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  • Bitcoin’s Undiscovered Potential

    Matt Powers
    July 28, 2014 9:58 AM

    A recent piece in American Banker magazine explores how Bitcoin and other cryptocurrencies can help the underprivileged, particularly the millions of unbanked people who do not have bank accounts. This is an area where digital currency could do much good.


    In fact, the online microfinancing platform Kiva has already begun a peer-to-peer service, known as Kiva Zip, whose model resembles some of the features in Bitcoin. Microfinancing is a form of lending for lower-income people that provides smaller loans than commercial banks are typically able to offer. Kiva Zip’s peer-to-peer structure means that users interact directly with each other, without administrators or other institutions acting as a middleman.


    Another service known as Swarm is already proposed to implement crowdfunding based on the Bitcoin protocol. Crowdfunding is a service where persons or companies propose a project or service they wish to develop and create a campaign to solicit funds for development. It is typical for campaigners to offer prize incentives for larger contributions, such as earlier access to the product or other perks.


    These new innovations represent just the initial adaptations of the Bitcoin protocol. In order for these technologies and services to continue to develop—and to help people—it is imperative that new regulations not be prematurely implemented. Otherwise, it will not be just Bitcoin businesses that suffer. Those at the bottom of the economic ladder could suffer as well, as they would lose precious opportunities to access capital.


  • Obama Claim Spurious; Labor Unions Furious; New Ranking Curious

    Aloysius Hogan
    July 28, 2014 9:55 AM

    Coauthored with Alex Bolt.


    President Barack Obama spuriously claimed, "These so-called right-to-work [RTW] laws, they don't have anything to do with economics," when he futilely attempted to thwart Michigan’s enactment of a right-to-work law.


    A new study by the Competitive Enterprise Institute demolishes Obama’s spurious claim by showing how RTW laws, which free workers from a mandate to join a union in order to be employed, benefit states.  RTW laws produce better income, population, and job growth than in forced-unionism states.


  • CEI’s Battered Business Bureau: The Week in Regulation

    Ryan Young
    July 28, 2014 7:33 AM

    Seventy-four new regulations, from spearmint oil to insurance exchanges.


  • Subprime Auto Concerns Caused by Government Intervention

    John Berlau
    July 25, 2014 1:19 PM

    Should we worry about a crisis in subprime auto loans? That question has been asked in the financial media lately.


    My answer is yes, with caveats. While there are important differences in the auto and mortgage markets, there are similar government interventions that have the potential to fuel a bubble in car loans the same way they did for home loans.


    First, the differences. So far, thankfully, there is no auto equivalent of a Fannie Mae, Freddie Mac, or other government-sponsored enterprise to inflate the car loan market. Sure, there have been lots of bailouts in the auto industry in general, but the secondary market in car loans has developed largely on its own.


    And without a government backstop, it is much smaller than the mortgage market ever was. An otherwise alarmist front-page story this week by The New York Times conceded, “the size of the subprime auto loan market is a tiny fraction of what the subprime mortgage market was at its peak, and its implosion would not have the same far-reaching consequences.”


    Also, unlike with mortgages, there is no expectation among the vast majority of lenders of borrowers that a car’s value will appreciate. Most folks know that a car will be “underwater” the minute it is driven off the lot, and the loans are priced with that reality in mind.


    Yet, there are some striking similarities. But not the ones the NYT or other nannyists point to.


  • Obamacare Architect Admitted in 2012 States without Exchanges Lose Subsidies

    Ryan Radia
    July 24, 2014 6:09 PM

    This week, an unprecedented circuit split emerged in Halbig v. Burwell and King v. Burwell over whether health insurance premium assistance is available in states that didn’t set up health insurance exchanges. Many commentators have since claimed that there’s no way Congress intended to deny premium assistance to residents of the 36 so-called “refusenik” states that have not set up their own health insurance exchanges.


    But in January 2012, Jonathan Gruber—an MIT economics professor whom the The New York Times has called “Mr. Mandate” for his pivotal role in helping the Obama administration and Congress draft the Affordable Care Act—told an audience at Noblis that:


    What’s important to remember politically about this is if you're a state and you don’t set up an exchange, that means your citizens don't get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that's a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this.



  • CEI Podcast for July 24, 2014: Victory in Halbig v. Burwell

    Ryan Young
    July 24, 2014 3:16 PM

    General Counsel Sam Kazman talks about what the Halbig decision means for the Affordable Care Act, as well as broader principles such as taxation without representation and the rule of law. Click here to listen.


