From SLM News Blog:
9:02 AM (14 hours ago)Fined for growing too much foodfrom SLMNews Blog by Pat H.It's not just the federal government that is curbing our freedoms. In Georgia, a farmer is being fined for growing too much food on his two acres.
We have similar problems in South Carolina. In speaking with one of the owners of a restaurant just over a mile from my farm, I discovered that he's not permitted to buy any produce from me unless I get my farm "approved" by the South Carolina Department of Health and Environmental Control, also known as DHEC (appropriately pronounced dee-heck), and if he were to buy anything grown on my farm without that prior approval, they'd shut him down.
Think about that, no one can grow or produce food and sell it to any restaurant without permission from some bureaucrat in Columbia, or one of their local representatives in my, or your, county.
Thursday, September 30, 2010
Humor: Fun Toy Banned Because Of Three Stupid Dead Kids
From The Onion:
Fun Toy Banned Because Of Three Stupid Dead Kids
August 16, 2000
ISSUE 36•28
07.09.03 WASHINGTON, DC–In cooperation with the U.S. Consumer Product Safety Commission, Wizco Toys of Montclair, NJ, recalled 245,000 Aqua Assault RoboFighters Monday after three dumb kids managed to kill themselves playing with the popular toy, ruining the fun for everybody else.
The Aqua Assault RoboFighter, an awesome toy children can no longer enjoy, thanks to stupid Weiller, Torres, and Krug (L to R).
"The tragedy is inconceivable," Wizco president Alvin Cassidy said. "For years, countless children played with the Aqua Assault RoboFighter without incident. But then these three retards come along and somehow find a way to get themselves killed. So now we have to do a full recall and halt production on what was a really awesome toy. What a waste."
"My mom won't let me play with my RoboFighter because of those dumb kids who died," said 10-year-old Jeremy Daigle of Somerville, MA. "I used to set up army guys around the RoboFighter and have it run over them and conquer Earth for the Zardaxians. But now I'll never see it again, all because three stupid idiots had to go and wreck everything."
Each of the deaths was determined to be the result of gross misuse of the toy, an incredibly cool device that could shoot both plastic missiles and long jets of water, as well as maneuver over the ground on retractable wheels.
The first death occurred June 22, when 7-year-old Isaac Weiller of Grand Junction, CO, died after deliberately firing one of the spring-loaded plastic missiles into his left nostril. The missile shot into his sinuses, shattering the roof of his nasal cavity and causing a massive brain hemorrhage.
Shortly before dying, Weiller told emergency medical personnel at St. Luke's Medical Center that he had shot the missile into his nose in the belief that it would travel through his body and out his belly button.
"I've heard some pretty stupid shit in my time, but that has to take the cake," said Dr. Anderson Hunt, the attending physician. "Why would any kid think he could fire plastic missiles up his nose and expect them to come out his belly button? There's no point in feeling bad about this child's demise, because the deck was obviously stacked against him from the start. What we should feel bad about is the fact that because of him, millions of other children will no longer get to fire the RoboFighter's super-cool Devastator Missiles or soak their friends with its FunFoam WaterBlasters."
Joshua Schatzeder of Grand Rapids, MI, is forced to play with a boring little fire truck as a result of the recall.
Less than one month after Weiller's death, 5-year-old Danielle Krug fatally suffocated on fragments of the toy after repeatedly smashing it with a claw hammer in the garage of her parents' La Porte, IN, home.
"I'm not kidding," said Dianne Ensor, an emergency-room nurse at Our Lady Of Peace Hospital in La Porte, where Krug was pronounced dead. "She thought the broken shards were candy. That's what you'd assume after breaking a plastic, inedible toy, right? Absolutely un-fucking-believable."
The third and arguably stupidest death occurred August 12, when 11-year-old dumbass Michael Torres held the RoboFighter above his head and jumped off the balcony of his family's third-story Torrance, CA, apartment, thinking he would be able to fly like Superman.
"A couple of my fellow emergency workers thought we should cut the kid some slack, because at least he wasn't trying to eat the toy or shove it up his nose," said paramedic Debra Lindfors, who tried in vain to revive Torres. "I considered this for a while, but then I decided no. No way. If you're 11 years old, you should know that it's impossible to fly. And poor Wizco's probably going to go bankrupt because of this shit."
As a result of the extreme idiocy of the three children, the CPSC was forced to order Wizco to stop making the toy and remove it from store shelves, as well as recommend that parents remove it from their homes.
"I know the overwhelming majority of American kids who owned an Aqua Assault RoboFighter derived many hours of safe, responsible fun from it," CPSC commissioner Mary Sheila Gall said. "But, statistically speaking, three deaths stemming from contact with a particular toy constitutes an 'unreasonable risk.' Look, I'm really sorry about this. Honestly. But our agency's job is to protect the public from hazardous products, even if those who die are morons who deserved what they got."
Fun Toy Banned Because Of Three Stupid Dead Kids
August 16, 2000
ISSUE 36•28
07.09.03 WASHINGTON, DC–In cooperation with the U.S. Consumer Product Safety Commission, Wizco Toys of Montclair, NJ, recalled 245,000 Aqua Assault RoboFighters Monday after three dumb kids managed to kill themselves playing with the popular toy, ruining the fun for everybody else.
The Aqua Assault RoboFighter, an awesome toy children can no longer enjoy, thanks to stupid Weiller, Torres, and Krug (L to R).
"The tragedy is inconceivable," Wizco president Alvin Cassidy said. "For years, countless children played with the Aqua Assault RoboFighter without incident. But then these three retards come along and somehow find a way to get themselves killed. So now we have to do a full recall and halt production on what was a really awesome toy. What a waste."
"My mom won't let me play with my RoboFighter because of those dumb kids who died," said 10-year-old Jeremy Daigle of Somerville, MA. "I used to set up army guys around the RoboFighter and have it run over them and conquer Earth for the Zardaxians. But now I'll never see it again, all because three stupid idiots had to go and wreck everything."
Each of the deaths was determined to be the result of gross misuse of the toy, an incredibly cool device that could shoot both plastic missiles and long jets of water, as well as maneuver over the ground on retractable wheels.
The first death occurred June 22, when 7-year-old Isaac Weiller of Grand Junction, CO, died after deliberately firing one of the spring-loaded plastic missiles into his left nostril. The missile shot into his sinuses, shattering the roof of his nasal cavity and causing a massive brain hemorrhage.
Shortly before dying, Weiller told emergency medical personnel at St. Luke's Medical Center that he had shot the missile into his nose in the belief that it would travel through his body and out his belly button.
"I've heard some pretty stupid shit in my time, but that has to take the cake," said Dr. Anderson Hunt, the attending physician. "Why would any kid think he could fire plastic missiles up his nose and expect them to come out his belly button? There's no point in feeling bad about this child's demise, because the deck was obviously stacked against him from the start. What we should feel bad about is the fact that because of him, millions of other children will no longer get to fire the RoboFighter's super-cool Devastator Missiles or soak their friends with its FunFoam WaterBlasters."
Joshua Schatzeder of Grand Rapids, MI, is forced to play with a boring little fire truck as a result of the recall.
Less than one month after Weiller's death, 5-year-old Danielle Krug fatally suffocated on fragments of the toy after repeatedly smashing it with a claw hammer in the garage of her parents' La Porte, IN, home.
"I'm not kidding," said Dianne Ensor, an emergency-room nurse at Our Lady Of Peace Hospital in La Porte, where Krug was pronounced dead. "She thought the broken shards were candy. That's what you'd assume after breaking a plastic, inedible toy, right? Absolutely un-fucking-believable."
The third and arguably stupidest death occurred August 12, when 11-year-old dumbass Michael Torres held the RoboFighter above his head and jumped off the balcony of his family's third-story Torrance, CA, apartment, thinking he would be able to fly like Superman.
"A couple of my fellow emergency workers thought we should cut the kid some slack, because at least he wasn't trying to eat the toy or shove it up his nose," said paramedic Debra Lindfors, who tried in vain to revive Torres. "I considered this for a while, but then I decided no. No way. If you're 11 years old, you should know that it's impossible to fly. And poor Wizco's probably going to go bankrupt because of this shit."
As a result of the extreme idiocy of the three children, the CPSC was forced to order Wizco to stop making the toy and remove it from store shelves, as well as recommend that parents remove it from their homes.
"I know the overwhelming majority of American kids who owned an Aqua Assault RoboFighter derived many hours of safe, responsible fun from it," CPSC commissioner Mary Sheila Gall said. "But, statistically speaking, three deaths stemming from contact with a particular toy constitutes an 'unreasonable risk.' Look, I'm really sorry about this. Honestly. But our agency's job is to protect the public from hazardous products, even if those who die are morons who deserved what they got."
Federal Government Forces New York City To Spend $27 Million To Change Lettering On Street Signs
From Gateway Pundit:
Feds Making NYCity Spend $27M to Change Lettering on Street Signs
Posted by Guest Contributor on Thursday, September 30, 2010, 2:00 PM
-By Warner Todd Huston
So you are a busy federal agency with lots and lots to do. You have roads to build, bridges to reinforce, and infrastructure to shore up, but there is something gnawing at your paper pushing soul. It’s those darn street signs in New York City and others. So, like a good, jackbooted government automaton, you storm down to that offending city and demand it spend $27million to change the lettering on those darn signs. I mean it’s not like you have anything else to do, right?
Well, it may seem like a joke but this is precisely what has happened. The Federal Highway Administration has demanded that New York City and other cities change street signs from all upper case to upper and lower (i.e. BROADWAY to Broadway) and it is going to cost an estimated $27 million of the taxpayer’s money to do it in New York City alone.
The city reports that 11,000 signs will have been changed by the end of this fiscal year and the rest will be done by 2018.
So why is this waste of money being forced on the nation from our masters in Washingon? Because the federal government has changed its street sign regulations. In all its brilliance, this federal agency has determined that all caps signs are harder to read and might cause accidents as drivers take too long to read signs while driving.
See. It’s all because the feds are worried about your safety. As your taxes go up every year for regulatory silliness such as this, doesn’t it make you all warm inside that the feds care about your safety?
Certainly we all want the safest street signs possible. But these millions wasted all at once by federal fiat is not the right way to go. Replacing the signs when new signs are needed or using the new regulatory scheme on all new signs from this point forward is the proper way to address this situation, especially in this day when we are all taxed to death and have states and cities with budgets so far in the red that bankruptcy is a real possibility.
But what this really shows is the outrageous overstepping of power that the federal government wallows in these days. Regulations such as this passed down from the federal government, violating local control of our lives is the perfect example of how our federal government has gone so far off track.
Yet all is not lost. In its magnanimity the feds have given the little people 15 years to toe the line before that jackboot comes down on their necks. See. They DO care about us!
Feds Making NYCity Spend $27M to Change Lettering on Street Signs
Posted by Guest Contributor on Thursday, September 30, 2010, 2:00 PM
-By Warner Todd Huston
So you are a busy federal agency with lots and lots to do. You have roads to build, bridges to reinforce, and infrastructure to shore up, but there is something gnawing at your paper pushing soul. It’s those darn street signs in New York City and others. So, like a good, jackbooted government automaton, you storm down to that offending city and demand it spend $27million to change the lettering on those darn signs. I mean it’s not like you have anything else to do, right?
Well, it may seem like a joke but this is precisely what has happened. The Federal Highway Administration has demanded that New York City and other cities change street signs from all upper case to upper and lower (i.e. BROADWAY to Broadway) and it is going to cost an estimated $27 million of the taxpayer’s money to do it in New York City alone.
The city reports that 11,000 signs will have been changed by the end of this fiscal year and the rest will be done by 2018.
So why is this waste of money being forced on the nation from our masters in Washingon? Because the federal government has changed its street sign regulations. In all its brilliance, this federal agency has determined that all caps signs are harder to read and might cause accidents as drivers take too long to read signs while driving.
See. It’s all because the feds are worried about your safety. As your taxes go up every year for regulatory silliness such as this, doesn’t it make you all warm inside that the feds care about your safety?
Certainly we all want the safest street signs possible. But these millions wasted all at once by federal fiat is not the right way to go. Replacing the signs when new signs are needed or using the new regulatory scheme on all new signs from this point forward is the proper way to address this situation, especially in this day when we are all taxed to death and have states and cities with budgets so far in the red that bankruptcy is a real possibility.
But what this really shows is the outrageous overstepping of power that the federal government wallows in these days. Regulations such as this passed down from the federal government, violating local control of our lives is the perfect example of how our federal government has gone so far off track.
Yet all is not lost. In its magnanimity the feds have given the little people 15 years to toe the line before that jackboot comes down on their necks. See. They DO care about us!
Where The EPA Is Public Enemy Number One
From The American Spectator:
Political Hay
Where EPA Is Public Enemy #1
By Robert James Bidinotto on 9.30.10 @ 6:08AM
The Wall Street Journal's Daniel Belkin reported this week that "anger against incumbent Democrats echoes across the rural Midwest." Belkin cited a WSJ/NBC poll from last month showing that Midwesterners and rural Americans are even more likely than other voters to disapprove of President Obama and to think the country is on the wrong track.
"There's little doubt that the Midwest is the Democrat's toughest region this year," Democratic pollster Tom Jensen concedes. "If the election was today, the party would almost certainly lose the governorships it holds in Iowa, Wisconsin, Illinois, Michigan, Ohio, and Pennsylvania," plus a host of Midwest Senate seats.
But why? One underreported reason is the belief, widespread among Farm Belt residents, that Obama administration environmental regulators are gunning for them.
Farmers, ranchers, and foresters "are increasingly frustrated and bewildered by vague, overreaching, and unnecessarily burdensome EPA regulations," a U.S. senator charged last week. They "are facing at least a dozen new regulatory requirements, each of which will add to their costs, making it harder for them to compete.… [M]ost if not all of these regulations rely on dubious rationales."
Significantly, the protesting senator was not a farm-state Republican making partisan hay. It was Blanche Lincoln, the Arkansas Democrat who chairs the Senate Committee on Agriculture, Nutrition and Forestry. Facing bleak re-election prospects in her heavily rural state, Lincoln convened a September 23 hearing to assess "the impact of EPA regulation on agriculture." Her clear, if tacit, message to EPA administrator Lisa Jackson and the White House was: You people are killing our election prospects in the heartland.
Lincoln ticked off examples of onerous EPA intrusions: unworkable "spray drift" pesticide regulations; proposed ambient air-quality standards that would impose impossible dust-reduction requirements on farmers; "wetlands" regulations that put even bone-dry areas off-limits to agricultural use; an ideological bias toward environmentalists when resolving Clean Water Act lawsuits.
"You're hammering the little guy," Nebraska Republican Mike Johanns told EPA administrator Jackson. Senator John Thune, a South Dakota Republican, delivered a blunt message from his constituents: "The Environmental Protection Agency has become Public Enemy Number One of our farmers and ranchers."
This bipartisan barrage put Jackson on the defensive. "The concern in the countryside that I've heard when I've gone out," she acknowledged, "is that somehow the EPA 'has it in' for the agricultural sector." Jackson denied any such intent, but she had no luck convincing the agriculture-industry representatives present.
"Farmers and ranchers have never felt more challenged and threatened in their livelihood than they do today from the continuous onslaught of regulations and requirements from the Environmental Protection Agency," said Rich Hillman, vice president of the Arkansas Farm Bureau.
Among his examples: "EPA wants us to build retaining walls around fuel tanks in the middle of our fields and pastures. This would cost us thousands of dollars to mitigate -- what? EPA is attempting to address a problem which simply is not there." Hillman also cited proposed new EPA regulations on dust, whose mitigation would be prohibitively expensive for many farmers and ranchers.
Jay Vroom, president of Croplife America, a trade association, complained about conflicting regulatory requirements from the EPA, the National Marine Fisheries Service, and the Fish and Wildlife Service concerning compliance with the Endangered Species Act. Also testifying was Jere White, executive director of the Kansas Corn Growers Association.
White provided a vivid case study of how environmental activists and trial lawyers rely on intrusive EPA regulations to intimidate manufacturers, users, and even proponents of agrochemicals. He described how he has been personally targeted by personal-injury trial lawyers merely for publicly defending atrazine, an herbicide used widely and safely for a half-century by corn, sorghum, and sugar cane growers.
"Trial lawyers joined forces with environmental activists and sought to regulate through the courts what science could not support within the EPA regulatory process," White said.
Giving impetus to the attorneys' lawsuits was EPA's groundless about-face last year about the chemical's safety. The agency itself estimated that farming without atrazine would cost corn growers $28 an acre and cause sugar-cane crop losses from 10 to 40 percent. Moreover, its safety has been confirmed in some 6,000 studies, here and abroad. After a dozen years of reviewing these, the EPA in 2005 found "no harm that would result to the general U.S. population" from its continued use. On that basis, it re-registered atrazine in 2006.
But in 2009, after Obama appointees took the agency's reins, EPA -- in defiance of all previous safety studies, but in admitted response to alarmist claims by environmentalist pressure groups and the media -- ordered a complete re-re-registration examination of atrazine, to include four more Scientific Advisory Panel (SAP) reviews.
