On the Blog

Puerto Rico’s Economic Crisis Rooted in History of Feds’ Anti-Trade Policies

Somewhat Reasonable - May 22, 2016, 1:10 PM

Alejandro Garcia Padilla, the governor of Puerto Rico, has skipped out on a $422 million payment owed to private-sector creditors.

The missed payment, due on May 1, was just another scene in the slow-motion train wreck that has been termed “Puerto Rico’s economic crisis,” but to call the territory’s status a “crisis” understates the severity of the problem. Over 12 percent of the workforce in Puerto Rico is unemployed, and one out of every four employed Puerto Ricans works for the government, instead of contributing to the territory’s economy.

The job-sector universe—the raw number of jobs available and filled—in the territory is contracting as well. According to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), there were 889,200 employed people working in Puerto Rico in October 2015. In March 2016, the most recent month for which BLS statistics are available, there were 893,300 people working, which means an average of 683 more people became unemployed every month for six consecutive months.

Puerto Rico’s territorial government is responsible for some of the problems its people are facing, such as its overly generous entitlement programs for workers, but Washington, DC lawmakers are ultimately responsible for the territory’s economic death spiral. As a territory, Puerto Rico exists at the pleasure of the U.S. Congress. Puerto Rico can elect its own governor, but Congress maintains most of the power.

One Washington, DC policy making things worse for Puerto Rico is called the Jones Act. The Jones Act, or the Merchant Marine Act of 1920, was passed nearly 100 years ago as part of the fit of anti-trade sentiment that led to the Great Depression. It was intended to require regions of the United States separated by the open ocean to be serviced by all-American crews and ships, built with all-American parts, thereby banning foreign vessels from transporting goods from the United States to states and territories such as Alaska, Hawaii, and Puerto Rico.

Instead of promoting economic prosperity by tilting the playing field, protectionist trade policies such as the Jones Act disadvantage consumers and benefit businesses favored by the government.

A 2012 report issued by the Federal Reserve Bank of New York (FRB-NY) studied the effect of the Jones Act on Puerto Rico and concluded increasing the cost of shipping goods to Puerto Rico from the mainland has resulted in fewer goods being shipped to Puerto Rico and less money available to Puerto Ricans.

According to the American Maritime Congress, a lobbyist organization representing the interests of the merchant marine industry, only 77 ships in the entire world comply with the requirements of the Jones Act. By artificially reducing the volume of shipping, the cost of shipping increases, making everyday goods more expensive for Puerto Ricans.

“It costs an estimated $3,063 to ship a twenty-foot container of household and commercial goods from the East Coast of the United States to Puerto Rico; the same shipment costs $1,504 to nearby Santo Domingo (Dominican Republic) and $1,687 to Kingston (Jamaica)—destinations that are not subject to Jones Act restrictions,” the Federal Reserve Bank of New York wrote.

Although other factors have contributed to Puerto Rico’s financial ship of state running aground, Washington, DC lawmakers’ refusal to face the reality of a global economy, by removing protectionist policies and allowing the free market to determine the cost of shipping goods, has played a significant role in making life on the “Island of Enchantment” less enchanting and more miserable.

Instead of considering targeted big-ticket bailouts from the mainland’s treasury to patch over their past mistakes, national lawmakers should enact free-market policies, including repealing the Jones Act, to help make prosperity more readily available to everyone, regardless of whether they live in Chicago, California, or Canóvanas.

[Originally published at Inside Sources]

Categories: On the Blog

Portland Public Schools Board Bans Any Dissent from Climate Dogma

Somewhat Reasonable - May 22, 2016, 1:00 PM

The Portland Public Schools Board (via screen cap at the Portland Tribune.)

The Portland Public Schools board this week voted unanimously to institute a ban on allowing any materials or discussion that express doubts that human activity is causing a catastrophic climate crisis. They might as well have just put out a resolution promoting homeschooling.

The story outlining this in the Portland Tribune is absolutely incredible. It is filled with so many layers of nonsense, ignorance, petty tyranny, and moral preening that it seems a bit much, even for hopelessly lefty Portland. I do wonder, however, if they will host a book-burning ceremony at the football stadium. It’s the logical next step, right? Because, apparently, their text books are infected with terms like “might,” “may,” and “could” in some passages that address climate change. We must make sure those doubts don’t accidentally infect the minds of the children they are charged with educating indoctrinating. So why not purge all the sin from the books by fire.

Have these lefties not even an inkling of self-awareness? Do they not see how they have created a climate alarmist parallel to the Scopes Monkey Trial? They are demanding that their unshakable faith in catastrophic anthropogenic global warming be the only thing taught in school. Because, “science.” But even today, proponents for Intelligent Design don’t demand that’s all that’s taught in school, only that it be included in the discussion. Right or wrong, it’s a more open-minded approach than the Climate Cultists — especially considering there are volumes of peer-reviewed evidence that “might,” “may,” and “could” are conservative hedges.

Some of my favorite/most-outrageous parts of this story:

“It is unacceptable that we have textbooks in our schools that spread doubt about the human causes and urgency of the crisis,” said Lincoln High School student Gaby Lemieux in board testimony. “Climate education is not a niche or a specialization, it is the minimum requirement for my generation to be successful in our changing world.”

That’s right. The first quote in the story to bolster this idea, in the second graph, is from a high school senior, everyone’s go-to expert for identifying credible and effective curriculum. Gaby also sees her generation as already uniquely informed and wise enough to save the world previous generations have ruined. Of course she does. She’s gone to Portland public schools her whole life.

Here’s a shocker: This drive to purge doubt about the dogma is being driven by a radical environmentalist group.

Bill Bigelow, a former PPS teacher and current curriculum editor of Rethinking Schools, a magazine devoted to education issues, worked with 350PDX and other environmental groups to present the resolution.

“A lot of the text materials are kind of thick with the language of doubt, and obviously the science says otherwise,” Bigelow says, accusing the publishing industry to bowing to pressure from fossil fuels companies. “We don’t want kids in Portland learning material courtesy of the fossil fuel industry.”

So, a former teacher has apparently long entertained the fantastical and paranoid idea that just having the words “may,” “might,” and “could” in any discussion about the causes and consequences of climate change was slipped in there “courtesy of the fossil fuel industry.” Big Oil. What can’t it do!?

Another shocker: That former teacher and radical environmentalist also happens just so happens to produce a text book for children titled “A People’s Curriculum for the Earth.” That sure sounds like science to me, with not a hint of radical politics. Asked if his interest in producing climate science books for schools might be a conflict of interest, he says it doesn’t’ because his organization is “a nonprofit, not a money-maker.” OK, then.

Oh, almost forgot. The school board member who introduced the resolution — which, again, passed unanimously — has a pretty large conflict of interest, too:

School board member Mike Rosen … leads NW Ecoliteracy Collaborative, a project focused on environmental curriculum standards. However, he says that work has been on hold.

“I have become concerned about its ability to make progress and not have a conflict with being a school board member,” Rosen said, noting that he is now instead working part-time for the Audubon Society of Portland. “I don’t want there to be a conflict between my school board work and this nonprofit.”

No worries, Mike. You’ve made progress … toward 16th Century thinking.  It’s hard to imagine what else full victory over “climate deniers” would look like short of scarlet letters, stockades, and pyres ready to set aflame.

UPDATE: Read the board’s resolution for yourself here.

Categories: On the Blog

Florida Can Curb Doctor Shortage, in Part, by Empowering Nurses

Somewhat Reasonable - May 22, 2016, 12:16 PM

Co-authored by: Logan Pike & Matthew Glans

Decades of overregulation of the health-care labor market, an aging population and the implementation of the Affordable Care Act have created a shortage of primary-care doctors nationwide.

This isn’t a problem that has snuck up on lawmakers. Even before the ACA’s passage, many states faced the prospect of a doctor shortage. In 2011, a study published in the Milbank Quarterly found the ACA would create a need for between 4,300 and 7,000 more physicians in the United States by 2019.

A new report suggests the Milbank authors were correct about the looming shortage of primary-care physicians, especially in the state of Florida. The Robert Graham Center estimates Florida alone will need an additional 4,671 primary-care physicians by 2030 (based on the 2010 figure of 12,228 primary-care physicians) to accommodate the rising need for health-care services.

Some efforts are already underway in Florida to help fix this growing problem. On April 15, Gov. Rick Scott signed a bill making Florida the last state to allow advanced nurse practitioners and physician assistants to prescribe certain controlled substances. This will significantly decrease the demand currently placed on many primary-care doctors.

A 2014 survey by the Physicians Foundation found most doctors have little or no room to add patients, with 81 percent of physicians describing themselves as “either over-extended or at full capacity.” Only 19 percent of the respondents “indicate they have time to see more patients.” The report also found 44 percent of physicians surveyed plan to take steps that would reduce patient access to their services, including “cutting back on patients seen, retiring, working part-time, closing their practice to new patients or seeking nonclinical jobs.”

Strict licensing standards have become a significant barrier to entry in many fields, but nowhere is the influence of licensing more sharply felt than in the health-care industry. Supporters of strict state licensing standards argue they assure quality, but critics say the arduous and often expensive licensing process harms the health-care market by hindering entry for new physicians, thereby impeding the market competition needed to lower costs and improve access for patients.

There are several paths Florida legislators and medical boards can choose to lower regulatory barriers in the health-care industry to reduce the physician shortfall. The first proposal, recently introduced as model legislation by the Federation of State Medical Boards, would make it easier for doctors licensed in one state to treat patients in another.

Reporter Robert Pear wrote in The New York Times that this reform would not only cover in-person visits but also videoconferencing and online visits. The proposed legislation would create an interstate compact, and the Times reports it has political support from both sides of the aisle.

