Export-Import Bank Drama Continues

Posted on June 13, 2016 | Comments Off on Export-Import Bank Drama Continues

The Senate’s main business right now is the annual Defense Appropriations bill. The Export-Import Bank, or Ex-Im for short, might become part of that bill. Ex-Im caused one of the most contentious political fights in recent years. While the fight seemed over when Ex-Im re-opened last December after a five-month shutdown, there is still one more bit of drama to be resolved. That might happen this week.

Ex-Im is currently unable to make transactions larger than $10 million—essentially neutering an agency that does nearly 80 percent of its business in big deals with a literal top-ten of big businesses such as Boeing, General Electric, Caterpillar, and a handful of others. But Sen. Lindsey Graham (R-S.C.), who counts Boeing as a constituent, is trying to restore cronyism as usual at Ex-Im.

A bit of background: Ex-Im offers loans and loan guarantees to foreign buyers of U.S. products. For example, Ex-Im will guarantee loans that a foreign airline takes out—if the airline buys its jets from Boeing instead of Airbus.

For a number of reasons, free-market activists want to permanently close Ex-Im. These range from numerous corruption scandals to the harm Ex-Im does to other U.S. businesses, such as domestic airlines that compete with Ex-Im-subsidized foreign airlines.

Last year Congress refused to renew Ex-Im’s charter, which expires every few years. Ex-Im actually closed for five months, able to do nothing more than maintain its existing portfolio. It reopened when Ex-Im’s supporters succeeded in placing its reauthorization in a must-pass spending bill.

But their victory was a partial one. Ex-Im has a five-member board of directors that must approve any transaction larger than $10 million. As directors’ terms expired during the shutdown, the board was down to two members.

Here’s where the fun begins: Any vote on a $10 million-plus transaction has a quorum requirement of three members—meaning Ex-Im, though open for business, can only perform relatively small transactions until it gets more board members. These require Senate confirmation, and the Senate has shown no interest in considering any nominees.

Enter Sen. Graham, and the current controversy. He is threatening to create a loophole large enough to drive a truck through. If the president decides a $10 million-plus Ex-Im project has national security implications, Sen. Graham proposes giving the president the power to override Ex-Im’s quorum rule, allowing Ex-Im’s current diminished board to approve it.

We all know how creative politicians can be when it comes to tying anything and everything to national security. No doubt Boeing, which typically receives about half of Ex-Im’s business, will work very hard to push as many of its potential loan guarantees as possible through that loophole.

The worst part is that Sen. Graham isn’t pushing this idea as a stand-alone bill that could succeed or fail on its own merits. He is trying to fold it into the must-pass Defense Appropriations bill, which even Ex-Im’s fiercest opponents have to vote for.

What to do about it? Sen. Graham’s proposal is in an amendment he is offering to the defense bill, which is still in the Committee phase. So either the amendment must fail, or another senator must offer a counter-amendment to nullify the Graham amendment. The defense bill is in markup this week, so we could find out soon if Ex-Im’s cronyism will return to its previous vast scale.

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Posted in Economics, Export-Import Bank, Trade

CEI’s Battered Business Bureau: The Week in Regulation

Posted on June 13, 2016 | Comments Off on CEI’s Battered Business Bureau: The Week in Regulation

The number of new regulations for the year exceeded the 1,500 mark last week, with new rules covering everything from seatbelts to suckerfish.

On to the data:

  • Last week, 97 new final regulations were published in the Federal Register, after 61 the previous week.
  • That’s the equivalent of a new regulation every one hour and 44 minutes.
  • With 1,502 final regulations published so far in 2016, the federal government is on pace to issue 3,283 regulations in 2016. Last year’s total was 3,406 regulations.
  • Last week, 1,920 new pages were added to the Federal Register, after 1,895 pages the previous week.
  • Currently at 38,004 pages, the 2016 Federal Register is on pace for 84,831 pages. This would exceed the 2015 Federal Register’s all-time record adjusted page count of 81,611.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 15 such rules have been published so far in 2016, none in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations ranges from $3.59 billion to $5.43 billion.
  • 123 final rules meeting the broader definition of “significant” have been published this year.
  • So far in 2016, 297 new rules affect small businesses; 45 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.

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Posted in regulation

Minimum Wage Is No Panacea

Posted on June 8, 2016 | Comments Off on Minimum Wage Is No Panacea

I recently spoke to a reporter about the minimum wage’s tradeoffs: it helps some people, but at the cost of hurting other people. Here’s the writeup.

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Posted in Economics, Media Appearances, Minimum Wage

CEI’s Battered Business Bureau: The Week in Regulation

Posted on June 6, 2016 | Comments Off on CEI’s Battered Business Bureau: The Week in Regulation

Last week’s Federal Register fell short of 2,000 pages, mainly because it was a four-day work week due the Memorial Day holiday. While the Federal Register continues its record pace, there were no economically significant rules last week (costing $100 million-plus per year), after four the previous week. It’s still too early to tell if the Congression Review Act-related midnight rush was real or not, but early indications are that it may be. New rules from the last week range from portable air conditioning to the Death Master File.

