You are here


  • Executive Wisdom from Down Under

    September 17, 2015 4:27 PM

    Yesterday the U.S. Chamber of Commerce hosted Andrew Mackenzie of Australian natural resources giant BHP Billiton here in D.C. as part of their CEO Leadership Series. Mackenzie’s speech discussed his own background (PhD in organic chemistry) and his company (one of the largest mining companies in the world), and then focused on international and U.S. economic policy. Not surprisingly, he is in favor of free trade, opposed to commodity subsidies, and believes that overregulation threatens the unique competitive advantages of U.S.-based companies.

    What is also interesting, however, is what he did not talk about. At a time when CEOs are expected to please every self-declared “stakeholder” group under the sun, Mackenzie stuck largely to the business of mining, shipping, and selling BHP’s products. He didn’t eat up his time by announcing a green energy partnership with environmental groups, or ticking off a laundry list of diversity, labor, and cultural initiatives. He did, however, talk about how the increase in free trade—through NAFTA and engagement with China—has led to unprecedented growth and prosperity around the world in recent decades. He also took on some pernicious myths:

    The political pressures to resist free trade, and even maybe roll it back, seem to have been gathering strength. … Those opponents of open markets argue that they harm working people and their families, and that protectionism is the right response for resource scarcity. I totally reject this! You know, we have a lot of working people with families who come through our gates each day, and to them and to all of those people around the world, and those who purport to represent them, I would say, free trade doesn’t take jobs on a net basis – it makes them, big time.

  • Time to Throw out Michelle Obama's Lunch Program?

    September 17, 2015 3:45 PM

    As I wrote in The Hill today, Congress this month will decide whether or not to continue funding Michelle Obama’s favorite Healthy, Hunger-Free Kids Act. The goal of the program was to address childhood obesity by getting schools to adhere to government nutritional standards in exchange for federal funds. Five years after implementation, we must ask if the program has achieved its laudable goals or if it is time to put those fifteen billion dollars to better use.

    HHFKA, enacted in 2010, requires schools to offer more fruits and vegetables, less sugar, less sodium, and more whole grains in order to receive federal funding supporting free breakfasts and lunches at school. According to a report released last month by the Centers for Disease Control, the number of schools in the nation complying with federal nutrition standards has significantly increased. Since 2000, schools offering two or more vegetables and two or more fruit options with lunch has increased by about 18 and 10 percent, respectively. About 40 and 50 percent of schools switched to low-sodium canned vegetables (instead of regular canned vegetables) and used other seasonings instead of salt since 2000. This sounds like great progress, but it doesn’t tell us if kids are actually eating healthier as a result.

    Obesity among children between two and five years old has declined 3.7 percent from 2010 to 2012. However, for kids between 12 and 19 years old, the obesity rate increased by 2.1 percent. Overall, childhood obesity has remained fairly stable between 2008 and 2012. What does this mean? It means obesity is an immensely complicated and long-term disease that takes years and potentially hundreds of genetic and environmental factors to manifest.

    What these numbers do show us is that the declines and increases occurring now are just part of a trend that has been developing over more than 10 years. Childhood obesity rates for almost all age groups declined between 2008 and 2012 (if temporarily). Only 12-19 year olds saw consistently increasing obesity rates since 1980. But even that group had something of a plateau between 2002 and 2010, seeing only slight increases of 0.3 percent to 0.7 percent. Yet, as I noted, between 2010 and 2012 that rate jumped by 2.1 percent.

  • GE's Outsized Reaction to Ex-Im Expiration

    September 16, 2015 12:53 PM

    General Electric recently announced it would not move its headquarters to Cincinnati. The reason for this earth-shattering news is that some members of Ohio’s congressional delegation oppose reauthorizing the Export-Import Bank. GE is a major beneficiary of Ex-Im financing.

    The announcement costs GE nothing to make, as the top contenders for relocation apparently include New York and Georgia. It expects to reach a decision by year’s end. GE, currently headquartered in Connecticut, is mulling a move as it sells off most of GE Capital, its financing arm. Connecticut’s high taxes and unfavorable business climate are also factors in GE’s relocation decision, though apparently GE only pays the state minimum in corporate tax--$250 (GE and its employees pay plenty of other taxes, though). Most of GE’s Connecticut employees work for GE Capital, whereas most of its other operations are elsewhere—including, ironically, Ohio.

    GE also announced that, because of Ex-Im’s uncertain future, it is moving 500 jobs overseas. Then again, this isn’t exactly big news, either. GE has roughly 307,000 employees, so this is equivalent to about one sixth of one percent of its workforce. GE’s natural turnover from retirements, hirings, and firings is orders of magnitude higher. Also worth pointing out: about 55 percent of GE’s employees are already overseas.

