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Brad Rodu, Endowed Chair, Tobacco Harm Reduction Research at the University of Louisville and Senior Fellow at the Heartland Institute discusses tobacco harm reduction on “The Legislature Today’ radio show in Bismark, North Dakota.

Read some of Dr. Rodu’s work, and Heartland coverage of tobacco harm reduction, at PolicyBot.

[Subscribe to the Heartland Daily Podcast free at this link.]

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As green energy stimulus recipients raked in billions of dollars the last few years, with President Obama declaring what a great “investment” they were for taxpayers, friends of mine would jokingly ask, “Where’s my dividend?” “Where are my stock certificates?” “Where’s my free electric car?!”

In the case of our $193-million stake in Fisker Automotive, thanks to a Department of Energy loan guarantee, it looks like American shareholders will end up with the whole company itself.

With the Anaheim non-automaker (no cars produced since last summer) firing about 160 of its 200 remaining employees on Friday, a bankruptcy law firm hired, and no buyer to pick over the $102,000 Karma model’s carcass, the Chicago Tribune reported Monday the imminent insolvency “could leave the federal government essentially owning” Fisker.

That would be quite a feat, since it’s been widely reported that Fisker drew more than $1 billion in private investment and has felt the love of celebrities such as Justin Bieber, Leonardo DiCaprio and Al Gore. Well-heeled Silicon Valley investment firm Kleiner, Perkins, Caufield and Byers also helped generate enthusiasm for the company launched by the well-known designer for BMW and Aston Martin, Henrik Fisker. For U.S. taxpayers to come away with a company that generated so much buzz, for so cheap, would be considered a steal.

Yet despite all the millions poured into the company, it has become essentially worthless.

“Expect the assets to be sold for pennies on the dollar,” said Dave Sullivan, manager of product analysis for industry consulting firm AutoPacific, to the Tribune.

That’s quite a contrast to what one of Fisker’s investors, Toby Smith, told Fox Business (with great certainty) in October 2011 about the company’s promise.

“Fisker is a company that has 3,000 of their cars pre-sold,” said Smith (video link, about 3:30 in), who was characterized by Fox host David Asman as “a savvy investor.” “They have deposits. They are going to be a company that’s going to go a billion dollars in sales in 2012 – the fastest-growth company in the history of commerce in the United States…selling at a profit every one of those cars. They have 47 dealerships. They have 700 new jobs that that DOE loan started.”

Smith won’t go down as the first or last Wall Street false prophet, but his forecast woefully missed the mark. If the 3,000 deals did close (reports are they fell well short of that), revenues would not have exceeded $325 million just from those pre-sales. Even if Fisker doubled those numbers, sales would have fallen well short of his predicted $1 billion for 2012.

The fact is he was a cheerleader for a sorry company that extracted money from taxpayers thanks to the political connections of Kleiner Perkins and six-figure lobbying efforts for the Recovery Act. The idea that Fisker – selling a single model that only extremely rich people would buy – would soar as a company was pure fantasy.

And now the reality is at least 660 workers – plus hundreds more in Delaware who were promised future employment at a former General Motors plant – have been let down. Soaring political rhetoric and delusions of grandeur by the likes of Smith and Vice President Joe Biden unjustifiably raised their expectations, and now they are looking for jobs again.

Many of them aren’t just swallowing the decision, which was delivered on Friday without forewarning or severance pay. The same day a lawsuit was filed in California by employees, alleging Fisker violated the federal Worker Adjustment and Retraining Notification Act and a similar state law by not providing 60 days advanced written notice, which the plaintiffs said is required in mass layoff situations. The complaint seeks two months of pay and benefits for the fired workers.

“It happens when a company is circling the drain,” said a lawyer with the firm that brought the lawsuit, Outten and Golden, which won a $3.5 million decision for terminated Solyndra workers in a similar situation.

After blunders and stumbles that included fires, recalls and bad reviews for the Karma, media scrutiny has intensified over Fisker in recent months. Many outlets appear to want to get the scoop on the bankruptcy announcement even before it’s official. Reporters can’t come right out and say it themselves, so they find “experts” to say it for them in their stories. Examples:

• “This is going to be another Solyndra, a poster child for perhaps a lack of due diligence on the part of the federal government when it’s investing funds.” – Jeremy Anwyl of auto research firm Edmunds.com, to Bloomberg
• “The fact that some of these companies fail is because companies make mistakes. Fisker made mistakes.” – director of the Institute of Transportation Studies at the University of California, Davis, also to Bloomberg
• “Without cash coming in they can’t pay bills, they can’t do development on the next vehicle. The race is over for them now.” – the aforementioned Sullivan to the Chicago Tribune

While the watchdog “experts” emphasized Fisker’s gurgling, the ever-optimistic Department of Energy looked on the bright side.

“Despite Fisker’s difficulties, our overall loan portfolio of more than 30 projects continues to perform very well, and more than 90 percent of the $10 billion loan loss reserve that Congress set aside for these programs remains intact,” said a DOE spokeswoman to the Wall Street Journal.

Feel better? That means only $1 billion of taxpayer money has evaporated thanks to bad DOE loans. That’s how the stewards of your money, who seize it from you, see the world.

At least some in Washington are taking Fisker’s failure a little more seriously. Ohio Rep. Jim Jordan, a Republican, has called an April 24 hearing before a subcommittee of the House Oversight and Government Reform Committee to examine the Energy Department’s decision to award stimulus money to Fisker. Among those he wants to testify are founder Henrik Fisker, who resigned last month after disagreements with the executive leadership. In an interview with the Detroit News, Mr. Fisker said he would testify, even if he had to travel to Washington at his own expense – despite having received no severance or lingering benefits from the company that was named for him.

“I have nothing to hide,” he said.

The News reported that Mr. Fisker said he paid full price for a Karma after his departure from the company last month.

“I wanted to support my local dealer,” he told the newspaper.

That’s one less vehicle the taxpayer-owners will have to unload.

[First Published at National Legal and Policy Center]

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As I’ve noted before, there were three opportunities for those who oppose  Obamacare to repeal and replace it. One path was at the ballot box, where  opponents failed. The next best was the avenue of the Courts, which resulted in  partial success on Medicaid, the largest portion of the coverage expansion. And  finally, they’ll have an opportunity once the approach goes live based on the  public’s measure of how it works. There will be a post-Obamacare health care  policy shift – either to reopen the measure from the left to try and fix its  numerous problems, or from the right to deconstruct it in more significant ways.  This week, with the release of the president’s budget and a few other rule and  regulatory updates, we’re seeing a torrent of indications that this policy  approach is failing to match up with the promises of the president and the hopes  of his party. The admissions from Kathleen Sebelius that this is a bigger task than they had hoped are just a  prelude for what’s coming down next. Here are five different ways Obamacare is  already failing.

1. Kicking the Can on Deficits. The White House is admitting  that Obamacare’s Medicaid expansion won’t work as promised. Sarah  Kliff: “For decades now, Medicaid has sent states billions of dollars in  something called Disproportionate Share, or DSH, payments. These funds, which  totaled $11.3 billion in 2011, go to the hospitals that provide a higher level  of uncompensated care and are meant to help offset the bills of the uninsured.  At first, the health law appeared to make DSH payments unnecessary. When the  Affordable Care Act expanded Medicaid to 17 million Americans, it would  significantly reduce the burden of unpaid bills on health-care providers. The  Supreme Court decision, however, changed the equation. It allowed states to opt  out of the Medicaid expansion. Many Republican governors now say they won’t move  forward on that program, which means that a lot of the unpaid bills will still  exist. And that left hospitals clamoring for these DSH cuts to be reversed so  they could continue covering the uncompensated care they provide. The White  House budget essentially proposes something close to that: not reversing the DSH  cuts, but delaying their implementation for one year.”

This is both what everyone predicted at the time, and it’s a stunning  indication of how much the deficit savings under Obamacare continue to  evaporate. Essentially the White House is kicking the greater reductions into  the out years, counting on future Congresses to stop DSH payments – creating a  likely “DSH-fix” scenario, just as we currently have with the “Doc Fix” on  Medicare payments. As for states currently deciding whether to expand Medicaid,  this step means the providers can no longer use these DSH payments as a  justification for demanding expansion. These cuts were never real – now, the  administration has admitted as much.

2. Exchange Costs Double. Running exchanges in 33 states is  an expensive and bureaucratically demanding proposition, and the Obama budget admits  it. “Setting up the central piece of President Obama’s healthcare law has  cost the administration more than twice as much as originally intended. The  Health and Human Services Department (HHS) said in budget documents Wednesday  that it expects to spend $4.4 billion by the end of this year on grants to help  states set up new insurance exchanges. HHS had estimated last year that the  grants would cost $2 billion. The department also is asking Congress for another  $1.5 billion to help set up federally run exchanges in states that do not  establish their own. The request for extra money comes at a critical time —  exchanges are supposed to be up and running in every state by October. But it is  also sure to meet hostility in Congress, which just last month denied HHS’s last  request for additional funds.” They’re running behind schedule, they’re over  budget, and HHS is still being very coy about the details of how things are  going to run when things go live in October. Sebelius may blame Republicans for not giving them the money needed to make the exchange work, but  that’s unlikely to resonate outside Washington.

3. Driving Premium Shock. One of the reasons to expect  premium shock in huge ways in 2014 is the fact that there’s a lot more  incentives in place for unhealthy people, the most expensive portion of the  market, to move onto the taxpayer funded exchanges rapidly – while there’s far  less incentive for the young and healthy to join. But the administration is  actually making this problem worse, according to Nicole  Fisher: “Recent changes made by the federal government however, now have  states and insurers concerned about the program they are required to pay into  and get funding from, once the health care law takes effect. The Department of  Health and Human Services (HHS) has released regulation clarifying that state  high-risk pools are no longer eligible for the return of funds, and that the  government money will not be given for anyone with medical costs around $60,000  per year. This shifting of incentive has many health policy analysts worried  that states now have no reason not to dump their high-risk pools onto the  exchanges on opening day. Under the new regulations it actually makes sense for  insurers to move high-risk enrollees as quickly as possible to get larger shares  of the reinsurance funds.” Given how mismanaged the temporary federal program on  high risk individuals has been, it wouldn’t surprise me if this is another area  where the effect is the opposite of what the administration hopes.