The second proposal, supported by the Institute of Medicine and National Governors Association, would further expand the scope of responsibilities for nurse practitioners, allowing them to provide additional health-care services. These additional services would include expanding the scope of practice to services like the initial evaluation of new symptoms, ongoing care for chronic diseases and preventive services, such as immunizations and screenings. This extension would only apply to registered nurses who have also received a graduate degree in nursing. Allowing nurse practitioners to administer care would greatly reduce the doctor shortage and increase access to care.

Currently, 19 states and the District of Columbia allow nurse practitioners to diagnose and provide some form of treatment for certain illnesses. Although critics of these efforts claim expanding the scope of practice will lower the overall quality of care, a 2012 article in Health Affairs reviewing 26 studies noted the “health status, treatment practices, and prescribing behavior [of NPs] were consistent between nurse practitioners and physicians.”

Further, according to research from the Mercatus Center at George Mason University, the average American would rather see a nurse practitioner or physician assistant than wait to see a primary-care physician. But nurse practitioners and physician assistants cannot serve as practical alternatives when they lack the authority to prescribe controlled substances.

In a time when many health-care-policy debates at the state level are gridlocked, there are still policies that would improve access to care without increasing costs or decreasing quality. Allowing physicians to treat patients across state lines and expanding the scope of practice of nurse practitioners are two incremental steps Florida can take to address the doctor shortage.

[Originally published at the Orlando Sentinel]

Categories: On the Blog

Costly Lessons from Europe on Renewable Energy Support

Somewhat Reasonable - May 22, 2016, 10:58 AM

Wind Farm in Desert

A new study by the Manhattan Institute shows the aggressive policies adopted by the European Union to fight climate change have resulted in dramatic increases in electricity costs for residential and industrial consumers. For instance, between 2005, when the E.U. adopted its emissions trading scheme, and 2014, residential electricity rates in the E.U. increased by an average of 63 percent. In addition, E.U. countries intervening the most in their energy markets – Germany, Spain, and the U.K. – have seen their electricity costs increase the fastest.

Higher energy costs are undermining European companies’ international competitiveness. In 2013, the Center for European Policy Studies found European steelmakers were paying twice as much for electricity and four times as much for natural gas as U.S. steel producers. A 2014 International Energy Agency (IEA) report warned continued energy imports, along with expensive climate policies, will likely hurt European industry for the next two decades or more, predicting the E.U.’s share of “the global export market for energy-intensive goods, especially for chemicals, is expected to fall (by around 10% across all energy-intensive goods, i.e., cement, chemicals, pulp and paper, iron and steel).” By contrast, IEA expects the United States and emerging economies to be able to increase their shares of the global export markets for these goods.

With these facts in mind, in January 2014, Germany’s energy minister, Sigmar Gabriel, declared that his country had reached  “the limit” with renewable-energy subsidies and that Germany had to reduce its electricity prices or risk “ deindustrialization.”

The study also found Europe’s sacrifices failed to affect global carbon dioxide emissions. Since 2005, while the E.U. reduced its carbon dioxide emissions by 600 million tons per year, the combined emissions of four developing countries – Brazil, China, India, and Indonesia – increased by 4.7 billion tons per year, nearly eight times the reduction achieved in the European Union.

Categories: On the Blog

Google’s Omnipresent Tracking Much Harder to Leave than an ISP for Privacy

Somewhat Reasonable - May 21, 2016, 12:23 PM

If you are online, you can’t escape Google’s myriad of ways it tracks you, but you can leave your ISP.

A famous 2009 Google Blog post boasted that: “Google is not the Hotel California — you can check out any time you like and you CAN, in fact, leave!

Since Google chose that apt metaphor, and boasted about how easy Google makes it to “check out” your private data and “leave” to a competitor, lets test if you can ever “in fact leave” Google-Eye’s pervasively invasive online surveillance — from a privacy perspective.

But first, why is this point a relevant exercise for people who care about privacy at this particular point in time?

Right now in the U.S., the FCC is trying to justify differential treatment of ISPs and dominant edge platforms like Google in its Title II privacy proceeding and its AllVid set top box proceeding, by claiming that ISPs are more “sticky” and harder to leave than dominant edge platforms like Google.

The Senate Judiciary Committee last week heard testimony from the FCC that: “…we can choose not to visit a website or not to sign up for a social network, or we can choose to drop one and switch to another in milliseconds. But broadband service is fundamentally different. Once we subscribe to an ISP—for our home or for our smartphone—most of us have little flexibility to change our mind or to do so quickly.

The FCC Chairman also said: “I go to WebMD, and WebMD collects information on me. I go to Weather.com, and Weather.com collects information on me,” he said. “I go to Facebook, and Facebook collects information on me. But only one entity collects all of that information, that I’m going to all of those different sites, and can turn around and monetize it.”

I don’t challenge that there is a real time hassle to switch ISPs.

What I do respectfully challenge is that first, Google essentially doesn’t “collect all of that information” because they do (see here), and second, that Google somehow is easy to escape,when it comes to collecting one’s private information, because it is not, as I will prove below.

Let’s return to Google as a “Hotel California” where “you can check out but never leave.”

Google likes to present the mirage of freedom by touting that they allow users to leave by easily exporting their private information to take elsewhere. As with most things Google, that’s the truth, but not the whole truth and nothing but the truth.

One can take a copy of one’s data, and leave, but Google generally retains a copy of it all and can use it for all sorts of purposes. Tellingly, Google’s Cloud Platform director Tom Kershaw told the New York Times last year: “Never delete anything, always use data – it’s what Google does

Most importantly, when you leave Google, it can still track most all you do. How?

First, if you surf the web, you need to know that ~98% of the top ~15 million websites use Google Analytics so most everywhere you go on the net, Google can track you.

Second, two million of the most popular websites use the Google YouTube Display Ad Network to serve you video and other display ads so they can track you.

Third, 1.2 million of the top websites about physical locations like stores, restaurants, hotels etc. have Google Maps embedded by default enabling Google to track your location and intent.

Fourth, even if you are not one of the billion plus Gmail users, Google’s Gmail algorithm secretly reads your emails that are sent to Gmail users.

Finally, if you use any type of smartphone 93% of all mobile searches use Google Search because it is installed by default by manufacturers on Android and Apple smartphones/tablets, and if you are the half of U.S. users who use Android, the dominant licensable operating system in the U.S., multiple Google mobile services track your usage and location in order to function as designed.

In sum, if you are a consumer who values their privacy and seeks to control the use of their private information, it is likely a more involved ongoing hassle to quit all Google services and avoid Google’s ongoing pervasive tracking of non-Google users, than it is to leave an ISP.

That’s because once the time hassle of leaving your ISP is done, the privacy concern is done. However, if one tries to leave Google-Eye’s persistent surveillance, the hassle and switching cost of proactively protecting one’s private information from Google is not over, it persists indefinitely.

If you want to learn about all the things one has to do to fully quit Google’s omnifarious products and services, see these accounts of what it involves to leave Google completely from: Slate, TechRepublic, ieee.org, MacWorld, PCWorld, Time, and MakeUseOf.com.

Simply, with Google you may be able to check out, but when you think you’ve left them, they still secretly follow you most wherever you go online.

[Originally published at the Precursor Blog]

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an emergent enterprise risk consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google and also before the relevant House oversight subcommittee on Google’s privacy problems.

Categories: On the Blog

Heartland Weekly – Robert Zubrin’s ‘Merchants of Despair’ Back in Print

Somewhat Reasonable - May 20, 2016, 4:12 PM

If you don’t visit Somewhat Reasonable and the Heartlander digital magazine every day, you’re missing out on some of the best news and commentary on liberty and free markets you can find. But worry not, freedom lovers! The Heartland Weekly Email is here for you every Friday with a highlight show. Subscribe to the email today, and read this week’s edition below.

Heartland Joins Fight Against the Abuse of RICO Power Jim Lakely, Somewhat Reasonable Five weeks have passed since our friends at the Competitive Enterprise Institute (CEI) were served a subpoena for their climate thought crimes. To the displeasure of the group of attorneys general, they are not rolling over. In fact, CEI and a coalition of supporters are fighting back harder than ever. A full-page ad in this week’s New York Times, which included Heartland’s public support, makes it clear this legal action is an affront to free speech and will not be taken lightly. READ MORE

Recognizing May as Mental Health Awareness Month In recognition of National Mental Health Awareness Month, The Heartland Institute has constructed a page containing all recent Heartland news, research, and commentary related to this important subject. These articles seek to promote innovation in reaching and treating those with mental illness and improving the quality of care they receive, as well as identifying solutions to public policies that obstruct innovation and the delivery of mental health services. READ MORE

Heartland Reprints Robert Zubrin’s Merchants of Despair Combining riveting tales from history with powerful policy arguments, Merchants of Despair provides scientific refutations to environmentalists’ pseudo-scientific claims, including its tirades against nuclear power, pesticides, population growth, biotech foods, resource depletion, industrial development, and, most recently, fear-mongering about global warming. Merchants of Despair exposes this dangerous agenda and makes the definitive scientific and moral case against it. ORDER A COPY

Featured Podcast: Dr. Keli’i Akina: Hawaii Moving to Ban Gasoline and Diesel Vehicles In a move that puts appearance ahead of practicality, two state representatives from Hawaii have introduced legislation banning from the state vehicles powered by gasoline and diesel fuel. Dr. Keli’i Akina, president of the Grassroot Institute of Hawaii, joins The Heartland Daily Podcast to explain how bad this wacky idea really is, and why the government should stand aside and let the free market pick winners and losers in the energy sector. LISTEN TO MORE