This reversal infuriates growers who depend on the weed-killer. It also puts atrazine's manufacturer, Syngenta Crop Protection, and even supporters like Jere White, directly in the crosshairs of personal-injury attorneys, who have been buoyed by the EPA's expressed concerns.
"I testified in support of atrazine at last week's SAP, sharing our concerns over trial-attorney harassment of stakeholders as part of my comments," White told the senators. "The very next day, activist attorneys sought and obtained subpoenas against Kansas Corn, Kansas Grain Sorghum, and me personally." The subpoenas order White to produce tens of thousands of private memos, emails, public statements, speeches, and other documents spanning more than a decade.
"With fifty years of safe use," White concluded, "if you cannot defend atrazine, what product is there that we will be able to use?"
Questions like these echo throughout the Farm Belt these days. Mired in recession, plagued by the constant challenges intrinsic to their professions, growers and ranchers look upon the EPA's overbearing regulatory apparatus as the epitome of everything that they detest about Washington, D.C. Their anger and frustration is reflected in sinking poll support for the party in power. "Is it any wonder that the American public is so upset?" asked Croplife's Jay Vroom, in a pointed reference to the coming elections.
Few are more aware of this rebellious mood than beleaguered Democratic incumbents such as Blanche Lincoln.
"It is truly the uncertainty and unpredictability that comes out of Washington that is going to fail us in putting our economy back on track and people back to work," she declared.
She might have added: "… and fail in putting people like me back to work."
Political Hay
Where EPA Is Public Enemy #1
By Robert James Bidinotto on 9.30.10 @ 6:08AM
The Wall Street Journal's Daniel Belkin reported this week that "anger against incumbent Democrats echoes across the rural Midwest." Belkin cited a WSJ/NBC poll from last month showing that Midwesterners and rural Americans are even more likely than other voters to disapprove of President Obama and to think the country is on the wrong track.
"There's little doubt that the Midwest is the Democrat's toughest region this year," Democratic pollster Tom Jensen concedes. "If the election was today, the party would almost certainly lose the governorships it holds in Iowa, Wisconsin, Illinois, Michigan, Ohio, and Pennsylvania," plus a host of Midwest Senate seats.
But why? One underreported reason is the belief, widespread among Farm Belt residents, that Obama administration environmental regulators are gunning for them.
Farmers, ranchers, and foresters "are increasingly frustrated and bewildered by vague, overreaching, and unnecessarily burdensome EPA regulations," a U.S. senator charged last week. They "are facing at least a dozen new regulatory requirements, each of which will add to their costs, making it harder for them to compete.… [M]ost if not all of these regulations rely on dubious rationales."
Significantly, the protesting senator was not a farm-state Republican making partisan hay. It was Blanche Lincoln, the Arkansas Democrat who chairs the Senate Committee on Agriculture, Nutrition and Forestry. Facing bleak re-election prospects in her heavily rural state, Lincoln convened a September 23 hearing to assess "the impact of EPA regulation on agriculture." Her clear, if tacit, message to EPA administrator Lisa Jackson and the White House was: You people are killing our election prospects in the heartland.
Lincoln ticked off examples of onerous EPA intrusions: unworkable "spray drift" pesticide regulations; proposed ambient air-quality standards that would impose impossible dust-reduction requirements on farmers; "wetlands" regulations that put even bone-dry areas off-limits to agricultural use; an ideological bias toward environmentalists when resolving Clean Water Act lawsuits.
"You're hammering the little guy," Nebraska Republican Mike Johanns told EPA administrator Jackson. Senator John Thune, a South Dakota Republican, delivered a blunt message from his constituents: "The Environmental Protection Agency has become Public Enemy Number One of our farmers and ranchers."
This bipartisan barrage put Jackson on the defensive. "The concern in the countryside that I've heard when I've gone out," she acknowledged, "is that somehow the EPA 'has it in' for the agricultural sector." Jackson denied any such intent, but she had no luck convincing the agriculture-industry representatives present.
"Farmers and ranchers have never felt more challenged and threatened in their livelihood than they do today from the continuous onslaught of regulations and requirements from the Environmental Protection Agency," said Rich Hillman, vice president of the Arkansas Farm Bureau.
Among his examples: "EPA wants us to build retaining walls around fuel tanks in the middle of our fields and pastures. This would cost us thousands of dollars to mitigate -- what? EPA is attempting to address a problem which simply is not there." Hillman also cited proposed new EPA regulations on dust, whose mitigation would be prohibitively expensive for many farmers and ranchers.
Jay Vroom, president of Croplife America, a trade association, complained about conflicting regulatory requirements from the EPA, the National Marine Fisheries Service, and the Fish and Wildlife Service concerning compliance with the Endangered Species Act. Also testifying was Jere White, executive director of the Kansas Corn Growers Association.
White provided a vivid case study of how environmental activists and trial lawyers rely on intrusive EPA regulations to intimidate manufacturers, users, and even proponents of agrochemicals. He described how he has been personally targeted by personal-injury trial lawyers merely for publicly defending atrazine, an herbicide used widely and safely for a half-century by corn, sorghum, and sugar cane growers.
"Trial lawyers joined forces with environmental activists and sought to regulate through the courts what science could not support within the EPA regulatory process," White said.
Giving impetus to the attorneys' lawsuits was EPA's groundless about-face last year about the chemical's safety. The agency itself estimated that farming without atrazine would cost corn growers $28 an acre and cause sugar-cane crop losses from 10 to 40 percent. Moreover, its safety has been confirmed in some 6,000 studies, here and abroad. After a dozen years of reviewing these, the EPA in 2005 found "no harm that would result to the general U.S. population" from its continued use. On that basis, it re-registered atrazine in 2006.
But in 2009, after Obama appointees took the agency's reins, EPA -- in defiance of all previous safety studies, but in admitted response to alarmist claims by environmentalist pressure groups and the media -- ordered a complete re-re-registration examination of atrazine, to include four more Scientific Advisory Panel (SAP) reviews.
This reversal infuriates growers who depend on the weed-killer. It also puts atrazine's manufacturer, Syngenta Crop Protection, and even supporters like Jere White, directly in the crosshairs of personal-injury attorneys, who have been buoyed by the EPA's expressed concerns.
"I testified in support of atrazine at last week's SAP, sharing our concerns over trial-attorney harassment of stakeholders as part of my comments," White told the senators. "The very next day, activist attorneys sought and obtained subpoenas against Kansas Corn, Kansas Grain Sorghum, and me personally." The subpoenas order White to produce tens of thousands of private memos, emails, public statements, speeches, and other documents spanning more than a decade.
"With fifty years of safe use," White concluded, "if you cannot defend atrazine, what product is there that we will be able to use?"
Questions like these echo throughout the Farm Belt these days. Mired in recession, plagued by the constant challenges intrinsic to their professions, growers and ranchers look upon the EPA's overbearing regulatory apparatus as the epitome of everything that they detest about Washington, D.C. Their anger and frustration is reflected in sinking poll support for the party in power. "Is it any wonder that the American public is so upset?" asked Croplife's Jay Vroom, in a pointed reference to the coming elections.
Few are more aware of this rebellious mood than beleaguered Democratic incumbents such as Blanche Lincoln.
"It is truly the uncertainty and unpredictability that comes out of Washington that is going to fail us in putting our economy back on track and people back to work," she declared.
She might have added: "… and fail in putting people like me back to work."
EPA Proposes New Rules On Lead Paint
From The American Thinker:
eptember 29, 2010
Proposed EPA Rules on Lead Paint
Susan Pucci
The EPA has new rules on lead paint abatement when renovating, repairing, or repainting residential rental property (read them here).
As a quick look will reveal, it is lengthy and complicated, with many links. It is obvious that it is a bureaucratic nightmare for an elderly person with one rental unit.
The contractors who are certified will have to charge outrageous prices in order to comply with these rules. Even if you can find a contractor willing to comply with all that would be involved (like the "white glove test"), and even if the landlord were to have to the money to pay for it, they would still be required to have copies of the rules at hand and have tenants read and sign papers before doing any work.
Landlords would have to keep all the information of file. How many landlords even know this? The ramifications have the potential of making rents sky-rocket and scaring landlords to the point that no one will want to rent property. Also you know the old saying "first they came for (fill in the blank) and then they came for me." Can private home owners be far behind? How about newer properties and mold?
If they get away with this what is to stop them from making private home owners get permission to renovate their own homes?
Posted at 01:02 AM
eptember 29, 2010
Proposed EPA Rules on Lead Paint
Susan Pucci
The EPA has new rules on lead paint abatement when renovating, repairing, or repainting residential rental property (read them here).
As a quick look will reveal, it is lengthy and complicated, with many links. It is obvious that it is a bureaucratic nightmare for an elderly person with one rental unit.
The contractors who are certified will have to charge outrageous prices in order to comply with these rules. Even if you can find a contractor willing to comply with all that would be involved (like the "white glove test"), and even if the landlord were to have to the money to pay for it, they would still be required to have copies of the rules at hand and have tenants read and sign papers before doing any work.
Landlords would have to keep all the information of file. How many landlords even know this? The ramifications have the potential of making rents sky-rocket and scaring landlords to the point that no one will want to rent property. Also you know the old saying "first they came for (fill in the blank) and then they came for me." Can private home owners be far behind? How about newer properties and mold?
If they get away with this what is to stop them from making private home owners get permission to renovate their own homes?
Posted at 01:02 AM
Wednesday, September 29, 2010
Who Will Regulate The Regulators?
From Lew Rockwell.com:
Who Will Regulate the Regulators?
by Thomas J. DiLorenzo
by Thomas J. DiLorenzo
Recently by Thomas DiLorenzo: Fascialism: The New American System
In government, failure is success. That’s what I call DiLorenzo’s First Law of Government. When the welfare state bureaucracy fails to reduce poverty, it is rewarded with more tax dollars and more responsibilities. When the government schools fail to educate children, they are rewarded with more tax dollars and more power to meddle in education. When NASA blows up the space shuttle, it is rewarded with a large budget increase (unlike a private airline, which would likely go bankrupt). And when the Fed causes the worse depression since the Great Depression, it is rewarded with a vast expansion of its powers.
DiLorenzo’s Second Law of Government is that politicians will never assume responsibility for any of the problems that they cause. No one in society is more irresponsible than politicians, especially ones like President Obama who blame today’s economic crisis on an alleged lack of responsibility in the private sector. They will always blame capitalism for our economic problems, even when capitalism is not even the economic system that we live under (it’s economic fascism, to end the suspense). Nothing is more irresponsible than knowingly destroying what’s left of our engine of economic growth with more and more governmental central planning, even if it is given the laughable name of "public interest regulation."
DiLorenzo’s Third Law of Government is that, with one or two exceptions, all politicians are habitual liars. The so-called "watchdog media" is a myth, for pointing out the lies of politicians is the best way to end one’s career as a "prominent journalist." Do this, and your sources of governmental information will be shut off.
Today’s Biggest Governmental Lie is that financial markets are unregulated and in dire need of more direction, regulation, control, and in some cases, nationalization, by the Fed or by a new Super Regulatory Authority. This is all a lie because, according to one of the Fed’s own publications ("The Federal Reserve System: Purposes and Functions"), the Fed already has "supervisory and regulatory authority" over: bank holding companies, state-chartered banks, foreign branches of member banks, edge and agreement corporations, U.S. state-licensed branches, agencies, and representative offices of foreign banks, nonbanking activities of foreign banks, national banks, savings banks, nonbank subsidiaries of bank holding companies, thrift holding companies, financial reporting procedures of banks, accounting policies of banks, business "continuity" in case of economic emergencies, consumer protection laws, securities dealings of banks, information technology used by banks, foreign investment by banks, foreign lending by banks, branch banking, bank mergers and acquisitions, who may own a bank, capital "adequacy standards," extensions of credit for the purchase of securities, equal opportunity lending, mortgage disclosure information, reserve requirements, electronic funds transfers, interbank liabilities, Community Reinvestment Act sub-prime lending demands, all international banking operations, consumer leasing, privacy of consumer financial information, payments on demand deposits, "fair credit" reporting, transactions between member banks and their affiliates, truth in lending, and truth in savings. And of course it also engages in legal price fixing of interest rates and creates inflation and boom-and-bust cycles with its "open market operations." This is the Washington, D.C. establishment’s definition of "laissez faire" in financial markets. (Note that I didn’t even mention other financial market regulators such as the SEC, Comptroller of the Currency, Office of Thrift Supervision, and dozens of state regulatory agencies).
DiLorenzo’s Fourth Law of Government is that politicians will only take the advice of their legions of academic advisors if it promises to increase their power, wealth, and influence, even if they know the advice is bad (or even devastating) for the rest of society. The academics happily play along with this corrupt game because it also increases their notoriety and wealth. The most glaring example of this phenomenon today is the fact that there has been virtually no discussion at all by government officials or the media of the vast literature of the gross failures of government regulation to protect "the public interest," a literature that documents the failures of government regulation for more than a century.
There has always been some kind of government regulation of economic activity in America, but the regulatory state got its first big boost with an 1877 Supreme Court case known as Munn v. Illinois. The two Munn brothers owned a grain storage business, and the powerful farm lobby in their state wanted to essentially steal some of their property from them by having the Illinois state legislature pass a price control law that forced the price of grain storage down below the free-market price. Such laws had previously been ruled as an unconstitutional taking of private property or a violation of the Contract Clause of the Constitution, but no longer. The plunder-seeking farmers prevailed, and it was hailed by the Court as a great victory for "public interest" regulation. Thus, the first example of "public interest" regulation was unequivocally an act of legalized theft for the benefit of a powerful and unscrupulous political special-interest group at the expense of honest, hard-working small businessmen.
Either through ignorance or corruption (or both), academics – including the founders of the American Economic Association, such as Richard T. Ely – sang the "public interest" tune with regard to economic regulation for decades, creating the popular myth that markets always fail, and government regulation is always benevolent, omniscient, and correcting. They did this despite the glaring evidence all around them that regulation was always and everywhere a special-interest phenomenon. As historian Gabriel Kolko wrote in his 1963 book, The Triumph of Conservatism, big business in the early 20th century sought government regulation because the regulation "was invariably controlled by leaders of the regulated industry, and directed toward ends they deemed acceptable or desirable." "Government regulation has generally served to further the very economic interests being regulated," legal scholar Butler Shaffer wrote some thirty years later in his book, In Restraint of Trade. Kolko called this "the new Hamiltonianism" and "a reincarnation of the Hamiltonian unity of politics and economics," referring to the mercantilist aspirations of the nation’s first treasury secretary.
Most academic economists, seduced by the prestige and money that came from being governmental advisors, ignored all of this reality and instead spent roughly fifty years – from the pre-World War I years until the 1960s – inventing factually empty theories about the alleged "failures" of markets and the need for benevolent and presumably omniscient government regulators to "correct" these alleged failures. It was all based (and still is) on the quite fraudulent technique of proclaiming that markets are not "perfect," but that government was, and would therefore correct any imperfections in real-world markets (as though anything on this earth is "perfect"). Economist Harold Demsetz mockingly labeled this approach to the study of markets "the Nirvana Fallacy."
The Austrian School of Economics is the only school of thought within the economics profession that never participated in this corrupt charade. The same cannot be said of the famous "Chicago School" whose acknowledged founder, Henry Simons, embraced many "market failure" theories and was an interventionist by any day’s standards.
$26
But the Chicago School performed a penance of sorts beginning in the 1960s with research and publications about the actual effects of government regulation, including analyses of who benefits and who loses from it. Unlike the rest of the economics profession (with the exception of the Austrian School), they no longer simply accepted the unfounded assumption that government regulation was unequivocally a good thing. Hundreds of books and thousands of academic journal articles were published that essentially rediscovered the old truth that "as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit," as Nobel laureate George Stigler wrote in 1971. Stigler was awarded the Nobel Prize in Economics for his research on "the economics of regulation."
This research was expanded over the years to account for different kinds of regulation, such as regulation that is sought by one producer group that does not necessarily harm consumers but competing producers. Large corporations often lobby for onerous government safety and environmental regulations, for example, because they know the regulations will likely bankrupt their smaller competitors and deter the entry of potential rivals. In any event, there now exists a gigantic literature on the economic effects of regulation that shows that, for over 100 years, it has rarely, if ever, benefited consumers despite all the pro-consumer/public interest rhetoric that is attached to it. All of this literature is studiously ignored by Ivy League "superstars" like Fed Chairman Ben Bernanke, the former chairman of the Princeton University economics department. It is a shameless act of academic fraud, but unlike normal academic fraud, it will have tremendous negative real-world economic consequences.
A major thrust of this literature is the recognition that, historically, businesses that have tried to form cartels have always failed. Even the infamous OPEC Cartel only had the power to raise world oil prices for about seven years during the 1970s before it collapsed. Private attempts to cartelize or monopolize markets always fail because of the powerful temptation to cheat on the cartel agreement by cutting prices. Once one member of the cartel cheats in this way, the whole thing breaks down as everyone else "cheats" while the cheating is good and there are still profits to be made.
