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The Policy and Commentary Blog of The Heartland Institute
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Rushing to Regulate: Democrat Rosenworcel is Right – So She Should Vote ‘No’ on Net Neutrality

May 09, 2014, 11:06 AM

Federal Communications Commission (FCC) Democrat Commissioner Jessica Rosenworcel yesterday made a very good point.

Rosenworcel: Delay Vote on Net Neutrality Rules

Democratic FCC Commissioner Jessica Rosenworcel has asked FCC Chairman Tom Wheeler to delay his planned May 15 vote on a draft of new network neutrality rules by at least a month….

“His proposal has unleashed a torrent of public response. Tens of thousands of e-mails, hundreds of calls, commentary all across the Internet….

“We need to respect that input and we need time for that input.  So while I recognize the urgency to move ahead and develop rules with dispatch, I think the greater urgency comes in giving the American public opportunity to speak right now, before we head down this road.

“I believe that rushing headlong into a rulemaking next week fails to respect the public response to his proposal.

She pointed out that the seven-day quiet period before the vote begins May 8. “That means we no longer accept public comment. I think it’s a mistake to cut off public debate right now as we head into consideration of the Chairman’s proposal. So again, at a minimum, we should delay the onset of our Sunshine rules.

So as of today, the FCC stops listening to what we have to say.  And Commissioner Rosenworcel thankfully wants to continue listening.

Chairman Wheeler, sadly, remains impervious.

 An FCC source speaking on background said the vote would go on as planned….

Commissioner Rosenworcel’s impression and instincts are exactly right.  And there’s a way she can get the appropriate delay – by voting “No” next Thursday.

Her Nay – combined with the likely Nays of the two Republican Commissioners – would be a majority three and stave off Net Neutrality’s imposition.

Would that mean Net Neutrality is dead and gone?  Of course not – its proponents are relentless.

Government-Imposed Net Neutrality: Twice-Bitten, Not Shy About a Third Try

It’s Groundhog Day – Again: Government Taking Third Stab at Net Neutrality Power Grab

Why Can’t the Government Take No for an Answer?

A Key Ingredient in the Left’s Wins: Persistence

What it would mean is We the People would have more time to weigh in on this huge government infliction on 1/6th of our nation’s economy.

Which is just what Commissioner Rosenworcel rightly wants.

Her No vote would give us that.

[Originally published at RedState]

Categories: On the Blog

VIDEO: How to Modernize Communications

May 09, 2014, 10:54 AM

NetCompetition, an organization dedicated to improving competitiveness in the internet market, held a panel discussion and debate on April 4th on the topic “Thinking and Starting Anew: Modernizing Communications Law for American Consumers.” Scott Cleland, Heartland Institute policy advisor and president of the Precursor consultancy firm, was the first of the five guests to speak.

Cleland explained how regulations in the communications market have become increasingly obsolete due to the speed of innovation in the sector and that, rather than replacing the old regulations, new rules are simply layered on top of the old. Cleland likened these layers of regulation to an archeological site; the historical layers become lose stability over time as external forces work their way into them.

Cleland asked the question, “How do you take something that obsolete and that dysfunctional, how do you make it work?” The answer is simple and elegant: “You want to build it on a lasting foundation of enduring American values.” These values, according to Cleland, are competition, consumer protection, universal connectivity, and public safety. By enacting a new regulatory regime that allows for innovation in the ever-shifting marketplace, the communications and technology industries will be able to grow and thrive.

Most of the panelists agreed in large part with Cleland’s analysis. Gene Kimmelman of Public Knowledge even acknowledged the detrimental effects of extremely complex regulation. Kimmelman proposed that a bipartisan be established to reach agreement on what the “shared values and principles” are.

Hal Singer of the centrist Progressive Public Policy Institute likewise condemned the current regulatory regime as one that stifles innovation and beneficial competition, saying that, “many of the existing regulations are no longer justified.”

The only panelist rigorously opposed to Cleland’s ideals was Mark Cooper, the researcher director of the Consumer Federation of America. Cooper contended that, “The layers we’ve added, that Scott laments, are, in fact, progress. And every time we’ve had a major revolution in America, in terms of the economy, we’ve expanded the rights of individuals, because that’s what progressive societies do.” Cooper also argued that the market would not solve in some areas and that some subsidies in the market would be essential.

The American Enterprise Institute’s Jeff Eisenbach struck back at this criticism, explaining that Cooper’s argument amounted to an upholding of “the tyranny of the status quo.” Eisenbach added a new layer of criticism of that status quo, arguing that a principle of zero-base regulatory budgeting would solve many of the problems of obsolete and overly-constricting regulations. In zero-base budgeting, the regulator must ask one question: “If we weren’t doing it, would we start?”

Eisenbach contends that this question could transform the regulatory regime: “If you asked that question about the vast majority of what the Federal Communications Commission does today, the answer is no.”

The arguments presented by the panelists show a growing movement in favor of cutting our and streamlining the grotesque regulatory regime of the communications sector. Communications technology is one of America’s most cutting-edge industries, but that can only remain the case if onerous regulations do not stifle it.

Categories: On the Blog

Net Neutrality III is Huge Government Heinous

May 08, 2014, 11:45 AM

The Barack Obama Administration is back at it — yet another big government power grab is in the works.

The Administration’s Federal Communications Commission (FCC) again resurrecting Network Neutrality — an all-encompassing Internet usurpation twice unanimously killed by court as an illegal overreach.

Court Backs Comcast Over FCC on ‘Net Neutrality’

Verizon Wins Net Neutrality Court Ruling Against FCC

Net Neutrality III does in fact acknowledge and allow for a basic economic precept: If you use more, you pay more.

It will allow Internet Service Providers (ISPs) to charge bandwidth hogs like Netflix and Google (owner of YouTube) for the Web-exploding bandwidth they use:

Netflix and YouTube Make Up Majority of US Internet Traffic

Netflix Now The Largest Single Source of Internet Traffic In North America 

Video Viewing on Netflix Accounts for Up to 30 Percent of Online Traffic

Right now,  all of us — including non-Netflix and non-YouTube users — subsidize their massive profit-models. Changing this, of course, upsets them.

Google And Netflix Are Considering An All-Out PR Blitz Against The FCC’s Net Neutrality Plan

Shocker.

This nod to economic reality also has the left rending garments and gnashing teeth in overwrought, overdramatic fashion.

Barack Macbeth’s ‘Murder’ of Net Neutrality 

So This is How Net Neutrality Dies, Under a Democratic President

Thanks to the FCC Net Neutrality is Dead 

Stop the FCC from Breaking the Internet

If these leftist bad actors had their way, the government would mandate that gas stations charge the same price for empty Escalades and Escorts.

Their reaction is part knee-jerk response to anything less than total government command-and-control, and part political theater.  Their screeching — combined with our reasonable objection to this third attempt at massive government overreach — allows FCC Chairman Tom Wheeler to say, See — both sides are angry with me.  My proposal must be reasonable.

Hardly.  The Chairman has circulated amongst the Commission his Net Neutrality Notice of Proposed Rule Making (NPRM) – the first step in a process that so often ends in really bad policy.  I spoke — on condition of anonymity — with someone inside the Beast.  And the first draft ain’t good.

A caveat: This is a first draft.  The final version, once the four Commissioners weigh in, may end up looking dramatically different.  But this is Chairman Wheeler left to his own devices — and it ain’t good.

The proposal possesses two over-arching characteristics.

  1. A preemptive Mother-May-I approach to Internet innovation. Anytime the marketplace develops a new way of doing just about anything, the innovators must first check with the government to see if they can implement it. Fairly command-and-control, is it not?  Not exactly a great way to run a constantly evolving, endlessly-faceted World Wide Web.
  2. A nebulousness to exactly just how far the government’s regulatory reach is.  Just what nook or cranny of the private Web — if any — lies beyond the Leviathan’s tentacles?

The order’s lynchpin is how the government will now define “high speed broadband.”  It appears to mandate that everyone must be able to simultaneously download multiple movies while watching Game of Thrones and playing Call of Duty with everyone from their graduating class.

And if that ridiculously huge bandwidth demand slows you down ever so slightly — the government won’t consider it “high speed.”

See, the actual law — which the FCC is ignoring by imposing Net Neutrality — allows the government to stick it’s enormous proboscis even further into the Web if there is “market failure.”  So the government will absurdly define market “success” — and then claim it’s failing.  Then start ratcheting up the regulations.

Remember Obamacare’s nutritional information disclosure requirements? Obamacare Requires 34 Million Pizza Nutrition Signs 

The new Net Neutrality order dramatically ramps up the disclosure requirements for ISPs.  How?  In what forms and fashions?  Again, it’s nebulous — and open-ended.  If Obamacare’s multi-million menu amendments are anything like a precedent, it isn’t good.

What are the punishments for violating these absurd new regulations? Again — nebulous. And, again — the government’s omni-directional precedents aren’t good.

Uninsured Next Year? Here’s Your Obamacare Penalty 

Small Businesses Could Be Hit With Huge Obamacare Fines

Obamacare Springs New, Expensive Contractor Misclassification Penalty

Obamacare to Hit Smokers with Huge Penalties

Obamacare Work Disincentives Will Add $200 Billion To Cost 

Think this latest version of Web-sector-choking Net Neutrality won’t provide similarly costly disincentives?

That ain’t nebulous.


[Originally published at Daily Caller]

Categories: On the Blog

The Inequality Trap Distracts from the Real Issue of Freedom

May 08, 2014, 11:43 AM

A new book by French economist Thomas Piketty on “Capital in the Twenty-First Century” has recently caused a major stir on the opinion pages of newspapers and magazines. Piketty has resurrected from the ash heap of history Karl Marx’s claim that capitalism inescapably leads to a worsening unequal distribution of wealth with dangerous consequences for human society.

Not that Professor Piketty is a Marxist in the traditional sense of believing that mankind follows a preordained trajectory through history that inevitably leads to a worldly utopia called socialism or communism. To the contrary, he believes that capitalism is a wondrously efficient economic system that produces more and better goods and services.

Seeing Income Inequality as a Social Danger

What morally irks him is the inequality of income and wealth that he believes the capitalist economy results in, and may continue to make worse looking to the years ahead. He admits that for a long time in the twentieth century income inequality had considerably diminished between “the rich” and the rest of society. The middle class grew with more people moving out of poverty in the Western nations of Europe and America, and middle class incomes were rising at a more rapid rate than upper income levels were increasing.

But he believes that an array of statistical data strongly suggests that this has been changing over the last several decades. Middle class incomes are now rising much more slowly relative to the increases in the higher income brackets. Piketty considers that this is likely to continue into the foreseeable future with the wealth of the society more and more concentrated in fewer and fewer hands at the expense of the middle and low income groups in society, as Karl Marx prophesied.

It is not surprising, therefore, that Piketty entitled his book, “Capital in the Twenty-First Century,” because Karl Marx’s major work in the nineteenth century was called “Capital,” and Piketty is offering what some are calling a twenty-first century update of Marx’s prediction that capitalism would make a few in society richer and richer as the many became relatively less well-off in comparison to them.

