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  • SEIU Support for Minimum Wage Hikes Based on Self-Interest

    April 13, 2015 10:17 AM

    Why is the Service Employees International Union funneling $15 million into the Fight for 15 campaign when the average private-sector union member makes $22 an hour and only 1 percent of the American workforce earns the minimum wage?

    Union rhetoric would tell you that they support wage hikes as a means to preserve the middle class and to lift low-wage workers out of poverty.

    However, what many do not realize is that unions’ self-interest is the primary motivation for their support of wage hikes, not altruism or concern for the well-being of low-wage workers.

  • Operation Choke Point: The CFPB Is Now in Charge

    April 9, 2015 3:41 PM

    I suggested at TheBlaze some weeks ago that even as the Federal Deposit Insurance Corporation was stepping back from its involvement in Operation Choke Point, the Consumer Financial Protection Bureau was entering the fray. This now appears to be confirmed, as American Banker reports:

    The Consumer Financial Protection Bureau has filed a massive lawsuit against more than a dozen debt collectors, payment processors and related entities that the agency said failed to stop fraudulent collection tactics…

    But the potentially groundbreaking part of the case is that the CFPB also sued several payment processors, including worldwide processor Global Payments and its contracted parties, because the agency said they "should have known" about the alleged violations.

    The case is one of the CFPB's largest to date that pursues multiple different entities, some of which were not directly involved in the harassment of consumers. In that way, it resembles the Justice Department's controversial "Operation Choke Point," observers said.

    Operation Choke Point operates under the purported principle that if increase regulatory pressure, up to and including subpoenas, on the financial firms that work with suspected fraudsters, then those guilty parties will find their financial oxygen choked off. What happened, of course, was that banks and financial firms that dealt with any industries at supposed “high risk” of fraud were scared off from dealing with those industries as a class. The FDIC wisely saw the error of that approach and made it clear that this was an inappropriate approach by its regulators.

    Now, however, the CFPB is treading down the same road, telling firms that they “should know” about potential fraud from the same broad sweep indicators that Choke Point depended on. Once again, whole classes of industries will be cut off from financial services. Brian Wise of the US Consumers’ Coalition pointed out the problems in a statement:

    “Once [Operation Choke Point] was made public, and victims began coming forward, the Administration had to find a way to protect the program and its ability to prevent lawful industries from operating. Due to the lack of congressional oversight, and the unique funding and leadership structure of the CFPB, the Administration knows that it will make the perfect agency to carry on the legacy of Operation Choke Point. The Administration will continue to remove any obstacles in their way.

    “The U.S. Consumer Coalition has been warning lawmakers and industry leaders about the plan for the CFPB to take over Operation Choke Point since the FDIC took down their list of ‘high-risk’ merchants in 2014. Now everyone can begin to see that the CFPB is the nation’s most dangerous, unaccountable, and out of control agency in the federal government.”

    Brian is right. Choke Point is not over, and the CFPB is less accountable than FDIC. Two things need to happen: Congress needs to act against Choke Point and its new incarnation specifically, and it also needs to move to make the CFPB accountable to Congress, the Executive branch, and the Courts, as CEI recommended in Free to Prosper this year.

  • Could Alcohol Taxes Reduce Fatal Car Crashes?

    April 9, 2015 2:46 PM

    A new study from the University of Florida asserts that because Illinois instituted an alcohol tax increase in 2009 and the rate of alcohol-related traffic fatalities have declined 26 percent since 2009, the tax must certainly be responsible for the decline in deaths. Of course, news outlets have begun touting the study as evidence that increasing taxes results in fewer deaths. Are they right?

    A team of UF Health researchers discovered that fatal alcohol-related car crashes in Illinois declined 26 percent after a 2009 increase in alcohol tax. The decrease was even more marked for young people, at 37 percent.

    So, was it the alcohol tax increase that led to the state’s declining alcohol related traffic deaths? To answer that question, one need only examine the rate before and after the tax increase went into effect and compare it to the rest of the United States. Looking at these numbers (provided by DISCUS), it becomes clear that the rate of alcohol related traffic fatalities was declining faster in the year before the tax increase went into effect. Furthermore, since the state jacked up the alcohol taxes, Illinois has experienced a slower decline than the rest of the nation.

