Recent Policy Studies

• Information Technology
  

  The Cost of State Online Spending-Transparency Initiatives

  By Jerry Brito, Mercatus Center
  
  Mercatus on Policy, 04/13/2009
  

  Legislatures around the country have begun to propose spending-transparency Web sites. The most effective argument against these efforts is the potential high cost of such Web sites. We looked at ten recently established state spending sites and found that initial cost estimates often overestimated the final cost. The cost of the surveyed sites range from $30,000 to $300,000, and there is little correlation between the amount spent and the quality of the Web site.

  
  
  
• Budget & Taxation
  

  Six Steps to Paying Off the U.S. Government Debt

  By D. Sean Shurtleff, Pamela Villarreal, National Center for Policy Analysis
  
  Brief Analysis, 04/13/2009
  

  The best economic stimulus policy would be to reduce long-term government debt, including current public debt and unfunded liabilities. This type of responsible debt policy would strengthen the dollar and spark consumer and investor confidence. If it can work for an individual, why wouldn't it work for government?

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Why Anti-Growth Activism Does Not Help the Environment

  By K. Lloyd Billingsley, Pacific Research Institute
  
  Capital Ideas, 04/13/2009
  

  Sierra Pacific Industries (SPI) is closing down an El Dorado County sawmill that has been around since 1889. SPI will also close another sawmill and electric power plant in Tuolome county. Two more SPI mills in Plumas and Humbolt counties will also close, leaving hundreds of workers without jobs. One reason for the closings is the drop in new-home construction. Anti-growth activists will be happy about the shutdowns, part of their stance known as BANANA – Build Absolutely Nothing Anywhere Near Anyone. Drexel University, for example, wants to build a campus on donated land near Roseville already approved for development. The Sierra Club opposes the new campus, which they fear will lead to other growth, such as homes. This anti-growth stance, however, will hinder rather than help the environment.

  
  
  
• Information Technology
  

  Why Legislators Target California’s High-Tech Innovators

  By Daniel R. Ballon, Pacific Research Institute
  
  Capital Ideas, 04/13/2009
  

  The California Assembly will soon consider proposals to “protect” residents from two of Silicon Valley’s most successful innovators. Google and Facebook help form the backbone of the state’s high-tech economy, but some lawmakers see them as a threat to privacy and security.

  
  
  
• Transportation/Infrastructure
  

  Smart Policies for a Smarter Grid

  By Daniel R. Ballon, Pacific Research Institute
  
  Tech Policy Transmission, 04/13/2009
  

  President Obama’s vision for economic recovery centers on creating “green collar” jobs through substantial investment in clean technologies. Upon signing his “green stimulus” bill in February, Obama touted a $4.5- billion provision to “create a newer, smarter electric grid that will allow for broader use of alternative energy.” Despite the clear benefits of giving the electricity grid its first major upgrade since the 1950s, few proponents have addressed the obvious questions: Why did the nation’s infrastructure grow so obsolete, and are we setting the stage for another six decades of stagnation?

  
  
  
• Budget & Taxation
  

  Border Zone Cigarette Taxation: Arkansas’s Novel Solution to the Border Shopping Problem

  By Mark Robyn, Tax Foundation
  
  Fiscal Facts, 04/13/2009
  

  On February 12, the Arkansas General Assembly passed legislation to increase the state’s excise rates on all tobacco products. As required by the bill, on March 1 the cigarette tax went from 59 cents to $1.15 per twenty-pack. But the same tax rate will not be enforced statewide. In a novel provision, the legislation, Act 180 of 2009, included a lower, variable rate for certain towns and stores located near the Arkansas border.

  
  
  
• Budget & Taxation
  

  From the House That Ruth Built to the House the IRS Built

  By Travis Greaves, Joseph Henchman, Tax Foundation
  
  Fiscal Facts, 04/13/2009
  

  The new Yankee Stadium’s construction costs have been publicly subsidized in the form of $942 million in tax-exempt bonds issued by New York City. Seeking tax-free status for the bonds to ensure a lower interest rate, New York structured the deal to ensure it didn’t run afoul of a federal tax code provision which requires that such bonds not be “private activity bonds.” This serves as a huge benefit because the bonds are exempt from city, state, and federal taxes, and have an interest rate about 25 percent below that of taxable bonds. There are two parts to this financing scheme which seem “foul.” First, the new Yankee Stadium will be city-owned and thus exempt from property taxes. Meanwhile its primary tenant, the Yankees, will pay no rent. This clearly brings up the issue of whether such tax-exempt bonds should have been issued at all, and especially when the city is so far in the red.

  
  
  
• Budget & Taxation
  

  The Effect of the Federal Cigarette Tax Increase on State Revenue

  By Patrick Fleenor, Tax Foundation
  
  Fiscal Facts, 04/13/2009
  

  Today the federal cigarette tax will rise from 39 cents to $1.01 per pack. The proceeds will help fund expansion of the federal State Children’s Health Insurance program. This program provides federal matching funds to states to assist them in providing health insurance to families and children. The SCHIP program is targeted at families with modest incomes above Medicaid eligibility limits. Of course what the federal government gives with one hand it takes with the other. A $6.3 billion increase in the federal cigarette excise will reduce the disposable incomes of residents in the states.