  • Missouri Can Make History with Right to Work Override Vote

    September 16, 2015 11:55 AM

    Today, the Missouri legislature is scheduled to vote on overriding Governor Jay Nixon’s veto of right to work. If Republicans can muster enough votes—several GOP members have received substantial union funds and stand in the way—for the first time in American history a majority of states will protect workers from being forced to pay union dues or lose their job.

    At risk of losing coercive power to extract dues from workers, labor unions have their political machine set on overdrive and are spreading misinformation. Union-funded ads claim right-to-work (RTW) “takes away our voice” to collective bargain wages and work conditions. Other messaging cautions, “Workers in right-to-work states make on average $1,500 less per year than workers in states that allow employees to bargain for fair wages and benefits.”

    To dispel the union myths about RTW, the Competitive Enterprise Institute released a report that highlights the positive attributes that arise from ending forced union dues payments.

    First and foremost, RTW is about worker freedom. Workers should have the choice in how they spend their hard-earned paychecks. Providing workers a choice on whether or not to pay dues does not weaken labor unions or impair collective bargaining negotiations, common false union rhetoric against RTW.

    For example, if RTW was so devastating to labor unions, why has union membership seen an overall increase of 39,000 in RTW states between 2011 and 2012 while non-RTW states lost 390,000 members?

  • Drinkers Give More than They Take

    September 16, 2015 10:42 AM

    Public health advocates love to make the case that “sinners,” those folks who drink, smoke, or eat “unhealthy” foods, cost society money and that gives bureaucrats the right to interfere in their lives. Users and abusers of these products cost taxpayers billions of dollars, they say. If we have to pay for it, that’s argument enough to justify tax increases, advertising restrictions, and sometimes outright product bans. But is it true?

    A new study by Christopher Snowdon, director of lifestyle economics at the Institute of Economic Affairsfound that while drinkers in England cost around 3.9 billion pounds per year, they provide 10.4 billion in annual tax revenue. Therefore, drinkers in England are actually subsidizing non-drinkers to the tune of 6.5 billion pounds per year!

    As with Snowdon’s previous study, The Wages of Sin Taxesa good portion of the paper is dedicated to parsing out the difference between private costs and public costs. While advocates will claim that research shows alcohol use costs England up to 20 billion pounds a year, such statistics include items like lost productivity due to absenteeism, emotional distress, and the money spent on the product itself—none of which are costs borne by taxpayers.

  • Rebuilding Liberty with Charles Murray

    September 14, 2015 12:17 PM

    My colleague Fred Smith has a new review up, this time of Charles Murray’s most recent book By the People: Rebuilding Liberty without Permission. Murray argues that constitutional constraints on federal power have been so thoroughly eroded that conventional political activism in favor of smaller government is pointless. He instead advises embarking on a systematic campaign of civil disobedience in defiance of the government’s ever-growing regulatory apparatus.

    Fred admires the radical nature of Murray’s planned campaign against government overreach, but expresses some concerns about how its targets would be chosen:

    Murray seems to believe that common sense provides adequate guidance for sorting out “good” from “bad” regulations and that Americans oppose many of the bad ones. Yet, recent debates over financial, health, and environmental regulations cast doubt on this. Many feel that America is overregulated, but support specific regulations—such as for example, the left’s support for more restrictive environmental and financial regulations and the right’s calls for tighter security and immigration restrictions.

    Citing polling data, Murray finds reason for optimism in the fact that trust in government is declining and that businesses view regulations as increasingly burdensome. But that does not necessarily indicate support for a specific reform agenda. Congress, too, has lost the trust of the American people, yet more than 90 percent of all Members of Congress are routinely reelected.

  • Drone Policy Update: California Bill Vetoed, New Model Aircraft Guidance, and More

    September 14, 2015 11:27 AM

    CALIFORNIA UAS BILL VETOED: On September 9, California Gov. Jerry Brown vetoed Senate Bill 142 that would have imposed trespass liability on unmanned aircraft system (UAS) operators who fly less than 350 feet above another’s private property. While aimed at preventing invasions of privacy, such a law would have not only greatly restricted UAS operations (the Federal Aviation Administration (FAA) currently prohibits operators without special permission from flying more than 400 feet above ground level; more on this below), it would have subjected operators and the state to an enormous volume of litigation. The bill was strongly opposed by the UAS industry, hobbyists, press organizations, and others. Kudos to Gov. Brown. To be sure, there are privacy challenges associated with the rise of UAS technology, but ham-fisted approaches such as the one contained in SB 142 risk doing far more harm than good. My forthcoming CEI whitepaper on UAS myths and facts addresses these issues and more.