Heartland Library Book Shelf of the Week – Economics
For more, follow Heartland on Twitter @HeartlandInst

Get Your Popcorn Ready: Heartland Movie Night – Atlas Shrugged Part 2 Join us and fellow lovers of liberty for the second part of our special series of Heartland Movie Nights, in which we’re showing each part of the Atlas Shrugged trilogy on three Wednesdays in a row – May 18, May 25, andJune 1. Based upon the enormously influential 1957 novel by Ayn Rand, Atlas Shrugged: Part 2 follows the struggles of Dagny Taggart, a railroad heiress trying to maintain her integrity and keep her family’s railroad alive in the midst of a rapidly decaying world. Doors to Heartland’s Andrew Breitbart Freedom Center open at 5:30 p.m. Film starts at 6:00 p.m.Group discussion follows. SEE UPCOMING EVENTS HERE

Florida Can Curb Doctor Shortage, in Part, By Empowering Nurses Logan Pike and Matthew Glans, Orlando Sentinel Even before the implementation of Obamacare, many states were suffering from doctor shortages. Now the problem is even worse. Florida alone may need an additional 4,600 primary-care physicians by 2030. Proposed in this article are several solutions that would help increase access to care without increasing costs or decreasing quality. READ MORE

Remaining Contenders Differ Radically on Climate, Fuels H. Sterling Burnett, Climate Change Weekly Donald Trump’s views on climate change and energy production differ radically from those held by Hillary Clinton and Bernie Sanders. Trump, a climate change skeptic, has said he will reverse regulations issued by the Obama administration’s Environmental Protection Agency (EPA) to limit access to and use of fossil fuels, regulations he says harm the economy for little or no environmental benefit. READ MORE

Obamacare Court Rulings Protect Employers and Taxpayers’ Rights Michael Hamilton, Consumer Power Report Patients and taxpayers won two important battles against the Affordable Care Act, or Obamacare, in court this week. The U.S. Supreme Court, in Zubik v. Burwell, instructed multiple courts of appeal to reconsider the constitutionality of a mandate the federal government admits needlessly violates employers’ First Amendment rights. In a separate U.S. District Court case, the judge ruled against unlawful spending under Obamacare for which no funds were appropriated.  READ MORE

Bonus Podcast: Cynthia Cabrera: FDA’s War on E-Cigarettes and Vaping Power-hungry bureaucrats in the U.S. Food and Drug Administration are about to put electronic cigarettes – a relatively new and increasingly popular smoking cessation product – through a long and arduous federal approval process, potentially putting thousands of small companies out of business. Cynthia Cabrera, president of the Smoke-Free Alternatives Trade Association, joins The Heartland Daily Podcast to talk about how the new regulations will take many products off shelves and effectively promote smoking traditional cigarettes. READ MORE

Trans Bathrooms Edict Proves Feds Have Too Much Power Joy Pullmann, School Choice Weekly Regardless of one’s views about transgender issues, it’s clear the Obama administration’s edict last week Friday – requiring all 13,506 U.S. school districts to give transgender children access to the bathrooms, locker rooms, showers, and sports teams of their choice – proves the federal government has too much power over American schools. What fuels the culture war like perhaps nothing else is putting the force of government behind one side. READ MORE

Help Us Stop Wikipedia’s Lies! Joseph L. Bast, Somewhat Reasonable Many people rely on our profile on Wikipedia to provide an objective description of our mission, programs, and accomplishments. Alas, the profile they find there is a fake, filled with lies and libel about our funding, tactics, and the positions we take on controversial issues. Wikipedia refuses to make the changes we request. It even deletes and reverses all the changes made by others who know the profile is unreliable. We need your help! READ MORE

Invest in the Future of Freedom! Are you considering 2016 gifts to your favorite charities? We hope The Heartland Institute is on your list. Preserving and expanding individual freedom is the surest way to advance many good and noble objectives, from feeding and clothing the poor to encouraging excellence and great achievement. Making charitable gifts to nonprofit organizations dedicated to individual freedom is the most highly leveraged investment a philanthropist can make. Click here to make a contribution online, or mail your gift to The Heartland Institute, One South Wacker Drive, Suite 2740, Chicago, IL 60606. To request a FREE wills guide or to get more information to plan your future please visit My Gift Legacy http://legacy.heartland.org/ or contact Gwen Carver at 312/377-4000 or by email at gcarver@heartland.org.  

Categories: On the Blog

In The Tank Podcast (ep39): The TSA, Volunteer Care, Dependent States, and Tech-Enhanced ESAs

Somewhat Reasonable - May 20, 2016, 1:05 PM

John and Donny continue their exploration of think tanks in #39 of the In The Tank Podcast. This weekly podcast features (as always) interviews, debates, and roundtable discussions that explore the work of think tanks across the country. The show is available for download as part of the Heartland Daily Podcast every Friday. Today’s podcast features work from the Cato Institute, the Palmetto Promise Institute, and the Goldwater Institute.

Featured Work of the Week

This week’s featured work of the week is from the Cato Institute. John and Donny discuss a paper from Cato titled “End the TSA.” Recently, the news has been filled with stories of astonishingly long security lines at airports across the country. The problem: a shortage of TSA employees paired with the busy travel season. The paper gives a short historical context to airport security. Then, it shows how private firms are shown to be a better option the the current government-run system.

In the World of Think Tankery

Today Donny and John talk about a new Policy Brief by the Palmetto Promise Institute titled “Volunteer Care: More Healthcare without More Government.” The Brief outlines the growing imbalance of South Carolina’s health care system. According to the Brief, nearly 1 in 4 citizens are enrolled in Medicaid and CHIP. It then proposes a system called Volunteer Care – a program that has proven successful in Florida. This innovative idea has the potential to benefit thousands while saving the state government millions.

The next item Donny and John discuss is an article from Wallethub. While this study did not originate from a think tank, it does add to several discussions that have taken place on the podcast. The article, titled “2016’s Most & Least Federally Dependent States,” shows that support from the federal government is not equal. Some states receive less money from the federal government than others. This could factor into how much taxes states extract from their citizens.

The last item from the Goldwater Institute explores how technology could increase the efficiency of school choice programs like Educational Savings Accounts. Titled, “The Future of Money and Giving Every Child the Chance at a Successful Future.” this report shows how smartphone apps could hold the key to unlocking a transparent, efficient, and far-reaching school choice system for millions.

Events 

I hope you’ll listen in, subscribe, and leave a review for our podcast on iTunes. We welcome your feedback in our new show’s inbox at InTheTankPodcast@gmail.com or follow us on twitter @InTheTankPod.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

The Trust Ramifications of an EU-Google Search Bias Conviction

Somewhat Reasonable - May 20, 2016, 11:48 AM

The Sunday Telegraph reports that the EU is poised to fine Google an EU record ~€3b for “web search monopoly abuse” and that “Google will be banned from continuing to manipulate search results to favour itself and harm rivals.

Assuming this occurs in the reported June-July timeframe, and just like the EU’s 2015 Statement of Objections charged, the long-term ramifications for Google will be much broader and more serious than most appreciate.

That’s because Google has been so masterful in managing public, media and investor expectations that this day would never arrive, (because Google had done nothing wrong and Google was on the right side of competition in offering free, high-quality, and innovative services that benefited consumers); and that it was really EU regulators who were in the wrong because they were protectionists who were also “wrong as a matter of fact, law and economics.”

Why is the pending outcome here so problematic for Google?

First, Google has long maintained it is not a monopoly and has done nothing wrong, critical premises undergirding the public’s trust in Google, its algorithms, the objectivity of its search results, and its brands.

The EU’s pending decision per the Statement of Objections, will rule that Google “has abused its dominant position in the markets for general internet search services in the European Economic Area (EEA) by systematically favouring its own comparison shopping product in its general search results pages…” and that “Google has a dominant position in providing general online search services throughout the EEA, with market shares above 90% in most EEA countries.”

Simply, the EU will be ruling as a matter of law that Google is in fact a monopoly that has done wrong.

Second, what’s different here is this will be the first official search antitrust conviction of Google in the world, and it will be for abusing its search dominance to the detriment of consumers, competition and innovation.

Both the U.S. FTC’s negotiated settlement with Google in 2013, and the Canada Competition Bureau’s negotiated settlement with Google in 2016, afforded Google the opportunity to continue to represent itself publicly as not a monopoly, and that it had done nothing wrong.

Third, the EU’s pending ruling that Google “abused its dominant position” in search “by systematically favoring its own comparison shopping product in its general search results pages,” and its pending mandated remedy, that “Google should treat its own comparison shopping service and those of rivals in the same way,” both expose that Google has long fundamentally misrepresented its business model to the public, i.e. that it’s algorithms are neutral and unbiased, when they are not.

For over ten years, Google’s current “About” page has publicly asserted: “Ten things we know to be true. We first wrote these “10 things” when Google was just a few years old. From time to time we revisit this list to see if it still holds true. We hope it does—and you can hold us to that.” “Focus on the user and all else will follow. Since the beginning, we’ve focused on providing the best user experience possible.”We never manipulate rankings to put our partners higher in our search results and no one can buy better PageRank. Our users trust our objectivity and no short-term gain could ever justify breaching that trust.” [bold added] … “It is best to do one thing really really well. We do search.”

Simply, the expected EU ruling will conclude that Google has manipulated its search results since 2008, which means what Google claims it knows to be true – in fact, is not. Google lied.

In sum, this pending outcome is highly problematic for Google because its cuts to the heart of who Google is, what it does, and what it promises to be.

It officially exposes Google as a search monopoly that systematically manipulates search results in ways that undermine trust in Google, its search algorithms, and its public claims of neutrality and objectivity.

