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Mercatus scholars apply economic analysis to the issues of the day

Shut Down the Export-Import Bank

by Veronique de Rugy on June 30, 2015

Today at midnight, for the first time in 81 years, the charter of the Export-Import Bank will expire. This government bank claims to promote U.S. exporters by lending cheap, taxpayer-backed loans to foreign and domestic corporations. However, in the process, Ex-Im Bank puts millions of consumers, firms and workers at a disadvantage. As such, closing it down is an important first step in the battle against the unhealthy marriage between the government and corporate America.

Ex-Im Bank's corporate beneficiaries say much to defend their government privileges. They argue that the bank promotes small business, improves exports, is indispensable to countervail foreign export subsidies, and supports jobs. Their claims are either misleading or simply wrong—and are tailored to protect the corporatist status quo. Meanwhile, the many unseen victims of Ex-Im Bank subsidies are ignored.

...

Congress Takes Steps to Keep Consumer Financial Protection Bureau in Line

by Todd Zywicki, Chad Reese on June 30, 2015

Earlier this year, the Republican-controlled House Financial Services Committee voted out 11 bipartisan reforms to the Dodd-Frank Act, including two (H.R. 1265 and H.R. 1195) that would write into law certain practices that the Consumer Financial Protection Bureau has voluntarily adopted. And while the committee's ranking member, Rep. Maxine Waters, D-Calif., expressed support for the mandates as harmless, she also criticized them for "unnecessarily" codifying into law policies that the bureau already put into place.

But just because the bureau grudgingly acquiesced to certain needed reforms does not render Congress' actions redundant. Repeated complaints about the bureau's transparency led to it ...

Ex-Im Bank Charter to Expire at Midnight

by Veronique de Rugy on June 30, 2015

Unprecedented Action Comes in Response to National Backlash Against Cronyism

Arlington, Va.—Why, for the first time in more than eight decades, is the charter for the Export-Import Bank going to expire?   The answer, according to Veronique de Rugy, one of the nation’s leading experts on the Ex-Im Bank, is that the American people are now standing up to cronyism.   

“Today will be remembered as a day Americans stood up to powerful special interests and won,” said de Rugy, an economist and senior research fellow for the Mercatus...

How Not to Strangle the Internet of Things

by Adam Thierer on June 30, 2015

The Internet of Things is the hot new fixation in the world of technology, and it’s already raising concerns about safety, security, and privacy – many of which are persuasively documented in the special package just published here. We all face a host of new vulnerabilities in a world in which we’re always plugged into the Internet, and the objects around us are constantly sharing data about our personal and professional lives.

These fears have led some policymakers and activists to call for preemptive regulations. Specifically, they’re calling for limits on certain types of data collection, or restrictions on where and how these technologies can be used.

This is an appealing approach. It’s also shortsighted.

There’s good reason...

In an Uber World, Fortune Favors the Freelancer

by Tyler Cowen on June 27, 2015

With the rise of companies like Uber, entrepreneurs in a variety of fields are extending the concept of connecting customers and workers in what is sometimes called the new sharing economy. There are now online services for private tutors, dog walkers and delivery of packages and groceries, among numerous other options, and it is likely that these ventures will expand.

Many taxi drivers dislike the competition from Uber, but we need to think more systematically about the winners and losers as these new institutions develop. The greater convenience they provide consumers is obvious, but is this generally a good or bad thing for people on the other side of the market, the workers? One recent study, by Jonathan V. Hall of Uber and Alan B. Krueger, a professor of economics at Princeton,...

Trans Fat Ban Just a Swing in the Dark

by Richard Williams on June 26, 2015

When in doubt, throw it out. That philosophy seems to be what’s driving the FDA’s policy on trans fatty acids, and, in all likelihood, it’s just wrong. Let’s untangle what has transpired and see why.

First, the FDA probably should have left a big win alone. When the FDA required trans fatty acids to appear on the Nutrition Facts Panel, the food industry reacted immediately – those who could find substitute fats did so, which caused consumption to drop by 80 percent. At the previous levels, there was pretty good evidence that consumption of trans fatty acids at high levels (4 grams) was associated with heart disease.

But what about current consumption at lower levels? The evidence is missing. One might wonder: If it’s bad for you in larger amounts, why isn’t it bad for you in smaller amounts? Well, water is obviously good for you in small amounts, but if you drink too much...

America’s Crumbling Infrastructure?

by Robert Krol on June 26, 2015

Most politicians and transportation interest groups claim that America’s infrastructure is in bad shape. At a recent House Ways and Means Committee hearing, Chairman Paul Ryan, R-Wis., said our roads and bridges are in “a sorry state.” At the same hearing Bill Graves, president and CEO of the American Trucking Associations, reported, “Two-thirds of highways are in poor or mediocre condition.”

These statements are reinforced every time we drive over a pothole on the way to work. So it’s no surprise that many people think most roads in the United States are of poor quality. However, government statistics tell a different story. U.S. roads and bridges are not falling apart.

Each year state transportation agencies provide the federal government with comprehensive data on highway and bridge conditions. Highway quality is measured by a surface roughness index. The lower the index score, the better the quality of the road. Roads with index...

Mercatus' Graboyes on King v. Burwell

by Robert Graboyes on June 25, 2015

Robert Graboyes, a health care economist at the Mercatus Center at George Mason University, had this to say about today's King v. Burwell ruling:

King v. Burwell is over. The Court has ruled for the defendants (Burwell), and from a rule of law perspective, that's an unfortunate outcome. But as for the fundamental dynamics of U.S. health care, the case was never going to change much. Since World War II, Left and Right have fought bitterly—and almost exclusively—over how to divide up existing health care resources through health insurance coverage. Both sides have obstructed the development of newer, better, and less expensive modes of care—technologies that can bring better health to more people at lower costs, year after year. (For a fuller explanation, see my work, "Fortress and Frontier in American Health Care")

Nevertheless...

State's Exports Won't Collapse If Ex-Im Bank Goes Away

by Veronique de Rugy on June 24, 2015

With its June 30 expiration date quickly approaching, there are very few working days left should Congress want to address the termination of the Export-Import Bank - a federal outfit that mainly extends loans and loan guarantees to successful, well-connected foreign companies. At the center of the debate has been House Financial Services Committee Chairman Jeb Hensarling, R-Dallas, who noted last month: "The American people do not want privilege and subsidy. What they want is freedom and opportunity." Chairman Hensarling was referring to Ex-Im's problematic, and often corrupt, history.

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Repealing the Affordable Care Act Would Lower Federal Deficits

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by Charles Blahous on June 22, 2015

The Congressional Budget Office (CBO) has just released a report on the budgetary and economic effects of repealing the Affordable Care Act (ACA). Press reports reflect what CBO has reported pursuant to its scoring instructions – specifically, that relative to its scorekeeping baseline, repeal of the ACA would worsen the federal deficit but bolster the economy. CBO’s new inclusion of economic feedback with the score – finding that the ACA’s adverse economic effects make the deficit$216 billion worse over the next decade than it otherwise would be – is naturally...

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