If Obamacare works, Democrats will be running on it for a generation. But if  it fails, they will be fighting over it – how to fix it, whether to defend it,  or what to do next – for just as long.

[First Published at Real Clear Politics]

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In today’s installment of the Heartland Daily Podcast (in the player above), host Jim Lakely interviews Senior Fellow for Environment Policy James M. Taylor about how many states are rethinking their foolish commitments to mandate that a large percentage of the state’s electricity is generated from “renewable energy” sources, such as solar, wind, and biomass.

Taylor has spent this spring hopscotching across the country to testify in state legislatures about how — in his testimony in Ohio in March and Arkansas in April — “renewable power mandates raise electricity prices, kill jobs, and severely punish the economy.”

Listen to the podcast in the player above, and subscribe to the FREE Heartland Daily Podcast on iTunes for great free market commentary every day.

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The London-based newsletter Oil & Energy Insider posted on their April 12 issue information about a new bill being considered in Congress to overturn some of the most damaging parts of the 2007 Energy Security and Independence Act.

These parts involve the mandate to mix ethanol from corn with gasoline in ever increasing amounts from the twelve billion gallons today to 36 billion gallons of ethanol by 2022.  The newsletter portions dealing with ethanol mandates follows:

While all of this is going on, the controversial ethanol mandate is coming under increasing attack. On Wednesday, four US Congressmen — two republicans and two democrats — proposed legislation to ease the ethanol mandate in what they said was a move to protect consumers, energy producers, livestock producers, food manufacturers, retailers and the US economy at large.

The legislation, the Renewable Fuel Standard Reform Act, would reverse the biofuels mandate as of 2014 and rescind the requirements of blending up to 15 percent ethanol in the fuel supply. It would also prohibit corn-based ethanol from being used to meet renewable fuel standards.

The legislation is gaining wider support, with a coalition of 13 food groups jumping on the bandwagon over what they fear will be increases in food prices.

Advocates of the ethanol mandate accuse the oil industry is secretly being behind the new legislation in an attempt to eliminate biofuels as a competing force.

You might want to notify your Congressman about this act, which would stop the terrible waste of corn crops and potential damage to older model cars and all devices that operate with two-cycle engines — lawn mowers, weed eaters, chain saws, tillers, chippers, etc.

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Exports from the Pacific Northwest are an ongoing battleground in the environmental war on coal. Last week, the Sierra Club and three other groups announced that they would file suit against Burlington Northern Santa Fe Railway and six coal companies over shipments of coal in open-topped train cars. The announcement is an escalation in the three-year battle to stop new export terminals proposed for ports in Washington and Oregon. Underlying all the rhetoric is a concern that mankind is causing dangerous global warming.

In 2010, Peabody Energy, Cloud Peak Energy, and Australia-based Ambre Energy announced competing plans to build export terminals in the Pacific Northwest to ship coal to Asia, with Arch Coal joining the fray in 2011.  Five new export terminals have been proposed. Coal would be shipped by rail from the Powder River Basin coal mines in Montana and Wyoming, loaded on ships at the proposed terminals, and transported across the Pacific Ocean to meet the growing demand for coal in China and Asia. Potential coal exports to Asia are estimated at between 50 and 100 million tons annually. Environmental groups and students have mounted a growing campaign to oppose construction of the terminals and the planned coal exports.

The Sierra Club and other opponents claim that rail transport of coal is responsible for “emitting coal into waterways in many locations across Washington”  in the form of coal dust and that this violates the Clean Water Act. They fear that, if the export terminals are built, additional coal trains will add to the problem. “Coal is a toxic pollutant and this action today seeks to stop illegal pollution and keep our river free of dirty coal,” said Brett VandenHeuvel, Executive Director of Columbia Riverkeeper.

Shipping coal by rail and exporting coal is nothing new. In 2011, the US exported 89 million metric tons of coal, up 143 percent from 2002. Most of those exports went through the East Coast ports of Norfolk, New Orleans, and Baltimore to Europe, which is using more coal―not less. Most of this coal was delivered to ports by rail and water pollution has not been a major issue.

Neither is coal dust new. In 1900, coal provided 70 percent of US energy consumption. Factories, railroads, electrical utilities, and home furnaces were powered by coal. During the 1940s and 1950s, fallen snow in Chicago was blackened with coal dust after only a few days. Homeowners washed their walls once a year to remove accumulated coal dust. But thanks to cleaner-burning coal-fired plants and our nation’s shift to natural gas and petroleum, US emissions of coal dust today are at a 50-year low.

While environmentalists complain about coal dust, the real reason they hate coal is their acceptance of the ideology Climatism, the belief that man-made greenhouse gases are destroying Earth’s climate. In 2009 Dr. James Hansen stated, “The trains carrying coal to power plants are death trains. Coal-fired power plants are factories of death.” Environmental groups believe burning coal will cause catastrophic climate change, so “coal dust” is used as an excuse to try to halt coal exports.

But there is no empirical evidence that human greenhouse gas emissions are causing dangerous global warming. Carbon dioxide is a trace gas. Only four of every 10,000 air molecules are carbon dioxide. Ninety-nine percent of Earth’s greenhouse effect is natural, caused by water vapor and natural greenhouse gas emissions from oceans and the biosphere. Global temperatures have not increased for more than ten years, despite a continued rise in atmospheric CO2, confounding the climate models. And despite the furor over Hurricane Sandy, history shows that storms, floods, and droughts today are neither more frequent nor more severe than in past centuries.

Yet, protests against coal in the Pacific Northwest continue to escalate. It seems that “yes we can” works except in the case of export terminals and pipelines.

[First Published at The Washington Times]

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Only a month ago BP – which not long ago promoted itself as “Beyond Petroleum” – released an “energy outlook” video that projected 99 percent of America’s energy will be supplied domestically by 2030, in part because it says the U.S. will grow production from renewable sources 202 percent by that time.

Just don’t expect BP to participate in the alleged alternative energy “boom.” The London-based petroleum producer announced last week it would dump its investments in U.S. wind energy projects, which were said to be worth $3.1 billion. It’s hard to believe they’re really worth that much, however, especially without government subsidies – not to mention the fact that BP is so easily discarding “assets” that are supposed to hold great value. The move follows a December 2011 announcement that the company would exit the solar business.

 

So where does BP think – its “outlook” notwithstanding – the future of the energy really is? Well, the same place it has been in the past: with fossil fuels.

“BP has decided to market for sale our U.S. wind energy business as part of a continuing effort to become a more focused oil and gas company and re-position the company for sustainable growth into the future,” said Mark Salt, a company spokesman. “For BP, this effort represents another example of prudent and active management of our global portfolio, consistent with our pledge to unlock more value for shareholders.”

Environmentalists’ heads must be ready to explode. For years their pressure groups had slapped oil companies like BP and ConocoPhillips into submission, waging corporate campaigns to get them to adopt their centuries-old, inefficient sources of power generation – wind and solar – to appease their feel-goodism. They even succeeded in getting the oil giants to join the U.S. Climate Action Partnership for a time, until they exited in February 2010. Now BP, the “greenest” of the fossil fuel behemoths, is saying the way forward for its own “sustainability” is in oil and gas!

Adding insult to injury for the eco-zealots, BP is just emerging financially from huge fines and a publicity disaster caused by its April 2010 explosion and oil spill in the Gulf of Mexico. Bloomberg News estimates that catastrophe may cost the company $42 billion. Yet BP officials don’t see renewables as the path to recovery, but rather a refocus on the fuels the market truly demands: fossil fuels.

To re-emphasize:

• An enormous environmental accident gushed for weeks…
• Which led to disastrous economic consequences to many other industries, such as seafood and tourism
• Enviro-activists still harp about the spill to this day
• Local, state and federal governments heavily mandate and subsidize (“stimulate”) wind and solar
• The Obama administration demonizes the fossil fuel industries on a daily basis and…
• Raises the cost of their production by obstructing leases for drilling and projects like the Keystone pipeline

And despite all those financial and practical obstacles thrown in its path, BP still sees the best way forward is to reject renewables and refocus on oil and gas. There may be no greater an indictment of wind and solar energy than BP’s rejection, especially under these circumstances.

BP first showed its discontent with renewables when it bailed out on its 40-year solar business almost a year and a half ago – only four years after it had received a $7.5 million Department of Energy grant. BP Solar had just closed its only U.S. manufacturing facility, in Frederick, Md., the year before. The company had said it would outsource its production of solar photovoltaic panels to China and India, and then-CEO Tony Hayward told the Washington Post it was “moving to where we can manufacture cheaply.”

BP auctioned equipment in January 2012 from the closed solar plant, and with bankrupt Solyndra fresh in its memory, an experienced industrial auctioneer told the Frederick News-Post, “We’ve been doing more solar technology auctions lately.” One witness to the auction described a “somber scene” in which equipment was sold off in the midst of a storm that dumped nine inches of snow in northwest Maryland.

So much for the excuse that U.S. solar companies “can’t compete” because of the cheap, heavily subsidized production of panels in China and India. BP sent its manufacturing to those places, which would presumably have made solar viable, and it still shut down – even with its own U.S. grants. It was a fast and steep fall for BP Solar, which only six months earlier had produced a video (which BP has now removed from its YouTube channel) that espoused the innovative qualities of its solar panels.

Similarly now, a month after its rosy “energy outlook” video that promoted renewables growth, BP has dumped wind. The fact that such a globally known energy icon, which for a long time placed its sensitivity to environmental causes ahead of its core profit-making business, has bailed on the movement also shows how much the cause and concern for global warming has been depreciated in just a few years. As both temperature trends and public polls indicate, the climate “threat” that alarmists have tried to drum into the national conscience has fizzled away.

