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InsiderOnline Blog: October 2011

Legal Gun Ownership Still a Challenge in the Nation’s Capital

The District of Columbia’s city government isn’t making it easy for those who want to avail themselves of their constitutional right to “keep and bear arms.” The Supreme Court struck down the city’s restrictive gun control laws three years ago in its landmark D.C. v. Heller decision. The new regulations, however, present some major hurdles. Emily Miller chronicles the difficulties in a new series for the Washington Times. As she notes, you still can’t buy a gun in the district. And you can’t just ship or bring one back either. After you buy a gun from a licensed—and D.C.-approved—dealer in another state, you have to pay a legal gun broker $125 to transfer the gun to the District. There is only one legal gun broker in the District of Columbia. And that broker, Charles Sykes, has encountered red tape, too:

Last May, Mr. Sykes lost his lease when his office building was sold. The city then took advantage of a stray word in the law to classify his business as a “firearms retail sales establishment,” which made it almost impossible for him to relocate. The designation meant he couldn’t be within a football field’s distance from a school, church, apartment, house or library. In this tightly packed city, that left no reasonably priced options. […]

Thanks to a pending lawsuit, however, city officials realized the court could rule against them for wholly denying residents the ability to buy a gun within the law. When Mr. Sykes proposed the idea of leasing government space, they relented and agreed to a spot downstairs from the police headquarters.

Miller has just started working her way through the 17 steps of becoming a legal gun owner in the District. You can follow her progress in the series, “Emily Gets Her Gun.”

Posted on 10/31/11 03:53 PM by Alex Adrianson

Compact to Ditch the Electoral College Ignores the Constitution

The National Popular Vote (NPV) scheme is an attempt to amend the Constitution without going through the Constitution’s fussy procedures. The NPV is a compact under which participating states agree to allocate their electoral college votes to the presidential candidate who wins the national popular vote. The idea is to replace the electoral college with a winner-take all popular vote set-up. The compact goes into effect when it gains the support of states that collectively have 270 or more electoral college votes. Here’s Hans von Spakowsky explaining the constitutional problem:

The Constitution’s Compact Clause provides that “No State shall, without the Consent of Congress…enter into any Agreement or Compact with another State.” The Founders created the Compact Clause because they feared that compacting states would threaten the supremacy of the federal government in matters of foreign affairs and relations among the states. If states could make agreements among themselves, they could damage the nation’s federalist structure. Populist states, for example, cannot agree to have their U.S. Senators vote to seat only one Senator from a less populous state.

The very purpose of this clause was to prevent a handful of states from combining to overturn an essential part of the constitutional design. The plain text makes it clear that all such state compacts must be approved by Congress.

By circumventing the checks and balances of Congress, the NPV would risk setting a precedent that states can validate non–congressionally approved compacts as a substitute for a constitutional amendment. […] Such compacts could then create de facto constitutional amendments regarding many different public policy issues—including purely federal matters.

Read Spakowsky’s new paper “Destroying the Electoral College: The Anti-Federalist National Popular Vote Scheme,” The Heritage Foundation, October 27, 2011.

Posted on 10/28/11 02:32 PM by Alex Adrianson

The PTA Has Competition

For parents who want to get involved in education reform, there are alternatives to the Parent Teacher Association, seen by many as merely an extension of the education establishment—i.e., an echo of the teachers unions. Bruce Manno profiles three such groups: Parent Revolution, which led the charge to pass California’s “parent trigger” law; Education Reform Now, which was pivotal in pushing for lifting caps on new charter schools in New York; and Stand for Children, a group that mobilizes parents to demand reform of public schools.

According to Manno, these organizations “hold significant promise for mobilizing parents to advance an agenda that goes far beyond today’s PTA, whose critics, in the words of William Cutler, describe it “as a company union—part of the problem, not the solution. [….]’” Manno’s article is “Not Your Mother’s PTA” in the Winter 2012 issue of Education Next.

Posted on 10/28/11 01:54 PM by Alex Adrianson

You Do Not Make the Poor Rich by Making the Rich Poor

The possibility of amassing great personal wealth isn’t just good for those who do; it provides the incentives that spur the innovations that raise everyone’s standard of living. That and more of what liberals miss about inequality from Richard Epstein:

Posted on 10/28/11 11:41 AM by Alex Adrianson

The Coddled Are in Favor of Coddling

Forgiving student loan debt, as many of the “Occupy” protesters want, would be another middle-class handout, notes Richard Vedder:

In 1970, when federal student-loan and -grant programs were in their infancy, about 12 percent of college graduates came from the bottom one-fourth of the income distribution. While people from all social classes are more likely to go to college today, the poor haven’t gained nearly as much ground as the rich have: With the nation awash in nearly a trillion dollars in student-loan debt (more even than credit-card obligations), the proportion of bachelor’s-degree holders coming from the bottom one-fourth of the income distribution has fallen to around 7 percent. (“Forgive Student Loans?” National Review, October 11, 2011.)