He even does part of his calculations to justify this assessment with an implicit variation on Marx’s labor theory of value. He argues that it is fairly easy to determine the productivity and therefore worth of a common laborer such as an assembly line worker or a server in a fast-food establishment. So much additional labor time and effort “in,” and so much additional valued physical production “out.”

But he argues that there is no equivalent way to objectively measure and justify the stratospheric salaries and bonuses of bankers, financiers, and giant corporate CEOs or high-placed executive managers. Since he thinks there is no way to measure the productivity of such multi-millionaire earners in society, then it must necessarily follow that their salaries and wealth positions in society can in no way be justified.

Hence, the incomes of such rich members of society should be considered as arbitrary and unjust. Since it cannot be demonstrated that they earned it through a measurable contribution to the “social” processes of production, it must be viewed as unfair that they be allowed to keep it.

Taxing Away Wealth as an End in Itself

His economic policy conclusions necessarily follow from his diagnose of the “social malady” of income inequality. Incomes above $500,000 or a million dollars should be taxed at 80 percent, and those incomes between $200,000 and $500,000 should be taxed at 50-60 percent. In addition, he proposes an annual wealth tax of 10 percent precisely to prevent any further concentrated wealth accumulations looking to the future.

Clearly, once such a tax regime was imposed not much extra revenue would come from it, because after the first few years there would no longer be many in those higher income brackets; and hardly anyone any longer would have any motive to try to reach that income level since they would know it was going to be all taxed away if they were to succeed in acquiring it.

But that’s the point for Piketty. It is not that he hopes to create a perpetual redistribution machine with million-dollar and multi-million dollar incomes earned each year just waiting to be tax away and transferred by government to presumably more deserving lower-income members of society. Its purpose, instead, is to prevent there ever being such high incomes.

For instance, if one man is making one million dollars, while 100 men are each making, say, around $40,000 a year, the millionaire’s income is 25 times that of the middle class income earners. However, if any million-dollar income earner had 80 percent of what he earned taxed away, then his after-tax income of $200,000 only would be five times as great as the middle-income earner. Hence, the income inequality gap will have been greatly reduced.

One senses that it is not so much that Piketty wishes to raise the lower and middle-income earners up (though, of course, he would like to see that happen), as he wants to pull down those whom he considers to be receiving far more than he thinks can be fairly or objectively justified.

So it is not so much to take from Peter to give to Paul, as it is to pull Peter down closer to Paul’s level, and prevent Peter from ever again rising significantly above Paul’s average economic earnings. It is a psychology of envy and an ideology of egalitarianism vengefully at work.

I would like to suggest that there are some fundamental misconceptions and errors in Thomas Peketty’s understanding of the nature and workings of a free market capitalist system.

Income Earned is Not an Arbitrary Process

To begin with, he falls into the all-to-frequent conceptual mistake of thinking that the “production” aspect of the market process is independent of or at least separable from the “distribution” of what is produced.

This is an old mistake that goes at least as far back as the mid-nineteenth century British economist, John Stuart Mill. In his 1848, “Principles of Political Economy” Mill argued that the “laws” of production are more or less as fixed and unchangeable as the laws of nature, but the “laws” of distribution were a matter of the cultural and ethical values of a society at any moment in time.

This view conceives of total output as a large quantity of “stuff” produced by “society,” which then can be ladled out of the community production pot in any manner that “society” considers “good” and “right” and “deserving” to each of the members of that society.

Now in fairness neither John Stuart Mill nor Thomas Piketty believed that the level and amount of taxes did not affect people’s willingness to work and produce all that “stuff.” But Piketty certainly believes that since the multi-million dollar incomes earned by “the few” are not in any way rationally or objectively tied to an individuals’ actual measurable productivity, a lot of it can be taxed away without any significant reduction in those people’s willingness, interest, or ability to go about their work.

Firstly, it must be remembered “society” does not produce “stuff,” and for the simple reason that there is no entity or thinking and acting “being” called “society.”

Everything that is produced is done so by individuals either working on their own or as the result of associative collaboration with others, as is more commonly the case in a complex market system of division of labor.

Entrepreneurial Profit and Executive Pay are Not Irrational

Secondly, what is produced does not just happen and the amount of production does not just, somehow, automatically grow year-after-year. A good portion of that seemingly immeasurable value that is reflected in those higher incomes that bothers Piketty so much is the result of entrepreneurial creativity, innovation and a capacity to better “read the tea-leaves” in anticipating the future directions and forms of consumer demands in the marketplace.

What to produce, how to produce, and where and when to produce are creative acts of a human mind in a world of uncertain and continuous change. As the Austrian economist, Ludwig von Mises, once expressed it, “An enterprise without entrepreneurial spirit and creativity, however, is nothing more than a pile of rubbish and old iron.”

The market gives a clear and “objective” measure of what the achievements of an entrepreneur are worth: Did he succeed in earning a profit or did he suffer a loss? In an open, free competitive market, an entrepreneur must successfully demonstrate this capability each and every day, and better than his rivals who are also attempting to gain a part of the consumer’s business. If he fails to do so the profits he may have earned yesterday become losses suffered tomorrow.

Not every high-income earner, of course, is an entrepreneur in this sense. The market also rewards people who have the skills, abilities and talents to perform various tasks that enterprises need and consumers’ desire.

Again, in an open and competitive free market, no one is paid more than some employer or consumer thinks their services are worth. The executive manager, whether in the manufacturing or financial sectors, for instance, is only offered the salary he receives because others value his services enough to outbid some competing employer also desiring to hire him for a job to be done.

The Tax Code Distorts the Workings of the Market

Piketty’s proposed penalties on earnable salaries through confiscatory or near confiscatory taxes can only be viewed as a form of a maximum wage control. That is, a ceiling above which the incentive for people to search out for higher paying salaries is greatly diminished due to the 80 percent tax rate on anything earned above the Piketty-specified income thresholds.

But how shall these individuals’ valuable and scarce human labor skills and abilities be allocated among their alternative executive employments in the business world if the government uses its tax code to distort the market price system for workers?

It will threaten, over time, to result in mismatches between where the market thinks people should most effectively be employed to help properly guide enterprise activities and the actual places where some of these rare talents actually find themselves working. As with any mismatch between supply and demand, consumer demands and production efficiencies will be less satisfactorily fulfilled.

If such a confiscatory range of tax rates were to be employed, it should not be surprising to see the people in the market attempting to get around the government’s interference with wage determination via the tax code.

In the 1960s and 1970s, Great Britain was considered to be the “sick man of Europe” due to it anemic economic performance. One of the reasons was the extremely high tax rates on corporate and executive salaries that resulted in a British “brain drain” as some of the “best and the brightest” in business moved to the United States and a few other places where the tax penalty for their success was noticeably less than in their home country.

To get around the implicit “wage ceiling” under the tax code, British companies kept or attracted the executive talent they needed through “in-kind” additions to their money salaries. Companies would provide valued executives with high-end luxury automobiles for their own use, or give them company paid-for luxury apartments in the choice areas of London, or allowed them very liberal expense accounts on which many personal purchases could be made under the rationale that they were in some loose way business-related. These companies would then write off all these expenses from their corporate income taxes.

The Price System and a Rational Use of People’s Skills

The market economy has a steering mechanism: the price system. Through prices consumers inform businesses what goods and services they might be interested in buying and the value they would place on getting them. The prices for what the economist loosely calls “the factors of production” – land, labor, capital, resources and raw materials – inform those same businesses what other enterprises think those factors of production are worth in producing and bringing to market the various alternative goods the consuming public wants.

The prices offered and paid for the ordinary assembly line workers or the senior corporate managers are not arbitrary or “irrational.” Given their respective skills, abilities and talents to perform tasks they are paid what others think they are worth to do the job. If it turns out that this was a misestimate, those salaried workers in the “higher” or “lower” position will either be let go and have their wage revised down to what is now considered to be their more reasonable worth.

Whether it be formal price and wage controls that freeze the price system into what politicians and bureaucrats think people should be paid, or a tax code that discriminates against and penalizes threshold levels of success as well as the everyday incentives and ability to work, saving and investment, such policies slowly grind the market economy down, if not to a halt, then into directions and patterns of supply and demand significantly different from what a truly free enterprise could and would generate.

In a recent interview Thomas Piketty said that he had no formula to determine how much is too much in terms of “socially necessary” inequality. But he considered a variety of multi-million and multi-billion dollar wealth positions to be socially unnecessary and harmful.

Viewing the Individual as Owned and Used by the Collective

Notice his phrasing and the mindset that it implies. The society, the community, the tribe is presumed to own the individual and collectively decide how much the material “carrot” should be in terms of unequal incomes that may be “necessary” to induce people to be productive or innovative “enough.”

Enough for what? To make the communal economic pie grow at a rate that he and others like himself may think is the “optimal” amount – not “too much” and not “too little” – from out of which the government will then decide what “share” each will receive.

On the basis of what standard all of this will be determined, he clearly admits he has no clue, other than what he may subjectively think is “right” or “just” or “fair.” Like the difficulty of offering an objective definition of pornography, he just knows it when he sees it.

We have already seen to where this leads in modern democratic society. It is a mutual plunder land of individuals and special interest groups rationalizing every tax, redistribution, and regulation to serve their own purposes at the expense of others who are forced to directly or indirectly foot the bill through the use of government power.

A Society of Peaceful Production or Political Plunder

This gets us, perhaps, to an understanding of from where unjust and unfair inequality can arise. It is precisely when the political system is used to rig the game so as to manipulate the outcomes inside and outside of the market. It suggests the basis for conceiving of a non-Marxist notion of potential group or “class” conflict in society.

A French classical liberal named Charles Dunoyer (1786-1862) explained this long ago in the early nineteenth century. In an article published in 1817, Dunoyer distinguished between two groups in society. One of them he called the “Nation of Industrious Peoples” and the other are those who wish to use government to live at the expense of peaceful and productive others.

“The Nation of Industrious Peoples” Dunoyer said, is made up of “farmers, merchants, manufacturers, and scholars, the industrious people of all classes and all nations. In the other, there are the major portions of all the old and new aristocracies of Europe, office holders and professional soldiers, the ambitious do-nothings of all ranks and all nations who demand to be enriched and advanced at the expense of those who labor.”

“The aim of the first, Dunoyer went on to say, “is to extirpate from Europe the three scourges of war, despotism and monopoly, to ensure that men of every nation may freely exercise their labors, and, finally, to establish forms of government most able to guarantee these advantages at the least cost. The unique object of the second is to exercise power, to exercise it with greatest possible safety and profit, and, thus, to maintain war, despotism and monopoly.”

In other words, Dunoyer was saying that society is composed of one set of people who diligently work and conscientiously save and who honestly produce and peacefully trade; and there is another set of people who wish to acquire and consume what others have saved and produced. The latter group acquires the wealth produced by those others through political means – taxation, regulation, and government-bestowed privileges that interfere with the competitive free market. This source of injustice, and exploitation is the same in every country.

