While becoming more and more powerful, public sector unions are losing favor with taxpayers, Daniel DiSalvo, author of “Government Against Itself: Public Union Power and Its Consequences,” said during a forum hosted by The Illinois Policy Institute Tuesday in Chicago.
The event’s format was that of a two-way conversational discussion that took place between DiSalvo and Paul Kersey, director of labor policy at the Illinois Policy Institute, about the role of public-sector unions in politics today. Daniel DiSalvo is Assistant Professor of Political Science in the Colin Powell School at The City College of New York-CUNY and a senior fellow at the Manhattan Institute’s Center for State and Local Leadership.
Although Americans have long supported public unions because they associate them with the merits of the working class, recently taxpayers have begun to see reality with polls showing that barely half of Americans approve of unions, while an overwhelming majority approve of Right-to-Work laws.
Emily Rose, Vice President of Development, introduced Paul Kersey and Daniel DiSalvo. Mr. Kersey directed a series of questions to DiSalvo for his response, all of which were relevant to DiSalvo’s book, “Government Against Itself: Public Union Power and its Consequences.”
The book is about a broken system whose financial consequences have reached the point of being unsustainable. The broken system referenced pertains to unions representing government workers in contrast to those found in the private sphere.
No longer the underdog, public-sector unions since 2009 have totaled more members than the membership in traditional private-sector unions. This imbalance came about when in 1962 President John F. Kennedy signed Executive Order 10988 permitting collective bargaining for federal employees. Around the same time state and city workers, teachers and firemen were starting to unionize.
Fifty years ago, on January 17, 1962, Federal employees first obtained the right to engage in collective bargaining through labor organizations when President John F. Kennedy issued Executive Order 10988, “Employee-Management Cooperation in the Federal Sector.” Executive Order 10988 issued as result of the findings of the Task Force on Employee-Management Relations in the Federal Service, which was created by a memorandum issued to all executive department and agency heads by President Kennedy on June 22, 1961. In this memorandum the President noted that, “The participation of employees in the formation and implementation of employee policy and procedures affecting them contributes to the effective conduct of public business,” and that this participation should be extended to representatives of employees and employee organizations.
Public-sector government employment now accounts to 17% of total U.S. employment. Those employed are mostly found in state and local governments, with teacher having the most members, about 41% of the total public membership. The cost of public sector union employees (teachers) eats up two-thirds of the government’s (school district’s) operational budget. Public sector workers actually fight for benefits whose provision will hurt the public.
What is the nature of pubic unions versus private unions?
- In public sector unions, pre-existing job protection exists through civil laws that provide protections from arbitrary firing, transfers, and disciplinary actions that private sector workers usually lack.
- Government can access new revenue through taxation, while private workers are fully exposed to the business cycle.
- Public sector unions can vote for the politicians who sit across from them at the bargaining table. This gives politicians (or their delegates) an incentive to give unions concessions instead of bargaining hard, like private-sector unions do.
- Public sector unions contribute billions to candidates on every level, almost always to candidates from one party. At one point or other, these are the very candidates who will be “negotiating” contracts with these public sector unions, a definite conflict of interest. In some states public unions have become so powerful, that there is no opposition. They can also exert greater influence on their members that private sector unions, through political lobbying.
- In the private sector the argument is over how to divvy up the profits: How much to owners, how much to management, how much to labor, and how much spent to improve products? If labor gets too greedy, that drives up the cost of whatever they’re making until customers start buying less. Profits then decrease, raises decrease or stop altogether, and jobs start going away. Labor either wises up of the company goes down. The public sector can’t go out of business no matter how much union members manage to squeeze out of it. Union members have no incentive to settle for less, and the costs get passed along to the taxpayer. In many cases management benefits from higher settlements.
- Workers in the private sector struggle with stagnant wages, disappearing benefits, and rising retirement ages, while unionized public employees retire in their fifties, many with over $100,000 a year in pension and healthcare benefits.
Consequences of union inequality and imbalance
After work health and pension liabilities are a major source of bankruptcy of the governments that negotiated them. Retirement pension benefits are increasingly crowding out discretionary spending.
As such, public sector unions threaten the integrity of our democratic process by increasing a disparity in the standard of living between public and private sector workers, by decreasing efficiency in state and local services, and by reducing the number of necessary services that government can provide. Public sector workers actually fight for benefits whose provision will hurt the public. Because public sector unions are rich, taken together they spend hundreds of millions of dollars annually lobbying governments on behalf of their members.
Liberal Democrats face a bigger political downside when public pension become unsustainable, as they represent the party of bigger government or what government can do for you. What happens when public sector unions produce a government that costs you ever more and does for you ever less? If the Democrats cannot fix government, voters eventually conclude that they might as well elect Republicans to deal with the mess, as happened in Wisconsin with the success of Governor Walker.
The burden of public sector pensions alone is frightening, especially in states like Illinois, California and New York. Illinois not only exempts public sector union pensions from adjustment to meet changed economic circumstances, but also increases such pensions by 3% every year.
As long as the employer (the government) owns the pension liabilities of its employees, the hazard of potential bankruptcy will hover over the taxpayers. Given the political coalition that supports the public union status quo, it will be hard to reform public sector unions.
FDR was correct when he said there should be NO unions of tax paid employees (government unions), for the employees would be bargaining with themselves as they are also the tax payers who would pay them:
“The process of collective bargaining, as usually understood, cannot be transplanted into the public service,” Roosevelt wrote in 1937 to the National Federation of Federal Employees. Yes, public workers may demand fair treatment, wrote Roosevelt. But, he wrote, “I want to emphasize my conviction that militant tactics have no place” in the public sector. “A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government.”
When Daniel DiSalvo was asked what Governor Bruce Radner should first tackle, DiSalvo indicated that the Governor should think about pension reform before anything else. But at the same time, DiSalvo admitted that Illinois and Chicago are still a long way off from adopting any reform measures.
And they don’t address the question of what happens if you don’t like your Medicare.
You can drop Medicare Part B, though there is a penalty for getting back in. But to drop Medicare Part A, you have to give back all the Social Security payments you ever received, as well as forgoing future payments. This was litigated in the case of Hall v. Sebelius, and was revisited in the challenge to ObamaCare brought by the Association of American Physicians and Surgeons (AAPS), AAPS v. Burwell, which the U.S. Supreme Court recently declined to hear.
Why would anybody want to turn down free insurance, you may well wonder—especially when there is no private substitute for it. (President Johnson saw to that, to be sure that “his” program was successful.)
That has to do with your Medicare doctor, and your actual care. Medicare rules are forcing many independent physicians to give up their practice, and either retire early or become employees. Physicians who do remain in practice may not accept Medicare patients, or limit the number they see. If you are a Medicare patient, the entire Medicare regime is in the examining room or hospital room with you, like it or not. You are not allowed to be free for a day. Neither is the doctor. There is a way out (opting out or disenrolling), but that’s an all-or-nothing choice for the doctor.
A Medicare beneficiary can see a non-Medicare doctor as a private patient, but is very unlikely to be able to collect any Medicare reimbursement. A Medicare doctor cannot see Medicare-eligible patients as private patients.
Medicare is also making it increasingly difficult for Medicare patients to get tests, consultations, oxygen or other home-health items, or medications prescribed by a non-Medicare doctor, sometimes even if the patient is willing to pay privately.
Why should this be?
Keep in mind that Medicare is not yours. The money you paid in all your working life is long gone. Your benefits are coming out of the wages of people like Larry, John, and Jesus, who toil at Arnold’s gas station, and all of them are having a hard time these days. Now that payroll tax receipts are less than payouts, benefits are coming out of general tax revenues, which redeem the IOUs in the “Trust Fund.” And the ever-increasing Part B premiums pay only 25 percent of benefits. If you are on Medicare, you are a liability—to your doctor and to society.
Medicare does offer some fine new “benefits”—such as paying for “end-of-life” counseling. And why do you need that?
Death is something that could happen to anyone at any moment. If you have obligations or assets, you need to provide for your survivors. Medicare counseling, however, is not about life insurance, wills, or funeral arrangements—or about making peace with your family or God. It’s about reducing the cost of your care. The most expedient way to do that is to use “end” as a verb.
These days you can no longer assume that a hospital will seek to prolong your life and restore you to the health you enjoyed before you fell ill. It is much easier for the hospital if you give them permission ahead of time not to try. The purpose of the “advance directive” is to decline “life-sustaining treatments”—such as food and water.
Do not assume that doctors and hospitals have to “do everything” just because you said you wanted them to. Increasingly, hospitals demand the legal right to refuse care that is “futile”—by their definition. Medicare’s refusal to pay is a strong motive. Your consent provides immunity. Sedatives, to keep you quiet and peaceful, are cheap.
MIT economist Jonathan Gruber has told us how much the government cares.
What are the Republicans thinking? Coming right out of the gate, at the start of the new GOP-controlled Congress, they began talking about the crazy idea of increasing the gasoline tax. It has little chance of passing, yet can easily taint the party with a tax-raising reputation.