Clearly BP no longer fears the environmentalists’ messaging. Despite the Gulf disaster, sound economics, usable energy and scientific truth have won the day with BP’s decisions to quit solar and wind. Too bad politicians can’t see the light.

[First Published at the National Legal and Policy Center]

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The Wall Street Journal reported on April 5 that the federal prosecutors at the Department of Justice are considering a request to reduce the 292-month sentence imposed on Jeffrey Skilling for his conviction on one count of conspiracy, one count of insider trading, guilty on five counts of making false statements to auditors, and twelve counts of securities fraud. He was found not guilty on nine counts of insider trading.

The prosecutors are proposing negotiations with the Skilling defense with input from employees, shareholders and other victims of the Enron collapse. The resulting agreement, if reached, will be presented to Houston federal Judge Sim Lake who presided over the original trial and will have the final say about resentencing. The stated intent of the federal prosecutors is “to resolve certain disputed matters concerning sentencing.” It is not clear what those matters are.

Skilling has a pending petition for a retrial based on “newly discovered evidence.” The new evidence has not been publicly disclosed. However, I believe from reading decisions from previous appeals, they have to do with off-balance sheet special purpose entities where some of Enron’s debt was parked by Andrew Fastow, the chief financial officer. Special purpose entities (SPEs) are not illegal or contrary to accounting standards, if they meet some important conditions. The most important one is that the SPEs must be completely independent from the firm that created them.

That was not the case with the Enron SPEs. Fastow was in charge of the SPEs while he was still Enron’s CFO. He used the connection to syphon off tens of million dollars to his personal account. He subsequently pled guilty to wire and securities fraud. According to Biography.com, Fastow also became an informant and cooperated with federal authorities in the prosecution of other Enron executives, including Skilling. Indeed, Fastow was characterized as the “star witness” according to the New York Times.  Specifically, Fastow testified that Skilling knew of and approved the illegal connection between Enron and the SPEs. For his testimony Fastow  served only six years in prison.

It was subsequently revealed by the appellate court that Fastow had claimed in an interview by the Federal Bureau of Investigation Skilling did not know of the SPE connection to Enron was maintained. Moreover, this exculpatory evidence was kept from the Skilling defense team by the prosecution with the permission of trial Judge Sim Lake.

It has been reported by CNBC that the federal prosecutors have invited “employees, shareholders and other victims … to voice objections by April 17.”  The very hostile environment in Houston was widely acknowledged. Even Supreme Court Justice Sonia Sotomayor, a former prosecutor, recognized “the deep-seated animosity that pervaded the [Houston] community at large.”

Presumably objections from “victims”will be based on Enron’s share price decline in 2001 from $80 to less than $1. However, the preceding increase in share price in 2000 from $40 to $80 will probably not be one of the objections.

What is also unappreciated is the nature of Enron’s business model. In a word, it was hedging. In particular it was for natural gas prices. Shareholders and especially employees ought to have known about the value of hedging. Indeed, many of them may have hedged against the possibility of a decline in Enron’s share price. But these shareholders may be tempted to hide their hedge in order to share in damage awards.

Natural gas prices in 2000 rose from $2.50 per million Btus to $9 and then fell in 2001 back down to $2.50 per million Btus. The price spike followed decades when the prices were stable around $2.50 per million Btus. Thus, Enron’s share price moved in parallel with natural gas prices.

This connection gives a plausible rationale to Skilling’s run-on-the-bank theory. The sharp price decline also appeared in the 2008 market crash when there was a similar run on the bank at Bear Sterns. In this latter case the share price in one year ending March 2008 went from $150 to $2. Bear Stearns was later forced by the Treasury into JP Morgan at $10 a share.

Other 2008 runs on the banks according to Time magazine include: Lehman Brothers, AIG, Citigroup, Freddie Mac, Fannie Mae, several hedge funds and Iceland.

Large market moves are usually followed with government actions to divert attention from its role in causing the crash. The Enron case is no exception. The collapse of the newly established electricity market in California was the proximate cause. The flawed system forced all transactions into day-ahead and same-day markets. The so-called deregulated market, established without a single no vote by the California legislature in 1996, actually prohibited utilities from hedging. The two spot markets began operating in April 1998.

For a while the spot markets produced low prices for electricity. This was considered proof that the deregulation was working. But the inevitable disturbance in the markets arrived in 2000 and continued until the markets collapsed in 2001. Note that the electricity prices tracked the natural gas prices. during that time and even today. The reason is that the fuel used at the margin to generate electricity is natural gas. This connection is similar to the relationship between crude oil and gasoline markets.

The crisis in California Generated a lot of political heat and attracted the attention of federal prosecutors. It was then that the prosecution of Enron began.

The Enron case was an early example of what Harvey Silvergate describes as a similar prosecution tactic for insider trading cases:

“Accused traders and portfolio managers, looking at decades-long prison terms, come to understand that a much-reduced sentence awaits them if they cooperate with prosecutors. The key is to testify that they let the boss know that their trading moves were based on prohibited tips—such as an impending announcement of the success or failure of new-product testing, or a coming tender offer—and that the boss responded knowingly and with an admonition not to spread the secret around.”

That is hauntingly similar to the Enron prosecution. Not only did the federal prosecutors withhold the Fastow interview by the FBI, with the help of trial judge Sim Lake, but raises the possibility that the Fastow testimony at trial was suborned by the federal prosecutors.

That is not farfetched. In the notorious case of Ted Stevens, Senator from Alaska, exculpable evidence was withheld at the trial by the federal prosecutors. The New York Times on May 24, 2012 quoted a Justice Department report that two prosecutors engaged in “reckless professional behavior” but were only suspended by Attorney General Eric Holder for 40 and 15 days that were later reversed. This, despite the fact the Senator Stevens conviction just before the 2008 election that cost him his seat. This in turn gave the Democrats a filibuster-proof majority in the Senate, which enabled them to pass the health care law. There were even allegations in a report ordered by trial judge, Emmet Sullivan, that the prosecutors suborned perjury.

With this as background, it raises the possibility that a similar review of the Enron prosecution might take place. To head this off, a hedging strategy for the prosecutors is to reach a deal on resentencing of Skilling. If such a deal is reached, Skilling would have to withdraw his petition for a new trial. The prosecutors would therefore avoid being investigated.

Skilling has always maintained his innocence. However, he has already been deprived of his freedom for more than six years. He must now be evaluating whether he wants to stand on principle or to go for an earlier release. That must be a very difficult decision.

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How is it that every time environmentally supercharged politicians ring the alarmist bell, Mother Nature has a way of mocking their efforts? So was the case with the northern hemisphere’s strong finish to the winter season as much of Europe shivered under record cold while the eastern half of North America experienced March temperatures and snowfall that more than made up for a tranquil start to the season.

Of course, much of this news was being ignored by the “gangreenous” liberal media with the Los Angeles Times only able to recognize the extreme heat of Australia’s 2012-13 summer in its ongoing crusade to promote the climate change agenda. For those interested in acquiring a more balanced view of what was going on with the weather globally, one would have had to access the media sources like the U.K. Telegraph or some non-government U.S.-based weather services.

In short, for those who did not have such access, the U.K. “was subjected to its worst snowfall in 30 years,” as noted in an article by Telegraph Media Group on March 23. Indeed, a sharp increase in deaths during the winter months over previous years has generated some discussion over the wisdom of the carbon tax given the more deadly impacts of the cold on the U.K. population compared to the summer heat. So while Europe’s environmentalist lobby continued their drumbeat over global warming, the facts pertaining to increased mortality rates due to cold were belying a different story.

Meanwhile, the U.K.-based magazine, The Economist, attempted to make a begrudging concession to the scientific community that maintains a much less apocalyptic view of the world climate outlook (“A Sensitive Matter,” The Economist, March 30, 2013). The article questioned the accuracy of current IPCC climate models given their built-in high temperature sensitivities to changes in CO2 levels and the fact that continued growth in CO2 levels has not generated a concurrent rise in temperatures in the last 15 years. In fact, should the flat trend in global temperatures continue, the article states that the GCMs (global climate models) used by the IPCC may need to be revised to account for this unexpected change in the relationship between CO2 and global temperatures.

The article offers some insight into other factors that could alter the relationship between CO2 and temperature change such as cloud albedo, deep ocean temperatures, negative feedback from aerosols and the warming effect of black carbon or soot, but suggests that the net effect of these factors is to generate more warming than previously thought. The last part of the article reflects an attempt by the editor to reach some conclusion on the sensitivity issue.

The postulated use of the TCR, or transient climate response measure (defined as the temperature response after a gradual doubling of CO2 every 70 years), comes across as overly simplistic as it does not appear to adjust for other factors and feedback loops. Frankly, the article fails to mention some of the most significant factors that the community of climate change realist scientists believes are of major significance.

These include the sun and solar cycles (refer to studies by Dr. Willie Soon), the wider role of the oceans and ocean salinity in climate (refer to studies by Dr. William Grey) and the role of negative feedback loops in the determining temperature sensitivities (for a more detailed treatment of negative feedback loops in climate change analysis, refer to research by Dr. Roy Spencer). However, this is by no means an all-inclusive list as a number of other factors, many of which scientists are still attempting to understand, are known to have various effects on global temperatures.

Overall we found the editor of this article too unwilling to concede significant ground on the issue of climate change. The attributions to the IPCC as comprising the “mainstream of the scientific community” and representing “conventional wisdom” are questionable at best, especially given the multitude of errors and issues with the group’s first four scientific studies. There is also no treatment of the underlying credibility issue given recent scandals involving various participants in the IPCC’s work and well-documented weaknesses of the peer-review process. Third, the article comes off as focusing too much attention on CO2 as the “prime mover” in understanding the climate change issue, notably given the level of uncertainty about the effect of other factors and feedback loops.

