Mercatus Site Feed http://mercatus.org/feeds/home/wp-login.php/people/id.70%2Ccfilter.0/publication/publication/did-stimulus-dollars-hire-unemployed en A History of Cronyism and Capture in the Information Technology Sector http://mercatus.org/publication/history-cronyism-and-capture-information-technology-sector-0 <h5> Publication </h5> <p class="p1">This paper documents the evolution of government-granted privileges, or "cronyism," in the information and communications technology marketplace and in the media-producing sectors.&nbsp;</p> <p class="p1">It also shows that cronyism is slowly creeping into new high-technology sectors. This influence could dull entrepreneurialism and competition in this highly innovative sector since time and resources spent on influencing politicians and capturing regulators cannot be spent competing and innovating in the marketplace.&nbsp;</p> <p class="p1">Cronyism will also negatively impact consumer welfare by denying consumers more and better products and services. Additionally, consumers might end up paying higher prices or higher taxes due to government privileges for industry.&nbsp;</p> <p class="p1">Finally, this paper offers strategies for stalling and diminishing the cronyism already taking root in the high-tech sector.</p><p class="p1"><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2288082">Continue reading&nbsp;at SSRN</a></p> http://mercatus.org/publication/history-cronyism-and-capture-information-technology-sector-0 Tue, 21 Oct 2014 12:56:41 -0400 Todd Zywicki Book Panel: Consumer Credit and the American Economy http://mercatus.org/events/todd-zywicki-book-panel-consumer-credit-and-american-economy contact@mercatus.org (Mercatus.org) <h5> Events </h5> <p>The <a href="http://ppe.mercatus.org/">F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics</a> at the Mercatus Center invites you to a panel discussion featuring Todd Zywicki and his new co-authored book <i><a href="http://mercatus.org/consumercredit/consumer-credit-american-economy.html">Consumer Credit and the American Economy</a></i><i>.</i></p> <p>In this book, authors Thomas A. Durkin, Gregory Elliehausen, and Michael E. Staten, and Todd Zywicki examine the economics, behavioral science, sociology, history, institutions, law and regulation of consumer credit in the United States. It looks at why Americans use credit in their everyday lives and the implications of credit use for the American economy and government regulation. This examination challenges stereotypical views and provides an economically informed way of looking at how and why consumers use credit and how it is regulated.</p> <p>We will be pleased to hear from one of the authors, <b>Todd Zywicki</b>, as well as chair, <b>Peter Boettke</b>, and commenters, <b>Steven Pearlstein</b> and <b>Joshua Wright</b>.</p><p><b>If you have any questions about this event,&nbsp;<b>&nbsp;please contact Jason Wilbanks at <a href="mailto:Jwilbanks@mercatus.gmu.edu">Jwilbanks@mercatus.gmu.edu</a> or (703) 993-8297.</b></b></p> <p><b><a href="http://ppe.mercatus.org/todd-zywicki">Todd Zywicki</a></b><b> </b>is a senior scholar and senior fellow with the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University and Foundation Professor of Law at George Mason University School of Law. He specializes in bankruptcy, contracts, commercial law, business associations, law and economics, and public choice and the law.</p> <p><b><a href="http://ppe.mercatus.org/peter-j-boettke">Peter Boettke</a></b><b> </b>is University Professor of Economics and Philosophy at George Mason University, the BB&amp;T Professor for the Study of Capitalism, and the Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at GMU. He specializes in Austrian economics, economic history, institutional analysis, public choice, and social change.</p> <p><b><a href="http://www.ftc.gov/about-ftc/biographies/joshua-d-wright">Joshua Wright</a></b> is currently a Commissioner of the Federal Trade Commission. Wright was previously a professor at George Mason University School of Law and held a courtesy appointment in the Department of Economics. Wright is a leading scholar in antitrust law, economics, and consumer protection and has published more than 60 articles and book chapters, co-authored a leading casebook, and edited several book volumes focusing on these issues. Wright also served as Co-Editor of the Supreme Court Economic Review and a Senior Editor of the Antitrust Law Journal.</p> <p><b><a href="http://provost.gmu.edu/robinson/about/steven-pearlstein/">Steven Pearlstein</a></b> is Robinson Professor of Public and International Affairs at George Mason University and a Pulitzer-prize winning business and economics columnist for the <i>Washington Post</i>. Professor Pearlstein was awarded the Pulitzer Prize for commentary in 2008 for columns the previous year anticipating and explaining the recent financial crisis and global economic downturn. In 2011 he won the Gerald R. Loeb Award for lifetime achievement in business and financial journalism. His work has also been cited by the Society of Business Editors and Writers. He has appeared frequently as a commentator on national television and radio programs. He continues to write a regular column for the Post’s Sunday Business section, along with book reviews.</p> http://mercatus.org/events/todd-zywicki-book-panel-consumer-credit-and-american-economy Tue, 21 Oct 2014 15:01:59 -0400 Reclaiming Federal Spectrum: Proposals and Recommendations http://mercatus.org/publication/reclaiming-federal-spectrum-proposals-and-recommendations-0 <h5> Publication </h5> <p class="p1">As in many countries,<sup>1</sup> the United States government possesses&nbsp;a majority of the most valuable bandwidth and pays virtually&nbsp;nothing for this natural resource.<sup>2</sup> The Government Accountability&nbsp;Office (GAO) and other independent audits make it clear that&nbsp;federal spectrum is used ineffectively and that reforms are long&nbsp;overdue.<sup>3</sup> With increased consumer demands for new services&nbsp;requiring radio transmissions, it is urgent that some of the fallow&nbsp;federal spectrum be brought “online” and into the mobile&nbsp;broadband marketplace.</p> <p class="p1">The consumer demand in recent years for mobile broadband&nbsp;services—such as streaming Netflix, voice-over Internet Protocol,&nbsp;and Facebook use—is unprecedented and strains the current&nbsp;capacity of wireless carriers. Building out cell towers and networks&nbsp;increases capacity, but increasing the supply of radio spectrum is&nbsp;much more cost-efficient.<sup>4</sup> These realities have caused&nbsp;telecommunications policymakers in the past decade to seriously&nbsp;reexamine spectrum management. A growing consensus among&nbsp;experts is that federally held spectrum is lightly used and would be&nbsp;better redeployed for commercial uses that accommodate&nbsp;consumer demands and expand the United States economy.</p> <p class="p1">President Obama and his Federal Communications Commission&nbsp;(FCC) appointees have prioritized, at some political risk, making&nbsp;substantial amounts of spectrum, including spectrum currently&nbsp;used by federal agencies and the military, available for wireless&nbsp;broadband use. This Article discusses the history of spectrum&nbsp;management and the commercial and federal uses of the radio&nbsp;frequencies. Several policy proposals for reclaiming federal&nbsp;spectrum are presented, along with recommendations for&nbsp;rationalizing spectrum management.</p> <p class="p1">Two major spectrum management problems are addressed in&nbsp;the recommendations section. The first is that federal agencies&nbsp;receive almost no price signals that would encourage efficient use&nbsp;of this valuable input. The FCC and the NTIA gave federal users&nbsp;spectrum for free, often decades ago, and from the agencies’&nbsp;perspective it is a free resource.<sup>5</sup> The second problem is that there&nbsp;exists no reliable process for reclaiming federal spectrum and&nbsp;selling it for more productive commercial uses in the relatively&nbsp;short term (the next five to ten years). These agencies are&nbsp;institutionally reluctant to remit any of their spectrum for&nbsp;commercial use,<sup>6</sup> and billions of dollars of social welfare are&nbsp;squandered annually as a result.<sup>7</sup>&nbsp;</p><p class="p1">This Article recommends, in the&nbsp;short term, the creation of an independent spectrum management&nbsp;commission that has the authority to relocate federal systems and&nbsp;transfer federal spectrum to commercial users through auction. In&nbsp;the long term, Congress should establish an agency that possesses&nbsp;all federal spectrum and leases out spectrum at approximately&nbsp;market rates, in a way that imitates the General Service&nbsp;Administration’s (GSA) practice of leasing out real estate to federal&nbsp;agencies.