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  • How Will the Future View the “Temples” of Eco-Theocrats?

    October 7, 2014 9:40 AM

    While vacationing in Germany recently, I noted many beautiful and now largely untenanted churches. Elegant, majestic against the sky, they are potent symbols of a religious system no longer observed by many. They are maintained now largely as historic and cultural artifacts. I also noted, framed against the German landscape, the “temples” of today’s eco-theocrats—gigantic engineering marvels dominating almost all ridge lines, the modern version of the technologies of the 15th Century—windmills. As a technocrat, I did appreciate their aesthetic nature and can only marvel at the deep beliefs that have encouraged the German government to spend hundreds of billions on their construction and on the electrical interconnections necessary to get that power to market.  

    As a result, energy costs have gone up dramatically, threatening the competitiveness of German industry (particularly the chemical and manufacturing sectors), encouraging firms to expand in nations with more affordable energy and raising consumer energy bills. Understandably, political opposition has mounted to Chancellor Angela Merkel’s grand “Energiewende” plan for moving Germany to greater dependence on wind and solar power. The current system is non-sustainable.

  • Results of "Cash for Appliances"

    October 7, 2014 9:26 AM

    Under the American Recovery and Reinvestment Act of 2009 (commonly called "the stimulus"), a $300 million program to subsidize consumer purchases of energy-efficient appliances called the State Energy Efficient Appliance Rebate Program was established. A recent working paper from the National Bureau of Economic Research analyzes the results of the "Cash for Appliances" subsidy scheme. It turns out that "Cash for Appliances" was an incredibly inefficient energy-efficiency program. From the conclusion:

    We estimate freeriding rates of 73% to 92% across our three appliance categories. As a result, our measures of cost-effectiveness, ranging from $0.44 to $1.46 per kWh saved, are an order of magnitude greater than the $0.06 per kWh average cost-effectiveness estimated for utility-sponsored energy efficiency programs. Even after generous assumptions about accelerated replacement, the cost per kWh saved of C4A remains 4 to 16 times greater than this average in the literature.

  • Must Every Product in the World Be Safe Enough for Children?

    October 6, 2014 10:14 AM

    The New York Times reported Friday on the David-and-Goliath battle of businessman Shihan Qu, the last of the rare earth magnet renegades. Mr. Qu’s company, Zen Magnets, is the last U.S. company selling the popular sets of unusually strong magnets that first became popular when marketed under the name Buckyballs® (named after inventor and designer R. Buckminster Fuller). These sets allow scientifically-curious customers to creatively experiment with different geometric forms. When Craig Zucker and Jake Bronstein started selling Buckyballs® through their company Maxfield & Oberton in 2009, they were immediately successful.

    Magnets this strong do have safety concerns, however, and some children have swallowed them and been injured as a result. This is why the companies selling them covered them in warning labels and didn’t supply the product to stores whose inventory is primarily targeted to children, like Toys R Us. Since the magnets require a fair amount of manual strength and dexterity to use, they were never marketed to children, gaining their following largely from popular science and geek-themed outlets.

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

    October 6, 2014 7:40 AM

    The Federal Register topped the 60,000-page mark on Friday, and is on pace for the 6th-highest page count in its 79-year history. Along the way, new regulations cover everything from 5K races to how magnets work.

    On to the data:

    • Last week, 79 new final regulations were published in the Federal Register. There were 84 new final rules the previous week.
    • That’s the equivalent of a new regulation every two hours and eight minutes.
    • So far in 2014, 2,756 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,589 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
    • Last week, 1,814 new pages were added to the Federal Register.
    • Currently at 60,035 pages, the 2014 Federal Register is on pace for 78,171 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 33 such rules have been published so far this year, none in the past week.
    • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
    • 227 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2014, 527 new rules affect small businesses; 78 of them are classified as significant. 