Posted on 10/28/11 10:50 AM by Alex Adrianson

William Niskanen, R.I.P.

William Niskanen, chairman emeritus of the Cato Institute, died Wednesday at the age of 78. He was, “a world-renowned economist and a passionate leader of the growing classical liberal movement around the globe,” said Cato founder and president Edward H. Crane on the Cato-at-Liberty blog. “More importantly, he was a man of unshakeable integrity.” Indeed:

Niskanen’s 1980 departure from the Ford Motor Company was recounted in several books and in a Wall Street Journal profile. These accounts concluded that Niskanen’s departure had been forced upon him due to his principled opposition to protectionist trade policies. “Mr. Niskanen’s sermons against the protectionist temptation weren’t exactly what Ford management wanted to hear,” wrote the Journal‘s Robert Simison. “It soon decided to launch anyway what has become an active publicity and lobbying campaign for government controls on Japanese autos. …They also decided they didn’t need Mr. Niskanen’s advice. They fired him.”

Niskanen, says Steve Moore at The American, “had one of the biggest heads—literally—I ever saw, and I sincerely believe it was due to an oversized brain.”

No one else that I have ever met could tell you in an instant and with such clarity what the impact of a Mexican currency devaluation would be on the U.S. balance of trade deficit, or how an increase in the corporate tax in France would impact wages in the United States. He was stubborn and we would often argue about issues such as the proper level of taxes—he thought a tax increase would reduce the demand for government, I believed it would increase government's size. We wrote a book together on balancing the federal budget, which was both a thrilling and educational experience. If only Reagan, Bush, or Clinton had taken his advice.

Posted on 10/27/11 06:38 PM by Alex Adrianson

The Welfare State Wasn’t Really So Good for Sweden

Sweden isn’t the model of a successful welfare state that proponents think it is. In fact, explains Nima Sanandaji, it’s more nearly a case study in how the welfare state undermines a culture in the long run:

Between 1870 and 1936, the start of the Social Democratic Era, Sweden had the highest growth rate in the industrialized world. Between 1936 and 2008, the growth rate was only ranked number 18 out of 28 industrialized nations.

The growth rate was particularly low in the period from 1970 to 1995, when the development and influence of the welfare state was at its strongest. Swedish growth rates have improved between 1995 and the present, in part because of recovery from the mid-1990s crisis, and arguably in part due to reduced taxes and extensive pro-market reforms.

Sanandaji notes that the Swedes historically had a strong work ethic, but, over time, dependence on government eroded that ethic:

In the World Value Survey of 1981–84, almost 82 percent of Swedes responded that “claiming government benefits to which you are not entitled is never justifiable”. […] In the survey of 1999–2004, only 55 percent of Swedish respondents believed that it was never right to claim benefits to which they were not entitled.

On the other hand:

If Americans with Swedish ancestry were to form their own country, their per capita GDP would be $56,900, more than $10,000 above the earnings of the average American. This is far above the Swedish GDP, at $36,600 per capita. Swedes living in the US are thus approximately 53 percent more wealthy than Swedes (excluding immigrants) in their native country.

For more on Sweden’s experience with the welfare state, see Sanandaji’s paper, “The Swedish Model Reassessed: Affluence Despite the Welfare State,” published by Libera, October 2011.

Posted on 10/27/11 05:52 PM by Alex Adrianson

The Wind Is Mighty Expensive

Getting enough wind-generated electricity to meet 20 percent of U.S. electricity consumption, an oft-stated goal of “green energy” promoters, would require putting wind turbines on 72,000 square miles of land, calculates Robert Bryce: “That area, if taken together, would rank as the 17th-largest state in the country, just ahead of North Dakota […] .”

If the United States hit that goal in the year 2030, calculates Bryce, the amount of carbon emissions avoided from using less coal-fired electricity would amount to 2 percent of global carbon emissions that year.

The cost of such a project, including new transmission lines and back-up generation, would be at least $850 billion. Consumers would see electricity rates rise by at least 40 percent. The carbon tax implied by these costs would be at least $45 per ton of carbon—or about three times more costly than the European Union’s failed Emission Trading Scheme.

For details on these calculations, see Bryce’s report “The High Cost of Wind Energy as a Carbon-Dioxide Reduction Method,” published by the Manhattan Institute, October 2011.

