Tag Archives: regulation

How is a Government Mandate Pro Market Freedom?

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President Reagan’s national security advisor, Robert C McFarlane, recently offered some thoughts on a government mandate he considered would actually support a free market.   First, he lays out some background:

  • Petroleum products drive 97% of all air, sea and land transportation in our country. Oil is truly the lifeblood of every industrial economy.
  • The price of oil is set by a foreign cartel. The Organization of Petroleum Exporting Countries (OPEC) owns almost]80% of global oil reserves yet produces only 36% of daily global supply.
  • [I[ncreasing domestic production of oil or increasing fuel efficiency can reduce our trade deficit and the $400 billion (at current oil prices) we send overseas annually, but they won’t change the price we pay at the pump.

And thus, he says,

To outmaneuver OPEC we need to eliminate oil’s monopoly as the only transportation fuel.

His alternative fuel is natural gas from all those vast deposits embedded in shale, primarily in Pennsylvania, New York, Texas and Oklahoma.  Cleaned up and compressed, CNG (compressed natural gas), or with some processing, methanol, would make a fine fuel for our cars and truck, McFarlane says.  And he’s not far wrong on this, albeit NG has a considerably lower energy density than does gasoline.

Then he gets to his point:

Let’s open our market to good old American competition. …. Bills are now pending in both houses of the Congress…that seek to do exactly that by requiring car makers to enable fuel competition in their own product lines—adding flex-fuel, all electric, hybrid electric, or any other way auto makers choose to implement the law.

But this misses the point of a free market, capitalist economy with its inherent competition.  If the product is viable in the market place—IFF the product is something folks actually want and would buy—then a mandate to produce is unnecessary.  That natural market demand will drive production.

It’s true enough that some products have high barriers to entry, high initial costs to guts up a market; however, the automobile industry demonstrated that these need not prevent a market from developing: the car companies built their expensive factories, got their expensive distribution networks set up, and they did it all in a cutthroat competition environment.  So it is with flex fuel vehicles.  If there is a market for flex fuel cars and trucks, it’ll develop without need of mandates.

These bills don’t represent competition; they are government interfering in business decisions and in the market place.  The mandate contained in the bills is no different than a mandate that all of us must buy, oh, say, health insurance or contraceptives, whether or not we want or would use them.  Furthermore, mandates to produce (methanol) are mandates to buy (methanol); buying and selling are inseparable from each other—so such mandates limit both parties’ freedom of choice.

Qualified Opinions

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Do we allow those around here?  Even Massachusetts may be coming around.  Governor Duvall Patrick (D, MA) is looking at his state’s business regulations with a view to reducing their footprint on…business.  The Wall Street Journal is reporting that, among other things, he’s going to insist on what amounts to a business impact statement before a new regulation can go into effect.  The regulator proposing a new rule would be required to answer such questions as

Is this likely to encourage or deter the formation of business?

which is standard pap, but then Duvall cuts to the chase with a follow-up:

Who did you consult from the small business community to come to this conclusion?

Hmm….

The governor’s look includes rescission/tweaking of such regulations as a requirement that a hair salon owner selling her shop to an employee must first close down while the state processes associated paperwork, and a requirement that funeral directors must hire full-time apprentices only; part-timers are barred.  He’s also looking at an additional roughly 800 regulations across 60 state agencies.

Time will tell whether this is a serious look, or primarily politically useful tweaks, but it’s a promising start.

There is reason for skepticism.  Last year, President Obama made a big deal about the regulatory review process he was initiating.  That, though, has turned out to be a sham, consisting of minor changes to minor regulations without addressing his overall regulatory environment, which has been entirely anti-business.

This Is What A Progressive Government Stands For

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Our illustrious Treasury Secretary, Timothy Geithner had this to say in a recent The Wall Street Journal op-ed about the role of government in private decision making.  In setting up his meme, he described Bear Stearns’ risky investments and our own risky mortgage borrowing behavior.

Neither the Fed, nor any other federal agency, had the necessary comprehensive authority over investment firms…or the government-sponsored mortgage giants Fannie Mae and Freddie Mac.

Regulators did not have the authority they needed to oversee and impose prudent limits…. And they had no authority to put these firms, or bank holding companies, through a managed bankruptcy.…

Household debt rose to an alarming 130% of income, with a huge portion of those loans originated with little to no supervision and poor consumer protections.