</p><p class="p1"><a href="http://stlr.org/download/volumes/volume15/Skorup.pdf">Continue reading</a></p> http://mercatus.org/publication/reclaiming-federal-spectrum-proposals-and-recommendations-0 Tue, 21 Oct 2014 12:47:57 -0400 Getting Away from Gosplan http://mercatus.org/publication/getting-away-gosplan <h5> Publication </h5> <p class="p1">Describing the U.S. system of spectrum&nbsp;allocation, former Federal Communications&nbsp;Commission officials Gerald Faulhaber&nbsp;and David Farber have written,&nbsp;“[the] current system is similar to that&nbsp;of the former Soviet Union’s GOSPLAn&nbsp;agency, which allocated scarce resources&nbsp;by administrative fi at among factories and other producers in&nbsp;the Soviet economy.” the U.S. spectrum regulatory framework,&nbsp;still largely intact since 1927, severely distorts the 21st century&nbsp;technology industry and harms consumers with higher prices&nbsp;and lack of choice. As in many countries, the U.S. government&nbsp;possesses a majority of the most valuable radio spectrum and&nbsp;pays virtually nothing for this natural resource. Audits by the&nbsp;Government Accountability Office and independent groups&nbsp;have made clear that federal spectrum is used ineffectively and&nbsp;that reforms are long overdue. President Obama and his Federal&nbsp;Communications Commission appointees have, at some political&nbsp;risk, prioritized making substantial amounts of spectrum&nbsp;available for wireless broadband use, including spectrum currently&nbsp;used by federal agencies and the military.</p> <p class="p1">The consumer demand in recent years for mobile broadband&nbsp;services—such as streaming netflix, Voice-over-internet Protocol,&nbsp;and Facebook use via smartphones and tablets—is unprecedented&nbsp;and strains the current capacity of wireless carriers. Building&nbsp;more cell towers and laying more cables will increase capacity,&nbsp;but increasing the supply of radio spectrum is also needed. For&nbsp;this reason, Congress and the Obama administration examined&nbsp;spectrum management at the national telecommunications&nbsp;and information Administration (NTIA), which oversees federal&nbsp;agencies’ spectrum, and the FCC, which regulates non-federal&nbsp;spectrum. A growing consensus among experts is that federally&nbsp;held spectrum is lightly used and much of it would be better&nbsp;redeployed for commercial uses that accommodate consumer&nbsp;demands and expand the U.S. economy.</p> <p class="p1">Before repurposing federal spectrum can take place, however,&nbsp;Congress must address two major spectrum management&nbsp;problems. the first is that there exists no reliable process for&nbsp;repurposing federal spectrum and selling it for more productive&nbsp;commercial uses in the relatively short term (that is, the next five&nbsp;to 10 years). the second problem is that federal agencies receive&nbsp;almost no price signals that would encourage efficient use of this&nbsp;valuable input. the FCC and NTIA gave federal users spectrum&nbsp;for free, often decades ago, and from the agencies’ perspective it&nbsp;is a free resource. Predictably, overuse abounds and billions of&nbsp;dollars of social welfare are squandered annually as a result. in&nbsp;the short term, Congress should create a temporary independent&nbsp;spectrum commission that has the authority to relocate federal&nbsp;systems to other spectrum bands and transfer federal spectrum to&nbsp;the FCC for auction. in the long term, Congress should establish&nbsp;a permanent agency that possesses the remaining federal spectrum&nbsp;and leases it out at approximately market rates, imitating&nbsp;the GSA’s practice of leasing out real estate and buildings to&nbsp;federal agencies.</p><p class="p1"><a href="http://object.cato.org/sites/cato.org/files/serials/files/regulation/2014/1/regulation-v36n4-7.pdf">Continue reading</a></p> http://mercatus.org/publication/getting-away-gosplan Tue, 21 Oct 2014 11:50:32 -0400 Why Nebraska's Tax Reform Plan Failed http://mercatus.org/expert_commentary/why-nebraskas-tax-reform-plan-failed <h5> Expert Commentary </h5> <p class="p1">What would your family do with an extra $3,000 this year? Use the money for college education? Take more vacation? Pay off debt? Based on my research, if state governments eliminated all special privileges in their tax systems and lowered tax rates an equivalent amount, the average family could save thousands of dollars annually – all without any reduction in government services.</p> <p class="p1">In <a href="http://mercatus.org/publication/principles-privilege-free-tax-system-applications-state-nebraska">my recent study</a> published through the <a href="http://www.mercatus.org/">Mercatus Center</a> at George Mason University, I discuss the principles for a privilege-free tax system that can responsibly bring this scenario to fruition. Most state income, sales and property taxes contain a variety of exemptions, credits and deductions – or special privileges – that you may know as loopholes. Not only are many of these loopholes unfair, in that only certain industries and individuals can use them, they mean higher tax rates for the rest of us. This is also inefficient; it leads to less economic growth over time and consequently lower incomes for everyone.</p> <p class="p1">Using the state of Nebraska as a case study, I show how the typical family could save over $3,000 annually. Starting with the state’s biannual “tax expenditure” report, which estimates $5 billion in tax expenditures each year, the study isolates the categories that truly represent economic privilege and calculates the smaller but sizeable estimate of $2 billion. That translates into $1,000 for each Nebraskan – or $3,000 for a family of three.</p><p class="p1"><a href="http://www.usnews.com/opinion/economic-intelligence/2014/10/20/nebraska-gov-dave-heinemans-tax-reform-plan-failed-heres-what-to-do">Continue reading</a></p> http://mercatus.org/expert_commentary/why-nebraskas-tax-reform-plan-failed Tue, 21 Oct 2014 09:58:21 -0400 Adam Thierer Discusses Driverless Cars on CSPAN-2 http://mercatus.org/video/adam-thierer-discusses-driverless-cars-cspan-2 <h5> Video </h5> <iframe width="640" height="360" src="//www.youtube.com/embed/sIpP1D4mSMI" frameborder="0" allowfullscreen></iframe> <p>Adam Thierer Discusses Driverless Cars on CSPAN-2&nbsp;</p><div class="field field-type-text field-field-embed-code"> <div class="field-label">Embed Code:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> &lt;iframe width=&quot;640&quot; height=&quot;360&quot; src=&quot;//www.youtube.com/embed/sIpP1D4mSMI&quot; frameborder=&quot;0&quot; allowfullscreen&gt;&lt;/iframe&gt; </div> </div> </div> http://mercatus.org/video/adam-thierer-discusses-driverless-cars-cspan-2 Mon, 20 Oct 2014 16:58:51 -0400 Veronique de Rugy Discusses the Ebola Vaccine on Varney and Company http://mercatus.org/video/veronique-de-rugy-discusses-ebola-vaccine-varney-and-company <h5> Video </h5> <iframe width="640" height="360" src="//www.youtube.com/embed/Z_VBETukSfQ" frameborder="0" allowfullscreen></iframe> <p>Veronique de Rugy Discusses the Ebola Vaccine on Varney and Company</p><div class="field field-type-text field-field-embed-code"> <div class="field-label">Embed Code:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> &lt;iframe width=&quot;640&quot; height=&quot;360&quot; src=&quot;//www.youtube.com/embed/Z_VBETukSfQ&quot; frameborder=&quot;0&quot; allowfullscreen&gt;&lt;/iframe&gt; </div> </div> </div> http://mercatus.org/video/veronique-de-rugy-discusses-ebola-vaccine-varney-and-company Mon, 20 Oct 2014 13:27:17 -0400 Fortress and Frontier in American Health Care http://mercatus.org/publication/fortress-and-frontier-american-health-care <h5> Publication </h5> <p class="p1">For decades America’s health care debate has pitted Left against Right, federal against state, public&nbsp;against private. All sides, however, have shared a similar, inhibiting mindset—an excessive aversion&nbsp;to risk and deference to medical insiders—instead of stressing the ideal goal of better health care&nbsp;for more people at lower cost on a continuous basis.</p> <p class="p2">A new study published by the Mercatus Center at George Mason University shows how this&nbsp;“Fortress”-like mentality has limited innovation in health care, constraining medical advances&nbsp;and raising costs. Shifting to a “Frontier” approach—one that tolerates risk and opens the field to&nbsp;other participants and disciplines—would bring to health care the kinds of creativity seen in&nbsp;many other fields, such as information technology.