COMPETITIVE ENTERPRISE INSTITUTE VOL. 28, NO.

3 | FALL 2015

FEATURED ARTICLES

Whisky: A Living Testament to
the Human Spirit
4 BY LAWSON BADER

IAIN MURRAY
World’s Poor:
“We Want Capitalism”
S partan mothers reputedly would tell
their sons as they went off to war:
“Come home with your shield, or on it!”
I did not impart such encouraging words
to my son when he journeyed across the
Pond, but I did admonish: “Come home
with a bottle of whisky, or not at all.”
Two years ago, he and a high school

7 pal spent a week and a half traversing
Scotland. They went for the usual reasons:
FRED L. SMITH, JR.
family history, collegial adventures, and
spreading their wings of independence.
Experimenting in the Having frequented the “auld country”
Laboratory of Economics many times, I was able to offer suggestions
to their itinerary. But I insisted they take a
distillery tour. Where else but Scotland can
one learn the distillation process and expe-
rience the unique varieties that are single

12 malts? If they followed my advice, I’d feel
I’d done my job—and get that bottle of
whisky to boot.
that right—whisky once was a commonly
accepted currency. In fact, America’s own
Whiskey Rebellion may have been pre-
ANGELA LOGOMASINI As you’ve probably guessed, I have a vented had the government allowed citi-
Save the Bees: love for all things “uisge beatha.” I believe zens to pay their distillery taxes in whisky.
whisky is a living testament to the human The story of whisky is a story of tradi-
Eliminate Biofuel Mandates
spirit, embodied in enterprise and ingenu- tion. The essential distilling process has
ity. It symbolizes the spontaneous order of gone largely unchanged over centuries.
free markets and the unplanned innova- I’ve seen it up close throughout Speyside
ALSO IN THIS ISSUE tions they yield. Its story is one of happy and Islay and other Scottish regions, and
accidents, unforeseen circumstances, and of course along the Kentucky Bourbon Trail.
CEI Events Recap. . . . . . . . . . . . . . . . . . . . . 6 twists of fate that created a spirit made It is also a story of globalization and
perfect by its very imperfections. exchange. Distilling technology has trav-
The Real Problem with the TSA Can’t Be
Fixed with Yelp Reviews These flaws tell a story. Whisky once eled as peoples have migrated and settled
by Marc Scribner, Harper Jean Tobin, sanitized drinking water and offered a in new places. At times, government inter-
and John Whitehead. . . . . . . . . . . . . . . . . . 8 means to utilize available raw resources vention forced distilleries out of one region,
in an environment of extreme scarcity. only for them to spring up elsewhere to
The Good, the Bad, and the Ugly. . . . . . 14
Farmers preserved their excess crop yields meet demand. James Anderson, driven
Media Mentions. . . . . . . . . . . . . . . . . . . . 15 by distilling it into whisky and used the from England by Parliament’s Scottish
End Notes . . . . . . . . . . . . . . . . . . . . . . . . . 16 product as a unit of exchange. You read (continued on page 3)
Retro in Equestrium*
by Sam Kazman

T he Supreme Court’s ruling in our Obamacare
case is a few months old, but we’re still work-
ing our way through Elisabeth Kubler-Ross’s famed
Four years ago an appellate court ordered the TSA
to engage in a formal rulemaking on that policy,
rather than simply pull the policy out of thin air. The
Seven Stages of Grief. Those of you who are unfa- agency started its rulemaking process two years later
miliar with them should consider yourselves blessed, (no speed demon there), but still hasn’t finished it.
but in any case here they are: disbelief, anger, Meanwhile, there’s mounting evidence that the scan-
anger, anger, depression, anger, and, finally, anger. ners are woefully ineffective and incredibly expen-
FROM THE GENERAL COUNSEL

We’re currently in the anger phase, though it’s not sive. Joining us in our lawsuit are the National Center
clear precisely which one. But we probably would for Transgender Equality and the Rutherford Institute.
have been stuck somewhat longer in the depression If the TSA were half as transparent about the basis
stage were it not for a new ruling in our constitutional for its decision-making as passengers are when they
challenge to Dodd-Frank. pass through its scanners, we’d be a lot better off.
We filed this case back in 2012, on behalf Speaking of transparency, when it comes to
of ourselves, the 60 Plus Association, and, most secret emails there’s no reason to let Hillary Clinton
importantly, the State National Bank of Big Spring, hog the limelight. John Holdren, the chief White
Texas. The bank may be small, but it is one incred- House Science advisor and star of the hit movie, The
ibly courageous institution. We challenged the Polar Vortex Explained in 2 Minutes, has his own
structure of three major Dodd-Frank institutions—the personal email account. Our Freedom of Information
Consumer Financial Protection Bureau, the Financial Act request for work-related documents in that
Stability Oversight Council, and the Orderly account was turned down flat by the White House
Liquidation Authority—each of them with incredibly Office of Science and Technology Policy—which
broad powers over the economy, and each of them Holdren heads; no coincidence there, I’m sure. Our
miraculously free of the checks and balances under appeal is supported by the Reporters Committee for
which government entities generally operate. Freedom of the Press and 26 media organizations.
Our lawsuit was soon joined by 11 states, and Now if only there were body scanners for personal
then had the rug pulled out from under it when a email accounts—body scanners that worked, that is.
federal district court ruled that none of us had stand- By the way, as of October 1, Ted Frank and his
ing. Happily, on July 24 a major part of that ruling Center for Class Action Fairness have joined CEI. The
was reversed by the Court of Appeals, which held Center focuses on objecting, in court, to settlements
that we did indeed have standing to go after the in class action and shareholder suits where class
CFPB, as well as the recess appointment of its direc- members get little or nothing, while their attorneys
tor, Richard Cordray (and while the appellate court get ridiculously huge attorney fees. The Center’s track
affirmed the states’ lack of standing to challenge the record is awesome, and its success may well change
Liquidation Authority, it noted that this could change the dynamics behind the filing of these abusive
in the future once that authority started being used). cases. More on this to come.
On other fronts, in mid-July we filed a manda-
mus petition challenging the Transportation Security *Back in the saddle
Administration’s (TSA) policy on body scanners.