  
  
  
• Budget & Taxation
  

  Proposed Tax on AIG Bonuses Raises Constitutional and Policy Concerns

  By Joseph Henchman, Tax Foundation
  
  Fiscal Facts, 04/13/2009
  

  On March 19, 2009, the U.S. House of Representatives voted 328 to 93 to pass H.R. 1586, which imposes a 90% income tax on bonuses earned by employees who work at a company that received an aggregate of $5 billion in federal TARP bailout funds, including specifically Fannie Mae and Freddie Mac. Observers have noted that the bill is a direct result of bonuses awarded by bailout recipient American International Group (AIG), an insurance company now in something akin to bankruptcy trusteeship. Critics of the bill have raised policy concerns as well as suggestions that the bill may violate the constitutional prohibition on Bills of Attainder and other restrictions on legislation. Because the purpose of the legislation is to strip a specified group of people of their property, even though other nonpunitive options are available, and because the evidence suggests a punitive motive, the bill could be found unconstitutional as a bill of attainder.

  
  
  
• Information Technology
  

  New Directions in Broadband Policy: Is Net Neutrality Necessary or Advisable?

  By Michael K. Powell, et al., Free State Foundation
  
  Transcript, 04/13/2009
  

  For over a decade now we have witnessed an extraordinary evolution in this thing called “broadband,” and the discussions have grown about its significance and public policy treatment. We have seemingly gone from a techno-ecstatic, euphoric period, in which everything seemed possible, to a time where real issues of substitution for the traditional network have become important. And what clearly has emerged is that the broadband question is about both wireline and wireless, with enormous and extraordinary potential for economic productivity, education reform, and healthcare. There are no problems, challenges, or solutions that do not incorporate the significance of broadband or technology. And so, we are going to grapple with some of those issues today.

  
  
  
• Health Care
  

  Pharmaceutical Evolution: The Advantages of Incremental Innovation in Drug Development

  By Albert I. Wertheimer, Thomas M. Santella , Competitive Enterprise Institute
  
  Issue Analysis, 04/13/2009
  

  Innovation is the lifeblood of the pharmaceutical industry. Over the last century, that industry has been responsible for thousands of new drugs, based on hundreds of thousands of smaller incremental innovations. The breakthrough “blockbuster” drugs taken by millions of patients today were not produced from thin air. Most represent the combined weight of seemingly small improvements achieved over time. The advantages of incremental improvements on existing drugs are paramount to overall increases in the quality of health care. As the pharmaceutical industry developed, classes of drugs—those with similar chemical composition and which treat similar conditions—have grown to provide physicians with the tools they need to treat diverse patient groups. Still, critics have been highly condescending about what they call “Me-too” drugs—drugs within the same chemical class as one or more others already on the market—which they claim add little or no therapeutic value and are nothing more than an opportunity for pharmaceutical companies to fleece unsuspecting consumers.

  
  
  
• Budget & Taxation
  

  April 13 Is Tax Freedom Day

  By Josh Barro, Tax Foundation
  
  Special Report, 04/13/2009
  

  Tax Freedom Day will arrive on April 13 this year, the 103rd day of 2009. That means Americans will work about three and a half months of the year, from January 1 to April 13, before they have earned enough money to pay this year’s tax obligations at the federal, state and local levels. Tax Freedom Day falls a full two weeks earlier in 2009 than it did in 2007. In fact, not since 1967 has Tax Freedom Day come earlier than this year’s April 13 date. This shift has been driven by two factors: the recession has reduced tax collections even faster than it has reduced income; and the stimulus package, a.k.a. HR 1, the American Recovery and Reinvestment Act of 2009, includes large temporary tax cuts for 2009 and 2010. Nevertheless, in 2009, Americans will pay more in taxes than they will spend on food, clothing and housing combined.

  
  
  
• Foreign Policy/International Affairs
  

  Indonesian President Yudhoyono’s Big Decision

  By Walter Lohman, The Heritage Foundation
  
  WebMemo, 04/13/2009
  

  Indonesian President Susilo Bambang Yudhoyono is a clear winner in his country’s April 9, 2009 parliamentary elections. Yet he will need to form a governing coalition. The most important part of the coalition will be his choice of a vice presidential running mate.

  
  
  
• Foreign Policy/International Affairs
  

  The G-20 Summit: Mistakes and Missed Opportunities

  By Ted R. Bromund , The Heritage Foundation
  
  WebMemo, 04/13/2009
  

  The G-20 Summit in London promised to bring together the heads of the world’s leading nations to address the global financial crisis. Instead, the summit agreed on measures that are by turn weak, vague, and sinister.

