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A Tsunami of Bad Economics

Ryan Young — Wed, 23 May 2012 17:26:20 +0000

The broken Krugman fallacy.

Japan was hit by a tsunami last year on March 11. That’s not news, but the reaction of some economists sure is. Just imagine looking up at a hundred-foot tall column of water rushing towards you at highway speed. This was the last thing some people ever saw. According to official estimates, that wave killed more than 15,000 people and injured nearly 27,000 more. What’s the upside to this natural disaster? I’ll be blunt. There isn’t one. But some economists think there is.

To come to such an inhumane conclusion is to forget the economic discipline’s most fundamental lessons. Now that a year has passed and rebuilding is well underway, economic data is starting to come in that quantifies the tsunami’s impact. As it turns out, Japan’s GDP is growing twice as fast as America’s. Paul Krugman, in a recent post in his New York Times blog, argues that the tsunami played a starring role. He writes:

So Japan, which is spending heavily for post-tsunami reconstruction, is growing quite fast, while Italy, which is imposing austerity measures, is shrinking almost equally fast. There seems to be some kind of lesson here about macroeconomics, but I can’t quite put my finger on it...

Imagine for a minute that the tsunami never happened. Japan’s GDP growth would probably be slower; Krugman is almost certainly correct on that. And yet, a tsunami-less Japan would be better off. For one, the survivors wouldn’t have 15,000 holes in their hearts where their families, friends, and neighbors used to be.

As far as the economy goes, all that reconstruction spending would instead go to creating brand new wealth, as opposed to merely replacing what people already had to begin with. It is better to build than to rebuild.

Krugman, just as he did after 9/11, has fallen for the broken window fallacy. If a kid breaks a window, that creates a job for the repairman and boosts the economy. The lesson: break every window in the world, and we’ll all be rich. That tsunami broke a lot of windows, and according to Krugman, Japan is reaping the benefits. Maybe we should hope for another one.

If there is indeed a macroeconomic lesson here, it is to not rely so heavily as Krugman does on GDP to measure how well an economy is doing. GDP certainly has its uses. But over-reliance on that single statistic can lead to ghastly conclusions such as the one Krugman hints at: pray for more tsunamis. Or, failing that, alien invasions (I’m serious).

The trouble with such thinking, besides its basic inhumanity, is that Japan’s GDP surge isn’t evidence that its people are richer because they endured a tsunami.

To understand why, you need to know the difference between a stock and a flow. Things such as buildings and roads are stocks of wealth. GDP doesn’t measure that. It only measures the flow of wealth. Buildings and roads only add to GDP in the year in which they are built. But they remain tangible stocks of wealth for as long as they exist.

Despite Fannie Mae’s best efforts, your home is worth more than zero -- even if it’s more than a year old. GDP doesn’t capture that. And when that tsunami practically washed away entire towns, Japan’s GDP didn’t go down by a single yen. Clearly this is not a good yardstick for measuring the tsunami’s economic impact.

GDP measures how fast wealth is being created, and the faster the better. But the speed of that flow doesn’t measure how much wealth actually exists at a given time. Nor does it distinguish between replacing something that was there before, versus creating something new. The tsunami destroyed a good chunk of Japan’s stock of wealth. The rush to restore it has quickened the flow of GDP, which is the cause for Krugman’s ghoulish celebration. But Japan is still poorer than it would be if the tsunami never happened.

Natural disasters are called disasters for two reasons. One is that they kill people. The other is that they destroy wealth, even if post-disaster GDP makes it look they create it.

Ryan Young

Wed, 2012-05-23

Citation Source:

The American Spectator

http://spectator.org/archives/2012/05/23/a-tsunami-of-bad-economics

Higher Education Bubble Update

Hans Bader — Tue, 22 May 2012 20:50:56 +0000

From Glenn Reynolds' Instapundit:

HIGHER EDUCATION BUBBLE UPDATE: Are We Subsidizing Student Debt Too Generously? “Why am I subsidizing student loans for Harvard kids? . . . I have no idea why. It never made sense to me even when I was at Harvard. Harvard has a huge endowment, and just hoards it. It’s not mostly for the students. As the Dean of Harvard Law School publicly said then, students are merely ‘incidental.’”