The Plunder Land of Modern Democratic Politics

In our own times, those who want “to be enriched and advanced at the expense of those who labor” are, of course, the welfare statists, the economic interventionists, and the proponents and supporters of every other form of collectivism.

They are the crony-capitalists who use their influence with political power to obtain subsidies, regulations limiting competition, and bailouts and profit-guarantees at the expense of the taxpayers, their potential rivals who are locked out of markets, and the consumers who end up paying more and having fewer choices than if the market was free and competitive.

They are the swarm of locust-like lobbyists who lucratively exist for only one purpose: to gain for the special interest clients who handsomely pay them large portions of the wealth and income of those taxpayers and producers whose peaceful and productive efforts are the only source of the privileges and favors the plunderers wish to obtain.

They are the political class of career politicians and entrenched bureaucrats who have incomes, wealth and positions simply due to their control of the levers of government power; power they gives them control over the success or failure, the life and death of every honest, hardworking and peaceful and productive worker, businessman, and citizen, and who are squeezed to feed the financial trough at which the political plunders gorge themselves.

Regulated markets help preserve the wealth of the politically connected and hinders the opportunities of the potentially productive and innovative from rising up and out of a lower income or even poverty. Wealth and position may not be completely frozen, but it is rigidified to the extent to which it is politically secured and protected from open competition.

Welfare dependency locks people into a social status of living off what the government redistributes to them from the income and wealth of others, and makes escape from this modern-day pauperism difficult and costly. An underclass of intergenerational poverty is created, that reduces upward mobility and makes improvement difficult for those caught in this trap; at the same time it serves the interests of those in political power who justify their position and role as the needed caretakers of those whose dependency they live off.

Most of Human History Based on Plundered Inequality

For most of human history, those with certain inherited endowments and developed skills used their superior physical strength and mental agility to conquer, kill, plunder and enslave their fellow men. Whatever meager wealth may have been produced during those thousands of years ended up concentrated in the hands of the few through coercion and political cunning.

There was little justice in a world in which the “strong” stole from and controlled the “weak.” But slowly men began to revolt against this “unnatural” inequality under which what some had produced was forcefully taken by a handful of powerful others.

Against this imposed system of political and wealth inequality slowly developed a counter conception of a just and good society. Its hallmark was a call for a new vision of man and society based on the alternative notion of individual rights equally respected and enforced for all, rather than privileges and favors for some at the expense of the rest.

A New Society of Equal Individual Rights Before the Law

In a political system under which individuals had the same equal rights to their life, liberty, and honestly acquired property, each person could then rise to his own level based on his natural abilities and those he had acquired through experience and determination.

The outcomes and positions that individuals reached would inevitably and inescapably be different – unequal in terms of material and social achievement. But if some men earned and accumulated more wealth than others, its bases would be peaceful production and free trade.

In such a world of freedom and rights, some men’s skills and abilities would not have given them materially more successful positions through plunder and privilege; but instead it would be as the result of creatively producing and offering for sale in the marketplace what others may wish to buy, as the method through which each non-violently pursued his own self-interest.

If it were possible to give any reasonable meaning to the ambiguous and manipulated phrase, “social justice,” it would be:

Are the material differences among members of a society the result of the peaceful and voluntary associations and trades among individuals on an open and competitive free market? Or are the material inequalities coming from the use of political power to coercively obtain by taxation, regulation and forced redistribution what the recipients had not been able to obtain through mutually beneficial agreement with their fellow men?

The Appropriate Question is: Wealth from Production or Politics?

The only important and relevant ethical and political issue in a free society should be: How has the individual earned and accumulated his material wealth? Has he done so through peaceful production and exchange or through government-assisted plunder and privilege?

Rather than asking the source or origin of that accumulated wealth — production or plunder –the egalitarians like Thomas Piketty merely see that some have more wealth than others and condemn such an “unequal distribution,” in itself.

By doing so, they punish through government taxation and wealth confiscation the “innocent” as well as the “guilty.” This, surely, represents an especially perverse inequality of treatment among the citizenry of the country, especially since those who have obtained their ill-gotten gains through the political process usually know how to work their way through the labyrinth of the tax code and the regulatory procedures to see that they keep what they have unethically acquired.

The modern egalitarians like Thomas Piketty are locked into a pre-capitalist mindset when, indeed, accumulated wealth was most often the product of theft, murder, and deception. They, and the socialists who came before them, seemingly find it impossible to understand that classical liberalism and free market capitalism frees production and wealth from political power.

And that any income and wealth inequalities in a truly free market society are the inequalities that inescapably emerge from the natural diversities among human beings, and their different capacities in serving the ends of others in the peaceful competitive process as the means to improve their own individual circumstances.

[Originally published at epictimes.com]

Categories: On the Blog

Climate Change Is a Clear and Present Danger, Says Landmark US Report

May 08, 2014, 12:20 AM

This is the title of an article in the May 5 Internet edition of The Guardian written by Suzanne Goldenberg, US environment correspondent.  The article is about the release May 6 at the White House of the National Climate Assessment Report (NCA) with a great deal of fanfare.

The article states “Climate change has moved from distant threat to present-day danger and no American will be left unscathed, according to a landmark report due to be unveiled on Tuesday.  The National Climate Assessment, a 1,300-page report compiled by 300 leading scientists and experts, is meant to be the definitive account of the effects of climate change on the US.”

The article further states “Gary Yohe, an economist at Wesleyan University and vice-chair of the NCA advisory committee, said the US report would be unequivocal that the effects of climate change were occurring in real-time and were evident in every region of the country.  ‘One major take-home message is that just about every place in the country has observed that the climate has changed,’ he told the Guardian. ‘It is here and happening, and we are not cherrypicking or fearmongering.’

The draft report notes that average temperature in the US has increased by about 1.5F (0.8C) since 1895, with more than 80% of that rise since 1980. The last decade was the hottest on record in the US.  Temperatures are projected to rise another 2F over the next few decades, the report says. In northern latitudes such as Alaska, temperatures are rising even faster.”

It takes a very astute observer to note climate change is happening in the United States the past hundred years; or for that matter over the 4 billion year existence of the planet.  The country is blessed to have such people working on the NCA.  Surely these individuals will state climate change is the normal state of affairs for the nation.

The U. S. Weather Service and National Oceanographic and Atmospheric Administration has been collecting data since the late 19th century on all types of weather events such as temperatures, rain fall, drought, snow fall, wild fires, sea level rise, tornadoes, hurricanes, etc.   The data shows little change in event occurrence over times of observation.  If anything there is less frequency of some events the past twenty years when atmospheric carbon dioxide has been at its highest rate of increase.

The graph that follows is the monthly average of all daily high and low temperatures at all NOAA U. S. Historical Climate Network stations.

 

It is hard to visualize a continuous rise in U. S. temperatures from 1895 to 2013 in this data.  The planet is in a global warming cycle called the Current Warming Period since about 1850.  So it would be expected to see some warming over this 160-year period.   This warming can’t be attributed to increases in atmospheric carbon dioxide from burning fossil fuels.  Does the NCA report the pause in global warming since 1998?

Based on The Guardian article, it appears the NCA is another report similar to the latest United Nations 5th Intergovernmental Panel on Climate Change Report forthcoming the past eight months.  To counteract omissions, half-truths, and false statements in these reports, the Non-governmental International Panel on Climate Change (NIPCC) was formed in 2003.  Since 2009, the NIPCC has released six reports that give authoritative, easily-read information about the vast amount of experimental data showing negligible influence of carbon dioxide from burning fossil fuels on climate, financial losses from mitigation, and proper role of adapting to climate change.

If the material in the NCA contains the information cited in The Guardian, my only comment is aquote from attorney Joseph Welch protesting Joseph McCarthy actions June, 9, 1954, “Have you no sense of decency?”  After Mr. Welch’s statement, Senator McCarthy’s credibility was ruined and he died a lonely man three years later.

Let us hope the NCA will show the illogic reasoning for stopping use of the nation’s abundant, economical fossil fuel resources of coal, oil, and natural gas.  The attempts so far are the reasons for the economic malaise besetting country the past 6 years.  This agony must come to a halt, and the possible illogic NCA will awaken the public about the mass of false reasoning presented the past 25 years.
Categories: On the Blog

Heartland’s James Taylor Debunks Obama’s Climate Report on The Mark Levin Show

May 07, 2014, 9:40 PM

On Tuesday, when Barack Obama released his National Climate Assessment Report, Mark Levin asked Heartland’s James M. Taylor to be on his radio program to break down the laughably biased and anti-scientific aspects of the report.

Listen to the interview in the player above. James, Heartland’s senior fellow for environment policy, puts on a clinic on how people who are informed about the climate should publicly talk about it.

We’re grateful Mark took the time to thoroughly interview James — all the better for his audience to be fully informed about what the actual data says is happening to our climate, and why government bureaucrats are pushing global warming alarmism. We’re also greatful Mark shared the interview and information about the conference on his social sites. (BTW: If you don’t have the Mark Levin Show app on your phone, get it. Now!)

James referenced the latest NIPCC reports — definitive rebuttal to the politicized, alarmist “science” of the Obama administration’s EPA and the United Nations’ Intergovernmental Panel on Climate Change. If you want to know what the data says is happening to the climate — as opposed to garbage in/garbage out computer models — you must visit ClimateChangeReconsidered.org.

You should join James, The Heartland Institute, and scores of scientists and policy experts at the 9th International Conference on Climate Change at Mandalay Bay in Las Vegas.

Don’t just wonder about global warming … understand it!

Categories: On the Blog

To be Successful, Solar Combines Taxpayer Dollars with Deceptive Practices

May 07, 2014, 1:47 PM

The Spain-based company, Abengoa Solar, claims to be “a global leader in solar thermal energy.” Its website boasts: “Abengoa Solar is the largest solar plant operator worldwide.” Abengoa went public in October 2013, and since, its stock price has doubled. With the support the White House gives to solar energy and the mandates for renewable energy present in the majority of states, Abengoa sounds like a solid investment. And, that’s the image Abengoa has burnished with full-page ads in the Wall Street Journal to encourage investment. However, rather than a “buy,” Abengoa should be a “sell”—sell quickly—as its American run could be coming to a close.

For nearly two years, with researcher Christine Lakatos, I have covered Obama’s green-energy, crony-corruption scandal. Our collaborative efforts have resulted in the biggest single body of work on the topic. I’ve written more than 30 columns on it and Lakatos’ blog: The Green Corruption Files, contains a book’s worth of research. The message has been magnified due to frequent citations by many media outlets and commentators including Rush Limbaugh andMichelle Malkin.

Funding for our green-energy work has always been a challenge but has been nonexistent in 2014. However, when, based on previous coverage, a whistleblower from Abengoa contacted me, we went into overdrive. With hundreds of combined hours of researching, interviewing, and writing, Abengoa became our grand finale—with the hope of leading to its not-so-grand end.