Hmm….  He decries the lack of government control over our businesses and our personal borrowing.  He decries government’s inability to bypass the bankruptcy court system (except for two dinosaur car companies, whose government regulation he doesn’t mention).

He insists that  Government knows better the risks, government knows better the decisions that ought to be made.  His solution, thus, is increased intrusive government management of our decisions and our businesses.  As to the costs of this, he dismisses them:

Are the costs of reform too high? Certainly not relative to the costs of another financial crisis. Credit is relatively inexpensive….

He omits to add that cheap credit is due entirely to artificially suppressed Federal Reserve Bank rates—through which the Federal government is imposing an extreme inflationary risk on our economy.  He omits to acknowledge that the financial institutions are under resumed government pressure to quit sitting on cash and to lend—by lowering credit standards again—another government-imposed risk to our economy.

Are these reforms complex? No more complex than the problems they are designed to solve.  And, it should be noted, most of the length and complexity in the rules is the result of the care required to target safeguards where they are needed, not where they would have a damaging effect.

He chooses complexify a fundamentally simple problem: let the experts in business and business risk—businessmen themselves, exercise their own judgment, and suffer the consequences of bankruptcy if their judgment is faulty—or if they have bad luck.  He doesn’t mention the fact that the same government that wants to insert its own lending judgment in the place of our own and our business enterprises is the same government that is still owed tens of billions of dollars by those two American car companies that can never be paid back—and that one of those dinosaurs isn’t even American anymore; it’s Italian.  He also complexifies what is truly straightforward: get government out of the way, streamline regulations, and keep only those that are useful, with no overlap or conflicts.  He also demonstrates a lack of understanding of the problem: if the targets of the safeguards need “length and complexity” to address, it’s because the regulators don’t understand the targets well enough to articulate them simply and clearly, so that, if actually needed, they can be “targeted.”  The very complexity is another government-created risk.

Is there some risk that these reforms will go too far with unintended consequences? That depends on the quality of judgment of regulators in the coming months as they flesh out the remaining reforms.

Indeed.  That’s another enormous risk imposed by a Know Better government.  Look for instance, at the performance of the NLRB and the EPA, two example regulatory agencies devoid of objective judgment.  These are Progressive regulators, but there’s no reason to believe that “conservative” regulators wouldn’t wind up just as abusive, just as lacking in judgment, albeit in another direction.  The problem here is the existence of the regulators, not their political agendas.  Today’s problem, though, is compounded by so many of the regulators being subject to no oversight.

And then there’s our health.  Over in the legislative branch, Nancy Pelosi called the just-defeated Blunt Amendment a

“devastating legislation” and “the latest ploy in the Republican agenda of disrespecting the health of American women.” Planned Parenthood claimed the “dangerous proposal” would have allowed “your boss”—yes, yours—to decide “which prescriptions you can get filled and which medical procedures you can have,” including cancer screening, maternity care and AIDS medications.

Of course, it was nothing of the sort.  It was simply an effort to restore choice to women’s (and men’s) health decisions.  Yet, as the WSJ points out,

The fact that Democrats don’t dare to accurately describe their own positions, or the regulations that they want to foist on everyone else, shows how extreme those positions and regulations really are.

 

This is, then, what the Progressive government stands for.  A big, intrusive Federal government making business decisions for Americans and our businesses and deciding our health issues for us.  All, of course, with the best of intentions: to protect us from ourselves, and to protect us from our foolish decisions and their outcomes.  But at what cost?

At the cost of our freedom to make stupid decisions, our freedom to make decisions with which our governmental Betters might disagree, and our freedom to profit from risky decisions, or safe ones, of our choosing and not of our Betters’.  At the cost of our freedom to decide for ourselves what our health care might—or might not—entail..

At the cost of our ability to make any of our own choices.  At the cost of honoring our responsibilities ourselves, rather than having them surrendered to government to handle for us.

Energy Policy and Government

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Recall that not-yet-Secretary of Energy Steven Chu said in 2008

Somehow we have to find a way to boost the price of gasoline to the levels of Europe.

In light of rapidly rising gasoline prices in the last few weeks, now Secretary of Energy Chu testified before the House Appropriations Committee earlier this week.  In the course of that appearance, he answered a question from Congressman Alan Nunnelee (R, MI) about whether it “is the overall goal to get our price” of gasoline down.  “No,” answered Chu.  “The overall goal is to decrease our dependency on oil….”