Just two days after the swearing in of the new Congress, the January 8 Wall Street Journal (WSJ) headline reads: “Senate Republicans: Higher Gas Taxes are on the Table.” It states: “Senate Environment and Public Works Chairman James Inhofe (R., Okla.), who just took the reins of the panel, said he is open to considering raising the gas tax as a way to help pay for the dwindling Highway Trust Fund that keeps up the nation’s roads and other transportation infrastructure.”
Many of Inhofe’s Senate colleagues are clear about gas tax increase’s future. According to the Associated Press (AP), Senator John Cornyn (R-TX) said: “I don’t know of any support for a gas tax increase in Congress.” The WSJ cites Senator John Barasso (R-WY), “who said he doesn’t support an increase and doesn’t think there is a political appetite for doing so on Capitol Hill.”
The House isn’t any more optimistic. According to the AP, Speaker John Boehner (R-OH) doesn’t think there “are enough votes in the House for a gas tax increase.” Rep. Bill Shuster (R-PA), the House Transportation and Infrastructure Committee chairman, said: “I don’t think there’s a will in Congress and the American People don’t want it.”
Even the New York Times touts: “Gasoline-tax increase finds little support.”
However, Inhofe’s apparent willingness to consider an increase in the gas tax, along with Senators Orin Hatch (R-UT) and John Thune (R-SD), has given fodder to those who long for a carbon tax. A San Francisco Chronicle article titled: “Odds of gas-tax hike grow with quiet support of GOP Senators,” opens: “With Washington’s most famous climate-change skeptic expressing interest in raising the federal gasoline tax, Bay area Rep. Jared Huffman sees an opening to grab the brass ring of the environmental movement: a tax on carbon.” Huffman sees that “it’s a good time to make the tax a little more sophisticated so it reflects the carbon content of all fuels.”
The gas tax creates headlines because the Highway Trust Fund (HTF), which finances the interstate highway system, faces insolvency due to spending more than it takes in. Had Congress not come up with a solution to the $16 billion shortfall by August 1, 2014, federal highway projects would have ground to a halt and as many as 700,000 people would have received lay-off notices. An agreed upon “patch” put the crisis off until after the elections. That fix ends in May and the new Congress must now come up with another way to fund America’s roads and bridges. A gas-tax increase is the obvious solution as the concept means those who use the roads most, pay for them—supposedly making it more of a “user fee” than a tax.
The tax is currently 18.4 cents a gallon for gasoline and 24.4 cents for diesel—more than double the oil companies’ profit on that same gallon of gas. (Note: the gas tax is a flat figure, not a percent. With lower prices, people are driving more so revenues should be up.) With gasoline prices at historic lows, many think now is the time to raise the tax, as it will hardly be noticed.
But there are other options that don’t require raising taxes—or instituting a new carbon tax.
The fact that modern cars are more efficient than they were when the gas-tax was first instituted in 1956 at 3 cents a gallon is a major problem with HTF funding. Because drivers now go farther on less fuel, the roadways receive wear and tear without enough taxes collected to cover the use. As more electric cars fill our roads, the problem is exacerbated. Electric cars use the roadways for free while everyone else pays for them. Therefore many have proposed a mileage fee rather than a gas tax—or in addition to it. With a voluntary program passed in 2013, Oregon has been at the forefront of what is called mileage-based user fees (MBUF). The pilot program, which takes advantage of smart technology, has been hailed as a great success.
However, MBUFs should concern everyone concerned about more government involvement in our lives. At the Detroit auto show, BMW sounded an alarm about the “fine line between performance and privacy.” While the Financial Times (FT) report focuses on the pressure carmakers receive from technology companies and advertisers who want data collected by “connected cars,” one doesn’t have to be a conspiracy theorist to imagine the data collection morphing into a big-brother-like intrusion. According to the FT: “About two-thirds of today’s new cars have sensors and communications systems that send and receive data.” At last year’s consumer electronics show, Jim Farley, then Ford’s head of marketing, said: “We know everyone breaks the law. We know exactly when you do it because we have a GPS sensor in your car.” Imagine Environmental Protection Agency officers showing up on your doorstep because you have driven more than the allowed amount. Or, more likely, your gas supply getting cut off because you used up this month’s allotment early.
MBUFs may serve as a good option for electric vehicles, but implementation should not be universal—and therefore do not create the full answer to the HTFs funding woes.
The answer requires an understanding of the problem.
Gas taxes used to be more of a user fee—which made it fairer. “But since the 1990s the Highway Trust Fund has come to fund much more than new roads and bridges and highway maintenance,” claims a WSJ editorial. Heritage Foundation transportation and infrastructure analyst Emily Goff believes the problem is: “Spending priorities are determined more by politicians appeasing special interests than local needs or consumer choices. And the federal regulatory burden delays projects and smothers state and private-sector innovation.” She points out: “Washington diverts more than 25% of that money to subways, streetcars, buses, bicycle and nature paths, and landscaping, at the expense of road and bridge projects.” Users of these HTF projects utilize the infrastructure but don’t contribute to it. Cutting non-highway spending would go a long way to closing the funding gap. As the WSJ puts it: “Simply using the taxes that are supposed to pay for highways to, well, pay for highways makes the HTF 98% solvent for the next decade, no tax increase necessary.”
Another part of the solution, would redirect highway projects to the states. Chris Chocola, president of The Club for Growth, explains: “All 50 states have Departments of Transportation. More than 70% of all transportation spending in this country is already financed and spent at the state and local level. Each state has very specific infrastructure needs, and those needs are most effectively addressed at the local level, where those making the decisions are held most accountable by the taxpayers.”
States can more easily innovate and have already solved some highway issues with toll-concession private-public partnerships (PPP). Douglas Holtz-Eakin, head of the American Action Forum, a conservative advocacy group, and a former director of the Congressional Budget Office, sees creating more PPPs as an alternative to an increase in the gasoline tax.
A Reason Foundation FAQ on Toll Concession PPPs explains them this way: “A toll concession is a DBFOM (design-build-finance-operate-maintain) highway contract in which the principal funding source is tolls charged to users of the highway project. The projected toll revenue stream is used to support long-term revenue bonds, in addition to covering operation and maintenance costs of the project. In a toll concession, the consortium that wins the right to do the project takes on the risks of (a) construction cost overruns, (b) late completion, and (c) inadequate traffic and revenue. Those risks would otherwise be borne by the government (and hence, the taxpayers).”
I’ve outlined just four possible options to fund our roadways without raising the gas tax—which will still exist when gas prices go up and impacts the price of almost everything:
- MBUFs for electric cars;
- Limit spending to actual highway projects—not mass transit or nature trails;
- Redirect some projects to the states; and
- Toll concession PPPS.
Surely, the great minds in Washington could come up with more ideas.
With several options available to support the nation’s highways, the GOP needs create, innovate, and unify in fixing problems—like the HTF—and show America that they can do it without raising taxes.
(A version of this content was originally published on Breitbart.com.)
Can anyone remember how awful the U.S. healthcare free market system was that it needed to be replaced by the Affordable Care Act, otherwise known as ObamaCare? Can’t remember? That’s because it was ranked one of the best of the world and represented 17.9% of the nation’s economy in 2014. That’s down from the 20% it represented in 2009 when ObamaCare was foisted on Americans.
One of the best ways to follow the ObamaCare story is via Health Care News, a monthly newspaper published by The Heartland Institute. The January issue begins with an article by Sean Parnell, the managing editor, reporting that ObamaCare enrollment is overstated by 400,000.
“The U.S. Department of Health and Human Services (HHS) once again lowered its estimate of the number of Americans enrolled in health plans through government exchanges in 2014. The 6.7 million enrollees who remain are far lower than the eight million touted in May at the end of the last open-enrollment period.”
ObamaCare has been a lie from the moment it was introduced for a vote, all 2,700 pages of it, to the present day. Everything President Obama said about it was a lie. As to its present enrollments, they keep dropping because some 900,000 who did sign up did not make the first premium payment or later stopped paying.
Michael Cannon, director of health policy studies as the Cato Institute, said the dropout rate is a troubling trend. “It means that potentially hundreds of thousands of Exchange enrollees are realizing they are better off waiting until they get sick to purchase coverage. If enough people come to that conclusion, the exchanges collapse.”
Elsewhere in this month’s edition, there is an article, “States Struggle to Fund Exchanges”, that reports on the difficulties that “states are experiencing difficulty in paying the ongoing costs of the exchanges, especially small states. “’The feds are asking us to do their jobs for them. We get saddled with the operating costs,’ said Edmund Haislmaier, senior research fellow for health care policy studies at The Heritage Foundation.” Some are imposing a two percent tax on the insurance companies which, of course, gets passed along to the consumer. Even so, the exchanges are not generating enough income to be maintained.
Why would anyone want ObamaCare insurance when its rates keep rising dramatically? In Nebraska the rates have nearly doubled and another article notes that “A 2014 study finds large numbers of doctors are declining to participate in health plans offered through exchanges under the Affordable Care Act, raising questions about whether people buying insurance through exchanges will be able to access health care in a timely manner.” One reason physicians gave was that they would have to hire additional staff “just to manage the insurance verification process.”