Businesses long ago discovered that the only way to have a permanent or at least long-lasting cartel is to have the cartel agreement enforced by government regulation, with the threat of heavy fines and/or imprisonment for cheating. Thus, the railroad and trucking industries were cartelized by the Interstate Commerce Commission, which set industry prices and was controlled for decades by those industries. The Civil Aeronautics Board cartelized the airline industry in a similar way for about half a century until it was deregulated in the late 1970s. There was vigorous competition and price cutting in the electric utility industry until it was ended by government regulation and the creation of franchise monopolies by government in most cities in America. AT&T enjoyed a telephone industry monopoly thanks to state government regulation that made competition illegal for decades. The list is almost endless.
Perhaps most importantly, the Fed was created to facilitate the creation of a banking industry cartel and the creation of cartel profits in that industry as well. As Murray Rothbard wrote in A History of Money and Banking in the United States, "the financial elites of this country . . . were responsible for putting through the Federal Reserve System, as a governmentally created and sanctioned cartel device to enable the nation’s banks to inflate the money supply . . . without suffering quick retribution from depositors or noteholders demanding cash."
In other words, giving the Fed even more regulatory "authority" is like giving an alcoholic another bottle of whisky, a murderer another gun, or a bank robber another ski mask. It is bound to make things worse, not better. "We the people" have no ability to regulate the regulators in any way. Our only hope is to end the Fed before it creates an even greater depression than the one it has created for us today.
June 19, 2009
Thomas J. DiLorenzo [send him mail] is professor of economics at Loyola College in Maryland and the author of The Real Lincoln; Lincoln Unmasked: What You’re Not Supposed To Know about Dishonest Abe and How Capitalism Saved America. His latest book is Hamilton’s Curse: How Jefferson’s Archenemy Betrayed the American Revolution – And What It Means for America Today.
Copyright © 2009 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
The Best of Thomas DiLorenzo at LRC
Thomas DiLorenzo Archives at Mises.org
Who Will Regulate the Regulators?
by Thomas J. DiLorenzo
by Thomas J. DiLorenzo
Recently by Thomas DiLorenzo: Fascialism: The New American System
In government, failure is success. That’s what I call DiLorenzo’s First Law of Government. When the welfare state bureaucracy fails to reduce poverty, it is rewarded with more tax dollars and more responsibilities. When the government schools fail to educate children, they are rewarded with more tax dollars and more power to meddle in education. When NASA blows up the space shuttle, it is rewarded with a large budget increase (unlike a private airline, which would likely go bankrupt). And when the Fed causes the worse depression since the Great Depression, it is rewarded with a vast expansion of its powers.
DiLorenzo’s Second Law of Government is that politicians will never assume responsibility for any of the problems that they cause. No one in society is more irresponsible than politicians, especially ones like President Obama who blame today’s economic crisis on an alleged lack of responsibility in the private sector. They will always blame capitalism for our economic problems, even when capitalism is not even the economic system that we live under (it’s economic fascism, to end the suspense). Nothing is more irresponsible than knowingly destroying what’s left of our engine of economic growth with more and more governmental central planning, even if it is given the laughable name of "public interest regulation."
DiLorenzo’s Third Law of Government is that, with one or two exceptions, all politicians are habitual liars. The so-called "watchdog media" is a myth, for pointing out the lies of politicians is the best way to end one’s career as a "prominent journalist." Do this, and your sources of governmental information will be shut off.
Today’s Biggest Governmental Lie is that financial markets are unregulated and in dire need of more direction, regulation, control, and in some cases, nationalization, by the Fed or by a new Super Regulatory Authority. This is all a lie because, according to one of the Fed’s own publications ("The Federal Reserve System: Purposes and Functions"), the Fed already has "supervisory and regulatory authority" over: bank holding companies, state-chartered banks, foreign branches of member banks, edge and agreement corporations, U.S. state-licensed branches, agencies, and representative offices of foreign banks, nonbanking activities of foreign banks, national banks, savings banks, nonbank subsidiaries of bank holding companies, thrift holding companies, financial reporting procedures of banks, accounting policies of banks, business "continuity" in case of economic emergencies, consumer protection laws, securities dealings of banks, information technology used by banks, foreign investment by banks, foreign lending by banks, branch banking, bank mergers and acquisitions, who may own a bank, capital "adequacy standards," extensions of credit for the purchase of securities, equal opportunity lending, mortgage disclosure information, reserve requirements, electronic funds transfers, interbank liabilities, Community Reinvestment Act sub-prime lending demands, all international banking operations, consumer leasing, privacy of consumer financial information, payments on demand deposits, "fair credit" reporting, transactions between member banks and their affiliates, truth in lending, and truth in savings. And of course it also engages in legal price fixing of interest rates and creates inflation and boom-and-bust cycles with its "open market operations." This is the Washington, D.C. establishment’s definition of "laissez faire" in financial markets. (Note that I didn’t even mention other financial market regulators such as the SEC, Comptroller of the Currency, Office of Thrift Supervision, and dozens of state regulatory agencies).
DiLorenzo’s Fourth Law of Government is that politicians will only take the advice of their legions of academic advisors if it promises to increase their power, wealth, and influence, even if they know the advice is bad (or even devastating) for the rest of society. The academics happily play along with this corrupt game because it also increases their notoriety and wealth. The most glaring example of this phenomenon today is the fact that there has been virtually no discussion at all by government officials or the media of the vast literature of the gross failures of government regulation to protect "the public interest," a literature that documents the failures of government regulation for more than a century.
There has always been some kind of government regulation of economic activity in America, but the regulatory state got its first big boost with an 1877 Supreme Court case known as Munn v. Illinois. The two Munn brothers owned a grain storage business, and the powerful farm lobby in their state wanted to essentially steal some of their property from them by having the Illinois state legislature pass a price control law that forced the price of grain storage down below the free-market price. Such laws had previously been ruled as an unconstitutional taking of private property or a violation of the Contract Clause of the Constitution, but no longer. The plunder-seeking farmers prevailed, and it was hailed by the Court as a great victory for "public interest" regulation. Thus, the first example of "public interest" regulation was unequivocally an act of legalized theft for the benefit of a powerful and unscrupulous political special-interest group at the expense of honest, hard-working small businessmen.
Either through ignorance or corruption (or both), academics – including the founders of the American Economic Association, such as Richard T. Ely – sang the "public interest" tune with regard to economic regulation for decades, creating the popular myth that markets always fail, and government regulation is always benevolent, omniscient, and correcting. They did this despite the glaring evidence all around them that regulation was always and everywhere a special-interest phenomenon. As historian Gabriel Kolko wrote in his 1963 book, The Triumph of Conservatism, big business in the early 20th century sought government regulation because the regulation "was invariably controlled by leaders of the regulated industry, and directed toward ends they deemed acceptable or desirable." "Government regulation has generally served to further the very economic interests being regulated," legal scholar Butler Shaffer wrote some thirty years later in his book, In Restraint of Trade. Kolko called this "the new Hamiltonianism" and "a reincarnation of the Hamiltonian unity of politics and economics," referring to the mercantilist aspirations of the nation’s first treasury secretary.
Most academic economists, seduced by the prestige and money that came from being governmental advisors, ignored all of this reality and instead spent roughly fifty years – from the pre-World War I years until the 1960s – inventing factually empty theories about the alleged "failures" of markets and the need for benevolent and presumably omniscient government regulators to "correct" these alleged failures. It was all based (and still is) on the quite fraudulent technique of proclaiming that markets are not "perfect," but that government was, and would therefore correct any imperfections in real-world markets (as though anything on this earth is "perfect"). Economist Harold Demsetz mockingly labeled this approach to the study of markets "the Nirvana Fallacy."
The Austrian School of Economics is the only school of thought within the economics profession that never participated in this corrupt charade. The same cannot be said of the famous "Chicago School" whose acknowledged founder, Henry Simons, embraced many "market failure" theories and was an interventionist by any day’s standards.
$26
But the Chicago School performed a penance of sorts beginning in the 1960s with research and publications about the actual effects of government regulation, including analyses of who benefits and who loses from it. Unlike the rest of the economics profession (with the exception of the Austrian School), they no longer simply accepted the unfounded assumption that government regulation was unequivocally a good thing. Hundreds of books and thousands of academic journal articles were published that essentially rediscovered the old truth that "as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit," as Nobel laureate George Stigler wrote in 1971. Stigler was awarded the Nobel Prize in Economics for his research on "the economics of regulation."
This research was expanded over the years to account for different kinds of regulation, such as regulation that is sought by one producer group that does not necessarily harm consumers but competing producers. Large corporations often lobby for onerous government safety and environmental regulations, for example, because they know the regulations will likely bankrupt their smaller competitors and deter the entry of potential rivals. In any event, there now exists a gigantic literature on the economic effects of regulation that shows that, for over 100 years, it has rarely, if ever, benefited consumers despite all the pro-consumer/public interest rhetoric that is attached to it. All of this literature is studiously ignored by Ivy League "superstars" like Fed Chairman Ben Bernanke, the former chairman of the Princeton University economics department. It is a shameless act of academic fraud, but unlike normal academic fraud, it will have tremendous negative real-world economic consequences.
A major thrust of this literature is the recognition that, historically, businesses that have tried to form cartels have always failed. Even the infamous OPEC Cartel only had the power to raise world oil prices for about seven years during the 1970s before it collapsed. Private attempts to cartelize or monopolize markets always fail because of the powerful temptation to cheat on the cartel agreement by cutting prices. Once one member of the cartel cheats in this way, the whole thing breaks down as everyone else "cheats" while the cheating is good and there are still profits to be made.
Businesses long ago discovered that the only way to have a permanent or at least long-lasting cartel is to have the cartel agreement enforced by government regulation, with the threat of heavy fines and/or imprisonment for cheating. Thus, the railroad and trucking industries were cartelized by the Interstate Commerce Commission, which set industry prices and was controlled for decades by those industries. The Civil Aeronautics Board cartelized the airline industry in a similar way for about half a century until it was deregulated in the late 1970s. There was vigorous competition and price cutting in the electric utility industry until it was ended by government regulation and the creation of franchise monopolies by government in most cities in America. AT&T enjoyed a telephone industry monopoly thanks to state government regulation that made competition illegal for decades. The list is almost endless.
Perhaps most importantly, the Fed was created to facilitate the creation of a banking industry cartel and the creation of cartel profits in that industry as well. As Murray Rothbard wrote in A History of Money and Banking in the United States, "the financial elites of this country . . . were responsible for putting through the Federal Reserve System, as a governmentally created and sanctioned cartel device to enable the nation’s banks to inflate the money supply . . . without suffering quick retribution from depositors or noteholders demanding cash."
In other words, giving the Fed even more regulatory "authority" is like giving an alcoholic another bottle of whisky, a murderer another gun, or a bank robber another ski mask. It is bound to make things worse, not better. "We the people" have no ability to regulate the regulators in any way. Our only hope is to end the Fed before it creates an even greater depression than the one it has created for us today.
June 19, 2009
Thomas J. DiLorenzo [send him mail] is professor of economics at Loyola College in Maryland and the author of The Real Lincoln; Lincoln Unmasked: What You’re Not Supposed To Know about Dishonest Abe and How Capitalism Saved America. His latest book is Hamilton’s Curse: How Jefferson’s Archenemy Betrayed the American Revolution – And What It Means for America Today.
Copyright © 2009 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
The Best of Thomas DiLorenzo at LRC
Thomas DiLorenzo Archives at Mises.org
"Consumer Saftey" Bill Could Boomerang Against U.S. Manufacturers
From the CATO Institute:
September 28, 2010
Free Trade Bulletin no. 42
"Consumer Safety" Bill Could Boomerang against U.S. Manufacturers
by Daniel Griswold and Sallie James
Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute and Sallie James is a trade policy analyst with the center.
Published on September 28, 2010
--------------------------------------------------------------------------------
PRINT PAGE CITE THIS Sans Serif Serif Share with your friends:
ShareThisIntroduction
Barriers to trade can be straightforward and transparent, even if wrongheaded, such as a 27.5 percent tariff that certain members of Congress threatened to impose on imports from China. Or barriers can take the form of rules and regulations proposed in the name of protecting public health and safety but that have a secondary effect of restricting trade. An example of such a non-tariff barrier is legislation now before Congress called the Foreign Manufacturers Legal Accountability Act (FMLAA).
The sponsors of the legislation claim that their principal goal is to protect American consumers from unsafe foreign products, but there are warning signs that the bill may be more about restricting trade than protecting the public.
Introduced earlier this year in the House and the Senate, the FMLAA would require any foreign producer selling goods in the U.S. market to designate a legal agent located in the United States who could be served papers in a product liability suit. The agent would be required to register in a state with a substantial connection to the importation, distribution, and sale of the product. By registering an agent, the foreign producer would agree to accept the jurisdiction of the state and federal courts of the state where the agent is located.
Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute and Sallie James is a trade policy analyst with the center.
More by Daniel Griswold
More by Sallie JamesIf a foreign producer fails to designate a registered agent, the Act would ban the importation to the United States of any products made by the producer. Determining which foreign producers meet the minimum size requirements for falling under the Act would be left to agencies such as the Consumer Product Safety Commission and the Food and Drug Administration. As written, the bills would cover pharmaceuticals and cosmetics, biological products, consumer products, chemical substances, pesticides, and motor vehicles and their equipment and parts.
The safety issues behind the bill are real enough. In 2007, the Consumer Product Safety Commission sought the recall of 473 different products. More than 80 percent involved imported products, and three-quarters of those products came from China.1 The concern raised by advocates of the legislation is that American consumers harmed by such products will not be able to collect damages if the foreign-based producer has no legal presence in the United States. Domestic companies by definition have a legal presence in the United States and can thus be sued for damages caused by their products, which arguably puts them at a competitive disadvantage against foreign competitors allegedly operating outside the reach of the U.S. legal system. Hearings in June 2010 highlighted the case of contaminated drywall imported from China and the inability of U.S. homeowners harmed by the product to seek damages from the producer.
Americans damaged by faulty products, whether made abroad or domestically, should be able to seek compensation through the courts. But the approach advocated by supporters of the FMLAA would not solve the problem. It would create a false hope of collection for damages while bypassing existing procedures that have proven to work in most cases. The approach would potentially violate constitutional protections available to citizens and non-citizens alike as well as existing commercial agreements with other nations. It could potentially disrupt global manufacturing supply chains, putting American production and employment in jeopardy.
Remedies already available
Initiating legal action against a foreign-based entity is a common, established procedure. Efforts to serve process on foreign manufacturers are currently subject to the Hague Convention on the Service Abroad of Judicial and Extraterritorial Documents in Civil and Commercial Matters, a multilateral treaty governing the channels of transmission of judicial documents across borders to which the United States (and China, since May 1991) is a party. Under rules of the convention, each member agrees to serve legal papers on its citizens through the central authority of the state where the person or corporation being served resides. Papers can also be served through the mail, through consulates, and through other diplomatic channels. According to a Convention document, two-thirds of requests are processed within two months.2
Even if the original foreign-based producer cannot be served, the parties seeking damages can bring legal action against importers, distributors, and retailers who do have a legal presence in the United States. At a congressional hearing in June 2010, Jeremy Baskin of the Office of Compliance in the U.S. Consumer Product Safety Commission (CPSC) testified that:
In most cases, CPSC has been able to work with domestic partners of foreign manufacturers, such as importers or retailers, on enforcement activities to obtain relief for consumers without resorting to adjudicative proceedings. One example of this is a $50,000 settlement with a Hong Kong corporation with offices in the United States that imported toys manufactured in China that violated the Commission's lead paint ban.3
An exception to the rule was the case of imported drywall from China. After homeowners reported significant health problems connected with the drywall, the CPSC was unable to obtain any response from the producer in China. According to the testimony, attempts by the CPSC staff to send requests for information to the company were returned to the commission, "refused and unopened."4
Requiring foreign companies like the Chinese drywall producer to designate a legal representative in the United States would not guarantee collection of damages from the producer. Even if papers could be served in such a case, the plaintiffs would still need to win the case and be able to collect damages in order to be made whole. If the foreign producer ceases to operate or files for bankruptcy, collection of actual damages becomes virtually impossible even if papers can be served. Merely having a designated agent in the United States would not guarantee access to the resources of the original manufacturer to pay for the damages ultimately awarded in a court case.
The fact that a foreign producer may not have a legal representative in the United States does not change the fact that Customs officials, the FDA, CPSC, and agencies retain broad powers to bar the entry of tainted or defective products. American-based retailers, wholesalers, and others who have paid to import the products are accountable to those agencies and subject to a range of civil and legal penalties for failing to comply with U.S. health and safety laws.
Violates existing trade agreements, including WTO
The legislation as written also violates a broad array of international agreements—which themselves provide avenues for service of process. The proposed legislation would not only circumvent the procedures set forth under the Hague Service Convention of 1965. Its provisions also appear to violate Articles III and XI of the General Agreement on Tariffs and Trade (GATT), and abrogate U.S. commitments to key trading partners under the WTO Agreements.
A fundamental principle of international trade law is nondiscrimination. Nations are discouraged from maintaining a more lax set of standards for domestically produced products while enforcing a more stringent set of standards for imported products. The FMLAA appears to fail this test. A recent briefing paper by Hogan Lovells points out that "No corresponding registration, jurisdiction, and acceptance of liability requirements are imposed on U.S. manufacturers of like products, parts, or components, or their corporate parents."5
Indeed, H.R. 4678 explicitly exempts from its provisions American-owned foreign manufactures, and foreign-owned manufacturers with American subsidiaries, so long as the subsidiaries assume any liability on its foreign parent companies behalf. As the Hogan Lovells analysis suggests, those exemptions are discriminatory because foreign manufacturers with a U.S. parent preserve their right to defend themselves from legal liability. The rules of the World Trade Organization, of which the United States is a founding member, appear to prohibit that sort of discrimination.
If the safety regime is applied in a discriminatory manner—setting different and more rigorous conditions on foreign manufactured goods once they crossed the border, compared to domestically-produced goods—then it would likely constitute a non-tariff barrier to trade (NTB). NTBs are subject to rules in the World Trade Organization, rules that jurisprudence has clarified and lawmakers would be wise to consider. Indeed, at least some lawmakers sponsoring the bills have recognized the legal can of worms the new rules could open: S. 1606, for example, states in Sec. 1002 (9), that "United States laws and the laws of United States trading partners should not put burdens on foreign manufacturers and importers that do not apply to domestic competitors."
Those words are a nod to "national treatment," one of the guiding principles of the WTO. National treatment is essentially the recognition that, once past the border, imported goods should be accorded as favorable treatment to goods made domestically. The formal language pertaining to national treatment can be found in Article III:4 of the General Agreement on Tariffs and Trade, the largest and arguably most important treaty administered by the WTO, which states:
The products of the territory of any [WTO member] imported into the territory of any other [member] shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, pur chase, transportation, distribution or use ... [emphasis added]
Rules that apply to foreign manufacturers but not to domestic manufacturers—such as those in H.R. 4678 requiring foreign manufacturers to designate a U.S. agent for purposes of U.S. service of process—would presumably fall under the definition of the types of policies covered by Article III, and therefore would be subject to its disciplines. In a recent briefing paper, trade lawyer Russell Smith quoted a GATT ruling on Italy's restrictions on agricultural machinery, which stated that Article III includes "not only the laws and regulations which directly governed the conditions of sale or purchase but also any laws or regulations which might adversely modify the conditions of competition between the domestic and imported products in the internal market."6
Presumably the new requirements to establish an agent in the United States would modify, to the foreign manufacturers' disadvantage, the conditions of competition between domestic and imported goods and thus violate Article III.
The de minimus exceptions in the proposed regula-tions—those that would exempt small foreign manufacturers from the rules—are also problematic. They would appear to violate the obligation under GATT Article I to treat "like products" from all trade partners equally (the so-called "most favored nation" obligation). If some products are exempted from application of the new rules because they come from manufacturers that are deemed by regulators to be sufficiently small, they would necessarily be treated differently from like products from larger manufacturers, as though Americans deserved less protection from products made by small firms.
In fact, the bill may have the opposite effect on public safety from that which was intended by discouraging sourcing from larger, more reputable firms with long-established safety records. With the de minimus exceptions discussed above, there is the possibility for a perverse effect on foreign manufacturers: would making an exception for small producers/ importers (practical though it may well be for implementation purposes) increase the likelihood of fly-by-night operations? It doesn't take too much imagination to conceive of foreign entities deliberately keeping themselves small, "below-the-radar" operations in order to escape the reach of the law. Larger, more prominent firms (with an interest in protecting their reputation and brand integrity) would be at a disadvantage. Surely such a result would be opposite to the one intended.
The United States may try to argue that there is no discrimination between "like products" produced by firms of comparative size, and therefore any de facto discrimination between trade partners is incidental. But then the United States would in effect be arguing that it is discriminating on the basis of production and processing methods (or "PPMs" in the trade policy jargon), an equally contentious basis of discrimination, and one the United States itself has rightly argued against vigorously in trade law and policy fora.
Another legal flaw of the FMLAA is its resort to a complete ban on the imports in question if the producer fails to designate a domestic agent.
Article XI of the GATT, which covers the general prohibition in the WTO of quantitative restrictions, states in paragraph 1:
No prohibitions or restrictions other than duties, taxesor other charges, whether made effective through quotas, import or export licences [sic] or other measures, shall be instituted or maintained by any [member] on the importation of any product of the territory of any other [member].(emphasis added)
Establishing an agent for service of process, and notifying that agent to a regulatory agency may well violate Article XI. It is certainly not a duty, tax or other charge, the only allowable restrictions by the terms of the Article.
The United States may, in defense of its action should the Act pass into law, invoke various parts of Article XX of the GATT, which allows WTO members to deviate from the normal rules, including Articles I, III and XI, in order to achieve public policy objectives such as "protect[ing] human, animal or plant life or health" (Article XX[b]) or those that are "necessary to secure compliance with laws or regulations" which are not inconsistent with the other provisions of the GATT (Article XX[d]). However, those exceptions are allowed only under certain conditions, one of which is that the measure must be the least trade-restrictive option available to achieve the objective.
A GATT Panel on Thailand's restrictions on imported cigarettes ruled in 1990 that
a contracting party cannot justify a measure consistent with other GATT provisions as necessary in terms of Article XX(d) if an alternative measure which it could reasonably be expected to employ and which is not inconsistent with other GATT provisions is available to it. By the same token, in cases where a measure consistent with other GATT provisions is not reasonably available, a contracting party is bound to use, among the measures reasonably available to it, that which entails the least degree of inconsistency with other GATT provisions.7 (emphasis added)
A WTO Appellate Body ruling (on EU trade restrictions on asbestos) has reaffirmed that the same "necessity test" applies in the WTO era.8
For the purposes of the current discussion, the United States would have to demonstrate that the establishment of an agent—and the associated forfeiture of legal rights to defense under an alternative jurisdiction—is necessary for consumers' rights to be respected, and that no less discriminatory alternative is available. They would have to prove, in other words, that the Hague Service Convention is insufficient to meet the legitimate public policy objective.
Warning shots in the potential trade war have already been fired. The Canadian and EU governments recently wrote to congressional leaders and sponsors of the bill, alerting them to its legal implications and urging caution. The EU ambassador's letter to Speaker Pelosi, for example, points to the draft bill's potential for introducing "an additional layer of burden on ... foreign enterprises.... Establishing a registered agent in the U.S. for any potential damage claim of a
U.S. consumer seems disproportionate in terms of costs." and explicitly refers to Article XI of the GATT, calling the Act "questionable with regard to its compatibility with the WTO."9
Any benefits of the bills provisions must be weighed against these risks to the smooth functioning of the international trading system, in which the United States has a clear interest. The U.S. government cannot credibly complain that other governments are not "playing by the rules" when it is enforcing a law that violates our own international commitments.
Inflicts self-damage by disrupting supply chains
Even if the FMLAA approach were consistent with international trade law, it would not be wise economic policy. Requiring foreign producers to designate a domestic agent under the threat of an import ban would invite our trading partners to adopt copycat legislation and would disrupt the international supply chains that have become an important component of American manufacturing.
Whether adopted in retaliation or sincere imitation, the rise of FMLAA-type laws in foreign countries would be bad news for American exporters. It would impose a significant new cost of production on U.S. exporters if they were required to employ agents in every country where they plan to sell their products. Designating such agents would also invite lawsuits over product liability that may or may not have merit but would be difficult to defend, especially in emerging markets and less developed countries where the legal systems are under-developed as well. The temptation may prove irresistible to sue a deep-pocketed U.S. multinational through a poor country's legal system that may be both opaque and corrupt.
By discouraging and complicating imports to the United States, the FMLAA approach threatens to cut American producers off from critical supplies and components they need to produce final products for sale at home and abroad. The legislation as written ignores the complexity of global supply chains, where a final product may contain components made in dozens of other countries. Those components can cross borders multiple times, and can contain subcomponents from multiple suppliers. The law could be easily read to require that each supplier of any part that makes its way into the final product be required to appoint a legal representative in the United States.
The requirements of an FMLAA law would be especially onerous for small and medium sized enterprises that do not have the expertise or legal representation to protect themselves from the ramifications of such a law. An imported product or component can contain parts from smaller, domestic suppliers in the country of origin who do not export directly themselves. Those smaller suppliers abroad would find it difficult to comply with the requirement to establish a legal presence in the United States, and SMEs in the United States would find it a daunting task to monitor the origin of every imported component and subcomponent they might use in their production process.
The inability to access lower-cost, made-to-order, just-in-time components from global suppliers would drive up costs for American manufacturers, rendering them less competitive in global markets and less able to export their finished products. In this way, the FMLAA would be working in direct cross purposes with the Obama administration's National Export Initiative.
The requirements of the FMLAA would also impact major sectors of the U.S. economy such as the automobile industry. The inclusion of motor vehicles as covered products is somewhat puzzling given the fact that the major foreign-name-plate automakers already have production facilities and affiliated dealers spread throughout the United States. The law would reach under the hood to require a legal representative for every supplier of parts that go into an imported car, creating a huge non-tariff barrier. As the analysis by Hogan Lovells points out,
tracking the registrations for each and every part and component in an imported motor vehicle will be an administrative nightmare for U.S. Customs and forU.S. and foreign auto makers, since a car and its various components contain thousands of parts from multiple import and domestic suppliers.10
The globally integrated auto industry in the United States depends on access to imported parts from East Asia and our NAFTA partners Canada and Mexico. The provisions of an FMLAA-type law could delay the movement of containers across borders as Customs agents inspect each shipment for compliance. In a letter to Congress in September 2010, the Embassy of Canada offered a friendly warning:
Canada is particularly concerned that a requirement to identify the foreign agent for each of the numerous shipments on every single truck could delay shipments of component parts, thereby stalling U.S. assembly operations. This would be especially true for just-in-time shipments, such as for the auto industry, which depend on immediate delivery. This bill could also hamper commercial shippers and importers as trucks that contain goods shipped by hundreds of manufacturers could be stopped or be delayed at the border for the non-compliance of a single parcel.11
Advocates of requiring a U.S.-based agent claim they are trying to protect U.S. producers from unfair foreign competition, but a large swath of U.S. manufacturers see more harm than good in the approach. The National Association of Manufacturers warned Congress in a July 2010 letter that passage of legislation as currently written would damage the ability of its members to export American-made products to global markets. According to NAM, the proposed policy change:
is counterproductive to U.S. manufacturing interests because it indiscriminately risks severing critical supplier relationships benefiting U.S. manufacturers and supporting hundreds of thousands of U.S. jobs. It invites other countries to reciprocate by imposing mirror legislation against U.S. exporting companies and imperils President Obama's announced goal of doubling U.S. exports within the next five years.
The legislation would also interrupt important supplier relationships and subject U.S. companies to the jurisdiction of foreign courts, including countries with less developed judicial systems, should other nations adopt similar requirements, thereby adding additional barriers for U.S. exporters.12
Imposing new, regulatory burdens on foreign producers who import to the United States will not protect U.S. industry. Global manufacturing has evolved away from a simplistic "us vs. them" model in which goods wholly made in the United States must compete with goods wholly made abroad. Today, most manufactured products, especially higher end items such as consumer electronics, motor vehicles, civil aircraft and sophisticated equipment and machinery, are composed of components made in a number of countries. The future of American manufacturing depends on the ability of American companies to supply the design, engineering, and higher-end components for increasingly complex global supply chains.13
That new reality for American manufacturing means that U.S. companies must not only export to expand revenue but also import raw materials, capital machinery, and intermediate components to control costs and remain profitable. Capital goods and industrial supplies together accounted from more than half of the imported goods Americans purchased in 2009. Consumer goods excluding automobiles accounted for only about a quarter of imports.14
Any effort by the U.S. government to discourage imports generally, through a general tariff hike, an intentionally depreciated dollar, or new non-tariff regulatory barriers, will impose real costs on American producers as well as consumers.
Notes
1.Subcommittee on Commerce, Trade, and Consumer Protection Staff, Memorandum, "Re: Hearing on H.R. 4678, the ‘Foreign Manufacturers Legal Accountability Act,'" June 11, 2010, http://energycommerce.house.gov/documents/20100612/Briefing. Memo.ctcp.06.16.2010.pdf
2.Outline of the Hague Service Convention, prepared by the Permanent Bureau of the Hague Conference on Private International Law, November 2009, available on the "Service Section" of the Hague Conference website, at http://www.hcch. net/upload/outline14e.pdf.
3.Jeremy Baskin, Office of Compliance, U.S. Consumer Product Safety Commission, Testimony before the House Committee on Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection, Hearing on H.R. 4678, the Foreign Manufacturers Legal Accountability Act, June 16, 2010.
4.Ibid.
5.Warren Maruyama, "Proposed FMLAA Importer's Declaration also Violates WTO Rules," Hogan Lovells, of counsel to Daimler, copy in authors' files, p. 2.
6.Russell Smith, Briefing Paper: H.R.4678: The "Foreign Manufacturers Legal Accountability Act," Willkie Farr & Gallagher, of counsel to Mazda North American Operations, copy in authors' files, p. 4.
7.Panel Report on "Thailand—Restrictions on Importation of and Internal Taxes on Cigarettes, WT/DS10/R, adopted on 7 November 1990, 37S/200.
8.Appellate Body Report, European Communities—Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R (adopted 5 April 2001).
9.Letter from Joao Vale de Almerida, appointed ambassador of the EU to the United States to Nancy Pelosi, speaker of the House of Representatives, July 23, 2010.
10.Hogan Lovells.
11.Letter from Gary Doer, Ambassador of Canada to the United States to Sen. Sheldon Whitehouse, chairman, and Sen. Jeff Sessions, ranking member, of the Senate Judiciary Subcommittee on Administrative Oversight of the Courts, September 9, 2010.
12.National Association of Manufacturers, Association of International Automobile Manufacturers, and Organization for International Investment, Letter to Rep. Henry Waxman, chairman, and Rep. Joe Barton, ranking member, Committee on Energy and Commerce, U.S. House of Representatives, July 21, 2010.
13.See Daniel J. Ikenson, "Made on Earth: How Global Economic Integration Renders Trade Policy Obsolete," Cato Trade Policy Analysis no. 42, December 2, 2009.
14.U.S. Commerce Department, "U.S. International Trade in Goods and Services, Annual Revision for 2009," Exhibit 12a, "Imports of Goods by Principal End-Use Category," June 10, 2010, http://www.bea.gov/newsreleases/international/trade/2010 /pdf/trad1310.pdf.
September 28, 2010
Free Trade Bulletin no. 42
"Consumer Safety" Bill Could Boomerang against U.S. Manufacturers
by Daniel Griswold and Sallie James
Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute and Sallie James is a trade policy analyst with the center.
Published on September 28, 2010
--------------------------------------------------------------------------------
PRINT PAGE CITE THIS Sans Serif Serif Share with your friends:
ShareThisIntroduction
Barriers to trade can be straightforward and transparent, even if wrongheaded, such as a 27.5 percent tariff that certain members of Congress threatened to impose on imports from China. Or barriers can take the form of rules and regulations proposed in the name of protecting public health and safety but that have a secondary effect of restricting trade. An example of such a non-tariff barrier is legislation now before Congress called the Foreign Manufacturers Legal Accountability Act (FMLAA).
The sponsors of the legislation claim that their principal goal is to protect American consumers from unsafe foreign products, but there are warning signs that the bill may be more about restricting trade than protecting the public.
Introduced earlier this year in the House and the Senate, the FMLAA would require any foreign producer selling goods in the U.S. market to designate a legal agent located in the United States who could be served papers in a product liability suit. The agent would be required to register in a state with a substantial connection to the importation, distribution, and sale of the product. By registering an agent, the foreign producer would agree to accept the jurisdiction of the state and federal courts of the state where the agent is located.
Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute and Sallie James is a trade policy analyst with the center.
More by Daniel Griswold
More by Sallie JamesIf a foreign producer fails to designate a registered agent, the Act would ban the importation to the United States of any products made by the producer. Determining which foreign producers meet the minimum size requirements for falling under the Act would be left to agencies such as the Consumer Product Safety Commission and the Food and Drug Administration. As written, the bills would cover pharmaceuticals and cosmetics, biological products, consumer products, chemical substances, pesticides, and motor vehicles and their equipment and parts.
The safety issues behind the bill are real enough. In 2007, the Consumer Product Safety Commission sought the recall of 473 different products. More than 80 percent involved imported products, and three-quarters of those products came from China.1 The concern raised by advocates of the legislation is that American consumers harmed by such products will not be able to collect damages if the foreign-based producer has no legal presence in the United States. Domestic companies by definition have a legal presence in the United States and can thus be sued for damages caused by their products, which arguably puts them at a competitive disadvantage against foreign competitors allegedly operating outside the reach of the U.S. legal system. Hearings in June 2010 highlighted the case of contaminated drywall imported from China and the inability of U.S. homeowners harmed by the product to seek damages from the producer.
Americans damaged by faulty products, whether made abroad or domestically, should be able to seek compensation through the courts. But the approach advocated by supporters of the FMLAA would not solve the problem. It would create a false hope of collection for damages while bypassing existing procedures that have proven to work in most cases. The approach would potentially violate constitutional protections available to citizens and non-citizens alike as well as existing commercial agreements with other nations. It could potentially disrupt global manufacturing supply chains, putting American production and employment in jeopardy.
Remedies already available
Initiating legal action against a foreign-based entity is a common, established procedure. Efforts to serve process on foreign manufacturers are currently subject to the Hague Convention on the Service Abroad of Judicial and Extraterritorial Documents in Civil and Commercial Matters, a multilateral treaty governing the channels of transmission of judicial documents across borders to which the United States (and China, since May 1991) is a party. Under rules of the convention, each member agrees to serve legal papers on its citizens through the central authority of the state where the person or corporation being served resides. Papers can also be served through the mail, through consulates, and through other diplomatic channels. According to a Convention document, two-thirds of requests are processed within two months.2
Even if the original foreign-based producer cannot be served, the parties seeking damages can bring legal action against importers, distributors, and retailers who do have a legal presence in the United States. At a congressional hearing in June 2010, Jeremy Baskin of the Office of Compliance in the U.S. Consumer Product Safety Commission (CPSC) testified that:
In most cases, CPSC has been able to work with domestic partners of foreign manufacturers, such as importers or retailers, on enforcement activities to obtain relief for consumers without resorting to adjudicative proceedings. One example of this is a $50,000 settlement with a Hong Kong corporation with offices in the United States that imported toys manufactured in China that violated the Commission's lead paint ban.3
An exception to the rule was the case of imported drywall from China. After homeowners reported significant health problems connected with the drywall, the CPSC was unable to obtain any response from the producer in China. According to the testimony, attempts by the CPSC staff to send requests for information to the company were returned to the commission, "refused and unopened."4
Requiring foreign companies like the Chinese drywall producer to designate a legal representative in the United States would not guarantee collection of damages from the producer. Even if papers could be served in such a case, the plaintiffs would still need to win the case and be able to collect damages in order to be made whole. If the foreign producer ceases to operate or files for bankruptcy, collection of actual damages becomes virtually impossible even if papers can be served. Merely having a designated agent in the United States would not guarantee access to the resources of the original manufacturer to pay for the damages ultimately awarded in a court case.
The fact that a foreign producer may not have a legal representative in the United States does not change the fact that Customs officials, the FDA, CPSC, and agencies retain broad powers to bar the entry of tainted or defective products. American-based retailers, wholesalers, and others who have paid to import the products are accountable to those agencies and subject to a range of civil and legal penalties for failing to comply with U.S. health and safety laws.
Violates existing trade agreements, including WTO
The legislation as written also violates a broad array of international agreements—which themselves provide avenues for service of process. The proposed legislation would not only circumvent the procedures set forth under the Hague Service Convention of 1965. Its provisions also appear to violate Articles III and XI of the General Agreement on Tariffs and Trade (GATT), and abrogate U.S. commitments to key trading partners under the WTO Agreements.
A fundamental principle of international trade law is nondiscrimination. Nations are discouraged from maintaining a more lax set of standards for domestically produced products while enforcing a more stringent set of standards for imported products. The FMLAA appears to fail this test. A recent briefing paper by Hogan Lovells points out that "No corresponding registration, jurisdiction, and acceptance of liability requirements are imposed on U.S. manufacturers of like products, parts, or components, or their corporate parents."5
Indeed, H.R. 4678 explicitly exempts from its provisions American-owned foreign manufactures, and foreign-owned manufacturers with American subsidiaries, so long as the subsidiaries assume any liability on its foreign parent companies behalf. As the Hogan Lovells analysis suggests, those exemptions are discriminatory because foreign manufacturers with a U.S. parent preserve their right to defend themselves from legal liability. The rules of the World Trade Organization, of which the United States is a founding member, appear to prohibit that sort of discrimination.
If the safety regime is applied in a discriminatory manner—setting different and more rigorous conditions on foreign manufactured goods once they crossed the border, compared to domestically-produced goods—then it would likely constitute a non-tariff barrier to trade (NTB). NTBs are subject to rules in the World Trade Organization, rules that jurisprudence has clarified and lawmakers would be wise to consider. Indeed, at least some lawmakers sponsoring the bills have recognized the legal can of worms the new rules could open: S. 1606, for example, states in Sec. 1002 (9), that "United States laws and the laws of United States trading partners should not put burdens on foreign manufacturers and importers that do not apply to domestic competitors."
Those words are a nod to "national treatment," one of the guiding principles of the WTO. National treatment is essentially the recognition that, once past the border, imported goods should be accorded as favorable treatment to goods made domestically. The formal language pertaining to national treatment can be found in Article III:4 of the General Agreement on Tariffs and Trade, the largest and arguably most important treaty administered by the WTO, which states:
The products of the territory of any [WTO member] imported into the territory of any other [member] shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, pur chase, transportation, distribution or use ... [emphasis added]
Rules that apply to foreign manufacturers but not to domestic manufacturers—such as those in H.R. 4678 requiring foreign manufacturers to designate a U.S. agent for purposes of U.S. service of process—would presumably fall under the definition of the types of policies covered by Article III, and therefore would be subject to its disciplines. In a recent briefing paper, trade lawyer Russell Smith quoted a GATT ruling on Italy's restrictions on agricultural machinery, which stated that Article III includes "not only the laws and regulations which directly governed the conditions of sale or purchase but also any laws or regulations which might adversely modify the conditions of competition between the domestic and imported products in the internal market."6
Presumably the new requirements to establish an agent in the United States would modify, to the foreign manufacturers' disadvantage, the conditions of competition between domestic and imported goods and thus violate Article III.
The de minimus exceptions in the proposed regula-tions—those that would exempt small foreign manufacturers from the rules—are also problematic. They would appear to violate the obligation under GATT Article I to treat "like products" from all trade partners equally (the so-called "most favored nation" obligation). If some products are exempted from application of the new rules because they come from manufacturers that are deemed by regulators to be sufficiently small, they would necessarily be treated differently from like products from larger manufacturers, as though Americans deserved less protection from products made by small firms.
In fact, the bill may have the opposite effect on public safety from that which was intended by discouraging sourcing from larger, more reputable firms with long-established safety records. With the de minimus exceptions discussed above, there is the possibility for a perverse effect on foreign manufacturers: would making an exception for small producers/ importers (practical though it may well be for implementation purposes) increase the likelihood of fly-by-night operations? It doesn't take too much imagination to conceive of foreign entities deliberately keeping themselves small, "below-the-radar" operations in order to escape the reach of the law. Larger, more prominent firms (with an interest in protecting their reputation and brand integrity) would be at a disadvantage. Surely such a result would be opposite to the one intended.
The United States may try to argue that there is no discrimination between "like products" produced by firms of comparative size, and therefore any de facto discrimination between trade partners is incidental. But then the United States would in effect be arguing that it is discriminating on the basis of production and processing methods (or "PPMs" in the trade policy jargon), an equally contentious basis of discrimination, and one the United States itself has rightly argued against vigorously in trade law and policy fora.
Another legal flaw of the FMLAA is its resort to a complete ban on the imports in question if the producer fails to designate a domestic agent.
Article XI of the GATT, which covers the general prohibition in the WTO of quantitative restrictions, states in paragraph 1:
No prohibitions or restrictions other than duties, taxesor other charges, whether made effective through quotas, import or export licences [sic] or other measures, shall be instituted or maintained by any [member] on the importation of any product of the territory of any other [member].(emphasis added)
Establishing an agent for service of process, and notifying that agent to a regulatory agency may well violate Article XI. It is certainly not a duty, tax or other charge, the only allowable restrictions by the terms of the Article.
The United States may, in defense of its action should the Act pass into law, invoke various parts of Article XX of the GATT, which allows WTO members to deviate from the normal rules, including Articles I, III and XI, in order to achieve public policy objectives such as "protect[ing] human, animal or plant life or health" (Article XX[b]) or those that are "necessary to secure compliance with laws or regulations" which are not inconsistent with the other provisions of the GATT (Article XX[d]). However, those exceptions are allowed only under certain conditions, one of which is that the measure must be the least trade-restrictive option available to achieve the objective.
A GATT Panel on Thailand's restrictions on imported cigarettes ruled in 1990 that
a contracting party cannot justify a measure consistent with other GATT provisions as necessary in terms of Article XX(d) if an alternative measure which it could reasonably be expected to employ and which is not inconsistent with other GATT provisions is available to it. By the same token, in cases where a measure consistent with other GATT provisions is not reasonably available, a contracting party is bound to use, among the measures reasonably available to it, that which entails the least degree of inconsistency with other GATT provisions.7 (emphasis added)
A WTO Appellate Body ruling (on EU trade restrictions on asbestos) has reaffirmed that the same "necessity test" applies in the WTO era.8
For the purposes of the current discussion, the United States would have to demonstrate that the establishment of an agent—and the associated forfeiture of legal rights to defense under an alternative jurisdiction—is necessary for consumers' rights to be respected, and that no less discriminatory alternative is available. They would have to prove, in other words, that the Hague Service Convention is insufficient to meet the legitimate public policy objective.
Warning shots in the potential trade war have already been fired. The Canadian and EU governments recently wrote to congressional leaders and sponsors of the bill, alerting them to its legal implications and urging caution. The EU ambassador's letter to Speaker Pelosi, for example, points to the draft bill's potential for introducing "an additional layer of burden on ... foreign enterprises.... Establishing a registered agent in the U.S. for any potential damage claim of a
U.S. consumer seems disproportionate in terms of costs." and explicitly refers to Article XI of the GATT, calling the Act "questionable with regard to its compatibility with the WTO."9
Any benefits of the bills provisions must be weighed against these risks to the smooth functioning of the international trading system, in which the United States has a clear interest. The U.S. government cannot credibly complain that other governments are not "playing by the rules" when it is enforcing a law that violates our own international commitments.
Inflicts self-damage by disrupting supply chains
Even if the FMLAA approach were consistent with international trade law, it would not be wise economic policy. Requiring foreign producers to designate a domestic agent under the threat of an import ban would invite our trading partners to adopt copycat legislation and would disrupt the international supply chains that have become an important component of American manufacturing.
Whether adopted in retaliation or sincere imitation, the rise of FMLAA-type laws in foreign countries would be bad news for American exporters. It would impose a significant new cost of production on U.S. exporters if they were required to employ agents in every country where they plan to sell their products. Designating such agents would also invite lawsuits over product liability that may or may not have merit but would be difficult to defend, especially in emerging markets and less developed countries where the legal systems are under-developed as well. The temptation may prove irresistible to sue a deep-pocketed U.S. multinational through a poor country's legal system that may be both opaque and corrupt.
By discouraging and complicating imports to the United States, the FMLAA approach threatens to cut American producers off from critical supplies and components they need to produce final products for sale at home and abroad. The legislation as written ignores the complexity of global supply chains, where a final product may contain components made in dozens of other countries. Those components can cross borders multiple times, and can contain subcomponents from multiple suppliers. The law could be easily read to require that each supplier of any part that makes its way into the final product be required to appoint a legal representative in the United States.
The requirements of an FMLAA law would be especially onerous for small and medium sized enterprises that do not have the expertise or legal representation to protect themselves from the ramifications of such a law. An imported product or component can contain parts from smaller, domestic suppliers in the country of origin who do not export directly themselves. Those smaller suppliers abroad would find it difficult to comply with the requirement to establish a legal presence in the United States, and SMEs in the United States would find it a daunting task to monitor the origin of every imported component and subcomponent they might use in their production process.
The inability to access lower-cost, made-to-order, just-in-time components from global suppliers would drive up costs for American manufacturers, rendering them less competitive in global markets and less able to export their finished products. In this way, the FMLAA would be working in direct cross purposes with the Obama administration's National Export Initiative.
The requirements of the FMLAA would also impact major sectors of the U.S. economy such as the automobile industry. The inclusion of motor vehicles as covered products is somewhat puzzling given the fact that the major foreign-name-plate automakers already have production facilities and affiliated dealers spread throughout the United States. The law would reach under the hood to require a legal representative for every supplier of parts that go into an imported car, creating a huge non-tariff barrier. As the analysis by Hogan Lovells points out,
tracking the registrations for each and every part and component in an imported motor vehicle will be an administrative nightmare for U.S. Customs and forU.S. and foreign auto makers, since a car and its various components contain thousands of parts from multiple import and domestic suppliers.10
The globally integrated auto industry in the United States depends on access to imported parts from East Asia and our NAFTA partners Canada and Mexico. The provisions of an FMLAA-type law could delay the movement of containers across borders as Customs agents inspect each shipment for compliance. In a letter to Congress in September 2010, the Embassy of Canada offered a friendly warning:
Canada is particularly concerned that a requirement to identify the foreign agent for each of the numerous shipments on every single truck could delay shipments of component parts, thereby stalling U.S. assembly operations. This would be especially true for just-in-time shipments, such as for the auto industry, which depend on immediate delivery. This bill could also hamper commercial shippers and importers as trucks that contain goods shipped by hundreds of manufacturers could be stopped or be delayed at the border for the non-compliance of a single parcel.11
Advocates of requiring a U.S.-based agent claim they are trying to protect U.S. producers from unfair foreign competition, but a large swath of U.S. manufacturers see more harm than good in the approach. The National Association of Manufacturers warned Congress in a July 2010 letter that passage of legislation as currently written would damage the ability of its members to export American-made products to global markets. According to NAM, the proposed policy change:
is counterproductive to U.S. manufacturing interests because it indiscriminately risks severing critical supplier relationships benefiting U.S. manufacturers and supporting hundreds of thousands of U.S. jobs. It invites other countries to reciprocate by imposing mirror legislation against U.S. exporting companies and imperils President Obama's announced goal of doubling U.S. exports within the next five years.
The legislation would also interrupt important supplier relationships and subject U.S. companies to the jurisdiction of foreign courts, including countries with less developed judicial systems, should other nations adopt similar requirements, thereby adding additional barriers for U.S. exporters.12
Imposing new, regulatory burdens on foreign producers who import to the United States will not protect U.S. industry. Global manufacturing has evolved away from a simplistic "us vs. them" model in which goods wholly made in the United States must compete with goods wholly made abroad. Today, most manufactured products, especially higher end items such as consumer electronics, motor vehicles, civil aircraft and sophisticated equipment and machinery, are composed of components made in a number of countries. The future of American manufacturing depends on the ability of American companies to supply the design, engineering, and higher-end components for increasingly complex global supply chains.13
That new reality for American manufacturing means that U.S. companies must not only export to expand revenue but also import raw materials, capital machinery, and intermediate components to control costs and remain profitable. Capital goods and industrial supplies together accounted from more than half of the imported goods Americans purchased in 2009. Consumer goods excluding automobiles accounted for only about a quarter of imports.14
Any effort by the U.S. government to discourage imports generally, through a general tariff hike, an intentionally depreciated dollar, or new non-tariff regulatory barriers, will impose real costs on American producers as well as consumers.
Notes
1.Subcommittee on Commerce, Trade, and Consumer Protection Staff, Memorandum, "Re: Hearing on H.R. 4678, the ‘Foreign Manufacturers Legal Accountability Act,'" June 11, 2010, http://energycommerce.house.gov/documents/20100612/Briefing. Memo.ctcp.06.16.2010.pdf
2.Outline of the Hague Service Convention, prepared by the Permanent Bureau of the Hague Conference on Private International Law, November 2009, available on the "Service Section" of the Hague Conference website, at http://www.hcch. net/upload/outline14e.pdf.
3.Jeremy Baskin, Office of Compliance, U.S. Consumer Product Safety Commission, Testimony before the House Committee on Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection, Hearing on H.R. 4678, the Foreign Manufacturers Legal Accountability Act, June 16, 2010.
4.Ibid.
5.Warren Maruyama, "Proposed FMLAA Importer's Declaration also Violates WTO Rules," Hogan Lovells, of counsel to Daimler, copy in authors' files, p. 2.
6.Russell Smith, Briefing Paper: H.R.4678: The "Foreign Manufacturers Legal Accountability Act," Willkie Farr & Gallagher, of counsel to Mazda North American Operations, copy in authors' files, p. 4.
7.Panel Report on "Thailand—Restrictions on Importation of and Internal Taxes on Cigarettes, WT/DS10/R, adopted on 7 November 1990, 37S/200.
8.Appellate Body Report, European Communities—Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R (adopted 5 April 2001).
9.Letter from Joao Vale de Almerida, appointed ambassador of the EU to the United States to Nancy Pelosi, speaker of the House of Representatives, July 23, 2010.
10.Hogan Lovells.
