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OpenMarket: Business and Government

  • Advocating Free Trade, Not Foreign Aid for the World's Poverty

    July 1, 2015 3:25 PM

    A Review of the Poverty Cure Documentary Series

    Poverty Cure is a six part documentary series directed and hosted by Michael Matheson Miller, produced by Acton Media, and was released on December 5, 2014. The film is a project of Poverty Cure, a Christian-based organization that puts together a network of institutions in an effort to defeat poverty through the means of capitalism and entrepreneurship.

    This documentary series is primarily targeted at Christians who are presumably active in their faith-based communities. It proposes that Judeo-Christian values can serve as a beneficial moral code for entrepreneurs and businessmen. The series argues that this moral code will guide and serve as the means for businessmen to run companies effectively to serve the impoverished by providing them work and a place to start businesses of their own.

    The Christian values are reiterated throughout the entire series, and at times the rhetoric distracts from the series’ main argument. However, once the viewer is aware of the organization’s values and their target audience, the Judeo-Christian language seems more reasonable.

    That aside, the series argues its case successfully, convincing at least this viewer that the developing world does not need charity, foreign aid, or philanthropy. Further, it demonstrates that developing countries and poverty-stricken populations require a free market society, open trade, and accessible investment opportunities.

    From the start, the series does well to discredit celebrity campaigns that “combat poverty,” massive foreign aid campaigns, and substantial corporate donations, which is also known as “dumping.” We see that these actions cripple local economies of developing nations. The series uses the example of a Rwandan farmer who provides his local market and community with eggs. When an aid campaign group decided that they were going to continually donate eggs to the village, they effectively drove the farmer out of business. The community then became dependent on egg donations. Consequently, when the aid campaign stopped donating eggs, the community was unable to react to the change and was forced to import eggs from another region. While the intentions may be good, they can actually cause local businesses to lose their customers, subsequently crippling the local economy by stagnating or even reversing business growth.

    The series admits, correctly so, that people start these campaigns because they have good hearts and good intentions; they want to end suffering in the world and help those who are impoverished, so they think the easiest thing to do is donate goods and services to these people. However, Poverty Cure makes it evident that these strategies do not work, and can actually do more harm to the community.

  • 2015 CEI Dinner Movie: The Magnificent 7

    June 18, 2015 2:23 PM

    Complete with cowboy boots, wagon wheels, lamps made out of whiskey bottles, and wanted posters of the most “notorious” U.S. regulators—if you’re talking to a CEI staffer—this year’s annual dinner embodied the theme: Bourbon and BBQ Bash.

    Dinner guests were not disappointed with this year’s dinner movie production inspired by some of our favorite western movies, featuring some of CEI’s best work, and of course, starring some of CEI’s most beloved staffers.

    Watch the 2015 CEI dinner movie, “The Magnificent 7,” below:

  • Excerpts from Carly Fiorina's Address at CEI's Annual Dinner

    June 18, 2015 2:17 PM

    Keynote address by business and nonprofit leader Carly Fiorina delivered at the Competitive Enterprise Institute’s annual dinner on June 11, 2015.

    Excerpts from text as prepared for delivery:

    When I was a little girl, my mother told me: “What you are is God’s gift to you. What you make of yourself is your gift to God.” My mother and father would encourage me always to work hard, to aim high, to find and make the most of my gifts. I didn’t feel gifted as a young girl or a young woman, but my mother’s words seemed like both a promise and a challenge.

    I would start my career as a secretary in a little nine-person real estate firm. One day, two men who worked there approached my desk and said: “We’ve been watching you and we think you can do more than type and file. Do you want to learn about business?”

    They saw potential and possibilities in me and so I came to see these things in myself.

    Whether it is in business or in charity or in any other human endeavor, my experience tells me that human potential is limitless. Usually, it is underutilized or worse, squandered and wasted. It is the only limitless resource we have in this world, and it is all we need to solve every problem.

    Last week I was at a fundraising event where donors brought their children: some sons and many, many daughters. At the end of the event, a little girl approached me. She asked: “Have you ever wished you were someone else?” I answered: “I used to sometimes when I was younger, but now I know that I am who God intended me to be. Have you ever wanted to be someone else?” She looked away and said: “I don't know.” She was 10 years old and at that age “I don't know” means “Yes.” So I reassured her: “You are exactly who God wants you to be. Don't wish to be someone you are not. Find out who you are.”

