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CEI Planet - November-December 2011

CEI Planet - November-December 2011

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Published by: Competitive Enterprise Institute on Jan 10, 2012
Copyright:Attribution Non-commercial


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In Memoriam: William Niskanen,
by Fred L. Smith, Jr. . . . . . . . . . . . . . . . . . .2
 My Job Creation Proposal,
by Ryan Young. . . . . . . . . . . . . . . . . . . . . .9The Good, the Bad, and the Ugly . . . . . .10Media Mentions . . . . . . . . . . . . . . . . . . .11End Notes . . . . . . . . . . . . . . . . . . . . . . . .12
>>page 7 
>page 6
>>page 6 
epublicans were in an“Internet uproar” in early November over a false reportthat Environmental ProtectionAgency (EPA) Administrator Lisa Jackson had called them“jack-bootedthugs.”Meanwhile, deeply troublingstatements that EPA of 
cials didmake have hardly stirred a ripplein the blogosphere.At a recent hearing beforea House oversight panel, threeObama administration witnesses—  National Highway Traf 
c SafetyAdministration (NHTSA)Administrator David Strickland,EPA Assistant Air Administrator Gina McCarthy, and EPATransportation and Air QualityDirector Margo Oge— denied under oaththat motor vehiclegreenhouse gasemission standardsare “related to” fueleconomy standards. Inso doing, they denied plain facts they mustknow to be true.House GovernmentOversight and Reform ChairmanDarrell Issa (R-Calif.) put it lessdiplomatically: “Your statementsunder oath misrepresentedthe relationship betweenregulating greenhouse gasesand regulating fuel economy.”By “obstinately insisting” thatregulating greenhouse gasesand fuel economy are “separateand unrelated endeavors,” theof 
cials “impede the Committee’simportant oversight work.”Why did they “misrepresent”and “impede”? Had the of 
cialsanswered truthfully, they wouldhave to admit that California’sgreenhouse gas motor vehicleemissions law, AB 1493, whichthe EPA approved in June 2009,violates the Energy PolicyConservation Act’s (EPCA)express preemption of state lawsor regulations “related to” fueleconomy. The of 
cials wouldalso have to admit that EPAis effectively regulating fueleconomy, a function outside thescope of its statutory authority.
(continued on page 3)
Why Obama Of 
cials Lied to Congress about Fuel Economy Standards 
>>page 3
>>page 3 
Fred L. Smith, Jr.
Marc Scribner
Editorial Director 
Ivan Osorio
Contributing Editor 
Nicole Ciandella
The CEI Planetis produced by the CompetitiveEnterprise Institute,a pro-market publicinterest groupdedicated to freeenterprise andlimited government.CEI is a non-partisan, non-profit organizationincorporated inthe District of Columbia and isclassified by theIRS as a 501 (c)(3)charity. CEI reliesupon contributionsfrom foundations,corporations andindividuals for itssupport. Articlesmay be reprintedprovided they areattributed to CEI.Phone:(202) 331-1010Fax:(202) 331-0640E-mail:info@cei.org
ISSN#: 1086-3036
ill Niskanen was anindividual who will bemissed sorely in a worldwhere intellectuals of integrityare a rare breed. But he willalso be missed as a smiling face in the often grim worldof Washington. We at CEI join many others in wishinghis wife Kathy and his family our condolences andthoughts.I came to know Bill many years ago, when I waslearning the Washington game at the Council for aCompetitive Economy (CCE), which sought to bringtogether free market business leaders and pro-market public policy scholars. Then, as now, I thought itcritical for liberty-minded intellectuals to reach outto business leaders in our 
ght for economic liberty.After all, how can we defendcapitalism, if we cannot enlistcapitalists in that effort?Bill as a fellow intellectualwho had worked in business— most notably as Senior Economist at Ford—hadexperienced the tensions between the tactical expedienciesthat often dominate businessdecisions and the core principlescritical for sustainable pro
tability. His insights andadvice on reconciling thesetensions were invaluable.Bill, then a member of President Reagan’s Councilof Economic Advisers,spoke at several CCEevents and I came to knowand like him. He broughta combination of insightsinto business, government,and economics that wasunusual among prominenteconomists and gave himthe ability to analyze a broad array of issues.I founded the Competitive Enterprise Institute(CEI) after CCE closed down. As a tiny start-up, weneeded third party legitimacy. I formed an advisorygroup of in
uential individuals who were willing tovouch that CEI’s business model was viable and itsaims achievable. Bill accepted and became one of CEI’s early advisers. He was rather more respectful of economic orthodoxy than I, but amused and possiblyimpressed by my enthusiasm.Bill was always helpful whenever I sought toexplore new areas of policy and to venture amongacademics. He and Chris Culp encouraged me tocontribute a chapter, “Cowboys versus Cattle Thieves,”in their book,
Corporate Aftershock: The Public Policy Lessons from the Collapse of Enron and other Major Corporations
, which I think it is one of my best. Itwould not have happened without his push.In social situations, Bill was always friendly anda bit bemused by the bustle of the business-sociallife inside the Beltway. Fran and I would often meetBill and Kathy at the growing number of right-of-center soirees that have come to brighten the statist atmosphere of Washington.Bill’s major role in thefree market movement was asChairman of the Cato Institutefrom 1985 to 2008. Bill andCato President Ed Crane madefor an interesting and creativeleadership team. Ed is one of the most forceful and principledindividuals I’ve known. Billwas equally principled, but putgreater priority in exploring newfrontiers of economic theory.Together, they made for a formidable team in putting ideas into action.His legacy at Cato extendsfrom the theoretical tothe practical. Soundscholarship that forms theunderpinnings of creativeapproaches to solvingthe problems that ever-expanding governmentcreates.A mark of Bill’s in
