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COMPETITIVE ENTERPRISE INSTITUTE

VOL. 28, NO. 2 | SUMMER 2015

FEATURED ARTICLES

Big Data and 21st Century


4 Medicine
individualized experiences of thousands of
IAIN MURRAY BY BARTLEY J. MADDEN AND doctors and patients working on their own,
Britain Back from the Brink of GREGORY 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. Todays 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
only patients enrolled in FDA-monitored and more effectively than ever dreamed
ALSO IN THIS ISSUE
clinical trials, and a small number of other possible.
patients granted so-called compassionate The 21st Century Cures bill now being
Were All Greeks Now, use exemptions, may use them. drafted by Reps. Fred Upton (R-Mich.) and
by Bill Frezza. . . . . . . . . . . . . . . . . . . . . . . . 6 The justification for this policy is that Diana DeGette (D-Col.) proposes modest
A Federal Online Gambling Ban Would patients and doctors lack sufficient informa- steps to make drugs available to patients
Trample State Sovereignty tion to assess a developmental drugs 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-
The Good, the Bad, and the Ugly. . . . . . 14 that giving patients early access would tion technologies, we can provide greater
Media Mentions. . . . . . . . . . . . . . . . . . . . 15 make it harder to enroll enough subjects in choice to patients with serious and life-
the clinical trials needed to assess drugs threatening illnesses.
End Notes . . . . . . . . . . . . . . . . . . . . . . . . . 16 In a proposal we call Free to Choose
effectiveness and side effects. Worse, they
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 economyand the way
throughout the American economy. Notably, this
springs 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 Todays regulatory costs are greater than all
on. Even if we were to balance the federal budget federal spending in the early1990s, and exceed
tomorrow, wed 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 CEIs Obama signed 224 bills into law, while thou-
work. Regulation is discussed on Capitol Hill with sands of bureaucrats issued 3,554 rules and
far more frequencyand urgencynow, and by regulations. That means there were 16 rules for
far more members, both Republican and Democrat. every law passed last yeara ratio I call the
The last time the energy for getting things undone Unconstitutionality Index. As it shows, unelected
was this visible was in the 1990s, when unfunded regulators and bureaucrats do the bulk of lawmak-
mandates reform and the Congressional Review Act ing in America.
were enacted. Congress likes to blame agencies for excesses
The modern regulatory states continued advance like the Waters of the United States rule, but
shows these efforts werent enough, and policy Congress delegated that power, and has failed to
makers know it. Accordingly, there is now a bipar- restrain it. In addition to approving future agency
tisan proposal for a regulatory reduction commis- rules on the record, Congress must change the
sion. Ideas like one in, one out get discussed. The underlying statutes driving the regulatory flow.
Regulatory Accountability Act, to require more scru- Even Ten Thousand Commandments cannot
tiny of agency rules, has passed the House, and the adequately capture the presidents pen and phone
Regulations from the Executive In Need of Scrutiny approach to policy making. We can count regula-
(REINS) Act, to require congressional affirmation of tions, but guidance documents, notices, executive
all major agency regulations, is expected to pass orders, agency and presidential memos, and even
both houses of Congress this summer. blog posts and press releases all can set the tone for
This is President Obamas year of the veto, so policy making now. These can easily outnumber the
addressing overregulation remains difficult. But major rules issued by the agencies. This regulatory
address it we must. Based on federal government dark matter is something to which future editions
data, past reports, and contemporary studies, the of Ten Thousand Commandments and the policy
2015 edition of Ten Thousand Commandments making world in general needs to pay more atten-
estimates regulatory costs of $1.88 trillion annually tion. Stay tuned.

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


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 drugs 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 drugs 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 drugs 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 CEIs 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 Tomorrows 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.

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 3


Britain Back from the Brink of
Socialism (For Now)
paper and realized they couldnt vote of liberal philosophy in the UK. People
BY IAIN MURRAY for a socialist government seems not to vote for the more economically liberal
be the case. And it certainly wasnt the parties, but are not comfortable talk-

W ell, that was a surprise.