Publisher The CEI Planet is produced by the Competitive Enterprise
Lawson Bader Institute, a pro-market public interest group dedicated to
Editor free enterprise and limited government.
Marc Scribner
CEI is a non-partisan, non-profit organization incorporated in the
Editorial Director District of Columbia and is classified by the IRS as a 501 (c)(3)
Ph (202) 331-1010
Ivan G. Osorio charity. CEI relies upon contributions from foundations, corporations
Fax (202) 331-0640
info@cei.org Contributing Editor and individuals for its support. Articles may be reprinted provided
Keara Vickers they are attributed to CEI.
ISSN#: 1086-3036

2 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE
Whisky, continued
Whisky ban, immigrated to America, where
he assisted George Washington in creating
the renowned—and recently revived—Mount
Vernon Distillery. FROM THE CHAIRMAN
It is a story of entrepreneurs. Whisky
production celebrates the spirit of the indi- OF THE BOARD
vidual, as it has for centuries. Distillers rely on
their wits and on resources in their particular
environment to create distinct products, often
through mishaps and accidentally discovered
techniques. Consider the once-unavoidable
delay of slow shipping. It taught distillers the
Best wishes to departing
benefits of aging, as consumers began to
demand whisky that had sat in storage for an
Lawson Bader
extended period of time.
Similarly, distillers began charring the Friends of CEI,
inside of reused barrels to eliminate the fish As the chairman of the Competitive Enterprise Institute’s
flavor from them. That accidentally imparted Board of Directors, I’m writing to announce that CEI President
the smoky taste now expected in a good glass Lawson Bader will be departing CEI in November 2015 to join
of bourbon. Today, spirits are commonly aged the donor-advised fund, DonorsTrust, as president and CEO.
in barrels that previously held other products We at CEI are grateful for Lawson’s excellent leadership,
in order to impart a certain characteristic or steadfast commitment to free-market principles, and for the
flavor. Barrels are reused and exchanged in a many accomplishments he helped us achieve during his three
complex network connecting whisky produc- years at the helm. He and his renowned collection of whisky will
ers with winemakers and other varieties of be missed.
spirit maker.
In that spirit, I offer a special toast to the The board is also pleased to announce that Greg Conko
First Lady of Laphroaig, Bessie Williamson, will become acting CEI president at the end of Lawson’s tenure.
owner and operator of the distillery during Greg has been CEI’s executive director for the past three years
the Second World War. After the war, she and helped manage a successful transition when Lawson
introduced peaty single malts into a market joined CEI as president. The board will work closely with Greg
then dominated by blended whiskies. Bessie’s to manage this transition as CEI grows and expands its advo-
spirit lives on today. Recently, Marianne cacy and litigation efforts. CEI’s senior management team will
Barnes became the first female Master Distiller continue to lead the charge against regulatory overreach and
in Kentucky since Prohibition, a fitting tribute government abuse, and fight harder than ever to reduce govern-
that not only smashes our Don Draperesque ment barriers to economic liberty. 
stereotype of whisky drinkers, but epitomizes Thank you all for your support. We have every confidence
the global revolution in distilled spirits. that CEI will be in good hands while the board works to identify
The story of whisky is a story worth telling. the next president of CEI.
My son sent me a text from Edinburgh
Please join me in wishing Lawson well and welcoming Greg
shortly after he arrived. It read, “Islay peati-
in his new leadership role during this transition.
ness too much; like vanilla notes in high-
land malts.” While my parenting will not Sincerely,
be complete until he does appreciate those
Islay gems, he is clearly on the path to Todd J. Zywicki
enlightenment. Chairman of the Board,
And, yes, he brought me home a bottle. Competitive Enterprise Institute 

Lawson Bader (lawson.bader@cei.org)
is President of CEI. A version of this article
originally appeared on FoxNews.com.

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 3
World’s Poor: “We Want Capitalism”
There are several ways to ensure
BY IAIN MURRAY access to capital in the develop-
ing world, but the most important