On to the data:

  • Last week, 61 new final regulations were published in the Federal Register, after 70 the previous week.
  • That’s the equivalent of a new regulation every two hours and 46 minutes.
  • With 1,405 final regulations published so far in 2016, the federal government is on pace to issue 3,283 regulations in 2016. Last year’s total was 3,406 regulations.
  • Last week, 1,895 new pages were added to the Federal Register, after 2,013 pages the previous week.
  • Currently at 36,084 pages, the 2016 Federal Register is on pace for 84,309 pages. This would exceed the 2015 Federal Register’s all-time record adjusted page count of 81,611.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 15 such rules have been published so far in 2016, none in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations ranges from $3.59 billion to $5.43 billion.
  • 120 final rules meeting the broader definition of “significant” have been published this year.
  • So far in 2016, 270 new rules affect small businesses; 45 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

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Posted in regulation

Regulation in the News

Posted on June 2, 2016 | Comments Off on Regulation in the News

An otherwise-excellent Daily Caller writeup by Michael Bastach cites some of my research on the recent surge in regulatory activity.

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Posted in Media Appearances, regulation

Inequality: Policies That Work, and Policies That Don’t

Posted on May 31, 2016 | Comments Off on Inequality: Policies That Work, and Policies That Don’t

CEI recently released a pair of papers by Iain Murray and me about economic inequality. The first encourages activists to ask the right questions: think about flesh-and-blood people, not ratios. The second paper seeks to answer the right questions. Our main focus is on effective poverty reduction policies. But it is also important to know which policies don’t reduce poverty, so policy makers can avoid them. We mention two in our paper: minimum wage hikes and increased collective bargaining.

The arguments against both are similar: they have tradeoffs. Some workers benefit from a higher minimum wage, and many union members benefit from higher union wages. But their benefits come at a cost.

Workers pay for minimum wage increases in the form of reduced hours, firings, some workers never being hired in the first place, higher youth unemployment, and reduced on-the-job perks ranging from paid vacation to free parking and meals. These costs to people must be weighed against the benefits other people receive. Whether they are worth it or not is a decision every individual must make for himself, and is open for debate. That these tradeoffs exist is not debatable.

Collective bargaining’s costs include higher consumer prices, along with lower wages and reduced purchasing power for other workers. Public sector unions impose massive costs on taxpayers through their pension obligations. They are major contributors to potential government bankruptcies in coming years from California to New Jersey. Again, some workers do benefit from collective bargaining. And it is every individual’s own decision if the tradeoffs worth it or not. But the tradeoffs exist.

There are many policies that instead can make the poor better off, from affordable energy to occupational licensing reform, to easy access to capital, to regulatory reform, a CEI specialty. But some policies do not help the poor—or if they do help some of the poor, the tradeoffs eliminate net gains in human well-being. Minimum wages and collective bargaining are two such policies. Well-meaning activists should approach them with caution.

For more, see Iain’s my new paper, The Rising Tide: Answering the Right Questions in the Inequality Debate, as well its companion paper, People, Not Ratios: Why the Debate over Income Inequality Asks the Wrong Questions.

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Posted in Economics, Inequality, Minimum Wage

CEI’s Battered Business Bureau: The Week in Regulation

Posted on May 31, 2016 | Comments Off on CEI’s Battered Business Bureau: The Week in Regulation

The Congressional Review Act deadline for the possible midnight regulation rush has now likely passed, though the Federal Register once again topped 2,000 pages last week. That makes four weeks out of the last five the page count has gotten that high, which is unusual. If there is a slowdown in the next few months, we’ll know if the midnight rush was real or not. For now, it’s too early to tell. In the meantime, new regulations in the last week ranged from food labels to selling electricity.

On to the data:

  • Last week, 70 new final regulations were published in the Federal Register, after 68 the previous week.
  • That’s the equivalent of a new regulation every two hours and 24 minutes.
  • With 1,344 final regulations published so far in 2016, the federal government is on pace to issue 3,262 regulations in 2016. Last year’s total was 3,406 regulations.
  • Last week, 2,013 new pages were added to the Federal Register, after 2,065 pages the previous week.
  • Currently at 34,189 pages, the 2016 Federal Register is on pace for 82,984 pages. This would exceed the 2015 Federal Register’s all-time record adjusted page count of 81,611.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 15 such rules have been published so far in 2016, four in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations ranges from $3.59 billion to $5.43 billion.
  • 113 final rules meeting the broader definition of “significant” have been published this year.
  • So far in 2016, 261 new rules affect small businesses; 43 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

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Posted in regulation

Yet Another Ringing Endorsement

Posted on May 28, 2016 | Comments Off on Yet Another Ringing Endorsement

Politico: “Palin: It’s not ‘stupid’ to vote for Trump“

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Posted in Elections, General Foolishness, Political Animals

Inequality Coverage

Posted on May 27, 2016 | Comments Off on Inequality Coverage

Iain Murray’s and my new papers on inequality, People, Not Ratios and The Rising Tide, have gotten some good coverage.

