Volume 15, Issue 53: December 31, 2013
- The Folly of Ethanol
- Better Choices for Educational Reform
- Taxpayer Bailouts for Big Insurance?
- U.S. Should Avoid Syrian Civil War
- New Blog Posts
- Selected News Alerts
1) The Folly of Ethanol
In an effort to conserve resources, federal and state policymakers have discarded one of the most important resources of all: common sense. Take the government push for ethanol. Mandating that gasoline suppliers blend their products with ethanol is supposed to be good for the environment. But the result is more economic and environmental waste, according to Independent Institute Research Fellow Burton A. Abrams, author of The Terrible 10: A Century of Economy Folly.
Ethanol now accounts for about one third of the corn crop in the United States. As more and more farmland is devoted to growing corn for ethanol, the production of other crops falls, leading to higher prices for them. Higher agricultural prices make it easier for politicians to cut farm subsidies, but dont be fooled. Youre paying for this reduction in the form of higher prices. The governments mandates and subsidies for ethanol have also entailed another hidden cost: Because ethanol tends to corrode metal parts and rubber tubing on some motors, consumers are stuck with higher bills for equipment repairs and more frequent replacements.
But perhaps the greatest folly related to ethanol policy is environmental. More fertilizers, pesticides, and water are now used for corn production. More diesel and gas-powered farm equipment are used to manage corn crops. More ground transportation must be employed to move corn and ethanol, compared to fossil fuels. And more gasoline must be used because gas thats combined with ethanol results in worse car mileage. All told, the environmental costs from using corn-based ethanol may be higher than using straight gasoline, Abrams concludes.
Ethanol Isnt Green, Isnt Efficient, and Shouldnt Be Subsidized, by Burton A. Abrams (The Daily Caller, 12/27/13)
The Terrible 10: A Century of Economic Folly, by Burton A. Abrams
2) Better Choices for Educational Reform
Common Core is supposed to make Americas school children better prepared for college and work life. In reality, its leaders have proposed weakening academic standards in order to obtain political buy-in. Stanford University mathematician James Milgram and University of Arkansas education professor Sandra Stotsky both served on the Common Core Validation Committee and have written stinging critiques exposing the lack of rigor in the Common Core curriculum. The program is also under fire for its role in the dissemination of personal dataincluding students disciplinary records and parents political affiliationsto subsidized educational testing companies. Yet as bad as these problems areand politicization and invasions of privacy are serious chargesthey are not Common Cores chief flaws, according to Independent Institute Research Fellow Vicki E. Alger.
Ultimately, Common Core rests on the faulty premise that one centralized entity knows whats best for all 55 million students nationwide, Alger writes in U.S. News and World Report. Of course, children need to learn the basics, but there are better ways of accomplishing that goal than embracing a national curriculum developed by Washington. Parental choice programs, for example, educate students to high standards, without limiting the diverse schooling options needed to meet their unique needs.
Parental choice means higher graduation rates, higher college attendance rates, and higher reading and math scores than their peers. This is good news to the nearly 245,000 students, most of them from low-income families, who are enrolled in voucher and tax-credit scholarship programs. But much can be done to extend these and related educational benefits to the millions of students who lack access to the parental choice programs offered in 16 states and the District of Columbia. Parental choice, Alger concludes, ensures high standards and encourages the customization students need to succeed in school and beyondwithout all the cost, compromised rigor, or political agendas.
Rotten to the Core, by Vicki E. Alger (U.S. News & World Report, 12/17/13)
School Choices: True and False, by John D. Merrifield
Can Teachers Own Their Own Schools? New Strategies for Educational Excellence, by Richard K. Vedder
3) Taxpayer Bailouts for Big Insurance?
Although the snafus of the Obamacare rollout have received ample media coverage, the problems with President Obamas other major first-term reform legislationthe Dodd-Frank Acthave escaped media scrutiny and public concern. The law was supposed to save taxpayers money by preventing government regulators from bailing out financial institutions whose problems the regulators would deem to be a threat to the stability of the entire financial system. But rather than end the policy of too big to fail, Dodd-Frank has enshrined it, according to Independent Institute Research Fellow Vern P. McKinley and Hester Peirce.
