” by the John Locke Institute’s John Hood.)

A journalist is anybody who gets the facts and tells the story. Clearly think tanks of all sorts, national and state-based, are uncovering important information about what government is up to, and they are getting that information out to their audiences with much the same technology. Sure, they have a point of view, too, but so does a lot of the stuff published by traditional news outlets. The revelation this week that ABC news is airing a special report on health care from inside the White House raises all sorts of legitimate questions about whether that network has sold its news reporting soul for access. If accreditation isn’t to become a racket, then the media gate keepers need to take a more expansive view of what a media organization is.

Posted on 06/17/09 07:06 PM by Alex Adrianson

Lee Edwards on the Global Museum on Communism

The Victims of Communism Memorial, unveiled in 2007, serves as an important reminder of a fact that should never be forgotten: In the last century Communist governments killed 100 million people. Now, the Victims of Communism Memorial Foundation has unveiled an online Global Museum on Communism to help tell the whole story of Communism from 1917 up to the present day.

We sat down recently to talk with Lee Edwards, chairman of the Victims of Communism Memorial Foundation, about the museum and its mission of making sure people never forget Communism’s crimes.

Posted on 06/17/09 03:33 PM by Alex Adrianson

Class War—What Is It Good for?

Dan Mitchell: Five reasons why Obama’s plans to raise taxes on the rich will hurt everybody:

Posted on 06/16/09 03:14 PM by Alex Adrianson

Now Live: Global Museum on Communism

Don’t forget to check out the Global Museum on Communism, which launches today. It’s part of the continuing efforts of the Victims of Communism Memorial Foundation to make sure that the world never forgets the crimes committed in the name of Communism.

The museum features an online registry where the victims of Communist rule and their families can submit testimonials, an exhibit for each country that suffered a Communist regime, scholarly articles on particular aspects of Communist rule, a multimedia timeline of the major events in the history of Communism, and much more.

(In the the photo at right, from the museum’s exhibits, a man sits frozen to death somewhere in the Soviet Gulag.)

Posted on 06/16/09 02:41 PM by Alex Adrianson

Tea Party Tuesday: How to Plan an Event

How-to: If you are planning an event, we recommend John Hilboldt’s “So You Want to Hold a Public Event?” from the Summer/Fall 2006 issue of The Insider. Hilboldt, director of lectures and seminars at The Heritage Foundation, identifies the questions you need to ask yourself before you can pull off a great event.

Talking Point: Government-run health plans always cost more than what they are originally projected to cost. Cato’s Michael Tanner and Chris Edwards write:

When Medicare was launched in 1965, Part A was projected to cost $9 billion by 1990, but ended up costing $67 billion. When Medicaid’s special hospitals subsidy was added in 1987, it was supposed to cost $100 million annually, but it already cost $11 billion by 1992. When Medicare’s home care benefit was added in 1988, it was projected to cost $4 billion in 1993, but ended up costing $10 billion. Or consider that when Massachusetts Commonwealth Care was put into place in 2006, it was expected to cost about $725 million annually, but the expected cost for 2009 is now almost $1 billion.

President Obama’s health care agenda—an agenda of more taxes, spending, mandates, and regulations—is currently projected to have a 10-year cost of between $1 trillion and $1.5 trillion.

First Principles: Thomas Jefferson:

[A] wise and frugal government … shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.

To learn more about the Founders and their vision of limited, constitutional government, see the online Founders’ Almanac.

If you have an item you would like to share with Tea Party Tuesday, just send an e-mail to with “For Tea Party Tuesday” in the subject line.

Posted on 06/16/09 11:28 AM by Alex Adrianson

Mandating Medical Utopia

By now you’ve probably heard that President Obama and the Democrats in Congress have a plan to reform health care that they say will control costs, expand choices, improve quality, and extend coverage without adding to the budget deficit. Is that what we can really expect from a program of more spending, taxes, regulations, and mandates? Here are some good reads to keep you informed about the health care debate:

• One plank of the Democrats reform plan is to create a public health insurance option to compete with private insurance. Government health insurance, the plan’s supporters say, does a better job of controlling costs than do private payers. Jeffrey Anderson, a fellow at the Pacific Research Institute, finds that our experience with government financed insurance suggests exactly the opposite it true. Since 1970, Medicare’s per-patient expenses have grown 34 percent more than have the per-patient expenses of privately purchased health care.