I n the forests of India, something
exciting is going on. Villagers are
regaining property taken from them
approach is to unlock the produc-
tive potential of the capital already
available there.
when the British colonial authorities Land Titling. In many countries,
nationalized their forests. Just as excit- people could possess access to
ing, in urban Kenya and elsewhere, capital by virtue of the real estate
people are doing away with the need they already occupy, but they are
for banks by exchanging and saving unable to prove ownership of the
their money digitally. All over the land due to inadequate land-titling
world, poor people are discovering systems or because of traditional
the blessings of bottom-up capitalism. forms of property ownership where
Sadly, though, developed country everything belongs to the vil-
governments and anti-poverty activists lage chief. As Hernando de Soto
ignore this fact and insist that develop- explained in his book, The Mystery
ing nations need a paternalistic hand of Capital, land-titling reforms sig-
up. Both are missing an opportunity, nificantly benefit the poor, enabling
because there are billions of capitalists such opportunities as access to
in waiting at the bottom of the pyramid. credit, the establishment of systems
The United Nations is set to of identification, the creation of
announce the successors to its systems for credit and insurance
Millennium Development Goals, the information, the provision for housing Grameen Bank Building, Mirpur, Dhaka
global body’s approach to poverty and infrastructure, the issue of shares,
alleviation since the year 2000, to the mortgage of property, and a host There are also exciting opportu-
coincide with a visit by Pope Francis. of other economic activities that drive a nities that could arise for the public
These new goals will be touted as modern market economy. recording and utilization of such capi-
“sustainable.” But don’t expect to De Soto estimates that up to $10 tal through the distributed public-led-
hear much on the way people in the trillion of capital worldwide is locked ger system known as the blockchain,
Western world lifted themselves out of away unused because of inadequate best known for its role in the develop-
poverty: free-market capitalism. titling systems. A recent study by ment of bitcoin. Development of the
The phrase “the fortune at the the Peru-based Institute for Liberal blockchain for property recording
bottom of the pyramid” was coined by Democracy (ILD), which De Soto and titling would significantly reduce
the late C.K. Prahalad, building on the heads, estimated Egyptian workers’ both the transaction costs and the
work of Nobel laureate Amartya Sen. real estate holdings to be worth around widespread corruption associated with
In his groundbreaking 1999 work, $360 billion, “eight times more than all government-controlled titling systems.
Development as Freedom, Sen pointed the foreign direct investment in Egypt Significantly, De Soto’s ILD is promot-
out that one of the most important since Napoleon’s invasion.” ing these initiatives.
aspects of development is freedom of Similarly, many local assets around Microfinance. Recent innova-
opportunity, a vital part of which is the world remain in common owner- tions have enabled the development of
access to capital and credit. Capital ship—in reality, owned by no one. microfinance—access to small amounts
and credit appear nowhere in the draft Initiatives such as India’s privatization of credit for specific purposes. Today,
U.N. goals. of forest resources seek to address microfinance institutions all over the
When capital is sufficiently avail- this problem by enabling the titling of developing world provide small loans,
able, would-be entrepreneurs at the assets by indigenous peoples, who can access to savings, and microinsurance
bottom of the pyramid have demon- then tap into those resources for access to families or small businesses.
strated a willingness to launch new to credit to open up new opportunities. By giving them access to proper
ventures and invest in their futures—that Estimates suggest that similar initiatives investment capital and affordable
is, to embrace free-market capitalism could be extended to 900 million plots financial institutions, microfinance pro-
to the benefit of all concerned. of land across the developing world. viders help small- and medium-sized

4 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE
enterprises in developing countries to consumer-goods giant Unilever’s Vodafone, along with its Kenyan
grow. Often, these businesses are so Indian subsidiary. Unilever responded subsidiary, Safaricom, developed
small that they can neither afford the by introducing similar products, m-pesa, a mobile payment and
interest rates on bank loans nor come thereby growing this new market. In the value storage system to be used on
up with the capital they need on the process, more environmentally friendly its phones. Transactions are capped
their own. When implemented cor- products were invented and sold, too. at about $500, but crucially can be
rectly, microfinance loans empower As Prahalad points out, over 4 person-to-person, acting as digitized
their customers to invest, grow, and be billion people in the world lived on an cash. Introduced in 2007, it had 9
productive, all of which contribute to annual income of $1,500 or less (in million users—40 percent of Kenya’s
diminishing poverty within communities. 2002 dollars), with 1 billion living on population—just two years later. By
One of the most prominent exam- less than a dollar a day. Nevertheless, 2013, 17 million Kenyans were using
ples of microfinance is Nobel Peace based on purchasing power parity, this it, with transactions valued at over
Prize winner Muhammad Yunus’s market represents an economy of $13 $24 billion—over half of Kenya’s GDP.
Grameen Bank, first established in trillion or more, not that far off from the M-pesa has in turn improved access
Bangladesh. Areas where Grameen entire developed world. to capital even more, and technology
Bank offers programs saw unemploy- The developing world is ripe for businesses are thriving all over Kenya
ment rates drop from 31 percent to capitalism. The “unemployed” protes- as a result.
11 percent in their first year, accord- tors of the Arab Spring were, in fact, Kenya is not alone. The phenom-
ing to a RAND Corporation study. small businessmen who were pushed enon is spreading to other African
Occupational mobility improved, with to the breaking point by continu- countries and to some South American
many people moving up from low- ally having their capital and profits countries such as Paraguay.
wage positions to more entrepreneurial expropriated by corrupt government Environment, education, and
ones. There is evidence of increased officials. So, while the Western media health all benefit from wealth creation.
wage rates for local farmers. Women’s portrayed the protests as being mostly Perhaps the real mystery of capitalism is
participation in income-generating about politics and freedom of expres- that neither the United Nations nor the
activities also rose significantly. sion, they were as much—if not more— Pope recognize the benefits it can bring
The Consumers at the Bottom about the freedom to do business. to the world’s poor. Free enterprise and
of the Pyramid. Access to capital Kenya: Mobile Phones and human welfare boom where govern-
and credit enable new markets to Payments. Despite corruption and ments allow new markets with access to
spring up where none existed before. bureaucracy, strong markets have capital and credit. That is all it takes to
Entrepreneurial activity is unleashed. grown up in developing countries. meet the U.N.’s development goals.
Consider one of Prahalad’s case Kenya is a case in point. It leapfrogged
studies of Nirmal, a small Indian firm the Western world’s development
that sold detergent products designed process for mobile communications Iain Murray (iain.murray@cei.org) is Vice
for rural village uses, such as wash- technology. Kenyans went from having President for Strategy at CEI. A version
ing in rivers. The products came in few telephones to virtually everyone of this article originally appeared in The
small packages at low prices suit- having a mobile phone, bypassing Freeman. Within a week of it being pub-
able for Indian villagers’ daily cash the stage of landline infrastructure in lished, it was shared over 2,500 times
flow. The company soon found itself between. A similar process is now on social media.
with a market share equal to that of taking place in personal finance.

