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InsiderOnline Blog: September 2012

To Do: See Won’t Back Down

• Check out the new movie Won’t Back Down, a drama starring Maggie Gyllenhall and Viola Davis about what happens when so-called “parent trigger” laws empower parents to intervene in failing schools.

• Enjoy the best and most hilarious in liberal media bias by checking out the highlights of the Media Research Center’s Annual Dishonors Awards. And congratulations to Brent Bozell and the MRC on 25 years of holding the mainstream media accountable.

• Find out why the country needs more free trade, not less. The Heritage Foundation will host a panel assessing the political challenges to open trade, and what is at stake for consumers and American workers. The program begins at 1 p.m. on October 4.

• Hear a talk on free speech and tolerance from Jacob Mchangama. The Heartland Institute will host Mchangama, a human rights lawyer with the Danish think tank CEPOS, on October 11. The program begins at 11:30 a.m.

Posted on 09/28/12 03:33 PM by Alex Adrianson

How Big a Burden Are Government Regulations on Manufacturers?

Some details from a new study commissioned by the Manufacturers Alliance for Productivity and Innovation, as summed up by Thomas Hemphill:

[S]ince 1998, the costs of major federal regulations have far exceeded manufacturing sector growth, with the cumulative inflation-adjusted cost of compliance for major regulations growing by an annualized rate of 7.6 percent. Furthermore, the cost of major regulations has also significantly exceeded overall economic growth, as annual growth in the physical volume of manufacturing sector output averaged only 0.4 percent since 1998, while U.S. inflation adjusted GDP growth averaged 2.2 percent annually. […] [S]uch major regulations could reduce the manufacturing sector’s output by up to 6.0 percent over the next decade. In 2012, the cost of major regulations could reduce the total value of shipments from U.S. manufacturers by up to $500 billion in constant 2010 dollars and lower manufacturing exports by 17 percent.

[…] U.S. manufacturers are subject to an estimated 2,183 unique regulations between 1981 and April 2012, and that because 95 percent of the regulations are non-major (having estimated costs of less than $100 million) and not accounted for in the study (since the federal government does not track their costs or those of independent agencies), the aggregate burden of these non-major regulations could be equal to the cost of the major regulations. [American Action Forum, September 24]

Posted on 09/28/12 02:59 PM by Alex Adrianson

It’s Almost as If the Government Wants You to Keep Your Money in a Mattress

The Dodd-Frank financial regulations have increased banks’ costs, and one result seems to be that free checking is going away. The Wall Street Journal has the details of a new survey by Bankrate Inc.:

To avoid a monthly fee, bank customers in the U.S. must keep an average minimum balance of $723 in checking accounts that pay no interest—up 23% over last year, according to a new survey from data provider Bankrate Inc., which analyzed 477 checking accounts at 247 banks and thrifts. The average monthly fee on noninterest checking accounts rose 25% to $5.48, also a record. […]

The fees come as the banking industry looks to lose more than $10 billion a year in revenue through federal restrictions on debit cards and overdraft policies, according to bank consultants. […]

Banks began imposing fees for checking accounts in the early 1980s to offset higher interest rates paid on savings accounts. The trend reversed in the late 1980s, when small banks began wooing customers with free checking. Other banks followed, and free checking became standard by the late 1990s.

Not any longer. The Bankrate survey found that 39% of noninterest checking accounts are free to all customers, down from 45% in 2011 and a peak of 76% in 2009. [Wall Street Journal, September 24]

It doesn’t help that the Federal Reserve has pushed interest rates so low that having a bank account earns you next to zero interest.

Posted on 09/28/12 02:45 PM by Alex Adrianson

Indeed, There Have Been Some Bumps in the Road

Morgan Lorraine Roach:

The only success the Administration can claim is the killing of Osama bin Laden. Yet, as tragically witnessed in the deaths of four Americans in Benghazi, the threat of terrorism and Islamic extremism remains. For this, the U.S. needs strong leadership, not complacent wishful thinking that is reminiscent of Jimmy Carter. [The Foundry, September 26]

Posted on 09/28/12 01:37 PM by Alex Adrianson

The Party Never Got Started

On Thursday, the Commerce Department revised GDP growth for the second-quarter downward to 1.25 percent, which suggests a recession is coming, says James Pethokoukis:

[R]esearch from the Fed […] finds that since 1947, when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. And when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time.