Hans Bader

Tue, 2012-05-22

Citation Source:

Instapundit

http://pjmedia.com/instapundit/143502/

Obamacare’s Constitutional Defects, First Amendment Division

Hans Bader — Tue, 22 May 2012 20:42:33 +0000

From Ilya Shapiro's post on Cato@Liberty:

As the Competitive Enterprise Institute’s Hans Bader put it:

Obama’s HHS secretary sought to gag insurers that disclosed how Obamacare’s mandates are increasing the cost of health insurance, even though such speech is clearly protected by the First Amendment, telling them if they did so, they could be excluded from health insurance exchanges. Prior to that, the Obama administration attempted to gag insurers from disclosing how Obamacare harms Medicare Advantage participants, drawing criticism from First Amendment experts like UCLA law professor Eugene Volokh, the author of two First Amendment textbooks.

Beyond the unseemliness of it all, however, there’s also a constitutional problem: The government can’t require people to make politicized statements, whether that’s “Live Free or Die” on license plate or the labeling of consumer products where the labels aren’t justified on fraud-prevention or public health grounds. See some other examples and legal analysis in Bader’s post at CEI’s blog.

Hans Bader

Tue, 2012-05-22

Citation Source:

Cato@Liberty

http://www.cato-at-liberty.org/obamacares-constitutional-defects-first-amendment-division/

Medical Roundup

Hans Bader — Tue, 22 May 2012 21:05:52 +0000

From Overlawyered:

Forcing companies to make politicized disclosures to customers implicates First Amendment [Hans Bader on HHS "must credit ObamaCare" reg]

Hans Bader

Mon, 2012-05-21

Citation Source:

Overlawyered

http://overlawyered.com/2012/05/medical-roundup-4/

EPA's Friday Afternoon Surprise, Drug Imports, Google's Self-Driving Car, H-1B visas

Nicole Ciandella — Mon, 21 May 2012 21:50:12 +0000

PREEMPTION BY THE EPA

Resourcefulearth.org: EPA Overreach Threatens Entire U.S. Economy

On Friday afternoon, the Environmental Protection Agency (EPA) released a watershed document that provides a dangerous and misleading analysis of the Pebble Mine in Alaska. Not only does the report fail to recognize that Pebble will be state-of-the-art and one of the most modern, environmentally-friendly mines in the world, but the report also disregards the thousands of desperately needed Alaskan jobs that the mine would provide.

Serious implications await if the EPA preemptively denies Pebble’s permits, as this move would effectively give the EPA massive (and unconstitutional) powers. By allowing the EPA to deny Pebble, precedent would allow the agency to also kill any building project that has the potential to impact American waterways without ever going through the permitting process – and without the input from local, state, or other federal agencies. > Read the full comment on Resourcefulearth.org

DRUG IMPORTS - GREGORY CONKO

WashingtonTimes.com: High price of cheap drug imports

With the Senate set to vote on one of the few “must-pass” bills of the year, pharmaceutical industry critics are plotting ways to add poison pills to the Prescription Drug User Fee Act. PDUFA, as it’s known in health policy circles, was first enacted in 1992 and has significantly sped up the Food and Drug Administration’s (FDA) drug-approval process, giving new hope to millions of patients suffering from debilitating and fatal diseases that a cure is on the way. It is arguably the most important piece of health care legislation you’ve never heard of.

GOOGLE'S SELF-DRIVING CAR - MARC SCRIBNER

Openmarket.org: The Future of Automobility Is (Almost) Here: Google’s Self-Driving Car

This morning, CEI’s resident transportation policy junkies — General Counsel Sam Kazman and myself — had the opportunity to test-ride Google’s prototype self-driving car in downtown Washington, D.C. In October 2010, I wrote about the Google driverless car’s feat of secretly logging 140,000 miles on U.S. public roads without a single accident.

Google’s car uses a wide variety of sensors that detect pedestrians, objects, and infrastructure in real time. It is the sustained rapid collection of conditions data that allows the car to slow or stop suddenly if a pedestrian enters the street, a car suddenly changes lanes or pulls away from the curb, or a lane is closed for construction or an event.

IMMIGRATION - DAVID BIER

FoxNews.com: Why is Team Obama making it so hard to hire highly-skilled foreign workers?