In 2013, CEI established the R.M. Freedman Society in

R.M.
honor of and appreciation for Robert M. Freedman, a
business owner who placed CEI in his estate and gave
CEI its first legacy gift. Today, many of CEI’s extended
FREEDMAN family choose to include CEI in their estate plans through:
• Bequests • Charitable Lead Trusts
S O C IET Y • Charitable • Life insurance
Remainder Trusts beneficiary

While these sorts of decisions should be undertaken
Help CEI carry on its with the help of an estate planner, Lauren Avey and Al
work for generations Canata of CEI can be a resource to you. You can reach
them anytime at 202-331-1010.

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 5
Reaching Student Leaders
CEI President Lawson Bader joined Foundation
for Economic Education President Larry Read,
Mises Institute President Jeff Deist, and Fund for
American Studies President Roger Ream for a
discussion on living and leading a libertarian
vision at the Young Americans for Liberty
National Convention in late July in Washington,
D.C. Photo by Gage Skidmore.

On Capitol Hill
CEI Vice President for Policy Wayne Crews
appeared at a Capitol Hill panel event sponsored
by the Mercatus Center in June. Crews, one of the
contributors to the new Fraser Institute collection
of essays, What America’s Decline in Economic
Freedom Means for Entrepreneurship and
Prosperity, joined fellow contributors from George
Mason University and New York University
to discuss the challenges of and strategies for
confronting the modern regulatory state.

International Outreach
CEI Vice President for Strategy Iain
Murray spoke to students at the Institute of
Economic Studies, a European educational
organization dedicated to advancing
free market and classical liberal thought.
IES sponsors Europe’s Summer Seminar
on markets and liberty. Murray joined
academics, analysts, and thought leaders
from across Europe and the United States, at
an IES July conference in Bansko, Bulgaria.

6 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE
Experimenting in the
Laboratory of Economics
chromium, copper, nickel, tin, and
BY FRED L. SMITH, JR. tungsten. Ten years later, the prices of
all these commodities had declined.

N obel Prize-winning economist
Vernon Smith was in Australia
last week to lecture at the Macquarie
Ehrlich paid up—but remains a doom-
sayer to this day. When Julian died,
CEI was moved to honor his work by
Graduate School of Management in creating the prize in his name.
Sydney. In addition to his academic Vernon’s research comparing
obligations, he caused a minor flurry in longstanding economic theory to
the region’s financial press by suggest- real-world experimental outcomes
ing that Australian housing prices were has produced results that Julian Simon
currently in a “bubble,” similar to the would have found encouraging. His
U.S. real estate bubble that saw total pioneering work breaks economics
housing equity fall by over half from out of the “perfect competition” model
2006 to 2009. of the economy—not necessarily
His economic assessments come replacing other methods of inquiry, but
highly recommended. As Robert Harley adding an experimental approach to
of Australia’s Financial Review recently the economist’s tool chest. For exam-
wrote, “Professor Vernon Smith is an ple, how close to efficient outcomes
expert on bubbles. He has studied them will markets be, if one or more of the
in the laboratory, winning the Nobel assumptions of the perfect competition
Prize for Economics in 2002 for his model are dropped?
experimental work.” That work in help- Experimental economics importantly individuals often resolve such situations
ing to create the field of experimental creates a tool for reconciling two of by their own efforts, remediating theo-
economics is the basis for the relation- Adam Smith’s distinct insights. The first retical failures. Its findings demonstrate
ship between him and my organization, is the well-known economic principle how capitalism, by evoking both self-
the Competitive Enterprise Institute. developed in The Wealth of Nations, interest and empathy, finds voluntary
This year, Vernon accepted CEI’s that the complex network of mutually approaches that while not perfect are
Julian L. Simon Memorial Award, advantageous voluntary exchanges— “pretty good” and preferable to politi-
named after the late economist and the market—needs no central planner. cal alternatives.
inveterate optimist. Julian himself had Rather, it evolves as if organized by an Vernon’s work has enriched our
an amazing faith in mankind’s abil- invisible hand. However, in his earlier understanding of how Adam Smith’s
ity to solve problems and advance work, The Theory of Moral Sentiments, two great works explain the creative,
human progress. He was the intellectual Smith developed a distinct but support- wealth-producing achievements of
scourge of the perennial prophets of ing theme. Mankind had also evolved mankind. The two Smiths both under-
societal doom including—not surpris- a sensitivity to the plight of others—the stand well that progress occurs not
ingly—the butterfly ecologist Paul other-regarding value of empathy. because we solve analytic equations,
Ehrlich, author of laughably wrong Experimental economics creates a but rather because mankind finds ways
book, The Population Bomb. tool to explore the relevant significance to advance self-interest in societally
Julian famously challenged Ehrlich of these motivations and to vary the legitimate ways.
to a wager to illustrate their competing institutional framework to better under-
theories on resource depletion and the stand society.
future prosperity of mankind. Ehrlich Doing so enriches our understand- Fred L. Smith, Jr. (fred.smith@cei.org)
would pick any five commodities, and ing of markets, and helps us counter the is the Founder of CEI and director of
Julian bet $10,000 that in 10 years, argument that “market failures” call for CEI’s Center for Advancing Capitalism.
the real price of that bundle would government intervention. Experimental A version of this article originally ap-
decline. Ehrlich accepted and selected economics demonstrates how peared in Forbes.

