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  • How Markets Benefit Honeybees and Mankind

    August 3, 2015 8:32 AM

    After more than a decade of panicked reports about honeybees disappearing and potentially going extinct because of a phenomenon called “colony collapse disorder,” The Washington Post reported last week that the number of hives in the United States has reached a 20 year high. At the same time, I was making presentation at a meeting of the American Legislative Exchange Council, explaining that globally, there are more beehives today than there were in 1961, according to the Food and Agriculture Organization (FAO) of the United Nations.

    That is not to say that beekeepers haven’t had some challenges related to diseases and other factors that affect hive health. While such issues may raise the cost of keeping hives, they have not led to any serious long-term decline that warrants panic about the survival of this species.

    Honeybees will not go extinct any time soon for the same reason we don’t fear the loss of cows or chickens. All these species have important market value. Honeybees are largely a domesticated species, not completely different from cattle or even the family dog, and their very presence here in the United States has always been driven by the desire for honey or pollination services. In fact, when the colonists appeared in America, there were no honeybees. They had to be imported from Europe so that the settlers could have an affordable supply of honey.

  • If You Don't Eat Your Meat, They Can't Have Their Taxes

    August 3, 2015 8:29 AM

    If you think the brainless health nannies in the United States are bad, you should read up on the absurd proposals bursting from the cranial voids of Australian nannies. From plain packaging on cigarettes, which may or may not have actually increased smoking, to a proposal that would give cops the power to raid pubs and breathalyze patrons, the Aussie nannies seem to be quite innovative in their exercise of petty authoritarianism. But a recent proposal to tax meat really takes the cake.

    Tim Andrews, executive director of The Australian Taxpayers’ Alliance, has the herculean (or Sisyphean if you’re a pessimist) task of defending the people from government overreach. He wrote an amusingly caustic piece on those proposing the tax. An excerpt:

    What outrages me the most is the fact that it’s our taxes that pay for all of this. All of it. Our taxes pay the salary for these ‘academics’. Our taxes pay for the website this was published on. Everything about the lifestyle tax nanny state industry is paid for by our taxes…Professor Marinova’s salary is $177,345 a year.  And yet she feels compelled to call for further taxes on the most hard up in society.

    This is a good example of the phenomena economist Bruce Yandle dubbed “bootleggers and Baptists,” wherein two dissimilar groups want the same policy; one for moral reasons and the other for personal gain. The Baptists provide a cloak of morality so that politicians can grant personal gain either directly or by doing a favor for their supporters. In this case, the Baptist—public health advocates—provide the public good argument that allows a politician to fleece taxpayers while looking like a really good guy just trying to protect Australians. The researchers calling for the 10 to 15 percent tax on meat claim it is needed to help people repent their carnivorous ways and switch to what they believe is a healthier diet for both people and the planet. It’s just icing that the government gets to rake in billions more in desperately needed revenue and maybe send some of the plunder to these publicly-funded researchers.

  • EPA Reportedly Will Issue Final Rules on Power Plant Greenhouse Gas Emissions This Week

    August 3, 2015 7:51 AM

    Mainstream media outlets reported this week that the Environmental Protection Agency will release its final rules for limiting greenhouse gas emissions from new and existing power plants today or tomorrow, 3rd or 4th August. The Washington Post and the New York Times both ran stories that contain details of changes in the rules provided by unnamed White House sources. It was also reported that President Barack Obama will join EPA Administrator Gina McCarthy at a White House Rose Garden press briefing to announce the rules.

    According to these reports, the final rule for existing power plants, the so-called “Clean Power” Plan, will differ from the proposed rule released in June 2014 in several ways. The deadline for States to implement their plans to reduce emissions will be moved from 2020 to 2022. The EPA will offer extra credit to States that take early action to increase renewable energy and energy efficiency. Another report suggested that the final rule will give credit for nuclear plants under construction or being planned, rather than including them in the baseline. 

    After the final rules are released, the Cooler Heads Coalition’s web site, GlobalWarming.org, will provide analysis and links to other useful analyses. In addition, the American Energy Alliance has just created a hub for the “latest information on how States and the public are fighting back against the EPA’s so-called Clean Power Plan.”.

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

    August 3, 2015 6:42 AM

    One of this week’s 55 proposed regulations is a 264-page Interior Department regulation to prevent water stream pollution from coal mines. Final rules published cover everything from dairy tariffs to extension cords.

    On to the data:

    • Last week, 74 new final regulations were published in the Federal Register, after 65 the previous week.
    • That’s the equivalent of a new regulation every two hours and 16 minutes.
    • So far in 2015, 1,875 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,189 new regulations this year, which would be several hundred fewer rules than the usual total of 3,500-plus.
    • Last week, 1,586 new pages were added to the Federal Register, after 1,540 pages the previous week.
    • Currently at 45,795 pages, the 2015 Federal Register is on pace for 77,882 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Sixteen 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.
    • 157 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 323 new rules affect small businesses; 48 of them are classified as significant. 
  • Financial Regulation and Payments Update: July 31, 2015

    July 31, 2015 12:44 PM

    Last week saw the fifth anniversary of Dodd-Frank and there was a great deal of commentary from opponents of the act, not least from us here at the Competitive Enterprise Institute.