The DoddFrank Wall Street Reform and Consumer Protection Act created a commissionthe Financial Stability Oversight Councilwith the power to designate certain companies as systemically important to the stability of the financial system. Those companies would face greater regulatory oversight. If that extra scrutiny were deemed insufficient, the firms could potentially receive federal bailouts if the regulators believed this would prevent harm to the entire financial system. Unfortunately for taxpayers, theres ample justification for skepticism about the need for the bailout of so-called systemically important institutions. Years after the 2008 bailout of AIG, the regulators still havent made public their internal memos detailing the basis for their interventions. Could it be because they lacked a solid analysis that demonstrated a threat to the financial system? Former FDIC Commissioner Sheila Blair has admitted as much in her memoir.
The bad news for the economy is that, despite several protests from within the Financial Stability Oversight Council, the commission this year designated several large insurance companies as systemically important. They include GE Capital, AIG, and Prudential Financial; MetLife may be next. One problem is that Dodd-Frank has a provision called the Collins Amendment that requires regulators to apply bank-style capital standards to the designated institutions, even though insurance companies are structured differently than banks. (This one-size-fits-all approach is why several members of the council voted against these designations.) Moreover, designating these firms as systemically important could mean that regulators will grant them special favorsaccess to subsidized lines of credit, for examplemuch to the competitive disadvantage of their smaller rivals. Heres how McKinley and Peirce sum up the problem in their new Forbes op-ed: Dodd-Frank has exacerbated too-big-to fail by making it a permanent fixture of the insurance industry.... Its just a matter of time before bad legislation turns into market chaos.
President Obama Faces a Bigger Ticking Time Bomb than Obamacare Itself, by Vern P. McKinley and Hester Peirce (Forbes, 12/19/13)
Financing Failure: A Century of Bailouts, by Vern P. McKinley
Risky Business: Insurance Markets and Regulation, edited by Lawrence S. Powell
4) U.S. Should Avoid Syrian Civil War
Prince Turki al-Faisal of Saudi Arabia recently scolded the White House for limiting U.S. involvement in Syrias civil war. Like the leaders of Israel, the prince wishes the United States would help bring down the Assad regime. Its safe to say that his remarks have more to do with the Saudi regimes animosity toward its Shiite rivalsin Tehran as well as in Damascusthan with genuine humanitarian concerns.
In fact, the Saudis, who have a horrendous human rights record, likely dont care, one way or the other, about harming Syrian civilians, Independent Institute Senior Fellow Ivan Eland writes in the Huffington Post.
The Syrian civil war, many Saudis and Israelis fear, is a litmus test for whether the United States will attack Irans nuclear research and development sites: If Washington fails to bomb Syrian military installations, perhaps it wont bomb Iran either. However, even if this is true, Eland writes, Iran has nevertheless come to the negotiating table and reached an interim agreement to freeze its nuclear programs and even roll back at least one part of it. The Obama administration should continue its policy of relative restraint with respect to Shiite governments, Eland argues, lest it spark retaliation in the form of terrorist acts against Americans.
Ignore Saudi and Israeli Goading for a More Muscular U.S. Mideast Policy, by Ivan Eland (The Huffington Post, 12/23/13)
No War for Oil: U.S. Dependency and the Middle East, by Ivan Eland
5) New Blog Posts
From The Beacon:
Randall Holcombe (12/27/13)
Hooray! The Medicare Doc Fix Is Fixed Until March 31
John R. Graham (12/26/13)
Obamacare Health Insurance Has Narrow Networks, but Why Are There Any Networks at All?
John R. Graham (12/24/13)
The Independent ReviewWinter Issue Now Available
Carl Close (12/23/13)
From MyGovCost News & Blog:
Obamacare Holiday Cheer
K. Lloyd Billingsley (12/30/13)
The Road that Costs $5.32 Million per Mile
Craig Eyermann (12/28/13)
Stockings Stuffed All Year for California City Officials
K. Lloyd Billingsley (12/25/13)
Christmas for Government Waste! (Part 2)
Craig Eyermann (12/24/13)
6) Selected News Alerts