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 7
The Real Problem with the TSA Can’t
Be Fixed with Yelp Reviews
the Federal Register. Under
BY MARC SCRIBNER, HARPER JEAN the federal Administrative
TOBIN, AND JOHN WHITEHEAD Procedure Act, the TSA is
The TSA failed to detect 96
supposed to take these steps percent of weapons and
W ith the summer travel season
in full swing, nearly 2 million
before it revises its screening
policies. explosives that investigators
Americans every day are being sub- In 2012, the TSA tried tried to smuggle through
jected to airport security that’s invasive to explain away its inability
and dubiously effective. Travelers may to complete the regulatory airport security.
now be able to post one-star reviews process, saying it needed to
of their experience on Yelp, but that fill “three current vacancies (R-Fla.), who co-wrote the law creat-
doesn’t address the real problem with for economists.” This is laughable. The ing the TSA, said in a hearing that he
airport security: Current screening TSA has more than 50,000 full-time had the body scanners tested by the
methods are illegal. equivalent employees and spent nearly Government Accountability Office,
In July 2011, the U.S. Court of $7.4 billion in 2014. In fact, Congress and that while that study remains clas-
Appeals for the D.C. Circuit ruled has noted that the TSA has more sified, if Congress “could reveal the
that the Transportation Security employees than “the Departments of failure rate, the American public would
Administration (TSA) broke the law Labor, Energy, Education, Housing be outraged.” After the Inspector
when it rolled out body scanners, and Urban Development, and State, General’s report was leaked in June,
because the agency did not go through combined.” And the TSA’s parent Sen. Ben Sasse (R-Neb.) said: “The
the rulemaking process established by department, the Department of administration has an obligation to
Congress. By August 2015, the TSA Homeland Security, employs more responsibly declassify the Inspector
still hadn’t complied with the court’s than 1,800 attorneys. The TSA’s claim Generalʹs investigation and to publicly
mandate that it go through the proper that it lacks the budget and person- release everything else it knows about
rulemaking process. nel to comply with federal law and a TSA’s failures.”
This means the American people court’s mandate is simply absurd. We may differ in why we are con-
have no way to hold the TSA account- The TSA’s continued lawlessness is cerned about the TSA’s body scanner
able in court for employing these especially troubling in light of recent policy, but we all agree that the TSA
invasive and ineffective machines. The reports about the agency’s abysmal should be required to follow the law.
agency has been doing as it pleases, performance. On June 1, 2015, ABC The TSA must finally publish a final rule
kicking the can of accountability further News broke a story about a leaked on how it uses body scanners in air-
and further into the future. It is time for audit of the TSA’s airport screen- ports. Until then, the agency’s actions
the TSA’s lawlessness to end. That is ing practices by the Department of will continue to be shielded from public
why our organizations, the Competitive Homeland Security Inspector General. scrutiny and transportation safety will
Enterprise Institute, National Center The classified study found that the TSA continue to be threatened by bureau-
for Transgender Equality, and the failed to detect an astonishing 96 per- cratic lawlessness.
Rutherford Institute, filed suit on the cent of weapons and explosives that
four-year anniversary of the ruling, investigators tried to smuggle through
asking the court to compel the TSA to airport security. Given that body scan- Marc Scribner (marc.scribner@cei.org)
complete a body scanner rule within ners remain the main tool the agency is a Fellow at CEI, Harper Jean Tobin
90 days. (They are being represented uses to screen airline passengers—with is Director of Policy at the National
by CEI’s attorneys.) a jailhouse-style pat-down the only Center for Transgender Equality, and
The TSA started using whole-body alternative—this report casts serious John Whitehead is President of The
imaging scanners to screen airline pas- doubt on the TSA’s claims that the Rutherford Institute. All three organiza-
sengers back in 2008. But the agency machines are effective safeguards. tions and Scribner are petitioners in the
never proposed updated regulations, Lawmakers are also skeptical of lawsuit over the TSA’s body scanners.
solicited public comments, or pub- the TSA’s ability to protect American A version of this article originally ap-
lished rules regarding the scanners in travelers. In 2011, Rep. John Mica peared at MSNBC.com.