Posted on 10/27/11 01:07 PM by Alex Adrianson

Good Times for Trial Lawyers

The nation’s trial lawyers have been cashing in on contingency fees from work they do for the states; many state attorneys general, meanwhile, have been cashing in on campaign contributions from trial lawyers. In a new report for the Manhattan Institute, James Copland details these cozy relationships. The problem began in 1994, when Dickie Scruggs thought up the idea of suing the tobacco companies over state health care costs, and got Mississippi to retain his firm. That led to the tobacco settlement, which put $30 billion in contingency fees into trial lawyers’ pockets. Ever since then, the trial lawyers have been looking for new targets to sue on behalf of states. State attorneys generals have entered into contingency-fee arrangements for suits alleging pharmaceutical companies improperly marketed their products, that gun makers are a public nuisance, and that securities firms committed fraud against state pension funds. As Copland explains, the problem isn’t that attorneys general retain private law firms, but that they do so on a contingency-fee basis, which produces bad incentives:

[I]n many instances the lawsuits do not originate with the state officials; rather, private attorneys approach state attorneys general with ideas. Thus, private individuals with their own economic interests are influencing state law-enforcement priorities. Moreover, much of the litigation farmed out on a contingency-fee basis arises not from a violation of a clear legislative command but from some regulatory impulse culminating in a financial penalty more like a tax or a fine than a payment of damages to an injured party. In essence, policymaking is being usurped by state attorneys general at the behest of self-interested private parties. [Internal citations omitted.]

See Copland’s report: “Trial Lawyers, Inc.: Attorneys General – A Report on the Alliance between State AGs and the Plaintiffs’ Bar 2011.”

Posted on 10/26/11 07:00 PM by Alex Adrianson

We Live in a Republic, Not a Democracy

Aeon J. Skoble explains:

Posted on 10/25/11 08:14 PM by Alex Adrianson

Defend the American Dream

Get ready for a smorgasbord of pro-free market ideas, advocacy, and activism. Americans for Prosperity’s Defending the American Dream Summit is coming up. It will be held November 4 – November 5, at the DC Convention Center in Washington, D.C.

The event includes panels on all the big issues, like the federal government’s out-of-control spending, the states’ budget crises, the slew of regulatory proposals from the EPA, how Obamacare will affect your health care, the unions latest schemes, and much more.

The conference includes a back-to-basics track offering a variety of lessons on the importance of economic freedom. And activists will surely find helpful lessons in panels on countering Alinsky’s radicals, doing investigative journalism, getting the most out of Facebook, pimping your Web site, testify before Congress, mobilizing your grassroots supporters, being a watchdog of county budgets, and making YouTube videos.

So check out the agenda and the list of speakers, and then register for the conference.

Posted on 10/24/11 05:50 PM by Alex Adrianson

Spending Is Up, and Employment Is Down

Fiscal year 2011, which ended September 30, was a banner year for government spending. As the Wall Street Journal notes, Congress’s own bookkeepers have recently finished tallying the figures, and they report that the federal government spent more in FY 2011 than in any other year—ever. Not even 2009, when the Obama administration launched its “temporary” stimulus spending program, topped 2011.

The Journal sums up its chart:

The Obama years have racked up the three largest deficits, both in absolute amounts and as a share of GDP, since Hitler still terrorized Europe. Some increase in deficits was inevitable given the recession, but to have deficits of nearly $1.3 trillion two years into a purported economic recovery simply hasn’t happened in modern U.S. history. Yet President Obama fiercely resisted even the token spending cuts for fiscal 2011 pressed by House Republicans earlier this year.

The table also shows how close the federal budget was to balance as recently as fiscal 2007, with a deficit as low as $161 billion, or 1.2% of GDP. Those are the numbers to point to the next time someone says that the Bush tax rates are the main cause of our current fiscal woes.

Under those same tax rates in 2007, the government raised $2.57 trillion in revenue but it spent only $2.73 trillion. Four years later, the government raised $265 billion less thanks to the tepid recovery, but it spent nearly $900 billion more thanks to the never-ending Washington stimulus.

And for those keeping score, here’s another figure from the government: According to the Bureau of Labor Statistics, the unemployment rate remains above 9 percent. It was 8.2 percent when the “stimulus” spending bill was passed in February, 2009.

Posted on 10/21/11 12:13 PM by Alex Adrianson

Nobody Really Knows How Energy-Efficient We Should Be

When government mandates that products be more energy-efficient than what consumers would otherwise be willing to pay for, it’s acting on nothing more than a “pretense of knowledge,” explains Roy Cordato:

When advocates proclaim that it is “socially desirable” to promote energy efficiency through public policy — taxes, subsidies, mandates, etc. — they are saying that the tradeoff of higher equipment costs for less energy usage is worth it, from society’s perspective, even if it is a tradeoff that freely choosing individuals reject. […]

When an analyst or bureaucrat claims that we are overusing energy and that energy efficient windows should be subsidized, he is simultaneously claiming that the additional glass, insulation, and other resources that go into making these windows are being underutilized. But of course, energy efficiency advocates never quantitatively justify those tradeoffs nor do they even make them explicit. That would require the ultimate pretense of knowledge. Since the more valuable resources being used to manufacture the energy efficient windows or appliances or home would go elsewhere in the absence of the subsidy or mandate, the experts are actually saying that the energy being saved is more valuable to society than whatever it is that would otherwise be produced by the additional resources devoted to energy efficiency. That is not only a pretense of knowledge; it is the height of presumptuousness. If these experts had that much information, they could centrally plan the entire economy.