</p> <p class="p2">The study illustrates these ideas in part through a set of unconventional characters, including a&nbsp;Hollywood actress who figured out how to stop Nazis from jamming American torpedo controls,&nbsp;a small-town doctor who pioneered stem-cell therapy, an injured carpenter and a puppet-maker&nbsp;who saw $40,000 prosthetic hands and produced a workable alternative that costs less than $50,&nbsp;a dying rodeo enthusiast who successfully battled the Food and Drug Administration (FDA),&nbsp;and—on the other side of the coin—a well-meaning educator who helped destroy African-American medical education.</p> <p class="p2">Below is a brief summary. Please see “<a href="http://mercatus.org/sites/default/files/Graboyes-Fortress-Frontier_0.pdf">Fortress and Frontier in American Health Care</a>” to read&nbsp;the study and learn more about author <a href="http://mercatus.org/robert-graboyes">Robert F. Graboyes</a>, a senior research fellow at the&nbsp;Mercatus Center.</p> <p class="p1">______________________________ Key Findings ______________________________</p> <p class="p1">• From Fortress to Frontier. To replicate the kinds of revolutionary innovation seen in&nbsp;other fields, health care policymakers need to discard the constraints of their Fortress&nbsp;mentality and adopt a Frontier attitude, which tolerates calculated risks and welcomes&nbsp;competition from diverse practitioners and disciplines.</p> <p class="p1">• Address supply as well as demand. America’s health care debate has focused almost exclusively&nbsp;on demand: how many people have health coverage, and how providers are paid&nbsp;for which currently offered services. Successful reforms must ease limitations on both&nbsp;demand and supply, promoting innovations that can alter the nature of health care delivery&nbsp;and lower costs.</p> <p class="p1">• Step-by-step reform. This does not require wholesale, politically unrealistic changes in&nbsp;the health care sector. Indeed, reformers should instead advance through many small,&nbsp;incremental, and simultaneous steps, seizing opportunities to break down barriers to&nbsp;reform, possibly achieving quick victories.</p> <p class="p1">• Breaking down barriers. A vast range of such opportunities are at hand. The Fortress mentality&nbsp;has erected numerous obstacles to health care innovation. These obstacles are readily&nbsp;identifiable and can be overcome with targeted reforms that do not require a sweeping overhaul&nbsp;of the health care sector. The idea is to identify every potential limit on the supply of&nbsp;health care services, and then eliminate it. If the United States doesn’t do this, other countries&nbsp;will, and America will lose its leadership position in medical innovation.</p> <p class="p1">_______________________________ Summary _______________________________</p> <p class="p1">TWO WORLDVIEWS: FORTRESS AND FRONTIER</p> <p class="p1">The Fortress is an institutional environment that avoids risk and protects established producers&nbsp;(insiders) against competition from newcomers (outsiders). The Frontier, in contrast, tolerates risk&nbsp;and allows outsiders to compete against established insiders.</p> <p class="p1">• In recent decades, numerous industries have experienced remarkable and unexpected&nbsp;advances through a process of “disruptive innovation”—technological change driven by&nbsp;outsiders that yields previously unthinkable quality gains and massive price reductions.&nbsp;This is the Frontier approach.</p> <p class="p1">• An example is the original Internet, called ARPANET, created by an agency within the&nbsp;Department of Defense and at first tightly constrained. Once opened to outsiders, it&nbsp;spawned millions of websites and applications and profoundly changed human society.</p> <p class="p2">• In contrast, NASA was initially a great innovator. But after its heyday—the moon-landing&nbsp;era—the agency grew more and more risk averse (especially after the Columbia disaster).&nbsp;Now private innovators are competing to develop freight and passenger spacecraft, and&nbsp;markets reach above earth’s atmosphere for the first time.</p> <p class="p1">A BRIEF HISTORY OF THE FORTRESS IN HEALTH CARE</p> <p class="p1">In health care, the foundation of the Fortress was laid in 1910, with a report by an educator commissioned&nbsp;by the American Medical Association to evaluate the nation’s medical schools. The report rapidly led to actions that made medical education more exclusive, standardized, centralized, and&nbsp;expensive.</p> <p class="p1">• Following this report, however, half of the country’s medical schools—and most African-American medical schools—were forced to close, constricting the supply of doctors and&nbsp;boosting their incomes. The report also led to an excessive homogenization of medical&nbsp;practice. Essentially, doctors came to believe that, for any set of symptoms (and certain&nbsp;patient data), there is only one correct, deterministic treatment pathway. This stifled the&nbsp;variation that innovation requires.</p> <p class="p1">• Other structures developed, such as health coverage that was not so much insurance as&nbsp;prepaid medical care. In 1938 and again in 1962, driven by the tragic consequences of&nbsp;thalidomide and tainted sulfanimides, the FDA’s control over pharmaceuticals grew, and&nbsp;state controls expanded.</p> <p class="p1">ISLAND-HOPPING: A STRATEGY FOR REFORM</p> <p class="p1">During World War II, American operations in the Pacific Theater pursued many islands simultaneously&nbsp;and somewhat autonomously. To shift health care from Fortress to Frontier, reformers should pursue a similar island-by-island strategy rather than a wholesale approach. This will avoid the same centralized overreach that characterizes both the Affordable Care Act and “Repeal and Replace” proposals.</p> <p class="p1">• Successful reformers will identify legions of obstructions to supply and innovation and&nbsp;then eliminate them piecemeal, gaining incremental and possibly rapid victories.</p> <p class="p1">• Reformers could move state by state to remove particular barriers (e.g., certificate-of-need&nbsp;laws), or policy by policy within the states or the federal government. Issue-specific coalitions&nbsp;could form around each problem and could simultaneously deal with federal, state,&nbsp;and private limits on the supply of health care. This decentralized approach would eliminate&nbsp;the need for one grand bargain—or for total control of Washington, DC, by one party.</p> <p class="p1">LIMITS ON SUPPLY AND DEMAND</p> <p class="p1">To achieve the kind of advances seen in other fields, health care innovators must be free to supply&nbsp;new goods and services and consumers must be free to purchase them.</p> <p class="p1">• FDA limits and delays. The FDA’s slow and burdensome approval process inhibits the&nbsp;development and dissemination of new products and stifles innovation by exerting authority&nbsp;over too many goods and services. This could be partly overcome by methods such as&nbsp;approving drugs in stages so patients with serious, time-critical illnesses could gain early&nbsp;access, and “right to try” legislation that would grant terminally ill patients early access to&nbsp;drugs still in the approval process.</p> <p class="p1">• Limits on providers. Various restrictions, such as medical licensing and scope-of-practice&nbsp;limitations, constrict the supply of physicians and medical services. Among potential&nbsp;remedies are allowing nurse practitioners and other professionals to practice&nbsp;independently (as they already do in numerous states) and authorizing pharmacists to&nbsp;write certain prescriptions independently of physicians. Reciprocity agreements or&nbsp;interstate licensing compacts could make it easier for doctors to move from state to state.</p> <p class="p1">• Malpractice law. Tort law invites lawsuits and discourages innovation while also raising&nbsp;costs. The vagaries of tort law also discourage the production of vaccines and the development&nbsp;of new drugs and devices. Potential remedies include capping awards for noneconomic&nbsp;damages and shortening the statute of limitations on malpractice suits.</p> <p class="p1">• Taxes. Federal tax law favors employer-based coverage, which artificially lowers the cost of&nbsp;group insurance and raises the cost of individual plans. This may be the single most anticompetitive&nbsp;factor in the health insurance market, limiting the variety of available health&nbsp;plans. Breaking down these barriers could start with establishing tax parity for health&nbsp;insurance premiums and individual contributions to health savings accounts.</p> <p class="p1">• Homogenized medical education. Medical schools remain focused on individual knowledge&nbsp;rather than the interdisciplinary teams and networks that characterize much of modern&nbsp;medicine. This results in an overly specialized field. Potential remedies include interweaving&nbsp;classroom and clinical components of medical education and removing obstacles&nbsp;(e.g., licensing requirements) to alternative approaches, such as osteopathic medicine and&nbsp;for-profit, offshore medical schools.