by Richard Morrison
September 16, 2008

Lehman Brothers files for Chapter 11 bankruptcy protection.

CEI Expert Available to Comment: Center for Entrepreneurship Director John Berlau on why bankruptcy isn’t a dirty word:

“Business failure is not only a permissible outcome of capitalism, it’s a necessary one. As the great economist Joseph Schumpeter has written, the process of “creative destruction” is essential for the market to function. For innovation to flourish and the standard of living of the populace to improve, the market must be free to reward success and punish failure.

2. CONSUMER

Members of Congress consider reforming the National Flood Insurance Program.

CEI Expert Available to Comment: Senior Fellow Eli Lehrer on one suggested change that would make the program worse:

“The real threat, however, is the house-passed provision that would add wind insurance to the National Flood Insurance Program. For all intents and purposes, this would replace homeowners’ insurance in much of the country with a government program. It would cost a fortune and wouldn’t work well even on a modest scale. Congress needs to renew the program but, with luck, it can pass legislation that will contract it rather than making it bigger and more burdensome.

3. ENERGY

Democrats and Republicans debate U.S. offshore oil drilling in hopes of reducing prices and achieving “energy independence.”

CEI Expert Available to Comment: Director of Energy Policy Myron Ebell on the problem with energy independence:

“We can produce much more oil and natural gas domestically, which means that we won’t have to import as much. Reducing our trade deficit and creating thousands of high-paying jobs is a good thing. But achieving energy independence would require replacing much of the oil that we import with higher-priced alternatives. That would put our economy at a competitive disadvantage versus countries that continued to rely on cheaper oil imports. Politicians of both parties can talk all they want about the need to stop buying Mideast  But the fact is that Saudi Arabia is the lowest-cost producer and will still be selling oil when every other producer has been put out of business.  If we really did stop importing oil, the producers that would go out of business would be our two largest suppliers—Canada and Mexico.”

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