Sen. John Cornyn (R-Texas) introduced a bill Tuesday that would allow more Ph.Ds, scientists, and other high-skilled workers trained at U.S. universities to remain in America. The bill (S. 3185) would increase the H-1B visa quota by 55,000, but for some, the proposal doesn’t go far enough.

Mon, 2012-05-21

Sub Title:

Today in the News

Grassroot Perspective: Regulators Run Wild, the West Side’s Story, and More

Clyde Wayne Crews — Wed, 23 May 2012 17:37:45 +0000

From Malia Hill's column in The Hawaii Reporter:

Credit must be given to whoever thought up the title for the new report on federal regulation from the Competitive Enterprise Institute: Ten Thousand Commandments. It pretty much sums up the problem inherent in our over-regulated nation. Though few may be hardy enough to read the entirety of the 66 page document, it is well worth a brief look, if only to remind yourself of what the authors work hard to remind us all—that regulations function as hidden law (and a hidden tax) on our society. A few stomach-turning facts from this report include: that the Small Business Administration estimate that annual regulatory compliance costs more than $1.752 trillion; given annual government spending of about $3.598 trillion (yes, really), this regulatory “hidden tax” accounts for more than 48% of federal spending; and in 2011, agencies issued 3807 final rules and proposed 2898 rules, an increase of 6.5% and 18.8% over the previous year, respectively.

Clyde Wayne Crews

Fri, 2012-05-18

Citation Source:

The Hawaii Reporter

http://www.hawaiireporter.com/grassroot-perspective-regulators-run-wild-the-west-sides-story-and-more/123

High Price of Cheap Drug Imports

Gregory Conko — Wed, 23 May 2012 20:39:46 +0000

Here’s how it works. Biopharmaceutical companies pay a “user fee” to the FDA each time they submit a drug or other medical product for the agency’s safety and effectiveness review. Under a bill circulating in the Senate, the industry will pay $4.6 billion in fees over the next five years.

Before PDUFA, FDA typically took two years or more to evaluate new drugs - that’s after they already had been through nearly 10 years of clinical testing. The net effect was that American patients were often the last to benefit from important medical breakthroughs. Since 1992, the PDUFA user fees have enabled the FDA to hire new medical reviewers and improve its scientific capacity. More important, the average drug-approval period was cut in half, to just more than a year.

Ideally, individual firms should not have to pay user fees to fund regulatory oversight that is ostensibly for the public’s benefit. But in an era of tighter federal budgets, Congress has given the FDA more and more responsibilities but not the additional revenue to fund them. Without PDUFA, the FDA’s budget shortfall would mean fewer new medicines reaching the patients who need them.

Reauthorizing the user fees is a second-best choice, but in the face of a slow economy and pressure to reduce the federal budget deficit, it seems to be the best available option. That’s why small-government conservatives can vote for PDUFA with a clear conscience. But this year’s bill also includes a few much-needed FDA reforms that should make reauthorization a no-brainer.

One provision would expand the Accelerated Approval pathway, which provides for streamlined testing and review of “breakthrough” therapies for serious and life-threatening diseases. The bill also establishes performance standards for the drug-review process that should make the FDA more efficient and responsive. These and other measures will help lower development costs and speed drugs to market. But the biggest winners would be patients waiting for new drugs to be approved.

What Republicans should reject, however, is any attempt to attach amendments to PDUFA expanding FDA’s regulatory authority or legalizing prescription drug importation. This latter idea is a real threat, with a proposal being floated by a bipartisan group of senators attracted to the superficial appeal of reducing drug prices.

Without question, brand-name drugs are often cheaper in countries with rigid price controls than in the United States. But piggybacking on other countries’ price controls would have serious negative consequences for American patients. In the short run, it might result in lower prices for drugs already on the market. In the long run, it would reduce the capital available for drug research and reduce the flow of new medicines to the marketplace.

As the late Milton Friedman and more than 160 other economists warned the last time Congress seriously considered importation, “American consumers would get the short-term windfall of lower prices, but they would end up unnecessarily suffering and living shorter lives - because promising new therapies would be delayed or not even developed.”

On average, it takes more than $1 billion and 15 years of development and testing to win FDA approval for a new drug. It’s a staggering investment in money, time and manpower. But for the industry to fund the innovation that has led to scientific breakthroughs in cancer, Alzheimer’s, AIDS and other deadly diseases, those investments must be recouped.