Everyone in British poli-
tics, including those in government,
case in Scotland, where the avowedly
leftist SNP swept the board.
The currently accepted explanation
ing about it. This also underscores my
point about business leaders having
withdrawn from the philosophical
assumed from the polls that the British among pollsters is the phenomenon of debate and the need for them to return.
General Election would end in a shy Toriespeople who were always Making the case for free enterprise is
dead heat, likely resulting in a Labour going to vote Conservative but would too important to be left to politicians.
minority government backed up by not admit it openly. There appears to Another explanation, which at
the Scottish National Party (SNP). Not be some evidence for this in the differ- least one pollster has suggested, is the
only did the pollsters say that, the bet- ence between the large exit poll, which lazy leftyounger left-wing voters
ting markets did too. came closer to the actual result than who failed to turn out in the numbers
How wrong we all were. The the pre-election polls, and the re-poll projected in pre-election polls. Yet, this
Conservatives were returned with an of online panelists after they voted. seems highly unlikely in a very tight
overall majority, Labour was wiped out In other words, people gladly election where every vote counts
by the SNP in Scotland, and the Liberal acknowledged they had voted conser- indeed, turnout was up overall. It
Democrats (the Conservatives coalition vative in the anonymous exit poll, but is, however, a worrying possibility,
partner) collapsed across the country. returned to dissembling when back at suggesting the UKs return to socialism
So what happened? Pollsters like their computers. (The pollsters, it should is only one charismatic leader away.
Lord Ashcroft have ruled out a late be noted, got most of the other vote All the left needs is someone who can
swing to the Conservatives, so the shares about right.) motivate this vote to turn out.
comforting idea, for us classical liber- If this is the case, then it says Still, whatever the reason, the
als, that people reached for their ballot something disturbing about the state Conservatives won a slim majority.

4 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE


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

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COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 5


Were All Greeks Now
its not yet reflected in consumer infla- inflated by leveraged speculation, it
BY BILL FREZZA tion indices. But in time it must be, and led to fascism in Europe and a U.S.
many who thought they were saving for experiment in socialism called the

T he Greek drama has entered its


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

6 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE


A Federal Online Gambling Ban
Would Trample State Sovereignty
off with the increase in Internet usage Howard J. Shaffer. Additionally,
BY MICHELLE MINTON in the 1990s and became a multi- Harvard studies have shown that
billion-dollar business long before online gambling is no more addict-

S ince the early days of the Republic,


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

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 7


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

8 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE


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

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by CEI Fellow Bill Frezza.
Learn more at RealClearRadio.org.

COMPETIVE 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, president of the Hayek Institute. Bader
traveled with economists, politicians, and local
business leaders as part of the Free Market Road
Showa tour of 35 European cities promoting
a message focused on removing barriers to
economic growth and entrepreneurship.

CEIs Trey Kovacs Promotes


Worker Freedom in Missouri
On April 29, 2015, CEI Policy Analyst Trey
Kovacs spoke at the Missouri Capitol in the
House Speakers Lounge. He discussed Missouris
pending right to work legislation and his report
on taxpayer 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


Nations Infrastructure
The Airports Council International-North
America (ACI-NA) and the Beyond
the Runway coalition hosted a panel
in Washington, D.C., on Americas
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 COMPETIVE ENTERPRISE INSTITUTE


CEIs Iain Murray Analyzes
the UK 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 Catos Tom Clougherty.
Murrays presentation focused on the likely
deregulatory 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, CEIs Lawson Bader, Myron Ebell, and Ryan Radia shared their policy insights with allies from
around the nation at the Heritage Foundations Resource Bank conference in Bellevue, Washington.

CEIs 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 Obamas
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?

COMPETIVE 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

I s Jonathan Gruber now advising


the Department of Labor (DOL)?
You might remember him as the MIT
and anti-fraud rules?
Absolutely not, says the
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 DOLs 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 Grubers 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 ineffectiveor even harm- the most part strictly applied the term
A DOL fact sheet describes the ful. So, in the administrations 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 investorsfor their own good, individualized investment advice on a
retirement investment advice. The sinis- of courseand 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 Obamas 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
Cant 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 COMPETIVE ENTERPRISE INSTITUTE