  
  
  
• Education
  

  D.C. Opportunity Scholarships Boost Reading Scores, Family Satisfaction

  By Dan Lips, The Heritage Foundation
  
  WebMemo, 04/13/2009
  

  Now that an evaluation of the D.C. Opportunity Scholarship Program is complete, questions about this program’s effectiveness are resolved.

  
  
  
• Family, Culture & Community
  

  Proposed Decrease in Charitable Tax Deduction Crowds Out Civil Society

  By Ryan Messmore, The Heritage Foundation
  
  Backgrounder, 04/13/2009
  

  President Barack Obama’s proposal to raise taxes and reduce charitable deductions for the wealthy mistakenly suggests that government bureaucracy can deploy citizens’ resources more effectively than nonprofit civil society organizations can. It moves the dial of social responsibility one more notch in the direction of the state at the expense of local institutions that serve the poor more personally and efficiently.

  
  
  
• Economic and Political Thought
  

  Renewing Conservatism: Lessons from Britain

  By Iain Duncan Smith, The Heritage Foundation
  
  Heritage Lecture, 04/13/2009
  

  Emphasizing social policy means rediscovering the conservatism of Edmund Burke. There will be no sustainable reduction in the size of the state if civil society doesn’t become stronger, nurturing self-sufficient and vigorous citizens; no possibility of light-touch regulation if certain moral values are absent from our culture; and no competitive economy if families don’t encourage their children to learn and excel.

  
  
  
• National Security
  

  President Should Merge Homeland Security Council with NSC

  By Jena Baker McNeill, James Jay Carafano, The Heritage Foundation
  
  WebMemo, 04/13/2009
  

  President Obama should fold the Homeland Security Council into the National Security Council. Doing so would improve interagency policy planning and eliminate gaps between efforts to address transnational security threats at home and overseas.

  
  
  
• Budget & Taxation
  

  Analysis of Pennsylvania’s Municipal Pension Plans by Employee Category

  By Eric Montarti, Allegheny Institute for Public Policy
  
  Allegheny Institute Report, 04/10/2009
  

  This report analyzes data from the 2008 report on Pennsylvania’s Local Government Pensions prepared by the Public Employee Retirement Commission. While our previous report examined the pension plans of the state’s ten largest cities, this report segments pension data by employee classification police (963 plans), fire (79 plans), and non-uniformed (1,524 plans).to determine whether differences among the three types as gauged by the ratio of retirees to active members and the ratio of assets to plan liabilities. The study examines the data with Philadelphia and Pittsburgh in the total and with the two cities removed. It also looks at home rule municipalities as compared to the non-home rule municipalities in terms of pension plan measurements.

  
  
  
• Family, Culture & Community
  

  The Dirty Dozen: 12 New Policies That Undermine Civil Society

  By Jennifer A. Marshall, Katherine Bradley, The Heritage Foundation
  
  WebMemo, 04/09/2009
  

  Within the first quarter of 2009, the Obama Administration and the 111th Congress have advanced a number of policies that will undermine family and religious freedom in America.

  
  
  
• Transportation/Infrastructure
  

  Principles for Reform of Catastrophic Natural Disaster Insurance

  By Matt A. Mayer, David C. John, James Jay Carafano, The Heritage Foundation
  
  Backgrounder, 04/09/2009
  

  The private sector, state governments, and the federal government could take many actions short of creating a catastrophic hurricane fund that would provide greater stability to the insurance market at a lower cost to most taxpayers. Those who assume the risk of living in higher risk areas should fully pay for that risk through actuarially sound insurance rates.

  
  
  
• Foreign Policy/International Affairs
  

  NATO’s 60th Anniversary Summit: Unfocused and Unsuccessful

  By Sally McNamara, The Heritage Foundation
  
  WebMemo, 04/09/2009
  

  In spite of President Obama’s high personal approval ratings among Europeans, he did not further American interests at NATO’s 60th anniversary summit last weekend.

  
  
  
• Foreign Policy/International Affairs
  

  Suspend UNDP Activities in North Korea, Again

  By Brett D. Schaefer, The Heritage Foundation
  
  WebMemo, 04/09/2009
  

  The U.S. should seek to suspend the U.N. Development Program as a clear signal of international displeasure with North Korea’s missile launch.

  
  
  
• Education
  

  The Effect of Milwaukee’s Parental Choice Program on Student Achievement in Milwaukee Public Schools

  By Jay P. Greene, Ryan H. Marsh, Department of Education Reform at the University of Arkansas
  
  Report, 04/09/2009
  

  This paper examines evidence on the “systemic effects” of expanding school choice in Milwaukee, Wisconsin. Milwaukee is home to one of the nation’s longest-running school choice programs. If there are systemic effects from expanding school choice we should be able to see them in Milwaukee. This paper also introduces a novel method for analyzing systemic effects. Taking full advantage of student-level data, we develop a new measure of those effects based on the extent of voucher options that each student has each year. The idea behind this measure is that school systems face greater competitive pressure to serve students well when students have more options to leave. This type of measure might be useful for future analyses of systemic effects. Using this approach, we find that students fare better academically when they have more options from Milwaukee’s voucher program. The effects are modest in magnitude, but they are robust to multiple specifications of the model.