Kudos to CEI’s communications team for all their hard work. More to come.

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Posted in Inequality, Media Appearances

Raise, Don’t Level: New CEI Papers on Inequality and Poverty Relief

Posted on May 25, 2016 | Comments Off on Raise, Don’t Level: New CEI Papers on Inequality and Poverty Relief

Economic inequality is one of today’s defining issues. How to address it? Iain Murray and I offer an unconventional approach in a new two-part CEI study, released today. The first part frames the issue. The title sums it up well enough: People, Not Ratios: Why the Debate over Income Inequality Asks the Wrong Questions. The second part,The Rising Tide: Answering the Right Questions in the Inequality Debate, outlines a concrete policy agenda to make the poor better off.

Anti-poverty activists routinely fret about the ratio between a CEO’s salary and her lowest-paid employee’s, or how the top one percent’s ratio of national income compares to the bottom one percent’s. Instead of mathematical ratios, we encourage activists to focus on human beings. Again, we plead: focus on people, not ratios.

Ratio-obsessed activists from Thomas Piketty to Naomi Klein ignore some obvious questions due to their monomania:

  • How are the poor actually doing?
  • Is their economic situation improving over time?
  • What policies can make the global poor better off over time?

We seek to fill these disappointing gaps. According to nearly all available data, poor people are better off than ever before in human history—keep at it, then! There is still lots to do, but ignoring the accomplishments people have already made, and what can make more accomplishments possible, only hurts the poor.

Over the course of the 20th century, infant mortality went down by more than 90 percent—just think of how many parents’ broken hearts have stayed whole thanks to modern technology and sanitary practices.

Life expectancy improved by 30 years during the 20th century. And that’s not the only type of length modernity has improved: from 1900 to 1950, the average American became three inches taller, thanks to better nutrition, food security, and health care. The process has only continued since then.

Even if it was only the top one percent that enjoyed zero infant mortality, lived a hundred years, and were all seven feet tall, their best efforts could not bias society-wide statistics nearly that much, despite their most conspiratorial plutocratic efforts. This is what mass prosperity looks like.

According to the Swedish economist Max Roser, since 1960 the number of people living in absolute poverty has declined from nearly two billion to about 700 million—a two-thirds decline. And this happened as total world population more than doubled! This is good news. Today’s most important task is to keep this great enrichment going, and to eliminate absolute poverty altogether.

The poor will never have as much as the rich—every curve has a bottom and a top ten percent, and always will. No changing that. But only the hardest heads deny that most poor people today live better lives than their parents or grandparents did—and that future generations can expect this wonderful trajectory to continue, if they’re allowed to.

This is both a reason to celebrate, and a reason to double down. Now that we haveasked the right questions about inequality, the second part of our study, The Rising Tide, seeks to answer them: what policies can continue to make the world’s poor better off?

There are a lot of answers. We don’t pretend to have all of them, but we offer a few. One is an honest price system: runaway-inflation countries such as Zimbabwe and Venezuela are universally poor. Keeping inflation in check and making sure prices convey honest information will help consumers and entrepreneurs make wise decisions that create value for people.

Affordable energy is another answer, allowing everything from clean home heating (natural gas is somewhat cleaner than dung and logs, especially indoors) to more and better transportation choices, which expands employment options.

Any aspiring entrepreneur needs access to capital—Dodd-Frank-style financial regulations openly insult every person trying to escape poverty. So do many governments’ resistance to granting formal property rights to their people.

Another answer—there really are a lot of them, and no single panacea—is occupational licensing reform. There is no legitimate reason for an interior decorator or a hair-braider to undergo hundreds of hours of training in something they already know how to do, in order to do for pay something they can do for free. Nearly a third of American workers require government permission to begin their day’s work. That is ethically wrong, and should be immediately reformed.

Inequality is a complicated issue. Properly addressing it requires both asking and answering the right questions. Ask how real-world people are doing, not abstract income ratios. And ask about policies that can help people escape poverty. The answers are numerous, and Iain’s and my papers do not pretend to have all of them.

But, we humbly submit, a general ethos of not stamping down on impoverished hands would be a good start. It would also be quite a change from current policy in the U.S. and many other countries.

For more, see our papers, People, Not Ratios: Why the Debate over Income Inequality Asks the Wrong Questions, and The Rising Tide: Answering the Right Questions in the Inequality Debate.

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Posted in Development Economics, Economics, Inequality, Monetary Theory, Price and Wage Controls, Publications