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OpenMarket: August 2012

  • Teachers Unions Defend Institutional Incompetence

    August 8, 2012 3:00 PM

    No good deed goes unpunished.

    Take Mayor Michael Bloomberg’s brave decision to lay off 3,600 employees -- including teachers and principals -- of 24 of New York City's worst-performing schools, all with an eye toward rebooting them with new staff, management plans, and curricula. The outgoing staff were told they could reapply, but would have to compete with thousands of new applicants. The goal: Turn around the schools by turning them inside out.

    Naturally, the teachers’ unions pitched a fit, and have done everything they can to thwart the Mayor’s plan.

    The irony is that, as is so often the case, unions brought this pain on themselves. Bloomberg’s original plan was to institute a comprehensive instructor evaluation plan in order to, as The Wall Street Journal editorial board put it, “smoke out the lowest performing educators.” But New York’s powerful United Federation of Teachers (UFT) strongly objected to this effort to locate incompetent instructors, forcing Bloomberg into his plan B -- mass layoffs at the two dozen worst-performing schools.

    To no one’s surprise, this, too, was unacceptable to the UFT, which claimed the city’s actions violated the teacher’s collective bargaining agreement. And so off the case went to arbitration, where the Mayor got his hat handed to him: sole arbitrator Scott Burchheit scrapped the planned reboot of the failing schools because, he found, “a wish to avoid undesirable teachers was the primary, if not exclusive reason” for the closings.

    In other news, mice like cheese.

  • Today's Links: August 8, 2012

    August 8, 2012 9:16 AM


    STEVE FORBES: "To Help Free Market, Bury the Hatchet"
    "We all want America’s economy to improve and realize that crony capitalism — where Washington politicians, not free markets, decide who succeeds — is a barrier to prosperous growth. Yet industries still dispatch lobbyists to Capitol Hill to get a legislative or regulatory 'fix' when there’s a marketplace dispute. Consider the recent settlement between retailers and payment card companies over fees that merchants pay to accept plastic."

    WILL OREMUS: "What Happens When Our Cellphones Can Predict Our Every Move?"
    "Your cellphone knows where you’ve been. And new research shows it can take a pretty good guess at where you’re going next. A team of British researchers has developed an algorithm that uses tracking data on people’s phones to predict where they’ll be in 24 hours. The average error: just 20 meters. That’s far more accurate than past studies that have tried to predict people’s movements."

    INVESTOR'S BUSINESS DAILY: "The True Costs of the GM/UAW Bailout"
    "The administration claims to have saved the U.S. auto industry. What it really saved was the industry's dominant union - and it weakened capitalism in the process. Michigan is one of those light-blue states where Mitt Romney just may have a chance on Nov. 6. Don't be surprised, then, if Barack Obama's re-election campaign carpet-bombs it with ads noting that Romney once said the auto industry should go bankrupt, and that the Obama administration found a better way."

  • Today's Links: August 7, 2012

    August 7, 2012 9:54 AM


    A. BARTON HINKLE: "Abortion Debate Skewers Political Pieties"
    "According to a sympathetic piece in The Washington Post, Codding has 'tried for months' to 'scrape together' enough money for a 'costly renovation' of her Falls Church abortion clinic—and she is still short by nearly $1 million. Wherever shall the money come from? Gail France is frustrated as well. [...] Like Codding, Frances resents new regulations the state has imposed on her business that govern everything from hallway widths to parking spaces. [...] This is not, to put it mildly, the standard progressive posture regarding the regulation of business. To the contrary: When any other industry is being discussed, most liberals believe the correct level of regulation, always, is: more."

    AMY WHITCOMB SLEMMER: "Massachusetts' Decisive Move to Attack Health-Care Costs"
    "Massachusetts is six years into implementing the precursor to the Affordable Care Act (ACA) -- the law that every state, now that the Supreme Court has upheld its key provisions, is now trying to decide how to implement. [...] But when Massachusetts passed the law, it made the calculated decision to tackle the thorny issues of cost and quality later. That time is now. Massachusetts' health-care costs have escalated at an unsustainable rate. Consumers experience these increases as higher deductibles, copayments, and out-of-pocket costs. We've begun to get a good picture of what was contributing to the rising cost of health care -- and a clear indication that spending more was not necessarily contributing to our overall health."

    MASHABLE: 'Obama That I Used to Know' Parodies Gotye With Political Twist (VIDEO)

  • Decoding The Malthusian Fallacy

    August 6, 2012 5:35 PM

    The writings of Reverend Thomas Robert Malthus (1766-1834) inspired Victorian historian Thomas Carlyle to condemn economics as "the dismal science." Witnessing the deplorable crowding, poverty, and disease of England's dirty cities and struck by a grim historical record of famines and epidemics, Malthus embodied academic pessimism. The work that made his reputation and popularized his name was An Essay on the Principle of Population. Malthus felt he was a Cassandra, admonishing utopians to beware of a catastrophic inevitability they could not see: The human population would inevitably exceed the carrying capacity of its environment.

    This natural inequality of the two powers, of population, and of production of the earth, and that great law of our nature which must constantly keep their effects equal, form the great difficulty that appears to me insurmountable in the way to the perfectibility of society.

    Surrey's sour scholar essentially believed that human population grew exponentially, whereas agricultural productivity grew arithmetically, i.e., in a straight line. He was partially right. England's population growth was undergoing a historical uptick during Malthus' lifetime. However, agricultural productivity was too. Like civilization itself, urbanization was driven by rural agricultural and urban industrial productivity increases and the surpluses attending them. The same process drew Malthus' eye, ironically enough.