[Originally published at the Precursor Blog]

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an emergent enterprise risk consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google and also before the relevant House oversight subcommittee on Google’s privacy problems.

Categories: On the Blog

The Court Cops Out

Somewhat Reasonable - May 20, 2016, 8:56 AM

Like the camel that gets its nose under the tent, once the federal government butts into people’s business it’s very hard to get it out.  But in a per curiam decision in Zubik v. Burwell on May 16, 2016, the Supreme Court may have indicated that even in the age of the nanny state, even Supreme Court Justices can abide only so much.

Zubik may be better known to the public as “The Little Sisters of the Poor” case.  There, the high court granted certiorari to review appeals by seven Christian or Roman Catholic groups or organizations in suits against the Department of Health and Human Services, currently headed by Sylvia Burwell, who, thanks to the Affordable Care Act, a/k/a Obamacare, may find herself in the caption of more Supreme Court cases than she ever dreamed.

The question is Zubik is akin to how many angels can dance on the head of a pin.  Thanks to the Supreme Court in National Federation of Independent Business v. Sebelius, the ACA requires every adult American to carry health insurance or to pay a penalty – John Roberts calls it a “tax” – to the federal government for not doing so.  Thanks to the lobbyists who actually wrote the law and the regulators who draft its implementing provisions, every employer who provides health care to its employees under the Act must also, in the words of Zubik, “cover certain contraceptives.”

To many religious groups and orders, including Priests for Life, the Roman Catholic Archbishops of Washington, D.C., East Baptist University, and the aforementioned Little Sisters of the Poor, this is anathema.  Not only do their sincerely held religious beliefs teach against contraception, but they also in some cases at least vociferously oppose abortifacients, which prevent a fertilized egg from being implanted or otherwise interfere with the growth of human life from the moment of conception.

But the Supreme Court held in 1973 in Roe v. Wade that abortion is a woman’s constitutional right, and in 2012 it held in Sebelius that Congress can force everyone to buy, and employers to provide, health insurance that, through the Code of Federal Regulation, must include birth control.  So what to do about that pesky First Amendment, which requires no emanations from the penumbra to guarantee the free exercise of religion, especially since Congress passed the Religious Freedom Restoration Act of 1993?

RFRA provides in part that Americans don’t have to abide by otherwise generally applicable laws if those laws “substantially burden” the exercise of their religion.  It would seem that requiring the Little Sisters of the Poor and a group called “Priests for Life” to provide abortifacients to their “employees” easily meets this test:  What could be a more substantial burden than requiring you to do something that literally, in your view, may eternally damn you to hell?

Never passing up the opportunity to make people fill out a form, though, the government has a solution.  It says that religious objectors don’t have to provide otherwise required contraceptive coverage if they fill out a form stating that they object on religious grounds to doing so, and submit that form to either their health insurer or the federal government.

But in much the same way that some people argue they shouldn’t have to get a permit to exercise their freedom of speech, the Little Sisters of the Poor and the other objectors in Zubik argue that even filling out the form imposes a “substantial burden” on their religious freedom.

Even in this post-Obergefell same-sex marriage environment, the Supreme Court doesn’t get paid enough to decide this delicate question.  So following oral argument, it asked the parties to address in supplemental briefs ”whether contraceptive coverage could be provided … without any such notice from petitioners.”

In other words, might it be okay with everyone if the Little Sisters of the Poor and others looked the other way while their own insurers provided such coverage, so long as the Little Sisters of the Poor didn’t have to pay for it and didn’t have to say that they object?

Remarkably, all parties agreed that this would be okay, although just how they’re going to work it out remains unclear.  In this case, the Court found, filing suit was a pretty good indication that the objectors “have made the Government aware of their view that they meet ‘the requirements for exemption from the contraceptive coverage requirement …’”  But isn’t filing suit rather more burdensome (and expensive) than simply filling out the form?  What must future Zubiks, et al, do?  Choose between filling out a form and filing a federal court lawsuit?

In copping out in this case, the Court made plain that it “expresses no view on the merits of the cases” before it, and cited a few precedents for not doing so.  In particular, it gave no guidance on “whether petitioners’ religious exercise has been substantially burdened, whether the Government has a compelling interest, or whether the current regulations are the least restrictive means of serving that interest.”

Perhaps with an evenly-divided court with just eight justices this is the best we can do for now. So excuse me for asking, but isn’t answering the hard questions exactly what the taxpayers of this country pay Supreme Court Justices to do?

Categories: On the Blog

Government-Owned Internet Projects are a Bad Deal for Taxpayers, Consumers

Somewhat Reasonable - May 20, 2016, 8:48 AM

Despite claims of helping low-income earners access the Internet, and thereby joining the digital economic revolution, taxpayer-funded Internet infrastructure projects have a long and expensive history of failing to achieve their stated goals, even though government Internet services enjoy advantages over private businesses.

In Los Angeles, a 2015 taxpayer-funded municipal Wi-Fi program spent nearly $500,000 to build a series of government-owned Internet access points, also called hotspots, but users seeking to get online while outside were left high and dry, because none of the access points actually worked.

Between late 2015 and March 2016, reporters from the Los Angeles Times surveyed 24 California locations between Long Beach and Pasadena, testing the quality of municipal Wi-Fi hotspots serviced and maintained by the South Bay Regional Broadband Consortium, a municipal wireless-Internet program funded with telecom taxes added to Californians’ telephone bills. What the reporters found may surprise some: Nearly $500,000 had been flushed down the drain by the project.

An initial check of 18 hotspot locations, conducted in late 2015, revealed that none of the taxpayer-funded access points were even broadcasting a Wi-Fi signal.

In January 2016, the California Public Utilities Commission, the government agency commissioning SBRBC’s seemingly results-free project, determined only two of 24 locations were online. A follow-up investigation in March 2016 by Times reporters found three of the 24 taxpayer-funded hotspots were broadcasting availability but were unusable for getting online.

“The best results were on a section of Crenshaw Boulevard in Leimert Park where several businesses were broadcasting free Wi-Fi on a community network,” Times reporter Doug Smith wrote in an April 1 article.

In other words, the voluntary donations of private individuals were objectively more effective than a government program funded by the compulsory extraction of taxpayers’ money. The privately donated Wi-Fi access worked, and the taxpayer-funded Wi-Fi access didn’t work.

Despite the long trail of failed taxpayer-funded Internet programs, beginning in places such as Provo, Utah, and running through California’s South Bay region, lawmakers in other cities continue to insist these programs can work if properly administered.

Most recently, Washington, D.C., city councilmembers began exploring the creation of large-scale taxpayer-funded Internet services. Councilmember Vincent Orange proposed creating a government task force to study creating a citywide network of Wi-Fi hotspots at taxpayers’ expense, competing with private-sector businesses for users.

But as government Internet programs fail in spite of the uncompetitive advantages they enjoy over the private sector, and taxpayers are the losers.

When government tries to be everything to all people, it almost always becomes nothing but a burden on everyone — and an expensive one at that.

Instead of extracting more money from taxpayers to provide services the private sector can and does provide, city lawmakers such as those in California’s South Bay and in Washington, D.C., should stick to providing core services, such as ensuring public safety and protecting property rights.

[Originally published at the Washington Examiner

Categories: On the Blog

Heartland Daily Podcast – Lennie Jarratt: Nation’s Report Card Shows Falling Education Scores

Somewhat Reasonable - May 19, 2016, 3:54 PM

In today’s edition of the Heartland Daily Podcast, we listen in as Lennie Jarratt, project manager for education at The Heartland Institute, joins the Morning News Watch Radio Show to talk about the nation’s falling scores on the NAEP test – more commonly referred to as the Nation’s Report Card.

Jarratt explains how the test scores are some of the first seen during the Common Core era. While it may be too early to lay all of the blame on Common Core, Jarratt points to a study that shows that states which embraced Common Core had scores that fell the fastest.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

Google Doodle Celebrates Birthday of Radical Marxist Yuri Kochiyama

Somewhat Reasonable - May 19, 2016, 3:07 PM

The notion that the most powerful players on the Web – Facebook, Google, Twitter, etc. – favor the left and actively discriminate against conservatives is all in our heads, right? We’re all just paranoid. Well …

The “Don’t Be Evil” company today used its Google Doodle space to celebrate the birthday of the late Yuri Kochiyama, a Marxist radical who admired Mao; supported the black separatist movement; demanded the release of four Puerto Rican nationalists who opened fire in the House of Representatives in a terror attack; worked on behalf of cop killers Mumia Abu-Jamal and Assata Shakur; supported the Shining Path terrorist organization in Peru; and said in 2003: “I consider Osama bin Laden as one of the people that I admire. To me, he is in the category of Malcolm X, Che Guevara, Patrice Lumumba, Fidel Castro, all leaders that I admire.”

And all that is from where the Google Doodle directs readers: Wikipedia, which itself has been taken over by the radical left.

If Milton Friedman, Billy Graham, Ayn Rand, or Ronald Reagan got a Google Doodles for their birthdays, I must have missed it. But a Marxist radical who advocated violent revolution? Google takes “great pleasure” in honoring her.

Categories: On the Blog

Texas Conservative Blog Issues Misleading Article on Potential Article V Convention

Somewhat Reasonable - May 19, 2016, 12:52 PM

Shirley Spellerberg of the conservative blog Texas Republican Vote issued a blog post on May 6th titled, “Strike Two for Gov. Abbott.” Spellerberg criticized Texas Gov. Greg Abbott (R) for supporting an Article V convention proposal backed by the Convention of States Project. Abbott announced his support for an Article V convention in January during an event sponsored by the Texas Public Policy Foundation.