11.Letter from Gary Doer, Ambassador of Canada to the United States to Sen. Sheldon Whitehouse, chairman, and Sen. Jeff Sessions, ranking member, of the Senate Judiciary Subcommittee on Administrative Oversight of the Courts, September 9, 2010.
12.National Association of Manufacturers, Association of International Automobile Manufacturers, and Organization for International Investment, Letter to Rep. Henry Waxman, chairman, and Rep. Joe Barton, ranking member, Committee on Energy and Commerce, U.S. House of Representatives, July 21, 2010.
13.See Daniel J. Ikenson, "Made on Earth: How Global Economic Integration Renders Trade Policy Obsolete," Cato Trade Policy Analysis no. 42, December 2, 2009.
14.U.S. Commerce Department, "U.S. International Trade in Goods and Services, Annual Revision for 2009," Exhibit 12a, "Imports of Goods by Principal End-Use Category," June 10, 2010, http://www.bea.gov/newsreleases/international/trade/2010 /pdf/trad1310.pdf.
Tuesday, September 28, 2010
the Unfeasability Of The All-Electric Car
From Mises.org:
A 132-Year Payback on the All-Electric Car
Mises Daily: Tuesday, September 28, 2010 by Patrick Barron
The term energy encompasses a plethora of technologies, and each attracts the gimlet eye of Big Brother. In recent years environmental groups have been very successful in insinuating themselves into the halls of government so that today there is a revolving door between government and the environmental movement. And it's just like the revolving door between the government and other key industries, such as banking and the military-industrial complex.
Government would have us believe that a new regulation is the result of some great, objective, and careful investigation. But mostly these regulations and spending programs are foisted upon us by the people who only yesterday were nothing more than lobbyists for some fervently held cause. There has been no new data, but yesterday's lobbyists are today carrying the mantle of great authority and prestige because they have become high-level government bureaucrats.
We economists call such lobbying "rent seeking" and those who engage in it are "rent seekers." Rather than seeking the cooperation of other men in the free market, a rent seeker lobbies government to impose some special privilege. The cost of the rent seeker's efforts is greatly reduced because he need convince only a few elected officials or government bureaucrats rather than the entire market. His job is made all the easier by the knowledge that the elected official or government bureaucrat can grant the privilege with no cost to himself.
"Rather than seeking the cooperation of other men in the free market, a rent seeker lobbies government to impose some special privilege." When a rent seeker gets a job in government itself, well, the fox is in the henhouse. Officials move billions of dollars and coerce millions of people with no responsibility whatsoever. If a program fails to achieve its grand design, no government official suffers the consequences. Furthermore, failed regulations are seldom repealed, because, despite the net burden to the economy, a few new constituents do benefit and lobby mightily to keep them in place.
A Revolving-Door Lobbyist for the All-Electric Car
Such is the case, as recently reported by the Associated Press, of a lobbyist for an all-electric car.
"Leading the Charge" glorifies Mr. David Sandalow, a US Department of Energy assistant secretary and an avid advocate for the all-electric car. Hybrid cars usually recharge their batteries only while operating on their gasoline-powered engines, but Mr. Sandalow has converted his Toyota Prius hybrid into a plug-in hybrid at the cost of $9,000. Now he can recharge his car's battery from his home electrical outlet.
Mr. Sandalow is very proud that his daily five-mile commute (a ten-mile round trip) can be accomplished with a gasoline-refueling stop only "about once every month or two." Nevertheless his car needs to recharge after only 30 miles of travel, so he advocates that the government pursue developing a battery that will allow 100 miles between rechargings.
The government itself estimates the cost of such a battery at around $33,000 per battery. How the government knows this when no such battery yet exists was left unclear.
The article reassures us that government tax credits and stimulus funds will reduce the cost to the consumer to around $10,000 per battery. (But we Austrian economists know that government subsidies do not lower costs; they only change who pays. So it is disingenuous to say that government subsidies will lower the cost of such a battery.) Mr. Sandalow estimates that his electricity cost is equivalent to buying gasoline at 75¢ per gallon.
Recoup Your Investment in Only 132 Years!
One does not need to be a Brookings Institute scholar like Mr. Sandalow — specializing in "oil dependence, electric vehicles, and climate change" — to see why no one will willingly purchase an all-electric car, much less the one million that President Obama wants on the nation's highways in five years. (Call me cynical, but this number does not sound as if it were the result of a scientific analysis either.)
First of all, the cost of anything is that which is foregone by the purchase. In other words, when we buy something, we cannot spend this money on other things. That is what our cost is. In the case of Mr. Sandalow, his $9,000 investment cost him 3,000 gallons of gasoline at the current price of roughly $3 per gallon. Assuming Mr. Sandalow's Toyota Prius gets only 20 miles per gallon, he could have driven his car for 60,000 miles. Since his commute is 10 miles per day, Mr. Sandalow's conversion cost is the amount of gasoline he could have purchased to drive to work for 22.7 years.
But that is not the only cost; the cost of electricity, which Mr. Sandalow estimates to be the equivalent of 75¢ per gallon gasoline, has yet to be considered. This expense adds an additional $2,250 to his commute — 60,000 miles divided by 20 miles per gallon times .75 = $2,250. Stated another way, he could have purchased another 750 gallons of gasoline and commuted to work for another 5.7 years, or 28.4 years total.
Now let's move on to the $33,000 battery. Hold onto your hats! At $3 per gallon, Mr. Sandalow could have purchased 11,000 gallons of gasoline and driven his Toyota Prius for 220,000 miles. But, again, he would have had to buy electricity at the equivalence of 75¢ per gallon, which would have cost him another $8,250. With this additional money he could have driven another 55,000 miles, or 275,000 miles total. This would allow our intrepid energy saver to drive to work for 104 years. (Of course, this cost assumes that one $33,000 battery will last for that many miles. If two batteries are required, you can double the cost and the years required to break even.)
So, by converting his car to a plug-in hybrid for $9,000, buying a yet-to-be produced 100-mile range battery for $33,000, and buying electricity for the equivalence of 75¢ per gallon of gasoline, Mr. Sandalow could have purchased enough $3 per gallon gasoline to enable him to drive to work for 132 years!
Trust Only the Free Market
I have looked at the all-electric car calculation only from the point of view of the consumer. I have not touched upon the nation's capacity to generate enough electricity to recharge those one million batteries so desired by President Obama. And one can merely speculate on whether producing this additional amount of electricity will cause more smokestack pollution than the tailpipe pollution it supposedly will prevent. Certainly this is not a debate in which Austrians would engage.
As Ludwig von Mises makes clear in chapter 8 of Human Action, the only basis of economic calculation is money prices via a free market. This does not mean that unlimited pollution from power plants or automobile tailpipes is permissible. Property rights and one's health may not be abridged by another's pollution. But it does mean that a basis already exists for deciding upon the wisdom of an all-electric car — the free market.
MP3CD$20 $15
Audiobook read by Jeff RiggenbachEach man strives to improve his own condition by seeking the cooperation of others. Entrepreneurs who believe in the all-electric car are free to invest their own money and lobby investor capitalists for more. But right now the all-electric car appears to be a black hole for wasting more taxpayer money.
We must disabuse ourselves of the propensity to believe that anything can be accomplished as long as government throws enough money at it. We have been down this road before with the fast breeder nuclear reactor that was supposed to produce more fuel than it consumed. Billions were wasted. We seem to be doing the same thing today with wind and solar power, too. There may be an economically rational niche for these energy technologies, but only the free market will give us the answer.
Patrick Barron is a private consultant in the banking industry. He teaches in the Graduate School of Banking at the University of Wisconsin, Madison, and teaches Austrian economics at the University of Iowa, Iowa City, Iowa, where he lives with his wife of 40 years. Send him mail. See Patrick Barron's article archives.
A 132-Year Payback on the All-Electric Car
Mises Daily: Tuesday, September 28, 2010 by Patrick Barron
The term energy encompasses a plethora of technologies, and each attracts the gimlet eye of Big Brother. In recent years environmental groups have been very successful in insinuating themselves into the halls of government so that today there is a revolving door between government and the environmental movement. And it's just like the revolving door between the government and other key industries, such as banking and the military-industrial complex.
Government would have us believe that a new regulation is the result of some great, objective, and careful investigation. But mostly these regulations and spending programs are foisted upon us by the people who only yesterday were nothing more than lobbyists for some fervently held cause. There has been no new data, but yesterday's lobbyists are today carrying the mantle of great authority and prestige because they have become high-level government bureaucrats.
We economists call such lobbying "rent seeking" and those who engage in it are "rent seekers." Rather than seeking the cooperation of other men in the free market, a rent seeker lobbies government to impose some special privilege. The cost of the rent seeker's efforts is greatly reduced because he need convince only a few elected officials or government bureaucrats rather than the entire market. His job is made all the easier by the knowledge that the elected official or government bureaucrat can grant the privilege with no cost to himself.
"Rather than seeking the cooperation of other men in the free market, a rent seeker lobbies government to impose some special privilege." When a rent seeker gets a job in government itself, well, the fox is in the henhouse. Officials move billions of dollars and coerce millions of people with no responsibility whatsoever. If a program fails to achieve its grand design, no government official suffers the consequences. Furthermore, failed regulations are seldom repealed, because, despite the net burden to the economy, a few new constituents do benefit and lobby mightily to keep them in place.
A Revolving-Door Lobbyist for the All-Electric Car
Such is the case, as recently reported by the Associated Press, of a lobbyist for an all-electric car.
"Leading the Charge" glorifies Mr. David Sandalow, a US Department of Energy assistant secretary and an avid advocate for the all-electric car. Hybrid cars usually recharge their batteries only while operating on their gasoline-powered engines, but Mr. Sandalow has converted his Toyota Prius hybrid into a plug-in hybrid at the cost of $9,000. Now he can recharge his car's battery from his home electrical outlet.
Mr. Sandalow is very proud that his daily five-mile commute (a ten-mile round trip) can be accomplished with a gasoline-refueling stop only "about once every month or two." Nevertheless his car needs to recharge after only 30 miles of travel, so he advocates that the government pursue developing a battery that will allow 100 miles between rechargings.
The government itself estimates the cost of such a battery at around $33,000 per battery. How the government knows this when no such battery yet exists was left unclear.
The article reassures us that government tax credits and stimulus funds will reduce the cost to the consumer to around $10,000 per battery. (But we Austrian economists know that government subsidies do not lower costs; they only change who pays. So it is disingenuous to say that government subsidies will lower the cost of such a battery.) Mr. Sandalow estimates that his electricity cost is equivalent to buying gasoline at 75¢ per gallon.
Recoup Your Investment in Only 132 Years!
One does not need to be a Brookings Institute scholar like Mr. Sandalow — specializing in "oil dependence, electric vehicles, and climate change" — to see why no one will willingly purchase an all-electric car, much less the one million that President Obama wants on the nation's highways in five years. (Call me cynical, but this number does not sound as if it were the result of a scientific analysis either.)
First of all, the cost of anything is that which is foregone by the purchase. In other words, when we buy something, we cannot spend this money on other things. That is what our cost is. In the case of Mr. Sandalow, his $9,000 investment cost him 3,000 gallons of gasoline at the current price of roughly $3 per gallon. Assuming Mr. Sandalow's Toyota Prius gets only 20 miles per gallon, he could have driven his car for 60,000 miles. Since his commute is 10 miles per day, Mr. Sandalow's conversion cost is the amount of gasoline he could have purchased to drive to work for 22.7 years.
But that is not the only cost; the cost of electricity, which Mr. Sandalow estimates to be the equivalent of 75¢ per gallon gasoline, has yet to be considered. This expense adds an additional $2,250 to his commute — 60,000 miles divided by 20 miles per gallon times .75 = $2,250. Stated another way, he could have purchased another 750 gallons of gasoline and commuted to work for another 5.7 years, or 28.4 years total.
Now let's move on to the $33,000 battery. Hold onto your hats! At $3 per gallon, Mr. Sandalow could have purchased 11,000 gallons of gasoline and driven his Toyota Prius for 220,000 miles. But, again, he would have had to buy electricity at the equivalence of 75¢ per gallon, which would have cost him another $8,250. With this additional money he could have driven another 55,000 miles, or 275,000 miles total. This would allow our intrepid energy saver to drive to work for 104 years. (Of course, this cost assumes that one $33,000 battery will last for that many miles. If two batteries are required, you can double the cost and the years required to break even.)
So, by converting his car to a plug-in hybrid for $9,000, buying a yet-to-be produced 100-mile range battery for $33,000, and buying electricity for the equivalence of 75¢ per gallon of gasoline, Mr. Sandalow could have purchased enough $3 per gallon gasoline to enable him to drive to work for 132 years!
Trust Only the Free Market
I have looked at the all-electric car calculation only from the point of view of the consumer. I have not touched upon the nation's capacity to generate enough electricity to recharge those one million batteries so desired by President Obama. And one can merely speculate on whether producing this additional amount of electricity will cause more smokestack pollution than the tailpipe pollution it supposedly will prevent. Certainly this is not a debate in which Austrians would engage.
As Ludwig von Mises makes clear in chapter 8 of Human Action, the only basis of economic calculation is money prices via a free market. This does not mean that unlimited pollution from power plants or automobile tailpipes is permissible. Property rights and one's health may not be abridged by another's pollution. But it does mean that a basis already exists for deciding upon the wisdom of an all-electric car — the free market.
MP3CD$20 $15
Audiobook read by Jeff RiggenbachEach man strives to improve his own condition by seeking the cooperation of others. Entrepreneurs who believe in the all-electric car are free to invest their own money and lobby investor capitalists for more. But right now the all-electric car appears to be a black hole for wasting more taxpayer money.
We must disabuse ourselves of the propensity to believe that anything can be accomplished as long as government throws enough money at it. We have been down this road before with the fast breeder nuclear reactor that was supposed to produce more fuel than it consumed. Billions were wasted. We seem to be doing the same thing today with wind and solar power, too. There may be an economically rational niche for these energy technologies, but only the free market will give us the answer.
Patrick Barron is a private consultant in the banking industry. He teaches in the Graduate School of Banking at the University of Wisconsin, Madison, and teaches Austrian economics at the University of Iowa, Iowa City, Iowa, where he lives with his wife of 40 years. Send him mail. See Patrick Barron's article archives.
Obama Jobs Death Toll: EPA Wreckage And Drilling Moratorium Aftermath
From Michelle Malkin:
Obama jobs death toll: EPA wreckage and drilling moratorium aftermath
By Michelle Malkin • September 28, 2010 09:22 AM
Grim reaper photoshop credit: Manly Rash
Ed Morrissey at Hot Air has an exclusive sneak peek at the economic havoc that Obama’s eco rules are wreaking. Bottom line: More than 800,000 jobs are at risk in a broad cross-section of industries.
Read the details here.
On a related note, the Obama’s offshore drilling moratorium isn’t the only thing roiling the oil and gas industry:
When deepwater drilling restarts, it will do so in an all-new regulatory environment. The regulatory agency itself is new. The Macondo tragedy hastened and deepened a preordained overhaul of the old Minerals Management Service. At the new Bureau of Ocean Energy Management, Regulation, and Enforcement (BOE), regulators—now separate from resource and revenue managers—are busy.
…Already, BOE has issued notices to lessees that require additional technical and environmental information on applications for permits, and not just for deep water. Operators complain of a de facto moratorium in shallow water caused by new permit requirements and regulatory confusion. Meanwhile, stricter National Environmental Protection Act compliance for OCS leases is under consideration. And newly updated “idle iron” guidance presses operators to plug nonproducing wells and remove inactive platforms within strict time limits, prompting the National Ocean Industries Association to wonder if state and federal regulators will approve the work.
…Looming over this uncertainty are federal budget proposals calling for higher taxes on producers, higher fees, and penalties for leases on which production doesn’t begin promptly enough to suit regulators. Congress wants to remove liability limits for deepwater operators. And producers have no assurance deepwater drilling will resume Nov. 30. Bromwich told reporters on Sept. 14 that BOE won’t issue permits until applicants satisfy the new regulations—the regulations still under development, which might or might not be finished by Sept. 30.
More than 8,000-12,000 jobs are in jeopardy. With a regulatory tempest raging, a temporary moratorium, however painful now, is not the biggest or most enduring threat to offshore drilling and related employment…
And from TheStreet.com: Obama Drill Ban May End, But Drilling Delays Won’t: Poll
The debate over the Gulf of Mexico doesn’t just have potential repercussions for the oil spill companies led by BP, that is, if BP is ever allowed to drill in the Gulf again. All the oil spill companies, including deepwater engineer Halliburton(HAL), rig operator Transocean(RIG), and Anadarko Petroleum(APC), have major business interests tied to the Gulf.
Anadarko has been the most optimistic of the group, saying at a recent Barclays Capital conference that it is ready to begin drilling again the moment the ban is lifted in November.
Transocean has been moving rigs out of the Gulf of Mexico for contracts elsewhere, and currently has more rigs idled than has been common in its recent history.
Halliburton is sticking with its earlier estimate that the net impact of the oil spill and drilling ban on its earnings this year will be less than 10 cents per share.