  
  
  
• Health Care
  

  The Folly of Health Insurance Mandates

  By Devon Herrick, National Center for Policy Analysis
  
  Brief Analysis, 04/09/2009
  

  Many of the nearly 46 million uninsured say they are unable to afford health insurance. Advocates of various state regulations claim their proposals would make health coverage more affordable. These regulations include mandates that employers offer their employees health insurance or that individuals obtain health coverage, and requirements that health plans and insurers cover specified benefits or accept anyone who applies for insurance. However, rather than make coverage more affordable, these regulations drive up the cost of insurance.

  
  
  
• Health Care
  

  Exposing the Myths of Universal Health Coverage

  By Devon Herrick, National Center for Policy Analysis
  
  Brief Analysis, 04/09/2009
  

  Recent health care reform proposals have largely focused on achieving universal coverage through a combination of private-sector mandates, regulation of insurance premiums and expansion of government insurance. Proponents argue that adding more regulations and spreading costs across a wider insurance pool will make coverage more affordable. Reality belies these myths.

  
  
  
• Monetary Policy/Financial Regulation
  

  How Access to Short-Term Credit Helps Consumers

  By Chris Robertson, Texas Public Policy Foundation
  
  Policy Perspective, 04/09/2009
  

  Having access to various forms of short-term credit helps consumers by allowing them more choice in matters of personal finance. The best way to protect borrowers is to allow for a competitive and healthy short-term lending market.

  
  
  
• Economic Growth
  

  The Economic Impact of Federal Spending on State Economic Performance

  By Arduin, Laffer & Moore Econometrics, Texas Public Policy Foundation
  
  Studies, 04/09/2009
  

  Government spending crowds out private sector spending, diminishing the private economy’s rate of growth. In other words, increased government spending makes citizens poorer because it takes their money now, while also reducing their future income. This fact is at the heart of the debate about whether or not Texas should accept federal stimulus money.

  
  
  
• The Constitution/Civil Liberties
  

  Eminent Domain: SJR 42

  By Bill Peacock, Texas Public Policy Foundation
  
  Bill Analysis , 04/09/2009
  

  The best way to protect property rights is to define public use in the Texas Constitution; not to ban takings that are only for the “primary” purpose of economic development.

  
  
  
• The Constitution/Civil Liberties
  

  Eminent Domain Legislation SJR 42, SB 533, & SB 18

  By Bill Peacock, Texas Public Policy Foundation
  
  Bill Analysis , 04/09/2009
  

  The U.S. Supreme Court’s infamous 2005 Kelo decision exposed years of jurisprudence in Texas that has undermined the standard in the Texas Constitution that property be taken only for a “public use.” Legislative changes in 2005, in response to Kelo, attempted to solve this problem, but they came up short.

  
  
  
• Crime, Justice & the Law
  

  Reclaiming Texas Youth: Applying the Lessons from RECLAIM Ohio to Texas

  By Edward J. Latessa, Christopher T. Lowenkamp, Texas Public Policy Foundation
  
  Policy Perspective, 04/09/2009
  

  Texas lawmakers are now considering a pilot program to provide counties with funds to deal with youths they would otherwise send to Texas Youth Commission. Ohio adopted this policy in 1995, and this paper describes the policy and examines the results, which have included fewer commitments to state lockups, lower costs, and reduced recidivism.

  
  
  
• Regulation & Deregulation
  

  Rate Regulation of Homeowners’ Insurance

  By Bill Peacock, Texas Public Policy Foundation
  
  Policy Perspective, 04/09/2009
  

  Consumers don’t need the government to protect them from high prices; they need the government to allow them to make their own choices about what products they will buy at what price.

  
  
  
• Monetary Policy/Financial Regulation
  

  Central Banking in a Free Society

  By Tim Congdon, Institute of Economic Affairs
  
  Book, 04/09/2009
  

  Tim Congdon argues that the mistakes by the Bank of England arose directly from Gordon Brown’s decision to dismember the Bank in 1997. As a result, the Bank lost all its experience in commercial banking. Furthermore, the government and the Bank were unable to coordinate their actions in the way that had been envisaged by the government when it reformed the Bank of England. Congdon proposes a radical new settlement. The Bank of England should be privatised; its capital should be provided by the commercial banks; and it should regulate banks as well as providing them with lender-of-last-resort facilities. He shows how this new structure provides just the right incentives to regulate the banking system in a way that will ensure financial stability whilst allowing banks to provide efficient services to the public.

  
  
  
• Information Technology
  

  Ten Principles of Telecom Policy

  By Hance Haney, George Gilder, Heartland Institute
  
  Legislative Principles, 04/09/2009
  

  States discourage phone and cable companies from offering more competitive services and generating new jobs and economic growth by imposing taxes and regulations that are no longer appropriate for a highly competitive and fast-growing industry. Laws requiring cross-subsidies, utility regulation of competitive services, pricing inflexibility, tariff filing requirements, and consumer protection oversight in the hands of government staff whose specialty is regulation are not in the public interest. All serve chiefly as obstacles to investment that reduce asset values of all telecom suppliers.