It is an unfortunate reality that many of the most innovative new medicines are so expensive. But importing another country’s prescription drugs essentially imports their price controls. In effect, it would let, say, Canada, set the price ceiling for drugs in the United States. That goes against the very core of the free-market principles held by millions of Americans.

Importation is myopic, deeply flawed and at best would deliver minimal, short-term gains at the expense of long-term patient health. The message to Senate Republicans should be clear: Pass PDUFA, reject importation.

Gregory Conko

Fri, 2012-05-18

Citation Source:

The Washington Times

http://www.washingtontimes.com/news/2012/may/18/high-price-of-cheap-drug-imports/

Letter to the Editor: U.S. Principles at Stake As Government Keeps Growing

Fred L. Smith, Jr. — Wed, 23 May 2012 17:33:18 +0000

Sir, Martin Wolf’s latest column ignores the wisdom of conservative commentator Stan Evans: “The problem with pragmatism is that it doesn’t work!” (“American power needs pragmatism”, May 16).

Mr Wolf decries “the rising intransigence of the Republican party”, dismissing the fact that principles are at stake in policy fights. And he says GOP obstructionism is less than meets the eye. This week, Congress reauthorised the mercantilist Export-Import Bank with strong Republican support. Despite the efforts of Tea Party-backed freshmen, government keeps growing.

Mr Wolf’s rebuke of “the exploding role of money in politics” rings hollow. Efforts to intimidate businesses to stop funding pro-free market organisations such as the American Legislative Exchange Council, suggest that the real threat in America stems from a campaign to drive the market from the marketplace of ideas.

Wouldn’t Europe be in a much stronger position had it had a similarly vigorous debate on its financial crisis?

Mr Wolf seems to see economic changes in zero-sum terms, measuring only changes in income shares earned by various segments of the population, failing to recognise that many of those entrepreneurial gains are earned by newcomers.

The paths to the future carved out by these individuals will be critical in a world destabilised by pervasive government interventionist policies.

Mr Wolf warns: “If Americans choose to make their government fail, the US is sure to do so, too.” Americans have no desire to see our government fail, but we do wish to see it return to its appropriate sphere, as was intended by our founders.

Fred L. Smith, Jr.

Fri, 2012-05-18

Citation Source:

Financial Times

http://www.ft.com/intl/cms/s/0/017c512e-9f62-11e1-a455-00144feabdc0.html#axzz1viOA5pzx

Team Obama's War on Bald Eagles

Nicole Ciandella — Wed, 23 May 2012 17:47:50 +0000

From Deroy Murdock's column in The Washington Times:

“Lethal take” is Washington-speak for “federally approved eagle slaughter.” Precise eagle-kill numbers are tough to determine, in part because “other animals gobble the carcasses almost immediately,” the Competitive Enterprise Institute’s R.J. Smith explains. About 67 golden eagles are estimated to be killed annually just at Northern California’s Altamont Pass wind farm.

Robert J. Smith

Fri, 2012-05-18

Citation Source:

The Washington Times

http://www.washingtontimes.com/news/2012/may/18/team-obamas-war-on-bald-eagles/?page=1

Comcast's Puny Data Cap Increase

Ryan Radia — Fri, 18 May 2012 19:50:17 +0000

From Timothy B. Lee's op-ed on Forbes:

Ryan Radia wants to know what I think of Comcast’s announcement that it’s raising its data cap from 250 GB to 300 GB and making various other changes to its usage-based pricing scheme.

Ryan Radia

Fri, 2012-05-18

Citation Source:

Forbes

http://www.forbes.com/sites/timothylee/2012/05/18/comcasts-puny-data-cap-increase/

Corporate Campaigns: How Unions Take the Secret Ballot Away from American Workers

Christine Hall — Fri, 18 May 2012 09:48:36 +0000

Washington, D.C., May 18, 2012 - Labor unions are resorting to imtimidation strategies called "corporate campaigns" to strong-arm companies into eliminating the secret ballot in union elections, a new report shows. The Labor Watch report, "Corporate Campaigns: How Unions Take the Secret Ballot Away from American Workers," is authored by CEI labor policy experts, Trey Kovacs and F. Vincent Vernuccio and published by the Capital Research Center.