uence is the fact that his ideaslive on, not just at Cato, but among all those who areworking to maximize individual freedom in Americaand around the world. He will be greatly missed—for his accomplishments but most of all, for himself. It isan honor to have known and worked with him.
In Memoriam: William Niskanen
By Fred L. Smith, Jr.
 A mark o Bill’s infuence is the act that his ideas live on, not  just at Cato, but among all thosewho are working to maximizeindividual reedom in Americaand around the world.
Government Bureaucrats Cannot
Government Bureaucrats Cannot
Prevent Data Breaches
Prevent Data Breaches
ony’s popular PlayStation Network suffered a massive data breach earlier this year, exposing 100 million users’ creditcard numbers, home addresses, and more. Numerous other 
rms, including MorganStanley and marketing
rm Epsilon, alsohave suffered major breaches in recentmonths. With this epidemic of data breaches making headline after headline, itwas only a matter of time before Congressgot involved. But more governmentintervention will only make things worse.Data breaches can occur for any number of reasons—from the carelessness of employees, to the use of an exploit on aserver, to a complex orchestrated intrusionof a system. This is similar to your house being burgled. It could be because youleft the front door wide open, or a windowunlocked, or sophisticated burglars scopedout your place and struck, despite lockeddoors and an alarm system.Many businesses need to do more tosafeguard users’ personal information. Butthe federal government is not properlyequipped to dictate how companies mustsafeguard customer data. America’sunrivaled information security industryis creatively responding to data breachconcerns with new technologies that promisesmarter, more effective approaches tocombating data breaches. Congress cannoteven ensure federal agencies secure their data, as illustrated by the recent WikiLeakssnafu and the Con
cker worm, which hasaf 
icted millions of government computers.These lessons have fallen on deaf ears on Capitol Hill. In October, a trioof Senate bills targeting data breaches passed out of committee. The mostcomprehensive of these, sponsored bySen. Patrick Leahy (D-Vt.), would enjointhe Federal Trade Commission to regulatethe security practices of businesses thatcollect personal data. The legislation wouldalso require companies to promptly notifycustomers whenever breaches occur. Theother two bills contain similar provisions,although they differ in their treatment of federal agencies and breach noti
cationrequirements.Lawmakers’ current approach to data breaches wrongly treats companies asculprits, not the victims they are. KevinMandia, founder of the informationsecurity company Mandiant, recently toldthe House Intelligence Committee that data breaches are not necessarily indicative of a company’s security standards. Attackersonly need to
nd a single vulnerability, but defenders have to carefully guardtheir entire systems at all times. Thus, breaches are a real risk even for companieswith superlative security practices. By penalizing
rms that take data securityseriously, we risk encouraging businessesto focus more on keeping regulators at baythan on genuine security improvements.As AT&T cybersecurity chief EdwardAmoroso argues, the essence of robustsecurity lies not in standardization,
rewallsor antivirus programs, but in fosteringa diversity of systems and methods. If federal bureaucrats ordain a
nite universeof acceptable security practices, bad guys bene
t from a more predictable set of  platforms and technologies on which tofocus their attacks.The evolution of data security andthe responsible stewardship of personalinformation should be driven by consumer demand, not by bureaucratic whim.Companies that fail to protect against data breaches will suffer as consumers seek  better security with their competitors.Sony, for instance, took a huge reputationalhit for mishandling the massive breach itsuffered earlier this year, which also wipedout billions of dollars in shareholder value.This result is hardly surprising—consumersvalue the integrity of their data and willvote with their wallets against companiesthat make mistakes.America’s information security sector has grown by leaps and bounds in recentyears. From start-ups to industry giants,myriad companies continue to roll out awide variety of services to help companiessecure sensitive data. Security
rms likeWebsense, Fortinet and SourceFire areofferingdatabase-hardening services and vulnerabilityassessments. Other nascent
rms, suchas Co3 Systems, specialize in helpingcompanies handle the aftermath of a breach.Data breach insurance is also gainingtraction as companies strive to manage data breach risks and safeguard their networks.As data security concerns mount, insurerswill increasingly work with companiesto meet data security challenges, just asinsurers already help businesses improveworkplace safety practices to minimizecostly employee injuries. The HartfordGroup, for instance, now includes data breach coverage in its Spectrum BusinessOwners Policy package, which is designedfor small
rms.The security threats consumersand businesses face are real, but moregovernment red tape and mandates are notthe solution. A dynamic threat requires adynamic response, which is what marketsdo best. Government-mandated rulescould smother this vibrant and growing private market for security and insurance.Congress should stay its heavy hand ondata security.
 Ryan Radia
is Associate Director of the Center for Technologyand Innovation at CEI. Luke Pelican is a former Policy Fellow at CEI. A versionof this article originally appeared in The Daily Caller.

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