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OpenMarket: October 2013

  • CEI Study Supports Tax Cuts for Beer

    October 31, 2013 5:11 PM

    If you’ve read Lauren French’s Politico article on the two beer tax reduction bills currently under consideration in Congress, you might think that the Competitive Enterprise Institute views the bills as a threat to federal revenue, Brewers: Tax cuts good for what ales us (October 30, 2013). Let me set the record straight: as we state in our paper BEER and Small BREW Can Be Good for Youwe believe that in the short term the BEER Act, which reduces the federal excise tax for beer producers big and small, will be a boon to the nation’s economy, but that the ideal course of action is to repeal the Federal excise tax on beer entirely.

    The federal beer excise tax was first enacted in 1862 to help pay for America’s massive debt after the Civil War. It should have been repealed in 1933 with the repeal of national prohibition and the passage of the 21st Amendment that turned over authority to regulate intoxicating liquors to the states.  But more than 150 years later the beer industry is still saddled with the tax in addition to the state excise taxes, federal business taxes, state business taxes, and sales taxes that have been added since—all of which make the business of beer more costly and increase the cost consumers have to pay. All told, taxes now account for almost half of the cost of a beer.

  • Mel Watt Fails Taxpayer, Privacy, and Transparency Tests

    October 31, 2013 3:31 PM

    Former Rep. Mel Watt, D-N.C., failed his procedural confirmation vote today to head the Federal Housing Finance Agency, which oversees the government housing entities Fannie Mae and Freddie Mac. His defeat -- so far -- is a victory not just for fiscal integrity, but for privacy and transparency as well.

    As a congressman, Watt egged on the reckless policies of Fannie Mae and Freddie Mac that got us into the mortgage crisis from which the economy is still recovering. But just as bad, he was on the wrong side of both liberals and conservative reformers on two crucial issues. Watt was a co-sponsor and vocal supporter of the Stop Online Piracy Act (SOPA), which collapsed in 2012 after a transpartisan coalition made the public aware of its threat to privacy and innovation. And Watt was the chief Democratic opponent of a bipartisan proposal to audit the Federal Reserve and helped gut the provision from what would become the Dodd-Frank "financial reform" law of 2010.

    On Fannie and Freddie, as reporter Charles Johnson detailed at The Daily Caller, Watt "teamed up with Freddie Mac and Fannie Mae [and some banks]to announce Pathways to Homeownership, a pilot initiative designed to give home loans to welfare recipients" with minimal down payments. A press release from Watt said the loans would require “as little as $1,000 of the down payment to come from their own funds."

    Then, as Johnson pointed out, "In 2007, a full year after the real estate market peaked and began to plummet  under the weight of millions of mortgage defaults, Watt and Frank co-sponsored a  bill forcing Fannie and Freddie to meet even higher quotas for affordable  lending and investing  in an “Affordable Housing Fund” for inner city communities."

  • Towards a More Transparent Fed

    October 31, 2013 3:23 PM

    Iain Murray and I have a piece in today's American Spectator breaking down the new paper we co-wrote with John Berlau.

  • Corporate Culture Makes a Difference -- In Business and in Baseball

    October 31, 2013 1:40 PM

    Last night the Boston Red Sox won the World Series after coming back from a worst-place season in 2012. Their 6-1 defeat of the St. Louis Cardinals capped a remarkable turnaround that resulted from a mix of a new coach, a blockbuster trade to the Los Angeles Dodgers, seven free-agent acquisitions, and a “culture of excellence.” Sabermetrics undoubtedly played its important role, as it does for almost every ball club. But to a player, they created and bought into a team spirit that maximized their talent to reach their goal – and had fun doing it.

    Here’s one report of how the team coalesced:

    Red Sox players loved coming to the park early and finding several teammates ready to go to work with them to refine the subtle details of their games. They practiced together to improve their execution. And when they did not practice, they discussed their execution so that they could do a better job of preparing for game situations.

    The result was a team striving for greatness in the details. And as the players sensed that shared purpose, they recognized the logical conclusion of the undertaking. The players felt empowered to set critical standards for each other, foremost to play the game with maximum effort and intensity, with perfection of execution.

    This soon created the identity of a team that believed it could do something extraordinary.

    Red Sox General Manager Ben Cherington, in discussing the additions to the roster that made a difference, was reported as saying:

    He wanted players who had reputations for being good clubhouse guys. He wanted players who understand that playing for the Red Sox is a unique experience -- that is, expectations are high, and players are held accountable.

  • Happy Halloween! FAA to Allow Portable Electronic Devices During All Flight Phases

    October 31, 2013 12:03 PM

    A month ago, a Federal Aviation Administration (FAA) Aviation Rulemaking Committee (ARC) recommended that the agency drop its ban on portable electronic device (PED) use during takeoffs and landings. Today, the FAA announced it was largely adopting the ARC's proposals, which will soon permit passengers of commercial airlines to use non-transmitting PEDs (although WiFi on WiFi-enabled airliners and short-range Bluetooth devices will be allowed) gate to gate.

    This move was supported by both the airlines and the unions representing flight attendants. After years of evidence supporting such a policy -- electromagnetic interference with instruments from PEDs was never adequately demonstrated in the first place -- the ritual of powering down cell phones (in airplane mode) and other devices twice during flights will soon be a thing of the past.

    Note that the prohibitions will remain in place until operations procedures are implemented and individual airlines receive FAA approval for the PED policy change, so those traveling today and in the very near future will still need to switch off their phones and tablets. Pilots landing in low-viability conditions may still ask that passengers power down their PEDs, although this largely unenforceable and unnecessary provision was most likely included as a liability shield.

  • Congressional Scorecard Update--Richard Griffin Confirmation

    October 30, 2013 4:09 PM

    Yesterday, the Senate voted 55-44 to confirm Richard Griffin as the National Labor Relations Board general counsel, with Senator Lisa Murkowski as the sole Republican to vote to confirm Richard Griffin.

  • Jane Brody's Uninformed Attack on Cars and Suburbia

    October 30, 2013 1:16 PM

    While at a conference where participants discussed the wannabe social engineers cum urbanists' war on automobility and housing affordability, Jane Brody's broadside against Americans' "dependence on automobiles" and suburban living was published by the New York Times. Brody, unlike her Times colleague Michael Pollan, isn't a complete and total kook when it comes to agricultural biotechnology, and she is one of the more thoughtful nutrition writers in America. Unfortunately, Brody has fallen for one of the popular but incorrect urban elitist tropes about cars and the suburbs.

    Long commutes are killing us! Urban cores are healthier than the suburbs! Low-density living is just fattening us up for self-slaughter!

    Scary stuff, just in time for Halloween! But the "evidence" supporting such fear mongering ranges from flimsy to nonexistent.

    In her introduction, she unintentionally sets the stage for an interesting contradiction that drives suburb-hating urbanists crazy. "My son used to work in New Jersey, which entailed a hated commute by car that took 50 to 90 minutes each way," writes Brody. "He quit that job when his sons were born and, working part-time from home, cared for the boys. He now commutes to work in the city by foot and by subway, giving him time to read for pleasure."

    Despite the fact that many two-income American households don't have the realistic option to simply leave their jobs for childbirth, Brody fails to mention that the New York City metropolitan area has the longest commutes in the nation. Oh, but that's just for suburban New York metro commuters. City dwellers avoid those lengthy commutes, right? Wrong. New York City residents who can't afford to live in Manhattan can have extremely long commutes just like their suburban neighbors -- and some of the longest commutes in the metro area are those of Brooklyn and Queens residents. See this handy map that WNYC put together with Census data.

    This is to be expected. New York City has the lowest auto ownership in the nation and the highest public transit usage (about 40 percent of all transit trips taken in the U.S. are within the New York City metropolitan area). Those who get to work by transit rather than car generally have longer commutes: you need to walk to the transit stop, transfer, etc. That's why New York City drivers tend to have lower commute times than transit users. If you're looking for the shortest commutes, you'll need to move to auto-oriented, low-density places like Manhattan, Kansas, rather than Manhattan, New York, New York.

  • Fairy Tales and Astroturf

    October 30, 2013 9:17 AM

    Senators Elizabeth Warren, D-Mass., and Robert Menendez, D-N.J., want us to believe a simple progressive fairy tale that we have been hearing ad naseum for years now: the government couldn’t possibly abuse its power to silence political opponents.

    On Wednesday afternoon, Sens. Menendez and Warren are holding a press conference to encourage the Securities and Exchange Commission to require disclosure of all political activity from publicly traded companies. Currently, public corporations aren’t required to disclose any “non-material” political activity.

    In reality, this is a push to discourage corporations from exercising their right of free speech and political association. After all, since corporations are already banned from making direct contributions to federal candidates, the proposed measure forces corporations to publicly disclose their support to non-profit organizations such as trade associations and 501(c)(4)s.

    So how does this help shareholders?

  • CEI Podcast for October 30, 2013: Bringing Transparency to the Consumer Financial Protection Bureau

    October 30, 2013 9:00 AM

    George Mason University law professor and Mercatus Center senior scholar Todd Zywicki discusses his paper, "The Consumer Financial Protection Bureau: Savior or Menace?"

  • Don't Let FTC Shut Down Legit Credit Repair Services

    October 29, 2013 4:16 PM

    Next to the infamous, the website that featured the most bugs of the last month was, the site of the Federal Trade Commission.

    During the shutdown, many government websites were frozen to avoid the cost of upkeep, but with disjointed patterns. And Cato Institute Research Fellow Julian Sanchez noted at Slate that the FTC site was among the "weirder."

    "Browse to any of their pages and you’ll see, for a split second, the full content of the page you want—only to be redirected to a shutdown notice page also hosted at," Sanchez wrote. "If the full site is actually still running, it’s hard to see how a redirect after the real page is served could be avoiding any expenditures."

    Now that the shutdown is over, the agency and its website are up and running again. But that is not good news for millions of Americans who wish to improve their credit scores.

    The FTC will likely resume sending mixed signals, paralleling the stop-and-go messages of its shutdown website, to entrepreneurs attempting to help folks improve their credit. And its regulatory overreach will continue to threaten to shut these valuable services down.


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