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  • 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.

  • Balanced Budgets and Regulatory Budgets

    April 22, 2015 1:05 PM

    The Joint House-Senate Conference Meeting on the federal budget has begun. Chairman Tom Price of Georgia remarked:

    Completing a budget is one of Congress’ core legislative responsibilities. It helps ensure we are embracing our Constitutional power of the purse and legislating in an orderly manner....we must remember that a budget is more than just a set of numbers. It is a reflection of our priorities and vision for how we can achieve real results and move our country in the direction of greater opportunity, economic growth and a safer and more secure nation – one where Americans have the best chance of achieving their dreams for the future. 

    The basic plan purports to just barely balance the budget within 10 years. We’ll have a $6 trillion annual fiscal budget under Obama in 2025—but it’ll be at least $5 trillion under Republicans. Under Obama’s plan, we’re going to spend $49.3 trillion between 2016 and 2025; Republicans, $43.1 trillion. 

    The initial Republican plan released in February promised to get rid of Obamacare. However, Republicans are running away from that despite pre-election promises and can be counted on this summer to advance legislation embracing fundamental premises of Obamacare (even keeping “kids” on the parents’ policy until age 26 by force. Take a look at Los Angeles Times: “Obamacare Repeal Falls Off Republicans's To-Do List as Law Takes Hold.”)

    This issue alone assures no balanced budget in 10 years, as does the inevitable one-upsmanship among Republicans to spend more on defense.

    For future entrepreneurial progressives, the summer 2015 cave-in on Obamacare will remove key barriers to single-payer for some future Congress when the mixed approach fails. If Republicans are choosing government controls, then they are choosing government controls.

  • Google Now Opposes State Automated Vehicle Legislation?

    April 22, 2015 11:54 AM

    Back in 2012, I warned that California’s bill (now law) that would explicitly recognize the legality of automated vehicles and order state regulators to develop a detailed safety framework would tie the hands of innovators. In those days, Google was the chief proponent of such legislation, with California Gov. Jerry Brown signing the bill into law (sponsored by now-Secretary of State Alex Padilla) at Google’s headquarters, with Google co-founder Sergey Brin looking on.

    That 2012 law spawned a series of chaotic regulatory actions at the California Department of Motor Vehicles, which has still failed to implement the required licensing and operations regulations and which also imposed regulations that forced Google to dial back its efforts to produce and test a fully automated vehicle on public roads. Ironically, these now-forbidden operations were likely completely legal before California enacted its autonomous vehicle law in 2012.

    Fortunately, Google appears to have learned from its mistakes and is now opposing a similar piece of legislation in Texas. The technology giant isn’t explaining its about-face in the Longhorn State, but the automakers’ chief lobby, the Alliance of Automobile Manufacturers, was more candid:

    The Alliance of Automobile Manufacturers, which represents 12 automobile manufacturers including General Motors and Ford, was more forthcoming. Spokesman Dan Gage said the group was concerned that the bill might create state-specific standards related to safety or manufacturing that could tap the brakes on the development of the technology.

    “We don’t feel that legislation in this area in Texas right now is necessary,” Gage said. “The concern is by putting pen to paper you actually could prematurely limit some of those types of developments.”

    Gage said many of his group’s members are testing autonomous vehicle technology, but he could not say whether any are doing so on Texas roads or highways. Such testing would likely be legal here, as Texas law does not address self-driving vehicles, according to state officials. Google drove its self-driving car on Texas roads during a trip to Austin to promote the technology in 2013.

  • Gruber's Disciples Gunning for Your IRA and 401(k)

    April 21, 2015 11:32 AM

    Is Jonathan Gruber, the MIT economist who seemingly dropped out of public view after he was caught on camera bragging how he and other Obamacare architects misled the American public, now advising the Department of Labor?

    No evidence indicates that he is, but the authors of sweeping new 444-page DOL regulation that would sharply curtail choices of assets and investment strategies in 401(k)s, IRAs and other savings plans appear to share Gruber’s mindset on the “stupidity of the American voter” (a revelation National Review editor Rich Lowry aptly described as “us an unvarnished look into the progressive mind, which … favors indirect taxes and impositions on the American public so their costs can be hidden, and has a dim view of the average American”).