8 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE
Save the Bees: Eliminate Biofuel Mandates
vectors and poor diets related to habi- As farmers rushed to find new
BY ANGELA LOGOMASINI tat loss. Beekeepers are addressing places to plant corn, they wiped
key problems associated with disease out millions of acres of conserva-

T he Obama administration made
a lofty promise with the launch
of its National Strategy to Promote
transmission, but habitat loss is a much
tougher challenge that requires actions
by more than just beekeepers.
tion land, destroyed habitat, and
polluted water supplies.…
Five million acres of land set
the Health of Honey Bees and other Among the many items in the $80 aside for conservation—more
Pollinators. Over the next five years, million-plus national strategy are than Yellowstone, Everglades
the feds will implement an interagency plans to increase diverse foraging and Yosemite National Parks
campaign to restore and improve 7 habitat for pollinators. Action items combined—have vanished on
million acres of “pollinator habitat.” include spending millions of dollars Obama’s watch.
That may be a laudable goal. But the for government gardens, as well as
strategy fails to address one of the potential government land purchases According to the AP report, corn
biggest threats to pollinator habitat: and habitat enhancement on existing planting in 2012 alone increased
federal biofuel mandates. government land. Yet there are clearly by 15 million acres, thanks in good
This “National Strategy” emerged limits to what the government can measure to biofuel mandates, and
as a response to alarming news cover- accomplish since pollinators also must that was in just one year! Meanwhile
age about honeybee health. During the forage on private land. the president’s pollinator strategy
past couple of decades, beekeepers Fortunately, there is something the has set its five-year goal to “restore
have experienced unusually high hive federal government can do to make or enhance 7 million acres of land.”
losses ranging more than 30 percent private wildlife habitat more viable: Certainly, they could do multitudes
during winter hibernation. Fortunately, eliminate the federal Renewable Fuel better if they advocated that Congress
there is some good news: Such over- Standard. This mandate promotes trash the biofuels mandate.
winter losses have come down during excessive planting of corn by creating To add insult to injury, the program
the past few years, particularly in artificial demand for biofuels such as does not save energy and is a raw
Europe, and globally bee popula- ethanol. Corn, which self-pollinates, deal for consumers. As CEI Senior
tions are doing well. Yet now some has limited nutritional value to bees Fellow Marlo Lewis points out:
are concerned about losses during the and other pollinators. “[E]thanol contains about two-thirds
summer, which have not been consis- But rather than call on Congress the energy of an equivalent amount
tently measured. to eliminate this biofuels mandate, the of gasoline. The higher the blend, the
Researchers have identified factors Environmental Protection Agency has worse mileage your car gets, and the
that create significant challenges to proposed expanding the program. In more you have to spend to drive a
honeybees, including diseases and a recent Regulatory Announcement, given distance.” And ethanol man-
vectors that attack honeybees, poor the agency says it’s “proposing vol- dates also increase the price of food!
nutrition associated with habitat loss, umes which, while below the volumes The only clear beneficiaries of the
and the resulting limited diversity of originally set by Congress, would biofuels program are corn growers and
nectar-bearing plants. increase renewable fuel use in the U.S. ethanol producers, who are well con-
Researchers list certain pesticides above historical levels and provide nected with lawmakers in Washington.
as potential stressors as well, particu- for steady growth over time.” That will All consumers get is reduced energy
larly chemicals beekeepers must use likely lead farmers to plant yet more efficiency and higher prices.
in the hives to prevent mites and other corn. Yet already, 40 percent of the If the administration really wants
organisms from killing bees. Although corn grown in the United States is to help bees, it should end these
often targeted as the culprit, evidence produced to make ethanol, as Jillian mandates immediately. It will save
is lacking that certain agrochemicals Melchior points out in a paper for the consumers at the pump, and require
from a class called neonicotinoids Independent Women’s Forum. no new federal spending.
pose significant challenges, since their The impact of such mandates on
use is targeted and bee exposure is wildlife habitat is substantial. A 2013
limited. Associated Press investigation on the Angela Logomasini (angela.logoma-
The best strategy should focus on environmental impacts of biofuel man- sini@cei.org) is a Senior Fellow at CEI. A
the most obvious challenges: disease dates found: version of this article originally appeared
on The Huffington Post.

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 9
Keynote speaker
Carly Fiorina
addresses the crowd

Reason Editor-
in-Chief Matt
Welch, master of
ceremonies

On June 11, the Competitive
Enterprise Institute held its
Annual Dinner and Gala
at the J.W. Marriott in
downtown Washington, D.C.
CEI’s annual dinner brings
together an audience of policy
professionals, distinguished
scholars, congressional
staff, and CEI supporters
to celebrate CEI’s effective
advocacy for freedom. The
event is often cited as one of
Washington’s most enjoyable
events. Reason Editor-in-Chief
Matt Welch served as master
of ceremonies. Presidential
candidate Carly Fiorina
delivered the keynote address.
Professor Vernon Smith, 2002
Nobel Laureate in Economic
Sciences and Professor of
Economics and Law at
Chapman University, was
honored with the 2015 Julian
L. Simon Memorial Award.
Left to right: Guy Beeman, Michael Birsic,
and Patricia Richards of Marathon Petrolum,
and Max Hamel of Agenda-Global

10 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE
Left to right: CEI President Lawson
Bader, Candace Smith, 2002 Economics
Nobel Laureate and 2015 Julian Simon
Memorial Award winner Vernon Smith,
and CEI Founder Fred Smith

Left to right: Adam White of
Boyden Gray and Associates;
CEI Board Member Thomas
Haynes of Eagle Health Plans,
LLC; Anna Sophia Greve;
and George Mason University
Professor of Law and CEI
Board Member Michael Greve

Left to right: Washington Examiner columnist
Michael Barone, Swiss Ambassador to the
United States Martin Dahinden, Anita
Dahinden, and CEI Founder Fred Smith