Cordato notes that basing policies on a pretense of knowledge is exactly what economist Friedrich Hayek warned about in his 1974 Nobel Prize acceptance speech. For more, see: “Energy Efficiency, Economic Efficiency, and the Pretense of Knowledge,” John Locke Foundation, October 13, 2011.

Posted on 10/20/11 05:13 PM by Alex Adrianson

The Obama Economy Has Been Tough on Obama Voters

A down economy tends to be tougher on new entrants compared to those already in the job market. And recent college graduates—the folks most likely to have voted for Barack Obama—aren’t exempt. Diana Furchtgott-Roth’s latest column at Real Clear Markets (“The Economic Disappointment of Generation O,” October 20) runs through the data, painting a portrait of today’s 20-something angst:

White males with bachelor’s degrees are commonly regarded as a privileged class, but they have not been insulated from economic trends. According to unpublished Labor Department data, their unemployment rates have more than doubled over the past five years, from 5.2 percent in 2005 to 13.1 percent in 2010. Rates for white female grads have soared, from 4.1 percent in 2005 to 12.3 in 2010.

Black male BAs have fared even worse, with unemployment rates tripling from 6.5 percent in 2005 to 24 percent in 2010. This means that nearly one quarter of the black males who made it through a four-year degree program was unemployed.

Here’s the point, though:

Mr. Obama has promoted an Old Economy model that favors big corporations, labor unions and more government. But Generation O thrives best in a New Economy model that favors nimble start-ups, hard-charging union-free workplaces and minimal government interference.

Generation O voted for Barack Obama believing him to be a new kind of leader, but he has delivered them an Old Economy with European-style mandates (think Obamacare), sclerosis, and dysfunction. They put him in the White House, Barack Obama has consigned them to their parents’ house.

Recent college graduates are some of the folks who most need capitalism these days, but they seem to comprise a good portion of those protesting capitalism. Maybe they needed a better education.

Posted on 10/20/11 11:43 AM by Alex Adrianson

Obamacare Legerdemain Unravels

In Friday’s news dump, Obamacare got more expensive. Or, more accurately, one of the financing gimmicks that made Obamacare seem less expensive, was abandoned, moving the on-paper cost of the program closer to the reality. What happened was this: The Secretary of Health and Human Services announced that the Community Living Assistance Services and Support program—which offers coverage for assisted living services—could not be made actuarially sound. This federal insurance program was included in Obamacare, but the law stipulated that without actuarial soundness, the program could not be implemented.

Of course, insurance plans that can’t adjust premiums according to the insured’s risk will be unable to attract enough healthy enrollees paying premiums to cover claims. As was widely noted last year, the CLASS program faced just that problem. Here’s a graphic The Heritage Foundation put out showing the government’s own dire projections:

Enrollees become eligible for benefits after paying premiums for five years, which, as the graphic shows, produces a nice revenue bump that conveniently falls within the ten-year period for which Obamacare’s costs were estimated. That bump accounted for almost half of the $143 billion in ten-year deficit reduction claimed under the bill. But, as you can also see from the graph, the program as designed wasn’t going to attract enough healthy enrollees paying premiums to cover claims in the long-run. And since those premiums would eventually have to be paid out in claims, the deficit reduction was always an illusion.

Wow. Creating new entitlements doesn’t reduce the deficit after all. For more on the program’s problems, read Brian Blase’s paper, “No CLASS: How Congress Saddled Taxpayers with Another Costly Entitlement,” The Heritage Foundation, July 29, 2010.

Posted on 10/19/11 03:40 PM by Alex Adrianson

Hone Your Activism/Public Policy Skills—For Free

You don’t need a big budget to develop your professional skills. Just check out the Leadership Institute’s Activism on Demand, an online library of videos and training material for public policy organizations. The site allows you to watch lectures on fundraising, campaign management, grassroots activism, communications, and weekly VIP speakers like National Review’s Jonah Goldberg and Sen. Jim DeMint. Activism on Demand is free when you create your account with an e-mail address and password.

Some of our favorite videos are: “Building Coalitions,” “Hosting an Event,” and “Building a Grassroots Organization.”

Posted on 10/19/11 10:46 AM by Alex Adrianson

Get Ready for a GOP Defense Debate Hosted by Heritage, AEI, and CNN

If you care about foreign policy and the nation’s security (and shouldn’t we all care about those things?), then mark November 15 on your calendars.

The Heritage Foundation, the American Enterprise Institute, and CNN are teaming up to host the first and perhaps only GOP presidential debate that will focus on foreign and defense policy.

The debate will start at 8 p.m., November 15, at a Washington, D.C., location to be announced.

And add this to your to-do list: If there are particular questions that you think should be asked, please send them to us at insider@heritage.org with the subject line “questions for the candidates” and we will pass those suggestions along.