AFL-CIO President Richard Trumka once called a corporate campaign the “death of a thousand cuts.” He was referring to a type of union organizing strategy that uses an arsenal of legal, political, and public relations attacks to wear down a company’s resistance to unionization. These tactics are intended to impose financial and legal liabilities on the target company, sully its reputation with its suppliers, shareholders and customers, and hurt its standing in the community by subjecting corporate officers to personal embarrassment.

The report goes on to highlight instances in which unions have pressured companies to sign "neutrality agreements" to take away the right of employees to a secret ballot, used an anti-immigration bill against foreign auto companies hiring American workers, and engaged in shocking activities such as putting plastic cockroaches on food and claiming hospital food was contaminated.

So, what can be done?

The authors recommend some specific actions to fight back. Mainly, passing ballot measures to guarantee secret ballot union elections, passing a federal bill to do the same, and getting Congress to pass legislation allowing workers to re-elect their union every three years.

> View the CRC Labor Watch report, Corporate Campaigns: How Unions Take the Secret Ballot Away from American Workers

Christine Hall

Fri, 2012-05-18

Sub Title:

New Report on Union Tactics to Intimidate Companies

Give a Man a Fish

Iain Murray — Fri, 18 May 2012 11:25:41 +0000

Full Document Available in PDF

Some policy makers and environmental advocacy groups are beginning to realize that the solution lies not in further government regulation, but in investing fishermen with property rights. However, government bureaucrats are also attempting to utilize this insight to gain even more power over fisheries, threatening to derail the momentum toward a more rational allocation of ocean resources. That would be bad news for both fish populations and the people who depend on them for their livelihood.

The oceans are an important source of food and income for people around the world. In 2007, proteins from fish accounted for 15.7 percent of the total global animal protein supply. In 2008, an estimated 44.9 million people were directly engaged in the fishing industry (both marine capture and aquaculture). However, the world’s fish stocks are not limitless, and are being depleted rapidly.

Two principal factors are at work. First, the billions of dollars in subsidies bestowed on the fishing industry by many governments makes overfishing profitable, even as per capita fishing yields decline. Second, the absence of property rights over fish in most countries means that there is no incentive for any party to husband this resource. In fact, the absence of property rights, combined with subsidies, creates a perverse incentive to deplete this scarce resource.

Attempts to prevent overfishing by promulgating regulations (which are often at odds with subsidies) have proved both ineffective and impossible to enforce. As long as the incentives are skewed by bad government policy, many fishermen will continue to work around regulations or simply neglect to report some of their catches—a practice known as “black” fishing that is all too prevalent. Ending subsidies and extending genuine property rights to fisheries will help solve these problems.

Iain Murray

Roger Abbott

Fri, 2012-05-18

Sub Title:

The Case For a Property Rights Approach to Fisheries Management

Overregulation Shackles Next Facebook

John Berlau — Fri, 18 May 2012 20:59:02 +0000

Today, Facebook finally goes public with a market capitalization of $104 billion. Its initial public offering (IPO) is the capstone of its amazing ascent that changed the way the world communicates.

By contrast, other top American companies went public at much earlier stages in their growth. Barely anyone outside of the Atlanta area had heard of Home Depot when it went public in 1981 with just four stores in its name. The difference? Much of it has to do with the layers of regulation from the past decade that have made going and staying public so costly for smaller companies.

These rules are always justified as needed to go after “fat cats.” When George W. Bush signed Sarbanes-Oxley in 2002 and Barack Obama signed Dodd-Frank in 2010, both men cited scandals involving large corporations. After the JPMorgan Chase loss of $2 billion, the Beltway elites are painting any criticism of financial regulation as siding with the “big banks.”

But it’s smaller firms and smaller investors who have been the most burdened by these costly and complex rules, including the firms that could be the next Facebook or Home Depot. Home Depot co-founder Bernie Marcus has said many times the company likely never could have gotten off the ground if Sarbox, Dodd-Frank, and other of today’s regulations had been in effect. “We could never succeed today,” Marcus bluntly told radio host Hugh Hewitt last June.