     

     

    Repeat after me: correlation does not equal causation. The study’s authors claim that since the 2009 tax increase went into effect, Illinois saw a 26 percent reduction in traffic fatalities. That certainly is an impressive decline. But just because two things correlate, doesn’t mean that there is a causal relationship. For example, just because the divorce rate in Maine correlates almost one-to-one with the rate of margarine consumption in the U.S., it doesn’t mean one caused the other. 

    Furthermore, the whole nation saw a decline in alcohol-related traffic deaths between 2001 and 2011

  • A Voluntary Approach to Helping the Honeybee

    April 8, 2015 3:12 PM

    Today, the Competitive Enterprise Institute published my paper on the honeybee health issue and pesticide use. We have had several media outlets ask, why is CEI focused on the honeybee issue now? If you read this blog, you know that I have been writing about pesticides and their impact on public health and well-being for at least a decade and a half.

    CEI selects issues based on our goals to promote freedom and prosperity, using the market to advance public health and well-being. I focus on chemicals, which I believe are under appreciated and misunderstood market-generated technologies that advance human well-being.  My work on pesticides has focused on allowing strategic uses to control disease carrying vermin such as mosquitos and ticks as well as the benefits and importance of crop protection chemicals for producing a stable food supply. 

    But I have another agenda when it comes to honeybees. As long as I have owned a piece of land, I’ve poured my heart and soul into my wildlife garden. While other people complain and look for regulations and government intrusions, I’d rather be part of the solution. And when it comes to public policy, we won’t help pollinators unless we use science and reason rather than alarmism-driven, anti-technology agendas.

    That said, there are things that private parties can do to help honeybees, and other wildlife, without asking big brother to ban valuable technologies. Consider what I’ve done to my yard.

    When I first moved in, the grass grew up to the house, and I barely saw a bird or butterfly. With lots of digging and effort, my yard is now a destination for myriad butterflies, bumblebees, and bugs I can’t even name. It’s also a favorite destination for all kinds of birds, from hummingbirds to finches and mockingbirds to crows and mourning doves. I even periodically see a crazy beautiful moth called the clearwing hummingbird moth. This amazing little creature really does look like a hummingbird! The feeders in the backyard attract a wide array of birds as well.

    So, for those people who want to help the honeybee, consider growing some plants that will benefit them, whether it’s in your yard or simply in flower box. Habitat is critically important for these creatures. Here are some plants that do well in my Virginia garden. Why not try them in yours?

  • Has Greece Already Decided on Grexit?

    April 7, 2015 12:44 PM

    It has been a month since Greece was approved a four-month extension of its current bailout program, on condition that the leftist government implements a number of settled agreements. The extension, however, will only last until the end of June, which means that afterwards Greece will have to carry out serious reforms in order to convince its European creditors to sign the new bailout agreement. Unfortunately, a newly submitted reform plan, as well as controversial attempts to find funding abroad, suggests that Greece might instead be moving towards potential exit from a single currency area.

    The Greek government’s first attempt to unlock 7.2 billion euros worth of bailout funds did not receive much enthusiasm from the Eurozone authorities, which claimed that proposal lacked detail and substance. On Wednesday, Greek officials resubmitted a 26-page reform plan with estimated revenues of 6.1 billion euros this year (as well as funding needs of 19 billion euros). But it appears that the new plan, just like the previous one, includes only revenue raising measures, and hardly addresses any spending cuts. As a matter of fact, contrary to EU demands, the new document includes 1.1 billion euros worth of fresh spending, more than half of which is intended to cover the “13th pension”—an extra month’s pay for low-income retirees or, more specifically, for those who receive less than 700 euros per month. Furthermore, the five measures addressing the labor market included an increase in minimum wage and strengthening collective bargaining.

    The group of 19 Eurozone finance ministers discussed new reforms during the telephone conference on Wednesday, but debate showed little progress, with some officials claiming that the new submission remains insufficient and too optimistic. Meanwhile, the Greek Prime minister Alexis Tsipras promised his members of Parliament that he was not willing to give in to creditors by imposing what he termed recessionary measures on the economy. The head of the Bundesbank Jens Weidmann, however, urged the Greek government to talk less and demonstrate more action, as Greece is running out of time. According to some reports, during the telephone conference Greek official revealed that Greece will run out of cash after April 9. The statement was later denied by the Greek finance ministry.