    This pattern repeated in the 1970s. Productivity increased in previously undeveloped areas. Population growth swung upward. Cities became crowded. Demographers and economists went into a tizzy. Then huge segments of the global population surged from miserable poverty to genuine prosperity.

    Malthus made other contributions to his field, a true intellectual force. How did the latter halves of the previous two centuries so wildly, wonderfully contradict dismal expectations? Here we find the fatal flaw of his argument, and the worldview of many environmentalists. They appraise humanity as an "infant, mewling and puking in the nurse's arms," helpless, mouth open, desperately consuming the resources around it.

  • Unions Claim Moral High Ground, Kick Off Sleazy Smear Campaign

    August 6, 2012 9:17 AM

    UNITE-HERE, the nation’s largest hospitality union, has assembled a new coalition of pro-union organizations to target Hyatt hotels with the goal of organizing the chain’s entire workforce.

    The union, with the support of the AFL-CIO and NFL Players Association, is threatening to tarnish Hyatt’s reputation, portraying it as unfair to workers. On July 23, the coalition announced the initiation of its three-pronged attack against the popular hotel consisting of a global boycott, social media campaign, and a week of protests at Hyatt hotels in 20 major U.S. cities.

    UNITE-HERE seeks to portray its campaign as a humanitarian effort to combat abusive working conditions. On his union’s campaign website,, UNITE-HERE President John Wilhelm states, “Hyatt systematically abuses housekeepers and other hotel workers, and it is unacceptable.”In a press release, the union claims, “Hyatt has singled itself out as the worst employer in the hotel industry.”

    Yet a variety of independent sources have lauded Hyatt’s sterling employment record: in 2012 Hyatt Hotels Corporation won the Gallup “Great Workplace Award,” while the Human Rights Campaign, the nation’s largest gay rights organization, recognized Hyatt Hotels & Resorts as one of its “Best Places to Work for LGBT Equality.”

  • CEI's Battered Business Bureau: The Week In Regulation

    August 6, 2012 5:00 AM

    85 new regulations, from prairie dogs to corporate jets.

  • Update On TSA's Lawlessness Over Body Scanners

    August 3, 2012 3:09 PM

    As I noted previously, the Transportation Security Administration has failed to comply with a court order demanding that they initiate a notice-and-comment rulemaking regarding the use of Advanced Imaging Technology body scanners in airports, as required by the Administrative Procedure Act.

    This Wednesday, the D.C. Circuit Court of Appeals ordered TSA to respond to the Electronic Privacy Information Center's petition for writ of mandamus. The Court also ordered that an amicus brief submitted by CEI be accepted.

    Today, McClatchy ran an op-ed on their wire service authored by former American Airlines chairman and CEO Robert L. Crandall and myself, where we explain in more detail the problems caused by TSA's lawlessness. Read it here.

    And finally, the petition to President Obama demanding that he require the TSA to follow the law needs a bit over 6,000 more signatures by August 9. Please sign it if you haven't already!

  • Who's Really Responsible For Making Sure Teens Don't Smoke?

    August 3, 2012 2:05 PM

    In yesterday’s New York Times, Tina Rosenberg looked at different ways to curb teen smoking. Her biggest recommendation was a law to make the world a little more ugly, and a little more boring. She wants to require “generic cigarette branding,” of the kind they will implement this year in Australia. Rosenberg describes it like this:

    [caption id="" align="alignright" width="170"] Blech[/caption]

    All cigarette packs will look alike – a generic olive-green, with big health warnings and the brand name written in small, standardized lettering. But the article was printed with this example image, neither generic nor olive-green, but gut-wrenchingly disgusting. The article makes a few key omissions.

    She doesn’t mention the fact that while a generic-branding policy may have teens in mind, adults buy the same packs of cigarettes that teens do. Banning tobacco companies from branding their own cigarettes means they can’t market to adults either. It’s fair to demand that tobacco companies not advertise to children. We already do that. But it isn’t fair to demand that they not market their legal products to consenting adults.

  • CEI Podcast For August 2, 2012: Cybersecurity Bill Fails

    August 3, 2012 2:03 PM

    Today the Senate shot down a controversial cybersecurity bill that Associate Director of Technology Policy Studies Ryan Radia believes would have been a disaster.

  • The Great Hollywood Swindle

    August 2, 2012 1:51 PM

    When is a market not a real market? When it trades in fake goods -- products or services that could not exist if government didn’t bring them into being. A case in point is transferable targeted tax credits, which state and local governments routinely offer to attract businesses.

    In recent years, states have joined in a bidding war on tax credits to attract feature film production. This desire for Hollywood glamour has piled on bad economics to create a crony capitalist bonanza in which taxpayers are left holding the bag. The Boston Globe reports:

    At least 96 percent of the $265 million in tax credits used to attract movie and television productions to Massachusetts were sold by the film companies between 2006 and 2010, according to the state Department of Revenue.

    The incentives are so generous - rebates of up to 25 percent of production costs in the state - that most film companies do not end up owing nearly enough in taxes to use the credits. So they sell them at a discount, fueling a booming industry for brokers, accountants, and savvy taxpayers.

    Here's how it works:

    A production company that is awarded $10 million in tax credits might sell them to a broker for $8.7 million. The broker then sells the credits to a financial company that owes state incomes taxes for a bit more - say for $9 million, earning the broker a $300,000 profit. The financial firm can then claim the full $10 million in credits on its tax return, saving $1 million.


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