All the oil and gas companies have been chiming in on the issue as the oil spill itself receded into the deep and into history. The CEO of Total (TOT_) recently told the Wall Street Journal to expect 20% higher operating costs in the Gulf. The Total CEO cited permitting delays as one reason, and Noble Corp (NE_) has also claimed that permitting delays, even on shallow water projects, are already a major headache in the Gulf and will continue to be a major issue.
One more grim item from Thomas Pyle in the Examiner on White House book-cooking:
One day after being sworn into office, President Obama issued a memorandum to the heads of executive departments and agencies “reaffirming the commitment to accountability and transparency.”
Yet, with the majority party scrambling for votes and a grim November election forecast on the horizon, qualities such as transparency and openness have taken a back seat to political spin.
The administration itself offered the latest example of chicanery in its analysis of the economic effects of its moratorium on deepwater drilling – an analysis that found a loss of ‘only’ 8,000 to 12,000 jobs in the Gulf.
Though the administration’s dismissive attitude toward its own actions which left thousands of U.S. workers in the unemployment line are disheartening, the most troubling aspect of its report was the numeric sleight of hand the administration performed to minimize the appearance of the damage they had done.
Administration analysts cut their estimates by an unexplained 40 to 60%. Without these unexplained and unexplainable reductions, the estimate of lost jobs in the Gulf leaps to nearly 20,000 for just the 6 months covered by the original drilling ban. That’s just employment fallout. The report also fails to account for GDP, wages, or tax revenues lost.
The combination of misdirection and election pressure has the makings for a perfect policy storm. Congress is attempting to pass anything which can be leveraged for a campaign victory, while analysts are apparently being pressured to remain silent regarding damaging data…
Obama jobs death toll: EPA wreckage and drilling moratorium aftermath
By Michelle Malkin • September 28, 2010 09:22 AM
Grim reaper photoshop credit: Manly Rash
Ed Morrissey at Hot Air has an exclusive sneak peek at the economic havoc that Obama’s eco rules are wreaking. Bottom line: More than 800,000 jobs are at risk in a broad cross-section of industries.
Read the details here.
On a related note, the Obama’s offshore drilling moratorium isn’t the only thing roiling the oil and gas industry:
When deepwater drilling restarts, it will do so in an all-new regulatory environment. The regulatory agency itself is new. The Macondo tragedy hastened and deepened a preordained overhaul of the old Minerals Management Service. At the new Bureau of Ocean Energy Management, Regulation, and Enforcement (BOE), regulators—now separate from resource and revenue managers—are busy.
…Already, BOE has issued notices to lessees that require additional technical and environmental information on applications for permits, and not just for deep water. Operators complain of a de facto moratorium in shallow water caused by new permit requirements and regulatory confusion. Meanwhile, stricter National Environmental Protection Act compliance for OCS leases is under consideration. And newly updated “idle iron” guidance presses operators to plug nonproducing wells and remove inactive platforms within strict time limits, prompting the National Ocean Industries Association to wonder if state and federal regulators will approve the work.
…Looming over this uncertainty are federal budget proposals calling for higher taxes on producers, higher fees, and penalties for leases on which production doesn’t begin promptly enough to suit regulators. Congress wants to remove liability limits for deepwater operators. And producers have no assurance deepwater drilling will resume Nov. 30. Bromwich told reporters on Sept. 14 that BOE won’t issue permits until applicants satisfy the new regulations—the regulations still under development, which might or might not be finished by Sept. 30.
More than 8,000-12,000 jobs are in jeopardy. With a regulatory tempest raging, a temporary moratorium, however painful now, is not the biggest or most enduring threat to offshore drilling and related employment…
And from TheStreet.com: Obama Drill Ban May End, But Drilling Delays Won’t: Poll
The debate over the Gulf of Mexico doesn’t just have potential repercussions for the oil spill companies led by BP, that is, if BP is ever allowed to drill in the Gulf again. All the oil spill companies, including deepwater engineer Halliburton(HAL), rig operator Transocean(RIG), and Anadarko Petroleum(APC), have major business interests tied to the Gulf.
Anadarko has been the most optimistic of the group, saying at a recent Barclays Capital conference that it is ready to begin drilling again the moment the ban is lifted in November.
Transocean has been moving rigs out of the Gulf of Mexico for contracts elsewhere, and currently has more rigs idled than has been common in its recent history.
Halliburton is sticking with its earlier estimate that the net impact of the oil spill and drilling ban on its earnings this year will be less than 10 cents per share.
All the oil and gas companies have been chiming in on the issue as the oil spill itself receded into the deep and into history. The CEO of Total (TOT_) recently told the Wall Street Journal to expect 20% higher operating costs in the Gulf. The Total CEO cited permitting delays as one reason, and Noble Corp (NE_) has also claimed that permitting delays, even on shallow water projects, are already a major headache in the Gulf and will continue to be a major issue.
One more grim item from Thomas Pyle in the Examiner on White House book-cooking:
One day after being sworn into office, President Obama issued a memorandum to the heads of executive departments and agencies “reaffirming the commitment to accountability and transparency.”
Yet, with the majority party scrambling for votes and a grim November election forecast on the horizon, qualities such as transparency and openness have taken a back seat to political spin.
The administration itself offered the latest example of chicanery in its analysis of the economic effects of its moratorium on deepwater drilling – an analysis that found a loss of ‘only’ 8,000 to 12,000 jobs in the Gulf.
Though the administration’s dismissive attitude toward its own actions which left thousands of U.S. workers in the unemployment line are disheartening, the most troubling aspect of its report was the numeric sleight of hand the administration performed to minimize the appearance of the damage they had done.
Administration analysts cut their estimates by an unexplained 40 to 60%. Without these unexplained and unexplainable reductions, the estimate of lost jobs in the Gulf leaps to nearly 20,000 for just the 6 months covered by the original drilling ban. That’s just employment fallout. The report also fails to account for GDP, wages, or tax revenues lost.
The combination of misdirection and election pressure has the makings for a perfect policy storm. Congress is attempting to pass anything which can be leveraged for a campaign victory, while analysts are apparently being pressured to remain silent regarding damaging data…
EPA's New Boiler Rule Will Cost america Nearly 800,000 Jobs
From Fire Andrea Mitchell:
11:32 PM (5 minutes ago)James Inhofe report: EPA’s new “boiler rule” will cost America nearly 800,000 jobs!from Fire Andrea Mitchell! by adminKeep pushing that “green energy” mumbo jumbo Obama/Progressives! I think I’ve figured the whole progressive green economy thing. Destroy the country so that we can save everyone else from pollution! Yea that’s the ticket! Remember back in June when the EPA issued a proposal that would force industrial, commercial and institutional boilers and heaters to use “maximum achievable control technology”? The goal supposedly was to reduce harmful emissions that erode air quality and pose a public health risk. Well according to Fox News, Jim Inhofe released a scathing report Tuesday that he contends shows that the Environmental Protection Agency’s new proposed rule on cleaning up boilers nationwide could devastate America’s manufacturing base and imperil hundreds of thousands of jobs without providing any real public health or environmental benefits.
But the report found that the proposed rule, known as “Boiler MACT,” could put nearly 800,000 jobs at risk over requirements on commercial and industrial boilers, cement plans and ozone standards.
“Reducing emissions of mercury, hydrogen chloride and other hazardous air pollutants from commercial and industrial boilers is good policy,” the report reads. “But the manner in which EPA set standards to reduce those emissions is impracticable and costly.”
Geithner Cornered On Tax Hypocrisy
From Human Events and The Heritage Foundation:
Geithner Cornered On Tax Hypocrisy
by Jason Mattera
09/28/2010
Either Tim Geithner has elephant-sized chutzpah or he’s completely clueless. How else to explain his insistence that Congress follow the Obama plan to spike taxes on the top income brackets?
Forget for a moment that it is sheer economic lunacy to raise taxes on any quintile when our country is struggling with anemic private-sector growth, coupled with the fact that we’ve had unemployment above 9% for 16 straight months now. Geithner himself doesn’t have the moral authority to push tax hikes on anyone. He’s a tax cheat.
Recall that before his confirmation hearings to head the Treasury Department, Geithner paid $42,702 in back taxes and interest for the years 2001 through 2004. He blamed this “error” on TurboTax. Now he’s out pimping the Obama proposal to repeal portions of the Bush tax cuts, recently telling Fox Business that such tax increases are “good policy” that will “help the economy in the short term and in the long run.”
HUMAN EVENTS caught up with Mr. Geithner to ask him how exactly he squares his support for tax increases with his own tax-dodging days:
Obama’s America, folks: Where not only is our Treasury Secretary a tax cheat, but an advocate of higher taxes to boot.
--------------------------------------------------------------------------------
Mr. Mattera is the editor of HUMAN EVENTS and the author of Obama Zombies: How the Liberal Machine Brainwashed My Generation (Simon & Schuster). Previously, he was the Spokesman for Young America’s Foundation and a TV correspondent for Michelle Malkin. Follow Jason on Twitter, Facebook, and YouTube
Geithner Cornered On Tax Hypocrisy
by Jason Mattera
09/28/2010
Either Tim Geithner has elephant-sized chutzpah or he’s completely clueless. How else to explain his insistence that Congress follow the Obama plan to spike taxes on the top income brackets?
Forget for a moment that it is sheer economic lunacy to raise taxes on any quintile when our country is struggling with anemic private-sector growth, coupled with the fact that we’ve had unemployment above 9% for 16 straight months now. Geithner himself doesn’t have the moral authority to push tax hikes on anyone. He’s a tax cheat.
Recall that before his confirmation hearings to head the Treasury Department, Geithner paid $42,702 in back taxes and interest for the years 2001 through 2004. He blamed this “error” on TurboTax. Now he’s out pimping the Obama proposal to repeal portions of the Bush tax cuts, recently telling Fox Business that such tax increases are “good policy” that will “help the economy in the short term and in the long run.”
HUMAN EVENTS caught up with Mr. Geithner to ask him how exactly he squares his support for tax increases with his own tax-dodging days:
Obama’s America, folks: Where not only is our Treasury Secretary a tax cheat, but an advocate of higher taxes to boot.
--------------------------------------------------------------------------------
Mr. Mattera is the editor of HUMAN EVENTS and the author of Obama Zombies: How the Liberal Machine Brainwashed My Generation (Simon & Schuster). Previously, he was the Spokesman for Young America’s Foundation and a TV correspondent for Michelle Malkin. Follow Jason on Twitter, Facebook, and YouTube
Wasted Lives, Wasted Money: The Offense Of Overcriminalization
From The Hill and The Heritage Foundation:
Wasted lives, wasted money: The offense of overcriminalization
By Jim E. Lavine - 09/24/10 03:56 PM ET
Small businessman Abner “Abbie” Schoenwetter, a Florida seafood broker who is now 64, could have spent the last decade growing his business, contributing to the economy and the tax base, preparing for retirement, and enjoying liberty and happiness with his wife and three children. Instead, beginning with a grand jury indictment ten years ago, Mr. Schoenwetter’s real life became a surreal tale lifted from the pages of a Kafka novel.
Schoenwetter, who had no prior criminal history, was indicted and convicted on charges relating to lobsters he had agreed to purchase that, according to U.S. authorities, violated three Honduran administrative regulations. The U.S. claimed that, under Honduran law, there were undersized lobsters and lobsters with eggs in the shipment, and that the lobsters had been packaged in plastic, not regulation cardboard. The Honduran authorities, including the Honduran Attorney General, advised U.S. law enforcement authorities and the court that this effort to punish Schoenwetter and others under the Lacey Act for violating Honduran regulations was misplaced – the regulations in question had been declared null and void in Honduras. No matter, Mr. Schoenwetter was sentenced to over eight years in federal prison. He served most of his sentence and is now on supervised release.
How does one measure what was lost in this and other cases of wasteful criminalization and prosecution: Mr. Schoenwetter’s liberty and livelihood? The irretrievably missed economic activity and tax revenue from his work? The costs of law enforcement, lawyers, and court administration? Several years housing Mr. Schoenwetter in our prison system?
The world recently read about Mr. Schoenwetter’s case in a late July cover story from The Economist magazine, “Rough Justice: America Locks Up Too Many People, Some For Acts That Should Not Even Be Criminal.” On Tuesday, Congress will hear directly from Mr. Schoenwetter at a House hearing on “Reining in Overcriminalization,” sponsored by the Judiciary Subcommittee on Crime, Terrorism, and Homeland Security.
As President of the National Association of Criminal Defense Lawyers (NACDL), I too will testify at this hearing, and share with Congress much accumulated data and research revealing how very far astray our “overcriminalization nation” has veered. Experts from numerous disciplines, vantage points and political backgrounds, including NACDL, have studied and reported on the abject failure of America’s across-the-board “tough on crime” approach over the last several decades.
Well, we know that in the year 1900, there were about 165 federal criminal laws on the books. By 1970, that number was 2,000. Today, there are over 4,450 federal crimes scattered throughout the United States Code, with estimates of as many as 300,000 federal regulations that can be punitively enforced. The problem is out-of-control and growing. Just this year, when Congress enacted financial reform legislation, it added more than two dozen new crimes.
For many, when it comes to regulation of social conduct, every problem is a nail, so all that’s needed is the hammer of criminalization. With every passing Congress, though, we are getting a better idea of exactly what this criminal justice structure looks like, and it is not pretty, it is not cheap, and it is surely not rooted in the American values of fairness, justice, and checked government power.
A few months ago, the Heritage Foundation and NACDL released a groundbreaking, non-partisan, joint report and set of recommendations on an important part of this problem, Without Intent: How Congress Is Eroding the Criminal Intent Requirement in Federal Law. At the report’s release, former Attorney General Edwin Meese III highlighted the absurdity of the expression “ignorance of the law is no excuse,” given the current volume of the federal criminal law. He’s right.
Overcriminalization and wasteful prosecution have led the United States to have both the highest absolute number of people in prison – approximately 2.3 million – as well as the highest rate of incarceration– roughly one in 100, when just counting adults – of any nation on earth. And even as the world’s incarceration leader, the U.S. can make no claim to be anywhere near the safest society in the world.
Exactly what is served by taking away so much of Mr. Schoenwetter’s life? Our constitution cannot afford the police and regulatory state we have become. And the American people simply cannot afford its tragic human cost or economic price tag. Bipartisan efforts to fix what’s broken here will be good for fairness and justice, good for the economy, and good for people’s confidence in government as a problem-solver.
Jim E. Lavine is the President of the National Association of Criminal Defense Lawyers.
Wasted lives, wasted money: The offense of overcriminalization
By Jim E. Lavine - 09/24/10 03:56 PM ET
Small businessman Abner “Abbie” Schoenwetter, a Florida seafood broker who is now 64, could have spent the last decade growing his business, contributing to the economy and the tax base, preparing for retirement, and enjoying liberty and happiness with his wife and three children. Instead, beginning with a grand jury indictment ten years ago, Mr. Schoenwetter’s real life became a surreal tale lifted from the pages of a Kafka novel.
Schoenwetter, who had no prior criminal history, was indicted and convicted on charges relating to lobsters he had agreed to purchase that, according to U.S. authorities, violated three Honduran administrative regulations. The U.S. claimed that, under Honduran law, there were undersized lobsters and lobsters with eggs in the shipment, and that the lobsters had been packaged in plastic, not regulation cardboard. The Honduran authorities, including the Honduran Attorney General, advised U.S. law enforcement authorities and the court that this effort to punish Schoenwetter and others under the Lacey Act for violating Honduran regulations was misplaced – the regulations in question had been declared null and void in Honduras. No matter, Mr. Schoenwetter was sentenced to over eight years in federal prison. He served most of his sentence and is now on supervised release.
How does one measure what was lost in this and other cases of wasteful criminalization and prosecution: Mr. Schoenwetter’s liberty and livelihood? The irretrievably missed economic activity and tax revenue from his work? The costs of law enforcement, lawyers, and court administration? Several years housing Mr. Schoenwetter in our prison system?
The world recently read about Mr. Schoenwetter’s case in a late July cover story from The Economist magazine, “Rough Justice: America Locks Up Too Many People, Some For Acts That Should Not Even Be Criminal.” On Tuesday, Congress will hear directly from Mr. Schoenwetter at a House hearing on “Reining in Overcriminalization,” sponsored by the Judiciary Subcommittee on Crime, Terrorism, and Homeland Security.
As President of the National Association of Criminal Defense Lawyers (NACDL), I too will testify at this hearing, and share with Congress much accumulated data and research revealing how very far astray our “overcriminalization nation” has veered. Experts from numerous disciplines, vantage points and political backgrounds, including NACDL, have studied and reported on the abject failure of America’s across-the-board “tough on crime” approach over the last several decades.
Well, we know that in the year 1900, there were about 165 federal criminal laws on the books. By 1970, that number was 2,000. Today, there are over 4,450 federal crimes scattered throughout the United States Code, with estimates of as many as 300,000 federal regulations that can be punitively enforced. The problem is out-of-control and growing. Just this year, when Congress enacted financial reform legislation, it added more than two dozen new crimes.