Posted on 10/19/11 10:22 AM by Alex Adrianson

Reid/Obama Want to Stimulate Government

Extra money for public schools has so far yielded little in the way of results, but Senate Majority Leader Harry Reid and President Obama think that it will help the economy. A bill introduced by Reid to implement part of President Obama’s jobs plan provides states an extra $35 billion to pay public school teachers, firemen, and policemen. Andrew Coulson explains the problem with the education portion of the bill:

Over the past forty years, public school employment has grown 10 times faster than enrollment. If more teachers union jobs were going to boost student achievement, we’d have seen it by now. We haven’t. Achievement at the end of high school has been flat in reading and math and has declined in science over this period. …

So what has our public school hiring binge done for us? Since 1980, it has raised the cost of sending a child from Kindergarten through the 12th grade by $75,000 — doubling it to around $150,000, in 2009 dollars.

And what would going back to the staff-to-student ratio of 1980 do? It would save taxpayers over $140 billion annually.

But don’t those school employees need jobs? Of course they do. But we can’t afford to keep paying for millions of phony-baloney state jobs that have no impact on student learning. We need these men and women working in the productive sector of the economy — the free enterprise sector — so that they contribute to economic growth instead of being a fiscal anchor that drags us ever closer to the bottom of the Aegean. Freeing up the $140 billion currently squandered by the state schools would provide the resources to create those productive private sector jobs. [“Obama Reid Jobs Bill Soaked in Greece,” Cato-at-Liberty, June 18, 2011.]

Posted on 10/18/11 04:24 PM by Alex Adrianson

No Bank Bailouts Needed

Warnings from “financial experts” that we will need another round of bank bailouts may soon become deafening, warns John Hussman, who thinks another recession is coming. What they’re really after, he writes, is not saving the economy, but saving bondholders and shareholders:

Look at Bank of America’s balance sheet, for example. Reported assets are $2.261 trillion. Against that, liabilities to depositors amount to less than half that, at $1.038 trillion. Add in $239 billion for securities that they are obligated to repurchase, $129 billion in trading account and derivative liabilities, and $155 billion for accrued expenses. Now you’ve covered counterparties, as well as vendors or others who might have invoices outstanding. Even then, and you’re still only up to $1.561 trillion of the liabilities. The remaining 31% of Bank of America’s liabilities represent obligations to its own bondholders and equity of its own shareholders. This is well beyond what is sufficient to buffer any loss that the company might take on its assets, while still leaving customers and counterparties completely whole. …

You can do the same calculations for nearly every major financial institution in the world. The amount of bondholders and equity coverage varies somewhat, but in virtually every case, bondholder and shareholder capital of these institutions are more than sufficient to absorb any losses without the need for public funds, provided that the objective of government policy is to protect the people and the long-term viability of the economy, rather than defending the existing owners, bondholders, and managements of these institutions. Make no mistake – that choice is what the oncoming crisis is going to be about … . [“Recession, Restructuring, and the Ring Fence,” Hussman Funds, October 3, 2011; h/t: “Who Pays? Bondholders or Taxpayers,” e-21, October 13, 2011.]

Posted on 10/18/11 12:10 PM by Alex Adrianson

Know the Public Policy Players

If you need some background on one of the many Left-oriented groups trying to influence public policy in the United States, check out GroupSnoop.org. It’s a new Wiki site run by the National Center for Public Policy Research.

Posted on 10/17/11 05:54 PM by Alex Adrianson

Getting Answers on Green Jobs Isn’t Easy

But Andrew Klavan tries:

Posted on 10/14/11 04:30 PM by Alex Adrianson

A Trade War with China Is a Trade War on American Consumers

The image of trade policy as a conflict between sovereign nations is so familiar that we almost don’t notice how it twists the reporting of the issue. Roving ombudsman Don Boudreaux helps here with a rewrite of a Reuters report:

The Obama administration, under fire for not taking a harder line on China over its currency on American consumers who stubbornly take advantage of good deals offered by Chinese sellers and, allegedly, made even more attractive by Beijing’s monetary policy appears set to move against the Asia export powerhouse on other fronts these politically unorganized Americans as next year’s U.S. elections approach.

The United States is likely to launch fresh challenges against China American consumers at the World Trade Organization, probably stoking tensions between the world’s two biggest economies.

“I expect the United States will be bringing more cases against China in the coming year,” said James Bacchus, who as a former WTO appellate judge used to sit in judgment of international trade disputes.

Already firmly in campaign mode, President Barack Obama recently boasted of taking a tougher line on trade economic change, including consumers’ decisions to change how they spend their own money than his predecessors. In particular, American consumers’ voluntary choices to buy more goods and services from China, its currency and other trade issues have already become a big issue in the election campaigning.

Republican presidential hopeful Mitt Romney has ratcheted up his criticism of China American consumers’ choices despite his party’s traditionally pro-free trade stance.

And there’s more from Boudreaux at Cafe Hayek: “Damn Those Stubborn American Consumers,” October 14, 2011.