  
  
  
• Economic Growth
  

  Economic Peaks and Troughs

  By Andrew J. Rettenmaier, Thomas R. Saving, Private Enterprise Research Center
  
  PERCspectives on Policy, 04/09/2009
  

  We find ourselves in what appears to be a significant recession, a dramatic stock market decline, and a financial crisis simultaneously. Is it reasonable to lay the blame on the defaults of sub-prime mortgages as the primary cause of the current crises?

  
  
  
• Education
  

  Core Academic Knowledge

  By E.D. Hirsch, Thomas Birmingham, Pioneer Institute for Public Policy Research
  
  Transcript, 04/09/2009
  

  Today, when you compare American 15 year-olds to those in other nations on a combined measure of math, reading and science achievement, we are in the bottom quartile. It’s important to combine these subjects in a single view, especially reading, as I will explain later. Making these international comparisons with 15 year-olds is also a good idea, because students at that age stand at the end of the elementary school years, and their achievements at that point highly determine their later academic future. I completely agree with that view about the critical importance of the elementary grades. Those grades will be my focus in this talk.

  
  
  
• Education
  

  A Step Backwards: An Analysis of the 21st Century Skills Task Force Report

  By Jim Stergios, Pioneer Institute for Public Policy Research
  
  Policy Brief, 04/09/2009
  

  On November 18, 2008, the 21st Century Skills Task Force presented a set of recommendations to the Massachusetts Board of Elementary and Secondary Education (BESE) on why, how, and where to incorporate “21st century skills” in the state’s current academic standards and assessments for students and teachers. On December 16, the BESE agreed to ask the Commissioner and his staff at the Department of Elementary and Secondary Education (DESE) to develop an implementation plan. The DESE is expected to suggest a preliminary set of implementation priorities at the February BESE meeting, and to provide a more extensive response later this spring. The purpose of this policy brief is to help DESE set priorities for implementation of the task force’s recommendations. It outlines areas where Pioneer believes the task force has crafted useful recommendations and suggests how they might be implemented. It also calls attention to recommendations that we believe are mistaken in their emphasis on skills and pedagogy over academic content, and display a lack of practicality and knowledge of both state policy and local, district-level realities.

  
  
  
• Budget & Taxation
  

  Failed States

  By Michael Flynn, Adam B. Summers, Reason Foundation
  
  Reason, 04/09/2009
  

  Does any state, really “need” federal money during this economic downturn? Only if you accept the premise that state budgets should roughly double every decade.

  
  
  
• Monetary Policy/Financial Regulation
  

  Restoring the Private Property-Insurance Market to Reduce Florida’s Risk of Financial Insolvency

  By Eli Lehrer, James Madison Institute
  
  Backgrounder, 04/09/2009
  

  Without swift, sweeping reform, Florida’s current system for property and casualty insurance could well place the state in grave fiscal peril. This paper presents an agenda for reforming Florida’s property and casualty insurance system in the short term. It presents short-term steps that would pull Florida back from the brink of fiscal ruin, improve the state’s fiscal climate, reduce property insurance rates for many Floridians, and make the state safer and more secure against the threat of hurricanes.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Where Is Nuclear Energy in the Markey-Waxman Energy Bill?

  By Jack Spencer, The Heritage Foundation
  
  WebMemo, 04/08/2009
  

  If CO2 reduction is truly the objective, then maximizing America’s nuclear resources should be a top priority.

  
  
  
• The Constitution/Civil Liberties
  

  Protection of Health Care Providers’ Right of Conscience: What Federal Law Says

  By Randolph W. Pate, The Heritage Foundation
  
  WebMemo, 04/08/2009
  

  The Obama Administration is moving rapidly to overturn federal “conscience clause” regulations protecting health care providers who object to performing procedures that violate their religious beliefs or moral convictions.

  
  
  
• Immigration
  

  Help the Economy and Federal Deficit by Raising H-1B Caps

  By Jena Baker McNeill, Diem Nguyen, The Heritage Foundation
  
  WebMemo, 04/08/2009
  

  Raising H-1B caps will provide businesses the professionals and skills they need to develop their business when ready.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Secretary Chu’s Blue Ribbon Commission on Nuclear Waste

  By Jack Spencer, The Heritage Foundation
  
  WebMemo, 04/08/2009
  

  Secretary of Energy Steven Chu is forming a blue-ribbon commission to answer the question of what to do with America’s nuclear waste. Here are our recommendations for what the commission should do.

  
  
  
• Foreign Policy/International Affairs
  

  Obama in Ankara: Turkey’s Dangerous Drift

  By Ariel Cohen, Owen Graham, The Heritage Foundation
  
  WebMemo, 04/08/2009
  

  President Obama’s visit to Turkey highlights the importance Washington attaches to this country as a key regional player, a veteran NATO ally, and an influential Muslim state.