At the very end of the article, the editor suggests perhaps “a small reduction in estimates of climate sensitivity would seem to be justified.” He hastens to add, however, that “if climate scientists were credit-rating agencies, climate sensitivity would be on negative watch. But it would not yet be downgraded.” The view here is that the IPCC and the alarmist community are on the verge of their own version of the 2008 financial crisis. Subsequent to that event, the major credit rating agencies were the subject of multiple lawsuits and were forced to review their ethics and business policies. Perhaps the IPCC is much closer to facing such a crossroads than the consensus now believes.

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Ezra Klein is a man of the left. Heartland’s Benjamin Domenech is a man of the right. Yet they proved in this WonkTalk spot at the Washington Post that it is possible for people who disagree to have a civil discussion about policy.

Last week, Klein wrote a lengthy analysis of the Republican plan to replace Obamacare. Ben Domenech responded with a lengthy rebuttal. Klein, tongue in cheek, promoted Ben’s appearance above as an “Epic health Wonk Smackdown ” …  ”or maybe it was a calm, slightly dull conversation about block granting. I’m not going to tell you what to think.”

It was anything but dull. Ben does a fine job explaining that there have long been market-based alternatives to government “fixes” to our health care system.

There were a couple of encouraging comments beneath this video at the Post, which is not exactly brimming with non-lefty readers. Here are two:

jkaren
4/9/2013 12:04 PM CDT
i think “wonktalk” is just wonderful.
thank you for this really essential discussion.
thanks to you and to benjamin domenech. i admire him also.
this is what discussions are supposed to sound like….and this is how people can learn from discussions.

John Mansor
4/10/2013 9:46 AM CDT
More Please! Enjoyed the in-depth debate and gives good understanding of the two sides. I just dislocated my shoulder and I wish getting it fixed was as easy as replacing a lightbulb!!

Watch the WonkTalk “smackdown”:

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As posted previously on this blog, a North Carolina bill that would repeal the state’s renewable energy mandate had passed it’s first legislative hurdle, and is now scheduled to be heard next week in the Environment committee.

While a lot of North Carolina lawmakers have already come out supportive of repealing the mandate, there are still quite a few Republicans who have been  squishy on the issue, despite many of them having campaigned as being staunch fiscal conservatives.

In the letter below, representatives from several leading state and national policy organizations tell members of the North Carolina General Assembly that if they care about being fiscal conservative, or in ideas like social equity, then they must stop picking winners and losers in the energy arena.

 

Senator/Representative _________,

 

The North Carolina General Assembly is considering a proposal to cap and end the current renewable portfolio standards (RPS) mandate in North Carolina. As you are aware, in 2007 the General Assembly adopted Senate Bill 3, which had an RPS mandate requiring utilities to provide customers 7.5 percent of their electricity through renewable sources of energy, such as wind, solar, or biomass. These sources are all significantly more expensive than conventional sources of power, which North Carolina’s utilities voluntarily choose when they are left free to pursue truly efficient and affordable energy for North Carolina state citizens.

North Carolina’s RPS mandate forces electric utilities — and therefore their customers, who are given no choice in electricity providers in the state — to purchase arbitrary amounts of electricity generated from wind and solar plants that is significantly more expensive than electricity generated from traditional sources. According to the Energy Information Administration, electricity from new wind installations is more than 30 percent more expensive than electricity from natural gas, and electricity from solar is 120 percent more expensive. But natural gas, coal, and nuclear are also more valuable than wind and solar because these traditional sources are reliable — after all, the wind does not always blow nor does the sun always shine. These higher costs affect North Carolina families, businesses, industries, and taxpayers who pay the bills for state and local governments.

These higher electricity costs are also hurting the state’s economy. According to the Beacon Hill Institute at Suffolk University, North Carolina’s renewable energy mandate will cost North Carolina ratepayers $1.8 billion by 2021. Because higher electricity costs increase the cost of doing business in North Carolina, they estimated that the mandate will lead to losses of 3,600 jobs, $43 million in investment,  and $140 million in GDP in the state. It will also reduce North Carolinians’ disposable income by $57 million.

Electricity is a basic household necessity, not a luxury item. Hiking electricity rates works as a highly regressive tax on poor households. Electricity costs have been eating increasingly larger portions of their budgets. For ratepayers earning $30,000 a year or less, electricity constitutes from one-tenth to as much as one-third of their after-tax income.

North Carolina leaders have a moral obligation to promote least-cost, reliable and efficient energy sources, letting competition and free enterprise work to refine, pursue, and discover better ways to produce energy through conventional and renewable sources. State subsidies and edicts stop those free-market innovations from happening and keep electricity rates artificially high.

The signed coalition of public policy research and grassroots organizations are opposed to the North Carolina government picking winners and losers in electricity generation and forcing its citizens to bear the higher costs. For the good of its citizens and economy, North Carolina policy should support least-cost, reliable, and efficient energy sources.

 

Phil Kerpen, President

American Commitment

 

Thomas Pyle, President

American Energy Alliance

 

Todd Wynn, Energy, Environment and Agriculture Task Force Director

American Legislative Exchange Council

 

Craig Rucker, Executive Director

Committee For A Constructive Tomorrow

 

Myron Ebell, Director

Freedom Action

 

Sabrina Schaeffer, Executive Director

Independent Women’s Forum

 

Francis X. De Luca, President

John W. Pope Civitas Institute

 

Brandon Arnold, Vice President of Government Affairs

National Taxpayers Union

 

Larry Hart, Director of Government Relations

American Conservative Union

 

James Valvo, Director of Policy

Americans For Prosperity

 

Grover Norquist, President

Americans For Tax Reform

 

Thomas Tanton, Director of Science and Technology Assessment

American Tradition Institute

 

William Yeatman, Center for Energy and Environment Assistant Director

Competitive Enterprise Institute

 

Joseph Bast, President

The Heartland Institute

 

Jon Sanders, Director of Regulatory Studies

John Locke Foundation

 

David Ridenour, President

National Center for Public Policy Research

Tweet[Editor's note: Listen to Steve talk The Take with Charles Butler about chained CPI and other aspects of President Obama's 2014 budget with the player above.]

 

President Obama today unveiled his budget proposal. Left-leaning groups are slamming it for aiming to cut Social Security and other entitlement benefits, mainly by using “chained CPI,” a new means of calculating inflation. I’m also slamming it for that . . . and for the additional harm chained CPI would do.

Reported inflation rates would drop under chained CPI because it adjusts for less expensive substitutes that people could buy to reduce the impact of inflation. For instance, if the price of butter rises, shoppers could buy less-expensive margarine. If the price of beef rises, people could switch to cheaper cuts or to other sources of protein, such as chicken. This leaves government bureaucrats with lots of leeway to toy with inflation numbers. Here’s how I described it in a Heartland media release a few days ago, tongue only a little in cheek:

Chained CPI is just another means for government to lie about the true rate of inflation. Basically, chained CPI says people can substitute lower-price items if other items go up in price, so there’s not really inflation – buying margarine if butter goes up in price, for instance. Following the logic of chained CPI, if the price of steak goes up, people can buy hamburger; if the price of hamburger goes up, people can buy chicken; if the price of chicken goes up, they can buy eggs. Eventually we’re down to no inflation as long as there are dead possums along the side of the road that people can bring home for dinner.

Chained CPI would do more than give government a way to fudge inflation calculations to reduce Social Security benefits. It would also reduce future incomes for working Americans because employers usually factor inflation into what they pay. Expect lower pay raises — raises that fail to keep up with true inflation — if the government starts reporting inflation based on chained CPI.

Personal exemptions and standard deductions in the personal income tax are also indexed for inflation. With lower reported inflation rates, the tax bite would grow, because the exemptions and deductions would fail to keep up with true inflation. Adjustments in the Earned Income Tax Credit, which millions of lower-income workers receive, also would shrink under chained CPI.

Rather than lie about inflation, people in government should declare the truth: The government cannot sustain these entitlement programs as they are structured, so they’re going to be cut. This would be a form of default but at least it would not be a form of deception.

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President Barack Obama released his 2014 budget proposal, which would spend $3.8 trillion. The budget contains a tax hike of some $800 billion, including a requirement that “millionaires” pay at least 30 percent of their income in taxes, and places a 28 percent cap on deductions for charitable giving for the top 2 percent. Spending cuts include reductions in payments to doctors via Medicare, and lower cost-of-living adjustments for Social Security recipients.

Obama’s budget also imposes a tobacco tax to pay for “universal preschool,” and the president pledged to invest in the building of infrastructure, “green jobs,” and alternative energy sources.

The following statements from public policy experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Director of Communications Jim Lakely at jlakely@heartland.org and 312/377-4000.

“President Obama declared when releasing his budget blueprint: ‘I will not agree to any deal that seeks to cut the deficit on the backs of middle class families.’ Yet he wants to cut Social Security, Medicare and other benefits, which would cut the deficit on the backs of those families.

“Obama also would raise spending another 6 percent over current spending levels. His 2014 budget would be 27 percent higher than when he took office. This increase exceeds economic growth, price inflation, wage inflation, personal income growth, population growth, and nearly every other measure of the country’s economic performance. At least President Obama’s spending increases have been smaller than the ones we saw under his predecessor, the compassionately conservative Republican, George W. Bush. I don’t know if this should encourage or discourage persons who believe in fiscal responsibility.”

Steve Stanek
Research Fellow, Budget and Tax Policy
The Heartland Institute
Managing Editor
Budget & Tax News
sstanek@heartland.org
312/377-4000

 

“The president claims he wants to improve the economy, yet he proposes a minimum wage increase that both economic theory and historical experience show will raise unemployment among teenagers and minorities. He also wants to raise regressive taxes that burden the poor to fund preschool programs that empirical evidence suggest have little positive impact, and in any case are a state and local responsibility.”

