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COMPETITIVE ENTERPRISE INSTITUTE

VOL. 28, NO. 2 | SPRING 2015

FEATURED ARTICLES

Big Data and 21st Century


4 Medicine
individualized experiences of thousands of
IAIN MURRAY BY BARTLEY J. MADDEN AND GREGORY doctors and patients working on their own,
Britain Back from the Brink of CONKO so volumes of useful information would be
Socialism (For Now) lost.

M ore than a million and a half


Americans will be diagnosed with
cancer this year, and nearly 600,000
But the world today is far different than
in 1962, when the drug safety laws as we
know them were written. Today’s advanced
will die of it, often because there are no computing technologies are capable of
effective treatments on the market. There collecting and analyzing Big Data and
8 are over 700 new cancer medicines in
clinical trials or awaiting Food and Drug
easily sharing information with consumers.
Technology giants like Apple, Google,
ANGELA LOGOMASINI Administration (FDA) approval, but FDA and Microsoft are already working with
rules will deny most patients an opportunity hospitals, insurers, and the federal govern-
Saving the Bees vs. Pork Barrel
to try one of these developmental drugs, ment to study health records and determine
Spending
which could provide them their only chance which drugs, medical devices, and other
of survival. treatment protocols work best for which
It is tragic that these patients cannot patients.
make their own choices, especially as This ability to slice and dice the infor-
modern computing and “Big Data” infor- mation in those databases, and uncover

12 mation technologies have eliminated the


justification for those restraints. But an FDA
reform initiative by the House Energy and
previously unknown relationships, is pro-
viding comprehensive insights into medi-
cal treatments that are simply not possible
Commerce Committee, called 21st Century with the standard model of clinical trials.
JOHN BERLAU Cures, may offer a chance to lift these New technologies also make it possible
Obamacare for your IRA restrictions. to share results in real time with hundreds
Federal law requires new drugs to be of researchers, thousands of doctors, and
extensively tested and then approved by millions of patients, delivering valuable
the FDA before they can be sold. Until then, information to those who need it faster
ALSO IN THIS ISSUE only patients enrolled in FDA-monitored and more effectively than ever dreamed
clinical trials, and a small number of other possible.
The NLRB’s Joint-Employer Cases Threaten patients granted so-called compassionate The 21st Century Cures bill now being
American Business, use exemptions, may use them. drafted by Reps. Fred Upton (R-Mich.) and
by Aloysius Hogan. . . . . . . . . . . . . . . . . . . 6 The justification for this policy is that Diana DeGette (D-Col.) proposes modest
patients and doctors lack sufficient informa- steps to make drugs available to patients
A Federal Online Gambling Ban Would
Trample State Sovereignty tion to assess a developmental drug’s ben- sooner, but more should be done. By
by Michelle Minton. . . . . . . . . . . . . . . . . . . 7 efits and risks. Health officials also claim harnessing the power of modern informa-
that giving patients early access would tion technologies, we can provide greater
The Good, the Bad, and the Ugly. . . . . . 14
make it harder to enroll enough subjects in choice to patients with serious and life-
Media Mentions. . . . . . . . . . . . . . . . . . . . 15 the clinical trials needed to assess drugs’ threatening illnesses.
End Notes . . . . . . . . . . . . . . . . . . . . . . . . . 16 effectiveness and side effects. Worse, they In a proposal we call Free to Choose
say, researchers cannot learn from the Medicine, developers would test their
10,000 Commandments and Counting
by Wayne Crews

C EI is well-known for its focus on highlighting the


costs and impacts of regulation and govern-
ment intervention in the economy—and the way
throughout the American economy. Notably, this
spring’s edition of Ten Thousand Commandments
marks the 23rd year since I wrote the first edition.
FROM THE VICE PRESIDENT FOR POLICY

those enable government to grow out of public view, Yet, it seems we need it now more than ever.
beyond the spending so many free marketers focus Today’s regulatory costs are greater than all
on. Even if we were to balance the federal budget federal spending in the early1990s, and exceed
tomorrow, we’d still have the weight of regulation current personal and corporate income tax receipts
upon us. combined. The days of ignoring the matter are over.
As the federal government moves into more Sure, we can measure costs better, but get-
economic sectors, the saliency of regulation as the ting Congress on the record for regulation is what
real barrier to growth and individual liberty has matters. In 2014, Congress passed and President
become clearer, bringing greater attention to CEI’s Obama signed 224 bills into law, while thousands of
work. Regulation is discussed on Capitol Hill with bureaucrats issued 3,554 rules and regulations. That
far more frequency—and urgency—now, and by means there were 16 rules for every law passed last
far more members, both Republican and Democrat. year—a ration I call the “Unconstitutionality Index.”
The last time the energy for “getting things undone” As it shows, unelected regulators and bureaucrats do
was this visible was in the 1990s, when unfunded the bulk of lawmaking in the country.
mandates reform and the Congressional Review Act Congress likes to blame agencies for excesses
were enacted. like the Waters of the United States rule, but
The modern regulatory state’s continued advance Congress delegated that power, and has failed to
shows these efforts weren’t enough, and policy restrain it. In addition to approving future agency
makers know it. Accordingly, there is now a bipar- rules on the record, Congress must change the
tisan proposal for a regulatory reduction commis- underlying statutes driving the regulatory flow.
sion. Ideas like “one in, one out” get discussed. The Even Ten Thousand Commandments cannot
Regulatory Accountability Act, to require more scru- adequately capture the president’s “pen and phone”
tiny of agency rules, has passed the House, and the approach to policy making. We can count regula-
Regulations from the Executive In Need of Scrutiny tions, but guidance documents, notices, executive
(REINS) Act, to require congressional affirmation of orders, agency and presidential memos, and even
all major agency regulations, is expected to pass blog posts and press releases all can set the tone for
both houses of Congress this summer. policy making now. These can easily outnumber the
This is President Obama’s year of the veto, so major rules that the agencies issue. This “regulatory
addressing overregulation remains difficult. But dark matter” is something to which future editions
address it we must. Based on federal government of Ten Thousand Commandments and the policy
data, past reports, and contemporary studies, the making world in general needs to pay more atten-
2015 edition of Ten Thousand Commandments tion. Stay tuned.
estimates regulatory costs of $1.88 trillion annually