The article brought up numerous false charges against the Article V movement. Some of the charges cite talking points from left-wing organizations funded by billionaire George Soros, such as Common Cause. According to Spellerberg, “An Article V Convention would open up our Constitution to the elimination of our protections under the Bill of Rights—the First Amendment: freedom of worship and speech, the Second Amendment: our right to keep and bear arms, which is already under attack, and to the elimination of the Electoral College.”

Heartland Senior Fellow Rob Natelson has said that an Article V convention is only limited to the subject matter listed in applications submitted by the states to the Congress and in the official convention call. This fundamental limitation makes it impossible for other rights, such as freedom of speech, to be at risk during a convention.

Spellerberg falsely asserts a convention cannot be limited, but it is well known states can limit the conduct of their delegates by enacting delegate limitation and selection laws. The law gives the state the ultimate authority to automatically terminate the credentials of a delegate who votes for an unauthorized amendment or motion. The Assembly of State Legislatures (ASL) , is set to meet in Philadelphia in June to ratify the rules for a convention. A ratified set of rules from the ASL ensures the convention will be truly limited in its operation and scope.

Another incorrect point that Spellerberg raised in her article is she tried to suggest many conservative organizations working to implement an Article V convention are working alongside leftist organizations. This is not the case. WolfPAC, a progressive organization, is pushing for an Article V convention to reform campaign finance laws for the national government. They are not working directly with conservative groups such as the Balanced Budget Amendment Task Force, Compact for America, and the Convention of States Project. They are all pursuing their own efforts for a convention.

Spellerberg even goes so far as to cite the Wisconsin-based John Birch Society (JBS) in her attempts to prove that the left and right are working together on an Article V convention, but the arguments presented by JBS have long been disproven.

Spellerberg was a former member of the Republican Party of Texas’ platform committee. The last time she served on the committee was during the 2010 gubernatorial election—when she urged Texas Republicans to remove a 2014 resolution affirming support for the Convention of States project.

You would think Spellerberg, with all of her time spent dealing with the Article V movement, would present a more balanced and accurate description of what’s going on. Unfortunately, that has not been the case. Spellerberg’s misleading statements and incorrect assertions should be avoided and refuted by all those who value the truth, regardless of where they stand on the Article V convention proposals.

Categories: On the Blog

Heartland Part of Full-Page Ad in New York Times Standing Up For Free Speech on Climate, Against Abuse of Power

Somewhat Reasonable - May 18, 2016, 1:44 PM

Our friends at the Competitive Enterprise Institute (CEI) ran a full-page ad in the New York Times today that stands up for the right of individuals and organizations to speak their mind — on the climate, or any other issue. This is, naturally, in response to 18 state attorneys general taking legal action against CEI and other climate realist groups, demanding they hand over all correspondence related to their communication on the issue to ExxonMobil. Click here to see The Heartland Institute’s continually updated web page dedicated to this issue.

Heartland Institute President Joseph Bast was proud to add his name to those of 42 others who stand together against this egregioius abuse of power, as well as the right to speak out publicly against the state ideology of catastrophic man-caused climate change. You can view the ad in its full-color glory, and also read the text below.

ABUSE OF POWER

All Americans have the right to support causes they believe in.

The right to speak out is among the most fundamental principles of American democracy. It should never be taken away.

Yet, around the country, a group of state attorneys general have launched a misguided effort to silence the views and voices of those who disagree with them.

Recently, New York Attorney General Eric Schneiderman, U.S. Virgin Islands Attorney General Claude Walker, and a coalition of other “AGs United for Clean Power” announced an investigation of more than 100 businesses, nonprofits, and private individuals who question their positions on climate change.

This abuse of power is unacceptable. It is unlawful. And it is un-American.

Regardless of one’s views on climate change, every American should reject the use of government power to harass or silence those who hold differing opinions. This intimidation campaign sets a dangerous precedent and threatens the rights of anyone who disagrees with the government’s position—whether it’s vaccines, GMOs, or any other politically charged issue. Law enforcement officials should never use their powers to silence participants in political debates.

We are standing up for every American’s First Amendment right to speak freely. We hope you will join us. This is a critical battle, and it will determine whether our society encourages spirited debate or tolerates only government-approved opinions.

Kent Lassman
President & CEO, Competitive Enterprise Institute

C. Boyden Gray
Former White House Counsel

Andrew C. McCarthy
Former Chief Assistant United States Attorney, Southern District of New York

Michael B. Mukasey
U.S. Attorney General, 2007-2009; U.S. District Judge, 1988-2006

Ross McKitrick
Professor of Economics, University of Guelph

Ronald D. Rotunda
Distinguished Professor of Jurisprudence, Chapman University

Richard S. Lindzen
Professor Emeritus of Atmospheric Sciences, MIT

William Happer
Emeritus Professor of Physics, Princeton University

Jim DeMint
President, The Heritage Foundation

James H. Amos, Jr.
President & CEO, National Center for Policy Analysis

John A. Baden
Chairman, Foundation for Research on Economics & the Environment

Lisa B. Nelson
CEO, American Legislative Exchange Council

Paul Driessen
Author & Energy Policy Analyst

Thomas J. Pyle
President, Institute for Energy Research

Steven J. Allen
Vice President & Chief Investigative Officer, Capital Research Center

David Ridenour
President, National Center for Public Policy Research

Steven J. Milloy
Publisher, JunkScience.com

Brooke Rollins
President & CEO, Texas Public Policy Foundation

Paul Gessing
President, Rio Grande Foundation

Ron Arnold
Researcher & Author

William Perry Pendley
President, Mountain States Legal Foundation

Adam Brandon
President & CEO, FreedomWorks

Hank Campbell
President, American Council on Science and Health

Craig Rucker
Executive Director, Committee for a Constructive Tomorrow

Tom McCabe
CEO, Freedom Foundation

Richard B. Belzer
Economist

Heather R. Higgins
President & CEO, Independent Women’s Voice

Joseph G. Lehman
President, Mackinac Center for Public Policy

Sabrina Schaeffer
Executive Director, Independent Women’s Forum

Joseph Bast
President, The Heartland Institute

John C. Eastman
Founding Director, The Claremont Institute’s Center for Constitutional Jurisprudence

Robert Alt
President & CEO, The Buckeye Institute

Michael Pack
President & CEO, The Claremont Institute

Josh Blackman
Assistant Professor, South Texas College of Law

Lynn Taylor
President, Tertium Quids

David Rothbard
President, Committee for a Constructive Tomorrow

Tracie Sharp
President & CEO, State Policy Network

Kenneth Haapala
President, Science and Environmental Policy Project

Tim Phillips
President, Americans for Prosperity

Myron Ebell
Director of the Center for Energy & Environment, Competitive Enterprise Institute

George Landrith
President, Frontiers of Freedom

John Tillman
CEO, Illinois Policy Institute

Craig D. Idso
Chairman, Center for the Study of Carbon Dioxide and Global Change

Categories: On the Blog

Governments Create Monopolies and Cause Worker Exploitation, Not Free Markets

Somewhat Reasonable - May 18, 2016, 11:40 AM

The world is threatened with a renewed wave of anti-capitalism and anti-business sentiments and policies. Many who cheered the demise of Soviet communism in the early 1990s, presumed that this meant that, by default, the case for free markets and competitive enterprise had won in the battle of ideas. Over the last twenty-five years it has become clear that the same misguided arguments against free market capitalism constantly reemerge, like an ideological vampire waiting to rise from the intellectual grave and drain market freedom of its lifeblood by more government regulations and controls.

One of the most persistent of these misguided ideas is the belief that left on its own, competitive markets tend to bring about concentration of wealth, inequality of income, and “market power” to exploit workers and consumers of what justly should be theirs.

The most recent example of this is an article on, “Monopoly’s New Era,” by Joseph E. Stiglitz, the 2001 Nobel Prize winner in economics, which appeared on Project Syndicate website on May 13, 2016. Professor Stiglitz is one of those thinkers who seem to see a “market failure” at every turn and apparently has rarely found a government intervention he did not like.

Two Ways of Looking at the Market Process

He contrasts two differing views of the market economy. One view, an outgrowth of Adam Smith and those who followed in his intellectual footsteps over the last 250 years, argue that freedom, prosperity, and income equity are generally assured wherever the market is kept open and competitive, with minimal government impediments.

The other “school of thought” that he interestingly identifies with no one particular thinker of the past “takes as its starting point ‘power,’ including the ability to exercise monopoly control or, in labor markets, to assert authority over workers,” Stiglitz explains. “Scholars in this area have focused on what gives rise to power, how it is maintained and strengthened, and other features that may prevent markets from being competitive. Work on exploitation arising from asymmetries of information is an important example.”

Professor Stiglitz insists that this second approach has shown its insight and efficacy in the clear evidence of concentration of market control and income inequality in such sectors of the market such as finance and banking, cable television, health care, pharmaceuticals, agro-business, and a variety of others.

The truth and reality of this concentration of power and wealth conception of capitalism, Stiglitz argues, is also shown, historically, in labor markets, to the disadvantage of many “minority” groups. “Of course, historically, the oppression of large groups – slaves, women, and minorities of various types – are obvious instances where inequalities are the result of [market] power relationships,” he states.

His conclusion, therefore, should not be surprising. If competitive capitalism leads to it’s opposite – concentrated, monopoly capitalism – then government regulation and control is essential to preserve a free, prosperous, and “socially just” society. Or in the words with which Professor Stiglitz concludes his article: “But if markets are based on exploitation, the rationale for laissez‐faire disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.”