Citigroup has also taken a shot at determining the stall speed: “Specifically, when U.S. growth has cut below 1½ percent on a rolling four-quarter basis, it has tended to fall by nearly 3 percentage points over the following four quarters, and the economy has typically entered recession. [AEIdeas, September 27]

Posted on 09/27/12 04:44 PM by Alex Adrianson

Why Did AARP Boo When Paul Ryan Talked about Repealing ObamaCare?

Because, explains Avik Roy, the group benefits financially from ending Medicare Advantage:

According to an analysis by Representatives Wally Herger (R., Calif.) and Dave Reichert (R., Wash.), Obamacare’s cuts to the Medicare Advantage program, by driving seniors out of that program and back into traditional Medicare, could earn AARP over $1 billion over the next ten years, because AARP makes nearly half a billion dollars per year collecting royalties from supplemental Medigap policies sold by private insurers. Those Medigap policies are primarily sold to seniors in the traditional, government-run Medicare program.

In other words, AARP is poised to make billions thanks to Obamacare’s cuts to Medicare Advantage. As it is, the interest group makes almost twice from its Medigap royalties what it gets in membership dues. So it’s no wonder that AARP supported Medicare cuts that would be unpopular with seniors: Its own financial interests won out. [National Review, September 24]

Posted on 09/27/12 04:04 PM by Alex Adrianson

Childhood Hunger Is Up, and It’s the Government’s Fault

Kids around the country are complaining that their school lunches are leaving them hungry, according to reports from both the Daily Caller [September 22] and Reason magazine [September 22]. There’s no mystery here: In January, the U.S. Department of Agriculture unveiled new rules for USDA-provided school lunches that limit calories, salt, and fat; and require more whole grains, fruits, and vegetables. The rules were put in place to implement the “Healthy, Hunger-Free Kids Act of 2010.”

Reason’s Baylen Linnekin reports some of the backlash:

Seventy percent of students at one Wisconsin high school boycotted USDA school lunches. As one student at the school told the Milwaukee Journal Sentinel, the changes have meant the food is “worse tasting, smaller sized and higher priced.”

Across the country in Connecticut, a student petition protesting the smaller portion sizes resulted in the school district abandoning the rules after “only a few days.”

Different calorie limits apply to elementary schools, middle schools, and high schools; but schools have no flexibility to tailor meals to different students’ caloric needs. That means athletes with a high-metabolism get the same as amount of food as all other students. Nor do the new rules take into account that not all students have a weight problem.

Michelle Obama endorsed the new rules back in January, claiming that they would help prevent the hard work parents do giving their kids a balanced diet from being undermined in the school cafeteria. But according to both the Daily Caller and Reason articles, many parents are giving their kids a brown bag lunch to take to school so that they don’t have to eat the school-provided lunch.

Another problem: Many schools still offer chips and cookies a la cart, which means hungry students can supplement their USDA-approved lunch by loading up on junk food. That alone pretty much guarantees that the project will make absolutely zero contribution to fixing the obesity problem.

Posted on 09/27/12 03:37 PM by Alex Adrianson

If Speech Is Never Supposed to Offend, Then It Isn’t Really Free

“The future must not belong to those who slander the prophet of Islam,” said the leader of the free world on Tuesday at the United Nations in a speech that was partly an attempt to explain why free speech is an important American value.

President Obama also said, in reference to the film The Innocence of Muslims, which the administration has variously claimed provoked a mob to attack the U.S. consulate in Benghazi on 9/11/12: “I have made it clear that the United States government had nothing to do with this video, and I believe its message must be rejected by all who respect our common humanity.”

The value of free speech, in case the leader of the free world doesn’t know it, is not that it’s the best way to make everyone feel good about himself. The value of free speech, as Justice Oliver Wendell Holmes explained, is that it’s the best way of discovering truth:

If you have no doubt of your premises or your power and want a certain result with all your heart you naturally express your wishes in law and sweep away all opposition […] But when men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas.

By suggesting that certain belief systems should be beyond criticism or that it’s anyone’s responsibility to reject certain movies, the President failed in his defense of free speech.