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 COMPETITIVE ENTERPRISE INSTITUTE


Big Data, continued
drugs in the first phase clinical trials that verify basic short-term
safety and then complete at least one Phase II trial to begin
testing safety at effective doses. Developers could then choose
to proceed only with FDA-monitored clinical trials, as they do
today. But if results show significant promise, they could enter
the Free to Choose program, where they sell the developmen-
tal drug to any consenting patient whose doctor concludes its
potential benefits are sufficient to outweigh its uncertain risks.
Developers would have to make all laboratory and clinical
test results available on a publicly accessible database, where
patients and their doctors can see what is and is not known

R.M.
about each drug’s risks and benefits and make fully informed
decisions.
Patients would have to allow their doctors to submit anony-
mous treatment reports describing their diagnoses, health status,
physical characteristics, and experience with the treatment—
FREEDMAN
both effectiveness and side effects. This continuously updated
collection of data would provide additional information for other
SOCI ET Y
patients, and it would give the developer and other researchers
a way to study the drug’s performance in a real-world setting.
This would prove a valuable complement to standard clinical Help the Competitive
testing. One shortcoming of clinical trials is that patients are
selected to be as similar as possible in characteristics such as
Enterprise Institute
health status, disease progression, and other factors, to make carry on its work for
statistical analysis more reliable. But we often cannot spot generations by joining the
certain benefits or side effects until after a drug is approved and
prescribed to tens, or even hundreds of thousands of dissimilar
R.M. Freedman society.
patients.
Giving a wide range of patients the ability to choose for In 2013, CEI established the R.M. Freedman
themselves might sacrifice some statistical purity, but we would Society in honor of Robert M. Freedman,
gain a better picture of a drug’s real-world effects. One could a business owner from West Bloomfield,
even envision an alternative FDA approval process that uses Michigan, who placed CEI in his estate
this observational data for assessments. Either way, medical and, in 2009, sadly passed on and gave
researchers would get a treasure trove of information that could CEI its first legacy gift. We named the
improve how scientists spend their research dollars, leading to society in appreciation of his generosity.
faster, more efficient innovation. Many of CEI’s extended family choose to
Of course, not all manufacturers would want to sell their include CEI in their estate plans through:
products in a Free to Choose Medicine system, preferring
instead to pursue only the conventional FDA-monitored trials. • Bequests,
And some patients may be unwilling to try treatments that have • Charitable Remainder Trusts,
not been tested further and fully vetted by the FDA. But enacting • Charitable Lead Trusts, or as a
the proposal into law would make available additional treat-
ment options to many patients who now have few or no alter- • Life insurance beneficiary.
natives. When faced with life-or-death illnesses, more patients
should have this choice. If you make the decision to include CEI in
your estate plans, please reach out and let
us know.
Bartley J. Madden is a founder of the Tomorrow’s Cures Today
Foundation and author of Free to Choose Medicine: Better Drugs,
While these sorts of decisions should be
Sooner at Lower Cost. Gregory Conko (greg.conko@cei.org) is undertaken with the help of an estate
Executive Director of CEI. planner, Lauren Avey and Al Canata of
CEI can be a resource to you. You can
reach them anytime at 202-331-1010.

COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 3


Britain Back from the Brink of
Socialism (For Now)
liberals, that people reached for their If this is the case, then it says
BY IAIN MURRAY ballot paper and realized they couldn’t something disturbing about the state
vote for a socialist government seems of liberal philosophy in the UK. People
Well, that was a surprise. not to be the case. And it certainly vote for the more economically liberal
Everyone in British politics, includ- wasn’t the case in Scotland, where the parties, but are not comfortable talk-
ing those in government, assumed avowedly leftist SNP swept the board. ing about it. This also underscores my
from the polls that the British General The currently accepted explanation point about business leaders having
Election would end in a dead heat, amongst pollsters is the phenomenon withdrawn from the philosophical
likely resulting in a Labour minority of “shy Tories”—people who were debate and the need for them to return.
government backed up by the Scottish always going to vote Conservative Making the case for free enterprise is
National Party (SNP). Not only did the but would not admit it openly. There too important to be left to politicians.
pollsters say that; the betting markets appears to be some evidence for this Another explanation, which at
did too. in the difference between the large exit least one pollster has suggested, is the
How wrong we all were. The poll, which came closer to the actual “lazy left”—younger left-wing voters
Conservatives were returned with an result than the pre-election polls, and who failed to turn out in the numbers
overall majority, Labour was wiped the re-poll of online panelists after they projected in pre-election polls. Yet, this
out by the SNP in Scotland, and the voted. seems highly unlikely in a very tight
Liberal Democrats (the Conservatives’ In other words, people gladly election where every vote counts—
coalition partner) collapsed across the acknowledged they had voted conser- indeed, turnout was up overall. It
country. vative in the anonymous exit poll, but is, however, a worrying possibility,
So what happened? Pollsters returned to dissembling when back at suggesting the UK’s return to socialism
like Lord Ashcroft have ruled out a their computers. (The pollsters, it should is only one charismatic leader away.
late swing to the Conservatives, so be noted, got most of the other vote All the left needs is someone who can
the comforting idea, for us classical shares about right.) motivate this vote to turn out.

4 CEI.ORG COMPETITIVE ENTERPRISE INSTITUTE


ratified throughout Europe is the last which would be seen as a very drastic
thing Brussels wants at the moment. step. Moreover, laws that devolved
A British Bill of Rights Therefore, it remains to be seen how certain powers to Scotland, Wales,
could well involve many concessions David Cameron,
safely back at 10 Downing Street, can
and Northern Ireland also contain
references to human rights that compli-
more negative wring out of Brussels. He has promised
an in/out referendum on EU member-
cate matters considerably. The Scottish
Parliament could refuse to accept an
rights and be more ship by 2017. If Brussels is unrespon- “English” Bill of Rights. And scrapping
sive on renegotiation, “Brexit” may be the HRA could be seen as a breach
closely aligned with in the cards. of the Good Friday Agreement that
the common law— The second project also has a
European, although not an EU, dimen-
secured peace in Northern Ireland.
Thankfully, Cameron has appointed
an overall win for sion. The Conservatives pledged to
replace the Human Rights Act (HRA)
two of his cleverest MPs, Michael
Gove and Dominic Raab, to oversee
liberty. of 1998, which incorporated the the process at the Justice Department.
European Convention on Human Other good news involves the
Rights (ECHR) into British law, with appointment of a fiercely free-market
Still, whatever the reason, the a “British Bill of Rights” more closely business secretary, Sajid Javed, who is
Conservatives won a slim majority. aligned with classical liberal British likely to make deregulation a top prior-
What will they do now that classical lib- values, as articulated in the common ity. Regulation of the press, which was
erals can celebrate—or worry about? law. There has been some consterna- seriously threatened after the Leveson
Two large scale projects loom large tion at this on the Continent, as the inquiry into the hacking of celebrities’
on the agenda. The first is renegotiation ECHR was originally drafted by British phones, now appears to be off the
of the European Union treaties to get lawyers to bring a dose of liberalism table.
a better deal for Britain—which should to war-ravaged nations shaking off On the other hand, Home Secretary
mean less regulation and pan-Euro- fascism. Theresa May has hinted at an expan-
pean utopianism. Renegotiation would However, the convention’s lan- sion of the security services’ surveil-
also require constraints on immigration. guage emphasizes positive rights lance powers. The spy agency GCHQ
The first of these objectives is rather than Anglo-American-style (the innocuously named Government
plausible, as other nations, including negative rights. Its application in Communications Head Quarters)
Germany, have made noises about overwhelmingly civil law jurisdictions could become as infamous as the NSA
the crushing effect of EU regulation has caused some tension with the if she follows through.
on business. The latter is less so, as EU British constitution and its doctrine of All told, the British election result
officials have made it clear that free Parliamentary sovereignty. A British was moderately good news for liberty,
movement of labor is a fundamental Bill of Rights could well involve more and certainly not the calamity it could
principle of the union, and so it is likely negative rights and be more closely have been. So thank a “shy Tory”
the EU will be the guardian of the clas- aligned with the common law—an today.
sical liberal principle in this area. overall win for liberty.
However, with the EU deeply Of course, it’s not as simple as
immersed in the Greek crisis and wor- that. Repealing the Human Rights Act Iain Murray (iain.murray@cei.org) is Vice
ried about an aggressive Russia on its would possibly require the UK leav- President for Strategy at CEI. A version
Eastern border, detailed renegotia- ing the convention, along with the of this article originally appeared in The
tion of treaties that would have to be European Court of Human Rights, Freeman.

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Campaign launching Monday, July 13th
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COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 5


We’re All Greeks Now
inflation indices. But in time it must led to fascism in Europe and a U.S.
BY BILL FREZZA be, and many who thought they were experiment in socialism called the
saving for the future will ultimately New Deal that turned what could
The Greek drama has entered its learn that their money was funneled to have been a short recession into a
final act, after lingering on far too deadbeats. The freshly impoverished 15-year depression. And, oh, there
long. There was never any doubt will then be forced to join the grow- was that war unpleasantness. From
Greece couldn’t repay its sovereign ing line of said deadbeats seeking this experience in failed economic
debts. Debts that, until now, were handouts. This can only exacerbate intervention we have apparently
counted as assets on the books of its the demographic time bomb that learned … nothing.
lenders. Living by the motto, In Central would be threatening aging democra- Eight years ago a pyramid of
Planners We Trust, the Greeks forgot cies anyway, even if central planners easy money inflated a mortgage
to ask, “What could go wrong?” hadn’t embarked on a fit of monetary bubble that nearly melted down the
They—and the world—are about to madness. world financial system when it burst.
find out. This is where totalitarianism enters Bailouts, phony accounting, and even
Calls for debt relief that began in the picture. more frantic money printing coupled
Greece are arising across Europe—a Large scale institutionalized cor- with artificially suppressed interested
debt jubilee, if you will. Since debtors ruption is only sustainable under a rates created a thin illusion of recov-
always outnumber creditors, debt totalitarian political system. It requires ery. This inflated another asset bubble
jubilees can become overwhelmingly a ruthless elite, an extensive bureau- in stocks, real estate, art, and other
popular when times get tough. cracy deployed to do their will, alternatives to productive investments.
But debt relief is always and a monopoly on violence to crush Meanwhile, profligate governments
everywhere matched by asset destruc- opposition, and just enough merito- went on a borrowing binge in thrall to
tion. One can argue the assets were cratic social mobility to quell thoughts the siren song of Keynesian demand
already destroyed, so debt relief of revolt by the masses. The Ottomans stimulation.
merely forces lenders to acknowledge may hold the record, making it work None of this worked. The entire
reality. Cry them no tears. In a just for six centuries, but they were hardly house of cards is now being threat-
world creditors who insist on lend- alone. ened by an ugly return to reality.
ing to dubious borrowers deserve to But the Ottomans did not have to Today it’s Greece. What comes
taste the discipline of loss. But when deal with the specter now haunting the tomorrow is anybody’s guess. But
governments use toxic bonds on bank European Union, starting with Greece. Greece should come as a warning,
balance sheets to magically manu- I am speaking of a global financial with a government led by an unwieldy
facture money, the evaporation of market warped beyond recognition coalition of far left and far right parties
those underlying assets has secondary by easy-money government policies whose regard for the rule of law and
consequences. that punish thrift and distort millions, economic freedom is tenuous at best.
When default or debt relief even billions, of individual investment The lesson for the rest of us is
strikes—it makes no difference decisions. Think of it not as a powerful clear: If the market is not allowed to
which—the pyramid of manufac- dragon but as an enormous swarm of administer its bitter medicine to one
tured money must either shrink or the bees that can surmount any wall, seep and all, writing off bad sovereign
impaired assets must be replaced. (For through the cracks of any barrier, debts, liquidating malinvestments, and
example, if you write off all Greek penetrate any inner sanctum, and shift rationalizing prices and wages, and
debt, the European Central Bank has directions at a moment’s notice. When instead the world’s democracies insist
negative equity.) If panicked fear of placid, the bees can be very produc- on maintaining the illusion of prosper-
deflation causes these impaired assets tive. When alarmed or angry, watch ity, they won’t remain democracies for
to be replaced with freshly minted out. In time, that swarm will consume long.
fiat money, a vicious circle arises that the other European debtor nations
eventually causes money to lose its before crossing the Atlantic to reach
value. our shores. Bill Frezza (bill.frezza@cei.org) is a
We call this hyperinflation, a When the global monetary system fellow at CEI and the host of RealClear
process that is well underway even unraveled in the 1930s, precipitated Radio Hour. A version of this article
if it’s not yet reflected in consumer by the collapse of stock markets originally appeared in the Daily Caller.
inflated by leveraged speculation, it

6 CEI.ORG COMPETITIVE ENTERPRISE INSTITUTE


A Federal Online Gambling Ban
Would Trample State Sovereignty
Online gambling in America took Howard J. Shaffer. Additionally,
BY MICHELLE MINTON off with the increase in Internet usage Harvard studies have shown that
in the 1990s and became a multi- online gambling is no more addict-
Since the early days of the billion-dollar business long before ing that betting at brick-and-mortar
Republic, regulation of gambling has 2011. By 1997 consumers had spent casinos. In fact, online gambling sites
largely been reserved for the states. an estimated $1 billion worldwide on may be better equipped to identify and
However, Congress is considering net gambling, with around 60 percent address patterns of problem gambling
legislation that would overturn state coming from the U.S. Between 2003 by using software that tracks player
laws pertaining to gambling within and 2010 Americans spent $30 bil- behavior.
their borders and create a federal lion gambling on foreign-owned and Some, such as Texas Governor
ban, preventing states from legalizing -operated gambling sites. A prohibition Rick Perry, argue that the Internet is a
online gambling in the future. They would simply push Americans back stateless territory, “transcending state
claim it is to protect minors, those with into this black market. boundaries” and that states cannot
addictions, and states that do not want Today, 85 nations and three U.S. control this form of online commerce.
online gambling available to their states have legal online gambling and That raises a worrying precedent
citizens. This measure will achieve none regulate it in a way that protects their RAWA would set. If all online com-
of those goals. Rather, it will undermine citizens from crime and holds operators merce is interstate, then Congress
federalism and drive problem gam- accountable. In the three U.S. states would have the right to intervene in
bling underground. with online casino games—Delaware, any form of online commerce. Today
Proponents of the Restoration of Nevada, and New Jersey—there have it is Internet gambling; tomorrow a
America’s Wire Act (RAWA, H.R. been no known cases of an unauthor- lawmaker may take issue with online
707) argue that the Department of ized individual gaining access to the sales of ammunition, tobacco, or
Justice (DOJ) opened the floodgates sites. Website operators can confirm certain foods and beverages seen as
for online gambling in 2011, when an individuals’ identity by asking for “harmful.”
it unilaterally reinterpreted the 1961 a Social Security number, utility bill, So long as an activity does not
Wire Act to apply only to online bet- state-issued ID, or credit history infor- violate the rights of another person, no
ting on sports. Yet, the case for H.R. mation. Likewise, they can pinpoint government should prohibit adults from
707 is based on a misleading reading a player’s location through use of voluntarily participating in it. While
of history. IP, GPS, and carrier data, as well as some Members of Congress may have
The 1961 Wire Act was understood Wi-Fi triangulation. a moral objection to gambling, it is
by Congress and the Department of Compare that security measures neither the Congress’s responsibility
Justice as a narrowly focused law at brick-and-mortar casinos—a nor its right to legislate morality. When
targeting the Mafia’s telephone-run simple visual scan of a person’s I.D. the residents of several states decide
sports gambling racket. It wasn’t until Moreover, websites licensed to oper- that legal online gambling should be
the late 1990s and early 2000s that ate within the U.S. have an incentive legal within their borders and their
the DOJ interpreted the Wire Act to to comply with U.S. laws lest they face state representatives enact legislation
apply to all gambling on the Internet— fines or loss of their license to operate. to allow this, federal officials should
with no justification for it to broaden The fear that legal online gambling not overturn those democratically
its scope in this way. In fact, it was the will increase pathological gambling enacted laws.
DOJ’s 2011 memo that restored the rates is understandable, but ground-
Wire Act to its original meaning. less. Despite unprecedented increases
H.R. 707 is not only legally dubi- in the availability of gambling options, Michelle Minton (michelle.minton@cei.
ous; it is bad policy. A federal prohibi- the prevalence of pathological gam- org) is a Fellow at CEI. A version of this
tion on Internet gambling would harm bling has remained relatively stable article originally appeared in Human
individuals and states in various ways. or declined during the last 35 years, Events.
according to Harvard addiction expert

COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 7


Saving the Bees
vs. Pork Barrel Spending
(overwintering mortality) to no
BY ANGELA LOGOMASINI more than 15 percent within 10
years.” There is no good
Seriously? Federal officials
In May, the Obama administration
finally released its “National Strategy are going to determine how evidence that these
to Promote the Health of Honey Bees
and Other Pollinators.” It’s the federal
many beehives should survive
each year and what survival
products have any
government’s answer to all the hype rate is sufficient? This only sets impact on honeybees
found in the news related to the health the stage for news hype every
of the nation’s honeybee hives. While year losses exceed this govern- in real-life settings, and
it’s not clear what it will achieve for ment set arbitrary number. In fact,
the bees, we can be sure it comes with many surveys of beekeepers have there is considerable
lots of pork-barrel spending, gov-
ernment handouts, and shortsighted
indicated that a much higher rate
is acceptable, closer to 20 per-
evidence that
pesticide polices that undermine food cent a year. Moreover, survival
rates will ebb and flow based on
neonicotinoids have
production.
Much of the hype on this issue is myriad factors over which govern- both agricultural and
misinformed and why solutions will ment, and even beekeepers, have
only come from private collaboration no control, such as weather and environmental benefits.
between various parties—primarily the emergence of new and old
beekeepers and farmers. The federal diseases.
government is the last entity that will be The federal government has “international collaboration.” In addi-
able to “save” the honeybee. also decided how many butterflies tion, the feds promise to improve 7
Nonetheless, the report outlines we should have. Among its goals is to million acres of land to make it more
several goals for its program, some increase the Monarch butterfly popula- pollinator-friendly.
bordering on the ridiculous. For tion to 225 million butterflies that live The report lists out a host of action
example one key goal is: “Reduce on 15 acres in Mexico over the winter, items to achieve these goals, including
honey bee colony losses during winter and they seek to achieve that through spending more than $80 million on

8 CEI.ORG COMPETITIVE ENTERPRISE INSTITUTE


education and habitat development for that the government already owns an the least environmentally damaging
pollinators. Education will mean more estimated one-third of the nation if not pesticides on the market, because they
government posters and programs, all more and federal land management is are applied to seeds and don’t require
paid for with your tax dollars. Some of poor. spraying.
it may contain good information, some There will be lots of pork-barrel And if farmers are forced, they will
probably will amount to no more than spending in this strategy as well. For resort to potentially more damaging
anti-pesticide propaganda, and much example, the strategy includes provid- pesticides, unless the EPA regulates
of it may include just the right amount ing “emergency” financial assistance those products out of existence as
of alarmism to ensure bigger and to beekeepers who experience hive well. If federal policy limits pesticide
bigger allocations of your tax dollars losses that are “in excess of normal use enough to undermine agricultural
to address this “crisis.” mortality” over the winter because of productivity, farmers will need to plant
Part of the funds may go to gov- “Colony Collapse Disorder or other more land to produce food, leaving
ernment gardening, such as the much natural causes.” Now that the strat- less land available for pollinators and
touted White House Pollinator Garden, egy defines normal hive losses as 15 other species. This anti-technology
and funding for “People’s Gardens” percent, there may be a whole lot of approach is a no-win for humans or
around the nation that include only beekeepers who qualify for these gov- wildlife.
politically correct “native” plants. ernment handouts. Since “emergency” Finally, the strategy neglects to
Never mind that honeybees are not spending always seems to go beyond consider reforming federal policies
native to the United States. While it’s existing budgets, these handouts may that undermine wildlife habitat, in
great for first-family photo-ops, it’s not increase the program’s cost beyond the particular, federal ethanol subsidies
clear why this is a linchpin in federal $80 million. And ironically, this spend- and mandates that encourage over-
pollinator strategy. ing may well reward the beekeepers planting of corn, which has little value
That said, I can’t say I am upset that who do the worst job managing their to pollinators and means there is less
the government will plant pollinator- hives, since funds will to flow to bee- land for other crops and for wildlife.
friendly flowers on government lands. keepers with the highest losses. Cleaning up the federal govern-
But why can’t they shift funds from But the biggest defect with this strat- ment’s act should have been priority
existing landscape budgets to do that? egy is that it directs the Environmental No. 1, but that’s not as much fun as
Perhaps they need so much money Protection Agency (EPA) to hold off spending $80 million on everything
because they’d like to expand gov- on registering new uses of a class from a White House Pollinator Garden
ernment land holdings. Specifically, of pesticides called neonicotinoids, to government handouts for beekeep-
the report says: “FWS will acquire and the EPA may also use bees as an ers who should be ultimately respon-
more than 46,000 acres of land in excuse to limit existing uses. There is sible for their own hives.
the Midwest and Mountain Prairie no good evidence that these products
Regions, which, although primar- have any impact on honeybees in
ily aimed at protecting priority bird real-life settings, and there is consider- Angela Logomasini (angela.logoma-
habitats, will have secondary benefits able evidence that neonicotinoids have sini@cei.org) is a Senior Fellow at CEI. A
for monarchs and other pollinators.” both agricultural and environmental version of this article originally appeared
This surely isn’t good, given the fact benefits. Neonicotinoids are among at RealClearPolicy.com.

Realclear Radio offers listeners a


fresh perspective on political and
social issues of the day through
informative interviews and dis-
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Competitive Enterprise Institute
and RealClearPolitics, and hosted
by CEI Fellow Bill Frezza.
Learn more at RealClearRadio.org.

COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 9


CEI President Lawson
Bader Takes the Fight for
Liberty to Europe
On April 23, CEI President Lawson Bader spoke
in Paris about how and why government officials
stand in the way of economic progress. He was
joined by Josh Gilder, co-founder of the White
House Writers Group, and Barbara Kolm, presi-
dent of the Hayek Institute. Bader traveled with
economists, politicians, and local business lead-
ers as part of the Free Market Road Show—a
tour of 35 European cities promoting a mes-
sage focused on removing barriers to economic
growth and entrepreneurship.

CEI’s Trey Kovacs Promotes


Worker Freedom in Missouri
On April 29, 2015, CEI Policy Analyst Trey
Kovacs spoke at the Missouri Capitol in the House
Speaker’s Lounge. He discussed Missouri’s pend-
ing right to work legislation and his report on tax-
payer subsidies to government unions that violate
the state constitution. He was joined by Missouri
Lieutenant Governor Peter Kinder and Missouri
Rep. Eric Burlison, the sponsor of the right to work
bill in the House.

Lawson Bader: Free the


Nation’s Infrastructure
The Airports Council International-North
America (ACI-NA) and the Beyond
the Runway coalition hosted a panel
in Washington, D.C., on the America’s
aviation system during Infrastructure
Week on May 14. CEI President Lawson
Bader joined ACI-NA President and
CEO Kevin M. Burke, American Road
and Transportation Builders Association
President and CEO Peter Ruane, and
Airport Consultants Council President T.J.
Schultz to discuss policy priorities for the
forthcoming FAA reauthorization.

10 CEI.ORG COMPETITIVE ENTERPRISE INSTITUTE


CEI’s Iain Murray Analyzes
the U.K. after the Election
The Cato Institute held a panel on May 20 to
discuss the prospects for liberty in the UK after the
recent British elections. Vice President for Strategy
Iain Murray spoke on the panel alongside Mark
Littlewood, Director General of the Institute of
Economic Affairs and Cato’s Tom Clougherty.
Murray’s presentation focused on the likely deregu-
latory reforms for business proposed by new
Business Secretary Sajid Javid, and contrasted
those with likely heavy-handed interventionism in
other areas such as transportation infrastructure.

CEI at Resource Bank


During May 6-8, 2015, CEI’s Lawson Bader, Myron Ebell, and Ryan Radia shared their policy insights with allies
from around the nation at the Heritage Foundation’s Resource Bank conference in Bellevue, Washington.

CEI’s Marc Scribner


Debates Streetcars at
National Press Club
On June 16, CEI Fellow Marc Scribner
appeared at a National Press Club
Newsmakers event in Washington, D.C., to
debate Dan Tangherlini, President Obama’s
former Administrator of the General Services
Administration and former Director of the
Department of Transportation of the District
of Columbia, on the question, “Are Streetcars
Good for America?”

COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 11


Obamacare
for your IRA
of investment profes-
BY JOHN BERLAU sionals under a system
with strong disclosure
Is Jonathan Gruber now advis- and anti-fraud rules?
ing the Department of Labor (DOL)? Absolutely not, says the
You might remember him as the MIT Obama administration.
economist who seemingly dropped out “Disclosure alone
of public view after he was caught on has proven ineffective,”
camera bragging about how he and states the rule. “Most
other Obamacare architects misled the consumers generally
American public. No evidence indi- cannot distinguish good
cates that he is, but the authors of DOL’s advice, or even good
sweeping new regulations that would investment results, from
sharply curtail choices of assets and bad” (page 36). In fact, proclaims their own 401(k) portfolios or hold self-
investment strategies in 401(k)s, IRAs, the DOL, “recent research suggests directed IRAs.
and other savings plans appear to have that even if disclosure about conflicts In the 40 years since ERISA was
taken Gruber’s point about the “stupid- could be made simple and clear, it first enacted, DOL regulations have for
ity of the American voter” to heart. would be ineffective—or even harm- the most part strictly applied the term
A DOL “fact sheet” describes the ful.” So, in the administration’s view, “fiduciary” to managers of defined-
rule as “protecting investors from the only solution is to tax these dim- benefit plans and those who provided
backdoor payments and hidden fees in witted investors—for their own good, individualized investment advice on a
retirement investment advice.” The sinis- of course—and expose financial regular basis, such as registered invest-
ter-sounding “backdoor payments” professionals to a flurry of lawsuits ment advisers. Under the new rule,
actually refers to a longstanding and penalties if administration officials financial professionals who provide
practice of compensation to brokers deem their advice not to be in savers’ even one-time guidance or appraisal
from mutual funds and annuities. This “best interests.” of investments could find themselves
practice is disclosed to investors and Besides being unnecessary and classified as “fiduciaries.” Because
enables brokers to charge them less intrusive, the rule is legally dubious most of the exemptions in the new rule
because of the additional compensa- and a major case of executive-branch are vaguely written, the rule could
tion brokers receive. overreach. At Obama’s direction, the enable cronyism for certain types of
Yet upon further reading, the DOL DOL is massively stretching its limited financial-service providers and com-
rule seems premised on the Gruberite authority over pensions under the panies offering investments.
notion that American investors need Employee Retirement Income Security This means investment profes-
protection from their own stupidity. Act (ERISA) of 1974 to bypass the sionals dealing with 401(k)s, IRAs,
According to page 4 of the rule: Securities and Exchange Commission, HSAs, and Coverdell accounts (the
which has primary jurisdiction over DOL rule claims jurisdiction over the
[I]ndividual retirement investors last two under the rationale that they
investments, in an effort to reshape the
have much greater responsibility are subsets of IRAs and pensions) will
retirement-savings industry.
for directing their own investments, have to either look to the government
The Labor Department claims
but they seldom have the training or for permission to offer certain types of
authority by reclassifying a broad
specialized expertise necessary to investments or get out of the business
swath of investment professionals
prudently manage retirement assets altogether. A study by the consulting
as “fiduciaries” with a government-
on their own. firm Oliver Wyman and the Securities
imposed “best interest” standard,
Therefore, they “need guidance which subjects them to heavy penal- Industry and Financial Markets
on how to manage their savings to ties and lawsuits if the DOL or a court Association concluded that 12 mil-
achieve a secure retirement.” determines that they deviated from this lion to 17 million investors could lose
Can’t savers who feel they need standard. This is true even for financial access to their current service providers
this guidance seek it out from a variety professionals whose clients manage under a similar “fiduciary” mandate.

12 CEI.ORG COMPETITIVE ENTERPRISE INSTITUTE


90 days—and longer for a 2011 that imposing a fiduciary stan-
rule having this large an eco- dard on IRA service providers “would
At Obama’s direction, nomic impact—to just 75 from result in higher costs and potentially
the DOL is massively the issuing of the rule. The
deadline for public comments
fewer service providers to self-directed
IRAs,” which “in turn, could result in
stretching its limited for this liberty-stealing rule fewer investment choices.” And the
is, ironically, the first business new rule is full of phrases such as “gen-
authority over pensions day after July 4. erally accepted investment strategies”
The new rule is essen- that could cause heightened liability
under the Employee tially a rehash of a previous for those who assist investors in buying
Retirement Income proposed regulation that nontraditional assets for their IRAs.
proved highly unpopular. That Even if an investor could find such
Security Act (ERISA) measure was withdrawn in a service provider willing to take this
2011 after massive bipartisan heightened risk, that investor could
of 1974 to bypass the opposition — including from face a tax on investments deemed
Securities and Exchange Vermont’s self-proclaimed
socialist senator Bernie
not to be in his or her “best interest.”
The DOL fact sheet, under a section
Commission, which has Sanders, who protested that entitled “Strengthening Enforcement of
it was too restrictive on his Consumer Protections,” explains that to
primary jurisdiction over state’s businesses that offered protect consumers, “the IRS can impose
investments, in an effort employee-sponsored owner-
ship plans (ESOPs). ESOPs
an excise tax on transactions based on
conflicted advice” and “can require
to reshape the retirement- are exempt from the new correction of such transactions involv-
version, but pretty much every ing plan sponsors, plan participants
savings industry. other mandate is intact, and and beneficiaries, and IRA owners.”
some new ones have been We should learn from Gruber’s
added. other admonition that “lack of transpar-
American Action Forum analysts As with the 2011 rule, the ency is a huge political advantage.”
Sam Batkins and Andy Winkler argue, new regulation would also make it Sunshine, conversely, is the best politi-
“This sea change in the law would extremely difficult for owners of IRAs to cal disinfectant. Those who do not wish
force all brokers to move to the more hold specific nontraditional investments. to be subject to the financial equiva-
expensive ‘Registered Investment Many self-directed IRAs contain, by the lent of Obamacare for their 401(k)s,
Adviser’ role or charge their clients individual investor’s design, everything IRAs, and other savings plans must do
more money.” from precious metals such as gold and everything they can to expose the true
Noting that the DOL estimates that silver to peer-to-peer loans from plat- paternalistic and redistributive agendas
the regulation could cost $5.7 billion forms like Prosper and Lending Club. behind the DOL’s “fiduciary rule.”
over 10 years, Batkins and Winkler Whether inclusion of these alternative
write that “the proposal easily quali- assets is a good investment strategy is
fies as both ‘economically significant’ a matter of opinion, but it should be a John Berlau (john.berlau@cei.org) is a
and major,” and therefore should be choice for the investor to make. Senior Fellow at CEI. A version of this
subject to heightened scrutiny. Instead, The Retirement Industry Trust article originally appeared in National
the Obama administration is truncating Association, a trade group for custo- Review.
the comment period from the normal dians of self-directed IRAs, warned in

