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OpenMarket: October 2012

  • A Rational View Of The Presidency

    October 19, 2012 10:24 AM

    Back in 2008, Gene Healy wrote a book called Cult of the Presidency. It was an election year, so naturally many people thought it was an anti-Bush polemic. But it wasn't about Bush. It wasn't about any president, really. It was about how people view the presidency itself.

    Healy's thesis is people have unrealistically high expectations for the office -- expectations so high that no one can meet them. But in trying to meet them, presidents grab for more and more power. As they inevitably fail to make voters' hopes and dreams come true, they decline in popularity until  fresher faces take their place. And those fresher faces will grab for still more power and disappoint even more people. It's a remarkably vicious cycle.

    When Healy wrote the book, he had no idea Barack Obama would win the Democratic nomination. But win it Obama did, in large part by tapping into voters' unrealistic expectations for what the office can accomplish. Now that four years have gone by, he has institutionalized and expanded Bush-era abuses of power. He also is decidedly less popular than he used to be, although he still could win a second term.

  • Welfare Nation

    October 19, 2012 5:00 AM

    Welfare spending has exploded in America. Citing a new report from the Congressional Research Service, the Heritage Foundation notes:

    Roughly 100 million people—one-third of the U.S. population—receive aid from at least one means-tested welfare program each month. Average benefits come to around $9,000 per recipient. If converted to cash, means-tested welfare spending is more than five times the amount needed to eliminate all poverty in the United States.

    Despite the fact that welfare spending was already at record levels when he took office, President Obama has increased federal means-tested welfare spending by more than a third. . .

    At the beginning of this year, only four of the 80-plus federal welfare programs had work requirements; the Obama Administration has now suspended the work requirements in two of these. After the Obama Administration suspended the work requirement from the food stamp program in 2009, the number of people on food stamps doubled.

    Welfare now surpasses the government's biggest traditional money pit, the Pentagon. "By 2022, there will be $2.33 in federal and state welfare spending for every $1 spent on national defense."

    But the Pentagon, too, needs to be cut, even though that would make the Heritage Foundation unhappy. As Fareed Zakaria once noted, "the U.S. defense establishment is the world’s largest socialist economy." The Cato Institute has identified billions in readily-achievable savings at the Pentagon.

  • CEI Podcast For October 18, 2012: The Limits of Free Speech

    October 18, 2012 3:19 PM

    The best remedy for hateful speech, Senior Attorney Hans Bader argues, is not to silence it with laws and courts. It is to rebut it with speech of one's own.

  • Of Mice, Mushrooms, And Formaldehyde

    October 18, 2012 3:16 PM

    According to New York Times journalist Nicholas Kristof, the chemical industry is engaged in a grand conspiracy to hide the fact your kitchen cabinets and other home products contain a "dangerous" chemical. He explains:

    The chemical industry is working frantically to suppress that scientific consensus — because it fears “public confusion.” Big Chem apparently worries that you might be confused if you learned that formaldehyde caused cancer of the nose and throat, and perhaps leukemia as well. ...The industry’s strategy is to lobby Congress to cut off money for the Report on Carcinogens, a 500-page consensus document published every two years by the National Institutes of Health, containing the best information about what agents cause cancer. If that sounds like shooting the messenger, well, it is.

    Since then, hype about the risks of formaldehyde continues to circulate on the internet as if Kristof made some new discovery. For example, OMB Watch cites the article as authoritative evidence of an industry conspiracy in a blog entitled “Chemical Industry Spending Millions to Hide Danger of Cancer-Causing Products.”

    But before you agree formaldehyde is the “new tobacco,” let’s put the issue in perspective. Kristof drew his conclusion simply because the chemical industry questions -- along with scientists, nonprofits, many others -- some highly flawed government risk assessments. For example, back in 2011, a National Academy of Sciences report rebuked the Environmental Protection Agency's draft risk assessment that would have classified formaldehyde as a carcinogen for the study's failure to meet basic standards of good science. It noted:

    Overall, the committee noted some recurring methodological problems in the draft IRIS assessment of formaldehyde. Many of the problems are similar to those which have been reported over the last decade by other NRC committees tasked with reviewing EPA’s IRIS assessments for other chemicals. Problems with clarity and transparency of the methods appear to be a repeating theme over the years, even though the documents appear to have grown considerably in length. In the roughly 1,000-page draft reviewed by the present committee, little beyond a brief introductory chapter could be found on the methods for conducting the assessment. Numerous EPA guidelines are cited, but their role in the preparation of the assessment is not clear. In general, the committee found that the draft was not prepared in a consistent fashion; it lacks clear links to an underlying conceptual framework; and it does not contain sufficient documentation on methods and criteria for identifying evidence from epidemiological and experimental studies, for critically evaluating individual studies, for assessing the weight of evidence, and for selecting studies for derivation of the RfCs and unit risk estimates.