</p> <p class="p1">• Government controls and mandates. Most public and private health plans model their benefit&nbsp;structures on Medicare, which overpays for some services and underpays for others, misallocating&nbsp;the supply of countless health care services. In addition, the Affordable Care Act&nbsp;requires small-group and individual health insurance plans to cover a Washington-defined&nbsp;set of essential health benefits. This will homogenize the design of health coverage and limit&nbsp;innovation in the provision of medical services and health insurance. Reform options include&nbsp;allowing Medicare to reimburse for imported or offshore medical services and for email and&nbsp;telephone consultations, removing the essential health benefits and eliminating state benefit&nbsp;mandates, and allowing health insurers to sell policies across state lines.</p> http://mercatus.org/publication/fortress-and-frontier-american-health-care Tue, 21 Oct 2014 14:45:35 -0400 How to Restart Health Care Reform http://mercatus.org/expert_commentary/how-restart-health-care-reform <h5> Expert Commentary </h5> <p class="p1">Midterm elections are coming, and both parties are lobbing grenades over health care. Despite the furious rhetoric, the two sides are more alike than they realize. Both spent decades pursuing policies that obstruct health care's capacity to save lives, ease suffering and cut costs. The endless vitriol resembles World War I-style trench warfare. The Affordable Care Act moved the battle lines a little in one direction; the midterms that year moved them a little in the opposite direction. With divided government, the 2014 elections will move the lines even less.</p> <p class="p1">But those weary of the trenches can begin improving health care in January 2015 by shifting to a different theater of a different war in a different era. Think Pacific Islands, World War II. Think innovation.</p> <p class="p1">For 70 years, one side asked one question only: "How many Americans have insurance cards?" The other side pushed back feebly, claiming a superior ability to distribute cards. Both sides focused on distributing care and ignored creating care. Both contributed to stagnation by obstructing innovation. To understand how, compare health care with the most innovative industry of the past 25 years - information technology.</p> <p class="p1">Imagine riding a time machine to 1989 to tell your friends how health care has changed. They'll be mildly surprised by some specifics, but they'll believe you. Now tell them about IT in 2014: iPads, smartphones, Siri, Amazon, Kindle, Street View, email, iTunes, Netflix, Facebook, Twitter, GPS, Uber, Skype. Tell them how inexpensive it is. Talk about driverless cars, drones, and Bitcoin. Now they'll think you've lost your mind.</p> <p class="p1">Health care lags behind IT in innovation because we've locked health care in a "Fortress" and let IT roam the "Frontier."</p> <p class="p1">In the health care Fortress, policy has two goals: The first is imagining every terrible thing that could go wrong and striving to prevent any of that from happening. The second is making sure doctors and hospitals and health researchers never worry about outsiders threatening their financial security.</p> <p class="p1">On the IT Frontier, policy recognizes that big improvements in quality and big decreases in cost require people to accept some calculated risks. The Frontier allowed Apple and BlackBerry to challenge IBM and Western Electric. Outsiders in garages upended insiders in corporate towers.</p> <p class="p1">Bipartisan consensus allowed IT to thrive on the Frontier but confined health care to the Fortress (even as they argued ferociously about details).</p> <p class="p1">But, you say, health care and IT aren't comparable. Health care involves life and death, pain and suffering. Computers are harmless.</p> <p class="p1">Think again. Computers and smartphones offer terrifying ways to commit financial fraud, stalk and bully the vulnerable, steal identities, violate privacy, destroy reputations, and coordinate terrorism. Wireless telemetry failures put airline passengers and surgical patients at mortal risk. 1989 policy makers could easily have banned the internet and computers and smartphones. Thank goodness they didn't.</p> <p class="p1">Now, take your time machine 25 years into the future. 2039 medicine will likely be as unfathomable to you as 2014 IT seems to your friends in 1989. The question is whether American health care spends those years on the Frontier and leads this technological revolution or, alternatively, remains in the Fortress, leaving other countries to take the lead.</p> <p class="p1">I've been honored to meet some harbingers of the future. Ivan Owen - a puppet-maker who saw $40,000 prosthetic hands and co-invented one costing $10 to $50. Ian Shakil, who doubles doctors' output by freeing them from oppressive interaction with computer keyboards. Pat Basu, who delivers medical appointments by tablet and smartphone. And Jenna Tregarthen, who uses tablets and smartphones to help hundreds of thousands of people struggling with eating disorders.</p> <p class="p1">Other technologies are coming: printed replacement organs, nanobots traveling deep within you to repair damaged genes, pharmaceuticals custom-designed for your DNA.</p> <p class="p1">So how do we mimic the leaps and bounds of IT within health care? Currently, one side struggles to preserve the sputtering ACA. The other pledges to repeal it with a bill they haven't written, using power they don't possess. Regrettably, neither approach will do much to improve Americans' health or financial security.</p> <p class="p1">There is a better path.</p> <p class="p1">Instead of the futile back-and-forth of World War I, we can enter the Pacific Theater of World War II. Identify 10,000 islands blocking the way to innovation of care. Conquer lots of them simultaneously. Attack small pieces of Medicare and the FDA and the ACA rather than tackling the entire health care system in one piece. At the state level, conquer individual obstructions like certificate-of-need and occupational licensure provisions.</p> <p class="p1">Regardless of this election's outcome, island-hopping can begin in January, with coalitions spanning both sides of the aisle, uniting to clear the way for innovation.</p> http://mercatus.org/expert_commentary/how-restart-health-care-reform Mon, 20 Oct 2014 11:14:45 -0400 Dr. Yandle's Economic Situation Summary: Update on the US Economy and Discussion of Bootleggers and Baptists Theory of Regulation http://mercatus.org/video/dr-yandles-economic-situation-summary-update-us-economy-and-discussion-bootleggers-and <h5> Video </h5> <iframe width="640" height="360" src="//www.youtube.com/embed/YA53cwu3KZE" frameborder="0" allowfullscreen></iframe> <p class="p1" style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;">What do GDP reports really tell us? What does economic freedom have to do with job growth?</p><p class="p1" style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;">This presentation:</p><ul class="ul1" style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;"><li class="li1" style="margin-bottom: 10px; font-size: 12px;">Examines GDP data and the implications for the years ahead;</li><li class="li1" style="margin-bottom: 10px; font-size: 12px;">Reviews economic indicators;</li><li class="li1" style="margin-bottom: 10px; font-size: 12px;">Looks at unemployment numbers across the fifty states; and</li><li class="li1" style="margin-bottom: 10px; font-size: 12px;">Discusses US manufacturing performance.</li></ul><div class="field field-type-text field-field-embed-code"> <div class="field-label">Embed Code:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> &lt;iframe width=&quot;640&quot; height=&quot;360&quot; src=&quot;//www.youtube.com/embed/YA53cwu3KZE&quot; frameborder=&quot;0&quot; allowfullscreen&gt;&lt;/iframe&gt; </div> </div> </div> http://mercatus.org/video/dr-yandles-economic-situation-summary-update-us-economy-and-discussion-bootleggers-and Fri, 17 Oct 2014 11:51:17 -0400 Does Eminent Domain Even Raise Revenue? http://mercatus.org/expert_commentary/does-eminent-domain-even-raise-revenue <h5> Expert Commentary </h5> <p class="p1">Proponents of eminent domain for private development -- i.e., of forcibly taking private property and giving it to another private party -- claim it will generate more revenue for state and local governments. The Supreme Court even based its landmark 2005 case <i>Kelo v. City of New London</i> on this assertion, holding that the alleged economic benefits for communities legally justify these takings as "public use."