Posted on 09/26/12 05:11 PM by Alex Adrianson

Cutting Government Spending Needs to Be Part of the Program for Getting the Economy Going

… explains e-21:

A 2006 Treasury paper found that a permanent extension of current (2012) tax rates would result in a 2.3% larger capital stock if those tax reductions were financed by corresponding cuts in spending. With the exception of lower taxes on dividends and capital gains, which increase growth even when deficit-financed, all other tax components of the “fiscal cliff” would actually reduce long-run growth unless they are financed by spending restraint. Higher marginal income tax rates reduce work, effort, savings, and investment by reducing the household or business’ share of the incremental income generated by these activities. This is the same channel through which debt overhang operates, as the implied higher future tax rates generated by large deficits reduce work, savings, and investment. Indeed, because no one is sure who will pay the ultimate costs of the looming fiscal adjustment, persistently large deficits could be worse than higher taxes if households and businesses overestimate their likely share of the future tax burden.

Posted on 09/26/12 03:57 PM by Alex Adrianson

U.S. Effective Marginal Tax Rates Are Also Uncompetitive

Since earlier this year, the United States has had the highest statutory corporate tax rate in the world, with an average federal-state rate of 39.2 percent [Tax Foundation, April 1]. That’s about 50 percent higher than the average for countries in the Organisation for Economic Cooperation and Development. The picture of an uncompetitive tax rate actually gets worse when you calculate marginal effective corporate tax rates, according to a new Cato Institute report. The marginal effective tax rate reflects the amount of tax actually paid after accounting for deductions. The United States has only the fourth highest marginal effective tax rate on new corporate investment, but that rate is almost double the OECD average, says Cato:

The U.S. [marginal effective corporate tax rate] is 35.6 percent in 2012, or almost twice the 90-country average of 18.2 percent. The average rate for the 34 Organization for Economic Cooperation and Development (OECD) nations is just 19.4 percent. [“Corporate Tax Competitiveness Rankings for 2012by Duanjie Chen and Jack Mintz, Cato Institute, September 2012.]

Posted on 09/25/12 06:23 PM by Alex Adrianson

Too Good for Government Work

The Government Accountability Office doesn’t just identify waste, fraud, and abuse in government; it wins literature prizes on the side. Last Thursday, the 2012 Ig Nobel Prize Committee announced that the GAO had won the 2012 Ig Nobel Prize in Literature for its report “Actions Needed to Evaluate the Impact of Efforts to Estimate Costs of Reports and Studies.” The Ig Nobels, sponsored by the Annals of Improbable Research, are awarded annually to recognize “achievements that first make people laugh, then make them think.”

The GAO report was a review of a Department of Defense effort to estimate how much money DOD spends writing reports for Congress. GAO concluded that DOD’s estimation was not fully consistent with the relevant accounting standards. The agency then recommended that the Secretary of Defense “take steps to evaluate DOD’s effort to estimate costs […] .”

To sum up: the reports about reports were not so good, but the report about reports about reports that recommends another report was award-winning. That makes us wonder: How good can the next report be?

Posted on 09/24/12 04:34 PM by Alex Adrianson

To Do: Recognize the Best in Liberal Media Bias

• Help the Media Research Center celebrate its 25th anniversary by attending the media watchdog’s annual gala. Always one of the most entertaining events, the MRC Gala honors the year’s best in liberal media bias. Reception begins at 6 p.m., September 27th at the National Building Museum in Washington, D.C.

• Spread the word about how ObamaCare will make health insurance more expensive, reduce consumer options, impose billions in new taxes, make it harder for seniors to find a doctor, and many more problems. At the Galen Institute’s Web site, you can find 12 note-card-size guides containing key points, facts, and figures about ObamaCare. Perfect for printing up and distributing to your friends.

• Need to find some key footage of a news broadcast? Check on the Internet Archive’s new TV News page, which contains every news program going back to 2009. You can do a text search of program captions to find the exact clips you want.

• Mobilize the Mountain West by attending CPAC Colorado. The American Conservative Union’s western franchise of its annual Conservative Political Action Conference will be October 4 in Denver. We’ll be there!

Posted on 09/21/12 04:48 PM by Alex Adrianson

Work Requirements Make a Difference

Reports Philip Klein:

Obama administration officials have insisted that their decision to grant states waivers to redefine work requirements for welfare recipients would not “gut” the landmark 1996 welfare reform law. But a new report from the Congressional Research Service obtained by the Washington Examiner suggests that the administration’s suspension of a separate welfare work requirement has already helped explode the number of able-bodied Americans on food stamps.