• How can government extend coverage, expand choices, and maintain quality without increasing costs? Health care will become more efficient, we’re told, through government-defined best practices, government-funded research on the effectiveness of treatments, and government investments in health care information technology. In estimating the cost of the Democrat’s plan, however, the Congressional Budget Office isn’t playing along. CBO Director Douglas Elmendorf told Congress: “The adoption of more health IT is generally not sufficient to produce substantial savings because the incentives for many providers to use that technology in ways that control costs are not strong … Generating additional information [through comparative effectiveness research] is likely to have a very limited effect on spending for healthcare.”

• Is Medicare a model for quality? The Heritage Foundation’s Dennis Smith points out that Medicare’s fee-for-service system rewards inefficiency and punishes innovation. Attempts to reform the system, however, have backfired: “Pay for performance” reforms have encouraged doctors to drop noncompliant patients and avoid patients with complex medical needs. All of which points up the pitfalls of reliance on government mandates instead of market forces.

• Economists have identified a number of reasons for the growth in health care costs over the years, including the overuse of insurance, low labor productivity in health care, and a constrained supply of health care providers. Even though controlling costs is a major selling point of the Democrats plan, the plan does not address any of these sources of cost growth. Dustin Chambers, writing in The American, does, providing a good review of the real causes, which, of course, must be the starting point for finding real solutions.  

Posted on 06/15/09 03:57 PM by Alex Adrianson

The Health Care Bill Due

From Cato’s Michael Tanner and Chris Edwards, here’s a short list of middle class tax increases that Congress is considering as a way of paying for health care reform: Eliminating the tax exclusion on employer-provided health insurance; eliminating the tax advantages of health savings accounts and flexible spending accounts; limiting the deductibility of medical expenses; adding a 3 cent tax per 12-ounce drink of sodas, sports drinks, fruit juices, and ice teas; increasing the federal beer tax by between 33 cents and 81 cents per six-pack; increasing the federal wine tax by between 21 cents and 70 cents per bottle; and requiring U.S. multinational to pay a higher corporate tax, putting them at a competitive disadvantage to the multinationals of nearly every other country in the world.

According to Tanner and Edwards, if all those tax increases were passed into law, they would produce about $700 billion in additional revenue over the next decade. That’s less than half of the $1.5 trillion that the Lewin group projects will be needed to pay for the health care reforms proposed by President Obama, which raises the question: What other tax increases will they think of?

Posted on 06/12/09 09:59 AM by Alex Adrianson

Another One-Sixth of the Economy Targeted for Takeover

Various proposals to create a public health insurance option to compete with private health insurance have elicited great concern because of the inevitability that the government will tilt the playing field toward its plan, thus destroying real competition. But that isn’t the only threat to private health insurance that’s on the table. As Keith Hennessy points out, Sens. Edward Kennedy (D-Mass.) and Christopher Dodd (D-Conn.) have recently introduced a health-care reform bill that not only creates a public health insurance option, but also

• Gives a government-appointed Medical Advisory Council the ability to determine a standardized package of minimum benefits;
• Establishes three tiers of standardized copayments and deductibles, as well as the total dollar value of benefits included relative to an industry average;
• Mandates relative premiums for people with different risk profiles;
• Gives the Secretary of Health and Human Services authority to set a maximum percentage of administrative expenditures and profits for health plans;
• Requires plans to provide incentives for certain models of delivery of medical care; and
• Gives State “Gateways” authority to redistribute resources among health plans to account for the risk distribution of their beneficiaries.

What kind of competition will we see when all the important terms of health insurance contracts are determined by regulations, committees, and political appointees? It will be the kind of competition that does not lead to lower prices. As John Goodman explains, the reform proposals 

... impose rich, standard packages of benefits, with low deductibles, for all Americans. Those policies, typically containing everything from in-vitro fertilization to mental health benefits, are usually far more expensive than anything most people would pay for with their own money.