With the help of connections, such as board member and former Secretary of Energy Bill Richardson and investor and former Vice President Al Gore, Abengoa received $2.8 billion in loan guarantees from Obama’s 2009 Stimulus Bill and then another $818 million grant from the Department of Energy—making them one of the American Recovery and Reinvestment Act’s (ARRA) single largest recipient of taxpayer dollars.

Despite the largess, they couldn’t be successful within the confines of the rules. As I’ve addressed thoroughly in my Abengoa exposé published by the Daily Caller, and, with the help of additional whistleblowers who’ve since come out with their stories, documented by Lakatos, we show that Abengoa cheated its unwitting American investors. It broke immigration and employment laws, engaged in discrimination and favoritism, used expensive and/or outdated technology, and took cost-saving but dangerous shortcuts in design and construction.

Abengoa is now under an Immigration and Customs Enforcement investigation. It is out of compliance with Davis Bacon regulations—which requires that employees receive “prevailing wage” and that the certified payroll is submitted weekly. And, the Department of Energy has just suspended disbursements of ARRA loan guarantee funding until a full audit can be done and Abengoa is found to be in complete compliance with all laws, regulations, and stipulations. Based on our work on Abengoa and our knowledge of the arrogant, above-the-law way it operates, an audit will likely uncover far more violations than those that we’ve discovered.

But said audit won’t happen before California’s Energy Commission’s (CEC) May 7 vote to determine whether or not to give Abengoa, and Brightsource, its partner on this project, a permit for a new solar project: Palen Solar Electric Generating System to be located about 60 miles east of Indio, California. The CEC vote was reported to have been originally scheduled for April 16 but was delayed—which has allowed more time for our work to have an impact. We believe Commission members are aware of the investigations and the work Lakatos and I have done to bring Abengoa’s deceptions to light. The new project has many detractors. Sources report that it has serious opposition within the CEC—yet, the companies apparently believe there are enough votes for approval and are pushing to get it back on track.

In December 2013, Commissioner Karen Douglas issued a preliminary decision recommending that the Palen project be denied. In January, the CEC approved a delay for the decision on Palen. On March 21, a new petition was filed to reopen the proceedings for the stalled project. The CEC vote is now scheduled for May 7 at 2:00 PM.

One reason the companies are pushing for approval is the need to have the project online by June 2016 to qualify for a 30 percent federal income tax credit. The Desert Sun reports that Scott Galati, attorney for the developers, claims the “delays to the companies’ original approval target at the end of 2013 have been ‘devastating.’” Galati said: “the credit—and approval—are essential to secure private funding.”

Interestingly, K Kaufman, who has covered the Palen story for the Desert Sun, calls the desert solar projects: “massive experiments that require careful monitoring before any more are built.” While I believe she is referencing bird deaths and other environmental concerns, I totally agree with her statement—albeit for different reasons.

A few days ago, the Government Accountability Office (GAO) released a report on the Department of Energy’s Loan Guarantee Program—the program that awarded Abengoa the $2.8 billion loan guarantee. The report states: “The Department of Energy (DOE) has not fully developed or consistently adhered to loan monitoring policies for its loan programs.”

As Kaufman so eloquently stated, “carefully monitoring is needed before any more are built.” Hopefully, for the American taxpayer, on May 7, the CEC will decide to delay its decision once again until “careful monitoring” of Abengoa’s operation can be completed. No more taxpayer dollars should go to a company operating above the laws as Abengoa does. Without the flow of funds, Abengoa’s business model falls apart.

We hope our work has pushed an audit—“careful monitoring”—and, perhaps, influenced the GAO report. May our grand finale lead to Abengoa’s not-so-grand end.

[Originally published at RedState]

Categories: On the Blog

The View from the Bottom

May 07, 2014, 1:18 PM

It tells you everything you need to know about the utter contempt those in the White House and the circles of power that the announcement of 0.01% economic growth thus far this year was blamed on—wait for it—the weather! Specifically, a cold winter.

If you have been paying any attention of late, the weather and the climate have become the reason for everything in general and for tornadoes, floods and forest fires, in particular. The fact that these natural events have always been subject to whatever the weather is or the larger climate trends seems to have escaped the notice of too many people. If winter automatically drives down the economy to a point of invisibility, that is news to me.

I’m surprised some economist hasn’t blamed winter for the major decline in home ownership. It has hit its lowest level since the mid-1990s according to the Census Bureau. As the Wall Street Journal reported, “despite two years of recovery in the housing market there are still fewer homeowners than there were before the recession.”  Oh? The recession is over? You could have fooled me.

It is no surprise, however, that China is poised to pass the United States as the world’s leading economic power this year. The U.S. has been the global leader since 1872 when it replaced the United Kingdom and now “most economists previously thought China would pull ahead in 2019 according to the Financial Times.

Bear in mind that the U.S. has survived financial crises in the past, but the 2008 meltdown has persisted since around January 20, 2009 when a new President was sworn into office. It didn’t take him long to receive a Nobel Peace Prize that year and to preside over the first reduction in the nation’s top ranked credit rating in 2011.

Could the economic decline have something to do with the insane increase of federal government regulation? As John Merline asked inInvestor’s Business Daily, “After years of rapid growth during the Obama administration, the cost of federal regulations is now bigger than the entire economics of all but nine countries in the world.” He was reporting on the annual report. “Ten Thousands Commandments”, issued by the Competitive Enterprise Institute. Compiled by Clyde Wayne Crews, this year’s report found that the “regulation tax” imposed on the economy now tops $1.86 trillion. “By comparison, Canada’s entire GDP is $1.82 trillion and India’s is $1.84 trillion.”

“The problem, Crews notes, is that the combined cost of this ‘tax’ never shows up anywhere in the federal budget—or any other official report—even though it is now bigger than individual and corporate income taxes combined.” The CEI report noted that federal regulatory costs average $14,974 per household “which is more than the typical household spends on just about anything else.”

So you don’t have to have an economics degree to figure out what is wrong. “Last year,” Merline reported, “regulators issued 3,659 rules. That’s equal to one new rule every 2 l/2 hours of every day7 or nearly two federal rules issued every business hour.” Why is this happening? Because the 2013 Federal Register contains 79,311 pages, the fourth highest ever and the top two all-time totals were both under President Obama. Big government? No, TOO BIG Big Government.

A new poll surveying young Americans’ political attitudes was released at the end of April by Harvard University’s Institute of Politics. As indoctrinated as those 18 to 29 have been in our public schools, they are not brain-dead. The survey found that the millennials have less trust in government than ever before in the President, Congress, the Supreme Court, the military, and federal government as a whole. There is a comparable lack of confidence in Wall Street and the United Nations. Unfortunately, less than one-in-four (25%) of Americans under 30 said they would definitely vote in the forthcoming midterm elections, a decrease since last autumn, though more Republican millennials will vote than Democrats.

It’s not just the youth who are unhappy. A Wall Street Journal/NBC News poll taken in late April revealed “a marked change from past decades” as “nearly half of those surveyed wanted the U.S. to be less active on the global state, with fewer than one-fifth call for more active engagement—and anti-interventionist current that sweeps across party lines.”

This is hardly a surprise as one looks back on the years since 9/11 in which engagement in Afghanistan and Iraq turned out to be failures. In this regard Obama has his finger on the pulse of Americans who are weary of military interventions, but it is equally true he has used this to impose vast reductions on the U.S. military. If they are needed, there will be far less of them and the arsenal they will need.

The poll showed that approval of Obama’s handling of foreign policy has sunk to the lowest level of his presidency with 38% approval. His overall job performance now pulls in 47% or so. Both are below half the population of likely voters. The poll also demonstrated how disenchanted they are with the economy “that many believe is stacked against them.” The views expressed correlated with income and education, rather than party affiliation.

The state of the economy reflects the factors noted; too much regulation, Obamacare’s attack on one sixth of the economy, replete with dozens of taxes within it, as well as the serious disruption of the healthcare system.  What it has also done is cause many businesses to put a cap on how many they employ, a dagger in the heart of those coming out of college with few real prospects, those seeking employment after having been laid off due to Obamacare and other factors—some 90 million still.

If the nation does survive Obama, historians will express wonder that he was reelected and that his approval ratings weren’t considerably lower. He is still being defended by the mainstream media, so that might account for the latter, but recent revelations about the Benghazi cover-up may have an impact.

The people I talk with are “hanging on”, struggling to get by on what money comes in. They are not happy and I suspect they reflect a general unhappiness from the millennials to the senior set.

They are observing the nation and the world from the bottom of the barrel.

We’re Americans. We don’t like being number two

[Originally published at factsnotfantasy.blogspot]
Categories: On the Blog

FCC’s Next Overreach of Authority: Preempting States on Muni-Broadband

May 07, 2014, 10:56 AM

The FCC seems bent on overreaching their legal authority – yet again.

At the NCTA convention, Chairman Wheeler said: “I believe the FCC has the power – and I intend to exercise that power – to preempt state laws that ban competition from community broadband.” And in an FCC blog post, Chairman Wheeler also said this preemption of states on muni-broadband “is an issue that remains high on my agenda, and we will be announcing more on this topic shortly.”

FCC lawyers appear to think this is the time for more overreach of FCC authority because the legal outcome may be different than in the past.

They appear to be basking in the real empowerment of the D.C. Circuit Court of Appeals,Verizon v. FCC decision, which indeed does strongly affirm the FCC’s authority to regulate the Internet under Section 706. And they rightly are emboldened by the Supreme Court’s affirmation last year of Chevron Deference.

However, that oversimplifies.

The big legal miscalculation here is a heroic FCC legal assumption that this would be another broadband industry versus FCC legal challenge just like the Verizon v. FCC decision, where the Court already has decided the issue of the FCC’s authority largely in the FCC’s favor.

Wrong.

This would be less a legal challenge to the FCC’s statutory authority, but more of a Constitutional challenge of the FCC’s perceived supremacy over fundamental state sovereign functions.

If the FCC goes forward with this preemption of state authority, count on 20+ State Attorneys General to challenge constitutionally the FCC’s frontal assault on their core sovereign state functions of determining economic and fiscal policy.

More likely than not the FCC ultimately would lose that case because there is no Chevron deference or Section 706 authority empowering the FCC with an effective wholesale override of States’ constitutional rights.

It is ironic and surprising that when the FCC is arguing forcefully for following the D.C. Circuit Court’s specific roadmap for successfully asserting FCC legal authority to regulate the Internet, that the FCC would risk overreach yet again in trying to preempt fundamental state sovereign functions.

Simply, what the courts giveth, they can taketh away, especially if one overreacheth one’s constitutional authority.

The potentially fatal flaw in the FCC’s legal calculus here is trivializing the economic and fiscal predicate of the states.