</p> <p class="p1">The claim that eminent domain leads to higher revenues has largely gone unchallenged. We <a href="http://mercatus.org/publication/takings-and-tax-revenue-fiscal-impacts-eminent-domain"><b>recently examined</b></a> the available data, and our study finds virtually no evidence that eminent-domain activity for private development is associated with higher government revenue. To the contrary, we find some evidence that eminent domain is associated with <i>lower</i> growth of government revenue in the future.</p> <p class="p1">In other words, governments' primary justification for taking property from private owners like Susette Kelo and transferring ownership to big companies like Pfizer is based on faulty assumptions. In fact, the redevelopment plan for which Ms. Kelo's house (and those of her neighbors in New London, Conn.) was taken never happened. The land was actually used as a temporary dump for storm debris in the aftermath of Hurricane Irene in 2011.</p> <p class="p1">Confiscating someone's home or business and using the land as a dump is an egregious property-rights violation. Even if eminent domain for private development did achieve the objective of producing higher revenues for state and local governments, it would be an abhorrent activity. However, it also has serious negative implications for the future economic prosperity of the community.</p> <p class="p1">Private-property rights are the foundation of a successful market economy. Any encroachments on private-property rights -- like eminent domain -- hamper economic growth and result in lower standards of living than we would otherwise enjoy.</p> <p class="p1">For example, in countries like Cuba and North Korea, where private-property rights are very insecure, entrepreneurs are less willing to invest in the new machines and equipment they need to expand their businesses. Individuals in these countries have a reasonable expectation that any machinery or equipment, or overall business or land itself, may at some point be taken from them by government predation or by individual criminals.</p> <p class="p1">Fortunately, property rights in the United States are relatively secure -- but things are heading in the wrong direction. The Fraser Institute publishes an annual index that ranks countries according to their economic freedom using data in five areas: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation. In the recently released 2014 <a href="http://www.freetheworld.com/release.html"><b><i>Economic Freedom of the World</i> report</b></a>, the United States fell to 12th, down from the second spot in 2000 and the seventh spot in 2008. In the area of "legal system and property rights," the United States fell all the way to 36th.</p> <p class="p1">Our study's findings confirm that policymakers and the public are right to be skeptical of attempts to justify the seizure of private property with the promise of future financial windfalls. In reality, these encroachments may hamper economic growth and lead to lower standards of living for more than just those who have lost their homes or businesses.</p> http://mercatus.org/expert_commentary/does-eminent-domain-even-raise-revenue Fri, 17 Oct 2014 16:41:54 -0400 Measuring the Content, Not Just the Number, of Executive Orders and Proclamations http://mercatus.org/publication/measuring-content-not-just-number-executive-orders-and-proclamations <h5> Publication </h5> <p class="p1">President Obama recently <a href="http://www.gpo.gov/fdsys/pkg/FR-2014-02-20/pdf/2014-03805.pdf">ordered executive branch agencies</a> to pay a minimum wage of $10.10 per hour to federal contractors and subcontractors. The Department of Labor <a href="http://www.dol.gov/whd/media/press/whdpressVB3.asp?pressdoc=national/20141001.xml">finalized a rule</a> implementing the president’s directive in early October. These actions reflect one way that American presidents formally wield executive branch authority: by issuing executive orders and proclamations.&nbsp;</p> <p class="p1">The current administration has highlighted its own willingness to use executive orders and all other “existing legal authorities” to implement desired policies, first in this year’s <a href="http://www.nytimes.com/2014/01/29/us/politics/obama-state-of-the-union.html?_r=0">State of the Union Address</a> and later in <a href="http://www.washingtonpost.com/politics/transcript-president-obamas-remarks-on-immigration/2014/06/30/b3546b4e-0085-11e4-b8ff-89afd3fad6bd_story.html">press briefings</a>. In response, some analysts pointed out that the number of executive orders issued by presidents has been <a href="http://www.brookings.edu/blogs/fixgov/posts/2014/01/30-state-of-the-union-obama-executive-orders-hudak">declining over the 20th century</a> and that President Obama has <a href="http://www.presidency.ucsb.edu/data/orders.php">issued fewer executive orders</a> than many other modern presidents. In his first term, for example, President Obama issued 147 executive orders, compared to 173 in the first George W. Bush term, 200 in the first Bill Clinton term, and 166 for George H. W. Bush’s only term.&nbsp;</p> <p class="p1">But an analysis of the number of executive orders is incomplete. As John Hudak of the Brookings Institution <a href="http://www.brookings.edu/blogs/fixgov/posts/2014/01/30-state-of-the-union-obama-executive-orders-hudak">pointed out</a>, “not all executive orders are created equal. Some are quite forceful, making dramatic changes to policy. Others are more routine, housekeeping issues. To say that one president issued more executive orders than another, tells us little about the scope of those orders or the impact they have on policy.”</p> <p class="p1">While other analysts have examined the <b>number</b> of executive orders issued by different administrations, we have used <a href="http://www.regdata.org">RegData</a>, a database producing statistics based on the <i>Code of Federal Regulations</i>, to examine some of the <b>content </b>of these executive orders and proclamations for the past six presidencies, through the end of Obama’s first term. In particular, we examine the usage of <a href="http://regdata.org/methodology%22%20%5Cl%20%22metrics">restrictions</a>—words that create binding, legal obligations, such as “shall” and “must.” Although the current administration has issued fewer executive orders than other modern administrations, the figures below show that its total usage of restrictions in executive orders and proclamations exceeds that of any of the past six administrations, with the exception of Clinton’s first term. In fact, while the figures below show that Obama’s first term hardly stands out from other presidents with regard to the number of words published in executive orders and proclamations, both the Obama years and the Clinton years stand out for the restrictiveness of the text they produced, as measured by restrictions per 1,000 words.&nbsp;</p> <p class="p1">The charts below examine trends related to the quantity and content of executive orders and proclamations for the past six presidential terms by examining Title 3 of the <i>Code of Federal Regulations</i>. Title 3 of the <i>Code of Federal Regulations</i> contains all executive orders and proclamations published annually. (Title 3 also contains some regulatory language published by the Executive Office of the President regarding topics such as standards of conduct for White House employees, but this portion of Title 3 is relatively small compared to the compilation of the previous years executive orders and proclamations.&nbsp; For example, in 2012, it accounted for only 2.2 percent of the words in the entire title.) Unlike elsewhere in the <i>Code of Federal Regulations</i>, Title 3 is reset every year—so if you look at Title 3 in one year, you will see the executive orders and proclamations the president issued in the previous year.&nbsp;</p> <p class="p1">The first figure shows the number of restrictions published in Title 3 in each year from 1990 to 2012 (the full range of years for which we have data). The data shown in the chart correspond to the number contained in executive orders and proclamations issued in the prior year. Thus, the number of restrictions shown in year 2010 reflects the restrictions from executive orders and proclamations from Obama’s first year in office, 2009. The number of restrictions shown for year 2006 reflects the first year of George W. Bush’s second term, 2005. Figure 1 examines restrictions from Title 3 for the past six presidential terms. The presidential terms included are George H. W. Bush; Bill Clinton I; Bill Clinton II; George W. Bush I; George W. Bush II; and Barack Obama I.