April 17, 2015 12:53 PM
A recent New York Times article highlights the plight of one plucky New York taxi mogul caught between flawed governmental policy and the process of creative destruction. Evgeny Friedman is asking the city government to bail out his troubled cabbie business after he was unable to make good on loans he took out in order to pay for the sky-high price of dozens of New York City taxi medallions.
In New York, the issuance of a taxi medallion is analogous to owning a “deed” to a taxi. In order to operate a taxi, you must possess or work for someone who possesses one of these medallions, the supply of which is capped at about 6,000. Unsurprisingly, as both the population and demand for taxi services have increased over the years, the price of these medallions has skyrocketed, reaching a peak in 2013 of $1.2 million. Under this scheme, the cost of owning and operating one taxi in the Big Apple is about the same as buying three new 2015 Rolls Royce Phantoms.
April 17, 2015 11:36 AM
For a long time, TV personally and Cardiothoracic surgeon Dr. Mehmet Oz has gotten little criticism for his sensationalist and often junk science-laden advice. Finally, members of Congress from both parties called him to the table—asking him to appear at congressional hearings related to fraudulent claims about dietary supplements and other products. A largely unapologetic Oz said ,“I actually do personally believe in the items I talk about on the show. … I recognize they don’t have the scientific muster to present as fact but nevertheless I would give my audience the advice I give my family all the time, and I have given my family these products.”
April 16, 2015 6:00 AM
Things have been busy on the Export-Import (Ex-Im) Bank front. For those not in the know, the Ex-Im Bank makes loans and guarantees loans for U.S. exporters, as well as their foreign customers. For example, if a foreign airline wants to buy a new plane, Ex-Im will arrange favorable financing terms if it buys that plane from U.S.-based Boeing.
Ex-Im’s critics argue that the bank is a corporate welfare program, and is vulnerable to favoritism and corruption. I compiled several reasons to oppose Ex-Im in this paper. Ex-Im’s defenders counter that Ex-Im is necessary to increase U.S. exports and support American jobs, though buying that argument requires ignoring that 98 percent of U.S. exports happen without Ex-Im’s involvement, and that there are other, possibly better uses for the capital Ex-Im sits on.
Unlike most other agencies, Ex-Im has a built-in sunset, meaning it will automatically cease to exist unless Congress periodically votes to renew its charter. This led to a bitter political fight last fall, when Ex-Im’s charter was renewed until this June 30. Typical reauthorizations last for four or five years, so this nine-month reauthorization was a significant concession to reformers. As June 30 approaches, the Ex-Im battle is heating up once again. At this point, it appears Congress will hold a vote in May on Ex-Im’s fate.
This week, the House Financial Services Committee held a hearing, where Ex-Im head Fred Hochberg (see his written testimony here) defended his agency from Chairman Jeb Hensarling (R-TX), who wants to close the bank.
April 13, 2015 4:17 PM
File this one under “we told you so.” The Independent reports a scale-back in credit card reward programs in the United Kingdom:
The UK’s largest credit card provider has announced that it will no longer offer cashback rewards, labelling them “unsustainable”, after a new EU law was passed last month.
It is thought that other companies may follow Capital One’s decision, significantly curtailing customers’ air miles and cash bonuses in response to legislation from Brussels.
The European ruling will cap so-called ‘interchange fees,’ charged by card issuers to retailers when a debit or credit card is used as payment.
Money reaped by the companies – such as Capital One – under this system allow them to offer customers savings or discounts.
This is exactly what the International Alliance for Electronic Payments , a coalition that includes CEI, warned about in our letter to EU officials in December:
Capping interchange fees has been tried in some countries around the world. Despite claims that these efforts were for the benefit of consumers, the real world results have shown the opposite to be true. In every instance, consumers faced higher fees for banking services, a reduction in benefits and services and saw no return in the form of lower prices from merchants despite promises by merchants and policy makers to pass savings to consumers.
April 13, 2015 2:14 PM
In my recently released paper, I point out many misconceptions circulating regarding recent challenges to honeybee hive health. Today, I came across another example of the confusion about this issue in a letter to the editor in a Canadian newspaper. The title says it all: “Honeybees Headed for Extinction.” I agree with the author’s conclusion that planting certain flowers around farms to give the bees a more diverse diet is a good idea—and I do that myself. However, honeybees are not going extinct. Consider a few points I make in my paper:
The number of honeybee hives in the world has increased overall. Globally, far more honeybees are used for honey production than pollination services, and the amount of honey produced has increased. U.S. and European commercial hives have decreased because honey production simply moved to other nations, where the number of hives has grown substantially. According to the United Nations Food Agricultural Organization (FAO) statistics the number of beehives kept globally has grown from nearly 50 million in 1961 to more than 80 million in 2013.
April 13, 2015 1:16 PM
It was a slower week than usual, with 34 proposed regulations and fewer than 40 final regulations covering everything from missile exports to hydropower. Even so, the 2015 Federal Register will likely top the 20,000-page mark on Tuesday or Wednesday of this week.
On to the data:
- Last week, 39 new final regulations were published in the Federal Register, after 68 new regulations the previous week.
- That’s the equivalent of a new regulation every four hours and 19 minutes.
- So far in 2015, 779 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,822 new regulations this year, which would be several hundred fewer rules than the usual total.
- Last week, 1,120 new pages were added to the Federal Register, after 1,755 pages the previous week.
- Currently at 19,406 pages, the 2015 Federal Register is on pace for 70,312 pages.
- Rules are called “economically significant” if they have costs of $100 million or more in a given year. Six such rules have been published so far this year, none in the past week.
- The total estimated compliance cost of 2015’s economically significant regulations ranges from $693 million to $746 million for the current year.