... impose on a federal level the doctrine of community rating, in which all customers have to be offered the same rates, regardless of their health risks. Community rating forces young people to pay far more than their actual cost, a main reason for today’s 46 million uninsured, while it subsidizes older patients.

... ban consumers from buying private insurance across state lines, perpetuating the price differences in today’s fragmented market, instead of allowing all Americans to shop anywhere for the best deals.

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

A Green Windfall for Big Business

Before the “trade” part of any cap-and-trade system happens, there must be the politics. As things stand now, 85 percent of the emissions allowances that would be created by the Waxman-Markey cap-and-trade bill, should it pass, have already been set aside free of cost for various industries, report Ben Lieberman and Nicolas Loris. That’s the price of buying off business support for the plan.

Because nearly all economic activity results in greenhouse gas emissions, the companies that don’t receive allowances must either bid for them or buy them from companies who are willing to sell their allowances. The companies that end up selling the allowances they receive for free thus get a pure windfall at the expense of the companies that don’t—all because the government creates a new right by fiat.

Here’s a scoreboard showing what various industries’ lobbyists will have won if the bill passes as it currently is:

Posted on 06/11/09 05:33 PM by Alex Adrianson

The Experts Might Be Wrong—Or Not

Reason’s Steve Chapman aptly sums up the state of the debate:

If the economy improves and unemployment drops, Obama can take credit. If it fails to improve and unemployment rises, though, he can say he averted an even worse showing. Republicans will take the opposite tack—attributing any improvement to the natural resilience of the economy and blaming the administration if things get worse. And neither side will really know who’s right.

Maybe we’re being naïve, but shouldn’t we ask those who want to reduce liberty to demonstrate that their ideas will at least work? If the experts really don’t know, why not give the benefit of the doubt to policies that preserve or expand liberty?

Posted on 06/11/09 05:06 PM by Alex Adrianson

Be Thrifty

John Maynard Keynes picked the wrong word when he coined the phrase “paradox of thrift,” says David Blankenhorn, president of the Institute for American Values:

Thrift connotes industry, hard work, prosperity. The goal of thrift is to gain and enjoy the good things of life. Says the 16th-century poet John Lyly: “Thy heart’s thirst is satisfied with thy hand’s thrift.” The great apostle of thrift Benjamin Franklin says: “Be industrious and frugal, and you will be rich.” When Franklin similarly advises that “Industry need not wish,” he is offering a strategy for getting one’s wishes: Be industrious. That strategy, he tells us, “consists very much in Thrift.” Franklin openly states that “wealth is not his that has it, but his that enjoys it.” …

The thrift ethic is a secular expression of the religious principle of stewardship. The main idea is that we are not the owners of our wealth, but rather the trustees, who are therefore ethically obligated to use our wealth wisely and carefully, for our benefit and for the benefit of others. The Puritan divine Cotton Mather, who strongly influenced Franklin, writes in Essays to Do Good, published in 1710: “This may be said of all our estates: what God gives us, is not given for ourselves, but, ‘for the Lord.’” A quarter-century later, Franklin, in Poor Richard’s Almanac, omits the theology and puts it this way: “The noblest question in the world is What good may I do in it?”

Thrift connotes saving, carefulness in spending, sustainability, and conservation. While such capacities do not define thrift, they are integral to the larger concept of wise use. Careful spending, for example, as we learn from several old writers, is “the handmaiden of generosity.” Franklin constantly emphasizes the importance of frugality. For many decades during the 20th century, U.S. and British mutual savings banks gave away to their depositors small metal “Thrift Banks” (to save coins in) and pamphlet-style “Books of Thrift” (full of tips for Mom and Dad about household budgeting). A character called “Uncle Thrift,” the star of an American children’s book published in 1923, raps: We will be a thrifty nation, / When we all learn conservation.

Put the pieces together, and the concept of thrift turns out to be a sophisticated call for the ethics and practice of wise use. Thrift is the art of making the wisest use of all that we have—time, money, possessions, our health, and our society’s natural resources—to promote both our own flourishing and the social good. The concepts most contrary to thrift are idleness and waste.