  
  
  
• Regulation & Deregulation
  

  Is ‘Say on Pay’ Justified?

  By Stephen M. Bainbridge , Cato Institute
  
  Regulation, 04/08/2009
  

  Legislation that “fixes” a nonexistent problem by upsetting basic principles of federalism ought to be a nonstarter. Unfortunately, the executive compensation debate has become so thoroughly bollixed up with issues of class warfare and financial populism that rational arguments seem to fall on deaf ears.

  
  
  
• Regulation & Deregulation
  

  Discounting the Future

  By Indur M. Goklany, Cato Institute
  
  Regulation, 04/08/2009
  

  In this article, I address the threshold question of whether future generations would in fact be worse off than we are if climate change is allowed to occur and is uncontrolled. I compare current and future welfare per capita after accounting for the costs of climate change. To do this, I will reduce estimates of future welfare per capita in the absence of climate change by estimates of the welfare losses from climate change. For those downward adjustments, I use the Stern Review’s estimates of the costs of climate change from market effects, non-market (i.e., public health and environmental) effects, and the risk of catastrophe, even though several researchers have characterized the Stern Review’s estimates as excessive. I show that through 2200, at least, future generations will be much better off than present ones even after accounting for the costs of climate change.

  
  
  
• Economic Growth
  

  The Myth of Copyright Inefficiency

  By Stan J. Liebowitz , Cato Institute
  
  Regulation, 04/08/2009
  

  When the prices of current editions of copyrighted and noncopyrighted former bestsellers are compared, there is no clear evidence that copyright increases the price of books, a finding that I believe is likely to surprise many people. When books are given equal weight in the statistical analysis, I find no evidence of a price increase. When books are weighted by quantity sold, copyright appears to increase the overall price by no more than a fairly small 15 percent.

  
  
  
• Regulation & Deregulation
  

  Lessons from a Scalper

  By David E. Harrington, Cato Institute
  
  Regulation, 04/08/2009
  

  Free markets are often much better at handling greed in socially desirable ways than government regulations. To demonstrate this, I examined the secondary market for Ohio State University football tickets.

  
  
  
• Regulation & Deregulation
  

  The Fate of Bush’s Regulatory Reforms

  By Stuart Shapiro, Cato Institute
  
  Regulation, 04/08/2009
  

  President Obama has entered office with the clear intention of altering many policy choices of the previous administration. New policies on Iraq and health care will attract a great deal of public and media attention. Regulatory policies involving the Environmental Protection Agency and the Occupational Safety and Health Administration will also receive attention. However, President Obama’s decisions on whether to retain, modify, or eliminate the Bush administration’s many changes to the regulatory process will get little notice. This is unfortunate because those decisions will affect policy in a wide variety of areas, and they deserve careful consideration.

  
  
  
• Regulation & Deregulation
  

  Did the Federal Drinking Age Law Save Lives?

  By Jeffrey A. Miron, Elina Tetelbaum , Cato Institute
  
  Regulation, 04/08/2009
  

  Our recent research reexamines whether the 1984 act reduced traffic fatalities by pushing states to adopt a minimum legal drinking age of 21. As in earlier work, we compare traffic fatality rates in states before and after they changed their MLDA to 21. In contrast to earlier work, however, we look separately at the effect in states that adopted the higher drinking age on their own versus those pressured to do so by the 1984 law. This is a crucial comparison because the argument for federal imposition rests on the assumption that the act itself reduced fatalities, not just that an MLDA 21 reduced fatalities in some states.

  
  
  
• Labor
  

  The Ominous Employee Free Choice Act

  By Richard A. Epstein, Cato Institute
  
  Regulation, 04/08/2009
  

  There is today no constitutional obstacle against the rejection of competitive labor markets for the structure administered under the National Labor Relations Act (NLRA). But the current NLRA carefully preserves the exit option to protect against union domination. The EFCA removes that critical protection, which makes it a constitutional pariah, even for those who accept the New Deal constitutional synthesis that sustained the original Wagner Act. Rights of association and property clearly must count for something.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Way Forward: Incentives, Not Regulations

  By William Poole, Cato Institute
  
  Cato Journal, 04/08/2009
  

  The way forward in this financial crisis is to enact tax law changes that will improve the long-run stability of the economy by reducing the incentive for leverage, and by encouraging a substitution of business investment for consumption. And on the monetary policy front, the Fed must be prepared to reduce policy accommodation as the recovery takes hold.