Posted on 10/14/11 02:19 PM by Alex Adrianson

CPAC 2012—Book It

This event looks like it’s going to be a big deal, so put it on your calendars for February 9 – 11, 2012:

Posted on 10/14/11 01:52 PM by Alex Adrianson

Cutting Spending Is Good Economic Policy

Yes, there are plenty of examples showing that cutting spending is good economic policy. Stephen Davies discusses those in this video from the Institute for Humane Studies:

For more on Canada’s success with fiscal restraint, see the latest issue of The Insider.

Posted on 10/14/11 01:41 PM by Alex Adrianson

Institute for Humane Studies Builds the Intellectual Infrastructure of Freedom

Did you know that the Institute for Humane Studies has over 1,400 alumni who currently hold teaching positions at colleges and universities? Those alumni are expected to teach some 8 million students over the course of their careers. That’s a lot of pro-freedom teaching.

And, did you know that the intellectual architect of the constitutional challenge to Obamacare, Randy Barnett, is an alumnus of IHS?

That’s just a sample of the contribution that IHS has made toward building a pro-freedom movement in the United States. We learned these facts and more about IHS Thursday night at the institute’s 50th anniversary dinner, at which Barnett won IHS’s annual outstanding alumni award.  Thank you, Randy Barnett and the Institute for Humane Studies for the important work you do.

Posted on 10/14/11 01:40 PM by Alex Adrianson

Iran Terror Plotting Not New

Iran isn’t new to the hemisphere. Long before Tuesday’s allegations of an Iranian plot to assassinate the Saudi ambassador to the United States, Iran’s client Hezbollah began setting up camp in Latin America. Here’s a rundown of the past few years:

• In a September 2009 speech, then–District Attorney of New York Robert Morgenthau identified Hugo Chávez’s two principal interlocutors with Hezbollah: Venezuelan Interior Minister Tarik El Aissami, who was suspected of having issued passports to Hezbollah operatives, and Venezuelan Ghazi Nassereddine, who has been sanctioned by the United States as a terrorist financier of Hezbollah.

• In 2010, a sensitive source confirmed that two Iranian Hezbollah operatives were conducting terror training on Venezuela’s Margarita Island for people brought there from other countries in the region.

• In July 2010, Mexican authorities arrested Jameel Nasr in Tijuana, Mexico, for attempting to set up a Hezbollah network in Mexico and throughout the region.

• On August 22, 2010, Hugo Chávez hosted a terror summit of senior leaders of Hamas, Hezbollah, and Palestinian Islamic Jihad in Caracas.

• In April 2011, Venezuelan drug kingpin Walid Makled confirmed in an interview that Hezbollah operates cocaine labs in Venezuela with the protection of the country’s government.

• In August 2011, the Italian newspaper Corriere Della Sera reported that Hezbollah had established a cell in Cuba to expand its terrorist activity and possibly facilitate an attack on Jewish targets in the Western Hemisphere. [Internal citations omitted.]

This roundup is from “The Mounting Hezbollah Threat in Latin America,” by Roger Noriega and Jose R. Cardenas, The American Enterprise Institute, October 2011.

Posted on 10/14/11 11:31 AM by Alex Adrianson

Obamcare Puts Unskilled Workers’ Job Prospects at Risk

If the job market is bad for unskilled workers, one reason might be that Obamacare has prospectively raised the cost of hiring those workers—much like an increase in the minimum wage would. If a worker doesn’t produce enough widgets to generate a profit that exceeds the minimum wage, his employer won’t keep him on the payroll.

Obamacare poses a similar problem. In 2014 the law requires companies employing more than 50 workers to provide their full-time employees with health insurance or pay a fine. The Department of Health and Human Services will announce what benefits will be required for a plan to satisfy the employer mandate. Those requirements are expected to make plans more expensive than most health insurance offered today.

James Sherk estimates that the cost of those plans will raise the minimum cost of hiring a worker by at least $1.79 per hour. That’s the additional cost for an employee who signs up for single coverage. And employees who sign up for a family plan will cost an additional $5.51 per hour.

Sherk predicts that workers whose productivity doesn’t justify those cost increases will be either laid off or shifted to part-time work in order to avoid the requirement to provide them with insurance. Indeed, employers may already be anticipating those additional costs. While the overall job market is slack, the number of workers employed part time has increased by over 1 million in the past year, according to the Bureau Labor Statistics’ latest job report.

See Sherk’s paper “Obamacare Will Price Less Skilled Workers Out of Full-Time Jobs,” The Heritage Foundation, October 11, 2011. And for a roundup of studies finding a link between higher minimum wages and unemployment, see Lachlan Markey’s, “Liberals Laud Alan Krueger’s Fatally Flawed Minimum Wage Study,” The Foundry, August 30, 2011.

