CEI Podcast for November 1, 2012: Is Google’s Search Dominance Permanent?

Posted on November 1, 2012 | Comments Off on CEI Podcast for November 1, 2012: Is Google’s Search Dominance Permanent?


Have a listen here.

Associate Director of Technology Studies Ryan Radia argues that Google’s current dominance as an Internet search engine service is a fragile thing. Creative destruction is everywhere, and its onset cannot be predicted. As soon as something better comes out, consumers will flock to it in droves. Calls for antitrust enforcement should not be answered.

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Posted in Antitrust, CEI Podcast, Competition, Technology

Hurricane Sandy Begins

Posted on October 29, 2012 | 1 comment

This image might be faked. Not sure at this point.

The Eastern seaboard’s economy is being stimulated by Hurricane Sandy right now. Just thought I’d post a quick note to let everyone know that all is well so far at the DC-area Inertia Wins HQ. The schools, government, and subway are all shut down, and probably will be through tomorrow.

Mrs. Inertia and I are hunkering down and staying safe. We encourage East Coast readers to do the same.

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Posted in Housekeeping

CEI’s Battered Business Bureau: The Week in Regulation

Posted on October 29, 2012 | Comments Off on CEI’s Battered Business Bureau: The Week in Regulation

This week in the world of regulation:

  • Last week, 77 new final rules were published, up from 71 the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 11 minutes — 24 hours a day, 7 days a week.
  • All in all, 3,135 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2012 will be 3,825 new rules.
  • Last week, 1,043 new pages were added to the 2012 Federal Register, for a total of 64,313 pages.
  • At its current pace, the 2012 Federal Register will run 78,553 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. The 41 such rules published so far in 2012 have compliance costs of at least $23.9 billion. Two of the rules do not have cost estimates, and a third cost estimate does not give a total annual cost. We assume that rules lacking this basic transparency measure cost the bare minimum of $100 million per year. The true cost is almost certainly higher.
  • No economically significant rules were published last week.
  • So far, 304 final rules that meet the broader definition of “significant” have been published in 2012.
  • So far this year, 588 final rules affect small business; 85 of them are significant rules.

Highlights from final rules published last week:

For more data, go to TenThousandCommandments.com.

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Posted in regulation

CEI Podcast for October 25, 2012: The Changing Climate Debate

Posted on October 25, 2012 | Comments Off on CEI Podcast for October 25, 2012: The Changing Climate Debate


Have a listen here.

Director of Energy and Global Warming Policy Myron Ebell discusses his recent PBS Frontline appearance, and how the debate over global warming has shifted in the last few years. The issue has all but fallen off the radar as economic difficulties have supplanted environmental concerns in the public mind.

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Posted in CEI Podcast, The New Religion

Regulation in Theory vs. Practice

Posted on October 23, 2012 | Comments Off on Regulation in Theory vs. Practice

Regulation is traditionally justified in three ways. One is the presence of externalities, such as a factory that pollutes a stream and affects its neighbors. Another is information asymmetry; think of a used car dealer who knows more about his wares than his customers do. Third is monopoly, where a firm can jack up its prices and lower its output without fear of competitors swooping in.

That’s the theory, anyway. Robert Litan and William Nordhaus know that the reality is very different. On page 34 or their 1983 classic Reforming Federal Regulation, they write:

In theory, regulation should arise as a response to market failures. In practice, regulation is more accurately characterized as a government tool for redistributing society’s resources toward those groups that have successfully enlisted the support of the government on their behalf.

Indeed. This public choice-influenced view is a far more useful tool than the traditional theory if the goal is to understand how regulators and regulated actually behave.

For example, the 50 biggest-spending lobbying groups spent $176 million on lobbying from July through September this year. If agencies weren’t cranking out 3,800 new rules per year, and if the Code of Federal Regulations wasn’t 169,000 pages long, it is unlikely that so much money would flow into Washington.

Externalities, asymmetric information, and monopolies are useful concepts for understanding how regulators perhaps should behave. But the important thing is how they do behave.

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Posted in regulation

Revisiting My 2008 Predictions

Posted on October 22, 2012 | Comments Off on Revisiting My 2008 Predictions

Shortly after the 2008 election, I made some predictions about how Obama’s presidency would turn out (original post here). Now that the 2012 election is upon us, let’s see how I did:

–Obama will be a two-term president, though he will be significantly less popular by the time his presidency comes to a close. Stars that burn so bright tend to fade quickly. It will not help Obama that many of the problems with politics-as-usual that he speaks out against are systemic. Even the leader of the free world is powerless against the political process.

Verdict: we’ll know about the second term in about two weeks. But he is already much less popular than he was four years ago. People expect the impossible from their presidents. That means the only way to win election is to promise the impossible. When those impossible promises obviously aren’t kept once in office, people are disappointed. It’s a common pattern that will repeat itself in future administrations.