Dr. Kris Held, a Texas eye surgeon, said ObamaCare “fails to provide affordable health insurance and fails to provide access to actual medical care to more people, but succeeds in compounding existing health care costs and accessibility problems and creating new ones.”
Health Care News reports what few other news outlets have noted. “In Section 227 of the recently enacted ‘Cromnibus’ spending measure, Congress added critical but little-noticed language that prohibits the use of funds appropriated to the Centers for Medicare and Medicaid Services to pay for insurance company bailouts.” William Todd, an Ohio attorney, further noted that “Congress did not appropriate any separate funding for ‘bailouts.’” Todd predicted that “some insurers are likely to raise premiums to avoid losses, or they will simply stop offering policies on the exchanges altogether.”
The picture of ObamaCare failure emerging from these excerpts is a very true one. Its momentum, in fact, is gaining.
In mid-December, the Wall Street Journal opined that “With the Supreme Court due to rule on a major ObamaCare legal challenge by next summer, thoughts in Washington are turning to the practical and political response. If the Court does strike down insurance subsidies, the question for Republicans running Congress is whether they will try to fix the problems Democrats created, or merely allow ObamaCare damage to grow.”
“King v. Burwell will be heard in March with a ruling likely in June. “Of the 5.4 million consumers on federal exchanges, some 87% drew subsidies in 2014, according to a Rand Corporation analysis.”
The Wall Street Journal recommended that “The immediate Republican goal should be to make insurance cheaper so people need less of a subsidy to obtain insurance. This means deregulating the exchanges, plank by plank. Devolve to states their traditional insurance oversight role, and allow them to enter into cross-border compacts to increase choice and competition. Allow insurers to sell any configuration of benefits to anyone, anywhere, and the private market will gradually heal.”
Or, to put it another way, eliminate ObamaCare entirely and return to the healthcare insurance system that had served Americans well until the White House decided that socialism was superior to capitalism.
The problem with the Affordable Care Act is that the cost of the insurance sold under the Act is not affordable and ObamaCare is actually causing hospitals and clinics to close their doors, thus reducing healthcare services for those who need them.
ObamaCare must go. If the Republicans in Congress did nothing more than repeal ObamaCare, the outcome of the 2016 election would be a predictable win no matter who their candidate will be. If not repeal, some separate actions must be taken such as eliminating the tax on medical instruments.
If the Republican Congress fails to take swift and deliberate action on ObamaCare between now and the 2016 elections, they will have defeated themselves.
Heartland Daily Podcast – Randal O’Toole: Funding for Highway Construction and Transportation Infrastructure
Cato Institute Senior Fellow Randal O’Toole joins Budget & Tax News managing editor Jesse Hathaway to talk about his work on changing the way the federal government funds highway construction and transportation infrastructure projects. O’Toole explains how the current funding system, based on discretionary grants, is inefficient and wasteful, and proposes a formula-based system.
Formula-based funding, O’Toole says, would fix many of the problems with the current system, removing political considerations and other inefficiencies from decisions on how infrastructure projects are funded. Also, shifting to a formula-based funding system would reduce cities’ incentive to build larger projects than are actually needed, as the system would be based on actual population and ridership statistics.
This is part 7 of the 8 part series establishing that the laser-focus of the Compact for America approach to organizing an Article V convention with the specific job advancing and ratifying a pre-drafted, specific federal Balanced Budget Amendment is clearly, unequivocally, and overwhelmingly what the Founders expected from the state-originated amendment process.
1788: “It should be remembered that a constitutional door is open for such amendments as shall be thought necessary by nine States.”
George Washington’s statement to his friend John Armstrong clearly indicates that two-thirds of the states (nine at the time) would specify the desired amendments in their Article V application and target the convention agenda accordingly. That’s because the only element of the process controlled by two-thirds of the states is the application!
If you agree, like and share!
[Originally published at Compact for America]
On Wednesday January 21, in his first speech on the floor of the senate as the Chairman of the Senate’s Environment & Public Works Committee, Sen. James Inhofe (R-OK) used a poster supplied by The Heartland Institute to drive home the point that the theory of man-made climate change is highly contested.
The poster, which can be seen here, identifies 58 climate experts who “don’t believe global warming is a crisis.” Among those listed are Dr. Richard Lindzen, Dr. Tim Ball, and Apollo 17 astronaut Harrison Schmitt – all of whom reject the UN IPCC’s conclusions regarding the human impact on our climate.
Inhofe used his time on the floor to poke holes in the arguments of climate alarmists in the Senate, who still believe that “97-98 percent of scientists agree” about the causes of global warming. “It just isn’t true,” Inhofe said.
He uses the poster to illustrate the large amount of dissenting opinion in the face of the generally held “consensus” on man-made climate change. Sen. Inhofe reassures us that there are going to be hearings in the future on the subject and “we’ll be there to be the truth-squad.”
Watch the speech in full above, and visit the archive site of Heartland’s nine International Conferences on Climate Change to see presentations by many of the scientists featured on that poster.
Lindsay Boyd, policy director at the Beacon Center of Tennessee, discusses ‘Right to Try’ legislation that has been introduced in Tennessee and elsewhere, and already passed in five states. Under ‘Right to Try,’ patients with a terminal illness are able, with their doctor, obtain medicines that have passed the FDA’s phase one clinical trials for safety but haven’t yet passed phases two and three, which test the efficacy of new drugs.
Right to Try expands treatment options and would give Americans access to many drugs that have already been approved in Europe and elsewhere. It would expand and speed up the FDA’s current ‘compassionate use’ policy that allows patients access to drugs that have not yet been approved. The process for compassionate typically takes between 9 and 18 months, and requires about 100 hours of a doctors time, making approval for compassionate use an arduous and time-consuming process that many patients just can’t wait on.
Cape Wind, touted as “America’s first offshore wind project,” became one of America’s most high-profile and most controversial wind-energy projects. Fourteen years in the making, estimated at $2.6 billion for 130 turbines, covering 25 square miles in Nantucket Sound off the coast of Massachusetts, the Cape Wind project has yet to install one turbine—let alone produce any electricity. Now, it may be “dead in the water.”
On January 6, the two power companies, National Grid and Northeast Utilities, that had agreed to purchase most of the electricity Cape Wind was to generate, terminated their contracts with the developers due to missed milestones. Under the terms of the contracts, Cape Wind had to secure financing and give notices to proceed to its suppliers to start work by December 31, 2014. Neither happened and both companies filed to cancel power purchase agreements. “The project is in cardiac arrest,” according to Amy Grace, a wind-industry analyst with Bloomberg New Energy Finance.
Cape Wind has faced stiff opposition since it was first proposed in 2001. Senator Edward Kennedy’s efforts, and those of his wealthy friends, to fight Cape Wind have been the most publicized, but Native Americans, fishermen, and local communities have also battled the industrialization of Nantucket Sound. The town of Barnstable has been particularly active in the fight. The Cape Cod Times reports that Charles McLaughlin, Barnstable’s assistant town attorney, said: “The town’s concerns include the possibility that a collision between a boat and the large electric service platform the project requires could spill thousands of gallons of oil into the sound.”
Former Massachusetts Governor Deval Patrick (D) positioned Cape Wind as the centerpiece of his renewable energy goals and invested significant political capital backing the proposal—including tying the NStar power purchase agreement to approval of the NStar and Northeast Utilities merger (given the unfavorable terms of the agreements, the companies may have been looking for any exit ramp). Yet, Ian Bowles, Patrick’s first energy and environment chief who, according to the Boston Globe, “helped shepherd the offshore project,” acknowledgesthat the loss of the power purchase agreements “may have spelled the end for Cape Wind.”
The announcement came two days before Patrick left office. While he claims: “We’ve done everything as a state government to get them over the regulatory lines,” Patrick concedes it is now “up to the market.” According to the Cape Cod Times, the former governor doesn’t know “if the project could survive without the contracts in place.”
Even the Department of Energy (DOE), which seems to indiscriminately throw money at any politically favored green-energy project, was tepid in its support for Cape Wind. DOE’s loan guarantees generally average about 60 percent of the project’s costs, but the $150 million offered to Cape Wind made up a mere 6 percent—and that, only after the project received commitments for about half of its financing. In most cases, the government guarantee comes before the private financing and signals a go-ahead for investors.
Additionally, the political winds have shifted. While Governor Patrick championed Cape Wind, Massachusetts’ new governor, Charlie Baker (R) was staunchly opposed to it—even calling it Patrick’s “personal pet project.” While campaigning, Baker “dropped his opposition to Cape Wind” because he believed it was a “done deal.” Now that the deal may well be undone, Baker says he “will not try to influence the outcome of the legal process surrounding the Cape Wind project.”
Wind energy’s future faces problems beyond Massachusetts.
While Massachusetts’s utility companies filed to cancel power purchase agreements, two Minnesota wind farms, operating as Minwind Companies, filed for bankruptcy because the eleven turbines needed extensive repairs and the 360 farmers and landowners who invested in the projects can’t afford the maintenance. Weather related damaged put them 200-300 percent over budget.
Minwind’s nine separate limited-liability companies allowed investors to take advantage of federal wind-energy credits, USDA grants, and the now-discontinued state assistance program for small wind projects. The Star-Tribune reports: “The owners stand to lose their investment, and the wind farms eventually may have to shut down.”