Richard Vedder
Professor of Economics
Ohio University
Policy Advisor, Economics
The Heartland Institute
vedder@ohio.edu
312/377-4000

 

“President Obama said that his proposed budget will make ‘targeted investments’ that will create jobs. By ‘investments’ he means more government spending.  By ‘targeted’ he means that the government will spend our money to distribute to businesses that the government favors. This is crony capitalism.

“He ‘invests’ in electric car makers that sell $100,000 vehicles for the rich and are now heading for bankruptcy. His administration is not very good at picking winners; it is very good at picking losers. Bankrupt businesses do not create more jobs, and his higher taxes will slow economic growth.”

Ronald D. Rotunda
The Doy & Dee Henley Chair and Distinguished Professor of Jurisprudence
Chapman University
rrotunda@chapman.edu
312/377-4000

 

“The president promises that more government spending will boost the economy. That is just more failed Keynesianism – the premise that government spending magically grows the economy. This caricature of Keynes’s thinking has been proven false time and again, most spectacularly in the United States by Obama himself. As government grows, the rest of the economy shrinks. Obama’s budget is a fine prescription for a recession.”

S.T. Karnick
Director of Research
The Heartland Institute
skarnick@heartland.org
312/377-4000

 

“Barack Obama’s 2014 budget, as with all of his prior budgets, is not serious. The only good thing to say about it is that he has broken the Democrat cone of silence about the need to curb the growth of entitlements.

“But when you see a budget which aims to limit the amount an American can accumulate in retirement accounts, or which aims to federalize the last private part of education in America, namely pre-kindergarten, and fund it by raising tobacco taxes, you know this is an ideological document first and foremost. The suggestion of going to chained CPI for Social Security cost-of-living adjustments is nothing but a smokescreen so he can claim to be offering a balanced approach.

“Yet Obama continues to call for upper-income earners to ‘begin to pay their fair share,’ despite that group carrying the weight for the nation under the most ‘progressive’ tax structure in America’s history. He continues to call for a higher minimum wage despite that being a sure recipe to worsen the already disastrous unemployment rates among the youth and among blacks. He calls for more stimulus and fighting climate change despite most of the public realizing that those are both nothing more than government-growing sinkholes for taxpayer money.

“Obama does one particularly clever thing, and one which unfortunately is likely to have some traction with economically illiterate Americans: He argues that his plan is deficit-neutral, as if that makes it OK. Putting aside the fact that liberal plans always end up with more spending and less revenue than forecast, supporters of limited government and liberty must remind Americans that the burden of government is not measured by the deficit, but rather by spending, perhaps most easily measured by federal spending as a share of GDP. Until we get that well below 20 percent, aiming for 15 percent, our country will be neither fiscally sound nor truly free.”

Ross Kaminsky
Senior Fellow, Finance
The Heartland Institute
rossputin@aol.com
312/377-4000

 

“We live in very Orwellian times, but anything that starts with a ‘t,’ as in trillion, does not deserve – even by Washington standards – to be called a ‘budget.’ It is instead a blueprint for the further destruction of the American Republic.

“What President Obama outlined in the Rose Garden today is simply another example of the ‘never let a good crisis go to waste’ mentality that pervades the constant campaign mode of the Obama administration. Like his predecessor, Franklin Delano Roosevelt, Barack Obama has persistently pushed policies that have deepened and worsened a recession, apparently for political purposes. Instead of ‘tax and spend,’ he now promotes ‘enhanced revenues’ and ‘investment’ – the former code words for raising taxes yet again on the most productive players in our economy, the latter code for paying off interest-group supporters like construction workers and teachers’ unions to help ensure voting support for his leftist agenda.

“The president is correct that ‘nothing shrinks deficits faster than a growing economy,’ but he has demonstrated for the last four years that he hasn’t a clue how to grow an economy. Whether this results from willful ignorance or malevolent intent remains to be seen, but the results remain the same: a stagnant economy in a country that slouches further and further in the direction of Greece.

“Senate Republican Leader Mitch McConnell has it right when he dismisses the Obama proposal as ‘not a serious plan; for the most part, just another left-wing wish list.’ Fortunately, like the president’s last four ‘budget’ proposals, this one is going nowhere in the Congress.

David L. Applegate
Policy Advisor, Legal Affairs
The Heartland Institute
media@heartland.org
312/377-4000

 

We’ve heard about not adding ‘one dime to the deficit’ before. Even if true this time, what does it do about the trillion dollars (10 trillion dimes) already added after the last such promise?

“Obama and the Democratic Congress and administrative agencies, especially the EPA, need to stop tearing down our infrastructure for generating electricity, and get out of the way of energy producers. They should stop looting industries that produce something useful, like oil and gas, to subsidize wind farms and other ‘green’ projects that go bankrupt as soon as subsidies stop, if not before.”

Jane M. Orient, M.D.
Executive Director
Association of American Physicians and Surgeons
janeorientmd@gmail.com
312/377-4000

 

“Everyone likes to tout the weak evidence that government preschool boosts poor children, but few people talk about the research that indicates large amounts of out-of-home child care hurts small children and parents. Kids separated from their parents are more insecure and likely to be aggressive. Parents who put their children in out-of-home care lose their parenting skills.

“Although one can argue children whose families will not teach them letters and colors would benefit from any mental enrichment of the type caring families naturally provide, this description does not fit all the children that would be eligible for the president’s preschool plan. And it is wrong to tax parents who sacrifice to care for their children to pay for parents who choose not to.”

Joy Pullmann
Research Fellow, The Heartland Institute
Managing Editor, School Reform News
jpullmann@heartland.org
312/377-4000

 

“President Obama’s 2014 budget arrived late. Both the Senate and the House, tired of waiting for him to fulfill this constitutional obligation, had created their own budgets. Predictably, the president’s budget, and the Senate’s, demonstrate Keynesian insanity – insisting on spending more in the face of a nearly $17 trillion national debt, and a deficit that suggests the need to spend less.

“The ‘foolish, across-the-board budget cuts’ Obama deplored in his Rose Garden rant were the result of his failure to heed the Simpson-Bowles Commission and his suggestion to implement the ‘sequestration’ option if the bipartisan commission could not come to agreement. The only thing we know for sure from his first term is that he has learned nothing and thus hobbled the recovery from the 2008 financial crisis.

“The only ‘solutions’ the president offers are higher taxes when the nation needs a steep reduction in taxes to truly stimulate the economy. It worked for John F. Kennedy and it worked for Ronald Reagan.”

Alan Caruba
Founder, The National Anxiety Center
Policy Advisor, The Heartland Institute
acaruba@aol.com
312/377-4000

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There will be numerous eulogies today from people who knew her well, and most  will focus on Margaret Thatcher’s tenure as Prime Minister, when her wit and skill made her a force to be reckoned with, one whose message extends beyond her time. But that doesn’t mean we should ignore how she got  there in the first place, and how it informs the decisions of our own day.

Consider the clash within the Conservatives in the mid-1970s. Ted Heath, the  Mitch McConnell of his day, had won the Prime Ministership stressing more free market views, but then embarked on all sorts of disconcerting steps: income and  price controls, dropping his labor union reforms like a hot rock, subsidies for  industry cronies, nationalizing Rolls Royce. Thatcher was originally seen as a Heath acolyte within the Tory wing, given a cabinet position in Education – but  the distance between them grew, and she became closer to fellow Cabinet member  Keith Joseph, forming a tiny band of back benchers disagreeing with the aims of  the party leadership. She did not oppose him or undermine leadership publicly,  but she was careful to keep this cronyist approach to industry-driven governance  at arm’s length.

Heath’s approach failed at the ballot box. After losing the election in 1974  and failing to form a coalition government with the Liberal Party (a No  Labels-esque “Government of National Unity), he took it as a sign that the  Tories had to move leftward in order to adapt to the opinions of the nation.  Thatcher disagreed, and that made all the difference. When Joseph announced that  he would challenge Heath for party leadership, Thatcher was the only Cabinet  member to endorse him; when Joseph was forced to withdraw (thanks to demography comments implying the working class really ought to consider using birth control  more regularly – the speech is here),  he was forced to withdraw. So Thatcher insisted she would run.

No one took this seriously. She had to be a stalking horse for a different candidate – new rules allowed candidates to enter after the first round of  voting if it was inconclusive. But Thatcher insisted she was in it to win. John O’Sullivan describes it: “At a meeting of sympathetic journalists, the Daily Telegraph’s Frank Johnson asked her what she would do after the leadership  election. “I shall be leader of the Conservative Party,” she replied. “No, I  mean, really,” said Johnson, slightly nettled at being treated like part of a  public press conference. “Frank,” she responded, “I would not run for this job  if I did not really think I could win it.” And she did, on the first ballot.

That’s all fine, the press said at the time. But this was leadership of a down in the dumps party, one out of step with the populace. The dominant assumption was that she would have to moderate to become acceptable to the  British people. She did not. Instead, she repackaged conservative principles  with a message of common sense and optimism, attacking nonsensical regulation,  union dominance, and high taxes with verve. She promised hope and growth, not dour austerity, and insisted that acceptance of a nation in decline was a  choice, not an inevitability.

She won. And the  world changed because of it. RIP.

[First published at Real Clear Politics]

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Former British Prime Minister Margaret Thatcher died today at the age of 87, and we here in the United States should take good note of her accomplishments. Thatcher’s life’s work is of immense relevance because today’s United States has more in common with the Great Britain that Thatcher took over in 1979 than with the United States of 1981 when Ronald Reagan assumed the presidency after the inept Jimmy Carter administration.

Today the United States is as far gone into statism as Britain was when Thatcher became Prime Minister—perhaps farther, in fact, when one considers the powerful surveillance tools today’s U.S. government has and its lack of scruples in using them. The contemporary U.S. entitlement crisis, government debt disaster, and power of government-employee unions are disturbingly similar to the woes Thatcher faced.

Undaunted by the huge challenge that faced her, Mrs. Thatcher transformed a socialized, backward, union-dominated British economy into a modern success story in just a few short years, through market-opening, individual-empowering policies. For this she was vilified as heartless and mean-spirited. But to those of us who really want the poor and underprivileged to have a chance to succeed and to benefit from a growing economy, she was and remains a true heroine.