–One-party rule will not be good for Democrats. As happened with Republicans during the Bush era, unified government will lead to sclerosis, hubris, and an increase in corruption. Obama will not help; he will not risk angering his party by vetoing bad legislation. Democrats will lose their Congressional majority, probably in 2012. Voters seem to prefer divided government, which is why we’ve had it about two thirds of the time over the last century.

Verdict: I got the year wrong, but the House did indeed change hands in 2010.

-We will not see a full-fledged nationalization of health care. The government currently spends about 54% of all health care dollars; I expect that figure to rise, but not above about 67%.

Verdict: There was a big health care bill, and it did not nationalize the health care system. It will be a few more years before it’s fully implemented, but my cost estimate still seems to be in the right ballpark. Too soon to tell.

–Obama will withdraw most soldiers from Iraq sometime in 2011. Some small peacekeeping forces will remain there more or less permanently, as happened with Korea.

Verdict: Got it about right, though there is still sadly little peace to be had in Iraq.

-Obama will ramp up our presence in Afghanistan, and it will not go well. This will contribute to his declining popularity. The U.S. military can fight and win almost any battle, but even they cannot build a nation. That kind of change can only come from within. Like Clinton and both Bushes, Obama will not learn that lesson.

Verdict: Correct, as far as Afghanistan goes. But I did not foresee see Libya, Syria, Somalia, or the Pakistan drone strikes. I thought his foreign policy would be roughly the same as Bush’s. It turned out to be even worse.

-Taxes and spending will both go up, but not by catastrophic levels. Overall public sector growth will be slightly less than under Bush. That means Obama’s final budget will probably be the nation’s first to to exceed $5 trillion. When divided government returns, Obama will find his veto pen and strike down bad GOP legislation, no matter how similar it is to Democratic legislation. Government growth in Obama’s second term will be sharply lower than under his first term.

Verdict: The good news is that after a huge increase early in the administration due to the stimulus and the TARP bailouts, spending growth slowed. The bad news is that spending appears to be permanently stuck at the new, elevated level. This is not sustainable. Even so, Obama, Romney and Congress all appear disinterested in cutting spending to affordable levels.

Overall, I whiffed on a few predictions, but my batting average still looks pretty good. Just goes to show that, at least with politics, rampant pessimism can be a useful predictive tool.

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Posted in Elections, Political Animals, Predicting the Future

CEI’s Battered Business Bureau: The Week in Regulation

Posted on October 22, 2012 | Comments Off on CEI’s Battered Business Bureau: The Week in Regulation


This week in the world of regulation:

  • Last week, 71 new final rules were published, up from 38 the previous, holiday-shortened week.
  • That’s the equivalent of a new regulation every 2 hours and 22 minutes — 24 hours a day, 7 days a week.
  • All in all, 3,058 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2012 will be 3,820 new rules.
  • Last week, 1,991 new pages were added to the 2012 Federal Register, for a total of 64,313 pages.
  • At its current pace, the 2012 Federal Register will run 79,204 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. The 41 such rules published so far in 2012 have compliance costs of at least $23.9 billion. Two of the rules do not have cost estimates, and a third cost estimate does not give a total annual cost. We assume that rules lacking this basic transparency measure cost the bare minimum of $100 million per year. The true cost is almost certainly higher.
  • One economically significant rule was published last week.
  • So far, 301 final rules that meet the broader definition of “significant” have been published in 2012.
  • So far this year, 575 final rules affect small business; 84 of them are significant rules.

Highlights from final rules published last week:

  • This week’s economically significant rule is a big one. Strict new CAFE standards, which are minimum gas mileage requirements for car manufacturers’ product lines, were published on Monday. They come into effect starting with the 2017 model year. The EPA estimates annual costs to be $6.49 billion. A minor technical correction was also issued on Friday.
  • Oenophiles may be familiar with Washington state’s Columbia Valley winemaking area. The Alcohol and Tobacco Tax and Trade Bureau has established a new Ancient Lakes of Columbia Valley region inside the larger Columbia Valley area.
  • A new FAA rules allows passengers to bring approved portable oxygen concentrators on board airplanes.
  • If you want to become a certified seafarer, be aware that the Coast Guard has updated the requirements.

For more data, go to TenThousandCommandments.com.

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Posted in regulation

Well Done, Minnesota

Posted on October 20, 2012 | Comments Off on Well Done, Minnesota

Looks like Minnesotans can learn online, after all. A little bad publicity really can go a long way.

(via Katherine Mangu-Ward)

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Posted in Free Speech, regulation

Regulation of the Day 229: Educating Yourself

Posted on October 19, 2012 | Comments Off on Regulation of the Day 229: Educating Yourself


We live in a golden age of information. These days, anybody who wants to can get a college-level education without ever setting foot on a college campus. An outfit called the Teaching Company doesn’t confer degrees, but it does sell undergraduate-level lecture courses in history, philosophy, literature, the arts, the sciences, and more.