    It has been 95 years since women got the right to vote. 50 years since the Feminine Mystique. 16 years since I was named the first female CEO of a Fortune 50 company.

    There are only 23 female CEOs in the S&P 500. Fun fact: there are more CEOs named John than there are women. Among those same companies, there are only 19 women for every 100 Board members. 84 percent of women strongly agree that women can lead just as effectively as men. Only 43 percent of men agreed with the same statement. Companies headed by male executives receive 98 percent of all venture capital funding in Silicon Valley. That’s $1.88 billion dollars—compared to just $32 million for women. Recent studies from the NYU Child Study Center suggest that a girl's self-esteem peaks at age 9 and declines from there.

    I believe it is time to have a conversation about the state of women in America. Women represent half of all human potential. Women around the world continue to be subjugated and marginalized. Here in this country where women have more opportunities than anywhere else on earth, we still can make our country a better place by fully tapping the potential of every woman.

    Today, women hold nearly 48 percent of all US jobs, up from 37 percent 40 years ago. By 2011, this relatively small increase in the workforce accounted for one-quarter of our GDP. In other words, more than a stunning three and a half trillion dollars was generated by the increase in women’s participation in the economy: greater than the GDP of Germany and more than half of the GDP of both China and Japan. Additionally, companies with more women on their boards outperform their competitors.

    In other words, the facts are in and the data is clear. Realizing the potential of women isn’t just the right thing to do—it’s the smart thing to do.

    **********

  • Politics vs. Principle: Export-Import Bank Edition

    May 26, 2015 10:14 AM

    On the merits, the case for closing the Export-Import Bank is a slam-dunk. This has made life difficult for the bank’s supporters, especially since the bank will permanently close on June 30 unless Congress reauthorizes its charter. So they are switching to politics.

    One of the top items on Congress’ agenda is Trade Promotion Authority (TPA), which despite some drawbacks, would make international trade a little freer than it is now. Seeing a point of entry, Ex-Im supporters tried to tie Ex-Im reauthorization into the TPA bill. This way, a Senator who opposes Ex-Im might have to hold his nose and vote for it anyway, since it would be part of the larger TPA bill he supports.

    This attempt was rebuffed, and a clean TPA bill is poised to pass the Senate. But Sens. Maria Cantwell (D-Wash.) and Patty Murray (D-Wash.), both coincidentally from major Ex-Im beneficiary Boeing’s home state, did exact a promise from Senate leadership: the Senate will soon hold a separate vote on Ex-Im reauthorization. This is important, since Ex-Im will close if Congress does nothing.

    Since Ex-Im reauthorization is likely to pass the Senate, the political focus moves to the House. Sen. Cantwell tried to get Speaker Boehner to promise to hold a House Ex-Im vote, but he refused. But nor will he get in the way of a vote if members of his own chamber decide to bring one up.

    At least 90 House members oppose Ex-Im reauthorization, according to Heritage Action. The Republican Study Committee (RSC) announced its opposition to Ex-Im reauthorization, though not all RSC members share that stance, most notably Rep. Stephen Fincher (R-Tenn.), who is sponsoring an Ex-Im reauthorization bill. Despite this substantial groundswell, a House majority is 218 members, and it remains to be seen if enough other members will stand firm in opposing the bank.

    So that’s where the issue stands right now. The merits of Ex-Im were decided long ago—despite affecting less than 2 percent of U.S. exports, the agency has still managed to divert billions of dollars of capital away from deserving businesses, subsidize U.S. firms’ foreign competitors, and cause dozens of corruption cases. Now the question becomes whether politics are stronger than principle. Either way, Congress’ pending answer will be revealing.

  • Deceptive Discrimination Laws

    April 29, 2015 9:14 AM

    Discrimination may be bad for business, but that doesn’t mean laws banning discrimination are good for business. Often, these laws are like the proverbial Trojan Horse, applied by the courts in unexpected ways that are harmful to businesses, including employers who harbor no prejudice of any kind. For example, the Supreme Court interpreted a federal race and sex discrimination law (Title VII of the Civil Rights Act) as banning unintentional “disparate impact” (which is when a neutrally applied selection criterion weeds out more black than white applicants) even though that statute explicitly limited relief to cases where there was a showing that the employer had “intentionally engaged in or is intentionally engaging in an unlawful employment practice.” [See Griggs v. Duke Power Co. (1971); 42 U.S.C. 2000e-5(g).] The result of that case was to outlaw a wide array of useful, colorblind standardized tests.

    The Supreme Court also interpreted a statutory attorneys fees provision that was neutral on its face as instead mandating one-way fee-shifting, effectively entitling only prevailing plaintiffs to such fees (except in really extreme cases), not prevailing defendants, and entitling such plaintiffs to fees even if the employer had a reasonable, good-faith belief for taking the position it did. [See Christiansburg Garment Co. v. EEOC (1978).]

    Civil rights agencies and courts also impose emotional distress damages in discrimination cases that seem to be either grossly exaggerated, or insufficiently corroborated by objective evidence. For an example of the former, see the recent ruling by an administrative law judge in the Oregon Bureau of Labor and Industries, recommending “$135,000 in damages against Melissa and Aaron Klein, owners of Sweet Cakes by Melissa in Gresham, Ore., who had declined to cater a gay wedding on grounds of religious scruples [Oregonianearlier].” As is typical in administrative discrimination cases, the same agency is effectively serving as prosecutor, judge, and jury, which the Founding Fathers would have viewed as a violation of the constitutional separation of powers, as law professor Philip Hamburger has explained.

    $135,000 (or even a tenth that amount) is a grossly excessive emotional-distress damage award for a simple refusal to contract with a customer. Being rebuffed by a merchant is much less painful than losing your job, or even losing out on a promotion, and people wrongly fired from their jobs typically get less than $135,000 in emotional distress damages. The award is so ridiculously large that it seems to designed not to compensate, but to punish people for harboring archaic beliefs, with the lion’s share of the award being to punish the small business owners for their thought-crime, rather than make anyone whole.

  • CEI Statements on the Failed Comcast-Time Warner Merger

    April 27, 2015 3:35 PM

    CEI responded to the news that the Comcast-Time Warner merger failed. You can read more analysis from CEI's Vice President for Policy Wayne Crews here.

    "The deck was stacked against this deal from the beginning: Comcast and Time Warner Cable had to seek permission to merge from not only the Department of Justice, but also the Federal Communications Commission. While the DOJ must win in court before it can block an acquisition, the FCC has unilateral power to send a transaction into regulatory limbo for years before the merging parties get a chance to be heard by an independent federal judge. This process turns the rule of law on its head, and only Congress can fix it." 

    -- Ryan Radia, Associate Director of Technology Studies

    “The collapse of the Comcast-Time Warner merger merely because of the interference of government, not because of actual market rejection, illustrates the overwhelming power of the modern state to undermine the advance of communications technologies and services. These bureaucrats have decided on our behalf to award other communications industry companies a government-granted reprieve from the pressures of competition.”

    -- Wayne Crews, CEI Vice President for Policy

  • Comcast-Time Warner Cable Merger Derailed

    April 23, 2015 5:17 PM

    Today we’ve learned again that bureaucrats and their enormous kingdoms come before consumer welfare. 

    The collapse of the Comcast-Time Warner Cable merger merely because of the interference of government, not because of actual market rejection, illustrates the overwhelming power of the modern state in undermining the advance of communications technologies and services specifically in this instance, and of free competitive enterprise generally. 

    The proposed transaction was first announced well over a year ago, and as is now the unfortunate and disruptive norm, the parties had to await the verdicts of bureaucracies rather than set immediately about serving consumer markets. Now, the Justice Department’s Antitrust Division and the Federal Communications Commission, whose edicts change the direction of entire industries with the slightest gesture, have decided to derail the deal.  

    These bureaucrats have decided on our behalf that the merger wouldn’t help us. What they have really decided is that no competitor will need to react to the Comcast-TWC merger, and so competitors have been awarded a government-granted reprieve from the pressures of competition. Over and over, antitrust routinely harms consumers far more than any ordinary business transaction like this can ever do.