Muni-broadband is a very big economic and fiscal state issue. Constructing and operating community broadband networks is a large, long-term financial endeavor. They require taking on public debt via bond offerings. More public debt and operating funds for muni-broadband mean less borrowing and funds for public safety, public pensions, roads, bridges, water mains, sewers, etc.

Unfunded liabilities are a huge economic and fiscal state issue. States are well aware that the vast majority of hundreds of muni-broadband efforts to date have failed and stuck taxpayers with the burden of paying off the bill for this incompetence, waste, fraud and abuse.

Simply, the states’ have a strong fiscal interest in preventing more community broadband boondoggles.

Why would this likely be an overreach of the FCC’s authority?

First, the Supreme Court already has decided this issue effectively in favor of state rights. InNixon v. Missouri Municipal League (2004) the Supreme Court rejected federal preemption of state prohibitions on telecom services. It specifically rejected the use of the FCC’s Title IIsection 253(a) authority to preempt state prohibitions of localities offering telecom services on constitutional federalism grounds. (For more please see FSF’s legal analysis here.)

If clear FCC Title II statutory language was insufficient to overcome states constitutional rights, it is hard to see how the FCC’s new-found, balsa Section 706 authority would be sufficient to trump the Supreme Court’s defense of state’s rights in the Constitution.

This Supreme Court precedent presents a high bar for the FCC to overcome because the core constitutional issue is largely-settled and because Chevron Deference does not apply to the Supreme Court’s decisions.

Second, municipalities are legal creations of the state, not the Federal government. States have clear sovereign economic and fiscal responsibilities to the citizens and taxpayers of their state. The construction and operation of broadband networks in a local community clearly is an in-state activity not an inter-state activity that generally can afford the FCC jurisdiction.

In sum, if the FCC preempts state prohibitions of community broadband capital projects, the FCC essentially would be asserting that it, not the states, is the ultimate approving authority for community broadband capital projects, by effectively pre-approving all potential community broadband projects in advance, by denying the state its right to prohibit them.

Through the narrow lens of its newfound, balsa Section 706 authority, the FCC may imagine it is promoting competition and picking a popular fight with the broadband industry.

However, the FCC really would be picking an unnecessary, unpopular, and ultimately losing fight with America’s state legislatures and Governors, and also the U.S. Congress. FCC foot meet state’s rights hornet’s nest.

Congress won’t like this FCC overreach either. This issue is an obvious political and legal loser for the FCC.

Lastly, what is hardest to fathom here is why the FCC would want to risk losing its newfound, balsa Section 706 authority, so soon after receiving it?

Will the FCC’s well-known history of overreach repeat itself – yet again?

[Originally published at Precursorblog.com]

Categories: On the Blog

SPECIAL REPORT: AMERICA’S EMERGING HOUSING CRISIS

May 07, 2014, 9:01 AM

This is the executive summary from a new report, America’s Emerging Housing Crisis, published byNational Community Renaissance, and authored by Joel Kotkin and Wendell Cox. Download the report and the supplement report below.

From the earliest settlement of the country, Americans have looked at their homes and apartments as critical elements of their own aspirations for a better life. In good times, when construction is strong, the opportunities for better, more spacious and congenial housing—whether for buyers or renters—tends to increase. But in harsher conditions, when there has been less new construction, people have been forced to accept overcrowded, overpriced and less desirable accommodations.

Today, more than any time, arguably, since the Great Depression, the prospects for improved housing outcomes are dimming for both the American middle and working classes. Not only is ownership dropping to twenty-year lows, there is a growing gap between the amount of new housing being built and the growth of demand.

Our still-youthful demographics are catching up with us. After a recession generated drought, household formation is again on the rise, notes a recent study by the Harvard Joint Center for Housing Studies. In some markets, there isn’t an adequate supply of affordable housing for the working and middle classes. Overall, according to the research firm Zelman and Associates, the country is building barely one-third the number needed to meet the growth in households. Overall inventories of homes for sale are at the lowest level in eight years.

The groups most likely to be hurt by the shortfall in housing include young families, the poor and renters. These groups include a disproportionate share of minorities, who are more likely to have lower incomes than the population in general. This situation is particularly dire in those parts of the country, such as California, that have imposed strong restrictions on home construction. California’s elaborate regulatory framework and high fees imposed on both single- and multi-family `housing have made much of the state prohibitively expensive. Not surprisingly, the state leads the nation in people who` spend above 30 percent, as well as above 50 percent, of their income on rent.

Sadly, the nascent recovery in housing could make this situation even more dire. California housing prices are already climbing far faster than the national average, despite little in the way of income growth. This situation could also affect the market for residential housing in other parts of the country, where supply and demand are increasingly out of whack.

Ultimately, we need to develop a sense of urgency about the growing problem of providing adequate shelter. As a people we have done this many times — with the Homestead Act, and again, after the Second World War, with the creation of affordable “start-up” middle- and working class housing in places like Levittown (Long Island), Lakewood (Los Angeles), the Woodlands (Houston) and smaller subdivisions, as well as large scale cooperative apartment development in places like New York. Government policy should look at opportunities to create housing attractive to young families, which includes some intelligent planning around open space, parks and schools. It is important to ensure that a sufficient supply of affordable housing is allowed throughout metropolitan areas, for all income groups.

Nothing speaks to the nature of the American future more than housing. If we fail to adequately house the current and future generations, we will be shortchanging our people, and creating the basis for growing impoverishment and poor social outcomes across the country.

[Originally published at New Geography]

Categories: On the Blog

Gary Becker: Economic Imperialist

May 06, 2014, 4:09 PM

Gary Becker (1930-2014), part of the vaunted Chicago School of economics of the late 20th Century, brought the paramount insight of economics to the entire spectrum of human behavior, including areas previously considered parts of sociology, psychology, criminology and education.

From his first great insight into racial discrimination, through subsequent insights into schooling, the family, crime, addictive behaviors and even suicide, Becker re-unified the social sciences, with economics as the King, mathematics as the Queen and statistics as the Jack. Much indeed was gained, but something too was lost.

The paramount insight of economics is that humans are rational, weighing cost and benefit in making decisions. This is not to say that humans are completely rational. On this point, I could go Chicago School and say that for most purposes it is useful to assume that humans are rational. But, instead, I will say that the great majority of humans are rational when due allowance is made for the cost, in real time, of acquiring and analyzing information.

In the traditional ordering of the social sciences, economics focused on decision-making in the marketplace where cost and benefit are relatively easy to quantify. Sociology, in contrast, focused on decision-making – if you wanted to use that term – in non-market settings, where cost and benefit are relatively difficult to quantify, where reciprocity unsupported by legal obligation is involved, and therefore where emotional ties, trust and loyalty are involved.

Game Theory might seem to describe situations where the decisions of those participating in a game are based on expectations of reciprocity. But, social institutions such as families, churches, charities and even business organizations and nation-states, by developing emotional ties, affect the probability of reciprocity and, so, can foster greater cooperation.

Becker’s imperialism consisted of interjecting the economic insight of rational decision-making into non-market settings. For example, criminal behavior. People commit crime, he said, because the expected benefit exceeds the expected cost. Thus, when a person’s prospect of finding a job is low, that person is more likely to consider going into the “occupation” of thief. Conversely, if society wants to deter crime, among its options are to increase the likelihood of convicting thieves and to increase the penalties for those who are convicted.

Becker’s imperialism also consisted of requiring that theories of human behavior be subject to test. Thus, statistical analysis became de rigueur throughout the social sciences. Only, statistical analysis has been discovered to be rife with difficulties. Rape statistics, for example. More reporting of rape might reflect increased confidence in law enforcement, rather than increased incidence of rape. Long prison sentences might lower crime only because more of the relatively few criminals among us are removed from the population, rather than because more would-be criminals are deterred from crime. And, the correlation between the death penalty and the rate of murder may be more due to low-murder rate jurisdictions ending the death penalty than by any deterrent effect of a death penalty, what we call reverse-causation.

Putting aside the problem of statistical analysis, what has been lost in the translation of human behavior into mathematics is the evolutionary characteristic of social institutions. For Becker, the institutional framework in which individuals make their decisions is a datum entering his models. But, in free societies, social institutions evolve. These social institutions include customs and the law, in addition to the family, the church and so forth. In a free society, these develop so as to better enable people to be successful by promoting what we come to recognize as virtuous behavior. Things like prudence, integrity, tolerance and compassion.

But, in a socialistic society, the nation-state increasingly atomizes us, destroying social institutions. Whether intended or not, the family, the church, and private charity are displaced by the state, and customs are coarsened. Initially, appeals for support of an expanded nation-state might be made on the basis of the bourgeois virtues of the formerly free society, but eventually the realities of socialism require usefulness to the nation-state.

As important as was Becker’s application of the economic paradigm of rational decision-making to all human behavior, and the requirement that theories of human behavior be subject to empirical analysis, it is even more important that we reverse the rise of the nation-state and the destruction of our social institutions.

Categories: On the Blog

The Rise of European Economic Nationalism

May 06, 2014, 10:25 AM

The siren song of independence and national self-determination has sounded once again across Europe. It is a song that holds echoes of a century ago, when the internal force of nationalism convulsed the European empires into world war. Yet, while the song remains the same, the tune has changed.

One hundred years ago, many of the great countries of Europe were patchworks of cultures, ethnicities, and national identities. The most vulnerable of these states was the Austro-Hungarian Empire. It was so vulnerable because of its gross economic mismanagement and its denial of any political say from nationalist movements, a policy that left many groups resentful. It is thus no surprise that the spark that ignited World War I was lit by Serbian nationalists in Austro-Hungary.

The war tore Austro-Hungary apart. When the conflict ended, the country was divided into many smaller states, most of which were formed along ethno-nationalist lines. While the political divisions created by the war were soon convulsed anew in the Second World War, the idea that nations should be allowed to self-determine was firmly established in the European, particularly Western European, mindset.

That right of self-determination is now being tested across Europe. In Spain and Italy, regions are moving toward political separation from their central governments. However, the reasons are somewhat different than they were in the last century. While the impetus then was a desire for political freedom, today’s nationalists are more concerned about economics.

Economics is certainly the main driver of the independence movements in Spain and Italy.

Catalan Nationalism

Catalonia has long had a strong cultural identity unique from the rest of Spain. Separatist parties have frequently had great influence in the regional parliament, and cultural elements, such as teaching in the Catalan language, are strongly supported. Yet the separatists have also found it hard to build sufficient support to declare full independence from Spain.

Since the global financial crisis and recession, however, things have begun to change in Catalonia. As one of the richest regions in all of Spain, Catalans have come to feel as if they are subsidizing the profligacy and irresponsibility of less prosperous regions. This resentment might have been containable during the decades of economic growth after the fall of the Franco regime in the 1970s, but in the wake of a massive debt and housing crisis, it has bubbled to the surface.

Today, 55% of Catalans support full independence, and a far larger majority supports holding a referendum on the place of Catalonia in Spain. In 2013, the Catalan parliament set a date to hold a referendum on independence for November 2014.