    According to Goldman Sachs, Greek capital flight has reached an estimated 15.2 billion euros over the last three months, which together with tighter market conditions caused a severe shock to the economy. While deposit withdrawals declined to around 3 billion euros in March, the outflow since October has totaled 28 billion euros. In the mean time, Greek banks are continuing to purchase government debt instruments, using the emergency liquidity assistance (ELA) provided by the European Central Bank (ECB). Therefore, it is not surprising that on Wednesday Fitch Ratings downgraded four Greek banks’ long-term issuer default ratings (IDR) from “B -” to “CCC”, following the downgrade of the country’s sovereign rating last week.

  • White House Petition Asks President to Veto Online Gambling Ban

    April 6, 2015 9:23 AM

    A week after members of Congress debated a bill that would forbid states from legalizing online gambling, the Poker Players Alliance have issued a petition asking the White House to veto the measure. In order to receive a response from the White House the petition must receive 100,000 signatures by May 2. 

    Despite having legal and effectively regulated online gambling in America for more than two years, some in Congress insist that allowing states to legalize and regulate the activity is too dangerous for America. Supporters of the woefully mistitled Restoration of America’s Wire Act (RAWA, H.R. 707) claim it would “restore” a law from the 1960s that supposedly banned Internet gambling (despite there being no Internet at the time), protect states’ rights, and protect vulnerable individuals from predatory gambling. In reality, RAWA would do the opposite: it rewrites the law altering it in a way the authors never intended, it would outlaw the online gambling sites regulated by the states, pushing people back into the black market, and it violates the right of states, which have proven to be perfectly capable of regulating online gambling.

  • California Drought 2.0, or Is it 3.0?

    April 6, 2015 6:46 AM

    California’s water woes are back in the headlines after Gov. Jerry Brown commanded a 25 percent cut in consumption last week after extended drought.

    Pricing matters and we’ve not done the greatest job liberalizing infrastructure and matching resouces to market signals. California’s just the most extreme modern example, now pitting neighbor against neighbor. Pools in the desert are scorned, as are the lush desert golf courses, and thirsty agricultural interests.

    But water doesn’t cost much. It needs to cost what its worth, and part of the job of markets is to determine prices. But markets are not what water utilities are.

    After congressional testimony on western states water policy a year and a half ago, California’s water crisis resurfaced again. I wrote a column in Forbes then noting that California, western and national water resources and environmental amenities should be better integrated into the property-rights, wealth-creating sector. That’s an evolution derailed here as well as in other sectors such as in electromagnetic spectrum, electricity and transportation grids.

    Recommendations were these:

    First, better pricing of existing supplies can make shortages vanish. (I talked about the water/diamonds paradox; you can Google it.)

    Second, improving water infrastructure can reduce the leaks that now deplete some 17 percent of the annual supply, as noted in a Competitive Enterprise Institute report by Bonner Cohen.

    Third, better transport and infrastructure, including pipelines and canals, better reservoir storage, trucking, and crude oil carriers can secure supply and lessen artificial drought more cheaply than expensive politically pushed alternatives like desalination.

    Fourth, improved trades between cities, farmers and private conservation campaigns can be essential to pricing and value.

    All these can supplement direct sourcing alternatives including drilling, gray and wastewater treatment and reclamation; stormwater harvesting and surface storage and, OK, you got me: even desalination where it’s economically rational.

    The path taken politically is usually restrictions on usage rather than pricing and liberalization, so there’ll be plenty headlines to come. 

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

    April 6, 2015 6:42 AM

    It was a fairly typical week, with nearly 70 final regulations and more than 50 proposed regulations hitting the books, covering everything from potato handling to flying fuel cells. The big story to keep an eye out for is the preliminary version of the FCC’s net neutrality regulations, which should be appearing shortly. See here for CEI research on net neutrality.

    On to the data:

    • Last week, 68 new final regulations were published in the Federal Register, after 58 new regulations the previous week.
    • That’s the equivalent of a new regulation every two hours and 28 minutes.
    • So far in 2015, 742 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,898 new regulations this year, which would be several hundred fewer rules than the usual total.
    • Last week, 1,755 new pages were added to the Federal Register, after 1,398 pages the previous week.
    • Currently at 18,286 pages, the 2015 Federal Register is on pace for 71,430 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 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.
    • Sixty-six final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 146 new rules affect small businesses; 25 of them are classified as significant. 
  • Tesla vs. the Auto Dealers: A Hilarious Update

    April 3, 2015 12:36 PM

    Tesla Motors has faced significant regulatory challenges to its plan to sell its vehicles directly to consumers, rather than work with the existing system of franchised dealerships like other manufacturers. Tesla wants to retain control over as much of the customer experience as possible, but existing laws and regulations give the franchise owners a lot of clout.