</p><p class="p1"><img src="http://mercatus.org/sites/default/files/C2-Restrictions-by-year_0.jpg" width="585" height="398" /></p> <p class="p1">This figure shows a couple noteworthy patterns. First, with the exception of George H. W. Bush, a new president tends to issue the most restrictions in executive orders and proclamations in his first year. It’s plausible that this only occurs after a new president is of a different party than his predecessor, as the incoming president takes actions to repeal the previous president’s policies. This would also explain why George H. W. Bush’s first year did not show a relative surge, since he was taking over from a fellow Republican (for whom he had also served as vice president). Second, while the number of executive orders issued during Obama’s first term may be smaller than many other modern presidents’, the number of restrictions contained in those orders and proclamations appears to exceed the numbers issued by other modern presidents.&nbsp;<span style="font-size: 12.222222328186px;">&nbsp;</span></p> <p class="p1">This pattern also stands out when we examine the cumulative number of restrictions for each of the six presidential terms. Figure 2 illustrates this, where the figure shows the term’s cumulated total of restrictions from executive order and proclamation. Figure 2 shows that Clinton’s first term accumulated the most, followed by Obama’s first terms. It also shows a stark contrast between W. Bush’s second term and Obama’s first term.&nbsp;</p> <p class="p4"><img src="http://mercatus.org/sites/default/files/C3-Cumulative-by-pres-term.jpg" width="585" height="397" /></p> <p class="p1">All of the figures above examine only the total number of restrictions issued—an easy variable to examine since RegData measures restrictions by year. In addition to restrictions, RegData also measures the total word count of Title 3 in each year. Word counts paint a different picture compared to restriction counts. An examination of word counts shows similar results as an examination of the number of executive orders published. While George W. Bush issued by far the fewest restrictions in his two terms, he also issued the largest quantity of words (at least in his first term). Similarly, in terms of word counts, the first Obama term and the first Clinton term appear to be typical for modern presidents. Figure 3 shows this.</p> <p class="p2"><img src="http://mercatus.org/sites/default/files/C4-Word-count.jpg" width="585" height="397" /></p> <p class="p1">However, as noted above, not all executive orders are created equal. The contrasting results from analyzing word counts and restriction counts illustrate an important distinction in legal texts. Executive orders and proclamations do not have to contain restrictions. For example, Obama’s <a href="http://www.gpo.gov/fdsys/pkg/FR-2011-01-21/pdf/2011-1385.pdf">executive order 13563</a>, which is directed at executive branch agencies on the topic of regulatory review, contains 17 occurrences of the restriction “shall” and 3 occurrences of its less obligatory cousin, “should.” In contrast, <a href="http://www.whitehouse.gov/the-press-office/2011/07/11/executive-order-regulation-and-independent-regulatory-agencies">executive order 13579</a> is directed at independent agencies and contains only 4 occurrences of the restriction “shall” but 8 occurrences of the strong suggestion “should.” This contrast demonstrates that the actual content of text matters. Executive orders can be used to provide information or suggestions, or they can be used to create constraints on actions sets in a way that is similar to regulation. Restrictions create binding, legal constraints, whereas suggestions may not.&nbsp;<span style="font-size: 12.222222328186px;">&nbsp;</span></p> <p class="p1">Our final figure examines the restrictiveness of executive orders and proclamations. We do this by calculating restrictions per thousand words. Restrictions per thousand words are shown in figure 4. Figure 4 suggests a pattern that was not previously discernible: that some presidents may tend to use more restrictive language in their executive orders and proclamations. While the first Obama term and the first Clinton term appear typical when examining word counts alone, they appear atypical when examining restrictiveness.&nbsp;</p> <p class="p2"><img src="http://mercatus.org/sites/default/files/C5-restrictions-per-1000.jpg" width="585" height="397" /></p> <p class="p1">Simply counting executive orders, pages, or words can produce misleading statistics. In legal language, at least, the frequency with which restrictions occur can serve as a proxy for measuring the overall restrictiveness of text. Content matters.</p> http://mercatus.org/publication/measuring-content-not-just-number-executive-orders-and-proclamations Thu, 16 Oct 2014 16:23:52 -0400 Oklahoma City Supporter and Friend Lunch http://mercatus.org/events/oklahoma-city-supporter-and-friend-lunch-0 <h5> Events </h5> <p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;"><span style="font-size: 12px;">For at least half a century, our laws, regulations,&nbsp;and institutions have slowly closed the frontier of&nbsp;American health care—stifling the sort of disruptive&nbsp;innovation that saves lives and cuts costs. The&nbsp;unfolding of the consequences of the Affordable&nbsp;Care Act affords us a new opportunity to&nbsp;reinvigorate health care markets.</span></p><p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;"><span style="font-size: 12px;">Please join us for a lunch on Friday, November 7th,&nbsp;with Mercatus senior research fellow Robert&nbsp;Graboyes. Dr. Graboyes specializes in healthcare&nbsp;economics and will discuss the fiscal realities of the&nbsp;Affordable Care Act. He’ll also address the ultimate&nbsp;goal of health care reform—an ideal health care&nbsp;system that provides better health to more people&nbsp;at lower cost on a continuous basis, and why decades&nbsp;of legislative attempts have failed to achieve this aim.</span></p><p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;"><span style="font-size: 12px;">This is not a fundraising event, and there is no&nbsp;charge to join us. We are pleased to have you as our&nbsp;guest to show our thanks and appreciation to our&nbsp;donors. Dress is business casual. Please invite friends&nbsp;or associates who might be interested.</span></p><p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;"><span style="font-size: 12px;">Questions? Contact Jason Wilbanks at (703) 993-8297 or jwilbanks@mercatus.gmu.edu.</span></p> http://mercatus.org/events/oklahoma-city-supporter-and-friend-lunch-0 Thu, 16 Oct 2014 14:51:37 -0400 Tulsa Supporter and Friend Lunch http://mercatus.org/events/tulsa-supporter-and-friend-lunch-1 <h5> Events </h5> <p><span style="font-size: 12px;">For at least half a century, our laws, regulations,&nbsp;and institutions have slowly closed the frontier of&nbsp;American health care—stifling the sort of disruptive&nbsp;innovation that saves lives and cuts costs. The&nbsp;unfolding of the consequences of the Affordable&nbsp;Care Act affords us a new opportunity to&nbsp;reinvigorate health care markets.</span></p><p><span style="font-size: 12px;">Please join us for a lunch on Thursday, November 6th,&nbsp;with Mercatus senior research fellow Robert&nbsp;Graboyes. Dr. Graboyes specializes in healthcare&nbsp;economics and will discuss the fiscal realities of the&nbsp;Affordable Care Act. He’ll also address the ultimate&nbsp;goal of health care reform—an ideal health care&nbsp;system that provides better health to more people&nbsp;at lower cost on a continuous basis, and why decades&nbsp;of legislative attempts have failed to achieve this aim.</span></p><p><span style="font-size: 12px;">This is not a fundraising event, and there is no&nbsp;charge to join us. We are pleased to have you as our&nbsp;guest to show our thanks and appreciation to our&nbsp;donors. Dress is business casual. Please invite friends&nbsp;or associates who might be interested.</span></p><p><span style="font-size: 12px;">Questions? Contact Jason Wilbanks at (703) 993-8297 or jwilbanks@mercatus.gmu.edu.</span></p> http://mercatus.org/events/tulsa-supporter-and-friend-lunch-1 Thu, 16 Oct 2014 14:46:07 -0400 Tucson Supporter and Friend Lunch http://mercatus.org/events/tucson-supporter-and-friend-lunch-0 <h5> Events </h5> <p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;">Mercatus believes that ideas change the world.&nbsp; Unfortunately, we’ve seen bad ideas turn into destructive public policy in our country. As you know, the Affordable Care Act has had negative impacts on businesses and individuals and is stifling innovation and entrepreneurship. And, current predictions indicate that Social Security and other entitlement programs will go bankrupt in the near future. After the mid-term elections, what are the best ideas for reform? What changes should be top priority for the 114<sup>th&nbsp;</sup>Congress in order to restore prosperity?</p><p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;">Please join us for lunch on Wednesday, November 19 with Mercatus Center vice president Maurice McTigue to discuss the key opportunities for reform as well as the Mercatus Center’s role in bringing about these changes.