In addition to the broader work requirement that has become a contentious issue in the presidential race, the 1996 welfare reform law included a separate rule encouraging able-bodied adults without dependents to work by limiting the amount of time they could receive food stamps. President Obama suspended that rule when he signed his economic stimulus legislation into law, and the number of these adults on food stamps doubled, from 1.9 million in 2008 to 3.9 million in 2010, according to the CRS report, issued in the form of a memo to House Majority Leader Eric Cantor, R-Va. [Washington Examiner, September 19]

Posted on 09/21/12 12:47 PM by Alex Adrianson

The Problem Is the Response to the Video, Not the Video

“The video did it” argument—even if true—isn’t much of a defense of the Obama administration’s policies in the Middle East, explains Jonah Goldberg:

According to the Obama administration, its policies in the Middle East are working. The Cairo speech, the tougher line with Israel, the withdrawals from Iraq and pending drawdown in Afghanistan, Obama’s coolness to Iran’s failed Green Revolution: These have all been part of the successful effort to repair the damage done by the previous administration. Yet all of that hard work can go up in smoke if some crackpot says something mean about the prophet Muhammad on YouTube?

Progress that flimsy strikes me as no progress at all.

It is simply a fact that Islamist radicals, the Arab street and the Muslim world have been angry at America for decades, under Republican and Democratic administrations alike. It’s also true that demagogues and other opportunists have used things like this video as an excuse to attack America and the West for generations. Obama isn’t solely to blame for the current conflagrations, though his naivete about the transformational power of his presidency deserves ample scorn. [Los Angeles Times, September 18]

As a general rule of thumb, it’s no defense to say your policy failed only because of the actions of bad people. Neville Chamberlain’s policy of appeasement was working great, too—right up until Hitler ruined it.

Posted on 09/21/12 12:31 PM by Alex Adrianson

How the Constitution Protects Your Rights

Here’s one important thing to know about the United States Constitution, which turned 225 this week:

Most constitutions around the world enumerate rights: the right to work, to health care, and to ecologically sustainable development and use of natural resources while promoting justifiable economic and social development. In these constitutions, “rights” is just another word for free stuff government gives you.

But in the U.S. Constitution, the government doesn’t distribute rights; it secures them. Therefore, the word “right” is barely mentioned in the Constitution. It appears once in the unamended document: The Patents Clause in Article I, Section 8, Clause 8: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The Bill of Rights further secures rights by limiting the powers of the federal government.

Expanding on that last point, notice how the First Amendment begins with the words “Congress shall make no law …” So even the Constitution’s most well-known provision relating to rights is written as a prohibition on what government may do.

For more little understood facts about the Constitution, see Julia Shaw’s “The Forgotten Constitution,” at The Foundry, September 17, 2012.

Posted on 09/21/12 10:52 AM by Alex Adrianson

Yes, Economic Freedom Matters

… finds the Fraser Institute’s latest edition of its Economic Freedom of the World Report, just released this week:

Nations in the top quartile of economic freedom had an average per-capita GDP of $37,691 in 2010, compared to $5,188 for bottom quartile nations in 2010 current international dollars. In the top quartile, the average income of the poorest 10% was $11,382, compared to $1,209 in the bottom in 2010 current international dollars. Interestingly, the average income of the poorest 10% in the most economically free nations is more than twice the overall average income in the least free nations. Life expectancy is 79.5 years in the top quartile compared to 61.6 years in the bottom quartile.

According to the Fraser Institute’s ranking, the top ten in economic freedom are Hong Kong, Singapore, New Zealand, Switzerland, Australia, Canada, Bahrain, Mauritius, Finland, and Chile. The United States comes in 18th, right behind Qatar. The bottom five in economic freedom are Angola, the Republic of Congo, Zimbabwe, Myanmar, and Venezuela.