    Now, President Obama and Secretary of Labor Tom Perez are advancing a new regulatory and hidden-tax scheme while claiming to protect average Americans’ retirement savings from unscrupulous financial professionals. The proposed “fiduciary rule” would restrict the investment choices of holders of 401(k)s, IRAs, health savings accounts, and Coverdell education accounts.

    In a speech to AARP, Obama proclaimed:

    If you are working hard, if you're putting away money, if you’re sacrificing that new car or that vacation so that you can build a nest egg for later, you should have the peace of mind of knowing that the advice you’re getting for investing those dollars is sound, that your investments are protected.

    Similarly, a DOL “fact sheet” describes the rule as “protecting investors from backdoor payments and hidden fees in retirement investment advice.”

    Yet in practice, the rule seems premised on the Gruberite notion that American investors need protection from is their own stupidity. According to the DOL rule:

    [I]ndividual retirement investors have much greater responsibility for directing their own investments, but they seldom have the training or specialized expertise necessary to prudently manage retirement assets on their own. (page 8)

    Therefore, they “need guidance on how to manage their savings to achieve a secure retirement.”

    Can’t savers who feel they need this guidance seek it out under a variety of investment professionals under a system with strong disclosure and anti-fraud rules? Absolutely not, says the Obama administration.

    “Disclosure alone has proven ineffective,” states the rule. “Most consumers generally cannot distinguish good advice, or even good investment results, from bad” (page 91). In fact, proclaims the DOL, “recent research suggests that even if disclosure about conflicts could be made simple and clear, it would be ineffective—or even harmful.”

    So, in the administration’s view, the only solution is to tax these dimwitted investors—for their own good, of course—and expose financial professionals to a flurry of lawsuits and penalties, if administration officials deem their advice not to be in savers’ “best interests.”

  • Fix Cyber Information Sharing Bill, Free Market Groups Urge

    April 21, 2015 11:29 AM

    The Competitive Enterprise Institute, TechFreedom and a coalition of free-market groups issued an open letter to Members of Congress, urging them to consider amendments to the National Cybersecurity Protection Advancement Act (NCPAA) of 2015. The NCPAA intends to increase cyber security by facilitating greater sharing of potential cyber threats by private companies with each other and with government. But it also raises real privacy concerns because potential Cyber Threat Indicators could include private information like email content or Internet usage history.

    “Congress must ensure that agencies can’t strongarm companies into sharing information involuntarily, and that agencies can be held liable for recklessly misusing private data they might receive. And agencies should be barred from using such information for regulatory purposes or for unrelated criminal prosecutions,” said Ryan Radia, Associate Director of Technology Studies at the Competitive Enterprise Institute. “Finally, the existing bill’s blanket immunity for ‘defensive measures’ could encourage unauthorized access to protected computers, potentially endangering innocent bystanders caught in the middle of cyberattacks.”

    The letter proposes eight amendments:

  • Presidential Candidate, Poker Celebs Oppose Internet Gambling Ban

    April 21, 2015 9:22 AM

    What do two-time world poker champ Doyle “Texas Dolly” Brunson, presidential-hopeful Rand Paul, and Fraternal Order of Police President Chuck Canterbury have in common? They’ve all come out against the so-called Restoration of America’s Wire Act (RAWA), which would create a national prohibition on Internet gambling.

    They are just three of the thousands of Americans who oppose a law that was written by and for the benefit of one casino owner: Sands Chairman Sheldon Adelson. RAWA is not only a threat to those who want the freedom to gamble online, but also to those who value personal liberty, consumer protections, and a limited federal government.

    A two-time World Series of Poker champ, an inductee to the Poker Hall of Fame, and author of the poker bible, Texas Dolly is without question the most famous professional poker player alive. He regularly tweets using his handle @TexDolly, and on April 2, he posted a tweet to his 415,000 followers, requesting signatures for the White House petition, asking President Obama to veto RAWA should it land on his desk (add your signature here).