</p><p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;">This is not a fundraising event, and there is no charge to join us. We are pleased to have you as our guest to show our thanks and appreciation to our donors. Dress is business casual. Please invite friends or associates who might be interested.</p><p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;">Questions? Contact Caitlyn Van Orden at&nbsp;<a href="mailto:cvanorden@mercatus.gmu.edu" style="font-size: 12px; color: #666699;">cvanorden@mercatus.gmu.edu</a>&nbsp;or (703) 993-4925.</p> http://mercatus.org/events/tucson-supporter-and-friend-lunch-0 Thu, 16 Oct 2014 14:26:13 -0400 How Often Do Cities Mandate Smart Growth or Green Building? http://mercatus.org/publication/how-often-do-cities-mandate-smart-growth-or-green-building <h5> Publication </h5> <p class="p1">Much has been written about the role of government regulation in facilitating automobile-oriented sprawl. Zoning codes reduce walkability by artificially segregating housing from commerce, forcing businesses and multifamily landlords to surround their buildings with parking, and artificially reducing density. As a result, cities have become more car-oriented over the past several decades, resulting in increased greenhouse gas emissions and other forms of pollution. The “smart growth” and “green building” movements seek to make cities more environmentally friendly, both through regulation and through more libertarian, deregulatory policies. The purpose of this paper is to examine the extent to which cities have in fact chosen the more regulation-oriented path, and to discuss the possible negative and positive side effects of prescriptive smart growth and green building regulations. In particular, we focused on attempts to make cities more pedestrian-friendly, as opposed to smart growth policies designed to restrict the location of suburban development.</p> <p class="p3">To do so, we examined the zoning regulations of twenty-four medium-sized cities (cities with between 500,000 and 1 million residents). We chose this sample because it is large enough to reflect the policies of a reasonably diverse number of cities, yet small enough to be manageable. In addition, we focused on three types of regulation: parking, density, and “green building.”</p> <p class="p3">Because these regulations have received very little scholarly attention, it is too early to draw firm conclusions about their effect. But in theory, these regulations could have both positive and negative effects. Such regulations could make cities more pedestrian-friendly and encourage developers to build more environmentally friendly housing, thus reducing driving and pollution arising therefrom. Conversely, these regulations could make cities more difficult and expensive places to do business, thus driving developers to car-oriented suburbs. The weight of these benefits and costs is not yet clear.</p> <p class="p1"><b>I. Parking</b></p> <p class="p1"><b><i>A. The Status Quo</i></b></p> <p class="p1">Since the 1940s, local governments have generally required owners of commercial and multifamily structures to build off-street parking for customers and visitors. The primary purpose of these regulations is to prevent “cruising”—that is, drivers creating congestion and pollution while searching for scarce parking spaces. These regulations may also prevent “spillover parking”—the risk that if a business’s customers are not accommodated by a parking lot, those customers and their vehicles may “spill over” into adjacent residential neighborhoods, antagonizing those areas’ residents.</p><p class="p1"><a href="http://mercatus.org/sites/default/files/Lewyn-Mandating-SmartGrowth.pdf">Continue reading</a></p> http://mercatus.org/publication/how-often-do-cities-mandate-smart-growth-or-green-building Tue, 21 Oct 2014 15:05:48 -0400 Scottsdale Supporter and Friend Lunch http://mercatus.org/events/scottsdale-supporter-and-friend-lunch-5 <h5> Events </h5> <p>Mercatus believes that ideas change the world.&nbsp; Unfortunately, we’ve seen bad ideas turn into destructive public policy in our country. As you know, the Affordable Care Act has had negative impacts on businesses and individuals and is stifling innovation and entrepreneurship. And, current predictions indicate that Social Security and other entitlement programs will go bankrupt in the near future. After the mid-term elections, what are the best ideas for reform? What changes should be top priority for the 114<sup>th </sup>Congress in order to restore prosperity?</p> <p>Please join us for lunch on Tuesday, November 18 with Mercatus Center vice president Maurice McTigue to discuss the key opportunities for reform as well as the Mercatus Center’s role in bringing about these changes.</p> <p>This is not a fundraising event, and there is no charge to join us. We are pleased to have you as our guest to show our thanks and appreciation to our donors. Dress is business casual. Please invite friends or associates who might be interested.</p> <p>Questions? Contact Caitlyn Van Orden at <a href="mailto:cvanorden@mercatus.gmu.edu">cvanorden@mercatus.gmu.edu</a> or (703) 993-4925.</p> http://mercatus.org/events/scottsdale-supporter-and-friend-lunch-5 Thu, 16 Oct 2014 14:15:34 -0400 FDA Misses the Mark With Food Labeling Rules http://mercatus.org/publication/fda-misses-mark-food-labeling-rules <h5> Publication </h5> <p class="p1">As the battle to trim American waistlines heats&nbsp;up, the U.S. Food and Drug Administration&nbsp;has joined in the fray with not one, but two&nbsp;rules aimed at improving the nation’s diet.&nbsp;The rules constitute the biggest change to&nbsp;the Nutrition Facts label in over two decades.&nbsp;Despite the comprehensiveness of the effort,&nbsp;the fact that the rules were built on poor analysis makes it unlikely&nbsp;they will curb obesity or improve public health. Like the whole&nbsp;grain biscuits and unappetizing vegetables that are being forced&nbsp;onto the lunch trays of unhappy schoolchildren, the FDA’s efforts&nbsp;should end up in the trash (or at least a recycling bin).</p> <p class="p2">The FDA proposed the rules based on the authority granted&nbsp;by the Nutrition Labeling and Education Act of 1990 (NLEA) to&nbsp;regulate how information is displayed on food products. The first&nbsp;of the proposed rules, the Food Labeling rule, includes a laundry&nbsp;list of potential changes that are designed to “assist consumers&nbsp;in maintaining healthy dietary practices.” The changes required&nbsp;are numerous, involving both formatting and content changes to&nbsp;labels, increases in recordkeeping, and new analytic requirements.</p> <p class="p1">The second rule, the Serving Size rule, focuses on labeling&nbsp;changes affecting food packages that hold a small number of&nbsp;servings. Specifically, the rule requires that foods in packages that&nbsp;contain less than 200 percent of “reference amounts customarily&nbsp;consumed” (RACC)—that is, small packages that are nonetheless&nbsp;larger than a traditional serving size—must nonetheless be labeled&nbsp;as single-serving containers, while food packages with 200–400&nbsp;percent of RACC must employ a dual labeling format that gives&nbsp;Robert Scharff is an associate professor in the Department of Consumer Sciences&nbsp;at the Ohio State University. Sherzod Abdukadirov is a research fellow in&nbsp;the Regulatory Studies Program at the Mercatus Center at George Mason University&nbsp;nutrition information for both amount per serving and amount&nbsp;per package. Additionally, the rule defines new RACC for a number&nbsp;of products and gives a new serving size for breath mints,&nbsp;among other small changes.</p> <p class="p1">Together, the two rules result in major changes in how nutrition&nbsp;information is conveyed to the American public, resulting in&nbsp;billions of dollars in new costs, much of which will ultimately be&nbsp;passed on to consumers. It is disturbing that the agency made only&nbsp;a halfhearted—and ultimately failed—attempt to determine whether&nbsp;those costs are justified by corresponding benefits to the public.</p> <p class="p1"><b>Why Regulate?</b></p> <p class="p1">The FDA gives two reasons to justify the proposed regulations.&nbsp;First, the FDA argues that it needs to update the Nutrition&nbsp;Facts label requirements with regard to recommended Daily&nbsp;Values (DV) and serving sizes. This is a laudable goal given the&nbsp;advancements in nutritional science over the last two decades.&nbsp;For example, the rule updates the DV for fiber based on a recent&nbsp;Institute of Medicine (IOM) “Dietary Reference Intakes” report.&nbsp;The new value is set at the level associated with the greatest&nbsp;reduction in risk of coronary heart disease. Similarly, serving&nbsp;sizes are updated to reflect amounts that people consume today,&nbsp;as opposed to what was consumed in decades past.