Thatcher’s success shows that the state can be rolled back—even if only temporarily, as happened in Britain after Thatcher left office and the forces of big government returned to their arrogant, profligate, and reckless ways.

Margaret Thatcher achieved something very few politicians have ever done: She left her nation better off than she found it. In economic policy, fostering of social order, and national defense, Mrs. Thatcher was a true champion of liberty.

[First Published at The American Culture]

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The biggest political problem faced by so-called “liberals” and so-called “progressives” in President Obama’s second term is how to prevent voters from holding them politically responsible as the public comes to realize how badly they were lied to during the first Obama term to win passage of Obamacare.

Most supporters of Obamacare embraced it because of a principled belief that everyone should have access to essential healthcare.  But even the establishment, still Democrat dominated, CBO admits that after 10 years of implementation, Obamacare will still leave 30 million uninsured.

We will see below why that is a woeful underestimate.  Even worse, John Goodman and I explain how universal health care for all can be assured without Obamacare, with no coercive individual mandate, no job-killing employer mandate, and a savings to taxpayers of roughly $2 trillion over the next 10 years.  (Hint: true health care safety net, plus market incentives and competition.  See John C. Goodman and Peter Ferrara, Health Care for All Without the Affordable Care Act, Issue Brief No. 116, National Center for Policy Analysis, Dallas, Texas, October 17, 2012.  That has been explained in this column before.  But too many “progressives” see market incentives and competition as a fascist fraud against working people.)

Just wait until the broad realization dawns that the harsh reality of Obamacare is that tens of millions will lose their employer provided insurance because of the perverse incentives under the program.  Even the establishment CBO admits that at least 7 million, and as many as 20 million, will lose their employer coverage.  In February, CBO reported that “in 2019 [5 years after Obamacare is implemented], an estimated 12 million people who would have had an offer of employment-based coverage under prior law will lose their offer under current law [aka ‘Obamacare’].”

But that report is just the early breeze of the coming storm.  The Obamacare employer mandate requires all employers of 50 or more full time workers to purchase the expensive insurance for those employees that Kathleen Sebelius (“The Secretary shall determine”) specifies that they must buy.  But that mandate is enforced by a penalty of $2,000 per worker, which may be only 10% of the average cost of family coverage under the Sebelius requirements.

Moreover, workers who do not receive employer provided coverage are eligible to purchase their health insurance on the state Exchanges with extensive taxpayer subsidies to help cover the cost.  Indeed, in the Exchanges, low and moderate income workers can even get subsidies covering their out-of-pocket expenses.   Employers can terminate their employee coverage, give their workers a raise with part of the savings, and let the taxpayers bear the cost of subsidizing their coverage in the Exchanges.  Former CBO Director Douglas Holtz-Eakin estimated in a study for the American Action Forum that more than 40 million workers would lose their employer coverage due to these perverse incentives.  It’s going to be even worse than that, when all of the cost increasing impacts of Obamacare are realized.

So much for President Obama’s oft repeated first term promise that “If you like your health insurance, you can keep it.  No one is going to take that away from you.”

Obama campaigned in 2008 on a promise that Obamacare would reduce the cost of health insurance by $2,500 for average families.  But since Obamacare passed, the cost of an average family policy has already increased by $3,000.  That reflects the philosophical problem that so many “progressives” have with math, which they are certain is a fascist conspiracy against working people.  (Why must 2 +2 always equal 4?  That is just fascist authoritarianism.  Why can’t we be flexible so it can sometimes equal 3, or 5?)

But this again is just an early breeze from the coming storm.  If you require coverage of more benefits, such as “free” check ups, “free” preventive care, “free” contraceptives, “free” preventive care, and everything Kathleen Sebelius says must be covered to satisfy the individual mandate and the employer mandate, then fascist math says that means there must be higher premiums, just so those fascist insurance companies can have enough money to pay all their promised benefits.

Then there is the benevolent Obamacare regulation called “guaranteed issue.”  That requires all insurers to cover everyone who applies, no matter how sick they are when they first apply, without having ever paid any premiums to the insurer before.  That concept applied to fire insurance would require fire insurers to cover applicants who waited until their home caught on fire to call for coverage.

That regulatory requirement is then paired under Obamacare with the further compassionate regulation called “community rating,” which requires insurers to charge all applicants the same price, no matter how sick when they first apply, except for sharply restricted variances for age, geographic location, and smoking.  Applied to fire insurance, that concept would require the insurer to charge no more for the applicant that calls with his house already on fire than for other applicants.

Naturally, all these regulatory requirements are going to cause health insurance premiums to soar, especially for younger and healthier individuals, who are not going to be happy with Obamacare as a result.  The March 22 Investors Business Daily cites Aetna CEO Mark Bertolini as saying that Obamacare “will likely cause premiums to double for some small businesses and individuals.”  But he just represents a fascist insurance company trying to protect its rapacious, outrageous, exploitive, 4% profit margin.  A study of 5 major cities by Holtz-Eakins’ American Action Forum estimated premiums to climb there under Obamacare by an average of 169%.

Not to worry though.  The young and the healthy have a strategy available to them under Obamacare to avoid these costs.  They can refuse to buy any insurance until they get sick with some costly illness such as cancer or heart disease (or even just need some costly dental work).  Then they can sign up for the full product coverage under Obamacare, taking advantage of the compassionate, benevolent, guaranteed issue and community rating.  Until they recover.

The individual mandate, not to mention the employer mandate, was supposed to prevent this.  But we discussed the employer mandate above.  And individuals as well could just skip the insurance and pay the penalty at a savings of at least 50% to 75% or more.  But while Justice Roberts wisely concluded that it is precisely the individual mandate penalty that makes this whole socialist mess constitutional, when our Congressional representatives were put to a vote as to whether the IRS could enforce this penalty by garnishment or seizure, they equally wisely said, “Hell No!”

So millions, including myself, will pursue this strategy next year to avert the costs of Obamacare, which will mean millions more uninsured.  And that will mean more costly, sicker and older folks left covered in the insurance pool, which will cause premiums to soar further, which will cause still more individuals and employers to drop coverage, which means still more uninsured, and the chaos of a financial death spiral for private insurers.

“Progressives” will cheer this demise of the fascist, private insurance market, which was their goal all along, leaving all health care to be paid for by the “single payer” government.  But “liberals” never before cheered monopolies, all of whom are the single payers for their industries, maybe for good reason.  Maybe they knew something back then that today’s wise guys don’t.  We will see in any event whether the voting public enjoys the ride as much as the “progressives.”  And so much again for if you like your health insurance you can keep it, and no one is going to take that away from you.

All of this health insurance cost chaos will just further feed the labor market chaos that is already starting as the darkening cloud of Obamacare approaches.  Already employers are replacing full time employment with part time employment paying lower wages and no benefits.  Already small businesses with less than 50 employees are freezing hiring, and those with just above 50 workers have begun layoffs.  Moreover, under the Obamacare law, the employer mandate does not require employers to cover the family dependents of their workers.  So the trend towards losing that coverage is already beginning as well.

All of this is preparation to avoid the employer mandate.  But it will mean still more uninsured.  And still more declining incomes for the middle class and working people, which is the mark of Obamanomics, President Obama’s rhetoric deluding his “progressive” cheerleaders to the contrary notwithstanding.  Soaring health insurance costs, and failing health insurers, will just accelerate this labor market chaos even more.

But Obamacare is going to be causing chaos for seniors as well.  As NCPA President John Goodman points out in his health policy blog on March 25, almost half of Obamacare is paid for over the next decade by draining $716 billion out of Medicare.  While Democrats have been so aggressive about accusing Republicans of wanting to slash Medicare, it is Obama and the Democrats who have actually done it.

That leaves Medicare growing at only about half the rate of health care in the rest of the country, which, Goodman explains, has “been the trend for the past 40 years, and [contrary to “progressive” rhetoric] the United States is not unique. Our health care spending growth rate is in the middle of the pack among developed countries.”

That means that spending in the rest of the health care system, and health care spending in the rest of the developed world, will be growing at twice the rate of Medicare.  Goodman adds, “The Medicare Office of the Actuaries has included two graphs in the latest Medicare Trustees report showing what this will mean. These graphs — which have never appeared in the mainstream media or even been referred to by the mainstream media — show Medicare doctors’ fees dropping below Medicaid fees in the near future and falling progressively behind Medicaid and private sector payments, indefinitely into the future.”

As a result, “One out of seven hospitals will leave Medicare in the next seven years, say the actuaries, and beyond that things just get worse and worse. Access to care will become a huge issue as waiting times to see doctors and enter hospitals grows…. From a financial point of view, seniors will be less attractive to doctors than welfare mothers.”

Yet, “Time and again, the president, the vice president and every leading Democrat in Congress have referred to the Medicare spending reductions as ‘savings’ that will not harm the elderly in any way.”

Goodman concludes, “This is not leadership. This is not making tough choices. This is bait and switch. And if the administration won’t own up to what it has done today — when there is no obvious pain — what do you think future politicians are going to do when real seniors can’t find a doctor who will see them?” They are going to repeal the Medicare cuts, just like they never allow the SGR cuts to Medicare fees for doctors and hospitals to become effective.

President Obama promised us over and over that Obamacare would not increase the deficit by a single dime.  That is literally true, haha, sucker.  But repealing the Obamacare Medicare cuts will leave a $716 billion deficit hole in Obamacare, for just the next 10 years.  Into the future, that is trillions and trillions.

Moreover, in its original cost estimates for Obamacare, CBO assumed that only 30 million workers will obtain their health insurance through the Exchanges, with 162 million still receiving employer provided coverage.  Of those 30 million, CBO estimated that 19 million would receive the Obamacare subsidies for the cost of that insurance, at a total cost of $450 billion over the first 10 years, or actually first 6 years of implementation under Obamacare.