Posted on 10/13/11 01:55 PM by Alex Adrianson

Rethink Poverty

Check out PovertyCure. It’s a new initiative launched by the Acton Institute to bring together folks from around the world who believe that the fight against poverty needs a new focus. PovertyCure wants to make the poor participants in their own success rather than just passive recipients of aid. Here’s the promo video:

The group’s Web site has lots of resources, and churches and other organizations can sign up as partners, too.

Posted on 10/12/11 03:56 PM by Alex Adrianson

Lobbying Is a Growth Industry

Lobbying, it will surprise no one, pays—especially for companies asking government for favors. But the relationship has now been quantified. The investment-research firm Strategas has constructed an index of the 50 firms with the highest percentage of lobbying expense as a percentage of assets. That index has outperformed the S&P 500 going back to 1998:

The Economist has more: “Money and Politics: Ask What Your Country Can Do for You,” October 1, 2011.

Posted on 10/11/11 07:27 PM by Alex Adrianson

Government Is Making the Banks More Like Government

Banking is going to get less convenient thanks to Sen. Dick Durbin. His amendment to last year’s financial “reform” ordered up limits on the fees banks charge retailers for debit-card swipes. So banks are now rolling out new fees directly on consumers. But the problem isn’t just cost-shifting. Forcing the banks to charge consumers directly instead of charging retailers will undermine the efficiency of the system. Read Richard Epstein’s “The Debit Card Stealth Tax” at Hoover’s Defining Ideas to learn why the banks’ problem is much like what bars would face if ladies nights were outlawed.

Todd Zywicki runs down the consequences:

Some consumers who previously banked for free will be unable or unwilling to pay these fees merely for the privilege of a bank account. As many as one million individuals will drop out of the mainstream banking system […]

The past decade saw a dramatic increase in bank services and innovation, as banks have provided longer hours, more days of service and more branches, while rolling out products such as online banking, mobile banking and debit reward cards—and all for free.

This trend has been reversed in anticipation of the price controls. Banks have already eliminated rewards on debit cards. Future product innovation, including security, can be expected to decline or stop as banks avoid making investments they will be unable to recoup thanks to lost revenue from interchange fees.

The most noticeable change will likely be the closure of bank branches, reversing a decade-long growth. Branches today serve as customer-recruitment centers, as customers, once enrolled, do much of their banking electronically, by ATM or online. By making many new customers unprofitable, however, the Durbin amendment eliminates the incentive to compete by offering more branches. [“The Dick Durbin Bank Fees,” Wall Street Journal]

Posted on 10/07/11 03:03 PM by Alex Adrianson

Steve Jobs Will Be Missed

Steve Jobs, the technology visionary whose company, Apple, brought iPods, iPhones, iPads, and many other revolutionary products to consumers, died this week. Jobs became fabulously wealthy the old-fashioned way: by creating things other people valued and were willing to pay for. As David Boaz points out, two years ago Portfolio magazine estimated that Jobs added $30 billion in value to the world economy every year—a sum that dwarfs his personal wealth of $5.7 billion. In other words, by his work, Jobs was one of the greatest benefactors of humanity in history.

What made him so successful? Here’s a clue from Jobs’s 2005 commencement speech at Stanford:

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

Today the evidence of Steve Jobs’ work is everywhere and it’s a testament to how capitalism enhances the quality of life of so many. In the past few years, the U.S. government has tried a lot of things to get the economy moving again. Now it should try more capitalism. Thanks, Steve.

Posted on 10/07/11 11:42 AM by Alex Adrianson

Policy Uncertainty Holds the Economy Back

Policy uncertainty is one major factor holding back the economy, say a trio of economists who have quantified the problem. Scott Baker, Nicholas Bloom and Steven Davis have constructed an index of policy uncertainty based on the “frequency of newspaper articles that mention economic uncertainty and the role of policy, the number of federal tax code provisions set to expire in coming years, and the extent of disagreement among forecasters about future inflation and government spending.” Policy uncertainty is very high right now, which makes it difficult for businesses to know what their costs will be if they hire new workers:

One reason for the high level of policy uncertainty is the difficult economic circumstances of 2008. However, note the authors, “the persistence of policy uncertainty wasn’t inevitable. Rather, it reflects deliberate policy decisions, harmful rhetorical attacks on business and ‘millionaires,’ failure to tackle entitlement reforms and fiscal imbalances, and political brinkmanship.” The authors point out, for example, that in passing Obamacare Democrats “opted to pursue the most radical plan that could muster the necessary 60 votes in the Senate and a thin majority in the House,” which “ensured the act would become the focus of future electoral battles and rollback efforts.”

Another factor, as John Hoff has written, is that Obamcare itself contains a lot of uncertainty, leaving much to be implemented through regulations yet to be written by government agencies. (See Hoff’s paper, “Implementing Obamacare: A New Exercise in Old-Fashioned Central Planning,” The Heritage Foundation, September 10, 2010.)