On the national level, the American Wind Energy Association (AWEA) has continued to lobby for a retroactive extension of the Production Tax Credit (PTC) for wind energy that expired at the end of 2013. Disappointing AWEA, the lame-duck Congress did approve a ninth extension—but just through the end of 2014. AWEA’s CEO Tim Kiernan groused: “Unfortunately, the extension to the end of 2014 will only allow minimal new wind development and it will have expired again by the time the new Congress convenes.” In response to the “bare-minimum extension,” Luke Lewandowsi, Make Consulting research manager, said it “casts doubt on the willingness or ability of Congress to revisit the PTC in 2015.”
Adding insult to industrial wind’s injury, wind turbine installation placed number three in a recent list of 10 dying U.S. industries—in a better spot than only computer and recordable media manufacturing.
All of this news doesn’t bode well for the wind energy business, but for ratepayers and those who believe in the free market and who believe that government shouldn’t pick winners and losers, current wind conditions are a breath of fresh air. Governments, both state and federal, have given wind energy every advantage. Even Warren Buffet admits the tax credits are the only reason to build wind farms. And as Governor Patrick acknowledges: “It’s now up to the market.”
This is part 6 of the 8 part series establishing that the laser-focus of the Compact for America approach to organizing an Article V convention with the specific job advancing and ratifying a pre-drafted, specific federal Balanced Budget Amendment is clearly, unequivocally, and overwhelmingly what the Founders expected from the state-originated amendment process.
On February 7, 1799, James Madison wrote both that the states could ask their senators to propose an “explanatory amendment” clarifying that the Alien and Sedition Acts were unconstitutional, and also that two-thirds of the Legislatures of the states “might, by an application to Congress, have obtained a Convention for the same object.”
This is perhaps the clearest statement by the Founder called by some the father of the Constitution that an Article V application properly organizes an Article V convention to propose a specific amendment. In 1799, Madison defended the legislative declarations of Virginia and Kentucky that the Alien and Sedition Acts were void and unconstitutional. He said they were statements of opinion to which states are entitled. But he didn’t stop there. He emphasized how the states should consider following up their declaration with an Article V application to obtain an Article V convention for the object of proposing an “explanatory amendment” that the Alien and Sedition Acts were unconstitutional.
The modern notion that an Article V convention sets its own agenda and drafts any number of amendments independently of the will of the States as expressed in their Article V application is obviously, manifestly and completely alien to Madison’s expressed public understanding of the process.
If you find this evidence compelling, please like and share widely. Also, let’s bring the fight for a Balanced Budget Amendment originated by the states to the belly of the beast!Consider supporting our latest educational campaign-this time focused in Washington, DC.
[Originally published at Compact for America]
Once again the Permanent Internet Tax Freedom Act has been introduced in the House of Representatives, this time because the last temporary extension, passed in December, will expire on October 1. The bipartisan legislation bans taxes on Internet access permanently and disallows multiple or discriminatory taxes on Internet activities. If allowed to expire, states would begin to collect taxes on Internet access, or apply other discriminatory taxes that may already be in place in the state but which have been held at bay during the moratorium.
According to Scott Mackey, former chief economist for the National Conference of State Legislatures, an average household’s taxes would increase by $50 to $75 each year if states apply their sales or telecommunications taxes to Internet access. While that doesn’t seem like much, keep in mind that that is about what a low-income family spends in a year on subsidized school lunches. Those who qualify for such programs are exactly those who will be most negatively affected by a lapsed moratorium.
And those taxes are discriminatory. Since taxes are already being paid on the infrastructure that is delivering broadband, adding a new tax is merely a multiple tax, and hence discriminatory. Fortunately, for 17 years, as the moratorium has continued to be extended, the country has continued a policy of keeping the Internet free of multiple or discriminatory taxes to the benefit of all families.
Today, we also have a clear national mandate to expand broadband use. The addition of discriminatory online taxes would drive down online purchases, and additional access taxes would decrease adoption of broadband. However, permanently wiping out the many exceptions made to the ban over the years would eliminate discriminatory access taxes, which would actually encourage broadband adoption.
One would think that immediate passage of a permanent moratorium would be a foregone conclusion given the consensus that broadband across the nation is a good idea. Those taxes discriminate against certain technologies and business plans and ultimately fall heaviest on those least able to bear the burden.
Congress has a clear choice: Make complete and permanent the ban on Internet access and multiple or discriminatory taxes online, encouraging broadband access and e-commerce, or turn away from that national priority and allow the pro-tax thugs to loot our digital future.
Chris Casey, Managing Director at WindRock Wealth Management, sits down with the founder of Cryptohippie and author, Paul Rosenberg to talk about Bitcoin. Casey and Rosenberg answer all the most frequently asked question regarding the virtual currency.
With the increasing popularity of Bitcoin, people are curious about the currency and its potential benefits. However, since its inception, the value of a unit of Bitcoin has varied dramatically. This has caused some to become wary of using the digital currency. Rosenberg addresses those fears and explains that Bitcoin is here to stay for the foreseeable future.
Recently the movie, “Unbroken,” based on the best-selling book of the same name by Laura Hillenband about war hero Louis Zamperini, has gotten rave reviews, which the movie and book well deserve. It’s story line is mesmerizing of how an athletic upon becoming an airman embarked on a journey that led to his doomed fight and his drift into the unknown on a tiny raft where he encountered thousands of miles of open ocean, leaping sharks, thirst and starvation, and then was captured to endure horrific torture.
While the story of “Unbroken” is compelling and a powerful one, have you ever heard of Colonel Bud Day? The heroic story of Colonel Bud Day is on a par with that of Louis Zamperini.
Born in Sioux City, Iowa in 1925, Colonel Bud Day died in 2013 at age 88. During the course of his military career (World War II, Korean, and then Vietnam) Bud Day received every available combat medal, escaped death on no fewer than seven occasions, and spent sixty-seven months as a POW in the infamous Hanoi Hilton, where his occasional roommate was John McCain. Despite incredible torture, Day would not break. He became a hero to POWs everywhere–a man who fought without pause, a prisoner at war.
Bud Day and Louis Zamperini were true heroes and knew something about torture, which President Barack Obama does not.
Day’s biography, “American Patriot”, says it all. In his biography Colonel Day details how he and John McCain shared a cell for a while. McCain’s biography, “Faith of My Fathers”, references the same encounter.
Bud Day, a fine man before the war, remained so after the war. The unspeakable acts of brutality Day endured during his capture had little impact upon his retirement. That speaks volumes about the man.
Below is a description of just some of the atrocities committed against Bud Day. Remember Jane Fonda? She was having fun with the North Vietnamese while Bud Day was being subjected to unthinkable acts of brutality. And Obama thinks water boarding is a tough deal!
I got shot down over N Vietnam in 1967, a Sqdn. Commander.
After I returned in 1973…I published 2 books that dealt a lot with “real torture” in Hanoi. Our make-believe president is branding our country as a bunch of torturers when he has no idea what torture is.
As for me, I was put through a mock execution because I would not respond…Pistol whipped on the head….same event…Couple of days later….Hung by my feet all day. I escaped and a couple of weeks later, I got shot and recaptured. Shot was OK….what happened afterwards was not.
They marched me to Vinh….put me in the rope trick….almost pulled my arms out of the sockets. Beat me on the head with a little wooden rod until my eyes were swelled shut. Unbroken hand a pulp.
Next day hung me by the arms…rebroke my right wrist…wiped out the nerves in my arms that control the hands….rolled my fingers up into a ball. Only left the slightest movement of my left forefinger. So I started answering with some incredible lies
Sent me to Hanoi strapped to a barrel of gas in the back of a truck.
Hanoi…on my knees….rope trick again. Beaten by a big fool.
Into leg irons on a bed in Heartbreak Hotel.
Much kneeling–hands up at Zoo.
Really bad beating for refusing to condemn Lyndon Johnson.
Several more kneeling events. I could see my knee bone thru kneeling holes.
There was an escape from the annex to the Zoo. I was the Senior Officer of a large building… because of escape…they started a mass torture of all commanders.
I think it was July 7, 1969…they started beating me with a car fan belt. The first 2 days I took over 300 strokes…then stopped counting because I never thought I would live through it.
They continued day-night torture to get me to confess to a non-existent part in the escape. This went on for at least 3 days. On my knees…Fan belting…cut open my scrotum with fan belt stroke. Opened up both knee holes again. My fanny looked like hamburger…I could not lie on my back.
They tortured me into admitting that I was in on the escape…and that my 2 room-mates knew about it.
The next day I denied the lie.
They commenced torturing me again with 3- 6- or 9 strokes of a fan belt every day from about July 11 or 12th to October 14, 1969. I continued to refuse to lie about my roommates again.
Now, the point of this is that our make-believe President has declared to the world that we (U.S..) are a bunch of torturers…Thus it will be OK to torture us next time when they catch us…because that is what the U.S. does.
Our make-believe president is a know nothing fool who thinks that pouring a little water on some one’s face, or hanging a pair of women’s pants over an Arabs head is TORTURE.. He is a meathead.
I just talked to MOH holder Leo Thorsness, who was also in my squadron, in jail…as was John McCain…and we agree that McCain doesnot speak for the POW group when he claims that Al Gharib was torture…or that “water boarding” is torture.
Our president and those fools around him who keep bad mouthing our great country are a disgrace to the United States. Claims that water boarding is torture are stupid, when there are no after effects from water boarding.
If it got the Arab to cough up the story about how he planned the attack on the twin towers in NYC… .
Hurrah for the guy who poured the water!
The most telling statement in Bud Day’s account is that it’s fine to torture U.S. service men and women when caught because this is what we do with our captives.
There is a time to be nice, but when we are at war and the lives of our soldiers are in jeopardy, this nation has an obligation to protect its own citizens instead of playing nicey nice with the enemy. Will attempting to appear better than our enemy in the way we treat captives make them like us any better? I don’t think so? This is suicidal thinking which can be likened to political correctness when our best interests are tossed aside in favor of doing that which doesn’t offend others.
[Originally published at Illinois Review]
In just the second week of this new Congress, House Energy and Commerce Committee Chairman Fred Upton and Senate Commerce Committee Chairman John Thune proposed draft legislation that would provide the FCC with the permanent net neutrality enforcement authority the FCC says it needs.
The leaders of the FCC’s oversight committees have opened the new Congress with a transparent, outreached hand of assistance and bipartisanship by making the FCC’s top priority its initial priority.
To date however, the FCC appears intent on preemptively blocking and throttling Congress’s good-faith efforts to transparently resolve the FCC’s open Internet authority problem.
Whenever the prospect of congressional compromise comes up, the FCC snubs Congress by reiterating it will decide the matter of America’s open Internet policy and authority unilaterally in a Feb. 26 vote of five unelected FCC commissioners.
The FCC’s current message is obvious — it does not want Congress’ help, because the FCC wants to conjure up its own legal authority.
Why is the FCC wrong here?
Legally, it needs Congress.
The FCC is 0-2 in self-asserting the Internet regulatory authority it wants. The FCC lost Comcast v. FCC in 2010 and Verizon v. FCC in 2014. In both instances, the courts determined the FCC overreached its statutory authority.
How can the FCC imagine it will fare better with a Title II utility regulation of the Internet proposal that involves more legal overreach, more harm to reliance interests and a wholesale repudiation of over a decade of FCC legal precedents and findings of fact?
The FCC knows it’s choosing a much riskier legal strategy than ever before. The agency initially concluded the best legal approach was to obey the guidance of the U.S. Appeals Court in Verizon v. FCC.
In stark contrast, the FCC reportedly now seeks to blaze an entirely new legal path with a 180-degree policy reversal to Title II, combined with a follow-on, partial, 180-degree reversal of that new Title II policy via broad forbearance from Title II.
The FCC hopes any legal challenge will hinge on Chevron Deference to the FCC. However, it ignores that its abrupt and transparent political switch to Title II after long opposing it will transform this case into glaring violations of the Administrative Procedures Act, and obvious arbitrary and capricious treatment of huge longstanding reliance interests.
The FCC operationally needs Congress.
Congress funds the FCC, and the FCC is seeking a very big increase in its 2015 budget.
Congress investigates and oversees whether the FCC abides by legally required processes and procedures.
Congress is the source of all the FCC’s current and future authority, and the FCC’s congressional authorizing committees are actively in the process of updating the Communications Act that created the FCC in 1934.
The FCC also politically needs Congress.
If the FCC politically rejects Congress’ help, it alone will politically own any problems, unintended consequences, or public backlash resulting from an abrupt unilateral FCC reversal of the bipartisan policies that enabled the Internet we know today.
Any FCC utility regulation of the Internet that harms America’s consumers, economy, or national interests will be solely on the FCC, not Congress or the executive branch, of which the FCC insists it is “independent.”
Politics is credit-taking and blame-shifting.
In publicly rejecting Congress’ help and bipartisanship, the FCC’s majority will own political credit for what goes right, and political blame for what goes wrong.
Surely the FCC has seen the store signs, “You break it, you bought it.”
The FCC will own the negative commercial and financial consequences of a unilateral decision to take control of the Internet via utility regulation.
It will own any unintended tax or fee increases on consumers, any decline in broadband investment, deployment, jobs, growth and any legal uncertainty.
Apparently, the FCC imagines it alone is the solution to the Internet’s problems.
However, if the FCC goes ahead and unilaterally takes regulatory control over the Internet, it will find itself becoming the Internet’s main problem.
Wake up FCC. You need Congress.[This first appeared at The Daily Caller]
Earlier this week, Rev. James Meeks announced on on WLS 890 AM that he had been chosen by Governor Bruce Rauner to be the new chairman of the State Board of Education. During the interview Tuesday morning, Rev. Meeks’ said, “We have to have a Common Core Curriculum in the state of Illinois.”
That statement set off alarm bells within me.
Although Meeks, a Democrat, headed the Senate Education Committee while in the state senate, and bucked his party by advocating for vouchers and charter schools — a noble and outstanding thing to do — Meek’s unconditional support for Common Core is unacceptable.
Having been chosen by Governor Rauner to reform education, how can he say the Common Core Curriculum is really the pathway to education reform? Are Meeks and Rauner so out-of-touch that they are unaware Illinois started to adopt the Common Core standards in 2010 and fully implemented them last school year?
Starting this spring, the PARCC tests linked to Common Core standards will be used in school districts across the state. The tests will be given to students in grades three to eight, but only partially rolled out in high school because the state board of education had its budget request for assessments cut by $10 million. The ACT exam has been a state mandated assessment for high school juniors in recent years and doubles as a college entrance exam.
Being out-of-touch might be excused for the time being, but it is evident that both Governor Rauner and Rev. James Meeks need to be educated on what Common Core is all about, which will not be an easy task. Why is this so? The Illinois Education (IEA), as a progressive organization, fully supports Common Core. It also has tremendous clout in getting what it want as a Democrat-aligned organization.
As shared by Joy Pullman, research fellow for the Heartland Institute, in her recent booklet, “Common Core: A Bad Choice for America”:
Some advocates of Common Core insist it is not a curriculum and that it will promulgate an academic curriculum based on great works of Western civilization and the American republic. But the standards are being used to write the tables of contents for all the textbooks, used in K-12 math and English classes. This may not technically constitute a curriculum, but it certainly defines what children will be taught, especially when they and their teachers will be judged by performance on national tests aligned with these standards.
Initiatives related to Common Core include teacher evaluations, since many states tie teacher ratings to student performance on tests; school choice, because many school choice states require participating private schools to administer state tests; nearly all learning materials, because these must now correspond to Common Core; and college entrance exams including the SAT and ACT.
Following is shocking information about a teacher, Dr. David Pook, who helped write the controversial Common Core State Standards.
Dr. David Pook is a professor at Granite State College in Manchester, New Hampshire. He’s also the chair of the History Department and one of the authors of the Common Core standards. Pook’s role is documented at the pro-Common Core website, AchieveTheCore.com, which confirms that he worked closely with Susan Pimentel and the Council of Chief State Officers in drafting the Core Standards for English Language Arts, and currently has several projects underway with Student Achievement Partners on work aligned with the CCSS.
As a guest at the New Hampshire Institute of Politics, Dr Pook opened up on his reasons for participating in the creation of the Common Core standards. In the video posted by Campus Reform, the audience can be heard gasping and laughing, stunned and revolted by this comment by Dr. Pook’s:
The reason why I helped write the standards and the reason why I am here today is that as a white male in society I am given a lot of privilege that I didn’t earn.
Dr. Pook went on to say that all kids deserve an “equal opportunity to learn how to read,” the same advantages he had. Ironically, as Campus Reform notes, the Derryfield School where Pook works does not use the Common Core State Standards and has a student body that is 91 percent white.
Below are some basic facts about Common Core for Governor Rauner and Rev. Meeks to consider, both having endorsed the disaster that is Common Core:
- Common Core gives the federal government the power to collectextensive data from students including Social Security numbers, records of school attendance, supposed learning disabilities, religious affiliation, disciplinary records and parent’s income information.
- Regarding the claim that the Common Core standards were developed by top leaders in states, this is false. The standards areowned and copyrighted by two private trade associations in Washington, D.C. and were drafted by essentially five people. The standards were then submitted to a “validation” process that was little more than a rubber stamp. The only two content experts on the Validation Committee, Dr. Sandra Stotsky and Dr. James Milgram, were so disgusted by the charade and by the deficiencies of the resulting standards that they refused to sign off on Common Core.
- The Common Core standards have never been tested or piloted anywhere, and indeed are acknowledged to be considerably less rigorous than many of the state standards they replaced. Kids are being used as human Guinea pigs on untested standards, all in the hope that Common Core is the magic bullet to solve our education problems.
- In English language arts, Common Core replaces content knowledge with what Dr. Stotsky labels “empty skill sets” that will not prepare students for authentic college coursework. The standards also diminish the study of classic literature in favor of nonfiction “informational text” of the type students may find in their entry-level jobs (after all, Common Core consists more of workforce-development training than genuine education). This theory – that exposure to technical manuals rather than great stories will make students better readers, and ultimately better employees – is not only preposterous on its face, but refuted by all available research.