But adding Holtz-Eakin’s more than 40 million losing their employer health insurance on top of those 19 million CBO assumed would be subsidized by Obamacare would triple the $450 billion in estimated costs for the health insurance subsidies of Obamacare under the first 6 full years, adding nearly a trillion dollars to the costs and deficits of Obamacare during that time alone.  In future years, that added cost contributing to still higher deficits would soar further.  Which brings the Obamacare chaos to the federal budget, deficits and debt.

So in the end, President Obama is right after all.  Obamacare would not add a single dime to the deficit.  It’s all good.

[First Published at Forbes]

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President Barack Obama has for five-plus years said and done two contradictory things regarding the United States’ economy.

1)  He has repeatedly said that he wants the private sector to recover – and indeed thrive.

2)  He has repeatedly, dramatically grown government – in terms of spending, laws, regulations and taxes.  And rigidly insists that he be allowed to continue to do all of it.

But a Big Economy and a Big Government are mutually exclusive.

The wasteful federal government creates zero wealth.  Every penny it spends is at the expense of the productive private sector.  The former can only spend what it first takes from the latter – via taxation, or borrowing.

The more government taxes and borrows, the more limited the private sector is in its attempts to grow.  And expand the economy, hire people – and pay more taxes.

And the more time businesses spend complying with laws and regulations – including learning new ones – the less time they have to try to grow, expand the economy, hire people – and ultimately pay more taxes.

The wasteful federal government is draining the productive private sector of operational capital – and drawing its time and attention away from more worthwhile activities.

Imagine a tick that – in addition to bleeding the deer – can tell its host where, when and how it can move.

And the concern for an activist state continuing its over-activity freezes the private sector in amber – afraid to move, in dread anticipation of the next government anvil to fall.

So does President Obama want a Big Economy – or a Big Government?  The answer is best embodied in what he has done to the Internet.

Existing law prior to the Obama Administration left the Internet pretty much alone.  As always happens when the government removes itself, the Web has rapidly grown into a free speech-free market Xanadu.

“Technology Sector Found to Be Growing Faster Than Rest of US Economy”

Then came President Obama.  Who – despite the legal proscriptions and without any Congressional authority to do so – unilaterally imposed a host of new Web regulations.

The biggest being Network Neutrality – which places the government in charge of the entire Internet backbone.

Net Neutrality could lead to the loss of 1.5 million private sector jobs.  It will raise the cost for each and every consumer by about $55 a month.  Because it will raise Internet Service Providers (ISPs)’s costs by $20 to $40 billion per year.

It is egregiously damaging to continued investment – meaning the Web will slowly decay and deteriorate, rather than continue to rapidly improve and grow.

Not satisfied with that destruction, the Administration also imposed data roaming regulations.  Which require the companies who spend the tens of billions of dollars necessary to build their wireless networks to rent them to those that don’t.

Which raises a question: Why would any company spend said tens of billions of dollars, when they can just wait around for someone else to do it and then have the government force them to share?

Which raises a problem: If everyone is sitting around waiting for everyone else to build said networks, there’s a whole lot of nothing going on.

The Administration has done even more to derail the Tech sector – but you get the gist.

So too do you get that President Obama much prefers a Big Government to a Big Economy.

Because with the Internet, he inherited the latter – and has time and again insisted on imposing upon it the former.

[First Published at Red State]

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With the exception of Lech Walesa, the last of the great Cold War heroes has died.

Former Prime Minister of Great Britain Lady Margaret Thatcher, age 87, passed away Monday, April 8, 2013, following a stroke.

Along with Ronald Reagan, Pope John Paul II, and former Solidarity leader Lech Walesa, the Iron Lady is one of a small cadre of individuals personally responsible for the fall of the Berlin Wall and the demise of the former Soviet Union.  Like that of her American counterpart, former President Ronald Reagan, Lady Thatcher’s idea of Cold War strategy was simple:  “We win; they lose.”  She won, they lost.  And perhaps they knew they would:  it was the Soviets who dubbed Lady Thatcher “The Iron Lady.”

Her iron will, her steadfast vision, and her clear-headed sense of right and wrong not only proved her to be on the right side of history, but as former U. S. Secretary of State James Baker put it on the April 8, 2013, “PBS News Hour,” also helped to change the arc of history.  She was, as Chicago Tribune editorial cartoonist Scott Stantis characterized her in his tribute to her, “indomitable.”

Lady Thatcher’s biography is well-known, as is her late-in-life slide – like that of her hero Ronald Reagan – into dementia.  We write here not to repeat those details but solely to salute her life in the wake of her passing.

As another former Secretary of State, George Schultz, also put it, on the April 8, 2013, News Hour, the legacy of Margaret Thatcher’s, in one word, is “Freedom.”

Let us hope that she – and we – will achieve that for eternity.

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British Petroleum is still one of the world’s biggest oil companies. But as early as the late 1990s they didn’t want you think of them that way. CEO, Lord John Browne of Madingley, argued: “the transition to alternatives could be accelerated by changing industry practices today.” While other oil companies eschewed climate change alarmism, BP embraced it. In 2002, Lord Browne declared: “Climate change is an issue which raises fundamental questions about the relationship between companies and society as a whole, and between one generation and the next.”

As a result, in 2006, Mother Jones magazine reported: “BP vowed to cut its own CO2 emissions and invest heavily in solar, wind, and other alternative technologies; it even supported … the Kyoto climate treaty.”

BP jumped into renewables and the company’s moniker underwent an evolution from British Petroleum to BP, then to Beyond Petroleum. Between 2000 and 2005, BP invested $500 million into solar power and $30 million on wind and has invested more than $4 billion in alternative energy in the US since 2005. At the time, according to the Wall Street Journal, BP turned a profit on its solar business but not on wind. In 2005, Browne “decided that the energy giant should enter unknown territories of wind, solar and hydrogen power,” which began a “re-branding” designed to “capture public affection” by positioning “themselves as environmentally friendly enterprises.”

The switch seemed to be sound strategy. ExxonMobil didn’t agree.

Comments from a 2008 blog post on ExxonMobil’s position as “obstructive over climate change” included the following: “Given that oil isn’t going to last a whole heck of a lot longer, would not a good business strategy be to start investing in renewable energy?” and “Just from a corporate survival perspective, better start learning, and fast. Carbon is the low-hanging energy fruit and soon to become an economic dead end. What company wants to keep going down a dead end?” BP thought it was “prudent to start diversifying now as a kind of insurance policy.”

ExxonMobil took a different course. In 2005, then-CEO Lee Raymond, said: “What all these people are thinking about doing, we did 20 years ago—and spent $1 billion, in dollars of that day, to find out that none of these were economic.” “In the late 1970s, as oil prices skyrocketed, Exxon diversified into an array of fossil-fuel alternatives, including nuclear and solar energy.” “After several years, Exxon still couldn’t see prospects for renewable energy turning into a moneymaker, especially since oil prices were falling in the 1980s. In the mid-1980s, the company decided to get out of the business.”

Raymond had “an unabashed skepticism about the potential of alternative energy sources like wind and solar.” He saw “Spending shareholders’ money to diversify into businesses that aren’t yet profitable—and that aim to solve a problem his scientists believe may not be significant”—as “a sloppy way to run a company.”

Wall Street agreed. According to Mother Jones, in 2006, Wall Street “worried that even a small increase in investment in non-oil alternatives would distract BP’s focus from its core business—oil.” Commentators and analysts began mocking BP as being “Beyond Profits.”

Yet, critics of Exxon’s approach, in 2008, feared “that the company’s reluctance to explore alternative energy will prove to be bad business judgment in the long run.

Andrew Logan of Ceres, a Boston-based environmental group, sees two possible scenarios: “One is that all the scientists in the world are wrong, in which case there’s no climate change, in which case Exxon will do well.” He then says: “But if the scientists are correct and we have to find a way to transform the way we use energy, then Exxon is going to lag significantly behind its competitors.”

It is obvious now, nearly a decade later, which was the sound strategy. Global warming is not the manmade crisis it was sold to be in the mid-2000s, and we know that oil is “going to last a whole heck of a lot longer.” Today, innovation and imagination are producing record quantities of domestically produced oil and gas. Robert Bryce, author of Power Hungry, reports: “we won’t hit peak oil until we hit peak imagination.” And, Exxon’s Raymond made the right choice to get out of renewable energy.

On April 3, BP announced that it was selling its US wind assets—estimated to be worth $1.5-3.1 billion. The announcement stated that BP has decided sell the US wind energy business “as a part of our continuing effort to … re-position the company for sustainable growth” and that it would “unlock more value for shareholders.”  BP ended its venture in solar energy in 2011.

In a speech in late 2012, BP’s general manager for global energy markets, Mark Finley, praised the rapid growth of renewable energy—claiming it had increased by 18% over last year, “the tenth year in a row for double-digit growth.” However, he acknowledged “renewables make up such a small slice of the world’s energy portfolio now—only about 2%—that even at such a blistering growth rate they are unlikely to significantly displace fossil fuels in the next two decades.”

Addressing renewables’ growth, Finley said it was happening “most typically in places where the governments can afford the subsidies needed to help these fuels compete. The key challenge going forward is: when things grow fast, subsidies get expensive fast. So can these forms of energy achieve economies of scale that will allow them to compete without subsidies?”

“That is the real question.”

Yes, that is “the real question,” and apparently, BP got the answer. Without subsidies, renewables cannot compete—BP is bailing. Addressing wind energy’s future, Amy Grace, a New York-based analyst at New Energy Finance, said: “There’s limited visibility beyond 2014 about what the assets will be worth as a tax credit supporting turbines is set to expire at the end of this year.”

In a recent Wall Street Journal op-ed, Patrick Jenevein, CEO of Tang Energy Group—whose website lists developing wind farms as one of its projects, agrees: “Without subsidies, the wind industry would be forced to take a hard fresh look at its product. Fewer wind farms would be built, eliminating the market-distorting glut. And if there is truly a need for wind energy, entrepreneurs who improve the business’s fundamentals will find a way to compete.”