CEI President Lawson Bader welcomes guests

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 11
Charles Koch Institute
Director of Alumni and
External Relations Katey Left to right: Atlas Network Director of
Roberts (left) and CEI Board Outreach Stephanie Giovanetti Lips, Dan
Member Kerry Hardy Grossman, and Atlas Network CEO Brad Lips

Searle Freedom Trust Program
Officer Richard Tren (left) and
Reason.com and Reason.tv
Editor-in-Chief Nick Gillespie
CEI External Affairs
Officer Lauren Avey CEI Adjunct Fellow Fran Smith
and CEI Executive and Wolfgang Mueller of the
Director Gregory Institute for Freedom, Berlin
Conko

12 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE
Left to right: David
Parker of Old Boston
Restoration, Karen
Parker, RealClearMarkets
Editor John Tamny,
Graziella Abu-Jawdeh, and
RealClear Radio Hour
host Bill Frezza

Vernon Smith (left), 2002 Nobel
Laureate in Economics, confers
with FreedomWorks Chief
Economist and Vice President for
Research Wayne Brough, Antigua
Forum Executive Director and
CEO Wayne Leighton, and
CEI Vice President for Policy
Wayne Crews

Left to right: Curated
Innovation President Terry
Kibbe, Mercatus Center Senior
Vice President Carrie Conko,
and Distilled Spirits Council of
the United States Senior Vice
President for Economic and
Strategic Analysis David Ozgo

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 13
THE THE THE
GOOD BAD UGLY

CEI’s RealClear Radio NLRB Ruling in Joint New EPA Rules
Hour Expands to New Employer Cases Threaten American
Markets Enshrines Union Prosperity
Privileges

In August, CEI’s “RealClear Radio On August 27, the National Labor On August 3, the Environmental
Hour with Bill Frezza” expanded to Relations Board voted 3-2 to expand Protection Agency (EPA) released
three additional markets: Spokane, employers’ liabilities as so-called two final rules and a proposed rule
Washington, Nashua, New “joint employers.” “Yet another deci- that are considered a major part of
Hampshire, and Riverton, Wyoming. sion by unelected regulators, this time President Obama’s climate agenda.
This brings the show’s total number at the National Labor Relations Board, “Consumers, particularly in the heart-
of radio markets up to 11, including will have a devastating impact on land states that have affordable elec-
Boston and San Francisco. As an American employers and employees,” tricity from coal-fired plants, are going
entrepreneur, investor, and 40-year said CEI Vice President Iain Murray. to see their rates skyrocket, just as
veteran of the technology industry, “The decision will force franchise and the president promised,” said Myron
host and CEI Fellow Bill Frezza offers contract businesses into a one-size- Ebell, director of CEI’s Center for
an independent perspective, asking fits-all business model when it comes Energy and Environment in response
questions and telling stories you to liability and wage issues. That may to the Clean Power Plan final rule.
won’t hear in the mainstream media. be good for labor union bosses and “Because the EPA does not anticipate
Each week, RealClear Radio Hour trial lawyers in search of big targets anyone building new coal-fired power
presents fresh ideas and in-depth dis- of opportunity, but it will hurt anyone plants anyway, evidently, the new
cussion of diverse issues ranging from who now benefits from flexible work source performance standards rule’s
education and health care to science arrangements.” value is purely instrumental—to pro-
and technology. More information vide the regulatory springboard for the
can be found at RealClearRadio.org. so-called Clean Power Plan for exist-
ing power plants,” said CEI Senior
Fellow Marlo Lewis in response to the
EPA’s new source performance stan-
dards final rule. The administration’s
proposed Federal Implementation Plan
was derided by CEI Senior Fellow
William Yeatman as yet another
example of “mission creep.”