  • New Study Questions Link Between Alcohol And Breast Cancer Risk

    October 18, 2012 2:58 PM

    Every day, we make decisions about what to eat and drink that can affect our long-term health. Each individual is ultimately responsible for determining the best diet for his or her body and life. Ideally, individuals should make nutritional decisions by balancing health goals and personal enjoyment, while considering their unique physical condition, family history, and risk for certain conditions.

    Unfortunately, this is not what public health advocates or many in the media believe. Every new study that manages to get published in a journal (regardless of how reliable or unreliable the conclusions are) represents an opportunity to push for government policies or lifestyle recommendations, applying one-sized-fits-all prescriptions for the public.

    For example: Alcohol has known health risks but it also has significant health benefits—not to mention the social and psychological costs and gains. This past November, the Journal of the American Medical Association published a study linking moderate alcohol consumption to an increased risk for breast cancer. The study was conducted by the Nurses' Health Study (NHS), and it received a great deal of media attention.  While earlier research had theorized that heavy drinking was associated with increased breast cancer risk, the NHS study found that even moderate and light consumption (less than one drink a day) could cause a 10 percent increase in a woman’s risk for breast cancer.

    The Los Angeles Times, USA Today, and ABC News among many others reported on the study. The Telegraph went as far as to tell female readers that they should “stick to one glass a day” or completely abstain if they have a family history of breast cancer.

    However, the National Institute on Alcohol Abuse and Alcoholism (NIAAA) released a paper this month that called the NHS study into question and saying that the “relationship between moderate alcohol consumption and breast cancer risk needs further study.” They highlight some problems with the self-reporting method, such as underreporting of alcohol consumption, which might lead to the conclusion that less alcohol has greater effects. Also, the NIAAA points out that the study does not account for the potential difference in binge-drinking versus long-time light drinking. While epidemiological studies like the NHS study add valuable information, as the NIAAA notes, it’s inadvisable to create guidelines for consumers based on such preliminary evidence.

  • Southern European Bailouts Must Focus On Reform

    October 18, 2012 12:45 PM

    As European leaders meet in Brussels this week for a summit on the future of European integration, bailouts for the south will be heavy on their minds. Rescue funding for Greece’s heavily indebted government and Spain’s bust banking sector are sore topics of debate by now, but debate will continue nevertheless.

    Greece has missed, again, the preconditions for releasing its next tranche of bailout funds. I explain why in the City A.M.

    Greece has become complacent about making necessary structural changes, having received two bailouts, interest rate support from the European Central Bank (ECB), and an internationally sanctioned private debt restructuring earlier this year. It has failed to reform its public sector, privatise state-owned companies, increase competitiveness — all conditions for receiving additional international support.

    Read the full article for a detailed description of how far Greece has fallen behind the reform targets set out in its two bailouts and also behind the rest of Europe.

    As leaders discuss next options for releasing Greece’s bailout funds, Greeks have taken to the streets in tens of thousands as part of a 24-hour general strike to protest further austerity measures. But Greek austerity has been relatively mild compared to that of its Baltic counterparts, which endured harsh cuts in wages and government spending as well as some tax increases. Those countries are now outperforming the rest of Europe. For example, Estonia cut government spending and public wages. A flexible labor market also allowed for businesses and workers to agree on wage cuts in order to improve competitiveness. GDP fell by 14 percent in 2009, but bounced back the very next year with 2 percent positive growth. Unemployment shot up to 17 percent, but quickly receded to 12 percent the next year and is still declining. Greece, on the other hand, has limped along the path to reform and has brought persistent negative growth and rising unemployment along for the ride.

  • Culinary Workers Union Behind Sin City Setback

    October 18, 2012 10:39 AM

    As of July 2012, the unemployment rate of greater Clark County, Nevada, which includes the desert oasis of Las Vegas, is at 12.9 percent, compared to the national rate at 7.8 percent. The state of Nevada as a whole suffers from the highest state unemployment rate in the country at 12.1 percent. Vegas was also hit hard when the housing bubble burst, with many homes lost between 60 to 65 percent of their value since 2007. Currently, Nevada ranks sixth in the nation for highest housing foreclosure rates in the nation.

    The people of Las Vegas are struggling to turn their town and their fortunes around. Unfortunately, local unions are standing in their way.

    On October 13, 2012, a coalition of local downtown Las Vegas business owners called the “Downtown Las Vegas Alliance,” sponsored an event called “Rediscover Downtown,” which was meant to draw attention to businesses in the downtown area north of the famous Las Vegas Strip. Sadly, the local Culinary Workers Union decided to disrupt the event at several locations.

    The purpose of the protest was to bring attention to the union’s health and retirement benefits, which the union is trying to retain after their recent contract expired in June at many downtown Las Vegas locations, including the Golden Nugget and Main Street Station. Negotiations for new contracts between casino management and union reps have been contentious: casinos are demanding concessions from unions due to flat or declining gaming revenue.

    Unions aren’t having any of it, and have decided instead to throw their very public temper tantrum. As the Las Vegas Review-Journal lamented: “It's one thing to rain on someone's parade. It's entirely another to spray down a celebration with fire hoses -- and then expect to be rewarded.”

  • Today's Links: October 18, 2012

    October 18, 2012 10:30 AM


    LACHLAN MARKAY: "Another DOE-Backed Solar Company Goes Bankrupt"
    "A solar company that got a multi-million-dollar grant from the Department of Energy earlier this year announced Wednesday that it will file for Chapter 11 bankruptcy protection, making it the second taxpayer-backed green energy company to file for bankruptcy this week."

    PETER SUDERMAN: "Obama Campaign Can't Make Obama's Deficit Math Add Up Either"
    "Obama's big debt reduction plan, which he claims would reduce national debt by $4 trillion, is also highly problematic. It's packed with gimmicks, and what debt reduction it might achieve would mostly come from tax hikes. And pressed to defend the plan, Obama's campaign has serious trouble."

    ERIC JAFFE: "Is It Harmful to Release Gang Maps?"
    "Chicago isn't the only city being what we might call a bit territorial about its gang knowledge. The Toledo Blade recently sued the city police department for refusing to release a 'gang boundaries map' that circulates internally. Earlier this year a King County detective questioned the accuracy of an interactive map of Seattle gangs produced by the blog Northwest Gangs."

  • Greece Fire: Unions Hold Up Negotiations On Austerity Measures

    October 18, 2012 9:41 AM

    This week, Greek officials and monetary lenders continued negotiations over the austerity measures the country must implement to save itself from economic collapse.

    Greece must pass a proposed measure that would cut public spending by 13.5 billion Euros in order to receive the next installment of its 173 billion euro bailout from international creditors: the European Commission, the International Monetary Fund and the European Central Bank -- known collectively as the troika. It’s crunch time in Greece; they are expected to be out of money by November so they must reach an agreement with lenders by the end of this month.

    Rumor has it that negotiations have gone fairly well. Reuters quotes IMF Mission Chief for Greece Poul Thomsen saying late Tuesday that both sides came to agreement on “most policy issues.”

    The lone holdup? Labor.

  • The True Cost Of The Auto Bailout

    October 18, 2012 8:29 AM

    By Matt Patterson and Crissy Brown

    Once upon a time, there was a company called General Motors. It made cars. But the company failed to adjust to changing market conditions, and that, combined with the high cost of its unionized workforce, drove it to insolvency. But before the doors were shuttered forever, a great and benevolent benefactor swooped in.

    That benefactor was you -- the American taxpayer..

    It was you who stepped in back in 2008 and flooded GM with billions from the Troubled Asset Relief Program (TARP), a desperate attempt to shore up a variety of decrepit institutions whose imminent collapse threatened the entire U.S. economy (or so we were told). The initial bailout was followed in summer 2009 with another round of auto stimulus; all told, the taxpayer tab for General Motors bailout was a cool $50.7 billion.

    What did we get for that money? Some jobs were saved. But President Barack Obama loves to embellish what the bailout actually achieved. He claimed at an April campaign event, for example, the bailout "saved probably a million jobs" and that "GM is now the No. 1 automaker again in the world."

    In truth, GM employed only 91,000 workers in the U.S. before it entered into bankruptcy in the summer of 2009. As John Lott notes for National Review, "[y]ou can reach a 400,000 total by assuming all of GM's jobs, as well as all the jobs of its parts suppliers and car dealers, would have been lost." In 2011, the entire U.S. auto industry employed only 717,000 people.


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