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  • The American (Business) Revolution

    July 3, 2014 2:52 PM

    On our nation’s 238th birthday, a flood of public events, political speeches, and TV specials will remind us of the courage of our colonial ancestors in throwing off the authoritarian government of King George III. The Revolutionary War sparked a movement for democratic government that spread rapidly, eventually serving as an inspiration to billions around the globe.

    But the separation from Great Britain was also a revolution for commerce. In the 1770s, American merchants and consumers labored under a burden of high taxes, administrative red tape, and punitive import duties. It was the passage of the Tea Act in 1773, which worsened that burden, which drove the patriots known as the Sons of Liberty to destroy the East India Company’s famous cargo during the Boston Tea Party.

    We often forget that the taxes and regulations on tea that the Sons of Liberty found so odious were not just there to raise revenue for the crown. They were what we would call today a case of crony capitalism –a system of government policies that give a company preferential treatment over its competitors. Parliament passed the Tea Act in large part to bail out the British East India Company, which by that time had accumulated such an overstock of unsold tea that it was on the verge of bankruptcy.

    While many colonists objected to the government in London imposing taxes on them at all, the policies that led to the Boston Tea Party—and eventually the American Revolution—went beyond that by stacking the deck in favor of moneyed British interests. The King’s government routinely granted exclusive monopolies and privileges to for-profit ventures, often via cozy arrangements that, not surprisingly, benefitted the already wealthy and well-connected.

    Americans knew then what most Americans still believe today—that there is nothing wrong with making an honest profit from an honest product. Small merchants and skilled craftsmen thrived throughout colonial America by providing their neighbors with everything from horseshoes and barrels to clothing and beer. When an out-of-touch government raised taxes and passed laws to bail out big business interests, however, they protested the injustice. Sound familiar?

  • New York Court Voids Cyberbullying Law, Thus Casting Doubt on Proposed Workplace Bullying Law

    July 3, 2014 1:57 PM

    A law firm notes, “Since 2003, twenty-one states have introduced legislation to combat private workplace bullying but none have been passed into law.” However, a bullying bill known as the so-called “Healthy Workplace Bill” (S. 3863) recently passed the New York Senate Labor Committee.

    A recent ruling by the New York Court of Appeals provides additional fodder for critics of overly-broad bullying legislation, such as bills that restrict supervisors’ criticism of employees or hold employers liable for hurtful or offensive remarks by a worker’s peers.

    On July 1, New York’s highest court struck down Albany County’s cyberbullying law, finding it unconstitutionally overbroad even as to minors, in its 5-to-2 ruling in People v. Marquan M. As UCLA law professor Eugene Volokh notes, the ordinance criminalized “disseminating … personal … information” about any person, if it’s done “with the intent to … annoy …, abuse, [or] taunt” and “with no legitimate private, personal, or public purpose.”

  • Red Tapeworm 2014: A Fourth of July Reflection on Presidental Executive Orders and Loss of Liberty

    July 3, 2014 11:28 AM

    In other countries, similar edicts may be known as decrees, orders in council, or fiat.


    This is a special July Fourth Edition of my series Red Tapeworm 2014. It represents Part 15 of a walk through some sections of Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State (2014 Edition).

    Executive orders covering the internal workings and operations of the federal government do not make up a big component of the Obama “pen” and “phone” initiative (yet), as I’d noted recently in Forbes; “Memos” do instead, as do agency guidance, blog posts and press releases.  

    Presidential use of executive orders is nothing new. They began with George Washington; they number retroactively to Abraham Lincoln via a 1907 Department of State system.

    Obama’s totals are not high compared to other presidents; as of year-end 2013, he had issued 181, as the figure nearby depicting executive orders issued since 1995 shows. Obama did issue more in his first term than President George Bush did in his second term, yet still fewer overall than chief executives did at any other time depicted.

    Of course he still has two years to go, and orders such as minimum wage mandate for federal contractors and Non-Retaliation for Disclosure of Compensation Information are big ones. He is primarily using the other instruments noted.

    The real question, as economic and social liberty yields in the U.S., is what these executive orders, and those yet to come, are used for; what they do.

  • Celebrate Food Freedom this 4th of July

    July 3, 2014 10:56 AM

    “If people let the government decide what foods they eat and what medicines they take, their bodies will soon be in as sorry a state as are the souls of those who live under tyranny.” –Thomas Jefferson

    By 1939, most Americans realized that national alcohol prohibition was a complete disaster. The “noble experiment” intended to solve societal harms linked with alcohol consumption was an utter failure and would foster in Americans a permanent distrust of food or drink bans “for our own good.” Modern self-styled public health advocates have learned from prohibitionists' mistakes: if you eliminate food choices slowly, people are less likely to protest.

    By passing laws and implementing regulations, health advocates have been able to increase the cost, limit availability, and removed the choice of consuming certain foods or ingredients they deem “unhealthy.” While the methods may differ, the intent and the results are largely the same. Health advocates want to engineer a world in which we can only make the choices they have decided are the best for us. The result is a loss of freedom and independence by baby steps.

    Earlier this year, the Food and Drug Administration announced its plan to revoke the “Generally Recognized As Safe” designation for partially hydrogenated oils (PHOs), which would create a de facto ban on the additive commonly used in foods such as pie crust, pastries, shortening, and fried foods (among other things). Despite the fact that PHOs have been used by Americans for over a hundred years, the FDA asserts that artificial trans fats (contained in PHOs) can increase the risk of heart disease.

    As I wrote in November 2013, this is a sea change for the FDA. Rather than protecting people from unknowingly consuming foods that are likely to cause harm, the FDA has now turned to protecting consumers from the cumulative harms of poor dietary choices over the course of a lifetime—something they are already aware of (nobody believes a lifelong diet of fried chicken and cherry pies will allow them to live to 120 years old!).