- The Common Core math standards are even less likely to achieve the lofty results touted by the Chamber authors. One of the lead authors of the math standards admits that they are not designed to prepare students for STEM (science, technology, engineering, and math) studies in college. How could they, when they include no trigonometry or calculus and stop with an incomplete Algebra II course? And as Dr. Milgram of Stanford University points out, Common Core’s mandated “reform math” techniques stand in stark contrast to the traditional techniques employed by the highest-achieving countries. The Gates Foundation gave over $7 million, much of which has gone to promote Gates’s pet education project – the Common Core national standard
The truth about Common Core is obvious to all who are willing to take the time to evaluate the untested educational program. Common Core is very racist and very political. As stated by Dr. Pook early on this this article, his aim was to balance the scales because he, and many others, were benefiting from some mythical ‘white privilege‘ that was not earned.
As Jason Dewitt of Top Right News notes:
Common Core is not only about irrational and bizarre math problems as some might think. Make no mistake, this program is about indoctrinating our children into a leftist way of thinking which includes destructive ideas such as the embracing of Islam and normalizing sexual promiscuity.
Is it any wonder that states are rejecting and suing the federal government over Common Core? 45 states signed on to Common Core education standards in 2010, sight unseen. States, however, are starting to rebel and are taking action. As of September, 2014, Oklahoma and Indiana have dropped Common Core, with Oklahoma having its No Child Left Behind waiver revoked in retaliation. South Carolina and Missouri have taken strong steps toward replacing Common Core, while North Carolina seems to have found a compromise in which they’d merely tweak the standards. Louisiana Gov. Bobby Jindal has been doing everything in his power to drop the standards, though so far to no avail. He’s currently embroiled in a lawsuit against the US Department of Education. Check here for a roundup of other state action against Common Core.
Michelle Malkin, Glenn Beck and many others have written extensively about the abject disaster that is Common Core, and as Americans have been exposed to examples of its instruction, and motivations of its backers, they have increasingly rejected it.
U.S. schools, and many in Illinois, do need to improve. Consider this 1912 eighth grade exam: Could you make it to high school in 1912?
Education has been dumbed down since 1912, but is Common Core the answer? On the contrary, it seems like a bad choice for America – and for Illinois.
[Originally published at Illinois Review]
Competitive Enterprise Institute senior fellow John Berlau joins The Heartland Institute’s Budget & Tax News managing editor Jesse Hathaway to talk about the U.S. Treasury Department’s recent announcement that the “auto bailout” portion of the Troubled Asset Relief Program (TARP) had officially ended with the final repayment of taxpayer-funded loans to Ally Financial, formerly known as GMAC.
Berlau offers a brief history of the auto bailout, started by President George W. Bush and continued under President Barack Obama, and explains the consequences affecting taxpayers today.
With the Presidential State of the Union address tonight, The Heartland Institute Director of Research S.T. Karnick talks with Tony Katz, host of The Big Story, about what to expect from the speech. Both Karnick and Katz agree, tonight’s State of the Union will be all show and no substance.
President Obama is expected to layout a number of programs designed to appeal to the public and, most of all, his political base. As Karnick states in the interview, the address has devolved over the years into a laundry list of things the government is going to do for you. Instead of the address explaining the challenges that lie ahead for the nation, it now resembles more of a political stump speech.
The President will likely outline a number of plans. He is expected to discuss tax cuts and hikes, new infrastructure and housing projects and a plan to offer free community college. But as Karnick warns in his interview, most of these concepts are formed around misconceptions and bait-and-switch tactics.
Be sure to stay tuned to The Heartland Institute for news and analysis of the 2015 Presidential State of the Union.
The recent brutal events in France have reminded us how small the world is that we all share. Violence and conflicts that have their origin in one part of the globe shows itself in another part of our planet. And mass media immediately shares those events to the rest of us, no matter where we are.
The impression that is often created by these events and those images is that the world is a dangerous place. And that the more interconnected we become, the more we face the threat of that violence and those conflicts coming our way.
However, the sensationalism of the pictures and videos capturing such tragic events as those in Paris should not distract us from the much more fundamental and everyday linkages that increasingly bind all of us together for mutual prosperity and possible world peace here on Planet Earth.
The Global Economy and Gains from Trade
I mean, of course, the global economy and the network of supplies and demands, productions and consumptions of goods and services that has been and continues to make us one interdependent market of buyers and sellers regardless of the political lines that appear to divide us into different nations and countries in this common world of ours.
For the last two hundred years the increasing integration of our world has, certainly been, been greatly influenced by new, better, and swifter means of travel and communication.
For example, about 160 years ago, in the 1850s, a journey from Boston, Massachusetts to Charleston, South Carolina took about 15 to 16 days of hard riding by stagecoach, or anywhere between 7 and 25 days by sailing ship, depending upon the winds.
Now, in the 21st century, flying nonstop gets you from Boston to Charleston in less than two and a half hours. Air travel enables us, as well, to circumvent the globe in less than twenty-four hours.
But what has been the prime factor behind the develop of trade and its increasingly global nature is a social and economic setting in which individuals are relatively free to peacefully interact in networks of exchange guided by market prices that inform producers and consumers about potential gains from trade.
More and more parts of the world are being drawn into this nexus of international trade, and reaping benefits from it.
South Carolina’s Place in the Global Economy
Let’s take South Carolina, the state in which I now live, as an example of the impact and significance of global trade on people’s livelihood and well being. South Carolina is part of this global economy no less than the rest of the United States.
In 2013, South Carolina industries exported goods to over 200 countries worth more $26 billion, making up nearly 15 percent of the state’s Gross Domestic Product. Charleston, alone, made up $3.5 billion of those export earnings
If 160 years ago, cotton was “king” in export earnings, today, the state’s leading export sectors are automobiles, machinery, rubber, aircraft, plastics, paper and wood products, optics and organic chemicals. Indeed, South Carolina, in 2013, was the number one state in the export of tires, and number two in the export of automobiles to the global market.
Nearly 30 percent of South Carolina’s manufacturing jobs are connected with its export trade. In fact, out of an employed labor force of over two million, more than 500,000, or one-fourth of the total jobs in South Carolina, are connected with exports, imports, and international shipping. Twenty percent of those half-a-million trade related jobs are supplied from foreign direct investment in the state of South Carolina.
Foreign imported goods into South Carolina in 2013 came to over $32 billion, with the largest share of those goods coming into the state arriving from Germany, China, Canada, and Mexico. Nearly 200,000 South Carolinians are employed where foreign, imported goods are sold in the state.
I wish to highlight the import side of South Carolina’s foreign trade because most discussions over the benefits that the state or America as a whole receives from international commerce focuses on the gains in sales and jobs in the export sectors of the state’s economy.
Imports as the Real Gain from Trade
The only real purpose and benefit from “exporting,” however, is its ability to enable us as individuals or a country to earn the financial means to buy “imports” either from our neighbors next door or from sellers on the other side of the globe, who can produce and supply those goods at a lower cost and/or a better quality than if we tried to manufacture them for ourselves.
As Adam Smith expressed it in his famous book, The Wealth of Nations, in 1776:
“It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor . . .
“What is prudence is the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better to buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.”
A concern is often expressed that the purchasing of any good or service from the producers of another country deprives domestic businesses and workers of employment.
Imports are Paid for with Exports
But we need to remember that, just like ourselves, the foreign seller does not give his goods away for free. He wishes to sell them precisely in order to earn an income that enables him to, then, turn around and purchase other goods that we or some other country’s producers can make better or less expensively than if he made those goods in his own home country.
When manufacturers in Germany, China, Canada, or Mexico sell some of their goods in South Carolina or some other part of the United States, they earn dollars. Since U.S. dollars are not the currency of use in any of these countries, they will either spend those earned dollars back in the United States demanding American goods in exchange for what they have sold to us, or will sell those dollars on the foreign exchange market for some other currency they wish to use to buy desired goods and services.
If, for example, an export producer in Canada would prefer to buy goods made in Germany than those produced in the U.S., he will sell his earned dollars for Euros. But why would some holder of Euros have sold them for U.S. dollars other than that he, instead, wishes to buy goods made in America or even in South Carolina?
Ultimately, it is goods that trade for goods through the medium of one type of money or another. And what we buy from other countries must, finally, be paid for through part of our own output as individuals and as a nation.
It is true that if American consumers find it more attractive to purchase a foreign version of some product, the domestic American producer(s) may experience declines in their sales, market share, and profitability. Some U.S. firms in this part of the economy may reduce output or even go out of business, with a matching loss of some jobs in this sector of the domestic market.
Those businesses and jobs will have to shift into other areas of enterprise. To where will these businesses and workers “migrate”? Some will find alternative profitability or employment in the export industries with which South Carolina’s and America’s imports are paid.