  
  
  
• Monetary Policy/Financial Regulation
  

  Interest-Rate Targeting during the Great Moderation: A Reappraisal

  By Roger W. Garrison, Cato Institute
  
  Cato Journal, 04/08/2009
  

  Legislative interventions that nullify market mechanisms for the sake of achieving social goals have perverse consequences. This is a lesson can be learned many times over whether well-meaning or ill meaning interventions are in play. The current crisis in the markets for housing and for mortgages is an especially dramatic illustration of such perversities. The solution to this circumscribed aspect of the economy wide crisis is as easy to set out as it would be difficult to implement, given the state of public opinion and the scope for political opportunism. First, government-backed guarantees for mortgage loans or for any other loans should be a thing of the past. They stunt the market’s ability to constrain the risk-taking behavior of both borrowers and lenders. Fannie Mae and Freddie Mac should be permanently eliminated from the scene. Second, regulatory practices that override considerations of creditworthiness with other, supposedly more socially responsible criteria for making mortgage loans or any other loans should be no part of the housing industry’s future. In the end, the impersonal forces of the marketplace have a much more credible claim to being socially responsible than do the political forces that produce the override.

  
  
  
• Monetary Policy/Financial Regulation
  

  Money and the Present Crisis

  By Gerald P. O’Driscoll Jr., Cato Institute
  
  Cato Journal, 04/08/2009
  

  We must not give in to the temptation to inflate our way out of the debt crises by depreciating the dollar and wiping out creditors wholesale. Yet there are disturbing signs that is direction in which policymakers are headed. If the Treasury and Fed do that, free markets will be euthanized.

  
  
  
• Monetary Policy/Financial Regulation
  

  Moral Hazard and the Financial Crisis

  By Kevin Dowd, Cato Institute
  
  Cato Journal, 04/08/2009
  

  If anything is obvious about the current crisis, it is that the system of managed state intervention into the financial system has failed dismally: it is not “free”—that is, unregulated—markets that have failed, but the statist system within which financial markets and institutions have been forced to operate. This is not an academic issue or a case of ideological point scoring. It matters because we need to understand what went wrong if we are to get future reforms right. My own view is that the edifice of modern central banking cum financial regulation cum limited liability needs to be dismantled and 150 years of state intervention needs to be rolled back, but I have few illusions that this will happen. Be this as it may, my main message here is to take moral hazard seriously. Measures that rein in moral hazard are to be welcomed and will help to reduce excessive risk-taking; measures that create or exacerbate moral hazard (such as massive bailouts?) will lead to even more excessive risk-taking and should be avoided. In short, a key yardstick that should be applied to any proposed reform measure is simply this: Does it reduce moral hazard or does it increase it?

  
  
  
• Monetary Policy/Financial Regulation
  

  Moral Hazard in the Policy Response to the 2008 Financial Market Meltdown

  By Andrew A. Samwick, Cato Institute
  
  Cato Journal, 04/08/2009
  

  The playing out of the subprime crisis has revealed a weakness in our public policy framework for dealing with institutional failure in financial markets that invites a continued expansion of government into areas that should be the domain of private citizens and institutions. In particular, policymakers have been unwilling to let financial institutions that made unwise decisions bear fully the negative consequences of those decisions. Procedures exist to provide liquidity to solvent but illiquid institutions, and other procedures exist to liquidate insolvent institutions. But as the subprime crisis emerged, the government failed to adhere to a consistent policy for dealing with troubled institutions, opening itself up to special pleading from many of these institutions at unnecessary cost to the taxpayer.

  
  
  
• Monetary Policy/Financial Regulation
  

  The Case for Policy Sustainability

  By Wolfgang Münchau, Cato Institute
  
  Cato Journal, 04/08/2009
  

  Should we worry about moral hazard while the house is burning? The discussion about economic policy is full of biblical metaphors, the language of water and floods, and of fire extinction during crises. Metaphors, even when not mixed, are often obstacles to the clarity of thought. That is clearly the case with the metaphor of moral hazard in trying to understand the current financial crisis. Instead of focusing on moral hazard, I prefer to use the concept of policy sustainability to argue that sustainable monetary, fiscal, and regulatory policies are essential for lasting prosperity.

  
  
  
• Monetary Policy/Financial Regulation
  

  Federal Reserve Policy and the Housing Bubble

  By Lawrence H. White, Cato Institute
  
  Cato Journal, 04/08/2009
  

  The U.S. housing bubble and the fallout from its bursting are not the results of a laissez-faire monetary and financial system. They happened in an unanchored government fiat monetary system with a restricted financial system.

  
  
  
• Monetary Policy/Financial Regulation
  

  Bad Rules Produce Bad Outcomes: Underlying Public-Policy Causes of the U.S. Financial Crisis

  By Bert Ely, Cato Institute
  
  Cato Journal, 04/08/2009
  

  Many commentators claim that financial deregulation since 1980 caused the U.S. housing crisis, leading to the global financial crisis. Yet, they fail to convincingly identify specific deregulatory actions that contributed to those crises. At the same time, numerous public-policy causes of the crisis, causes which still are in place, go unexamined. As President Obama and the new Congress begin to consider reform of the structure of the financial services industry, reform of the structure of the financial regulatory agencies, and reform of the manner in which financial intermediaries are regulated, one hopes that some consideration will be given to addressing the causes discussed in this article, however painful, politically and ideologically, that might be.