Posted on 06/11/09 02:22 PM by Alex Adrianson

Medicare’s Efficiency Myth

Since 1970, Medicare’s per patient costs have increased 34 percent more than have the per patient costs of privately purchased health care, according to Jeffrey Anderson, senior fellow at the Pacific Research Institute. Anderson’s calculations undercut a central claim that the Obama administration has been making about its health care reform plans: that creating a public insurance option modeled on Medicare will help control costs.

Other research, including that of Cristina Boccuti and Marilyn Moon, and of Jacob S. Hacker, has claimed to show that Medicare does a better job of controlling costs than does private health care. That research has helped build the case for a public insurance option. According to Anderson, however, Boccuti, Moon, and Hacker compared only private insurance costs to Medicare costs, forgetting that out-of-pocket expenditures are also a component of privately purchased health care. Anderson writes:

By selecting only the private-insurance segment of privately purchased care, these analyses neglect a major shift in privately purchased health care. From 1970 to 2007, out-of-pocket expenditures dropped from 62 percent of the privately purchased health care market to just 26 percent. Correspondingly, insurance expenditures increased from 38 percent to 74 percent. These authors make no allowances for that change. That’s like looking at LP or CD sales, but ignoring MP3s, and concluding that Americans are no longer as fond of music.

According to Anderson, the cost advantage for privately purchased health care is likely greater than his calculations show, because his estimates make some assumptions favorable to Medicare. For instance, because Medicare began covering prescription drugs only since 2006, Anderson counts all prescription drug expenditures as part of privately purchased health care in order to maintain a constituent basis for comparison since 1970. He does this in spite of the fact that much of the prescription drugs covered now by Medicare were previously covered by Medicaid, and thus never really part of private health care expenditures. Anderson also removes anyone on Medicare or Medicaid from the pool of patients receiving privately purchased health care, even though a significant portion (32 percent in 2000) of the health care received by those on Medicare was purchased privately. Anderson’s analysis also does not take into account the fact that Medicare’s low reimbursement rates lead providers to shift $88 billion of costs to private payers annually.

Using these assumptions, Anderson calculates that since 1970, Medicare’s per-patient costs have risen 26.2 times, while the per patient costs of total national health care expenditures minus Medicare and Medicaid have risen only 19.6 times. The policy implications?

If Medicare has in fact fared particularly poorly versus private out-of-pocket spending, then this gives even more credence to the argument, made by former U.S. Health and Human Services Secretary Mike Leavitt and others, that the real key to keeping health care costs in check is to increase consumer choice, price transparency, and cost consciousness, which is best accomplished by increasing the percentage of care paid for out of pocket. If we know how well Medicare has controlled overall costs versus privately purchased health care, then we necessarily also know this: that the better Medicare has controlled costs versus private insurance, the worse it has controlled costs versus private out-of-pocket spending. Thus, the more Boccuti, Moon, and Hacker are right that private insurance has not controlled costs as well as the whole of privately purchased care, the more Leavitt and others are right that consumers, paying out of pocket, are the best bargain shoppers and the surest pursuers of value in the American health care market.

(See “Medicare Costs Have Risen Far More than the Costs of Private Health Care” by Jeffrey H. Anderson, published by the Pacific Research Institute, June 2009.)

Posted on 06/11/09 12:23 PM by Alex Adrianson

Expect Stagflation

Since September of 2008, the Federal Reserve has increased the money supply by a little less than $1 trillion. That increase, says Arthur Laffer, will lead to four or five years of rapid inflation, higher interest rates, lower employment, and reduced output, much like the 1970s—or perhaps worse:

The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10 (see chart nearby). It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless. … It’s difficult to estimate the magnitude of the inflationary and interest-rate consequences of the Fed’s actions because, frankly, we haven’t ever seen anything like this in the U.S. To date what’s happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits. Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn’t a pretty picture.

Why not withdraw the liquidity? The Fed should, but probably won’t, says Laffer:

If the Fed were to reduce the monetary base by $1 trillion, it would need to sell a net $1 trillion in bonds. This would put the Fed in direct competition with Treasury’s planned issuance of about $2 trillion worth of bonds over the coming 12 months.