    Highlights from selected final rules published last week:

  • Journalists Called Out for Bad Reporting on Consumption Data

    October 3, 2014 2:20 PM

    Being a journalist is not an easy job; it demands fast paced and high volume production. For those “wonk” journalists tasked with analyzing data-heavy reports for laymen readers, the task is even more difficult. A new post from Forbes’s Trevor Butterworth scrutinizes some recent articles from The Washington Post’s Wonkblog, highlighting how some journos aren’t exactly rising to the challenge. And the consequences go beyond a misinformed public.

    On September 25, Wonkblog posted an article claiming that 24 million American adults are consuming a shocking average of 74 drinks per week. Butterworth delves into the source of those data and points out the numbers aren’t exactly accurate. The data were pulled from a 2007 report which used information from a survey of Americans’ consumption during 2001-2002. Of course, self-reporting surveys are notoriously flawed. Participants misremember what they ate, miscalculate how much, or outright lie about their consumption habits. Butterworth states that if people really consumed what they tell researchers in self-reporting surveys, “life for almost two thirds of Americans would be biologically implausible.”

    Cook, understanding these flaws, attempted to correct for underreporting by multiplying the reported number of drinks by 1.97 which, as Butterworth noted, “requires us to believe that every drinker misremembered by a factor of almost two. This might not much of a stretch for moderate drinkers; but did everyone who drank, say, four or eight drinks per week systematically forget that they actually had eight or sixteen? That seems like a stretch.”

    Furthermore, the study also requires us to believe that those reporting no consumption didn’t drink a drop and even more significantly problematic that those under 18 years old—who were not included in Cook’s study—never consumed alcohol. Plenty of data demonstrates that even though they aren’t legally supposed to drink, a fifth of 12th graders are consuming alcohol. Additionally, Cook’s study, which was trying to account for a discrepancy between how much people said they consumed versus how much alcohol was sold in America, did not account for waste. As Butterworth points out, “…waste is a huge issue with food, with estimates running from 30-40 percent of calories produced; we do not know how much alcohol is, if you’ll forgive the pun, wasted.” Lastly, he notes that other studies looking at consumption patterns “[a]ll converge on a similar proportion; none come remotely close to Cook’s estimate; none are mentioned in Wonkblog.”

  • Is Driving to Work in Decline?

    October 2, 2014 3:42 PM

    Over at The Washington Post's Wonkblog, urban affairs reporter Emily Badger has a post up on the recently released U.S. Census Bureau American Community Survey 2013 commuting data. The title of the post, "The share of Americans driving to work is declining for the first time in decades," seems to suggest that a smaller share of commuters are driving themselves to work. Badger relies almost exclusively on a Brookings Institution blog post that makes similar claims.

    However, what neither blog post mentions is that between 2007 and 2013, the share of Americans driving to work alone actually increased.

    While the Brookings authors at least note that "the vast majority of [those commuting by private automobile] travel alone rather than in a carpool," they don't point to the large decline in carpooling as a major source of the slight decline in private vehicle commuting. Below is a table containing the 2007 and 2013 ACS data cited by Brookings (and reblogged by Badger):

  • Moody’s $2 Trillion Public Pension Shortfall Estimate Highlights Need for Better Pension Accounting Practices

    October 1, 2014 11:12 AM

    In a new report, Moody’s estimates the nation’s largest pension funds face a $2 trillion taken together. That’s a lot of money. But as significant as the size of the deficit is Moody’s criticism of how many pension funds have been managed, and pension fund’s reporting of their own liabilities. Bloomberg reports:

    “Despite the robust investment returns since 2004, annual growth in unfunded pension liabilities has outstripped these returns,” Moody’s said. “This growth is due to inadequate pension contributions, stemming from a variety of actuarial and funding practices, as well as the sheer growth of pension liabilities as benefit accruals accelerate with the passage of time, salary increases and additional years of service.”