Coupled with the Obama administration’s slow-walking of permits—even after a Federal court had ordered the administration to quit stalling—for deep water drilling in the Gulf of Mexico, President Obama’s killing of the Keystone XL pipeline, his refusal to allow drilling on Federal lands, and on and on, it’s quite clear the Obama has no intention of expanding America’s access to domestic oil and gas any faster than he absolutely has to, being dragged kicking and screaming to greater production.  He’s not at all interested in lower gasoline prices, or in lower energy prices generally.  Not at the expense of his (heavily subsidized) “green” energy projects.

Even knowing, as he surely does, that every 25₵ increase in the price of gasoline takes $35 billion annually out of the economy—out of the hands of Americans—he’s not interested.  Never mind the money taken out of Americans’ hands by higher home heating costs through higher oil and gas prices (which underlie the rising gasoline prices), or the higher costs of air travel from resulting higher jet fuel costs, or the higher cost of goods shipping, or the higher costs of production—and so higher end-product costs to us consumers—from higher energy costs to our manufacturers, and….

Later, at his daily mid-day press conference hosted by his Press Secretary, Jay Carney, Obama even tried to pretend he was unaware of his Energy Secretary’s testimony.

Reporters today asked White House Press Secretary Jay Carney about Energy Secretary Stephen Chu’s controversial statement about gas prices.

“I am not aware of that statement or the characterization that you have given it,” Carney replied.

Obama then claimed, through Chu’s follow-up Congressional testimony Thursday, that he really did want to lower the price of gasoline.  How, though, is it possible to believe him?

Contraception Coverage and Freedom

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Just to look at one small aspect of Americans’ liberties, here’s an item: mandated coverage of women’s contraception.

Senator Roy Blunt’s (R, MO) amendment was an attempt to restore a measure of liberty; a copy is here;  it said, in part [emphasis added]

(E) While PPACA provides an exemption for some religious groups that object to participation in Government health programs generally, it does not allow purchasers, plan sponsors, and other stakeholders with religious or moral objections to specific items or services to decline providing or obtaining coverage of such items or services, or allow health care providers with such objections to decline to provide them.

It also says

(A) FOR HEALTH PLANS.—A health plan shall not be considered to have failed…on the basis that it declines to provide coverage of specific items or services because—(i) providing coverage (or, in the case of a sponsor of a group health plan, paying for coverage) of such specific items or services is contrary to the religious beliefs or moral convictions of the sponsor, issuer, or other entity offering the plan; or (ii) such coverage (in the case of individual coverage) is contrary to the religious beliefs or moral convictions of the purchaser or beneficiary of the coverage.

The measure was voted down in the Senate on Thursday by a nearly straight party-line vote of 51-48.  In the run-up to the vote, Senate Democrats had cast it as an attempt to limit women’s access to birth control.  They also had claimed

[T]he bill is “a wolf in sheep’s clothing,” and may allow employers to exclude coverage for any conditions they find religiously or morally objectionable.

They say this could become a slippery slope, resulting in the exclusion of coverage for HIV & AIDS, mental health, hemophilia, STD’s and more

The Obama administration blasted Blunt’s amendment in a press release Wednesday, saying the president’s supporters need to “stand for a woman’s right to make her own health decisions.”

I certainly hope the amendment, had it passed, would have allowed exclusion—or a decision not to purchase—for “and conditions” that are “religiously or morally objectionable.”  This is an area in which our Constitution, so routinely disregarded by the Progressive administration, explicitly barred the Federal government from entering.  Furthermore, aside from the freedom of choice issues related to mandating coverage—and so paying for this coverage when it’s unwanted or unneeded—and the ludicrous “essential health benefits” aspects of contraception, what religious or moral grounds would be cited?  The Progressives have carefully declined to offer any examples.

Senator Frank Lautenberg (D, NJ) was especially disingenuous in his argument against this amendment.

I don’t want Republican politicians making decisions about my family’s health care.  Women are capable of making their own health-care decisions.

Except, no, they’re not.  Not after Lautenberg got his way: their decision is thrust upon them by this Progressive and his fellows.  Senator Lautenberg and the Federal government now will make health-care decisions in lieu of them.  Obama claimed to “stand for a woman’s right to make her own health decisions,” but with this vote, women are not allowed to decline to purchase a health-care service they do not want or will not use or find morally or religiously objectionable.  They must buy.  They cannot make their own health decision.  Read again the Section E quoted at the start.  See the freedom of choice that the Progressives voted down.