Posted on 06/10/09 06:25 PM by Alex Adrianson

Tea Party Tuesday: Fighting Waste in Local Government

So you’ve been to a Tea Party protesting out-of-control government spending. Or perhaps you couldn’t make it to one of those events, but want to get involved now. What’s next for efforts to make governments accountable to taxpayers? A lot of attention is focused on the fiscal policies of the federal government—and rightly so—but state and local governments can be significant sources of waste, fraud, and abuse, too. And citizens may find their voices are most effective when organized to impact their local communities.

There may already be a local taxpayer watchdog in your community. If so, you should consider volunteering your efforts to that group. If not, you should consider starting a taxpayer organization for your community. We recommend two articles to help you and your fellow citizens organize to keep government spending in check.

In “How to Form a State or Local Taxpayer Group,” published in the Winter 2009 issue of The Insider, Kristina Rasmussen and Pete Sepp provide a step-by step-guide to forming a taxpayer group, from announcing the group, to scheduling the meetings, to dividing up responsibilities, to promoting your group’s work, to setting priorities. Rasmussen and Sepp also provide details on how you can obtain start up funds from the the National Taxpayers Union’s Standing Together Grant Program.

In “How to Reduce Property Taxes with a Citizens Audit Committee recently published by Connecticut’s Yankee Institute, Armand Fusco and Lewis Andrews explain how a citizens audit committee can be created to scrutinize the spending of local governments and school districts. Andrews is a policy analyst with the Yankee Institute, and Fusco is a former school superintendent who has been involved in education for over 50 years. Fusco has helped the towns of Enfield, Conn., and Redding, Conn., use citizens audit committees to identify wasteful spending. So where are the bodies buried? Don’t look in the budget expecting to find a line-item called waste, fraud, and abuse. You have to get and read through the check registers which is a record of all the checks the government or school district has written. It’s public information, but you may have to ask for it. That and other essential tips can found in Fusco and Andrews’s article.

Happy reading, and happy organizing!

If you have an item you would like to share with Tea Party Tuesday, just send an e-mail to with “For Tea Party Tuesday” in the subject line.

Posted on 06/09/09 12:01 PM by Alex Adrianson

Bastiat Prize Accepting Entries Till June 30

The International Policy Network is accepting entries for its Bastiat Prize until June 30. Every year, IPN’s Bastiat Prize recognizes “writers whose published works promote the institutions of a free society: limited government, rule of law brokered by an independent judiciary, protection of private property, free markets, free speech, and sound science.”

The award is named after the French writer Frederic Bastiat who was famous for wittily demonstrating the fallacies of economic protectionism and other statist policies. In his “A PETITION From the Manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting” Bastiat called on the French Chamber of Deputies “to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds – in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses” in order to fight the unfair competition from the sun which “apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price.”

Bloggers take note: This year’s Bastiat Prize also features a separate award for online journalism.

Posted on 06/08/09 06:15 PM by Alex Adrianson

Coming Up: Tea Party Tuesday

Next up for the Tea Party movement is July 4, Independence Day, when many groups will hold events to remind their fellow citizens that we celebrate not just the independence of those British colonies that became the United States; we celebrate also the vision of self-government that inspired the Founders. The U.S. constitutional structure puts the people in charge of the government, not the other way around.

To help keep things that way, starting this Tuesday and every Tuesday thereafter, we will post articles from The Insider archives that provide helpful ideas on how citizens can get involved and hold their government accountable. As always, we invite other groups to share their resources with us. If you have an item you would like to share with Tea Party Tuesday, just send an e-mail to with “For Tea Party Tuesday” in the subject line.

Stay tuned for some good ideas.

Posted on 06/05/09 01:09 PM by Alex Adrianson

CEI Celebrates 25 Years

Congratulations to the Competitive Enterprise Institute which next week celebrates its 25th anniversary. You know what that means: a party. CEI will hold its 25th annual dinner and gala next Thursday, June 11. John A. Allison, IV, Chairman of BB&T Bank will deliver the keynote address, and Tucker Carlson will be the master of ceremonies. The festivities kick off with a reception at 6 p.m. at the Hyatt Regency Washington on Capitol Hill. (See: Invitation.)