- 68 final rules meeting the broader definition of “significant” have been published so far this year.
- So far in 2015, 151 new rules affect small businesses; 25 of them are classified as significant.
Highlights from selected final rules published last week:
April 13, 2015 11:47 AM
Equal Pay Day is coming up on April 14. That means it's time for false statistics and legal claims from groups pushing for more rules and red tape governing employee pay, such as the proposed Paycheck Fairness Act.
On April 10, Linda D. Hallman, Executive Director of the American Association of University Women (AAUW), sent a mass email containing two false claims. The first alleged that "women have to work almost four months longer than men do to earn the same amount of money for doing the same job." This is a fundamental misinterpretation of a statistic that itself is obsolete and years out of date.
It is based on a much-repeated and much-debunked statistic that women make 77 percent as much as men do. That statistic was obsolete in 2013, when former Chief Labor Department economist Diana Furchtgott-Roth noted:
The 77 percent figure is bogus because it averages all full-time women, no matter what education and profession, with all full-time men. Even with such averaging, the latest Labor Department figures show that women working full-time make 81 percent of full-time men’s wages. For men and women who work 40 hours weekly, the ratio is 88 percent.
April 13, 2015 10:17 AM
Why is the Service Employees International Union funneling $15 million into the Fight for 15 campaign when the average private-sector union member makes $22 an hour and only 1 percent of the American workforce earns the minimum wage?
Union rhetoric would tell you that they support wage hikes as a means to preserve the middle class and to lift low-wage workers out of poverty.
However, what many do not realize is that unions’ self-interest is the primary motivation for their support of wage hikes, not altruism or concern for the well-being of low-wage workers.
April 9, 2015 3:41 PM
I suggested at TheBlaze some weeks ago that even as the Federal Deposit Insurance Corporation was stepping back from its involvement in Operation Choke Point, the Consumer Financial Protection Bureau was entering the fray. This now appears to be confirmed, as American Banker reports:
The Consumer Financial Protection Bureau has filed a massive lawsuit against more than a dozen debt collectors, payment processors and related entities that the agency said failed to stop fraudulent collection tactics…
But the potentially groundbreaking part of the case is that the CFPB also sued several payment processors, including worldwide processor Global Payments and its contracted parties, because the agency said they "should have known" about the alleged violations.
The case is one of the CFPB's largest to date that pursues multiple different entities, some of which were not directly involved in the harassment of consumers. In that way, it resembles the Justice Department's controversial "Operation Choke Point," observers said.
Operation Choke Point operates under the purported principle that if increase regulatory pressure, up to and including subpoenas, on the financial firms that work with suspected fraudsters, then those guilty parties will find their financial oxygen choked off. What happened, of course, was that banks and financial firms that dealt with any industries at supposed “high risk” of fraud were scared off from dealing with those industries as a class. The FDIC wisely saw the error of that approach and made it clear that this was an inappropriate approach by its regulators.
Now, however, the CFPB is treading down the same road, telling firms that they “should know” about potential fraud from the same broad sweep indicators that Choke Point depended on. Once again, whole classes of industries will be cut off from financial services. Brian Wise of the US Consumers’ Coalition pointed out the problems in a statement:
“Once [Operation Choke Point] was made public, and victims began coming forward, the Administration had to find a way to protect the program and its ability to prevent lawful industries from operating. Due to the lack of congressional oversight, and the unique funding and leadership structure of the CFPB, the Administration knows that it will make the perfect agency to carry on the legacy of Operation Choke Point. The Administration will continue to remove any obstacles in their way.
“The U.S. Consumer Coalition has been warning lawmakers and industry leaders about the plan for the CFPB to take over Operation Choke Point since the FDIC took down their list of ‘high-risk’ merchants in 2014. Now everyone can begin to see that the CFPB is the nation’s most dangerous, unaccountable, and out of control agency in the federal government.”
Brian is right. Choke Point is not over, and the CFPB is less accountable than FDIC. Two things need to happen: Congress needs to act against Choke Point and its new incarnation specifically, and it also needs to move to make the CFPB accountable to Congress, the Executive branch, and the Courts, as CEI recommended in Free to Prosper this year.
April 9, 2015 2:46 PM
A new study from the University of Florida asserts that because Illinois instituted an alcohol tax increase in 2009 and the rate of alcohol-related traffic fatalities have declined 26 percent since 2009, the tax must certainly be responsible for the decline in deaths. Of course, news outlets have begun touting the study as evidence that increasing taxes results in fewer deaths. Are they right?
A team of UF Health researchers discovered that fatal alcohol-related car crashes in Illinois declined 26 percent after a 2009 increase in alcohol tax. The decrease was even more marked for young people, at 37 percent.
So, was it the alcohol tax increase that led to the state’s declining alcohol related traffic deaths? To answer that question, one need only examine the rate before and after the tax increase went into effect and compare it to the rest of the United States. Looking at these numbers (provided by DISCUS), it becomes clear that the rate of alcohol related traffic fatalities was declining faster in the year before the tax increase went into effect. Furthermore, since the state jacked up the alcohol taxes, Illinois has experienced a slower decline than the rest of the nation.
Repeat after me: correlation does not equal causation. The study’s authors claim that since the 2009 tax increase went into effect, Illinois saw a 26 percent reduction in traffic fatalities. That certainly is an impressive decline. But just because two things correlate, doesn’t mean that there is a causal relationship. For example, just because the divorce rate in Maine correlates almost one-to-one with the rate of margarine consumption in the U.S., it doesn’t mean one caused the other.
Furthermore, the whole nation saw a decline in alcohol-related traffic deaths between 2001 and 2011.