Even a firm as big as Facebook had difficulty navigating this regulatory maze, stating in its initial IPO filing that “compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources.” But what’s “not seen,” in the words of classical economist Frederic Bastiat, are the innovations from the number of firms that could never have launched due to the prohibitive costs of these rules.

These regulations have also robbed ordinary investors of the opportunity to grow wealthy with Facebook in its early stages. Ditto with other recent IPOs like LinkedIn, Pandora, and Zynga.

IPOs of the past few years can be called “Cheers IPOs” because to paraphrase the theme song of the 1980s television sitcom, everybody knows their names. But what a healthy economy needs is IPOs of companies you have never heard of, which go public not to realize market value for the shares of their founders, but to raise money to expand operations and jobs.

Unlike the case with the Cheers IPOs and similar to that of Home Depot, no one outside of certain regions had heard of Starbucks and PetSmart when these retailers went public in the early 1990s. These firms used the money raised from the IPOs to become the dominant national chains they are today, creating thousands of jobs along the way. The relative ease for companies to go public in the 1990s helped the economy power out of its recession early in that decade and move toward the boom in the latter part.

But as Marcus has noted, firms as small as Home Depot in 1981 could never go public today with the costs of Sarbox and Dodd-Frank weighing them down. The SEC has calculated that the average annual costs of one Sarbox provision alone — the “internal control” mandates of Section 404, come to $2.3 million.

Statistics on both the reduced number and increased size of IPOs show the dramatic effects of these regulatory costs. In the years since Sarbanes-Oxley was passed in 2002 — a span that included good economic times as well as bad — not once has the number of IPOs come close to the numbers recorded during the slow-growth years of the early 1990s, let alone the boom years of the later part of that decade.

As I noted in February testimony to the House Energy and Commerce Committee, there were about 50 more IPOs in 1991 than there were in 2006 or 2007, relatively good years for economic growth.

The decline is especially severe among small firms. Even Obama’s Council on Jobs and Competitiveness has noted that “the share of IPOs that were smaller [in market capitalization] than $50 million fell from 80 percent in the 1990s to 20 percent in the 2000s.” In fact, in addition to Facebook, LinkedIn, Zynga, and Pandora all had market capitalizations that exceeded $1 billion when they went public.

But there is some good news. Since the slightly deregulatory Jumpstart Our Business Startups (JOBS) Act passed Congress and was signed by President Obama in early April — after much stalling from statist liberals in the Democrat-controlled Senate — there has been a trickle of smaller firms returning to the IPO market.

Among other things, the JOBS Act creates a five-year “on-ramp” for most firms going public in which they are exempt from the Sarbox internal control mandates, the Dodd-Frank proxy provisions and other burdensome regulations.

Despite Obama’s signature, the JOBS Act has been bashed by the usual suspects to whom regulation is religion — i.e., The New York Times editorial page and Rolling Stone’s Matt Taibbi — as somehow benefiting giant corporations and the “big banks.” But the data show the first firms taking advantage of this law are the very emerging growth firms supporters of the law had pointed to as beneficiaries. ClearSign, a Seattle-based firm that makes energy-efficient furnaces, launched an IPO with a market cap of just $12 million and cited the JOBS Act as allowing it to do that.

This is good news, because every dollar a smaller firm can raise by going public is one less dollar that firm has to beg and grovel for from a bank. This extra cash can be used to expand the business faster with many more employees added to the firm. As the Obama jobs council and others have noted, 90 percent of a public company’s job creation occurs after it goes public.

For ordinary investors, small-cap stocks are high-risk but potentially high return. And these high returns shouldn’t be restricted to the 1 percent of wealthy investors by burdensome regulation justified ironically as going after the “big guys.”

Facebook’s stock market launch should be celebrated, but the mini-IPOs enabled by the JOBS Act are the wave of our entrepreneurial future.

John Berlau

Fri, 2012-05-18

Citation Source:

NewsMax

http://www.newsmax.com/JohnBerlau/Overregulation-Next-Facebook-IPO/2012/05/18/id/439568

Why Is Team Obama Making it So Hard to Hire Highly-Skilled Foreign Workers?

David Bier — Fri, 18 May 2012 19:45:53 +0000

Speaking at a California economic conference this month, former-President Bill Clinton proposed taking “the lid of the H-1B Visas”—to finally remove the decades-old quota system entirely. “It’s easier to start a business here,” he said. “And we’re still the center of [research and development] in the world.”