    To start off with, here’s the assessment of House Financial Services Committee Chairman Jeb Hensarling (R-Texas):

    Too-big-to-fail institutions have not disappeared. Big banks are bigger, small banks are fewer, and the financial system is less stable. Meanwhile, the economy remains in the doldrums.

    Before Dodd-Frank, 75% of banks offered free checking. Two years after it passed, only 39% did so—a trend various scholars have attributed to Dodd-Frank’s “Durbin amendment,” which imposed price controls on the fee paid by retailers when consumers use a debit card. Bank fees have also increased due to Dodd-Frank, leading to a rise of the unbanked and underbanked among low- and moderate-income Americans.

    Before Dodd-Frank’s passage, former Sen. Chris Dodd said that “no one will know until this is actually in place how it works.” Today we know. The law he co-wrote with former Rep. Barney Frank is gradually turning America’s largest financial institutions into functional utilities and taking the power to allocate capital—the lifeblood of the U.S. economy—away from the free market and delivering it to political actors in Washington.

    At CEI, we agree. In a paper issued last week I concentrated on Dodd-Frank’s harmful effect on Main Street:

    Many of the rules issued under Dodd-Frank have harmed some of the poorest Americans, who have seen their insurance made more expensive, their banking choices reduced, and their bank fees increased. Many have been forced out of the banking system altogether, only to face the alternatives, such as prepaid debit cards and payday loans, more difficult to access. When legal choices are restricted, people turn to illegal ones. Loan sharks and racketeers could soon make a comeback, thanks to Dodd-Frank’s “consumer protection” provisions.

    CEI’s board chairman, Prof. Todd Zywicki, also recently testified before the House Financial Services Committee on Dodd-Frank’s legacy. He also concentrated on the effects of Dodd-Frank on the consumer:

    Dodd-Frank imposed a regime that instead has led to higher prices, less innovation, and less choice in consumer credit products, while doing little to improve consumer protection. By taking away preferred choices for consumers, such as mortgages, bank accounts, and credit cards, Dodd-Frank and other laws have increased consumer dependence on less preferred products like payday loans, pawn shops, and check cashers. Most tragic of all, low-income and younger consumers—who already had the fewest choices—are those who have suffered the most from Dodd-Frank’s regulatory onslaught.

    At CEI, we suggest that part of the answer to these problems is greater competition in the banking sector, which will require substantial reform to Dodd-Frank. John Berlau outlines that here.

  • A Primer on Expected EPA Climate Rules

    July 31, 2015 12:41 PM

    In 2010, during the 111th Congress, Senate Majority Leader Harry Reid shelved a cap-and-trade bill because too many Democrats opposed the bill during caucus meetings. And during his 2012 reelection campaign, President Obama conspicuously dodged speaking about climate change. Despite the failure of climate policy within his own party in the Senate, and after neglecting the issue altogether in 2012, President Obama in the summer of 2013 unveiled a far-reaching executive strategy for addressing global warming, known as the Climate Action Plan.

  • CEI Joins Coalition to Support Right-to-Work Protections in Missouri

    July 29, 2015 3:15 PM

    No individual should be forced to financially support an organization with which they disagree or risk penalty. However, in Missouri and 24 other states, private-sector employers and unions may agree to a contract provision known as a union security clause, which compels workers to pay union dues or lose their job.

    Currently, Missouri is considering becoming a right-to-work state, which would allow workers to opt-out of paying dues to a union they may not support without risk of termination.

    While worker freedom is the most important aspect of right-to-work protections, other benefits arise from such laws. In a recent study conducted by the Competitive Enterprise Institute, “Interstate Analysis of Right to Work Laws,” found that real personal income, over the duration the study analyzed (1977-2012), grew by 123 percent in the United States, but right-to-work states saw faster growth rate of 165 percent whereas non-right-to-work states only saw below average growth of 99 percent.

    With respect to Missouri, the study’s economic analysis showed that the Show Me State's estimated per capita income loss associated with not having a right-to-work law was $3,040.

    The Competitive Enterprise Institute along with 54 other organizations signed on to a coalition letter showing our support for right-to-work protections in Missouri.

  • The FTC Targets Apple Music: Part I

    July 29, 2015 9:07 AM

    When launching a new product, the goal is to create excitement, as any company will tell you. But Apple’s newly launched music streaming service, Apple Music, may be generating more excitement than desired. According to a report in The Washington Post, the Federal Trade Commission has launched an investigation into Apple’s treatment of competing music streaming apps sold in its mobile App Store.

    The controversy stems from Apple’s requirement that any company selling digital goods through iOS, its mobile platform, use Apple’s In-App Purchase interface (IAP), which restricts sellers’ offerings in several important ways. Apple Music, however, is exempt from these restrictions. Therefore, while Apple Music and rival music streaming services are on equal footing when competing for users of desktop computers, laptops, and Android smartphones, these services play by different rules within Apple’s iOS ecosystem.