The Spanish government has not responded well to the threat of secession. The national parliament and courts have rejected the referendum as unconstitutional.

Despite the opposition of the central government, the separatist government of Catalonia has declared its decisions will not be made by the Spanish authorities. Now most Spain-watchers think the regional parliament will call an election to act as a proxy for an independence vote. If the separatist parties are returned to power, the march to independence may become unstoppable.

Venetian Nationalism

Venice has always been independent-minded. An independent republic for over a thousand years, Venice is a relatively recent addition to the also relatively young unified Italy. Rolled into Italy by conquest, the current state of things does not sit well with many Venetians.

The level of discontent only became clear in March 2014 when an unofficial referendum on Venetian independence was held by separatist activists. Independent sentiments were always high, as much as 65% in favor according to some polls, but no one anticipated the result of the referendum. Fully 89% voted in favor of secession from Italy.

The shocking degree of pro-independence sentiment has sparked a full-fledged movement to gain political independence. Activists are buoyant about their prospects and look forward to leaving the sclerotic Italian central government behind.

Like Catalonia, Venice is much wealthier than the majority of the mother country. Venetian taxpayers pay billions of dollars in net transfers to the central government. They have finally become sick of it and are ready for a change.

The Ties that Bind

The lesson the separatists of Catalonia and Venice offer collectively is that the ties that bind nations are not unbreakable, especially when they are confronted with economic strains. Whether these regions gain their independence, greater autonomy, or return to the status quo, the very fact that the question is being tested at all shows that government profligacy and economic distribution can only go on for so long. Eventually those who face the economic drain will revolt against the injustice.

Under such circumstances, maybe a peaceful secession is the best solution one can hope for.

Categories: On the Blog

Why Teachers, Parents, and a Comedian Want to “Can Common Core”

May 06, 2014, 10:06 AM

[This article was co-authored by Bonnie O'Neil]

Common Core is appropriately named. It is indeed “common”, and not the exceptional education system its promoters promised. Digging into its core we find problems with its design, philosophy, tactics by which it was implemented, and specific ideology which is liberally peppered throughout the various subjects.

One might speculate how this unproven program was sold to the governors of 45 states, without their having actually seen any of the Common Core curriculum. Much like the Affordable Care Act, Common Core was approved based on lofty promises and without a shred of proof it was superior to the program it replaced.

We do know states accepting Common Core were “forgiven” their contract with “No Child Left Behind”, which was appealing, because many school districts had not met their commitments to that contract and were eager to be excused from their obligations. Also, there was a financial “carrot” via “No Child Left Behind” federal money.

Big money speaks

Bill Gates and other big business tycoons saw an opportunity to make millions from the new system and donated huge amounts to help launch and promote it.  However, that was only part of Gates reason and not his real passion. When interviewed on national television, all Gates offered as to why he supported the new education system was the tired standard Common Core talking point that American students needed to compete globally. Hey, our country is a World leader; we already are competitive. What Gates failed to mention is his close association with the United Nations and that he bought into their one-world globalist agenda, which is directly tied to U.N. Agenda 21, Chapter 36 under Education, Public Awareness, and Training”. Common Core is the surreptitious takeover of public education by a handful of liberals, with Bill Gates prominent among them.

Would governors have approved Common Core if they had known beforehand that it embraces the “three E’s of Agenda 21″ which will become evident in an article to follow when discussing Common Core standards for Math, Language Arts, History, and Science: 1) Equality, meaning Common good, not individual rights; 2) Economy, meaning redistribution of wealth; and Environment, meaning animals have equal rights or even more rights than humans. That certainly does not sound like the philosophy under which our nation has prospered for centuries

Government control over state violates Constitution

“The philosophy of the classroom of one generation will be the philosophy of government in the next” is a wise statement attributed to Abraham Lincoln. Our wise forefathers knew the potential problems of a federal government or any “elitist” group dictating what every school child learns in classrooms across America, which is why they gave the responsibility of education to each individual state. There is an inherent danger in one small body of people deciding what every student in America will be learning in our schools.

How can any reasonable person not be concerned when Common Core violates the very intent of our Constitution and forefathers warnings? What happens if Common Core proves its critics right and test scores in all 45 states are lower, not higher? We know states, such as New York, that have been using Common Core for a couple of years, have experienced plummeting test scores, unhappy children, and furious parents. A large N.Y. teachers union blamed Common Core for creating education chaos in their state. How do students get back those wasted years?  How will our country redeem the loss?

Little impact on student achievement

A study published last month by the Brookings Institution concluded that the Common Core State Standards (CCSS) will have “little to no impact on student achievement.” Two statistical analysis of states with math mandates like Common Core and those with mandates unlike Common Core found that states whose standards were less like Common Core performed better on national assessments. As to states never adopting the standards (Alaska, Minnesota, Nebraska, Texas and Virginia), the difference in test scores were not noticeable in comparison to those states considered strong implementers of Common Core standards.

Author and journalist Dean Kalahar writes:

“Common Core . . . may look delicious, but before you take a bite out of the apple, it might be a good idea to know a razor is inside; furthermore, the foundational philosophy of Common Core is to create students ready for social action so they can force a social-justice agenda.  Is that really what American citizens want for their children’s future? Have we not learned from the mistakes of other once prosperous countries that declined due to their experimenting with Socialism?”

Critical thinking emphasized, even if age inappropriate

A prominent claim of Common Core is that students are being taught to be critical thinkers. However, minds of children develop at different paces. Educators have understood that for centuries, which is why curriculum in the past was designed with an age appropriate concept that is lacking in the new program.

The inconvenient truth is our children are being used as guinea pigs. Teachers have not been given appropriate instructions for teaching the new system, and rather than wait until it was thoroughly tested and teachers provided the necessary tools they needed, the experimental program was inflicted on an entire generation of American students, the majority of whom may suffer for many years.

A major concern is the reduced emphasis on memorization skills. Students now have to connect the dots and apply critical thinking in what experts are calling higher-order thinking necessary for preparing students for life after high school. The concern is how much the curriculum actually leads students into forming the author’s pre-planned conclusion. Are they being carefully guided into a desired thought pattern?  Evidence to support those parental concerns will be discussed in a subsequent article.

Remembering the plot of a short story is no longer good enough for children in the elementary grades. Today’s students are being asked to apply critical thinking, even in Kindergarten and 1st Grade.  Consider the American classic “Charlotte’s Web”.  Common Core requires First and Second grade students to understand and explain how the characters see the “world differently.”  Why does Fern see Wilbur in a different way than the Narrator does?  Young students are asked to explain situations beyond their scope of understanding.

Consider a Common Core school assignment which asked children in the 6th grade to remove and replace two of the first ten amendments of the Constitution. The assignment stated that the Bill of Rights is outdated and may not remain in its current form any longer. This would be an impossible task for a 6th grader having no prior training as to how to amend the Constitution, further leading them to believe all that is needed to change the Constitution is a special committee.  In fact, why are young students being given the idea there needs to be changes in our Constitution in the first place?  We were taught that America’s Constitution was a remarkable document which provided us with the most amazing government in the history of our mankind? Curriculum should be planting seeds of national pride, not seeds suggesting a need for change.

Moral teachings questioned and compromised 

Comprehensive sexuality education often goes unchallenged, that is, until people discover what it teachers. A Kansas father was shocked after discovering his 13-year-old daughter’s health curriculum – part of her middle school’s approved curriculum — included a poster on which were references to vaginal intercourse, anal sex, and touching each other’s genitals, only later to discover that it was in line with what other schools around the country are also teaching.  Reporters dubbed this program “x-rated.”  Chicago, the third largest school district in the nation, is leaving no stone unturned. Within two years sex education will be coming to Chicago kindergartners as part of an overhaul of the Chicago public schools sexual health program.

Parents have been expressing concern that part of the critical thinking project is designed for young children to question the morals and teachings they have received at home and church.  One example occurred during a student independent reading time where kids were required to read a book that is “just right”, one girl’s choice was the Bible, but a teacher promptly took the Bible away. Parents encourage their children to respect and obey their teachers; what does an action like that suggest to a classroom of vulnerable minds?  It feels a lot more like what one would expect in Russia, China, or Afghanistan, not the United States of America. Why, what or who would encourage that extreme behavior from a teacher?

Dr. Terry Bratton testified before an Alabama State Education Committee that “the new education measure has a specific and radical agenda.”  He accused Common Core of promoting an acceptance of homosexuality, alternate lifestyles, radical feminism, abortion, illegal immigration, and the redistribution of wealth. That certainly sounds like a liberal’s dream platform.  He went on say that“Alabama places a priority on family and Christian values. We don’t want our kids taught to be anti-Christian and anti-Catholic and anti-America,” said Bratton. “We don’t want our kids to lose their innocence, beginning in preschool and kindergarten, by being taught that homosexuality is okay and should be experienced at an early age.”  I think he speaks for most American parents!

Bratton also railed against what he called ideas of “social justice” woven into the Standards. He said such teachings are “contrary to traditional American notions of justice in the United States Constitution” and lamented that kids were told “America is an unjust and oppressive society that should be changed.” It is unclear if Dr. Bratton provided proof of all his claims.  However, we do know that there is a strong connection between the authors of Common Core and extreme radical education groups whose goal is to teach social justice to students in our schools. This website explains that connection in more detail.

What does history tell us?  (Need to find the link, Bonnie.)

Historian David Barton of Wallbuilders has also made some important points worth considering.  He suggested we look back in history and consider Americas’ first teaching principles. The primary goal was to “teach religion, morality and knowledge”. The second goal was the role of faith in teaching important thinking skills.  The historian noted that religion was so important that new states being admitted to the union were required to embrace “religion, morality and knowledge,” which is why these elements made it into many states’ constitutions.

Barton blamed the 1960s Supreme Court decision for changes that stripped religion out of schools and morality out of society. Soon after that decision, other laws were amended or enacted which allowed for more sexually implicit media opportunities. STDS, underage pregnancies, and violence skyrocketed. The unfortunate “cause and effect” of that specific court decision is obvious and remains evident today. We are all reminded that elections have serious consequences that reverberate through society for decades, causing us to more fully appreciate the importance of an educated voter. While morality is best taught at home, to be more effective, it should be reinforced at school and throughout every other avenue of learning opportunities. Common Core is another step down in our nation’s declining moral state.

Concluding thoughts

You know something is really wrong, when a comedian can no longer laugh or joke about an issue. Consider Louis C.K., who is also a father, and whose children have been adversely affected by Common Core. Check out his story in the New York Daily News.

In conclusion, there is little doubt in our minds that Common Core was developed by a determined group of liberals in accordance with a United Nations education agenda.  No wonder our state governors were not given any facts, examples of curriculum, or proof that this new education system matched their expectations.  But now that the facts are known, where is the massive outcry to stop this radical new education program? Oh, its out there in most every state and gaining momentum.  But there needs to be an even louder and stronger opposition. Will you dedicate some of your time to be a part of that essential movement to stop this liberal agenda?  Contact your state representatives and educate them on the facts, and ask for their help in closing the door to Common Core.