The former-president is right—to remain on top, America needs access to the skilled talent its businesses need. The current H-1B program is woefully inadequate to meet the highly skilled labor needs of a country that wants to compete internationally.

On April 2, the U.S. Citizenship and Immigration Service started receiving H-1B applications for next year, and they are already more than half gone. Trends indicate that by June 25, the Master’s degree quota will be filled, and by July 12, the regular quota will be exhausted. All this indicates that the economy is ready to grow, but quotas and restrictions hinder growth. As Microsoft founder Bill Gates told Congress back in 2008, “The jobs are going to exist somewhere, and the jobs around them are going to be created wherever those uniquely talented people are, so even though it may not be realistic, I don’t think there should be any limit [on H-1Bs].”

Gates knows firsthand how immigration restrictions can send jobs elsewhere. Back in 2007, H-1B restrictions forced Microsoft to open a campus in Vancouver, British Columbia, calling it a “home to software developers from around the world.”

Microsoft employees aren’t the only highly skilled workers heading north. Canada has also claimed thousands of other skilled U.S. workers over the last decade.

From 1998 to 2008, Ottawa alone has seen the number of U.S. skilled workers double from 1,969 to 4,085. And in 2008, Alberta made H-1B visa holders automatically eligible for permanent residency. By contrast, America expels foreign skilled workers after just six years.

Simply put, America cannot cut itself from the international labor market and succeed.

In 2009, the Technology Policy Institute (TPI) found that restrictions forced 300,000 H-1B visa holders out of the country during 2004-2007, lowering GDP by $23 billion in 2008 and cutting tax revenues by about $5 billion. In addition, TPI found that 182,000 science, technology, engineering, and math students left due to restrictions, costing the economy an additional $13.6 billion in lost GDP and $3 billion in uncollected taxes.

These workers are not taking American jobs—they are helping companies expand and pull the economy out of a recession. A 2009 National Foundation for American Policy study found that, “each H-1B request in labor condition applications was associated with an increase of employment of 5 workers.”

And that’s just for large firms.

For small firms with less than 5,000 employees, NFAP found a 7.5 employee increase. In other words, companies don’t use H-1Bs to downsize and replace American workers—they use them to grow.

Burdensome regulations are making access to H-1B visas even more difficult. The Obama administration recently raised the H-1B fee from $325 to over $2,000 for large employers.

Employers usually need to hire a lawyer—typically for about $3,000 per applicant—to ensure that the application is submitted correctly, and then wait three to four months to hear if it’s been approved, which it often is not.

In other words, the government forces businesses to take risks with thousands of dollars just to get these workers to come to the United States. Then, if the worker is dismissed—even in cases of negligence—employers must pay for the worker’s return trip.

America’s job market has changed a lot in the four decades ago since the quota system was first created. Manufacturing employment has given way to software engineering, finance, education, and health care.

Today, America’s most important resources don’t come from the Earth, but from the human mind. The president who occupied the White House during the prosperous 1990s is right. To continue to prevent American employers from obtaining this human capital wouldn’t just be a policy mistake—it would be an economic disaster.

David Bier

Fri, 2012-05-18

Citation Source:

Fox News

http://www.foxnews.com/opinion/2012/05/18/why-is-team-obama-making-it-so-hard-to-hire-highly-skilled-foreign-workers/

'People's Rights Amendment' Would Knock Out People's Rights

Hans Bader — Fri, 18 May 2012 20:39:14 +0000

From Overlawyered:

Incredibly, versions of this radical rights-stripping measure has been endorsed through resolutions by the state legislatures of Vermont, Hawaii, and New Mexico, with backing from groups like Public Citizen. [Ilya Shapiro and Kathleen Hunker, Cato; Hans Bader, CEI; earlier] More: Professor Bainbridge (“utterly moronic”)]

Hans Bader

Thu, 2012-05-17

Citation Source:

Overlawyered

http://overlawyered.com/2012/05/peoples-rights-amendment-would-knock-out-peoples-rights/

Horses In the Dining Room?