  • New Study Makes the Case for Ending the Export-Import Bank

    April 20, 2015 1:01 PM

    The Export-Import (Ex-Im) Bank is making quite the ruckus in Washington these days. Senate Majority Leader Mitch McConnell (R-Ky.) has dubbed the state-run bank “controversial.” House Republicans seem divided on the issue. Indeed, this lesser-known bank will likely surface in the coming months as a topic of debate for presidential hopefuls. Some have called it “crony capitalism,” while others maintain the bank is useful to small businesses nationwide. 

    A new study by Mercatus Center scholar Veronique de Rugy and Heritage Foundation senior research fellow Diane Katz sheds light on the issue. They find that the Export-Import Bank dedicates around 80 percent of its financing to large firms while only 20 percent goes to small firms. So what is the claim that Ex-Im benefits small business based on?

    The bank determines a firm to be “small” when it employs up to 1,500 workers and makes up to $21.5 million in revenue annually—a definition of “small” business that includes firms owned by Warren Buffet and Carlos Slim, as well as companies like Swarovski jewelers, Toshiba, and Hitachi. Indeed, the bank doles out lavish sums of money to domestic and international giants like Boeing, Caterpillar, and Halliburton. It also benefits foreign firms—including oil giants like Mexico’s Pemex and India’s Reliance Industries and airlines like the UAE’s Emirates and Hong Kong’s Cathay Pacific.

  • New York Times Clings to Discredited Legal Myths about Corporate Personhood

    April 20, 2015 9:51 AM

    Progressivism is essentially a religion based on a set of shared myths and boogeymen. True believers cling to those myths no matter how many times they are debunked by economists, legal historians, or other experts. These shared myths create a sense of belonging and moral superiority to others who don’t share those beliefs.

    A classic example of this is the myth that the Supreme Court’s 2010 Citizens United decision created the concept of corporate personhood, giving corporations constitutional rights for the first time. In reality, corporate constitutional rights were recognized by 1819, if not earlier. Yet, progressive op-ed writers repeat this myth even after its fallaciousness has been pointed out over and over again in their own newspapers, by experts who know more about law and history than they do.

  • CEI’s Battered Business Bureau: The Week in Regulation

    April 20, 2015 7:24 AM

    The Federal Register passed the 20,000-page mark in a big way, with Thursday and Friday’s editions alone accounting for more 1,200 pages. New regulations cover everything from macadamia insurance to net neutrality.

    On to the data:

    • Last week, 57 new final regulations were published in the Federal Register, after 39 new regulations the previous week.
    • That’s the equivalent of a new regulation every two hours and 57 minutes.
    • So far in 2015, 850 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,872 new regulations this year, which would be several hundred fewer rules than the usual total.
    • Last week, 2,127 new pages were added to the Federal Register, after 1,120 pages the previous week.
    • Currently at 21,533 pages, the 2015 Federal Register is on pace for 72,747 pages.
    • Rules are called “economically significant” if they are estimated to have annual costs of $100 million or more. Six such rules have been published so far this year, none in the past week.
    • The total estimated compliance cost of 2015’s economically significant regulations ranges from $693 million to $746 million for the current year.
    • 73 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 159 new rules affect small businesses, while 25 of them are classified as significant. 

    Highlights from selected final rules published last week:

  • No Bailouts for Taxi Cab Moguls

    April 17, 2015 12:53 PM

    A recent New York Times article highlights the plight of one plucky New York taxi mogul caught between flawed governmental policy and the process of creative destruction. Evgeny Friedman is asking the city government to bail out his troubled cabbie business after he was unable to make good on loans he took out in order to pay for the sky-high price of dozens of New York City taxi medallions. 

    In New York, the issuance of a taxi medallion is analogous to owning a “deed” to a taxi.  In order to operate a taxi, you must possess or work for someone who possesses one of these medallions, the supply of which is capped at about 6,000. Unsurprisingly, as both the population and demand for taxi services have increased over the years, the price of these medallions has skyrocketed, reaching a peak in 2013 of $1.2 million. Under this scheme, the cost of owning and operating one taxi in the Big Apple is about the same as buying three new 2015 Rolls Royce Phantoms.

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