Imports and Cost-Efficient Trade Improve Our Standard of Living
Others will find new profits and employments satisfying different domestic demands. For instance, suppose that a foreign import costs $10, while the domestic version of this product that Americans or South Carolinians used to buy costs $15. Consumers in America now pay $10 for what used to cost them $15. They have the desired good, plus they have saved $5 on the price. The less expensive foreign product has “freed up” $5 of purchasing power in each consumer’s pocket that now enables them to increase their demand for other things that previously they could not afford when they were paying the higher American-made price for this good.
No doubt, in the short-run this requires some people to change what products they produce or where they are employed. But this is the price of economic progress from which we all gain in the long-run: new, better, and less expensive goods and services available to improve our standard of living as well as the quality of our life.
The fact that more commercial airplanes and automobiles are now manufactured in South Carolina has, no doubt, resulted in the loss of some business and jobs in other states in America where these planes and cars were previously being produced. (Or, if nothing else, a loss of greater business and jobs that might have come to those other states, if factories had not been built in South Carolina, instead.)
But in the long run everyone in America is better off with those planes and cars being produced where they could be manufactured most cost-efficiently to the gain of all of us as consumers. When goods that we, the consumers, want are produced in the most least costly manner, which includes the comparative advantage of the manufacturing location as well, all in society benefit from the resources available to people being used in the ways that enable getting the most out of them that is possible in both physical and value terms.
Finally, I would emphasize another gain from international trade and commerce that goes beyond its more narrowly “economic” benefits to all participants.
Ends in Ourselves, and Means to Each Other’s Ends
I am referring to the fact that trade is a means and a method for people who may live very differently from each other, based on widely diverse beliefs and values, to cooperate and mutually benefit from free and voluntary association.
The nature of the market economy, both domestic and international, is that it leaves each individual and voluntary group free to follow whatever ends, goals or purposes they may find desirable to pursue, given their values and belief-systems. Each serves others in society as the means to their own ends, with little concern or consideration as to why and for what purpose those who fulfill our demands want the income they earn by selling us the goods we desire.
For example, how much do any of us know about those who earn a living making commercial planes or automobiles at the Boeing or BMW factories in South Carolina, and how they use their incomes in their own role as consumers? The answer is, virtually nothing.
In some cases, no doubt, if we knew how some of them spend the income they have earned by producing and selling us automobiles, we would be shocked and disturbed because of, maybe, radically differing views about what values and ends people should pursue in their lives.
But the beauty of the market system is that we use each other as means, while each of us is free to follow the ends that give meaning, purpose and value to our individual lives. Whether a vocal minority or a substantial majority disapproves of how you furnish your home, select your wardrobe, decide on the church to go to, or contribute to some charitable cause, you are at liberty to make your own decisions in these matters as a sovereign consumer in a free market, given your success as a producer in fulfilling and satisfying the ends and goals of others with whose choices you may have no agreement or even respect.
Political Decentralization and Market Freedom Make for Diversity
It is this aspect or element of a, now, global market, that makes for, and even fosters the social and cultural “diversity” about which many often speak, but about which they frequently have little understanding concerning how it is only made possible through a competitive, open, and free market order.
A Muslim in Kuwait who makes his living in his country’s oil fields may use his income to contribute to his mosque and maintain a standard of living for his two-wife family. The American Christian family that drives to church on Sunday with gasoline that has been refined from Kuwaiti crude oil may tithe for significantly different reasons than that Muslim half-way around the world, and consider having more than one wife morally and legally unacceptable.
But each can live his own life as he chooses without a “conflict of visions” about a moral and right life leading to violence and bloodshed between them. What makes this possible at an international level is that fact that we live in a world of global anarchy.
That is, there is no single and unified political authority that controls the world and imposes the political and ideological values of one society on all the rest. It is that decentralization of political power among many governments rather than one global united nation that leaves people free in their international dealings from the values and preferences of others in other parts of the world with which they may disagree.
When governments do not intrude into international trading affairs for either economic or ideological reasons through political or military intervention, there is often the potential for greater peace and mutual harmony than within a country, where different groups and individuals vie for control over their own government to impose their particular values, beliefs and desires on their fellow citizens.
This is why on the mundane, everyday level, the people of South Carolina and those of the United States as a whole are able to trade and associate with the other people of the world through buying and selling, importing and exporting, with all the participants gaining and benefiting from the talents, skills, and specializations of others in faraway places.
All of this happens for everyone’s mutual betterment without having to accept or have imposed on them the values, beliefs and ideals of others in those faraway lands. If we understand this better and leave markets and people free in this manner, there would be a greater chance for both world peace and material and cultural prosperity for all.[The text is based on a talk given at the Charleston Rotary Club of South Carolina on January 13, 2015 And, first appeared at Epictimes]
Climate Alarmists turn back the Clock
Three centuries ago, the world ran on green power. Wood was used for heating and cooking, charcoal for smelting and smithing, wind or water-power for pumps mills and ships, and whale oil or tallow for lamps. People and soldiers walked or rode horses, and millions of horses and oxen pulled ploughs, wagons, coaches and artillery.
But smoke from open fires choked cities, forests were stripped of trees, most of the crops went to feed draft animals, and streets were littered with horse manure. For many people, life was “nasty, brutish and short”.
Then the steam engine was developed, and later the internal combustion engine, electricity and refrigeration came along. Green power was replaced by coal and oil. Carbon energy powered factories, mills, pumps, ships, trains and smelters; and cars, trucks and tractors replaced the work-horses. The result was a green revolution – forests began to regrow and vast areas of crop-land used for horse feed were released to produce food for humans. Poverty declined and population soared.
But new environmental problems emerged. Smoke pollution from burning cheap dirty coal in millions of open fires, old boilers and smelters produced massive smog problems in cities like London and Pittsburgh.
The solution was improved technology, sensible pollution-control laws and the supply of coal gas and coal-powered electricity to the cities. The air was cleared by “Clean Coal by Wire” at the flick of a switch and “Piped Coal Energy” at the click of a gas-lighter. In some places use of hydro, geothermal and nuclear power also helped.
In recent years, however, affluent urban alarmists have declared war on the carbon dioxide produced by burning coal, oil and gas. They claim it is a pollutant and it causes dangerous global warming.
The pollutant claims are easy to refute.
The worst air pollution in the world today is the Asian smog. Smog is very visible – but carbon dioxide is a transparent gas that is exhaled by all living creatures.
Smog is air polluted with particulates and noxious gases – but there are no particulates or noxious components in carbon dioxide. Therefore carbon dioxide plays no part in creating smog.
Smog consists of ash particles, unburnt fuels and noxious gases produced by the inefficient combustion of anything, usually in open fires or obsolete boilers engines or smelters with no pollution control equipment. Wind-blown dust, bush and forest fires, blue haze from forests and drifting volcanic ash add to the smog. Modern coal-fired power stations with efficient pollution controls do not release detectable particulates or noxious gases. Bans on dirty combustion and more clean electricity will clear the smog of Asian cities.
All gases in the atmosphere have an effect on global climate, usually a moderating one, reducing the intense heat of the midday sun and reducing the rate of cooling at night. But only in theoretical climate models does carbon dioxide drive global warming – real evidence contradicts them.
The unrelenting war on carbon fuels has far greater risks, with some zealots advocating “Zero Emissions”, while also, incredibly, opposing nuclear and hydro-power. They would take us all back to the BC Era (before coal).
Already urban environmentalists are polluting city air by burning wood (“biomass”) and briquetted paper in stoves and home heaters; and trying to prevent millions in Asia and Africa from getting cheap clean electricity. Other misguided nations are clearing forests and transporting low-energy wood chips to burn in distant power stations. And the high costs of green energy are already forcing some poor people to burn old books and strip parks and forests for fire-wood.
In addition, crops that once fed people are now making “green” ethanol to fuel cars, and native forests are being cleared and burnt to make way for more fuel crops. Our modern “Iron Horses” are eating the crops again.
The use of carbon fuels in the production, fertilising, transport and storage of food has been a major factor in allowing the world population to grow by several billions since the start of the industrial revolution. If climate alarmists succeed in turning back the clock, food and energy will again become reserved for the rich and powerful, and billions of poor people will die of starvation or exposure.
For those who would like to read more:
Wood burning stoves are encouraged but they produce soot:
The Fireplace Delusion:
Greeks raiding National Parks for Firewood:
Drax power station converts from burning coal to burning wood:
The New Dark Green Age coming to Britain:
Dust storms envelope Iran:
Most of the trees in England had been cut down to make charcoal for iron making. Britain was the first country to reach crisis point over the shortage of wood and charcoal. The industrial revolution faltered because of the shortage of timber in England. Then a bright spark, Abraham Darby, came up with the idea of making iron with coke. His first pour was on 4/1/1709 in Coalbrookdale (where there was low-Sulphur coal). After that Coalbrookdale became the centre of the British iron industry.
Source: Robert Raymond, “Out of the fiery furnace”, MacMillan, Australia, 1984. ISBN 0 333 38024 X.
Politicians Promote Futuristic Schemes to Gullible People:
Some thoughts on coal power and The Asian smog:
Rising Seas are Nothing New.
The most careful analysis of world sea levels suggests they are rising at between zero and 2mm per year. Measurements to this accuracy are questionable as they are complicated by changes in ocean currents and wind direction, and shorelines that may rise and sink.