    The arguments for maintaining the auto dealers’ privileged status are highlighted in the current issue of Car and Driver by Ezra Dyer. Dyer’s article, “An Open Letter to Tesla, From Your Friendly Local Car Dealers,” is a lovely bit of satire that recalls Frédéric Bastiat’s "Candle Maker's Petition." Dyer’s fictional letter highlights the extremely flimsy case for forcing Tesla to share its business and profits with incumbent retailers.

  • Anti-Business Myths Pervade Reporting on Religious Freedom Legislation

    April 1, 2015 3:36 PM

    Sometimes, the media propagates anti-business myths, in the course of reporting on legislation that has little impact on business. So it is with its recent reporting on the Religious Freedom Restoration Act legislation enacted in Indiana, and passed by Arkansas legislators. (CEI takes no position on such legislation, which we previously discussed at length at this link.)

    As The Washington Examiner notes, “The federal version of Indiana's bill, which was signed into law in 1993 by Democratic President Bill Clinton, prohibits the federal government from substantially burdening a person's free exercise of their religion — except in instances where the government can prove it has a ‘compelling interest’ and can impose the burden in the least-restrictive way possible.”

    In reporting on the Indiana legislation, many media sources have erroneously suggested that it is somehow radical to give rights to businesses or corporations (as opposed to individuals) and that such legislation would be unprecedented in allowing religious freedom to be asserted as a defense to a lawsuit by a private person.

    Press coverage has also often falsely implied that religious-freedom legislation gives religious businesses a broad right to discriminate against gays and lesbians, when in fact no such right has ever been recognized under the similar legislation that already exists at the federal level and in many states. As The Washington Examiner points out, “The words ‘gay,’ ‘lesbian’ and ‘sexual orientation’ are nowhere to be found in” its “language,” and “no religious freedom bill has been used successfully to defend discrimination against members of the LGBT community in the 22 years since Congress and states began adopting such laws.”

    This is not because of the novelty or rarity of such laws: as The Washington Post’s Hunter Schwarz notes, many states have their own Religious Freedom Restoration Act, and “Indiana is actually . . . one of 20 states with a version of the Religious Freedom Restoration Act.” Instead, religious defenses to gay-rights claims tend to fail because the court finds a “compelling interest” justifying regulation, or finds no “substantial burden” on the business owner, which illustrates the limited reach of these religious freedom statutes as applied to discrimination claims.

    But, in fact, there is already a Religious Freedom Restoration Act at the federal level, and as Washington Post fact-checker Glenn Kessler has observed, it has already been interpreted to apply as a defense in lawsuits brought by private persons, by most (but not all) of the federal appeals courts that have considered the question, including “The U.S. Courts of Appeals for the 2nd, 8th, 9th and D.C. Circuits.”

    I have previously explained why businesses should be able to assert constitutional rights and other civil liberties as a defense to lawsuits by private people at this link. Thus, Kessler’s colleague Sandhya Somashekar was mistaken to write earlier that Indiana’s law is “fundamentally different” from the “federal” RFRA, which “protects only individuals seeking relief from government intrusions on their religious beliefs, while “[t]he Indiana law and others like it also apply to disputes between private parties.” In reality, Indiana’s law merely makes explicit what was already implicit in the federal law, as commentators like Reason’s Jacob Sullum and law professor Josh Blackman have observed.

    The media have also suggested it is somehow radical to give rights to businesses (as opposed to individuals). But it makes little sense to deny rights to an association of persons, such as a corporation, since that would allow the government to effectively use the corporate form to take away the rights of real people. The Supreme Court’s Hobby Lobby and Gonzales decisions, like the great majority of prior court rulings, allowed corporations to rely on the federal Religious Freedom Restoration Act. I have previously explained why corporations logically have rights at this link, noting that corporations also have rights under international human-rights accords, such as the European Convention on Human Rights. (See also this Detroit News op-ed by CEI’s Ryan Young and me at this link, and my commentary, “Amendments try to take away the rights of corporations and gay people.”)

    There is nothing novel about a corporation having constitutional or other rights: The Supreme Court first recognized such rights in ruling in favor of Dartmouth College, an incorporated entity, in its decision two centuries ago interpreting the Constitution’s Contracts Clause, in Dartmouth College v. Woodward (1819).

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