Posted on 09/21/12 10:33 AM by Alex Adrianson

Bad Incentives

The tax code still contains what’s come to be known as a “marriage penalty”—i.e., as a result of filing jointly, many married couples face a higher tax rate than they would if each individual filed separately. A new Mercatus Center paper by Jason J. Fichtner and Jacob Feldman reviews the research on this problem. Fichtner and Feldman point out that the penalty especially affects low-income households:

Marriage penalties are predominantly borne between two groups of two-earner couples: (1) low-income two-earner families filing for the earned income tax credit (EITC) and (2) low- and middle-income two-earner couples for which the two salaries are roughly equal (for example, see the section “Under Current Law” in the table). These marriage penalties are strongest among low-income households utilizing the EITC, the same households that would potentially benefit most from the acclaimed sociological benefits of marriage. Where marriage bonuses are present, the tax code discourages labor force participation among secondary earners, predominantly women. A higher marginal tax rate for a single-earner household more strongly depresses the economic return of a potential secondary earner. On their own and not married, the secondary earner could experience an entry marginal tax rate of 10 percent rather than 25 percent or higher. As a result, certain economic growth and productivity is forgone as a consequence of the married filing status requirement. An ideal tax code would be neutral with respect to marriage; in other words, the decision to enter into marriage would not be adversely affected by the tax code.

The authors also observe that studies have found higher marriage penalties are associated with a greater incidence of divorce. [“Taxing Marriage: Microeconomic Behavioral Responses to the Marriage Penalty and Reforms for the 21st Century,” by Jason J. Fichtner and Jacob Feldman, Mercatus Cener, September 2012]

Posted on 09/20/12 10:08 PM by Alex Adrianson

Driving Corn

Low yields on corn this year mean corn prices are heading upward. But corn prices would be at least 8 percent lower if it weren’t for federal rules requiring motor fuel to be blended with ethanol. Those requirements divert some corn from food and feed to ethanol production. Eight percent is the low end of the estimates; the impact could be much bigger, says David Kreutzer. [The Heritage Foundation, September 17]

Posted on 09/20/12 05:42 PM by Alex Adrianson

The Feds Ignore the Private Sector Costs of Regulations

Federal regulations really cost the economy $1.8 trillion per year, not $89 billion as calculated by the Office of Management and Budget, says the Competitive Enterprise Institute’s Clyde Wayne Crews. So what is the 95 percent of regulatory costs that OMB forgot to count? OMB’s estimate includes only the taxpayer cost of federal regulations, leaving out what the private sector spends to comply with regulations, plus the economic impact of those regulations, and the cost of unfunded mandates on the states. That’s all.

An annual cost of $1.8 billion isn’t pocket change, even when compared to the U.S. gross domestic product, forecast to come in around $15.8 trillion this year. The federal government will spend about $3.8 trillion in 2012.

Crews, who produced the estimate by compiling information from numerous sources, has created a “perpetual working paper and e-book” to keep track of federal regulatory costs. He calls the project “Tips of the Costberg,” and anticipates refining his estimate over time. Crews encourages anyone with information about regulatory cost estimates to share those with him at the Web site,

Posted on 09/20/12 03:56 PM by Alex Adrianson

Jay Leno, Keen Observer of the American Economy

What James Sherk and Rea Hederman Jr. reported earlier this month [The Heritage Foundation, September 7], only funnier: 

Posted on 09/18/12 02:11 PM by Alex Adrianson

Happy 225th, Constitution!

Today, when a concerted effort is made to obliterate this point, it cannot be repeated too often that the Constitution is a limitation on the government, not on private individuals—that it does not prescribe the conduct of private individuals, only the conduct of the government—that it is not a charter for government power, but a charter of the citizen’s protection against the government. [Ayn Rand, The Virtue of Selfishness, 1961]

Posted on 09/17/12 05:25 PM by Alex Adrianson

Should Making It Harder to Fire Workers Be a Goal of Public Policy?

Only if you like two-tiered systems that make some workers less secure, explains Virginia Postrel:

Imagine a career in which once you had worked somewhere for a long time – say, seven years – and you couldn’t be fired unless you did something really horrible. To make the picture even more appealing, imagine further that your industry was largely immune from foreign competition, had been enjoying increasing consumer demand, was subsidized by the state and federal governments, and rarely experienced any bankruptcies.

As you have probably realized, this career exists. It’s the professoriate. But while outsiders imagine higher education as a sheltered enclave of secure jobs, the actual state of American faculty members is much more uncertain. Tenure-track employment is no longer the norm. Part-time work is.