Posted on 06/05/09 12:17 PM by Alex Adrianson

America’s Ally

In a speech seeking a new beginning between the United States and the Muslim world, delivered earlier today in Cairo, President Obama stated:

America’s strong bonds with Israel are well known. This bond is unbreakable. It is based upon cultural and historical ties, and the recognition that the aspiration for a Jewish homeland is rooted in a tragic history that cannot be denied.

Indeed, Israel is the United States’s strongest ally in the Middle East, as reflected in how often the two countries vote the same way in the United Nations:

Source: U.S. State Department, Voting Practices in the United Nations, 2008, via Michael Rubin at The Enterprise Blog.)

Outreach to the Muslim world is a good idea, as long as the administration makes it clear that it is not going to forget which countries have shown by their actions that they share America’s values.

Posted on 06/04/09 01:38 PM by Alex Adrianson

Efficiency—Not Quite What the Government Says It Is

The case for cutting emissions by forcing Americans into smaller/denser living units is based on bad data, says Heritage fellow Ron Utt. “Smart growth” advocates point to data in the Department of Energy’s Buildings Energy Data Book to claim that apartments are much more energy efficient than single family homes. But the DOE forgot to count some of the energy consumption associated with apartments. Specifically, says Utt,

… the Energy Department forgot to collect and incorporate information on the energy required to light the common areas, including exterior and parking areas, lobbies, stairwells, laundry rooms, and hallways. The Energy Department also forgot to collect data on the energy used to heat and cool these common areas and the energy used to operate the elevators, washers and dryers, and swimming pools. By the Energy Department's own admission, none of the many comparative analyses and tables presented in the Buildings Energy Data Book include this significant use of energy.

Had these uses of energy been included in the data and in the calculations cited in the 2008 Buildings Energy Data Book, then the data per square foot would be even more favorable to single-family detached dwellings. And more accurate data would either have narrowed or flipped the apartment-household difference in favor of single-family units. The 2008 Buildings Energy Data Book is therefore utterly worthless in guiding policymakers to a rational energy conservation strategy as it relates to tenancy choices.

Proponents of social engineering have a history of confabulating claims about the efficiency of their plans. Advocates of single-payer health care, for instance, famously claimed that herding everyone into a single-payer health care system would produce savings on administrative costs that alone would be more than enough to finance the additional cost of providing public insurance to the 47 million Americans currently not insured. That turns out to be false, in part because there are substantial hidden costs in government activities that are not counted as part of Medicare’s administrative costs. According to Benjamin Zycher of the Manhattan Institute, Medicare’s administrative costs are actually twice as large as those reported directly by the program. [See “Comparing Public and Private Health Insurance: Would A Single-Payer System Save Enough to Cover the Uninsured?” by Benjamin Zycher, Manhattan Institute, October 2007.]

Posted on 06/03/09 06:58 PM by Alex Adrianson

Global Museum on Communism to Launch June 16

The Global Museum on Communism will officially be unveiled on June 16. This museum is a Web site that will contain oral histories and other exhibits telling the whole story of Communism from Karl Marx to the present day. It’s just a part of the continuing efforts of the Victims of Communism Memorial Foundation to educate the public about the crimes of Communism. (See: preview videos.) Ultimately, the foundation plans to build a “bricks and mortar” museum as a permanent record of the crimes of Communism.

Festivities to mark the Web site launch include a ribbon cutting ceremony and reception at the Romanian ambassador’s residence in Washington, D.C. The reception runs from 6:30 p.m. to 8:30 p.m. You can register online; a donation is requested for admittance. Also on the 16th, there will be a wreath laying ceremony at the Victims of Communism Memorial (intersection of Massachusetts Ave. and New Jersey Ave., NW, Washington, D.C.) at 10:30 a.m.; and, at noon in the Rayburn House Office Building, the Truman-Reagan Medal of Freedom Ceremony will recognize international heroes of freedom. (More: Victims of Communism Memorial Foundation.)

Posted on 06/03/09 12:16 PM by Alex Adrianson

… Not That There Is Anything Wrong with the Name Jose

The name Jose is only the 13th most popular name in Los Angeles, according to a recent Pew Center study on immigration. A decade ago, it was the most popular. That, says Kay Hymowitz, is a sign that “Hispanics are assimilating to American life much like previous generations of newcomers and as successfully as the so-called ‘model’ Asian immigrants.”

