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OpenMarket: April 2013

  • Fred L. Smith, Jr., In This Month's Cato Unbound

    April 16, 2013 5:03 PM

    This month's Cato Unbound series focuses on the constraints of money in politics, how businesses respond to opportunities for rent-seeking, and prospects for the future of free market advocacy.

    In his initial essay, CEI Founder and Chairman and Director of CEI's Center for Advancing Capitalism, Fred L. Smith, Jr., makes the case for increased business involvement in politics on the side of free markets. He suggests that academics and intellectuals sympathetic to capitalism should consider how their work affects the narratives about business that frame the general public's views. Public choice economists, in his opinion, may have actually contributed to the decline of principled businessmen and the rise of crony capitalists.

    You can read see the entire series here, or go directly to Fred's essay here.

  • Lessons On Regulatory Reform: The BRAC Acts

    April 16, 2013 5:02 PM

    Overview of Regulatory Reform in the U.S. from The Base Realignment and Closure Act

    The Base Realignment and Closure (BRAC) Act of 1988 was created to close or realign excess military bases in order to save money. Since Department of Defense (DoD) spending can attract millions of dollars to a politician’s constituents every year, they will rarely vote to close unneeded bases. The BRAC Act worked around this problem by creating a commission of independent experts (the Base Realignment and Closure Commission) who, along with the DoD, would recommend base closures and realignments.

    The DoD used military need as its primary criterion for deciding which bases should be realigned or closed. The BRAC commission then amended the DoD’s recommendations to ensure that they adhered to a set of criterion created by Congress and sent final recommendations to the president for approval or disapproval.

    The president cannot make any changes to the recommendations and must either approve or disapprove of the entire set. If approved, the president sends the recommendations to Congress which then has 60 days to pass a resolution of disapproval. If Congress does not pass such a resolution, the BRAC commission’s recommendations automatically become final.

    Results from the BRAC Act of 1988

    After years without significant military base reform through the traditional legislative approach, the BRAC Act of 1988 resulted in the closure of 16 major U.S. military bases and the realignment of 11 others. This and subsequent BRACs have been estimated to save about $7 billion annually.

  • Food Safety Modernization Act Far More Costly Than Supporters Claimed

    April 16, 2013 10:27 AM

    "Proposed FDA safety rules frustrate tree fruit farmers," reported The Washington Post. As the FDA puts "in place a massive overhaul of the nation’s food safety system," due to the Food Safety Modernization Act, "Few groups have expressed more frustration than tree fruit farmers, who grow apples, pears and a variety of other produce. They complain that the FDA’s approach, in some ways, defies common sense." The 2010 law is proving far more costly than its supporters promised it would be in order to get enacted. The "Food Safety Modernization Act would impose only modest costs on farmers, or so we kept being assured when it passed in 2010." But many orchard growers now face tens of thousands of dollars in costs, notes the Cato Institute's Walter Olson. As he notes, the law's unexpected costs have caused a furor in some farming communities, and the Town of Brooksville recently became the "ninth in Maine to pass symbolic 'food sovereignty' resolution [See Jordan Bloom, The American Conservative; Food Renegade (Dan Brown of Blue Hill)]."

  • Seven Principles Of Free Market Immigration Reform

    April 15, 2013 9:58 AM

     1.      Immigration laws should value human beings. America should welcome newcomers so long as they pose no threat to the health or safety of Americans. Human beings truly are the ultimate resource. Only human inventiveness and creativity make the world a vibrant and prosperous place. The history of the United States itself refutes the fallacy that greater numbers of people only degrade wages, destroy the environment, and consume resources. In a free society, people serve others through voluntary exchanges and associations, creating wealth and making everybody better off.

     2.      Immigration reform should reflect market realities. Just as alcohol prohibition spawned a black market in alcohol, immigration restrictions have spawned a black market in labor. The government issues just 10,000 green cards for workers who lack higher education, special skills, or family connections. This arbitrary cap -- along with other restrictions on temporary visas -- pushes otherwise law-abiding workers toward illegal channels for entry. Creating an orderly and accessible pathway for entry should be a central component of reform.

    The 1986 reforms, while well-intentioned, failed because they stressed enforcement but created no legal avenue for workers to enter. Today, less than 10 percent of U.S. visas are based on employment, and the process is so difficult that most businesses cannot afford to spend the resources to attempt to recruit foreign workers, particularly when they might be rejected. The current process presupposes that America needs no new workers and requires businesses to overcome that presumption. This guilty-until-proven innocent system is incompatible with free markets and limited government. The market -- employees and employers who contract together -- should determine the supply of labor, not government bureaucrats.

     3.      The rule of law should be upheld. Failure to protect the nation’s borders and enforce the law is incompatible with any concept of the rule of law. Immigration law serves an important purpose. It protects this country against criminal, national security, or health threats from abroad. But immigration enforcement should force potential immigrants to avail themselves of viable legal alternatives for entry, not simply push them out or drive them into the underground economy. At the same time, the inability to enforce the law empowers the president to enforce it selectively, which undermines the rule of law. Reform should both end the black market in labor and not sanction future law-breaking.

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

    April 15, 2013 9:55 AM

    67 new regulations, from drawbridge schedules to wireless signal boosters.

  • In today's Wall Street Journal

    April 15, 2013 9:42 AM

    Today's Wall Street Journal covers one element of the fee dispute in Citigroup Securities. More discussion at Point of Law, together with links from coverage of last week's fairness hearing.