</p> <p class="p1">Second, the FDA claims that food labels are not currently&nbsp;designed to promote ideal healthy behaviors. The agency points out&nbsp;that while many consumers report using the label, they find some&nbsp;of its information confusing. Consequently, the FDA claims that&nbsp;improving the label’s design could potentially improve consumers’&nbsp;ability to understand and use the label, which, if successful, would&nbsp;ultimately lead consumers to make healthier food choices.</p><p class="p1"><a href="http://mercatus.org/sites/default/files/fda-misses-mark-with-food-labeling-rules.pdf">Continue reading</a></p> http://mercatus.org/publication/fda-misses-mark-food-labeling-rules Fri, 17 Oct 2014 10:41:02 -0400 Who’s Regulating the Regulators? http://mercatus.org/expert_commentary/who-s-regulating-regulators <h5> Expert Commentary </h5> <p class="p1">As the Goldman Sachs tapes show, regulators almost always fail. In other cases, they cheat consumers out of choices. Leave it to the market.</p> <p class="p3">Many people simply take it for granted that government regulation achieves its intended ends. National political debates often reflect this: Doe-eyed Democrats position themselves as the forthright champions of the little guy, selflessly tying unscrupulous businessmen to the mighty yoke of the regulatory state. On the other side, smooth, corporate Republicans appeal to our inner entrepreneurs, decrying the lost productivity and forgone trickled-down growth that would torture our nation’s shackled conglomerates under the proposed new round of regulations.</p> <p class="p3">Whether you’re pro-regulation or anti-regulation in America depends more on affiliation than reality. For better or worse, the truth is more insidious; regulators are often captured by the industry they regulate at the expense of everyone else.</p> <p class="p3">Consider the recent revelation that the regulators at the Federal Reserve in New York were cozying up with one of the nation’s biggest financial institutions it was supposed to oversee. Secret <a href="http://www.thisamericanlife.org/radio-archives/episode/536/the-secret-recordings-of-carmen-segarra">recordings made by Carmen Segarra</a>, a bank examiner for the Fed in New York—parked at Goldman Sachs—exposes the degree to which Fed regulators were actually failing the taxpayers they allegedly protect against the “too big to fail” corporations that the government created. For instance, in the recording, one can hear Fed officials explain how they suspect a Goldman deal with Banco Santander to be “legal but shady”—and then fail to challenge the firm. One can even hear both the regulators and Goldman executives acknowledge that the deal should have required Fed approval.</p> <p class="p3">But then the regulators cave to the firm’s opinion that it is above the rules. This is not a unique event, Segarra reports. In fact, according to her, it was common belief among Goldman employees that, depending on the client, they could choose which consumer rules to follow—or not follow—without any fear of consequences from the Fed.</p> <p class="p3">No matter how infuriating this is, it is neither a unique case nor a new phenomenon. In fact, for over 40 years we have known that the romanticized “protection of the public” theory of regulation doesn’t hold water. And yet, it is still so prominent today.</p> <p class="p3">In his seminal 1971 article, “The Theory of Economic Regulation,” (<a href="http://www.ppge.ufrgs.br/GIACOMO/arquivos/regulacao2/stigler-1971.pdf">PDF</a>) Chicago School economist George Stigler let America in on Washington’s dirty little secret: Regulations can be a capitalist’s best friend. He pointed out that industries with sufficient resources and political power have a huge incentive to exploit the state’s coercive power for their own ends. What might look like a regulation for the public interest from the outside is often little more than “regulatory capture” by corporate interests.</p> <p class="p3">Take the U.S. Food and Drug Administration (FDA), for example. Its stated role is to protect public health by assuring the safety of foods, medicines, and cosmetics. In practice, however, its regulations tend to harm consumers by reducing the availability of needed medications while increasing prices. In separate studies, economists Sam Peltzman and <a href="http://www.jstor.org/discover/10.2307/1935858?uid=3739832&amp;uid=2&amp;uid=4&amp;uid=3739256&amp;sid=21104827721787">Steven Wiggins</a> find that specific FDA regulations raise costs and lower the number of new drugs introduced. In practice, regulation tends to have the opposite effect of the pro-consumer policies the agency claims to promote.</p> <p class="p3">It is one problem if regulations merely hurt consumers instead of helping them; it is quite another if they also help large corporations at the expenses of the others. Unfortunately, this is often the case. Study after study produced by the leaders in law and economics—like, again, <a href="http://www.nber.org/papers/w0133">Sam Peltzman</a>, Richard Posner (<a href="http://www.nber.org/papers/w0041.pdf">PDF</a>), or Bruce Yandle (<a href="http://object.cato.org/sites/cato.org/files/serials/files/regulation/1983/5/v7n3-3.pdf">PDF</a>)—show how private interests too often benefit under the guise of public welfare. In the case of the FDA, large, established pharmaceutical companies might grumble in public about the cost of new regulations, but they are well aware that their competitors will bear these same burdens. Smaller upstarts, however, are thwarted by the heavy cost of regulation before they even get a chance to enter the market.</p> <p class="p3">Finally, I would be remiss to talk about the FDA and not recommend that everyone watch the movie “Dallas Buyer’s Club.” Without going into the details, the film is a perfect example of the deadly consequences that regulatory capture can have on people’s lives. I will also leave the analysis of the recent crop of health-care industry titans cheerleading for the Affordable Care Act in light of regulatory capture as a task for the reader.</p> <p class="p3">When considered objectively, it is hard to imagine a scenario where regulatory policies are not commonly captured by a country’s most powerful interests. The assumptions of the “regulation as public interest” crowd undermine their stated conclusions. If industrial concerns are indeed as powerful, unaccountable, and ruthlessly-profit-seeking as the naïve view of regulation claims, why should we expect them to play fairly—by the rules of the game?</p> <p class="p3">Even if a regulatory body is initially staffed by upright public servants, there are few (if any) ways to maintain a pure commitment to the agency mission. Over time, wealthy and powerful industry representatives sometimes buddy up to regulators and offer them employment after their service concludes. Instead of dousing the wild blazes of unregulated capitalism, regulatory policy can pour fuel on the fire. Meanwhile, left and right are largely none the wiser.</p> <p class="p3">Going back to the New York Fed’s tapes, it is fair to ask what the point of a complex and burdensome regulatory system is if the rules are so easily ignored by the companies they are supposed to constrain. Isn’t the main reason behind these rules that taxpayers’ money is on the line—since the government has granted an implicit promise to bail out big companies in distress? But if the rules aren’t doing their job, and the implicit bailout is encouraging firms to be reckless, aren’t taxpayers left doubly exposed? If we can’t control these financial institutions either way, it seems that the best regulation is the discipline imposed by the market. Companies that act badly should go under. This is how you get rid of bad actors, warn the future bad ones that there will be no bailout, and save us from the drama of finding out what a joke this pretense of oversight really is.</p> http://mercatus.org/expert_commentary/who-s-regulating-regulators Fri, 17 Oct 2014 11:04:54 -0400 2015 Annual Retreat: Advancing Liberty, Creating Change http://mercatus.org/events/2015-annual-retreat-advancing-liberty-creating-change <h5> Events </h5> <p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;"><span style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;">Mercatus Center supporters and friends are invited to join us for our 14th Annual Retreat in Scottsdale, AZ, co-hosted with the Institute for Humane Studies (IHS).&nbsp;</span></p><p style="font-style: normal; font-size: 12px; font-family: Helvetica, Arial, sans-serif;">If you have questions about this event, please contact Caitlyn Van Orden at (703) 993-4925 or <a href="mailto:cvanorden@mercatus.gmu.edu">cvanorden@mercatus.gmu.edu</a>.</p> http://mercatus.org/events/2015-annual-retreat-advancing-liberty-creating-change Thu, 16 Oct 2014 00:47:10 -0400