Karl Marx’s Theory of Worker Exploitation

The nineteenth century economist most famous for insisting that capitalism leads to concentration, monopoly and exploitation was, of course, Karl Marx. He is the leading thinker that Stiglitz avoids mentioning by name. Marx claimed to have unearthed “the laws of historical evolution” that by a necessity as irresistible as the physical laws of nature, place human history on a trajectory that transformed society from feudalism to capitalism and would have to culminate in the triumph of socialism and a post-scarcity world of communism.

Marx was insistent that businessmen are driven in the pursuit of profits to invest in laborsaving industrial machinery. This results in two consequences. First, in this competitive race for profits through industrialization, some private enterprisers would be driven to the wall and pushed out of business, with their companies bought up by those capitalists who had better weathered the market storm. As this process repeated itself, there would be fewer and fewer private enterprisers left standing, with the result of the private ownership of businesses remaining in fewer and fewer hands. Hence, market competition leads to the concentration of ownership and wealth in the hands of a diminishing number of enterprise owners, according to Marx.

Second, as machines replace workers, there are fewer and fewer jobs for all those needing employment to feed themselves and their families. The non-property owning workers – “the proletariat,” in Marxian jargon – are joined by the businessmen driven out of business due to that concentration of ownership and wealth.

Workers competing for a decreasing number of jobs bring about a lowering of wages and decreased living standards for the vast majority of the population. Thus, a growing material inequality emerges between most working members of society and the handful of property-owning wealthy capitalists, or as it has become fashionable to describe them nowadays, the “one percent.”

Finally, in the Marxian version of this theory, the workers rise up and overthrow the remaining handful of exploiting capitalists, and the new dawn of historical progressivism arrives: socialism, with the State owning, managing and centrally planning the resources and enterprises of the society in the name of “the people.”

Marx’s Errors and the Benefits from Classical Liberal Capitalism

Both economic theory and the actual events of economic history have shown the errors and absurdities in this and related theories over the last two hundred years. Rather than a bi-polar social world of a handful of “the rich” versus a human mass of “the poor,” industrial and financial capitalism saw the emergence of what has become known as “the middle class,” whose numbers came from the ranks of the poverty-ridden poor of the pre-capitalist era.

The political philosophy of classical liberalism that gained intellectual ground in the eighteenth and nineteenth centuries called for the end to absolute monarchy and the establishment of representative, but constitutionally limited government. It espoused the cause of ending the governmental privileges and favors bestowed on a narrow group of special interest groups surrounding and serving the king, including legal monopolies that prevented market competition.

Classical liberalism called for the end to slavery, the emancipation of women, and an equality of individual rights for all in society to life, liberty, and honestly acquired property before an unbiased and impartial rule of law.

Domestic and international trade barriers were reduced or abolished, opening the field to virtually unrestricted free market competition. A smaller and far less intrusive government brought about a lowered tax burden on all in the society, leaving more of the earned wealth by all in the hands of the private individuals whose efforts and energies had produced it.

Respect and enforcement of private property rights; competitive markets open to all those with entrepreneurial visions of how to manufacture and sell more, better and less expensive goods and services to consumers as the peaceful and honest means of pursuing the earning of profits; freed labor markets giving all the opportunity to search out gainful employment wherever the most attractive terms of earning a living seemed to offer itself; and a growing financial sector provided the means for making possible the expensive industrial investments that created jobs and expanded the productive capabilities of society.

Capitalism Created a Prosperous Middle Class from the Poor

The last point is, perhaps, worth emphasizing. Through most of human history, the vast majority of people who found themselves able to somehow save anything out of their meager earnings were fortunate if they could hide away a few gold or silver coins as a form of accumulated wealth.

But the development of modern banking now made it possible for even those of meager material means to put aside their modest savings in a financial institution offering an interest return on their deposits. These financial institutions could now pool together large amounts of savings from many modest savers. They funneled these people’s savings out to entrepreneurs who could never have funded their dreams of industrial enterprises out of their own incomes.

Out of the profits earned by the successful entrepreneurial borrowers came the monetary means to pay back what had been borrowed plus the interest payments agreed to, to start up or to expand their private enterprises. This interest income earned by the banks both paid the interest owed to the depositors and increased the capital of the banks to develop their ability to lend to a growing number of enterprising borrowers.

The increasing field of created and expanded private enterprises was made possible through the savings of “the workers,” themselves, and who thereby earned interest on their individual savings accounts, and through the plowing back of retained earnings into those enterprises by successful businessmen widened the number of businesses looking for workers to fill the growing number of jobs in the marketplace.

At the same time, investment in more and better machines, tools and equipment in those industrial enterprises were increasing the productivity of each worker employment, helped to increase the wages worth paying each worker hired in conjunction with the increased demand of more employers competing for workers in their businesses.

Of course, wages for all types of labor did not all rise at the same time and to the same degree. But looking over the decades of the nineteenth and twentieth centuries, competitive and relatively free markets demonstrated the lie to all the naysayers like Karl Marx who claimed that “the workers” were doomed to poverty, destitution, and despair.  Competitive capitalism did and has been raising increasing portions of mankind from wretched subsistence and starvation to unimaginable ease, comfort and convenience that even the richest and most successfully plundering kings and conquerors of the past could never have conceived.

Joseph Stiglitz and Asymmetric Information

Joseph Stiglitz, needless to say, is not a Marxist or a socialist, and it would be unfair to in anyway suggest that he is. His own variation on the injustice of capitalism and its potential for exploitation is partly based on his theory of “asymmetric information” and how it enables private enterprisers to take advantage of consumers and workers in society. Indeed, this theory helped earn him the Nobel Prize in Economics in 2001.

A core element in his theory is that individuals in the marketplace do not all possess the same type or degree of knowledge. Some people know things that others do not. And this “privileged” information can enable some to “exploit” others. For instance, the producer and marketer is likely to know far more about that product’s qualities, features and characteristics that he is offering on the market than most of the buyers possibly interested in purchasing it.

By withholding or not fully informing the potential buyer about all of the qualities, features and characteristics of his good, he may succeed in creating a false impression that makes the consumer have a greater demand for it and be willing to pay a higher price for it than would be the case if that consumer knew as much about the good as the seller knows.

Markets Integrate and Coordinate Decentralized Knowledge

There is no doubt that in a system of division of labor there is an accompanying division of knowledge, but this is a theme in theories of the market process long ago explained by economists in the “Austrian” tradition, especially Friedrich A. Hayek, who also received a Nobel Prize in Economics in 1974.

The Austrians have long emphasized that competition is a “discovery procedure” through which individuals find out things never known or imagined before. The peaceful rivalry of the marketplace creates the incentives for entrepreneurs to be unceasingly alert to profit opportunities to see possibilities that either others have missed or not thought of before. The unknown or barely perceived become seen and understood, and then taken advantage of in the form of new, better, and less expensive products offered to the consuming public.

The purpose of competitive markets and price systems is precisely to provide a way to integrate and coordinate the dispersed and decentralized knowledge in any society possessing a degree of complexity.

This same competitive market has also found ways to reduce and overcome the asymmetry of consumer versus seller knowledge concerning the qualities, features and characteristics of goods, as well, and thereby to reduce the potential and possibility of “exploiting” what the seller may know at the expense of the market buyers.

The Meaning of Search Goods and Judging the Quality of Products

In explaining how markets do this, economists sometimes distinguish between two types of goods offered and sold on the market: search goods and experience goods.

Search goods are those that can be examined and judged by the potential buyer before a purchase is made. For instance, suppose that a supermarket advertises that perfectly ripened bananas are available and on sale in their store. A consumer can enter the supermarket and fairly reasonably judge whether the quality of the good matches what has been promised in the advertising before buying it.

If examination shows that the bananas are either non-eatable green or over-ripened brown, the consumer can walk away without spending a penny on a product that has not met what was promised. By falsely or incorrectly advertising, or even unreasonably exaggerating in its advertising, the business runs the risk of not only losing that sale but the loss of its brand name reputation, threatening to see that consumer never return to that establishment again. Plus, that person can tell others what his “search” of the good came up with, potentially leading to those others not trusting that businesses advertising word without inspecting the good themselves.

This creates a self-interested incentive on the part of such sellers to practice “true in advertising,” or suffer the loss of some their regular customers upon whose repeat business their long-term profitability is dependent.

The Meaning of Experience Goods and Market Safeguards

Experience goods are those goods whose qualities, features and characteristics cannot really be fully known and appreciated without using the product in question for a period of time. Think of an automobile; you can go for a test drive, but your own best judgment of its safety, reliability and handling cannot be really known without driving the car in various weather and traffic conditions over a period of time. Or think of a bed mattress; you sit down and bounce on it, or stretch out and lay down on it in the furniture showroom, but you cannot really know if it will give you a comfortable and restful sleep every night until you’ve gone to bed on it for a period of time.

The same applies to many goods, such as household appliances, for instance. The competitive market’s response to this uncertain and imperfect knowledge on the part of potential buyers has been the seller and manufacture’s system of product warranties that enable the buyer to return the product over a period of time for his or her money back, or a replacement at no extra cost to the buyer.

It is, again, in the seller’s own self-interest to make sure that the product is what has been promised and is reliable in its working order and performance. Once more, the seller and manufacturer run the risk of losing their brand name reputation concerning quality and trustworthiness. Plus, if a warranty has to be fulfilled it is the manufacturer or seller who is forced to eat the cost of replacing the unit returned due to malfunction or failure to match buyer expectation, thus cutting into his own profit margin.

Market Uncertainty and Franchise Businesses

But what about those situations in which concern about repeat business or brand name reputation do not seem to be as present? For instance, suppose you are traveling on business or vacation and are passing through some town you are highly unlikely ever to see again.

You’re hungry for a meal or a place to stay for the night. How can you know about the quality of the meal in the local “Joe’s Greasy Spoon,” or the bedbug-free mattress in any of the rooms in the local “Bates Motel”?

The market has provided consumer information about the qualities, features and characteristics of such products and services to overcome this inescapable imperfect knowledge in the form of chain stores and franchises. You may never eat or sleep again in that particular town, but you will likely eat and sleep away from home somewhere at sometime again in the future.

The sight of the MacDonald’s “Golden Arches” or the sign for an IHOP (International House of Pancakes) anywhere, any place tells you the quality and variety of foods that you can have in any of their establishments, regardless of where its location in the United States or even the world. The same applies to seeing the sign for a Motel 6, or a Holiday Inn Express or an Embassy Suites, or a Hilton-family hotel.

You may never again go to that particular MacDonald’s or Holiday Inn, but if you travel you may very well eat or spend the night at some other chain franchise of that company. And that is the repeat business and brand name reputation that is important to the “mother company.” Thus, each chain store and franchise is required to meet standards of quality and variety that enables the consumer to have a high degree of confidence and reduced knowledge uncertainty of what he or she is getting when they enter any of these establishments regardless of where it may be located.

What makes this practice in the market consistently happen and successfully relied upon? Market competition and the self-interested profit motive.

“Perfect Competition” versus the Competitive Process

Professor Stiglitz sets up the straw man of what in economics is known as the “perfect competition” model. The presumption is that a market is only and truly “competitive” when it is filled with such a large number of sellers that each one is too small to influence the market price and in which each seller offers a product the quality of which is exactly the same ones sold by his competitors; and in which every buyer already knows all the same perfectly correct information as is known by all the sellers in those same markets.

Friedrich Hayek demonstrated the essential fallacies in this argument exacting 70 years ago when he delivered a lecture on “The Meaning of Competition” on May 20, 1946 at Princeton University. He explained that the very nature of a truly competitive market is precisely one in which rivals are attempting to improve the qualities of the products they offer to consumers and try to devise ways to make their products at lower costs precisely to be able to afford to offer them at lower prices to buyers to attract business way from their competitors. That is what makes market competition a dynamic, never-ending process of improved and less expensive goods and services available for the members of any society.

For economists like Joseph Stiglitz, trying to offer goods at prices different than your rivals or with qualities and characteristics differentiated from those sold by your competitors is a sign of “market failure,” of “imperfect” or “monopolistic” market practices. But for economists like Friedrich Hayek, such price and product rivalry and competition is the essential indication of the vibrancy of the competitive process at work.

Market competition in Hayek’s sense of the concept does not need a large number of rivals to be “truly” competitive. What is required are no political or legal barriers that stand in the way of potential competitors either at home or from abroad. From the economic point-of-view the market encompasses the world, regardless of where those who runs governments may have drawn lines on a political map.

Stiglitz’s “Market Failures” are Really Forms of Crony Capitalism

And this gets to the crucial and essential error in Professor Stiglitz’s argument concerning the concentration of “monopoly” power in the marketplace, and any resulting “unjust” inequality of wealth.

Every one of the examples that he lists as instances of such concentration of “market power” – finance and banking, cable television, health care, pharmaceuticals, agro-business – are all instances in which the competitive, free market has been interfered with by the paternalistic and regulatory hand of the government. It is not the market that has “failed” in these corners of the economy, but rather it is the presence and pervasiveness of the interventionist state.

But this, too, is typical of market critics such as Professor Stiglitz. They deceptively call “market failures” instances not of competitive free markets but of “crony capitalism” under which special interests have successfully interacted with politicians and bureaucrats to rig the market for their own benefit at the expense of both consumers and potential competitors who are legally prevented or hindered from entering sectors of the economy where they would like to try to gain market share and earn profits by offering better and lower priced goods than their privileged rivals are offering to those consumers.

Con Men Are Always with Us, Free Markets Constrain Them

Are there con men, hucksters and cheats? Of course there are. They existed in ancient Athens just as they exist today. There are always people who will try to dishonestly get what others have, when doing it that way seems easier and less costly than through honest production and trade.

The question is not whether human nature can be transformed to eliminate this aspect of human conduct. The question is, are their market institutions and incentives that can systemically reduce this type of behavior and, instead, generate more honest and properly informed human interactions?

And the answer is, yes. In fact, most of these positive incentive mechanisms have emerged and evolved out of the competitive market process, itself. These “market solutions” to the “social problem” of asymmetric information were discovered by market participants themselves to be profitable ways of gaining consumer trust and confidence and business, without any government command or imposition. Plus, their discovery and practiced institutional forms could never have been fully anticipated or imagined in their detail before and separate from the competitive market processes that generated them.

Once again, the “let-alone” principle of peaceful competitive market association has demonstrated itself to be superior to the presumption and arrogance of the governmental social engineer.

Worker Exploitation has Its Source in Government Intervention

Furthermore, if workers have been exploited in the past or present, and do not receive the full and proper value for the labor services they may render, this, too, has been the result of politically-sponsored or allowed “power” inside the market. Compulsory labor unions have manipulated and rigged labor markets, giving wage and work privileges and favors to some workers, but at the expense of other workers locked out of employment and income opportunities due to the “closed shop.”

Government imposed minimum wage laws have priced some low and unskilled workers out of jobs leaving them unemployed and possibly permanent wards of the government’s welfare state programs. Anti-competition regulations and related market restrictions (including burdensome taxes on business) have reduced the private sector’s ability and incentives to create jobs and invest in ways that raise the value of workers’ output over time.

If workers are “exploited” in the modern world, Professor Stiglitz should look at the very interventionist policies that he proposes and defends. They are the primary cause of the very conditions and injustices that he deplores, including the greater degrees of material inequality than would or need exist, if only the regulating and paternalistic state they he so much desires and admires were to get out of the way of the free market competitive process.

[Originally published at the Future of Freedom Foundation]

Categories: On the Blog

Heartland Daily Podcast – Dr. Mike Koriwchak: “Meaningful Use” Regulations Killed Health Record Innovation

Somewhat Reasonable - May 18, 2016, 11:15 AM

So you want electronic medical records (EMR) and electronic health records (EHR)–and so you should. Doctors in private practice were innovating to provide top-flight electronic records long before the federal government encumbered EMR and EHR with fruitless reporting requirements under the guise of “meaningful use,” which distract physicians from providing patients with the highest quality care.

In today’s Health Care News Podcast, Dr. Mike Koriwchak, vice president of Docs4PatientCare Foundation and co-host of The Doctor’s Lounge joined Heartland research fellow and Health Care News Managing Editor Michael Hamilton to share why the day the feds rolled out “meaningful use” was the day innovation died in the realm of EMR and EHR, and how lawmakers and CMS can help revive it.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

[Please subscribe to the Health Care News Podcast for free at this link.]

Categories: On the Blog

Cruz Withdrawal Postpones the Concern Over ‘Natural Born’

Somewhat Reasonable - May 18, 2016, 11:08 AM

A silver lining to the withdrawal of Sen. Ted Cruz, R-Texas, from the presidential race is that we will be spared a battle over whether he met the Constitution’s requirement the president be a “natural born citizen.”

The evidence is not all one way, but on balance there is a good case Cruz did not meet the constitutional requirement.

As a general rule, the Constitution uses legal terms such as “natural born” in their 18th-century English legal sense. Under the law of the time, a foreign-born person did not qualify unless he had a citizen father not then engaged in treasonous or felonious activities.

Cruz was born in Canada of an American mother and a Cuban father.

Cruz, who in other respects is a strict constitutionalist, blew off the question, claiming it already had been decided in his favor.

This was demonstrably untrue. Although Cruz was born a citizen by virtue of federal law, federal law cannot, of course, alter constitutional definitions.

As Harvard law professor Lawrence Tribe has pointed out, the Supreme Court has never determined authoritatively the constitutional definition of “natural born.”

Several conservative commentators wishing to back up Cruz’s claim pointed to a 1790 congressional statute that can be read as recognizing as “natural born” children born abroad of citizen mothers.

But the statute was problematic for several reasons: (1) It can be read in other ways, (2) prevailing contemporaneous law rendered the Cruz-favored reading unlikely, (3) the statute probably had purposes unrelated to the presidency, and (4) it was soon repealed.

Liberal commentators appeared to be split on the issue.

Some upheld Cruz’s position, while others were not willing to be seen applying a doctrine as politically incorrect as patrilineality — the doctrine that one’s citizenship status comes through the status of a child’s father.

Some claimed founding-era law disqualified anyone not born in the U.S. Others claimed a child born abroad was “natural born” only if the citizen-parent was in active government service at the time.

Both of these positions are demonstrably false as well. Founding-era law did recognize as natural born those children born abroad whose fathers were citizens, and those fathers frequently were merchants or others not involved in government service at the time.

On top of everything else, several courts, when ruling in Cruz’s favor, cited an article authored by two former U.S. solicitors general.

The article relied heavily on a citation from 18th-century legal commentator William Blackstone.

As it happened, the authors’ report of what Blackstone had written was diametrically opposed to what Blackstone actually had said.

If the case had gone to the Supreme Court, you can bet the justices would not have been so sloppy.

Cruz’s withdrawal gives us some more time to think about the issue.

In the wider context of founding-era jurisprudence, the citizenship patrilineality rule was not particularly “sexist,” because it was balanced by matrilineal rules in certain other areas. However, these rules —matrilineal or patrilineal — make little sense today.

Perhaps a constitutional amendment is in order, recognizing as “natural born” the foreign-born child of either an American mother or American father.

This is a good illustration of why the Constitution has an amendment process.