About 30 percent of faculty members are either tenured or on the tenure track, compared with about 57 percent in 1975. The rest are “contingent faculty”: About 19 percent work full time, usually on contracts lasting one to three years, and more than half work part time. (These figures omit graduate students who also teach classes.) Along with a lack of job security, contingent faculty members receive lower pay and fewer, or no, benefits. They frequently don’t have offices and may not even get library cards. [Bloomberg, September 16]

Posted on 09/17/12 04:01 PM by Alex Adrianson

“Most Transparent Administration Ever” Accused of Hiding Official Correspondence

Keep your eye on a new lawsuit filed Tuesday by the Competitive Enterprise Institute; if it succeeds, federal bureaucrats would no longer be able to shield official correspondence from public disclosure by sending it through personal e-mail accounts.

In May, the free market think tank filed a Freedom of Information Act request seeking correspondence between Environmental Protection Agency Regional Administrator James Martin and the Environmental Defense Fund, for whom Martin worked before joining the EPA. CEI requested correspondence sent by Martin from both official and non-official e-mail accounts, because, CEI contends, Martin has a “clear history of using such accounts to perform official business.”

But the EPA has been stonewalling the request, so on Tuesday CEI went to court. According to CEI fellow Christopher Horner, the practice of conducting official government business via non-official e-mail accounts, “is organized and systematic throughout the ‘most transparent ever’ administration.”

For tips on using the Freedom of Information Act, see “Getting Government Records: How to File a Successful Freedom of Information Act Request” by Lisette Garcia in the summer issue of The Insider.

Posted on 09/14/12 02:47 PM by Alex Adrianson

Invitation to Fraud: The Insider, Summer 2012

The new issue is out, and here is the editor’s note (with links to individual articles embedded):

Who Works for Whom?

In March 2010, then-Speaker of the House Nancy Pelosi delivered the most notable and quotable line of the past few years. Explaining the rush to pass President Obama’s signature health care bill, she said: “We have to pass the bill so that you can find out what is in it.”

In addition to raising doubts about Ms. Pelosi’s own grasp of the bill (Couldn’t she just tell us?), the line revealed a backward theory of American democracy. James Madison and company thought they had created a government that worked for “we the people.” The attitude of Ms. Pelosi and company is that the people will be informed in due course what the government has decided.

We are occasionally reminded, however, that even if the people aren’t doing a very good job of being governed, the government can’t just throw them out and choose a different group of people to go be the people. Those occasions are called elections, and they work the other way around.

Unfortunately, as John Fund and Hans von Spakovsky observe in our cover feature, democratic accountability is undermined by an election system that provides plenty of opportunity for voter fraud. In many cities around the country, the number of registered voters exceeds the number of residents over the age of 18. Thirteen percent of the nation’s voter registrations are either inaccurate or invalid, according to the Pew Center on the States. Fixes could be made; the question is whether the politicians want them.

Giving the people information may be a low priority for some in government, but we can at least thank Congress for the Freedom of Information Act, which requires the federal government to disclose many of its records upon request. Lisette Garcia, a senior investigator with Judicial Watch, provides us some tips on the finer points of crafting a Freedom of Information Act request.

In other articles of this issue, we talk with John Goodman about the need for real free markets in health care, Chris Edwards and Tad DeHaven explain how ending corporate welfare will generate more entrepreneurship and innovation, and Jennifer Marshall explains how welfare dependency is on the way back.

Posted on 09/14/12 02:07 PM by Alex Adrianson

Eventually Public Schools Will Run Out of Other People’s Money

Public-sector monopolies like public schools don’t exist to improve services; they exist to limit competition and expand their power to extract benefits from taxpayers. That is the system that teachers unions, like the one representing Chicago’s striking teachers, are defending. Here’s a graphic illustration of how it works, from and the Motion Picture Institute:

Posted on 09/14/12 01:00 PM by Alex Adrianson

The Economy Is Worse Than the Unemployment Rate Shows

Since the recession began, the proportion of adults working or looking for work has fallen to its lowest level in decades. In fact, if all those discouraged workers were still counted as unemployed, there would have been no drop at all in the unemployment rate in the past three years. The reason the jobs situation remains bad, explains James Sherk, has less to do with layoffs than with a lack of new hiring:

Employers hired 13 million new employees in the second quarter of 2012—15 percent fewer than the 15.3 million new workers hired in the last quarter of 2007. Unemployment remains high primarily because businesses are creating fewer new jobs—not because of increased layoffs. […]

Job creation and new hiring remain low for several reasons. The most prominent are the lingering effects of the collapse of the housing bubble and resulting financial crisis, as well as the domestic consequences of the economic slowdowns in Europe and China. The U.S. government has also contributed to the problem. Excessive taxes and increased regulation discourage risk-taking and investment. Prominent leaders in Congress have announced their intentions to raise taxes by $500 billion in January 2013. The Administration has increased the regulatory burden facing businesses, especially in health care.

Small-business owners report that tax burden and government red tape are significant problems. In fact, small-business owners are statistically as likely to cite either taxes (21 percent) or regulations and red tape (21 percent) as poor sales (20 percent) as their single greatest problem. [The Heritage Foundation, August 30]

Posted on 09/14/12 12:40 PM by Alex Adrianson

To Do: Celebrate Constitution Day

Celebrate Constitution Day, which is September 17. Here’s a few ideas: (1) Check out the online Heritage Guide to the Constitution, a comprehensive and searchable guide to every clause in the Constitution; (2) Visit Hillsdale College’s online Constitution Reader, which lets you view 113 primary source documents related to the Constitution. (3) Take Hillsdale’s online course Constitution 101, which is archived and can be started at any time. (4) Pick up a copy of the Federalist Papers, now available in free e-book format (along with 375 other classics) from (5) Check out’s exhibits on the American Founding. (6) Learn about current constitutional controversies at the Cato Institute’s annual Supreme Court Review, an all-day conference on September 18.

Head over the Values Voter Summit, which runs Friday through Sunday at the Omni Shoreham in Washington, D.C. Among the discussions offered: Understanding Radical Islam 101; Repealing ObamaCare; Economic Inequality: Reconciling Capitalism and Compassion; Millennials and the Future of Political Engagement; and Debunking the Myth of Separation … Why Pastors Must Engage in Politics. The Values Bus will be there, too.

Fill up your e-library with some classics every conservative should read. Did we mention the Federalist papers are now available for free in e-book format at So are selected works of John Locke, Edmund Burke, Adam Smith, and George Orwell.

Posted on 09/14/12 12:07 PM by Alex Adrianson

Thomas Szasz, R.I.P.

Thomas Szasz, author of The Myth of Mental Illness (1961) and other writings that challenged the psychiatric profession’s claims of a scientific understanding of human behavior, died Tuesday. “Szasz’s war against psychiatry,” writes Trevor Burrus, “can be viewed in the same light as Hayek’s war against planned economies: an opposition to state-backed conglomerations of power masquerading under the pretense of knowledge.”

Szasz’s unique contribution to psychiatry was to continually refocus the question on whether there is a scientific, objective basis for asserting that certain “kinds of behavior are regarded as indicative of mental illness.” His unique contribution to libertarian thought was to focus on personal responsibility as the proper response to claims of “mental illness,” to be concerned about the involuntary incarceration of the “mentally ill” as an immoral deprivation of liberty, and to criticize the state as the most significant “whom” that defines mental illness.

Because of this focus on the state’s effect on social and scientific areas, rather than in just the economic and philosophical realms, Szasz’s work encourages libertarians to look to broader social criticisms of government. Szasz wisely questioned the implications of letting the government define “mental illness” and trusting the political forces that affect those determinations. As he wrote in The Myth of Mental Illness, “Debate about what counts as mental illness has been replaced by legislation about the medicalization and demedicalization of behavior. Old diseases such as homosexuality and hysteria disappear, while new diseases such as gambling and smoking appear, as if to replace them.” [Cato-at-Liberty, September 11]

Posted on 09/14/12 03:54 AM by Alex Adrianson

This “Recovery” Is Different


Rather than accelerating to return to the trend growth rate, the economy has actually grown at a slower average pace after the recession ended than it did before the recession began. This is anomalous because one would have anticipated an especially brisk recovery to match the size of the contraction. For the first time in U.S. economic history, the depth of the contraction and the strength of the recovery have been asymmetric, causing the economy to fall well below the level consistent with its long-run trend.