14 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE
MediaMENTIONS
The New York theatre maga- The Washington Post quotes CEI Senior Fellow
zine Playbill quotes CEI Fellow CEI’s Hans Bader on President Marlo Lewis
Marc Scribner on the legislative Obama’s misleading statements discusses bio-
problem facing Times Square’s on the Lilly Ledbetter Act: fuel blending at
billboards: Hans Bader, an attorney at the right- Bloomberg:
The Washington Post reported, leaning Competitive Enterprise Institute, “This proposal
“The threat to Times Square’s bill- wrote to The Fact Checker questioning today is a stopgap
boards is not the fault of the Obama this statement by the president. He said measure,” Marlo
administration or Transportation it was misleading because “Ledbetter Lewis, a senior fellow
Department bureaucrats” and quoted admitted in her deposition that she knew at the Competitive
Marc Scribner of the politically conser- of the pay disparity years earlier, and Enterprise Institute, told reporters May
vative Competitive Enterprise Institute the Supreme Court specifically said in 29. “It will probably leave us within the
as saying the move “is a classic exam- footnote 10 of its decision that the result blend wall for another couple of years,
ple of Congress passing stupid laws, might have been different under the ‘dis- but the blend wall will loom large again
ordering regulators to implement them covery rule’ if she hadn’t learned of it in in 2017 and 2018, and EPA doesn’t
stupidly, and then forgetting about time to sue.” have a solution for that. It’s just post-
them until unintended consequences Bader further expanded on his case poned the day of reckoning.”
spring up down the line.” in a blog post. He had written often –MAY 29,
Scribner pinned down the law as about this issue, including in a letter to Bloomberg
the surface transportation reauthoriza- The Washington Post.
tion (MAP-21 Act of 2012), Section –MAY 14, The Washington Times quotes
1104, which added arterial roads The Washington Post CEI Adjunct Fellow Fran Smith
such as those that pass through Times on the Trans-Pacific Partnership
Square as part of an “enhanced Peter Roff cites CEI Vice President negotiations:
National Highway System” that is Wayne Crews’s work on the cost Some analysts say the administra-
subject to the Highway Beautification of regulation in U.S. News & tion’s stature on the world stage is
Act of 1965. That act imposes federal World Report: hanging in the balance. Negotiations
restrictions on outdoor advertise- These costs are not insignificant. on sticking points of the sprawling
ments within 660 feet of the National As the Competitive Enterprise Institute Trans-Pacific Partnership, a proposed
Highway System. documents in the latest edition of free trade pact with 11 other Pacific Rim
–MAY 7, its annual report “Ten Thousand nations including Japan and Australia,
Playbill Commandments,” the so-called hidden have slowed while the potential trad-
tax imposed by the regulatory state ing partners wait to see whether Mr.
CEI Vice President Wayne Crews has reached $1.88 trillion. Obama will have the authority to
is quoted in Fortune on Verizon’s “Federal environmental, safety conclude the agreement without major
AOL buyout: and health, and economic regulations changes by Congress.
“This is a positioning deal, to pro- affect the economy by hundreds of “If TPA stays in limbo, it means that
vide ad-serving to the mobile video billions of dollars annually,” wrote the ongoing trade negotiations will become
sectors,” says Clyde Wayne Crews, report’s author, Competitive Enterprise much more difficult,” said Frances B.
Jr., vice president for policy and Institute Vice President Clyde Wayne Smith, an analyst on trade issues at the
director of technology studies at the Crews, Jr. “Regulatory compliance Competitive Enterprise Institute. “How
Competitive Enterprise Institute. “TV is costs borne by businesses will find their can countries negotiate in good faith
said to be on the way out, but at the way into the prices that consumers with the U.S. when they know the specif-
same time TV drama is in a golden pay, affect the wages workers earn, ics of their agreements can be pulled
age because of the different methods and lead to lower levels of growth and apart and dealt with separately rather
of delivery. This includes the mobile prosperity.” than as a whole?”
handset. This deal makes sense as it –MAY 16, –JUNE 14,
puts Verizon in a commanding role to U.S. News and World Report The Washington Times
deliver content on handsets and reap
the rewards from the advertising.”
–MAY 13,
Fortune

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 15
Nonprofit Org.
U.S. Postage
PAID
Permit 425
Southern MD

...END NOTES
Chronically Tardy New Jersey Teacher Keeps Job, Minimum Wage Hike Targets Severely Disabled
Blames Breakfast Like many American cities dominated by left-wing politi-
In two years, elementary school teacher Arnold cians, St. Louis is considering a minimum wage hike. Many
Anderson was late for class 111 times. As one might expect, economists warn that mandating higher wages for the same
administrators at Roosevelt Elementary School in New work will simply increase unemployment, particularly among
Brunswick, New Jersey, found this behavior unacceptable. low-skilled youth, as some work is not worth the govern-
They then suspended and moved to fire Anderson. His union ment-defined minimum wage. But the St. Louis case is poised
challenged the dismissal. In August, an arbitrator reinstated to harm an even more vulnerable community: the severely
Anderson to his $90,000 per year job, saying he was developmentally disabled. For decades, sheltered workshop
entitled to “progressive discipline,” though Anderson will nonprofits such as Industrial Aid have employed cognitively
remain suspended without pay until January 1. His reason disabled individuals to perform meaningful employment for
for being late so many times? “I have a bad habit of eating these otherwise unemployable workers. In August, the bill’s
breakfast in the morning, and I lost track of time,” Anderson sponsor removed a provision exempting sheltered work-
told reporters after being reinstated. “I have to cut out eating shops, similar to a federal exemption. Mike Stroud, execu-
breakfast at home.” tive director of Industrial Aid, doesn’t fault the motives of the
campaign organizers, noting they “are trying to improve the
Officials Grudgingly Accept Coins for Fines lives of these folks, but they’re going to destroy their lives.”
In August, handyman Justin Greene was fined $25 by
Chambersburg, Pennsylvania, for parking his work truck Calls for Flamethrower Ban Lead to Sales Spike
on the wrong side of the street for about 10 minutes. Irked Detroit software developer and device maker Ion
by the petty tyranny of the borough’s officials, Greene Productions Team recently released its XM42 Flamethrower,
attempted to pay his fine with 2,500 pennies. “I work too capable of shooting a 25-foot stream of flaming fuel. The
hard for my money and thought it would be fun to get back company suggests possible uses for the $900 handheld
at someone, inconvenience them like they inconvenienced flamethrower, including “weed control, clearing snow, start-
me,” Greene admitted to the Chambersburg Public Opinion ing your bonfire,” and offers discounts to law enforcement,
newspaper. Officials initially declined his request, claim- firefighters, and military veterans. But some lawmakers in
ing the law allowed them to reject payment in such small Michigan are worried about the potential for misuse and
denominations. However, the law cited by officials had have filed bills that would outlaw the devices. After press
been amended in 1965 to recognize all U.S. coins as legal reports suggested flamethrowers would soon be banned,
tender. Legal issues aside, officials eventually caved to the move backfired. “Business is skyrocketing higher than
public pressure and went the extra mile by installing coin- ever due to the discussion of prohibition,” Chris Byars of Ion
counting machines in city offices. Productions told the press.

16 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE