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OpenMarket: April 2013

  • 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.

  • 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.

  • Railroading The Railroads

    April 12, 2013 10:46 AM

    In recent years, members of Congress have worked with various interest groups for the purpose of imposing new economic regulations on the freight rail industry. This action has been partly led by concerns over the scale of consolidation that has occurred in recent years.

    The consolidation of this industry is the end result of gains in efficiency and productivity that have come about from railroads having greater freedom to adjust their behavior to cater to the needs of their shippers. Prior to deregulation, a regulatory board called the Interstate Commerce Commission (ICC) had veto authority over most major decisions of freight carriers. The ICC forced firms to maintain service in unprofitable regions, imposed rate ceilings, and bizarrely also required railroads to keep their shipping rates artificially high    Needless to say, railroads under this regulatory regime lacked the revenue or the incentives necessary to maintain healthy railway networks.

    With the freedom that came with deregulation, carriers cut waste by discontinuing unprofitable lines and poured cash—more than $500 billion since the enactment of 1980’s Staggers Rail Act—into upgrading and expanding infrastructure in order to cater to the greatest number of shippers at the highest level of quality. According to the Association of American Railroads, as of June 2012, inflation-adjusted rates charged to shippers have dropped by 45 percent since the Staggers Act. Larger carriers that could exploit their economies of scale were able to use their size to charge the lowest rates.

    Many are now calling for new regulations to mitigate the perceived harm that post-deregulation railroad consolidation has imposed on shippers. Unlike most sectors, railroads currently retain limited exemptions from antitrust law. Some shippers only have access to only a single carrier with which to transport their products. Critics of the status-quo are now accusing large railroads of abusing their market power to charge excessively higher rates to shippers that do not have any viable alternative to doing business with them. Their proof is in the slight increase in shipping rates that has come about since 2004. In addition, the three large Class I publicly traded carriers (BNSF is wholly owned by Warren Buffett’s Berkshire Hathaway) recently reported profit margins exceeding 15 percent.

  • Dodd-Frank's Burden On Credit Unions Highlighted At Hearing

    April 12, 2013 8:46 AM

    At a recent speech before a convention of the Credit Union National Association (CUNA), new Sen. Elizabeth Warren (D-Mass.) made the pitch that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was achieving its goal of reining in Wall Street while "level[ing] the playing field" for credit unions.

    On the law's creation of the Consumer Financial Protection Bureau (CFPB), which Warren first proposed and then organized as an adviser to President Obama, Warren proclaimed: "The agency works for consumers. It also works for the lenders and small financial institutions, like credit unions."

    Yet at a Wednesday congressional hearing, those who manage credit unions begged to differ with Warren's assessment. They maintained that credit unions were struggling against a sea of red tape from both the CFPB and from other provisions of Dodd-Frank sold as going after "big banks," such as the Durbin Amendment's price controls on debit card interchange fees.

    "Although I recognize the need for appropriate regulation, too often credit unions end up paying the price for abusive practices perpetrated by non-credit union entities," testified Mitch Reiver, general counsel for Melrose Credit Union in Queens, New York, at the hearing before the House Financial Services Committee's Subcommittee on Financial Institutions and Consumer Credit.

  • CEI Podcast For April 11, 2013: Reining in Unfunded Mandates

    April 11, 2013 5:18 PM

    Vice President for Policy Wayne Crews warns that the higher the deficit goes, the more tempted the federal government is to resort to unfunded mandates, which don't appear on the federal budget.


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