[e21: Economic Policies for the 21st Century, September 12]

Posted on 09/14/12 12:58 AM by Alex Adrianson

The Fed’s Class Warfare

The Fed’s plan for more quantitative easing [i.e., printing money] really means more redistribution of wealth from the poor and middle classes to the very rich. As Anthony Randazzo explains, the Fed buying up securities will boost the value of stocks, most of which are owned by the wealthiest 10 percent. But that’s not all, says Randazzo:

The whole idea of QE is to drive investors out of lower risk investments like mortgage backed securities and government debt and get them to put that money in “more productive” use—lend it, build skyscrapers, invest in technology, etc. Since there is little confidence about the future of the economy, many investors have crowded into the stock market with their money, and still others have invested in commodities.

The problem is that investing in commodities can push up prices on things like gas, meat (because of feed corn prices), bread (because of wheat prices), and even orange juice. There certainly have been other contributors to commodities prices going up, but if the Fed has boosted stocks, they’ve boosted commodities too. So not only are the cronies gaining from quantitative easing, there is a negative wealth effect too.

The cronyism doesn’t end there. In a Dallas Fed paper released in August, OPEC chief economist William White points out that easy monetary policy favors “senior management of banks in particular.” And even Bernanke himself suggested (as if it was a good thing) that quantitative easing purchases “have been found to be associated with significant declines in the yields on both corporate bonds and MBS.” Translation: the Federal Reserve has made it artificially cheaper for corporations to borrow money and has pushed up the prices of houses (benefiting homeowners but hurting homebuyers). [Reason, September 13]

Also, it encourages the same kinds of bad investments that led to the crisis in the first place.

Posted on 09/13/12 10:22 PM by Alex Adrianson

Appeasement Still Does Not Work

On Tuesday, the U.S. embassy in Cairo addressed the controversy over a film produced privately in the United States that portrayed the prophet Muhammad as a child molester and gay by issuing this statement:

The Embassy of the United States in Cairo condemns the continuing efforts by misguided individuals to hurt the religious feelings of Muslims—as we condemn efforts to offend believers of all religions. […] We firmly reject the actions by those who abuse the universal right of free speech to hurt the religious beliefs of others. [Embassy of the United States, Cairo, Egypt, September 11]

That was before a mob attacked the embassy, and before another mob did the same in Benghazi, killing the U.S. ambassador to Libya and three other Americans. About this idea that the U.S. government can reject the constitutionally protected actions of private citizens, Jesse Walker observes:

When you issue such statements, you encourage the view that the government is somehow responsible for the speech you’re condemning. Even if you succeed in calming the crowds – and to judge from what happened yesterday, you shouldn’t expect to achieve even that much – any fringe film that you haven’t anathematized can become the next cause célèbre. [, September 12]

Advice from Winston Churchill:

Never give in. Never give in. Never, never, never, never—in nothing, great or small, large or petty—never give in, except to convictions of honour and good sense. Never yield to force. [Winston Churchill, address to the students of Harrow, November 29, 1941]

Posted on 09/12/12 02:21 PM by Alex Adrianson

A Lesson in Union Power

About 350,000 students at public schools in Chicago are not learning in the classroom this week because the unionized teachers decided to go on strike. The teachers want a 30 percent pay raise, but as John Fund notes, teachers in Chicago are already well compensated:

Chicago teachers have the highest average salary of any city at $76,000 a year before benefits. The average family in the city only earns $47,000 a year. Yet the teachers rejected a 16 percent salary increase over four years at a time when most families are not getting any raises or are looking for work. [National Review, September 10]

Teachers also get approximately three months off every summer, time they can use to earn extra money or not work at all. The teachers also want to renegotiate the city’s new teacher evaluation system that emphasizes student performance. Of course they do: In Chicago only 56 percent of students who start the ninth grade end up graduating.

Who is still in the classroom in Chicago this week? Students attending private schools, parochial schools, and charter schools. [Chicago Tribune, September 9] Hey, why don’t we have more of those schools?

Posted on 09/11/12 03:13 PM by Alex Adrianson

Memorializing Disfunctional Government

The rebuilding of the World Trade Center has become an opportunity to fleece the taxpayer, reports ReasonTV’s Kennedy:

Posted on 09/10/12 02:58 PM by Alex Adrianson

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