For the latest on energy and environment policy, visit…

COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 13


THE THE THE
GOOD BAD UGLY

Second Circuit CEI Report: Amount National Research


Strikes Down NSA of Missouri Union Council Blasts FAA on
Bulk, Warrantless Subsidies Unknown to NextGen Delays
Surveillance Program the Public

On May 7, the U.S. Court of A March report from CEI reveals an In late April, the National Research
Appeals for the Second Circuit appalling lack of transparency in Council published a comprehen-
struck down the National Security how Missouri’s government agencies sive review of the Federal Aviation
Administration’s (NSA) domestic tele- account for taxpayer dollars going Administration’s (FAA) bungled rollout
phone surveillance program, which to labor union coffers. Public records of the multi-billion dollar update of
for years had collected millions of requests made by CEI aimed to find the nation’s air traffic control system,
Americans’ phone records. The Court out how much Missouri taxpay- known as NextGen. In the lengthy
ruled the NSA program was illegal ers were paying for “union release report, the authors harshly criticized
because it “exceeds the scope” of time,” a practice that allows public the FAA for its incompetence, noting
congressional authorization. CEI employees to conduct union business that, among other issues, “Not all parts
Vice President for Policy Wayne during work time without loss of pay. of the original vision will be achieved
Crews applauded the ruling, saying, But only a small minority of Missouri in the foreseeable future,” “NextGen,
“This ruling affirms the wisdom of the government agencies provided sat- as currently executed, is not broadly
citizenry’s watching and regulating isfactory responses to CEI’s requests. transformational,” and “‘NextGen’ has
secret government activities rather “At a time when taxpayer dollars become a misnomer.” CEI Fellow Marc
than passively being the target of are stretched thin in Missouri and Scribner called the report a wake-up
such. The federal government clearly other states, the government should call for Congress, urging lawmakers
expects us to give up our liberties for stop funding activities that only serve to remove air traffic control responsi-
its centralized vision of our security, special interests and do not advance bilities from the FAA in the forthcom-
when there are less brittle and inva- a public purpose,” said CEI Policy ing reauthorization due this fall. “CEI
sive alternatives. Worse is when we Analyst Trey Kovacs, who authored supports the creation of a non-govern-
give up our liberties to an unaccount- the report and filed the public mental, nonprofit air navigation service
able government whose very phi- records requests. provider,” said Scribner. “This would
losophy and approach undermines be similar to NavCanada, which we
genuine security and cybersecurity.” believe would speed the deployment of
new technologies, improve service and
safety, and reduce costs.”

14 CEI.ORG COMPETITIVE 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

COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 15


Nonprofit Org.
U.S. Postage
PAID
Permit 425
Southern MD

...END NOTES
Feds: Puerto Ricans Disabled Because They Speak Toyota Prius Batteries Good for the Planet, Great
Spanish—in Puerto Rico for Thieves
In April, the Office of Inspector General for the Social In May, a San Francisco TV station reported on a rash
Security Administration (SSA) issued an audit report that of battery thefts from Toyota Prius vehicles. According to
found the SSA had approved hundreds of disability requests the investigation, thieves are able to remove the batteries
for Puerto Ricans because they didn’t speak fluent English. in approximately 20 minutes. The batteries, which gener-
The rules SSA relied upon were intended to grant disability ally retail for $2,500, are then often sold on Craigslist
status to illiterate Americans. The government of Puerto Rico, for approximately $1,000. Reporters found that thieves
and most commercial ventures, conduct the vast majority smashed the cars’ windows, cut through the connecting
of business in Spanish. “SSA managers at various disability wires, and then pulled out the 150-pound battery pack.
decision levels stated Social Security is a national program, Technology news website Ars Technica recommended that
and the grids must be applied to the national economy, “if you’re a Prius owner who wants to mitigate against theft,
regardless of local conditions,” the audit said. Spanish is you should replace the battery’s existing 12mm bolts with
spoken by 95 percent of Puerto Ricans. “We found the tamper-proof bolts. Presumably that won’t stop the thieves
Agency did not make exceptions regarding the English- from first smashing your windows and damaging your
language grid rules for claimants who reside in Puerto Rico, upholstery, only to find out the battery can’t be removed,
even though Spanish is the predominant language spoken in however.”
the local economy,” the OIG said.
Colorado School Seizes Cookies from Parent-
Burnt Food Evacuates Iowa Capitol—Twice Packed Lunches
In late April, the Iowa Capitol was evacuated after a A school in the Denver, Colorado, suburb of Aurora
staffer burned macaroni and cheese in a microwave near gave a preschooler a rude lunch surprise. When preschooler
the Senate chamber. The incident occurred at around 11am, Natalee Pearson arrived home from school one day, she
according to the Associated Press, and the evacuation order told her mother that the cookies she had packed for dessert
was soon lifted. But just three weeks later, the Capitol was were deemed unacceptable by school officials. Instead, she
again evacuated after cafeteria smoke alarms were set off handed her mother Leeza a note from the school stating that
by burning food. The culprit in the second incident was a only healthy snacks were permitted on premises. Natalee’s
pizza crust. In both cases, there were no injuries or property mother was disturbed by the intervention and insult, telling
damage. The Iowa Department of Administrative Services is reporters that officials had taken their zealousness too far.
reportedly investigating Capitol Building cooking practices. Aurora Public Schools officials released a statement saying
that Natalee had received a healthy alternative after her
cookies had been seized.

16 CEI.ORG COMPETITIVE ENTERPRISE INSTITUTE