    In other words, for years, many public pension plans have determined their contribution levels using discount rates based on overly optimistic projection on investment returns. That in turn, has led to pension plans using riskier investment strategies in search of higher yields—a strategy the California Public Employee Retirement System recently abandoned in the case of hedge funds.

  • Cyanide, Tylenol and How Free Markets Make You Safer

    September 29, 2014 4:43 PM

    Today is the anniversary of one of the most significant food and drug related events in recent memory. Often discussed in college business classes these days, the 1982 Tylenol poisonings is usually heralded as the prime example of how companies should handle a consumer relations disaster. However, it is also a shining example of how the market itself—acting to protect its customers and thus its profits—can improve public safety. The actions that Johnson & Johnson took in the wake of this tragedy, without a doubt, improved the safety of consumers of all over-the-counter (OTC) drugs for the next 30 years.

    Within three days, beginning on September 29, 1982, seven people in the Chicago area died after taking Extra-Strength Tylenol laced with cyanide. More than 30 years later, who committed this crime and why remains a mystery. After an investigation, it was determined that the cyanide was not introduced in the factory, which, according to Grey Hunter, author of True Crime Stories“left only one other possibility. The Food and Drug Administration (FDA) and law enforcement agencies realized that someone had methodically taken the Tylenol bottles off the shelves at the stores where they were sold, filled the capsules with cyanide and returned them back to the shelves at a later period.”

    The incident triggered nationwide panic and distrust of OTC medicine as well as numerous copycat attempts. Within the next month, the FDA counted 270 incidents of suspected product tampering. However, it was unlikely that any tampering following the Chicago deaths involved Johnson & Johnson products. That’s because the company immediately implemented a protocol to make sure that customers could rest assured that any OTC they purchased from Johnson & Johnson was tamper resistant.

    While advertising genius Jerry Della Femina declared that Johnson & Johnson wouldn’t “ever sell another product under that name,” the company managed to turn the crises into a public relations campaign that would promote Johnson & Johnson products as safer than all others. Tylenol, which had been 37 percent of the analgesic market, plummeted to just 7 percent after the scare, but within a year it bounced back to a 30-percent market share. That is all thanks entirely to Johnson & Johnson’s robust campaign to prove to its customers that its top priority was their safety.

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

    September 29, 2014 7:21 AM

    A busy week ended with a flourish, with Friday’s Federal Register alone containing 28 final regulations and 542 pages.

  • Study on Artificial Sweeteners Interesting But Flawed

    September 26, 2014 1:29 PM

    ​A new study out of Israel on the possible effects of artificial sweeteners is making a lot of headlines this week. Unfortunately (and as usual) members of the media from Forbes to NPR’s Diane Rehm are reporting on the study without taking into consideration the growing criticism of its methodology, conclusions, and prior research on the topic. As Stephen O’Rahilly, endocrinologist and head of Cambridge’s metabolic research lab put it, “It would be unfortunate if this data were to influence public policy.” 

    Jotham Suez, a graduate student in the Department of Immunology at the Weizmann institute of Science, led the study. Suez et al. gave doses of water laced with saccharin, sucralose, and aspartame to mice and observed that the mice then developed a glucose intolerance. When they looked at the effects of artificial sweeteners on humans, four out of the seven subjects displayed “significantly poorer glycaemic responses” after consuming the maximum recommended daily limit of saccharin for a week. None of the subjects were regular users of artificial sweeteners prior to the study.

    While the results are certainly interesting, the researchers make quite a leap from their results to the assertion that artificial sweeteners “contributed to enhancing the exact epidemic that they themselves were intended to fight.” That is, they are suggesting a link between the consumption of non-caloric sweeteners, obesity, and type 2 diabetes. Yet, this link is dubious. The study may be the start of a significant investigation into how human gut bacteria is affected by artificial sweeteners, but it is preliminary and just one study among a number on the topic—many of which come to wildly different conclusions. Of course, you would never know that from the media coverage.

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