    As the FDA itself admitted, Americans have already virtually eliminated trans fats from their diet, from an average of 4.6 grams per day in 2003 to about 1 gram per day in 2012. And as I noted in my comments to the FDA, while there are studies showing a slight increase in heart disease risk at the higher levels of consumption, there’s no scientific basis for assuming there are risks at the very low levels Americans are currently consuming trans fats and no reason to assume further reductions will result in any health benefits. Of course, the FDA’s decision is less about science than it is about politics.

  • Obama Drives Up Tuition at Taxpayer Expense by Expanding Pay As You Earn Program

    July 2, 2014 4:11 PM

    If you wanted to encourage wastefully run colleges to ratchet up their tuition at taxpayer expense, you couldn’t come up with a better way than the Obama administration’s recent expansion of the Pay As You Earn program. That program limits borrowers' monthly debt payments to 10 percent of their discretionary income. The balance of their loans is then forgiven after 20 years—or just 10 years, if the borrower works for the government or a nonprofit.

    It will cost taxpayers a bundle, while doing nothing for most student borrowers (who may experience tuition increases as a result), and it will favor imprudent borrowers over prudent borrowers. 

    Most students chose inexpensive colleges or otherwise borrowed modestly, meaning “the average graduate’s debt level of $27,000” is no more than “the price of a car.” They will not choose to participate in this program, since they would pay more, rather than less, by paying ten percent of their income for years, which could add up to much more than $27,000 over a 20-year period.

    But imprudent borrowers who borrowed much more than that, for a major that does not lead to a high-paying job, will now be able to limit their payments to a fixed percentage of their discretionary income, and then have the unpaid balance remaining after 20 years (or just 10 years, if they go to work in the federal bureaucracy) written off at taxpayer expense, no matter how huge the unpaid balance is.

  • Red Tapeworm 2014: The Expanding Code of Federal Regulations

    July 2, 2014 11:50 AM

    This is Part 14 of a series taking a walk through some sections of Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State (2014 Edition)

    The page count for final general and permanent rules in the Code of Federal Regulations (CFR) is more modest than that of the Federal Register’s 70,000-plus pages annually. But the count is big nonetheless.

    Back in 1960, the CFR contained 22,877 pages. Since 1975, the total pages in the complete CFR have grown from 71,224 to 175,496 at year-end 2013, including the 1,170-page index.

    That’s a 146 percent increase over the period. The number of CFR volumes stands at 235 (as of 2012), compared with 133 in 1975. The chart nearby depicts the CFR’s pages for the past decade.

  • Harris v. Quinn Gives Home Care Workers Renewed Opportunity to Get Back Compulsory Dues

    July 1, 2014 3:53 PM

    When you can’t win, change the players. That was essentially the strategy pursued by government employee unions in recent years. This week, it came to a halt.

    Yesterday’s Supreme Court ruling in Harris v. Quinn put a brake on government unions’ efforts to expand the definition of “public employee” to any service provide who receives state assistance, such as home care workers who are paid by Medicaid. The Court ruled that “partial public employees” like home care providers cannot be required to pay for the costs of representation by a union—representation many didn’t ask for.

    Today, the Court gave some home care workers who have been forced to pay dues a renewed opportunity to get those dues back. The Court applied Harris v. Quinn to Schlaud v. Snyder, a suit brought by a group of Michigan home care workers seeking class action certification in order to get back union dues taken from them unwillingly.

  • AEA’s Unprincipled Stand

    July 1, 2014 3:51 PM

    Last Thursday the House of Representatives passed H.R. 6, the Domestic Prosperity and Global Freedom Act with a bipartisan vote of 266-150. The bill orders the Department of Energy to make a final decision on applications to export natural gas within 30 days of the bills enactment. This would greatly speed up the process, as the DOE has allowed some applications to languish for more than 2 years without a determination being made, effectively strangling exports of natural gas.

    The bill’s passage came despite the best efforts of America’s Energy Advantage, a business advocacy group that strongly opposes the bill. In a press release the day before the bill’s passage, AEA declared “exports of this scale will raise domestic natural gas and electricity prices for every American, undermine our manufacturing competiveness and cost the nation good-paying jobs”. Its argument is as follows: if we export natural gas, that will lower the supply sold in America, which will lead to an increase in natural gas prices. That, in turn, will “hurt manufacturing competiveness”(especially among companies who are part of the AEA) by making it more expensive to produce their goods. To protect America, then, we must limit natural gas exports.

    For that reason, the AEA called the bill “harmful to the public interest of American consumers, manufacturers and the economy” in a statement following passage.

  • CEI Podcast for July 1, 2014: John Holdren's Poor Data Quality Control

    July 1, 2014 10:41 AM

    General Counsel Sam Kazman talks about presidential science advisor John Holdren's refusal to comply with the federal Data Quality Act when CEI questioned some discredited scientific statements in a video he put up on an official White House website. Click here to listen.

  • Red Tapeworm 2014: Cumulative Final Rules in the Federal Register

    July 1, 2014 8:39 AM

    This is Part 13 of a series taking a walk through some sections of Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State (2014 Edition)

    Let’s keep this one short. Picture is worth a thousand words, one power-hungry bureaucrat is worth a thousand congressmen, and all that.

    The cumulative effect of regulation on the national economy and at the family and personal levels matters a great deal despite yearly fluctuations.

    The good news is that, final rules issued by federal agencies last year did dip a little, but proposed rules ominously are on the increase, and the president promises to go around Congress to shape society according to his left-wing biases and intractable redistributionist mindset.


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