 

[Originally published at Illinois Review]

Categories: On the Blog

Depends on When You Were Born

May 06, 2014, 9:53 AM

My Father was born in 1901 and was too young for World War One and too old to serve in World War Two. A gentle, quiet man, he would have been a terrible soldier. My older brother, however, was inducted in the U.S. Army and served during the Korean conflict. In the 1960s I served during a period of peace despite Cold War tensions.

In 1973, the U.S. ended military conscription, opting for an all-volunteer force. Those that chose to serve found themselves in combat in Afghanistan and Iraq. Earlier there were some minor engagements such as Panama in 1989. It was 9/11 that changed everything.

The thing about wars is that, if a nation wants to invade another one, all the laws and treaties mean nothing. One of the most useless international organizations, the United Nations, has a long record of not deterring all manner of wars, large and small, past and present. Then, too, wars are usually preceded by lies the aggressor puts forth to justify the action and much of what occurs is protected by a body of lies. The winner gets to write the history.

The last century had wars that killed millions, many of whom were civilians. A new generation is witnessing a Syrian war whose casualties now number 170,000. Two million Syrians are now refugees; a potential threat to the stability of Lebanon and Jordon. Both sides of the conflict have perpetrated horrors, but the use of poison gas by President Assad, a major crime against humanity, has not resulted in any loss of his power. Russia stepped in to give him cover. His other ally is Iran. Ukraine is likely to split between East and West.

The conflicts of the current century could escalate into even more massive loss of lives because nuclear weapons and poison gas have the capability of killing more people than the bombs of the last century.

Significantly, it took two atomic bombs to convince the Japanese leaders to surrender, but not until thousands died in Hiroshima and Nagasaki. The good news is that no atomic bombs have been used since. The bad news is that there a crazies like the Supreme Leader of Iran whose Islamic fanaticism cannot be counted upon to preclude his use of a nuclear weapon against Israel. Or us.

What is curious, foolish, and displays a huge ignorance of history is the way President Obama and his minions have been reducing America’s military. It has been American power that kept the Cold War with the former Soviet Union from turning into a hot war and it was that power that was instrumental in causing others to avoid military confrontations with us. Congress has to set aside the sequestration limits that affect our military strength and get busy rebuilding our Army, Navy, Air Force, Marines and Coast Guard. It should do so tomorrow!

The generation that served in World War Two and in the Korean conflict is no longer represented by those serving in Congress. Older members have passed away or retired. The present Congress—particularly its Democratic Party members—are some of the dumbest and most duplicitous politicians to have ever served there.

Like the President, they do not hesitate to lie and to spin whatever occurs. In a nation almost evenly divided politically, it will take a shift by the moderates and independents in the center to transfer complete political power in Congress to the Republican Party. Then we have to hope the GOP will more strongly embrace its principles to undo the damage done by the two elections of Obama and thwart further damage in his remaining two years in office.

The newest generations of voters and those who have been around awhile have been living through a period in which they have been ill-served by a Congress that spent and borrowed too much. Congress did the same during the Great Depression through which my parents lived. It prolonged it from 1929 to 1941 when we entered WWII. One can only hope that those graduating from college with big loans and no job prospects will vote to put a stop to that. Joining them will be the Baby Boomers, many of whom also cannot find work or cannot retire.

We are living through our own Great Depression for the same reasons Franklin D. Roosevelt’s solutions did not work. It is the private sector, not the government that determines the health and growth of the economy. In our case, we have been a major economic power,  number one since 1872. On August 5, 2011, the nation’s top credit rating was downgraded. The lesson from that event was lost on too many people.

That too many do not learn from history or are simply ignorant of it explains a lot about our present times.

No discussion of our present times would be complete without a look at one of the greatest legislative catastrophes, Obamacare, ever imposed. It will likely prove to be the final nail in the Democratic Party coffin for a while. It is a classic example of the liberal desire to control the most intimate aspects of our lives, our health and the care it requires, combined with the insane need to fashion legislation so complex that it cannot work. Worse, it will likely kill off large numbers of its alleged beneficiaries, particularly the old; denied or delayed access to nearby hospitals, their personal physicians, et cetera.

Obamacare is doomed. It will be repealed. A return of healthcare to the private sector will do what no amount of government ever can. It is fundamentally unconstitutional to require people to purchase something they do not want.

America may be at a significant turning point. Having indulged every government program to their near extinction—Social Security and Medicare are closing in on insolvency—we may return to more self-reliance, fiscal prudence, and less reliance on a government grown too large to do anything well.

It depends on when you were born whether you will live to see this occur. I likely will not.

 

[Originally published at Warning Signs]

Categories: On the Blog

Reality Check on the Electoral Politics of Net Neutrality

May 06, 2014, 9:44 AM

The net neutrality movement is positioning to influence the FCC, Congress, and candidates in the mid-term election cycle, to support their version of net neutrality — i.e. FCC reclassification of broadband Internet service as a telephone common carrier service.

It is instructive to look back at what happened in the last mid-term election cycle — in both the 2010 election, and in 2009-2010 Congress — when the net neutrality movement last tried this.

By way of background, this week the Progressive Change Campaign Committee (PCCC) launchedNoSlowLane.com, a petition website to pressure the President and the FCC on their version of Net Neutrality.

The 2010 Election:

In the 2010 mid-term election cycle, this same PCCC got 95 congressional candidates to sign a pledge: “I believe in protecting net neutrality – the First Amendment of the Internet…” Tellingly, all 95 candidates pledging PCCC support for Title II net neutrality — lost.

That’s a 0-95 electoral record for the PCCC Title II net neutrality position.

The 2009-2010 Congress:

It is also instructive to look back at the bi-partisan majority of Congress that opposed the FCC’s 2010 consideration of reclassifying broadband Internet service as a telephone common carrier service.

In formal letters to the FCC, Members of Congress opposed Title II reclassification by a 6-1 margin (299-49).

Per national Journal reporting, a bipartisan majority of Congress 56% (299 of 535 members)wrote in opposition to Title II reclassification of broadband. For example see the: House Democrat letter, House Republican letter, & Senate letter. The FCC has all the relevant letters in their own archives.

A small minority of Congress 9% (49 of 535 members) wrote in support of Title II reclassification of broadband.

As much as the net neutrality movement tries to create the perception that they enjoy broad political support beyond their email lists of activist supporters, it is instructive to see how real politicians in the real world decided on this issue when in Congress and in congressional elections.

Even in the politics of perception, facts are an important reality check.

[Originally published at Precursor Blog]

Categories: On the Blog

Registration Open for Heartland’s 9th International Conference on Climate Change

May 05, 2014, 8:21 PM

Come to fabulous Las Vegas July 7 – 9 to meet leading scientists from around the world who question whether “man-made global warming” will be harmful to plants, animals, or human welfare. Learn from top economists and policy experts about the real costs and futility of trying to stop global warming.

Meet the leaders of think tanks and grassroots organizations who are speaking out against global warming alarmism.

Don’t just wonder about global warming … understand it!

#ICCC9 takes place at the Mandalay Bay Resort and Casino. Rooms start at only $80 per night plus fees and taxes. Fly American or United and get a discount of up to 10%!

We are hosting the event in Las Vegas that week in partnership with our friends at FreedomFest, who are cosponsors of #ICCC9 and host their excellent annual conference July 9 – 12 at Planet Hollywood.

A preliminary schedule for the event is here. Speakers already confirmed include Fred Singer, Craig Idso, Willie, Soon, Roy Spencer, Marc Morano, Christopher Monckton, Patrick Moore, and Anthony Watts. For more speakers and their bios, click here.

Register for the event here, or call 312/377-4000 and ask for Ms. McElrath or reach her via email at zmcelrath@heartland.org.

Exhibiting and sponsorship opportunities are available starting at only $150! Contact Taylor Smith at tsmith@heartland.org for information about promotional opportunities and prices.

Several prizes will be awarded to scholars, elected officials, and activists for outstanding contributions to the debate over global warming. To nominate someone or to suggest a prize, contact Robin Knox at rknox@heartland.org.

To watch videos from the previous eight International Conferences on Climate Change, click hereRead testimonalsfrom previous attendees! For more information about The Heartland Institute, visit our website.

Categories: On the Blog

Paul Ryan’s Welfare Buzz

May 05, 2014, 11:38 AM

 

 

A week ago, I was scrolling through Buzzfeed hoping to take the latest quiz or find a shockingly specific, but relevant list to post on Facebook. Instead, I came across one of the most interesting articles I have read in a while.

McKay Coppins wrote an in depth piece titled “Paul Ryan’s Inner City Education.” As I started reading the article, I was prepared to become defensive and argumentative, assuming it was just another effort to slam the Republican Party. Surprisingly, the article praised Paul Ryan and the work he is doing. This piece has the potential to impact conservatives, the Republican Party, and the future of our welfare system.

With Ryan leading the way, conservatives are addressing a topic often avoided: welfare and the American poor. These leaders continue to prove that the system of handouts and dependency needs to change. Ryan is developing his own proposal, but with a level of compassion and empathy that is surprising for any policy. By making an effort to actually understand the devastating conditions in some American cities, Ryan approaches welfare in a way that few politicians (Democrat or Republican) ever do.

He includes the voice of those people actually a part of our welfare system—a voice so often ignored. Congress repeatedly makes decisions without consulting the American’s who are directly affected. How can we keep reforming education without the help of teachers, healthcare without consulting doctors, and welfare without including actual poor people? Paul Ryan is a privileged, elite politician along with most of D.C., but unlike his colleagues, he is finally recognizing it.

Most importantly, Ryan brought up a tough conversation. He is confronting major institutional problems that bring about questions of racism, classism, and sexism in America. Like any politician, he has to tread carefully. He has and will continue to make mistakes and the American public should always hold him accountable for those. That being said, he is trying to address issues that most members of Congress avoid at all costs. To that, we should be thankful.

I don’t think Paul Ryan has the ability to solve America’s greatest problems, but I do think he started a productive conversation. He has the potential to pressure the Republican Party to defend its platforms and produce real welfare policies that can change lives. He can also push the debate and make the Democratic Party propose reforms to a system that was established 50 years ago.

Paul Ryan is neither a prophet nor genius. To some he is not even a well-intentioned politician. He is, however, starting a conversation that is long overdue.

Categories: On the Blog

Charter-ing the Way Forward

May 05, 2014, 9:39 AM

Aside from whether you think the proposed Comcast – Time Warner Cable merger ultimately should be approved or not, it’s hard to suggest that Comcast’s announcement that it will divest 3.9 million subscribers does not advance the company’s pro-merger case by alleviating claimed competitive concerns. Without getting into the complexities of the proposed three-party subscriber divestiture transactions involving Comcast, TWC, and Charter Communications, the end result is that, as Comcast promised when the merger was announced in February, Comcast’s total number of subscribers, post-merger, will be less than 30% of the total number of U. S. cable subscribers.