Sea levels are never still, but with global temperatures flat and snow cover and polar ice steady, sea levels are probably as stable today as they ever get.
However, we still have creative climatists concocting complex computer models that predict dangerously rising seas to justify their goal to ban coastal development and to revive their failing war on carbon.
Alarmists should study earth history.
At the depth of our recent ice age, just 16,000 years ago, a thick sheet of ice covered much of North America and Northern Europe.
Source: created by Randall Munroe from Dyke et al 2002
If the above image does not display, Click the following link:
So much water was locked up in ice that humans could walk on dry land from London to Paris, from Siberia to Alaska and from New Guinea to Australia. The River Rhine flowed across a broad coastal plain (which is now the North Sea) and met the Atlantic Ocean up between Scotland and Norway.
There was no Great Barrier Reef as Queensland’s continental shelf was part of the coastal plain, and rivers like the Burdekin met the ocean about 160 km east of its current mouth. Most of its ancestral river channel can still be recognised beneath the Coral Sea.
Then, about 13,000 years ago, with no help from man-made engines burning hydrocarbons, the Earth began warming. This was probably caused by natural cycles affecting our sun and the solar system, aided by volcanic heat along Earth’s Rings of Fire under the oceans.
The great ice sheets melted, sea levels rapidly rose some 130m and coastal settlements and ancient port cities were drowned and are being rediscovered, even today.
As the oceans warmed, they expelled much of their dissolved load of carbon dioxide. The warm temperatures and extra carbon dioxide plant food caused vigorous plant growth. Permafrost melted, forests colonised the treeless tundra and grasses and herbs covered the Great Plains. Iceball Earth became the Blue/green planet, supporting a huge increase in plant and animal life.
Without any zoning laws to guide them, our smart ancestors moved ahead of the rising waters and adapted happily to the warmer climate with less snow, more rain, more carbon dioxide plant food and more ice-free land.
This warming phase peaked in the Medieval Warm Era about 1,000 years ago, when sea levels also peaked. They fell during the Little Ice Age, rose slightly during the Modern Warm Era, and are relatively stable now.
Rising seas are never a lethal threat to life on Earth. The danger sign is falling sea levels caused by a return of the great ice sheets. This would quickly put high-latitude farming into the deep freezer, thus creating widespread starvation. Trying to grow crops on emerging salty mudflats in a stormy, icy climate will give some future farmers a real climate concern.
And despite World Heritage listing, when the next ice age comes the skeletons of the stranded Great Barrier Reef will become bleached limestone deposits on the coastal plain. The indestructible coral populations will abandon their marooned homes and build new reefs further out under the retreating seas.
For those who would like to read more:
Ice Age Europe
Nothing New about Rising sea levels:
Sea levels were probably been higher than this during the Medieval Warming, and fell in the Little Ice Age:
The Buried Burdekin River Channel:
Sea level in the southwest pacific is stable:
Is Diesel the New Green Fuel?
Are Climatists giving a green tick to diesel power?
Ten thousand professional climate crusaders recently attended yet another Climate Carnival in Lima, Peru. Did they use green power to minimise their carbon footprint? No way; massive diesel generators were trucked in on diesel-powered lorries because the local hydro/solar power could not cope. The delegates were also moved between hotels and the venue in more than 300 diesel buses – few bothered to walk or ride the bicycles provided.
In sunny Spain, the government solar subsidies were so generous that some entrepreneurs managed to produce solar energy for 24 hours per day. However, inspectors discovered that diesel generators were being operated at night, thus producing great profits in selling “solar” energy to the grid.
Then in “go-green, vote-blue” Britain, wind power is proving so erratic that thousands of reliable diesel generators are being installed by utilities and businesses to maintain power when the grid becomes unstable.
Finally we have people who disconnect from the grid, aiming to become independent by generating their own power from small solar and wind installations. After the first long spell of cloudy windless weather, most turn to a reliable on-demand diesel backup generator to keep the fridge running and the lights on.
It seems that diesel is the new “green” fuel. In some bitter winter, when real blackouts hit UK or Europe, maybe clean “green” coal will be re-discovered and cranked up again.
For those who would like to read more:
Diesel powers Lima Climate Festivities:
Lima Climate Confab generates record carbon footprint:
Nothing Useful Achieved at Lima Climate Gabfest:
Climate Conference generates vast Carbon Footprint:
Diesel generates solar power in Spain:
The Spanish Solar Inquisition:
Diesel Generators step in when the volatile grid power fails in Britain:
Is Coal Dirty?
Coal, Combustion, and the Grand Carbon Cycle:
Save the Snipe AND the Swamps
The surest way to find an “endangered” species is to declare a major development site, and something “threatened” will soon turn up.
So it is no surprise that the proposed expansion of Abbot Point, which has been continuously shipping coal from Queensland for thirty years, has discovered the rare Australian painted snipe in a possible silt dumping site in adjacent swamps.
But we can save the snipe AND the Abbot Point wetlands by shifting the natural silt from port development further out to sea. That’s where rivers, creeks and ocean currents are taking it anyway.
And everyone knows we should not try to thwart nature – natural processes will dump it there eventually.
The Overflow Column
The ‘ocean acidification’ scare may be as fraudulent as ‘global warming’
Mike Wallace, a PhD candidate at the University of New Mexico, discovered that Richard Feely, the scientist who was richly rewarded for claiming that rising levels of CO2 is causing ocean acidification and, thereby, threatening sea life, committed fraud in constructing his theory. Freely omitted data prior to 1988 going back a hundred years. When all the data is included, there is no evidence of increasing ocean acidification. Wallace is incensed that it is acceptable among global-warmists to omit data and then hide the omission. So are we.
American Thinker. 25 December 2014
Remembering “The Little Ice Age”.
Global Warming is not the big danger– It is Ice that Kills. The Little Ice age was a time of storms, extreme weather, natural climate disruption, famine, death, disease, revolution and war. Climate is always changing, and we do not know the future. But climate history can give us a clue.:
Another Cold Winter in The Northern hemisphere:
And the Arctic is NOT Warming:
Don’t Forget: “The Great Global Warming Swindle”
Civilisation is Doomed – More Planned Propaganda on the road to Paris:
2015 is shaping up as the Climate Alarm Waterloo, but the climax will be seen in Paris, not Waterloo. The world climate alarmists will make one last attempt to stitch up yet another agreement that transfers power and cash to the UN and various unelected international pressure groups. We can expect a flood of climate alarm propaganda – lies, outlandish claims, abuse of sceptics and doomsday forecasts. For example, Lonnie Thompson who received the U.S. National Medal of Science in 2010, said recently that virtually all climatologists “are now convinced that global warming poses a clear and present danger to civilization.”
Pulitzer Prize-winner, Ross Gelbspan says that the climate crisis “threatens the survival of our civilization”.
Mark Hertsgaard agrees, saying that the continuation of global warming “would create planetary conditions all but certain to end civilization as we know it.”
Finally, a chance to listen to Professor Carter and Professor Franks in Perth, Sydney or Brisbane:
Perhaps the most important aspect of Martin Luther King, Jr.’s vision was his core belief that every American should be represented equally in our system of governance, regardless of race, color or creed.
King understood that good intentions were not enough to secure such equality. He understood that the structure of governance itself had to be reformed, and from the bottom-up.
The same core value animates the Balanced Budget Amendment, which is advanced by the Compact for a Balanced Budget.
The national debt problem is, at its root, a problem of representation. Without a limit on the federal government’s borrowing capacity, there is just too great an incentive for elected federal officials to make unsustainable political promises that advance their career. This is because they can borrow the money and send the bill to our kids and grandkids, who do not vote yet. Unprincipled elected officials know our kids and grandkids cannot punish them politically for many years—probably long after they’re gone.
Without a Balanced Budget Amendment, our kids and grandkids have to rely on us to represent their interests. But the truth is nobody can represent their future adult interests as well as they will be able to—just as wives could not rely on loving husbands to represent their interests adequately before women got the right to vote.
Our kids and grandkids are just not equally represented when it comes to our national debt, which undeniably burdens their future adult lives.
This problem of representation cannot be fixed by reforming access to the ballot. There is no time machine that can transport our kids and grandkids when they reach voting age to vote in our current elections.
Instead, just like civil rights reform required all Jim Crow laws to be uprooted, not just an end to the poll tax, we must reform the system itself to ensure that it does not treat our kids and grandkids unequally when they come of age.
That is precisely what the Balanced Budget Amendment at the core of the Compact for a Balanced Budget would do.
The Amendment would limit the federal government’s borrowing capacity, ensure fiscal transparency, and demand a wide national consensus for federal debt policy.
In short, the Amendment would ensure that our system of governance itself does not unequally represent our kids and grandkids when it comes to decisions that severely restrict their future freedom as adults.
While many battles continue on other fronts to fulfill King’s vision (and fiscal policy reform was not King’s focus), we sincerely believe that he would be proud of the Compact for a Balanced Budget.
If you agree, please like and share this blog! And don’t forget to support our Bring the Fight to Them campaign to put scholarly boots on the ground in DC to educate the Washington political class about the Compact for a Balanced Budget.
[Originally published at Compact for America]