  • Fraud Rampant and Unpoliced on Obamacare Health Insurance Exchanges

    Hans Bader
    July 24, 2014 12:04 PM

    Almost anyone can fraudulently obtain taxpayer subsidies to cover most of the cost of their health insurance on the Obamacare health insurance exchanges. That’s the gist of recent news coverage in The New York Times, Reason, and Associated Press. The fraud is possible because the government doesn’t check’s people’s eligibility, or verify the claims they make in their applications, contrary to what former HHS Secretary Sebelius certified in January.  


    Applicants can submit a fake name and social security number, and no one even checks—not the government, not  insurers, not Obamacare contractors. This is the finding of a recent investigation by the federal Government Accountability Office, as described in The New York Times and Reason magazine.


    This matters because most of the cost of health insurance policies on the exchanges is picked up by taxpayers through tax credits, to the tune of billions of dollars a year. (87% of Healthcare.gov customers are getting taxpayer subsidies to purchase health insurance, with taxpayers on average footing 76% of the bill.)

  • Uber, Regulation, and Free Markets

    Marc Scribner
    July 23, 2014 1:56 PM

    Libertarians are justifiably excited about the prospects of ridesharing companies such as Uber and equally justified in their disgust of regulators intent on preventing the expansion of ridesharing services. However, supporting the regulatory accomodation strategy that Uber appears to have adopted and supporting free market policies are two very different things. Over at The Skeptical Libertarian, I attempt to briefly outline these concerns and urge libertarians to keep their eye on the prize: dramatic transportation services deregulation. Read it here.


  • America's Energy Advantage Dodges the Question

    Ben Mertens
    July 22, 2014 2:21 PM

    America’s Energy Advantage has responded to my July 1 post criticizing its stance on the Domestic Prosperity and Global Freedom Act. That bill would liberalize liquefied natural gas (LNG) exports, while AEA opposes such exports because they would supposedly raise the raise the price of the LNG used by AEA’s members. 


    As CEI has pointed out in the past, AEA is trying to use bureaucratic obstacles to restrict what companies can do with their products—an approach antithetical to free markets


    What’s ironic is that, in its response to my post, AEA relies on a study that actually demonstrates the broad beneficial effects of exports. This study is the NERA’s Macroeconomic Impacts of LNG Exports from the United States. AEA claims that, despite being a pro-export study, the NERA study actually enforces their view, that LNG exports should be limited. According to AEA, “Once one looks beyond the surface-level conclusion “exports provide net benefits to the U.S. economy,” at winners and losers…the NERA report shows that the “losers” in this scenario are ALL other sectors of the U.S. economy and consumers, while the “winners” are producers and exporters of LNG.”

  • Happy There’s-No-Such-Thing-as-Junk-Food Day!

    Michelle Minton
    July 21, 2014 1:54 PM

    Whomever it is that decides the dates for the ever multiplying obscure holidays apparently designated today, July 21, as “Junk Food Day.” While the origin and intended purpose of the day is a mystery, it’s a good opportunity to address the myth of junk food. I say myth because junk food is an oxymoron; there’s no such thing. There is food that is less nutritious or perhaps higher in calories than what people normally think of as “health foods,” but calling food “junk” implies that is without value. As Professors Stanley Feldman (of London University and the Imperial College School of Medicine) Vincent Marks of the University of Surrey, put it in their book Panic Nation,“[e]ither something is a food, in which case it is not junk, or it has no nutritional value, in which case it cannot be called a food.”


    Over the last year, the news about the so-called obesity epidemic in the US gives one reasons to be cautiously optimistic. Headlines have declared that abdominal obesity rates among kids are “levelling off” and studies show that folks with higher BMIs may not necessarily be at greater risk of dying from heart disease than those with “normal” BMIs. But that hasn’t stopped self-styled health advocates from declaring that we’re “losing the war” on obesity and calling for greater restrictions on what, where, and how food can be sold or advertised. 


    Whether it’s warning letters on sodajunk food taxes, pressuring food makers to reduce ingredients like salt or caffeine, or restricting sales and increasing prices on alcohol, proposals by public health advocates have one thing in common: people are not smart enough or strong enough to consume in moderation foods and ingredients that can make up an unhealthy diet when over-consumed. Which foods they consider “junk” are based on “accepted wisdom” about what constitutes an unhealthy food. However, the track record for these advocates as well as government agencies in implementing “accepted wisdom,” about nutrition is less than stellar.


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