  
  
  
• Monetary Policy/Financial Regulation
  

  Financial Innovation, Regulation, and Reform

  By Charles W. Calomiris, Cato Institute
  
  Cato Journal, 04/08/2009
  

  This article reviews the major government policy distortions that gave rise to the subprime turmoil, and suggests robust policy reforms to deal with them (i.e., reforms that take into account the existence of those distortions and the political economy of regulation and supervision). The reforms proposed in this article would reduce the costs of distortions related to agency problems, too-big-to-fail problems, and government manipulation of housing credit markets.

  
  
  
• Monetary Policy/Financial Regulation
  

  What Lessons Can We Learn from the Boom and Turmoil?

  By Jeffrey M. Lacker, Cato Institute
  
  Cato Journal, 04/08/2009
  

  The current financial crisis undoubtedly will inspire a great deal of research in the years ahead, and it may take some time before anything like a professional consensus emerges on causes and consequences. After all, it took several decades to document the causes of the Great Depression, and recent research continues to provide new perspectives. Nonetheless, I believe the central questions that are likely to occupy researchers are plainly in view, and some tentative lessons have emerged already. And in any event, legislators are not likely to await the fruits of future scholarship. I will divide my discussion into two parts, reflecting two distinct time periods—the boom in housing and housing finance and the subsequent turmoil in financial markets—and then conclude with some thoughts about what lies ahead.

  
  
  
• Monetary Policy/Financial Regulation
  

  Asset Prices and Monetary Policy

  By Otmar Issing, Cato Institute
  
  Cato Journal, 04/08/2009
  

  A monetary policy strategy that monitors closely monetary and credit developments as potential driving forces for consumer price inflation in the medium to long run has an important positive side effect: it may contribute at the same time to limiting the emergence of unsustainable developments in asset valuations. As long as money and credit remain broadly controlled the scope for financing unsustainable runs in asset prices should also remain limited.

  
  
  
• Monetary Policy/Financial Regulation
  

  Monetary Policy and Asset Prices Revisited

  By Donald L. Kohn, Cato Institute
  
  Cato Journal, 04/08/2009
  

  I am not convinced that the events of the past few years and the current financial crisis demonstrate that central banks should switch to trying to check speculative activity through tighter monetary policy whenever they perceive a bubble forming. The recent experience may have made us a bit more confident about detecting bubbles, but it has not resolved the problem of doing so in a timely manner. Nor has it shown that small-to-modest policy actions will reliably and materially damp speculation. For these reasons, the case for extra action still remains questionable, despite our having learned that the aftermath of a bubble can be far more painful than we imagined.

  
  
  
• Monetary Policy/Financial Regulation
  

  Reflections on the Financial Crisis

  By Allan H. Meltzer, Cato Institute
  
  Cato Journal, 04/08/2009
  

  If we are to prevent future financial crises, a good place to start would be to (1) get a “lender of last resort” standard; (2) get the Congress to appropriate on the record the amount of money that they are going to use to subsidize housing; (3) improve the compensation system in the market; (4) get rid of some of the worst of the Basel Capital standards; and (5) close down Fannie and Freddie.

  
  
  
• Monetary Policy/Financial Regulation
  

  Origins of the Financial Market Crisis of 2008

  By Anna J. Schwartz, Cato Institute
  
  Cato Journal, 04/08/2009
  

  At least three factors exercised significant influences on the emergence of the global financial crisis: expansive monetary policy, flawed financial innovations, and the collapse of trading.

  
  
  
• Monetary Policy/Financial Regulation
  

  Bailout or Bankruptcy?

  By Jeffrey A. Miron, Cato Institute
  
  Cato Journal, 04/08/2009
  

  In this article, I provide a preliminary assessment of the causes of the financial crisis and of the most dramatic aspect of the government’s response—the Treasury bailout of Wall Street banks. My overall conclusion is that, instead of bailing out banks, U.S. policymakers should have allowed the standard process of bankruptcy to operate.

  
  
  
• Philanthropy
  

  The Robertson v. Princeton Case: Too Important to Be Left to the Lawyers

  By Neal B. Freeman, Hudson Institute
  
  Paper, 04/08/2009
  

  At the heart of every charitable contribution is the concept of trust—trust by the donor that the grantee will do what he has agreed to do. If that trust is allowed to erode, if the donor can no longer rely on the grantee’s assurance, then charitable contributions will decline and the civil society they sustain will decline along with them. If that were to happen—if the private, voluntary, civil society that Tocqueville first acclaimed, and that the Bradley Center still celebrates, were to wither away—America would abandon one of its defining national traits. Absent a vibrant civil society, only government would be left to fill the social vacuum and the America of tomorrow would come to look very much like the Europe of today.

  
  
  
• Natural Resources, Energy, Environment, & Science
  

  Cap-and-Trade Scheme Will Cost California Jobs

  By Frank Conte, Beacon Hill Institute
  
  Report, 04/08/2009
  

  Specific proposals that several Western states, including California, would implement to comply with a proposed cap-and-trade carbon emissions control pact would destroy jobs and erode income, according to a report co-released by an economics institute.