Additionally, having now actually lived with the presence of industrial wind turbines, people no longer want them “imposed on their communities.” On April 4, the Falmouth, MA, Board of Selectmen and the Falmouth Finance Committee held a joint meeting and unanimously stood by the selectmen’s prior vote to remove the town’s wind turbines. Residents say: “they’re suffering headaches, dizziness and sleep deprivation and often seek to escape the property where they’ve lived for more than 20 years.” Across the pond, more than 100 Conservative Members of Parliament urged Prime Minister, David Cameron, to block further expansion of onshore wind. Environment Secretary, Owen Paterson, called England’s onshore wind farms a “blight,” and while Minister of State at the Department for Energy and Climate Change (now the prime minister’s senior parliamentary advisor) John Hayes said: “We can no longer have wind turbines imposed on communities. … It seems extraordinary to have allowed them to be peppered around the country without due regard for the interests of the local community and their best wishes.”

As result of diminishing public support in the US, the revelation of extreme green-energy crony-corruption, tightening budgets, and a slow economic recovery, government support for renewable energy is under fire. The Daily Caller reports: “States across the country are aiming to scale back or eliminate laws that require certain amounts of power be purchased from renewable energy sources, including wind.”

Yes, the winds, they are a-changing—and BP decided to get out while the getting is good.

Robert Bradley, CEO and founder of the Institute for Energy Research, said: “BP put form over substance and took their eye off the ball” and called “Beyond Petroleum” “a failed corporate strategy. … BP went after an environmental fad, basked in the glow of the Left environmental movement, and now may have destroyed itself in the process.”

Even the “Left environmental movement” is no fan. Mother Jones cites an “industry observer” addressing a post-Valdez-disaster ExxonMobil: “It ‘is a company that does everything in a gold-plated manner. It’s purely a commercial decision: You never put in anything that might fail’—not for ethical reasons, but because as BP has discovered, failure is expensive.”

Now that BP is “back to petroleum,” perhaps now its moniker should be “Beyond Puff-power.

[First Published at OurMoney.net]

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Ironically six of the original European colonial powers of yesteryear, the UK, Germany, France, Italy, Spain and the Netherlands, have aligned to resist the new virtual-colonial-power — Google’s hegemony over online private data.

These six leading EU members, which comprise 75% of the EU economy, have jointly launched national investigations of Google’s privacy actions. That’s because Google has paternalistically rebuffed and ignored the EU belief that Google’s 2012 unification of its sixty privacy policies is a serious violation of European data protection law, because it does not allow any meaningful use transparency or user choice to opt-out of Google’s private data collection.

Just like the European colonial powers colonized and extended their power over weaker peoples and areas and established very unequal power relationships, in the virtual world of the Internet Google has effectively virtually colonized digitally-weaker Europe. Google has roughly 90% search market share among EU nations and commands about half of all European online advertising.

EU nations, including their citizens, businesses, and media, are for all practical purposes virtually-dependent on Google to an exceptional extent to find and monetize information online.  As effective digital colonies of Google, their exceptional online dependency on Google is in stark contrast to other nations with indigenous search engines like: the Czech Republic (Seznam has 45% share), South Korea (Naver has 72% share), China (Baidu has 76% share), and Russia (Yandex has 62% share).

In addition to believing that their citizens should not be the virtual vassals of a virtual sovereign Google – without any real rights to know, own or control their private data — the EU nations’ also believe that under EU law EU citizens’ private data only should be stored physically in the EU under their sovereign jurisdiction.

However, data is Google’s treasure. Google has already plundered most of the EU’s public and private information and shipped it back to their homeland datacenters.

Now EU countries are effectively saying we want our private data back, because it is ours, and Google has replied: “No.” Much like the European colonial powers have said “No” to many former colonies or conquests who have requested the return of national cultural antiquities that the colonial powers plundered in the past.

Apparently Google is maintaining the old adage here that “possession is nine tenths of the law.” Simply Google in proclaiming it’s “privacy policy respects European law,” is defiantly challenging the EU to prove otherwise, not only in court, but in the court of global public opinion, which Google is confident it can manipulate to take Google’s side.

Apparently, Google CEO Larry Page has adopted a virtual “realpolitik” approach to statesmanship based on power and not law or morality — much like Prussia’s Otto Von Bismarck’s “realpolitik” in the late 19th century.

Google understands this conflict’s outcome resides in the realm of power, specifically Internet power. Google has more Internet power than anyone, and the EU nations have very little.

Google practically has assessed the weaponry available to the virtual indigenous EU nations to fight back against Google and found that it is nothing to fear. Google smirks at the EU’s Lilliputian privacy fining authority, which looks like natives’ knives and fists next to Google’s virtual global navy; its state-of-the-art digital ship cannons and muskets of Internet dominance; and its hard-to-match regiments of the best privacy lawyers, lobbyists and media handlers that Euros can buy.

Moreover, Google has repeatedly challenged EU and European authorities over privacy and competition, and to date, they have always won decisively. When Google invaded EU nations with thousands of Street View cars and photographed and posted online most everybody’s home without homeowners’ or authorities’ knowledge or permission, many nations objected, but ultimately acquiesced giving EU citizens little opportunity or choice to opt out.

When a tenacious German regulator demanded to examine a Street View car in person, he discovered it was also collecting private WiFi data communications (emails, credit card numbers, etc.) emanating from people’s homes without users’ knowledge or choice to opt out. While many nations investigated this Google mass-invasion of EU citizens’ privacy, again there resulted no enforcement action of consequence to deter Google in the future.

Even after several authorities learned that Google did not destroy the private WiSpy data they recorded, when they promised to do so, once again Google suffered no sanction of consequence or of deterrence.

Last year, Google announced it was consolidating its sixty-odd privacy policies into one without meaningful transparency or opt-out choice, the EU authorities asked Google to halt. True to form, Google ignored them, while paternalistically informing the EU’s privacy authorities that they were in compliance with EU data protection law — implying that EU privacy authorities were not expert in their own privacy law.

As for EU antitrust enforcement, the evidence-to-date unfortunately suggests that the EU competition authority has been subordinated effectively by Google’s greater practical and political power.

No less than three times over the last year, the EU Competition authority has threatened publicly and firmly to enforce EU antitrust law against Google for four antitrust violations by issuing a Statement of Objections. Every time after the EU authorities have loudly threatened enforcement action against Google with a hard deadline, the EU has quietly backed down and given Google many months more to continue their illegal and anti-competitive behavior.

Once again, in Google’s world of realpolitik, Google has been taught by the EU authorities’ repeated actions that despite their bluster and threats, in the end, they are more bark than bite and no real match for Google’s greater practical and political power.

Interestingly there is also a “colonial era” power issue in competition policy in addition to privacy policy.

For the first few centuries of the European colonial period, the colonial powers were mercantilist, meaning the asymmetry of power between the colonial power and the colonies enabled them to enrich themselves at the colonies’ expense and to mandate that their products and services enjoy total supremacy over those of the colonies’ despite merit. They were mercantilists because they had the power to dictate terms. Might was right in that era.

Very interestingly, eleven European digital merchants in Google’s virtual colonies on the European continent recently issued an open letter to their authorities asking for an end to Google’s virtual mercantilist trade with Europe, where Google uses its virtual sovereign market power to regularly favor its own products and services over indigenous competitive European products and services — in order to enrich Google at the expense of the digitally-weaker European virtual colonies and their indigenous people. Apparently might is still right in this virtual era.

Just as the colonies increasingly demanded more free trade with their colonial powers over time, now these European digital merchants have a simple free trade expectation from the de facto virtual sovereign power of Google in search and search advertising in Europe — given Google’s ~90% market share in Europe and dominance of online advertising.

Simply, they petition their indigenous authorities: “Google must be even handed. It must hold all services, including its own, to exactly the same standards, using exactly the same crawling, indexing, ranking, display and penalty algorithms.” They only ask for the Golden Rule Ethic from Google: to be treated as Google wishes to be treated.

Google’s upcoming new challenge to the European privacy authorities will be Google’s promotion of Google Glass, Google’s cloud-tethered digital eyeglasses that can record and videotape everything in the wearers’ view without other people’s knowledge or permission by default.

This could be an exact repeat of Google Street View and Google Street View WiSpy privacy problems; where the virtual colonial power dictates another change in the privacy culture of Europe that everything everywhere is public for Google’s absorption and not private for EU citizens to control.

If Google is true to its consistent past privacy behavior, it will effectively operate in a stop-us-if-you-can mode, knowing that in the past the EU authorities always have backed down and submitted to their virtual colonial power’s realpolitik dictates.

(Interestingly, the homes of Google’s leadership are not available on Google Street View like most everyone else’s are, and one can expect that Google will not allow any outsider to wear Google Glass in Google’s offices. That’s because everyone that is permitted to enter the Google sanctum must sign a very strict confidentiality agreement that they will not disclose any private or confidential information that they may learn while visiting Google.)

In sum, this is all about Google as virtual colonial power establishing its virtual realpolitik power relationship over its weaker European digital colonies. EU practices and laws must bend to comport with Google  “law.” The EU’s digital “lingua franca” must change to lingua Google. And any form of EU Pax Romana must make way for Pax Google.

Simply this is a significant geo-political power struggle of the 21st century. The Czech Republic, South Korea, China and Russia are four different nations with very different approaches that have each maintained their digital sovereignty and independence in the virtual world by having a substantial indigenous search competitor to Google.

However, with no European indigenous competitor or counterweight to Google’s market and information power, will the EU surrender to full Digital-Colonialization, or will the EU assert their physical sovereignty and rule of law over the EU’s virtual world?

At bottom, this conflict is simple. Who is the digital sovereign in Europe – European authorities or Google?

[First published at The Precursor Blog, as part of the Google's Disrespect of Privacy Research Series]