90 daysand longer for a 2011 that imposing a fiduciary stan-
rule having this large an eco- dard on IRA service providers would
At Obamas direction, nomic impactto 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 essentially a that could cause heightened liability
under the Employee rehash of a previous proposed for those who assist investors in buying
Retirement Income regulation that proved highly nontraditional assets for their IRAs.
unpopular. That measure Even if an investor could find such
Security Act (ERISA) was withdrawn in 2011 after a service provider willing to take this
massive bipartisan opposi- heightened risk, that investor could
of 1974 to bypass the tionincluding from Vermonts face a tax on investments deemed
Securities and Exchange self-proclaimed socialist
Senator Bernie Sanders,
not to be in his or her best interest.
The DOL fact sheet, under a section
Commission, which has who protested that it was too entitled Strengthening Enforcement of
restrictive on his states busi- Consumer Protections, explains that to
primary jurisdiction over nesses that offered employee- protect consumers, the IRS can impose
investments, in an effort sponsored ownership plans
(ESOPs). ESOPs are exempt
an excise tax on transactions based on
conflicted advice and can require
to reshape the retirement- from the new version, but pretty correction of such transactions involv-
much every other mandate ing plan sponsors, plan participants
savings industry. is intact, and some new ones and beneficiaries, and IRA owners.
have been added. We should learn from Grubers
As with the 2011 rule, the other admonition that lack of transpar-
American Action Forum analysts new regulation would also ency is a huge political advantage.
Sam Batkins and Andy Winkler argue, make it extremely difficult for owners Sunshine, conversely, is the best politi-
This sea change in the law would of IRAs to hold specific nontraditional cal disinfectant. Those who do not wish
force all brokers to move to the more investments. Many self-directed IRAs to be subjected to the financial equiva-
expensive Registered Investment contain, by the individual investors lent of Obamacare for their 401(k)s,
Adviser role or charge their clients design, everything from precious IRAs, and other savings plans must do
more money. metals such as gold and silver to everything they can to expose the true
Noting that the DOL estimates that peer-to-peer loans from platforms like paternalistic and redistributive agendas
the regulation could cost $5.7 billion Prosper and Lending Club. Whether behind the DOLs fiduciary rule.
over 10 years, Batkins and Winkler inclusion of these alternative assets is a
write that the proposal easily quali- good investment strategy is a matter of
fies as both economically significant opinion, but it should be a choice for John Berlau (john.berlau@cei.org) is a
and major, and therefore should be 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

COMPETIVE 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 Missouris government agencies sive review of the Federal Aviation
Administrations (NSA) domestic tele- account for taxpayer dollars going Administrations (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 nations air traffic control system,
Americans phone records. The Court out how much Missouri taxpayers known as NextGen. In the lengthy
ruled the NSA program was illegal were paying for union release time, report, the authors harshly criticized
because it exceeds the scope of a practice that allows public employ- the FAA for its incompetence, noting
congressional authorization. CEI ees to conduct union business during that, among other issues, Not all
Vice President for Policy Wayne work time without loss of pay. But only parts of the original vision will be
Crews applauded the ruling, saying, a small minority of Missouri govern- achieved in the foreseeable future,
This ruling affirms the wisdom of the ment agencies provided satisfactory NextGen, as currently executed, is
citizenrys watching and regulating responses to CEIs requests. At a time not broadly transformational, and
secret government activities rather when taxpayer dollars are stretched NextGen has become a misnomer.
than passively being the target of thin in Missouri and other states, CEI Fellow Marc Scribner called the
such. The federal government clearly the government should stop fund- report a wake-up call for Congress,
expects us to give up our liberties for ing activities that only serve special urging lawmakers to remove air traffic
its centralized vision of our security, interests and do not advance a public control responsibilities from the FAA in
when there are less brittle and inva- purpose, said CEI Policy Analyst Trey the forthcoming reauthorization due
sive alternatives. Worse is when we Kovacs, who authored the report and this fall. CEI supports the creation
give up our liberties to an unaccount- filed the public records requests. of a non-governmental, nonprofit air
able government whose very phi- navigation service provider, said
losophy and approach undermines Scribner. This would be similar to
genuine security and cybersecurity. NavCanada, which we believe would
speed the deployment of new tech-
nologies, improve service and safety,
and reduce costs.

14 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE


MediaMENTIONS
The New York theatre maga- The Washington Post quotes CEI Senior Fellow
zine Playbill quotes CEI Fellow CEIs Hans Bader on President Marlo Lewis
Marc Scribner on the legislative Obamas misleading statements discusses bio-
problem facing Times Squares 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 Squares 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 hadnt learned of it in in 2017 and 2018, and EPA doesnt
stupidly, and then forgetting about time to sue. have a solution for that. Its 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 Crewss work on the cost Some analystssay the administra-
subject to the Highway Beautification of regulation inU.S. News & tions 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 whetherMr.
CEI Vice President Wayne Crews has reached $1.88 trillion. Obamawill have theauthorityto
is quoted in Fortune on Verizons Federal environmental, safety conclude the agreement without major
AOL buyout: and health, and economic regulations changes byCongress.
This is a positioning deal, to pro- affect the economy by hundreds of IfTPAstays 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, reports author, Competitive Enterprise much more difficult, said Frances B.
Jr., vice president for policy and Institute Vice President Clyde Wayne Smith, an analyston 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
Feds: Puerto Ricans Disabled Because They Speak Toyota Prius Batteries Good for the Planet, Great
Spanishin 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 didnt 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 youre a Prius owner who wants to mitigate against theft,
regardless of local conditions, the audit said. Spanish is you should replace the batterys existing 12mm bolts with
spoken by 95 percent of Puerto Ricans. We found the tamper-proof bolts. Presumably that wont 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 cant 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 CapitolTwice 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. Natalees
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 COMPETIVE ENTERPRISE INSTITUTE