    Sometimes mergers work, sometimes they don’t—like the failed AOL-Time Warner merger. But such matters should be settled in the marketplace, not by overlords in Washington who, if we are the slightest bit honest, are the real wielders of unchecked monopoly power over all industries, not just one sector like this.  

    For an earlier discussion of this merger, here’s a column of mine in Forbes. “Why Organized Conservative Opposition To The Comcast Time Warner Deal Misfires.”

    On the folly of antitrust regulation (and it is regulation), see my formal comments to the Federal Trade Commission’s Antitrust Modernization Commission

  • How Capitalism Created the Modern Family

    April 22, 2015 1:07 PM

    Prof. Steve Horwitz of St. Lawrence University has a fascinating article up at MarketWatch, in which he argues that many of the major changes in family structure and gender roles we have seen over time are primarily a result of market forces and increasing prosperity. Serendipitously, I recently attended a lecture by Prof. Jerry Muller, presented by the Snider Center for Enterprise and Markets, in which he made many of the same connections.

    The Industrial Revolution, for example, created new opportunities for wage labor outside the home and family farm, so all sorts of poor people—men, women, and children—ended up taking those jobs to contribute to the household’s income. As real wages rose with increased productivity, more men were able to become sole breadwinners for their entire family, and children and women were able to return to the domestic sphere. Many of those children went to school rather than doing any physical work, and women generally assumed the role of what many people today consider the “traditional” homemaker.

    But in many ways that tradition was short-lived. As an array of labor-saving devices for the home proliferated in the early 20th Century, women were again seeking career opportunities outside the home. Horwitz points out that this has led, for example, to more women working with young children, a trend that itself has been made possible because women, in recent decades, have been having fewer children on average, making paid daycare a more affordable option.

    I suspect Horwitz and Muller might disagree on the second half of Horwitz’s MarketWatch article that applies the same analysis to sexual orientation and individual expression, but the overall theory—that “social” trends have a lot more to do with economic effects than many historians and sociologists acknowledge—remains a compelling one.

  • Capitalism Makes a Comeback on Campus

    February 25, 2015 12:15 PM

    There’s exciting stuff going on in the world of higher education these days for fans of free markets. Just last week, the University of Arizona’s Center for the Philosophy of Freedom received a $2.9 million grant from the John Templeton Foundation to help build a network of philosophy, politics and economics (PPE) programs at several universities around the world.

    Closer to home here in Washington, D.C., the new Ed Snider Center for Enterprise and Markets at the University of Maryland is making a strong showing out of the gate. Earlier this month the Center hosted a debate over income inequality and public policy including current Executive MBA students and outside speakers Yaron Brook and Paul Vaaler. The video content from that event is well worth re-visiting for anyone who was unable to attend in person.

  • How to Help Tesla and Taxpayers

    February 20, 2015 12:59 PM

    Policies aimed at reducing auto emissions in California and 10 other states are having a troubling set of unintended consequences, according to a recent editorial at Bloomberg View. Editors point out that the “zero-emissions” credits program ends up amounting to a subsidy for electric carmaker Tesla Motors of up to $30,000 per car sold, penalizing the buyers of nonelectric vehicles who end up underwriting the purchase of someone else’s $100,000 Model S. In addition, electric cars may not even be much “greener” than their nonelectric counterparts, when one considers the time of day these cars are charged as well as the source of the electricity—in many parts of the country, exchanging a conventional vehicle for an electric one means trading a gasoline-powered car for one powered by coal.

    The Bloomberg editors, unfortunately, suggest solving the problem with two even worse policies: stricter fuel economy standards and a carbon tax. Perhaps if they had read this post by my colleague Richard Morrison, they might also consider a free market approach to the auto industry. Richard suggests treating Tesla fairly by ending both the apparent war against their retail strategy of selling directly to consumers (or owning their own dealerships), as well as eliminating the huge tax subsidies being offered by states like Nevada and New York. If Tesla makes cars that are as awesome as they are made out to be, then surely the company will find consumers who want to drive them—without having to pick their neighbors’ pockets.

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