  • Victory in Bayer

    April 14, 2013 11:08 PM

    As a result of our objection in the Bayer class action settlement, the parties modified the settlement to increase direct payments to the class by over $5.8 million, over 25 times as much as the class would have received in the cy pres-heavy settlement had we not objected. A second objection to one of the cy pres recipients resulted in a beneficiary more aligned with the purpose of the litigation. The district court has not yet finalized its decision on the fees to be awarded to plaintiffs' counsel. We'll be seeking modest attorneys' fees to come out of class counsel's share; if we are awarded more than $50,000 (less than 1% of the additional benefit to class members), we'll cede the rest to the settlement fund.

  • Conference Speaker Demonizes Alcohol Industry

    April 12, 2013 5:18 PM

    [caption id="attachment_67522" align="alignleft" width="300"]Robert Denniston Presenting at AP16 Robert Denniston Presenting at AP16[/caption]

    There’s a certain romance associated with being in the wine industry, which is why many people aspire to own a vineyard despite all the back-breaking work associated with farming. That’s why I was pretty shocked by the excessive disdain for the alcohol industry that many participants expressed at the Alcohol Policy 16 (AP16) Conference last week. Although the event is marketed as a public health forum, its participants seemed more interested in demonizing industry and not just the alcohol industry. "Junk food," guns, and even cars took some hits.

    According to one speaker, the “alcohol industry” could be likened to a mosquito carrying a dangerous virus, and we—the consumers are its victims. Well, that's how former U.S. National Institutes of Health (NIH) employee Robert Denniston suggested that others “frame” alcohol issues when lobbying in favor of taxes and laws to restrict access.

    During the last day of the event a the plenary session, Denniston made the following suggestion:

    A concept that is worthy of consideration about how to frame this issue is authored by Jaheil and Babor, who have proposed referring to the alcohol problem as the “industrial epidemic” because alcohol beverages are industrial products. The difference between natural and industrial epidemics is that the former are caused by natural agents that are driven by natural forces acting upon those agents, such as plasmodium falciparum and anopheles mosquitoes in the case of malaria … by contrast industrial disease epidemics are driven at least in part by corporations and their allies who promote a dangerous product such as tobacco or cars or guns. This understanding shifts the policy focus from the agent, alcohol, to the host, the problem drinker, to the disease vector, the alcohol industry and associates.

    What an astoundingly unbalanced view of industry!

  • House Of Representatives Rebukes Rogue NLRB

    April 12, 2013 5:17 PM

    On Friday, April 12, the U.S. House of Representatives passed the Preventing Greater Uncertainty in Labor-Management Relations Act, a laudable attempt to rein in President Obama's unconstitutionally staffed -- and therefore illegitimate -- National Labor Relations Board (NLRB).

    The Preventing Greater Uncertainty in Labor-Management Relations Act (HR 1120) requires the NLRB to "cease all activity that requires a three member quorum" in an attempt to bring some sense of order to a labor market thrown into chaos by a Board comprised of unconstitutional appointees issuing hundreds of now questionable rulings.

    Before the vote, the Competitive Enterprise Institute had released a statement urging members to support the bill, explaining:

    The U.S. Court of Appeals for the District of Columbia has unanimously held President Obama’s three so-called ‘recess appointments’ to the NLRB were unconstitutional. The legitimacy of every ruling the NLRB has made since January of last year is therefore in question, throwing even more uncertainty on a business community already plagued by high tax and regulatory burdens. H.R 1120 is not only a good idea but absolutely necessary to help bring stability and to preserve the integrity of the U.S. Constitution.

    “I am pleased the House passed this important legislation,” said bill sponsor Phil Roe (R-Tenn), chairman of the Subcommittee on Health, Employment, Labor, and Pensions.

  • U.S. Agrees To Japan's Entry Into Trans-Pacific Partnership Agreement

    April 12, 2013 1:19 PM

    international_trade57131757Today, the Acting U.S. Trade Representative announced that the U.S. has agreed to let Japan enter negotiations on the Trans-Pacific Partnership Agreement, subject to consensus agreement by the other 10 members of the TPP. U.S. Ambassador Demetrios Marantis noted that this agreement results  from lengthy consultations with Japan that were aimed at resolving specific issues between the U.S. and Japan:

    Since November 2011, the United States has been engaged in consultations with Japan focused on Japan’s readiness to meet the TPP's high standards for liberalizing trade and investment, and to address specific bilateral issues of concern in the automotive and insurance sectors, as well as other Japanese non-tariff measures.

    With Japan’s entry into the TPP, the 12 countries would account for nearly 40 percent of global GDP and about one-third of all world trade, according to the USTR.

    The sticky issues have been and probably will continue to involve the automotive and insurance industries and other non-tariff measures.

    In a statement, the USTR said that Japan agreed to double the number of U.S. motor vehicles allowed into Japan under its Preferential Handling Procedure (PHP), which provides U.S. manufacturers with a less complex certification method.

    In return the U.S. would phase out its tariffs on Japanese automotive imports.  But that’s not going to happen quickly. Their agreement says that the phase-out will equal the longest staging period for any product in the TPP, and the phase-outs would occur at the end of that period. Since the TPP negotiations haven’t been completed for all products, the exact time frame isn’t yet known.


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