The bad news, says Hymowitz:  

Most immigrants start off rather poor and over generations move up the socioeconomic ladder. Hispanics fit that pattern at first. Forty-seven percent of first-generation Latino children are poor; that rate falls to 26 percent by the second generation. So far, so good. But the third generation shows a disturbing lack of progress. Its poverty rate has barely budged, with 24 percent of its kids poor. … [O]ne cause is clear: the large proportion of Latino children being raised by a single parent. According to the Pew study … the proportion of such children rises over time and is actually higher in the third generation than in the first and second.

Perhaps there are some ways in which Hispanics would do better to assimilate less, such as by not adopting the casual attitude toward marriage that has led to the breakdown of the family in other American communities. For a discussion of this problem, see Kay Hymowitz’s article “Marriage and Caste in America” in the Spring 2007 issue of The Insider.

Posted on 06/02/09 04:17 PM by Alex Adrianson

Killing Motorists

If the past is any guide, the higher fuel-efficiency standards that President Obama has proposed run the risk of inducing car makers to make lighter cars than they otherwise would—and therefore to reduce the crashworthiness of their fleets. The National Research Council concluded as much in a 2002 report:

Past improvements in the overall fuel economy of the nation’s light-duty vehicle fleet have entailed very real, albeit indirect, costs. In particular, all but two members of the committee concluded that the downweighting and downsizing that occurred in the late 1970s and early 1980s, some of which was due to CAFE [Corporate Average Fuel Economy Standards], probably resulted in an additional 1,300 to 2,600 traffic fatalities in 1993. [Source: Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards, © 2002 by the National Academy of Sciences, p. 3.]

If CAFE were a chemical that caused 1,300 deaths per year, it would surely be illegal. finds a darkly comic way to make the point:

Posted on 06/02/09 03:12 PM by Alex Adrianson

Cutting Emissions: Where’s the Benefit?

The Waxman-Markey cap-and-trade bill doesn’t pass Jim Manzi’s cost-benefit analysis:

Climatologist Chip Knappenberger has applied standard climate models to project that, under the scenario for global economic and population growth referenced above, Waxman-Markey’s emissions reductions would have the net effect of lowering global temperatures by about 0.1°C by 2100. Remember that the estimated cost of a 4°C increase in temperature (40 times this amount) is about 3 percent of global economic output. Assume for the moment that global warming has the same impact on the U.S. as a percentage of GDP as it does on the world as a whole (an assumption that exaggerates the impact on the U.S.). A crude estimate of the U.S. economic costs that Waxman-Markey would avoid sometime later than 2100 would then be about one-fortieth of 3 percent, or about 0.08 percent of economic output. This number is one-tenth of 0.8 percent, the EPA’s estimate of consumption loss from Waxman-Markey by 2050. To repeat: The costs would be more than ten times the benefits, even under extremely unrealistic assumptions of low costs and high benefits. More realistic assumptions would make for a comparison far less favorable to the bill.

Manzi’s alternative:

The British entrepreneur Richard Branson has offered a $25 million prize to anyone who demonstrates a device that removes significant amounts of carbon from the atmosphere. What if the U.S. government upped the ante to $1 billion and pledged to make any resulting technology freely available to the world? That would solve any global-warming problem that might develop, at a one-time cost of less than 0.01 percent of U.S. GDP. Of course, this agency would still be a government program, and therefore rife with inefficiencies. But consider that its costs would be on the order of 1/100th of the costs of imposing a large U.S. carbon tax.

Read the whole article (“Dunce Cap-and-Trade”) at National Review for additional thoughtful dissection of the whole cap-and-trade idea.

Posted on 06/02/09 01:34 PM by Alex Adrianson

The GM Bankruptcy: Who’s Really Being Protected?