Baker, Bloom, and Davis estimate that returning to 2006 levels of policy uncertainty would add 2.5 million jobs to the economy in the next 18 months. (See their October 5 article at Bloomberg: “Policy Uncertainty Is Choking Recovery,” or their full paper, “Measuring Economic Policy Uncertainty,” published September 12, 2011.)

Posted on 10/06/11 05:54 PM by Alex Adrianson

Take a Crash Course in Citizenship; and then Delve Further

If you like reading about the American Founding, then you will love the new First Principles site at Heritage.org. It’s the reading list of all reading lists for citizens who want to be informed about the ideas on which their country was founded. But it’s more than just a reading list; it’s more like an annotated bibliography. Areas covered include the American Founding, the Constitution, the Civil War, progressivism, conservatism, free enterprise, and America’s role in the world. There is also a section on how America’s first principles apply to today’s public policy problems.

The site includes a “Basics” section that’s essentially an FAQ on America. This would be a good place for young students and those brushing up on their citizenship knowledge to start. Those who want to read the Founders’ own words or other important documents in the history of American political thought should check the “Primary Sources” section. And those who want dig further can check the “More Resources” section which identifies the best readings on American political thought.

Posted on 10/06/11 04:14 PM by Alex Adrianson

Buckley Awards Recognize Young Conservative Leaders

There are some outstanding young leaders in the conservative movement, and they were recognized last week by the Young Conservatives Coalition’s 2011 Buckley Awards. The awards are named after William F. Buckley, “a conservative movement leader/icon who founded National Review and wrote God & Man at Yale all before the age of 30.”

The winners: Amy Frederick, president of the 60 Plus Association, which gives a voice to the senior citizens who don’t favor sucking the marrow out of the young; Matt Lewis, a senior contributor at the daily must-read and semi-daily lightening-rod Daily Caller; Peter Redpath, who runs the Federalist Society’s student programs, thereby helping ensure a new generation of lawyers that understands law is not just another form of politics; Paul Teller, executive director of the Republican Study Committee, where most of the conservative thinking on Capitol Hill takes place; and Vincent Vernuccio, who’s research for the Competitive Enterprise Institute helps prevent unions from grabbing even more of the taxpayers’ wallets.

Posted on 10/06/11 01:52 PM by Alex Adrianson

Economics Isn’t that Hard

Unfortunately, we suspect it’s not a surplus of feet that is holding politicians back.

Posted on 10/05/11 06:11 PM by Alex Adrianson

Check Out the New MassOpenBooks

Massachusetts malfeasants beware! Taxpayers, citizens, and investigative reporters can now check a revamped MassOpenBooks to look up pretty much every check the Massachusetts state government cuts to anybody. The Web site, a product of the Pioneer Institute, provides the details on government worker salaries and pensions, and on payments to vendors. The data goes back a number of years.

The site provides users with an impressive array of searching, sorting, and displaying options. Users can look up the salaries or pensions of individual employees by name. Same goes for payments made to individual government contractors. Or users can pull up data in numerous broad categories, such as secretariat, department, fund type, subsidiary, object code, line item, and appropriation name. Users who want to know how well workers from certain unions get paid can look that up, too. The data can be displayed in tables—which can themselves be resorted—downloaded to Excel, or displayed in graphs.

The site lets users make comparisons and identify trends over time. The site packs a lot of features, so users eager to dive into the data may find it helpful to check out the site tutorial first.

Posted on 10/04/11 04:19 PM by Alex Adrianson

The Guy Who’s Taken a Few Hits Might Know Something About Incentives

“Imagine the National Football League in an alternate reality,” suggests Hall of Fame quarterback and entrepreneur Fran Tarkenton, who goes on to imagine it:

Each player’s salary is based on how long he’s been in the league. It’s about tenure, not talent. The same scale is used for every player, no matter whether he’s an All-Pro quarterback or the last man on the roster. For every year a player’s been in this NFL, he gets a bump in pay. The only difference between Tom Brady and the worst player in the league is a few years of step increases. And if a player makes it through his third season, he can never be cut from the roster until he chooses to retire, except in the most extreme cases of misconduct.

Let’s face the truth about this alternate reality: The on-field product would steadily decline. Why bother playing harder or better and risk getting hurt? […]

Of course, a few wild-eyed reformers might suggest the whole system was broken and needed revamping to reward better results, but the players union would refuse to budge and then demonize the reform advocates: “They hate football. They hate the players. They hate the fans.” The only thing that might get done would be building bigger, more expensive stadiums and installing more state-of-the-art technology. But that just wouldn’t help.

If you haven’t figured it out yet, the NFL in this alternate reality is the real-life American public education system.

In July, actor Matt Damon told a Reason.tv reporter that incentives don’t affect teachers because they only care about teaching. But if that were really true, then we could pay them nothing and still get the same results. Damon should read Tarkenton’s column, “What if the NFL Played by Teachers’ Rules?” in Monday’s Wall Street Journal.

Posted on 10/03/11 05:55 PM by Alex Adrianson

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