    MODEL AIRCRAFT GUIDANCE: On September 2, the FAA cancelled Aviation Circular (AC) 91-57, Model Aircraft Operating Standards. AC 91-57 had been voluntary guidance since 1981, and recreational UAS operators had increasingly demanded a badly needed update. In its place, the FAA released AC 91-57A pursuant to the FAA Modernization and Reform Act (FMRA) of 2012 that conformed the new guidance to the evolving hobbyist UAS market. Changes include a weight limit of 55 pounds and an ability to fly as close as five miles from an airport without notifying the tower or airport operator (AC 91-57 imposed a three-mile limit). One major difference in spirit between ACs 91-57 and 91-57A is that the FAA no longer describes its guidance as a set of voluntary best practices. While UAS hobbyists are likely to appreciate the clarity from an AC that isn’t nearly 35 years old, AC 91-57A does impose new restrictions that did not exist in the previous AC.

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

    September 14, 2015 8:26 AM

    It was a short work week due to the Labor Day holiday, but agencies still found the time to finalize new regulations covering everything from unfinished wood to fleeing felons.

    On to the data:

    • Last week, 48 new final regulations were published in the Federal Register, after 80 the previous week.
    • That’s the equivalent of a new regulation every three hours and 30 minutes.
    • So far in 2015, 2,306 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,276 new regulations this year, which would be more than 200 fewer rules than the usual total of 3,500-plus.
    • Last week, 1,322 new pages were added to the Federal Register, after 1,313 pages the previous week.
    • Currently at 55,011 pages, the 2015 Federal Register is on pace for 78,141 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Nineteen 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 $1.32 billion to $1.41 billion for the current year.
    • 194 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 383 new rules affect small businesses; 55 of them are classified as significant. 
  • Southern Ocean Carbon Sink Stronger than Previously Thought

    September 11, 2015 5:25 PM

    Two new studies, one published in Geophysical Research Letters (GRL), the other in Science, find that the Southern Ocean carbon sink has become stronger rather than weaker, contrary to what some scientists previously thought.

    In climate parlance, a “carbon sink” is anything that absorbs more carbon dioxide (CO2) from the atmosphere than it releases, while a “source” is anything that emits more CO2 than it absorbs. Oceans, forests, and soils comprise the world’s major sinks. The balance between sinks and sources determines the “airborne fraction” – the annual percentage of CO2 emissions that accumulates in the atmosphere.

    The GRL paper, which focuses on the Drake Passage, the roughest and windiest part of the Southern Ocean, is based on more than one million observations made by ocean-going vessels during 2002-2015. The Science paper, which examines the entire Southern Ocean, incorporates the GRL study data plus other data going back almost three decades.

    As summarized by the American Geophysical Union, which publishes GRL, the studies “conclude that the Southern Ocean has increasingly taken up more carbon dioxide during the last 13 years.” That’s a big deal. Although covering only 26% of total ocean area, the Southern Ocean accounts for nearly 40% of all CO2 absorbed by the world’s oceans.

  • California’s Path to Climate Nirvana Hits Some Snags

    September 11, 2015 5:23 PM

    Legislation to complete California’s transformation into climate nirvana hit some snags this week.  On Wednesday, 9th September, State Senate President Pro Tem Kevin de Leon (D-Los Angeles) and Governor Jerry Brown (D) announced that a provision to require that California petroleum consumption by motor vehicles be reduced by 50% by 2030 would be taken out of SB 350, a major piece of climate legislation.

    On Thursday, State Senator Fran Pavley (D-Agoura Hills) announced that she was withdrawing a companion bill, SB 32, that would have put into law executive orders by Governor Brown and his predecessor, Arnold Schwarzenegger (R), that set long-term mandatory targets for reductions of greenhouse gas emissions.

    SB 350 was passed out of the Assembly’s Natural Resources Committee late Thursday without the provision cutting gas use and is scheduled for a floor vote on Friday.  The California legislature’s current session ends Friday, so it’s not clear as I write whether the bill will make it through.  SB 350 still contains provisions requiring that half of the state’s electricity be produced by renewable sources by 2030 and that energy efficiency be doubled in all existing buildings by 2030.  State Senator de Leon claims that California’s electric utilities support the bill, as well as Halle Berry, Billy Crystal, Matt Damon, Jane Fonda, Morgan Freeman, Helen Mirren, Mark Ruffalo, and Leonardo DiCaprio.


Subscribe to OpenMarket