Ross Kaminsky does the math:

The government’s conversion of nearly $50 billion in debt into a 60% stake in the company implies a total company value of $83 billion. While a detailed valuation analysis will be left for another time, it bears mentioning that the highest total stock valuation GM ever achieved was about $52 billion in April, 2000. Yes, you read that right: President Obama is “investing” in General Motors with your money at a price about 60% higher than the highest price at which GM has ever traded. … An analyst on CNBC said today that GM bonds are trading at a price which implies a $25 billion value for “new GM” …


The horrendous treatment of bondholders in comparison to the union cannot be overstated. Last week Ron Gettelfinger, the president of the UAW said that GM’s retirees will see 25% reductions in their health care benefits under the plan. Compare that to the cramdown forced on bondholders: They are getting 10% of the new GM which, if you accept the administration’s implied valuation of $83 billion, means they’re losing 70% of the value of their investment, reduced slightly by the value of the warrants they’ll receive. A more reasonable valuation would show the bondholders losing 90% or more.

Just a thought: Maybe GM could get a better price for its bonds if investors were not afraid the government might threaten their stake in any future shakeout.

Posted on 06/02/09 11:08 AM by Alex Adrianson

The Trouble with Empathy, II

Another wise comment on the issue of judges and empathy, this one from Cato fellow John Hasnas:

In general, one can feel compassion for and empathize with individual plaintiffs in a lawsuit who are facing hardship. They are visible. One cannot feel compassion for or empathize with impersonal corporate defendants, who, should they incur liability, will pass the costs on to consumers, reduce their output, or cut employment. Those who must pay more for products, or are unable to obtain needed goods or services, or cannot find a job are invisible.

The law consists of abstract rules because we know that, as human beings, judges are unable to foresee all of the long-term consequences of their decisions and may be unduly influenced by the immediate, visible effects of these decisions. The rules of law are designed in part to strike the proper balance between the interests of those who are seen and those who are not seen. The purpose of the rules is to enable judges to resist the emotionally engaging temptation to relieve the plight of those they can see and empathize with, even when doing so would be unfair to those they cannot see.

Calling on judges to be compassionate or empathetic is in effect to ask them to undo this balance and favor the seen over the unseen. Paraphrasing Bastiat, if the difference between the bad judge and the good judge is that the bad judge focuses on the visible effects of his or her decisions while the good judge takes into account both the effects that can be seen and those that are unseen, then the compassionate, empathetic judge is very likely to be a bad judge. For this reason, let us hope that Judge Sotomayor proves to be a disappointment to her sponsor.

Posted on 06/01/09 04:17 PM by Alex Adrianson

Capitalism’s Accomplishments

(Photo from Reason’s Hit and Run Blog.)

If the people putting up these stickers don’t like the direction the world has taken since 1980, then they’ve got the right culprit. Of all the scholars who helped lay the intellectual foundations for the free market reforms implemented by Ronald Reagan, Margaret Thatcher, and other world leaders, few to none were more important than Milton Friedman. How far did the governments of the world go toward actually implementing Friedman’s ideas? From Andrei Shleifer’s recent article “The Age of Milton Friedman,” (via Daily Policy Digest) here are some measures:

Taxes: Between 1980 and 2005, top marginal income tax rates the world over fell from a population-weighted average of 65 percent to 36.7 percent.

Trade: Between 1980 and 2004, tariff rates the world over fell from a population weighted average of 43 percent to 13 percent.

Financial liberalization: In the 1980s, most governments restricted foreign exchange transactions; by 2005 “black market” exchange rates had nearly vanished.

Sound money: “The world median (taken over countries) inflation rate in 1980 was 14.3 percent; by 2005 that median declined to 4.1 percent.”

But before describing this state of affairs as global misery, the purveyors of those stickers should check these data, also supplied by Shleifer, showing the progress that has been made in the Age of Milton Friedman:

Infant mortality: Between 1980 and 2005, worldwide infant mortality dropped from a population-weighted average of 64.5 deaths per thousand births to 37.5 deaths per thousand births.

Education: “Worldwide population-weighted years of schooling grew from 4.4 in 1980 to almost 6 in 1999.”

Poverty: “Between 1980 and 2000, the share of the world’s population living on less than $1 a day fell from 34.8 percent to 19 percent.”

Do the folks putting up those stickers really believe that the turmoil of the last 18 months has negated all of those gains? Or that we couldn’t have just as much progress over the next 25 years if we let capitalism flourish once again? We have the feeling they probably do believe it, which is sad.

Posted on 06/01/09 03:43 PM by Alex Adrianson

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