[Originally published at the Fort Worth Star-Telegram]

Categories: On the Blog

For the Farmers, the Biofuel Bubble has Already Burst

Somewhat Reasonable - May 18, 2016, 10:03 AM

It’s planting season, and farmers are taking to the fields to put food on our tables. Even though Ted Cruz has withdrawn from the presidential race, his victory in the Iowa Caucuses caused political pundits of all stripes to speculate about the future of the Renewable Fuels Standard (RFS) and the corn ethanol mandate, largely because someone, Cruz, had finally campaigned against the ethanol mandate and managed to win in Iowa. While some wonks in Washington, DC may talk about a political end for the ethanol mandate, for the nation’s farmers, the biofuel bubble has already burst.

Many of the agriculture-related policy discussions taking place in the nation’s capital focus on how corn farmers will be hurt by the biofuel mandate because RFS requires traditional forms of biofuel, such as corn, to be replaced by “advanced biofuels” in the future. This assessment is correct. If advanced biofuels ever become viable—thus far they have not— it would eat into the share of biofuel derived from corn. However, this view ignores the damage that has already been done to farmers as a result of the ethanol mandate distorting crop prices.

For every action, there is a reaction, and for every boom, there is a bust. The ethanol mandate created a boom in the price of corn by driving up demand, because it resulted in approximately 40 percent of the nation’s corn crop being converted into fuel. The mandate had the dual effect of tying the price of corn—as well as other farm commodities—more closely to the price of oil. As a result, corn prices surged from approximately $2.50 per bushel before the ethanol mandate, to more than $8 just a few years after it was enacted. As corn prices surged, farmers devoted more acreage to growing corn, which in turn drove up the price of other crops, such as soybeans and barely.

Crop prices weren’t the only the thing to skyrocket. The price of farming inputs, including farmland, seed, and farm machinery, has skyrocketed over the past 10 years due to years of corn prices being $6 or $7 per bushel. In 2005, the average cost of land rent in central Illinois was $147 per acre, but within seven years, that price nearly doubled to $270 per acre. The rise in the cost of inputs made it harder for smaller, family farmers and young people interested in becoming farmers to buy or rent land and machinery.

Things boomed for a while, but because corn prices have fallen 60 percent from their highs—and below the cost of production for many farmers—farmers who took on debt in order to purchase equipment or land are finding these assets may not be worth what they were during the boom.

For example, 2014 marked the first year farmland values dropped since the Reagan administration. Although the declines were fairly modest, about 3 percent, the trend does not bode well for the next few years, when rising yields per acre, slowing economic growth in China, and low oil prices are likely to keep a damper on a recovery in grain prices.

Defenders of the ethanol mandate often argue higher biofuel mandates are needed in order to prop up crop prices above the cost of production. These pleas are often couched in phrases such as, “No policy in history has brought more wealth back to rural America than the ethanol mandate,” and for a time, this was true. But all bubbles eventually burst, and the aftermath is often messy.

The problem with government intervention in markets of any kind is eventually the market adapts, and more and more distortion is needed to maintain prices. The old adage “the cure for high gas prices is high gas prices” applies to all commodities. As high corn prices increased, the incentive for farmers to convert land for growing more corn increased along with them. The price has come down accordingly, but the malinvestment brought on by artificially inflating the demand for corn remains. In the end, policies such as these end up hurting the very people they were supposed to help, which is why Congress should act to phase out the ethanol mandate.

[Originally published at the Quad City Times]

Categories: On the Blog

Heartland Daily Podcast – Cynthia Cabrera: The FDA’s War on E-Cigarettes and Vaping

Somewhat Reasonable - May 17, 2016, 1:36 PM

In this episode of the weekly Budget & Tax News podcast, managing editor and research fellow Jesse Hathaway talks about the U.S. Food and Drug Administration new  “deeming regulations” for electronic cigarettes, which require e-cigarette manufacturers to submit their products through an arduous federal approval process.

Cynthia Cabrera, president of the Smoke-Free Alternatives Trade Association, the largest e-cigarette and smoke-free alternative trade association representing the interests of manufacturers, online retailers, small businesses, distributors, importers and wholesalers, and someone who the people in Big Tobacco probably find really annoying, joins Hathaway to talk about the new regulations, and how they will affect consumers, both non-smoking and smoking alike.

According to Cabrera, the new regulations effectively promote smoking traditional cigarettes, and how e-cigarettes do serve a purpose in the fight against preventable diseases like those caused by tobacco use.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

Is the Green’s “Daddy Warbucks” Helping the Planet or Himself?

Somewhat Reasonable - May 17, 2016, 11:27 AM

Any comprehensive review of green energy and its politics and policies has to include the name of wealthy liberal Tom Steyer—who has been called the environmental movement’s new “Daddy Warbucks.”  Having made his billions from his tenure atop Farallon Capital Management—much of it from coal projects around the world—Steyer apparently had an environmental epiphany and now wants to atone for his past sins by trying to save the planet from manmade climate change.

He is using his wallet to try to elect candidates who will promote policies and energy plans that agree with him. And that plan is “green.” As I’ve previously reported, he spent nearly $75 million in the 2014 midterms and intends to top that for the 2016 election cycle. Steyer–– a long-time donor to Democratic causes––was a 2008 Hillary Clinton supporter. After her campaign failed, he emerged as a bundler for Obama in 2008 and again in 2012. Additionally, Steyer is a Clinton Foundation donor, and last year, at his San Francisco home, he held an expensive fundraiser for Clinton’s 2016 presidential run.

Along with researcher Christine Lakatos, whose Green Corruption File was recently praised on the Michael Savage Show, I’ve repeatedly addressed Steyer’s involvement through our work on President Obama’s Green-Energy Crony-Corruption Scandal. Anytime there is a pot of government money available for green energy, as Lakatos found, Steyer’s name seems to be attached to it. Some of the most noteworthy include: Sungevity, ElectraTherm, and Project Frog—all funded by Greener Capital (now EFW Capital), which is a venture firm that invests in renewable energy, with Steyer as a known financial backer.

Steyer claims to have “no self-interest” in his political activism. The Los Angeles Times quotes him as saying: “We’re doing something we think is good for everyone.” Yet, as Forbes columnist Loren Steffy points out, he is spending his fortune lobbying for “short term political gains” rather than into research and development “aimed at making renewables economically viable.”

While he may say what he is doing is good for everyone, the policies he’s pushing are good for him—not for “everyone.” The Washington Post called him: “The man who has Obama’s ear when it comes to energy and climate change.” In California, where he has been a generous supporter of green energy policies, he helped pass Senate Bill 350 that calls for 50 percent renewable energy by 2030. California’s current mandate is 33 percent by 2020—which California’s three investor-owned utilities are, reportedly, “already well on their way to meeting.” It is no surprise that California already has some of the highest electricity rates in the country. Analysis released last week found that states with policies supporting green energy have much higher power prices. In October, Steyer spent six figures for an ad campaign calling for the next president to adopt a national energy policy similar to California’s: “50 percent clean energy mix in the U.S. by 2030” —which will raise everyone’s rates.

With Steyer’s various green-energy investments, these rate-increasing plans are good for him but bad for everyone else—especially those who can least afford it. And, it is the less affluent, I recently learned, he’s targeting with predatory loans for solar panels through Kilowatt Financial, LLC, (KWF)—a company that listed him as “manager” on corporate documents. KWF recently merged with Clean Power Finance and became “Spruce.” The financing structure used, according to the Wall Street Journal (WSJ), allows “homeowners to get solar systems at no upfront cost and then to pay monthly for the use of the power generated. Homeowners end up saving on their total electricity use, while financing companies get steady revenue over 20 years.” WSJ, points out, the KWF financing can be offered to “people who wouldn’t be approved otherwise.”

In the KWF model, contracted payments come from homeowners and “create a steady and reliable income stream, part of which is owned by its venture investors, including Kleiner Perkins.” About the arrangement, KWF chairman and Chief Executive Daniel Pillmer said: “Kleiner Perkins will make a lot of money.” Apparently, the money to be made is from selling the loans that are then securitized on Wall Street—much like the “sub-prime” mortgage crisis that offered loans to people who couldn’t qualify with “traditional lenders.” KWF’s website brags: “We support financing terms for almost every customer and provide ways for dealers to participate in the pricing process to generate even more approvals and create even lower consumer rates.” KWF offers “Instant Approvals, even for customers with lower credit scores” and “Same-as-Cash and Deferred Payment Offers.” In these types of payment plans, a low rate is usually offered in the beginning and increases retroactively if all the terms of the loan are not met.

In this model, the homeowners don’t actually own the solar systems—which means KWF receives the benefit of the federal tax incentives, such as the 30 percent federal “Investment Tax Credit,” designed to benefit the owner of the solar system.

It is practices like this that have drawn the ire of Congress. Several congressional Democrats sent a letter to the Consumer Financial Protection Bureau that warned about the similarities between the solar industry and what led to the subprime mortgage crisis: “easy initial financial terms, increased demand and a rapidly expanding industry.” These factors create a high risk potential that could, ultimately, be harmful to consumers. Similarly, Republicans sent a letter to the Federal Trade Commission that noted pressure from Wall Street is reportedly leading companies who use “potentially deceptive sales tactics”—which doesn’t sound like it is something that is “good for everyone.”

Yet, it is these very types of finance products, promoted by Steyer’s Kilowatt Financial that Greentech Media reports are “doing well.”

While Steyer claims to want to give everyone a “fair shake,” his pet policies increase costs for everyone, and offer a hand-shake for Wall Street. Steyer and his billionaire buddies win, “everyone” else loses—and that is a big part of the green-energy crony-corruption scandal.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.

Categories: On the Blog
Syndicate content