Of course, they charge money. Other outfits don’t. Coursera is a new company that has already attracted nearly 1.7 million customers. You can take online courses for free in almost any subject from medicine to economics to electrical engineering. The lectures are taped at top universities such as Columbia, Vanderbilt, Stanford, and more. You can even take an introductory class in guitar from the Berklee College of Music. Now you don’t need to rack up intimidating levels of debt to learn from the best professors at the world’s best universities.

Minnesota’s Solons would prefer that their state’s residents miss out on this golden age. State law bans unauthorized college courses from the state. Of course, this can’t really be done in the Internet age. Coursera should have pointed out how absurd this law is. Protecting people from free and abundant knowledge is not exactly doing them a service. There’s no force or fraud here, and Coursera does not even confer degrees. Despite all this, Coursera decided to take the appeasement route by posting the following notice:

Coursera has been informed by the Minnesota Office of Higher Education that under Minnesota Statutes (136A.61 to 136A.71), a university cannot offer online courses to Minnesota residents unless the university has received authorization from the State of Minnesota to do so. If you are a resident of Minnesota, you agree that either (1) you will not take courses on Coursera, or (2) for each class that you take, the majority of work you do for the class will be done from outside the State of Minnesota.

Fortunately, not everyone is a regulatory Neville Chamberlain. George Mason University’s Alex Tabarrok, along with his colleague Tyler Cowen, have just started up their own online university, MRUniversity. The name comes from their blog, Marginal Revolution (though I do sometimes pronounce it “Mr. University” in my head). Tabarrok, channeling his inner Churchill, posted this:

Tyler and I wish to be perfectly clear: unlike Coursera, we will not shut down MRU to the residents of Minnesota. We are prepared to defend our rights under the First Amendment to teach the good people of Minnesota all about the Solow Model, water policy in Africa, and the economics of garlic–even if we have to do so from a Minnesota jail!

Should it come to that, it would take mere seconds to decide the court case on the merits. Maybe the Institute for Justice, with its long track record of free speech litigation, can weigh in. With all the bad publicity this story is getting, maybe the mere threat of a lawsuit would cause Minnesota’s resident Savonarolas to back down.

At the risk of making this post illegal to read in Minnesota, I close by encouraging readers interested in free speech to read John Milton’s essay “Areopagitica.” It is one of the most stirring, passionate and eloquent defenses of free expression ever put to paper. The full text is even online for free, courtesy of Dartmouth University.

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Posted in Free Speech, regulation, Regulation of the Day

A Rational View of the Presidency

Posted on October 18, 2012 | 2 comments

Back in 2008, Gene Healy wrote a book called Cult of the Presidency. It was an election year, so naturally many people thought it was an anti-Bush polemic. But it wasn’t about Bush. It wasn’t about any president, really. It was about how people view the presidency itself.

Gene’s thesis is that people have unrealistically high expectations for the office. Expectations so high that no man can meet them. But in trying to meet them, that man will grab for more and more power. As he inevitably fails to make voters’ hopes and dreams come true, he will decline in popularity until a fresher face takes his place. And that fresher face will grab for still more power, and disappoint even more people. It’s a remarkably vicious cycle.

When Gene wrote the book, he had no idea Barack Obama would win the Democratic nomination. But win it Obama did, in large part by tapping into voters’ unrealistic expectations for what the office can accomplish. Now that four years have gone by, he has institutionalized and expanded Bush-era abuses of power. He is also decidedly less popular than he used to be (though this writer still expects him to win a second term).

Obama’s Republican opponents have suffered from a tiresome Obama Derangement Syndrome from the very beginning. But even Obama’s supporters have lost much of their enthusiasm. He didn’t keep all those grand promises he made. More to the point: he couldn’t possibly keep them.

It’s not in Gene’s nature to say “I told you so.” But he does have a new e-book that came out today that updates Cult of the Presidency. His thesis has only become more compelling now that enough time has come by for it to be tested. I’ve only just begun reading the book, but a passage from the introduction makes it clear just how prescient he was in 2008, well before he even knew who the candidates would be:

If the Obama presidency has driven Americans mad, perhaps that’s because we’ve embraced a demented notion of the presidency itself.

It’s childish to blame this state of affairs on the powerlust of individual presidents or the fecklessness of particular Congresses. Presidents reliably lust for power; Congress is dependably feckless. But the Pogo Principle is the soundest explanation for what the presidency has become: We the People have met the enemy, and it is us. We built this…

[O]ver the course of the 20th century, the modern president had become “our guardian angel, our shield against harm . . . . He’s America’s shrink and social worker and our national talk-show host. He’s a guide for the perplexed, a friend to the downtrodden–and he’s also the Supreme Warlord of the Earth.”

I’ll it say for him: he told you so. You can buy the book for less than four dollars here.

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Posted in Books, Elections, Executive Power, Political Animals