Nicole Ciandella — Fri, 18 May 2012 20:21:59 +0000

From Rep. Jason Chaffetz' op-ed in The Daily Herald:

Some 1.65 million lawsuits are filed each year over enforcement of federal regulations according to Berkeley law professor Sean Farhang, author of The Litigation State. Estimates by the Competitive Enterprise Institute suggest that regulation cost the economy $1.75 trillion in 2008. That's Trillion with a T. If you were to spend $1 million a day every day, it would take you nearly 3,000 years just to get to $1 trillion.

CEI Staff

Thu, 2012-05-17

Citation Source:

The Daily Herald

http://www.heraldextra.com/news/opinion/horses-in-the-dining-room/article_f7ec243e-845d-5e7c-b9f6-5735ca9bd9dd.html

NLRB's Ambush Rule Overturned For the Moment

F. Vincent Vernuccio — Fri, 18 May 2012 17:57:52 +0000

From Bob Adelman's article at the U.S. Chamber of Commerce Small Business Nation:

According to labor policy specialist Vincent Vernuccio at the Competitive Enterprise Institute, union efforts to persuade employees to join a union begin months in advance of any formal demand for a vote.

F. Vincent Vernuccio

Thu, 2012-05-17

Citation Source:

Small Business Nation

http://www.uschambersmallbusinessnation.com/article/nlrbs-ambush-rule-overturned-for-the-moment

Wind Turbines Endanger Eagles

Nicole Ciandella — Fri, 18 May 2012 20:28:14 +0000

From Deroy Murdock's op-ed in Newsday:

"Lethal take" is Washington-speak for federally approved eagle slaughter. Precise eagle-kill numbers are tough to determine, in part because "other animals gobble the carcasses almost immediately," the Competitive Enterprise Institute's R.J. Smith explains. About 67 golden eagles are estimated to be killed annually just at Northern California's Altamont Pass wind farm.

Robert J. Smith

Thu, 2012-05-17

Citation Source:

Newsday

http://www.newsday.com/opinion/oped/murdock-wind-turbines-endanger-eagles-1.3724773

Coalition Letter to Surface Transportation Bill Conferees

Marc Scribner — Wed, 16 May 2012 21:39:59 +0000

Full Document Available in PDF

CEI signed a coalition letter to House and Senate members of the conference committee of the surface transportation reauthorization bill in which we expressed our concern over provisions that limit states' ability to toll their highways.

Marc Scribner

Wed, 2012-05-16

Corn & Global Warming, NLRB in Court, and Real Immigration Stats

Nicole Ciandella — Wed, 16 May 2012 21:34:43 +0000

NLRB IN COURT - VINCENT VERNUCCIO

Openmarket.org: Court Slaps NLRB — Again

In yet another victory for workers and job creators, a federal district court has struck down the National Labor Relations Board’s (NLRB) ambush election rule. The ruling is the latest in a series of cases where the courts have overturned the NLRB. This time U.S. District Judge James Boasberg threw out the NLRB’s rule because the board rushed through the rule without the requisite three member quorum.

CORN & GLOBAL WARMING - MARLO LEWIS

Globalwarming.org: ♫ Corn Is Busting Out All Over ♫ (Update on Global Warming and the Death of Corn)

About a year ago on this blog, I offered some skeptical commentary about the gloomy testimony of Dr. Christopher Field of the Carnegie Institution for Science, who warned the House Energy & Commerce Committee that global warming would inflict major losses on U.S. corn crop production unless scientists develop varieties with improved heat resistence.

Well, this just in, courtesy of the Renewable Fuels Association (RFA): USDA projects the U.S. corn crop for 2012 to reach 14.79 billion bushels, the biggest ever. The numbers are mighty impressive and indicate that, in this decade at least, U.S. corn farmers are more than a match for climate change.

IMMIGRATION - DAVID BIER

Huffingtonpost.com: The Flawed Case Against Immigration

Not only does the anti-immigration crowd not seem to care about unfunded mandates or amnesty when those suit their purposes, their claims that are trying to costs welfare are also dubious. Since Arizona's SB 1070 actually criminalizes work, or looking for work, even looking like you're looking for work in "a place where unlawfully present aliens are known to congregate," the law's actual effect is to create more destitute and needy families who might use public benefits. Of course, this may be the point--at least to bolster their flimsy case against immigration.

Wed, 2012-05-16

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