    Although a number of Apple’s rules have come under scrutiny in recent weeks, the most controversial is the “Apple Tax,” a 30% cut that Apple takes from all purchases made through its App Store—or through any iOS apps offered in its App Store. In other words, whenever an Apple Music competitor sells a subscription through its iOS app, it owes 30% of its revenue to Apple. Consequently, any competitor to Apple Music wishing to sell subscriptions through its iOS app must choose between charging the same $10/month fee as Apple Music and putting itself at a financial disadvantage or charging a greater fee and putting itself at a competitive disadvantage. In practice, high costs have led most to choose the latter option; rival services Spotify, Rdio, Rhapsody, and Tidal have all raised the price of subscriptions sold through their iOS apps by 30 percent, from $10/month to $13/month.

    Users of these services can still pay the normal, $10/month price if they purchase their subscription on the service’s web site instead of through its iOS app. But Apple’s prohibition against apps “that link to external mechanisms for purchases or subscriptions to be used in the App” has made it difficult for rival services to inform their users that these alternative methods of purchase exist.

    Spotify, the market leader in music streaming, recently struck back, sending its iPhone customers an email PSA explaining that they can save money if they set up their payments through Spotify.com instead of through iTunes. Whether this move will counter the “Apple Tax” by informing users of other payment options remains unclear.

  • Ten Weak Reasons to Support Ex-Im

    July 27, 2015 1:45 PM

    Rep. Carolyn Maloney supports reauthorizing the Export-Import Bank, whose charter lapsed on June 30. She recently took to the Huffington Post to give 10 reasons to support Ex-Im. Here’s reason 1:

    Exports play an important role in the U.S. economy, supporting nearly 12 million jobs in 2014.

    Ex-Im did about $27.5 billion worth of business last year, amounting to about 1.2 percent of America’s $2.35 trillion in total 2014 exports, and less than one-sixth of one percent of America’s $17.7 trillion 2014 GDP. From this, Rep. Maloney concludes that Ex-Im supports nearly a tenth of the entire U.S. workforce!

    Also note the clever use of phrasing here. Rep. Maloney and other Ex-Im supporters always talk about jobs “supported,” and never jobs “created” or “saved.” This is on purpose. Such phrasing is vague enough to make Ex-Im look good without having to prove that it’s actually doing good. This is important, since every time Ex-Im helps Boeing sell a jet to a foreign airline, it hurts domestic airlines and eliminates jobs there. I am not aware of any official Ex-Im statistics on how many jobs the agency has un-supported.

    Reason 5 is similar, and reads in part: 

    Since 2009, our Ex-Im Bank has supported an estimated 1.3 million jobs.

    That averages out to 260,000 jobs supported per year (again, note the phrasing), or about one-sixth of one percent of the total year-end 2014 labor force, according to the Bureau of Labor Statistics. Since Ex-Im’s annual support is equivalent to only $2,300 per job supported, most of those jobs would still exist without Ex-Im—in fact, since Ex-Im is largely redundant with private sector financing, its actual amount of net support created is far smaller than even its own meager statistics show. Factor in the jobs Ex-Im unsupports, and Ex-Im is almost certainly a net drag on the U.S. economy.

    Rep. Maloney’s other reasons are of similar strength.

  • Bastiat Society Rallies Business Leaders Together

    July 27, 2015 11:06 AM

    My venerable colleague Fred Smith and I just returned from the Hoosier State, where we were honored to be guests of the Indianapolis chapter of the Bastiat Society. Our event featured a few dozen local business leaders: executives, attorneys, and entrepreneurs, as well as a few elected officials. We all gathered to discuss the role that businesspeople can play in defending the free market and reviving an appreciation for the virtues of capitalism.

    It may be surprising to some, but not every business owner is a Hayek-quoting ideologue who has a photo of Ayn Rand on his desk. The majority are focused overwhelmingly on their customers, employees, and the day-to-day work of running their company. We have found that most business people spend very little time on politics in general, much less the intellectual arguments over the morality of capitalism and the ideas of classical liberalism.

    At the same time, we have also found that it’s difficult for think tank types and academics to defend the enterprise of capitalism without at least a few actual capitalists speaking up as well. Fred, in his essay “Countering the Assault on Capitalism,” explains this dynamic and its history quite well. The late economist Joseph Schumpeter theorized this conflict as far back as the 1940s – most business leaders would stick to what they know best, and leave the public debate over morality and economics to others. With discussions of the proper role of government dominated by groups with little sympathy to private enterprise, the rise of big government was easy to predict.

    Fortunately, we now have a robust cadre of scholars as well as a growing network of free market professionals, including the members of the Bastiat Society around the globe, as well as members of groups like the Adam Smith Society and Benjamin Rush Institute. With events like our dinner this week, we’ll be working to bring those two groups together to stand up to the ever-increasing expansion of the regulatory state.

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