Of course, “30%” is the figure that represented the FCC’s subscriber ownership cap that twice was held unlawful by the D.C. Circuit. Each time, first in 2001 and then in 2009, the appeals court ruled that the agency could not justify such an arbitrarily low national ownership limit in light of the increasing competition in the video marketplace. Since the cap was last invalidated in 2009, there is no doubt the video marketplace – with satellite operators, telephone and fiber companies, and wireless firms all vying for customers — has only become more competitive.

By all rights, you might think – or at least you would have good reason to think – that Comcast’s announcement concerning the planned subscriber divestitures to Charter would ease the concerns of those that claim the merger would give Comcast too much market power. After all, not only will the subscriber divestitures bring Comcast below the now defunct 30% ownership cap, they will also materially strengthen Charter’s own market position as the second largest cable operator.

You might think so. But you would be wrong.

According to the April 29 edition of TR Daily, here is what Free Press’s Matt Wood had to say in response to the subscriber divestiture announcement: “Cable barons have always been great at dividing up the country and refusing to compete with each other. Transforming three giant companies into two behemoths gives no comfort to content providers or consumers.”

The emphasis is mine – in case you might have missed the point that Mr. Wood considers the subject cable companies to be large. I do puzzle a bit over whether – had I been in the position of trying to make Mr. Wood’s argument – I might have rearranged the second sentence to read: “Transforming three behemoth companies into two giants gives no comfort to content providers or consumers.”

Are giants more easily divided into behemoths, or vice versa?

No matter, really. Because this is all semantics, and semantics has nothing at all to do with the merits of the question.

Anyone who knows anything about the realities of constructing and operating increasingly costly high-speed broadband networks knows that it takes scale – that is, large companies – to raise the enormous amount of private capital needed to undertake the job. Indeed, common estimates of capital investments by broadband operators are in the range of $60 – $70 billion per year for the past several years.

But I don’t want to argue the merits of the proposed merger here. And, after all, the review process is just getting underway. It just strikes me as a bit out of sorts to use the occasion of Comcast’s announcement of its promised subscriber divestitures as another opportunity to engage in overheated anti-merger rhetoric. It would seem more fitting to acknowledge that such subscriber divestitures at least lessen professed concerns about concentration.

Again, I don’t want to engage in a full discussion concerning the merits of the proposed merger here. But it’s worth pointing out that, in the midst of all his rhetoric concerning barons, giants, and behemoths, Mr. Wood says that the cable operators have “refused” to compete with each other. Regardless whether “refused” is the proper word, the reality is that the cable operators – in this case Comcast and TWC – do not presently compete directly against each other, so the proposed merger will not lessen competition, or reduce the number of competitors in the “cable” marketplace, one bit. In any event, Charter looks to emerge as a stronger cable competitor as a result of the proposed subscriber divestitures.

The more important reality is that the cable operators do compete in the broader broadband marketplace – the market in which they seek to provide customers with high-speed data, video, and voice services – against facilities-based telephone companies, wireless companies, fiber providers like Google, and satellite operators. It is the competitive impact of the proposed combination relative to this broad broadband marketplace that should be the primary focus of the merger review.

For now, I am happy to give Comcast credit for advancing its case early in the review process by announcing the details of its subscriber divestiture plan. You should have no problem with giving such credit as well.

[Originally published by the Free State Foundation]

Categories: On the Blog

Gary Becker, R.I.P.

May 05, 2014, 9:37 AM

Gary Becker, a leading proponent of free markets and limited government, passed away over the weekend. He was 83.

Prof. Becker was one of the main figures in the Chicago School of Economics, a group of scholars based mainly at the University of Chicago who helped economics avoid a take-over and take-down by the left that would have been similar to what occurred to nearly every other academic discipline beginning in the 1960s. He vigorously defended economics and its tools, in particular methodological individualism, from those who misrepresented it. He demonstrated how economics explains social phenomena seemingly far removed from marketplaces.

He won the Nobel Prize in Economics in 1992 and another rather less prestigious prize, the Heartland Liberty Prize, in 2002. He graciously accepted our modest award and delighted the audience of our anniversary benefit dinner that year with a long and thoughtful acceptance speech. He was a long-time policy advisor to The Heartland Institute, participated in the peer review of our publications, and frequently spoke at our events.

A great teacher as well as thinker, he leaves behind thousands of former students who understand how to think like economists, a skill that immunizes whose who have it against all manner of wrong thinking on public policy.

He will be missed.

Categories: On the Blog

The Evolving Urban Form: Philadelphia

May 05, 2014, 9:22 AM

Philadelphia was America’s first large city and served as the nation’s capital for all but nine months between the inauguration of George Washington as the first president in 1789 and the capital transfer to Washington, DC in 1800.

Before the early 1900s, the United States Census Bureau had not developed a metropolitan area (labor market area) concept. However, the website peakbagger.com has attempted to define earlier metropolitan areas based on concepts similar to those used today. In the case of Philadelphia, this is important because it was somewhat unique in having virtually adjacent, highly populated suburbs that make comparisons of municipal populations (the only population data available) misleading.

The Nation’s Largest City

According to municipal population data, New York had become the largest municipality in the United States by the time of the first census, in 1790. Philadelphia was ranked second. However, a list of the top 24 urban places in 1790 shows two Philadelphia suburbs, Northern Liberties and the Southwark district. When peakbagger.com includes these suburbs, Philadelphia rises as the largest city (metropolitan area) in the nation in the 1790 and 1800 censuses. The New York metropolitan area is shown as rising to number one in 1810, a position it is held for 200 years and may last for much longer in light of the much slower growth rate recently for Los Angeles.

Soon the Nation’s 9th Largest City?

Those were the glory days. In the years since 1800, Philadelphia has been falling in population rank. The Philadelphia metropolitan area was displaced first by Chicago in 1900, according to the metropolitan district estimates of the US Census Bureau. In 1940, Philadelphia was demoted to fourth place by Los Angeles. Philadelphia held fourth position until 2006, when Dallas-Fort Worth raced past it. Then just a few years later (2010), Houston knocked Philadelphia down to 6th place. The downward trend could accelerate rather quickly. At current growth rates (2010 to 2013), Philadelphia would be passed by Washington and Miami by the time of the 2020 census. The Atlanta metropolitan area would also pass Philadelphia if its population growth rate is restored to pre-Great Recession rates. Philadelphia should start the next decade as either the 9th or 10th largest metropolitan area in the nation.

Population Growth in the Philadelphia Metropolitan Area

The Philadelphia metropolitan area is unusual in being divided between four states. The core city of Philadelphia is located in Pennsylvania. Directly across the Delaware River are the suburban counties of New Jersey. Wilmington, formerly the largest metropolitan area in Delaware has been incorporated into the Philadelphia metropolitan area (New Castle County). Maryland’s Cecil County is also included in the metropolitan area.

All of Philadelphia’s population growth since 1950 has been in the suburbs. In that year, the city of Philadelphia peaked at 2,072,000 residents. This was a healthy increase from the 1,930,000 in the 1940 census. However, this represented a decline from 1,951,000 in 1930 and shadowed massive population losses that would follow after 1950 (Cleveland and St. Louis also lost population between 1930 and 1940).

By 2000, the city’s population had dropped 27 percent to 1,518,000. This could prove its modern low, as the population recovered to 1,526,000 in the 2010 census and was estimated by the Census Bureau at 1,553,000 in 2013.

The suburbs of the metropolitan area as presently defined added nearly 2.6 million residents between 1950 and 2013. However, the metropolitan area only grew by 2.1 million residents because of the more than 500,000 loss in the city of Philadelphia. The inner ring suburbs, counties abutting Philadelphia County in Pennsylvania and New Jersey gained 1.8 million residents, while the outer suburbs gained nearly 800,000 residents (Figure 1).

Domestic Migration

Philadelphia has continued to lose domestic migrants to other areas of the country. Between 2010 and 2013, approximately 50,000 net domestic migrants left the Philadelphia area. Of this, 22,000 left the city of Philadelphia and 28,000 left the suburbs. The rate of domestic migration loss was 0.8 percent in the metropolitan area, 1.4 percent in the city of Philadelphia and 0.6 percent in the suburbs (Figure 2).

Employment

Within the metropolitan area, the commercial primacy of the core city of Philadelphia also has been reduced. Philadelphia has long been known for having one of the largest central business districts in the United States. The most recent census tract data from the CTPP indicates that Philadelphia has the sixth largest business district in the United States, with approximately 240,000 jobs. This represents only 8.7 percent of the metropolitan area employment, a figure slightly above the 8.4 percent average of the 52 major metropolitan areas (those with more than 1 million residents).

The development of Philadelphia’s “center city” business district may have been stunted by city regulations that prohibited buildings to exceed the height of City Hall, topped off by a statue of city founder William Penn. At nine floors and approximately 550 feet (165 meters), City Hall was briefly the tallest building in the world in the early 1900s. City Hall remained a dominant feature of the skyline until the late 1980s, when One Liberty Place, with its 61 floors rose to 945 feet (290 meters). There are now 8 buildings taller than City Hall. Construction will soon begin on a new office and hotel tower , which at 1,120 foot tall (340 meters), 59 floor building would be the tallest building in the United States outside New York and Chicago (and taller, by 20 feet than Wilshire Grand now under construction in Los Angeles).

Transportation

I have described the city of Philadelphia as a “transit legacy city,” which along with New York, Chicago, San Francisco, Boston, and Washington account for 55 percent of all the transit commuting destinations in the United States. This is nearly 10 times the share of jobs that are located in these six municipalities (not metropolitan areas).

Philadelphia, like the other five other transit legacy cities has an extensive urban rail system. Philadelphia has commuter rail lines extending outward to suburban locations in Pennsylvania, New Jersey and Delaware. There are also two Metro lines (subway lines) and electric trolley lines. This transit system delivers 44 percent of commuters to “center city” jobs. This represents more than 40 percent of the transit commuting in the Philadelphia metropolitan area. Transit’s market share to work locations outside downtown is relatively small at 6.0 percent.

The nation’s first long intercity tollway (the Pennsylvania Turnpike) passes through the Philadelphia metropolitan area. This route, in connection with the New Jersey Turnpike, the Ohio Turnpike, the Indiana Toll Road and the Chicago Skyway provided freeway equivalent access between the New York, Philadelphia, Pittsburgh, Cleveland and Chicago metropolitan areas in the middle 1950s, before the interstate highway system was authorized.

Philadelphia’s stagnant population growth is typical for the Northeast, which continues to lose domestic migrants to the rest of the nation. It seems likely to continue. In the two decades following 2020, Phoenix and Riverside-San Bernardino are projected by the US Conference of Mayors to pass Philadelphia. This would push Philadelphia down to 12th place, compared to the 4th ranking it had at the beginning of the 21st century. Quite a ride down for the City of Brotherly Love, and its surrounding region.

[Originally published at New Geography]

Categories: On the Blog