For many, when it comes to regulation of social conduct, every problem is a nail, so all that’s needed is the hammer of criminalization. With every passing Congress, though, we are getting a better idea of exactly what this criminal justice structure looks like, and it is not pretty, it is not cheap, and it is surely not rooted in the American values of fairness, justice, and checked government power.
A few months ago, the Heritage Foundation and NACDL released a groundbreaking, non-partisan, joint report and set of recommendations on an important part of this problem, Without Intent: How Congress Is Eroding the Criminal Intent Requirement in Federal Law. At the report’s release, former Attorney General Edwin Meese III highlighted the absurdity of the expression “ignorance of the law is no excuse,” given the current volume of the federal criminal law. He’s right.
Overcriminalization and wasteful prosecution have led the United States to have both the highest absolute number of people in prison – approximately 2.3 million – as well as the highest rate of incarceration– roughly one in 100, when just counting adults – of any nation on earth. And even as the world’s incarceration leader, the U.S. can make no claim to be anywhere near the safest society in the world.
Exactly what is served by taking away so much of Mr. Schoenwetter’s life? Our constitution cannot afford the police and regulatory state we have become. And the American people simply cannot afford its tragic human cost or economic price tag. Bipartisan efforts to fix what’s broken here will be good for fairness and justice, good for the economy, and good for people’s confidence in government as a problem-solver.
Jim E. Lavine is the President of the National Association of Criminal Defense Lawyers.
Obamacare And Other Regulations Killing Potential For Jobs
From Newt Gingrich:
Obamacare and Other Government Regulations Are Killing Jobs
Washington’s mixed indications about preventing the 2010 tax increases is not the only thing creating uncertainty in the job market.
In our September survey, 46% of small business owners identified the implementation of Obamacare as the action by government that is creating the most uncertainty in the economy.
Furthermore, in our August survey, 83% of small business owners identified the federal government as the No. 1 culprit when it comes to imposing the most burdensome taxes and fees.
Amazingly, 27% of small businesses lose more than 10 hours per month complying with state or federal requirements or regulations.
More than half of respondents said they would save between $10,000 and $50,000 annually if regulations were cut in half. Over 20% of small business owners said they would save more than $50,000.
Think of the impact this extra capital could have on job creation in America.
Here is what small business owners said about the impact of Obamacare and other government regulations on their ability to run their businesses and create jobs:
“My business has experienced two problems that affect us directly. 1) Health insurance premiums have increased due to new requirements. Our carrier told us that we cannot change our plan because of the new legislation, which resulted in higher cost than before. 2) The 5% tax on medical device sales has decreased our profitability to the point where we expect a loss next year.”
— Leo Leopold, owner of Medical Murray, a medical device design and manufacturer, in Hawthorn Woods, Ill.
“The trucking industry is paralyzed by taxes and government regulations. There is no incentive to try and make any money when the government comes in at the end of the year and takes more than half of what you have made… Now that things are slow in my business I have to lay off men who have families because there is no money for payroll. If I were allowed to save some money I would have it to pay my employees and to buy some new equipment. If things do not turn around soon, I will have to close the business that I have worked so hard for over the past three years.”
—Linda Almony, owner of LG Almony and Sons in Maryland
Obamacare and Other Government Regulations Are Killing Jobs
Washington’s mixed indications about preventing the 2010 tax increases is not the only thing creating uncertainty in the job market.
In our September survey, 46% of small business owners identified the implementation of Obamacare as the action by government that is creating the most uncertainty in the economy.
Furthermore, in our August survey, 83% of small business owners identified the federal government as the No. 1 culprit when it comes to imposing the most burdensome taxes and fees.
Amazingly, 27% of small businesses lose more than 10 hours per month complying with state or federal requirements or regulations.
More than half of respondents said they would save between $10,000 and $50,000 annually if regulations were cut in half. Over 20% of small business owners said they would save more than $50,000.
Think of the impact this extra capital could have on job creation in America.
Here is what small business owners said about the impact of Obamacare and other government regulations on their ability to run their businesses and create jobs:
“My business has experienced two problems that affect us directly. 1) Health insurance premiums have increased due to new requirements. Our carrier told us that we cannot change our plan because of the new legislation, which resulted in higher cost than before. 2) The 5% tax on medical device sales has decreased our profitability to the point where we expect a loss next year.”
— Leo Leopold, owner of Medical Murray, a medical device design and manufacturer, in Hawthorn Woods, Ill.
“The trucking industry is paralyzed by taxes and government regulations. There is no incentive to try and make any money when the government comes in at the end of the year and takes more than half of what you have made… Now that things are slow in my business I have to lay off men who have families because there is no money for payroll. If I were allowed to save some money I would have it to pay my employees and to buy some new equipment. If things do not turn around soon, I will have to close the business that I have worked so hard for over the past three years.”
—Linda Almony, owner of LG Almony and Sons in Maryland
Federal Regulators Say No Science Support Claims That POM Juice Can Treat, Prevent Diseases
From WSBTV2, Atlanta, Georgia and Liberty Pulse:
WSBTV.com Health StoryprintemaillinkShare this:twitterfacebookmorecomment[0]Text Size:AAAFTC Says POM Juice Ads Are Deceptive About Health
Regulators Say No Science Support Claims That POM Juice Can Treat, Prevent Diseases
AP Photo/Matt Rourke
EMILY FREDRIX, AP Retail Writer
Posted: 11:21 am EDT September 27, 2010
Updated: 3:55 pm EDT September 27, 2010
NEW YORK -- Federal regulators filed complaints Monday against the makers of POM Wonderful Pomegranate Juice, saying there's no science to support claims that the products treat or prevent diseases such as prostate cancer and erectile dysfunction.
The Federal Trade Commission says POM Wonderful LLC, its parent company Roll International Corp., its creators and an executive violated federal law by making false and deceptive claims about disease prevention and treatment.
The agency's complaint names POM Wonderful President Matthew Tupper and company founders Stewart and Lynda Resnick, a billionaire California couple whose holdings also include florist retailer Teleflora, Fiji Water and companies that produce Wonderful Pistachios and Cuties clementines.
POM Wonderful said in a statement it disagrees with the FTC and its results have been encouraging. It said it has a right to share its research as it becomes available, especially because its food products do not have risks associated with pharmaceuticals.
"It's a shame that the government is unable to understand this fundamental distinction, and instead is wasting taxpayer resources to persecute the pomegranate," the Los Angeles-based company said.
The company's statement did not offer specifics about the results of its research.
POM Wonderful is seen as starting the pomegranate craze that has spread to everything from tea to smoothies, hitting ice cream, martinis and salad dressings on the way. The company's health claims are a hallmark of its advertising and a way to get people to pay more for the products than they would for others. POM Wonderful costs $3.99 for a 16-ounce bottle, while a one-month supply of POMx pills and liquid extract - sold by direct mail - costs $30.
The industry seems to be hurting in the economic downturn. Pomegranate juice sales reached $3.73 billion at retailers excluding Wal-Mart in the year ending Sept. 4, a drop of nearly half from the prior year, according to market research firm Spins Inc. In 2007, the market reached $11.78 billion.
POM spent $12.1 million on advertising last year, a rise of 26 percent from the prior year, according to Kantar Media.
POM Wonderful says on its website that it has spent more than $34 million to support scientific research on POM products since 1998. Study topics include muscle recovery, diabetes, antioxidant potency, heart disease, prostate cancer and erectile dysfunction.
Regulators said the ads were misleading in saying the research shows the juice or related pomegranate supplements prevent or treat certain diseases.
"Any consumer who sees POM Wonderful products as a silver bullet against disease has been misled," said David Vladeck, director of the FTC's Bureau of Consumer Protection. He said companies using scientific research in their advertising must have research that supports the claims.
The complaint asks that future claims about pomegranate-based products comply with Food and Drug Administration regulations, though that has not typically been required for compliance with trade laws. Having the FDA approve claims would give the company more guidance, the FTC said.
The company sued the FTC two weeks ago, hoping to have a judge declare the agency's new advertising standards invalid. POM said in the complaint it filed in federal district court that the FTC was violating the company's right to free speech and imposing an "undue hardship ... by suddenly changing direction in the criteria it uses to evaluate deceptive advertising."
POM questioned the FTC's requirement that advertisers get approval from the FDA before making certain health claims about food, drinks or dietary supplements. The FTC said it has no comment on that lawsuit.
FTC complaints are not a conclusion or ruling that the law has been violated. The FTC will hold a hearing within eight months before an administrative law judge.
The FTC cited advertisements in national publications including The New York Times and Prevention, on Internet sites run by the company including pomwonderful.com and pompills.com, and elsewhere. Regulators question the scientific methods used and said some studies cited did not show POM Juice to be effective against the diseases.
The claims in POM ads that the FTC cites include:
- "New research offers further proof of the heart-healthy benefits of POM wonderful juice. 30 percent decrease in arterial plaque ... 17 percent improved blood flow ... promotes healthy blood vessels...."
- "Clinical studies prove that POM Juice and POMx prevent, reduce the risk of, and treat prostate cancer, including by prolonging prostate-specific antigen doubling time."
- "You have a 50 percent chance of getting (prostate cancer). Listen to me. It is the one thing that will keep your (prostate-specific antigens) normal. You have to drink pomegranate juice. There is nothing else we know of that will keep your PSA in check.... It's also 40 percent as effective as Viagra."
The agency also wants to prevent POM and its parents, founders and the executive "from making any other health claim about any food, drug, or dietary supplement without competent and reliable scientific evidence."
The FTC said it reached a settlement in a related case with Mark Dreher, the former head of scientific research and regulatory affairs for POM Wonderful. He has agreed to a settlement that bars him from making any disease treatment or prevention claims in POM Wonderful advertising unless the claim is backed up.
Dreher also must not make health claims for other products without scientific evidence.
Such settlements do not mean there has been an admission of violating the law, the FTC said.
Copyright 2010 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
WSBTV.com Health StoryprintemaillinkShare this:twitterfacebookmorecomment[0]Text Size:AAAFTC Says POM Juice Ads Are Deceptive About Health
Regulators Say No Science Support Claims That POM Juice Can Treat, Prevent Diseases
AP Photo/Matt Rourke
EMILY FREDRIX, AP Retail Writer
Posted: 11:21 am EDT September 27, 2010
Updated: 3:55 pm EDT September 27, 2010
NEW YORK -- Federal regulators filed complaints Monday against the makers of POM Wonderful Pomegranate Juice, saying there's no science to support claims that the products treat or prevent diseases such as prostate cancer and erectile dysfunction.
The Federal Trade Commission says POM Wonderful LLC, its parent company Roll International Corp., its creators and an executive violated federal law by making false and deceptive claims about disease prevention and treatment.
The agency's complaint names POM Wonderful President Matthew Tupper and company founders Stewart and Lynda Resnick, a billionaire California couple whose holdings also include florist retailer Teleflora, Fiji Water and companies that produce Wonderful Pistachios and Cuties clementines.
POM Wonderful said in a statement it disagrees with the FTC and its results have been encouraging. It said it has a right to share its research as it becomes available, especially because its food products do not have risks associated with pharmaceuticals.
"It's a shame that the government is unable to understand this fundamental distinction, and instead is wasting taxpayer resources to persecute the pomegranate," the Los Angeles-based company said.
The company's statement did not offer specifics about the results of its research.
POM Wonderful is seen as starting the pomegranate craze that has spread to everything from tea to smoothies, hitting ice cream, martinis and salad dressings on the way. The company's health claims are a hallmark of its advertising and a way to get people to pay more for the products than they would for others. POM Wonderful costs $3.99 for a 16-ounce bottle, while a one-month supply of POMx pills and liquid extract - sold by direct mail - costs $30.
The industry seems to be hurting in the economic downturn. Pomegranate juice sales reached $3.73 billion at retailers excluding Wal-Mart in the year ending Sept. 4, a drop of nearly half from the prior year, according to market research firm Spins Inc. In 2007, the market reached $11.78 billion.
POM spent $12.1 million on advertising last year, a rise of 26 percent from the prior year, according to Kantar Media.
POM Wonderful says on its website that it has spent more than $34 million to support scientific research on POM products since 1998. Study topics include muscle recovery, diabetes, antioxidant potency, heart disease, prostate cancer and erectile dysfunction.
Regulators said the ads were misleading in saying the research shows the juice or related pomegranate supplements prevent or treat certain diseases.
"Any consumer who sees POM Wonderful products as a silver bullet against disease has been misled," said David Vladeck, director of the FTC's Bureau of Consumer Protection. He said companies using scientific research in their advertising must have research that supports the claims.
The complaint asks that future claims about pomegranate-based products comply with Food and Drug Administration regulations, though that has not typically been required for compliance with trade laws. Having the FDA approve claims would give the company more guidance, the FTC said.
The company sued the FTC two weeks ago, hoping to have a judge declare the agency's new advertising standards invalid. POM said in the complaint it filed in federal district court that the FTC was violating the company's right to free speech and imposing an "undue hardship ... by suddenly changing direction in the criteria it uses to evaluate deceptive advertising."
POM questioned the FTC's requirement that advertisers get approval from the FDA before making certain health claims about food, drinks or dietary supplements. The FTC said it has no comment on that lawsuit.
FTC complaints are not a conclusion or ruling that the law has been violated. The FTC will hold a hearing within eight months before an administrative law judge.
The FTC cited advertisements in national publications including The New York Times and Prevention, on Internet sites run by the company including pomwonderful.com and pompills.com, and elsewhere. Regulators question the scientific methods used and said some studies cited did not show POM Juice to be effective against the diseases.
The claims in POM ads that the FTC cites include:
- "New research offers further proof of the heart-healthy benefits of POM wonderful juice. 30 percent decrease in arterial plaque ... 17 percent improved blood flow ... promotes healthy blood vessels...."
- "Clinical studies prove that POM Juice and POMx prevent, reduce the risk of, and treat prostate cancer, including by prolonging prostate-specific antigen doubling time."
- "You have a 50 percent chance of getting (prostate cancer). Listen to me. It is the one thing that will keep your (prostate-specific antigens) normal. You have to drink pomegranate juice. There is nothing else we know of that will keep your PSA in check.... It's also 40 percent as effective as Viagra."
The agency also wants to prevent POM and its parents, founders and the executive "from making any other health claim about any food, drug, or dietary supplement without competent and reliable scientific evidence."
The FTC said it reached a settlement in a related case with Mark Dreher, the former head of scientific research and regulatory affairs for POM Wonderful. He has agreed to a settlement that bars him from making any disease treatment or prevention claims in POM Wonderful advertising unless the claim is backed up.
Dreher also must not make health claims for other products without scientific evidence.
Such settlements do not mean there has been an admission of violating the law, the FTC said.
Copyright 2010 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Monday, September 27, 2010
Make Way For The Milk Monitors
From The American Thinker:
September 27, 2010
Make Way for the Milk Monitors
By Jeannie DeAngelis
The hardest thing to figure out is the dichotomous mind of a liberal. Liberals are so confused that destroying a child's innocence is considered a virtuous accomplishment, but allowing M&M's in the cafeteria is an abomination. Liberals remove soda from vending machines to protect the well-being of children and then, in some school districts, insist on teaching kindergarteners sex education couched in confusing stories like "Gloria Goes to Gay Pride."
Truth is, sanctimonious liberal educators believe they are fulfilling a higher calling if middle-school students are shielded from drinking Yoo-Hoo while being instructed how to properly place a condom on a cucumber.
Thanks to a curriculum being influenced by Obama's Safe School Czar, Kevin Jennings, schoolchildren are geniuses when it comes to identifying the date for GLSEN's scheduled April 2011 Day of Silence, but oftentimes those same students graduate lacking the ability to read at grade level, write a coherent sentence, or make change from a five-dollar bill.
Now, in an effort to feel better about substituting moral bankruptcy for academic excellence, educators and government bureaucrats have joined forces in a campaign to expose the evils of Nesquik.
That's right -- chocolate milk is on the way to being off-limits on school grounds because liberals who are unconcerned with morality are presently overly concerned with obesity. The same Food Police who, as a benevolent contribution to society, are in the process of emptying vending machines of pretzel sticks are now targeting cafeteria milk carts and discriminating against cocoa-infused foodstuffs.
Instead of being allowed to choose their own beverage, kids who supplied budget-challenged school districts with toilet paper are being given the non-choice of plain room-temperature milk as a reward. The argument against chocolate milk is this: "One 8-oz. serving of reduced-fat chocolate milk has nearly as many calories and sugar as a 12-oz. can of Coke. Encouraging students to regularly consume the drink," experts say, "is contributing to an already worrying childhood obesity crisis."
In fact, states like Florida are leading the way by banning chocolate milk from school premises in an effort to ensure that nationwide, American youngsters in more liberal school districts are safe from the harmful effects of corn syrup while being instructed in private-body-part pronunciation.
Standing in solidarity with Michelle Obama's "Let's Move" healthy kids campaign, public school systems are making it a priority to eradicate freedom of choice when it comes to milk. Is choice a right liberals guard only if a teenage girl needs assistance disposing of an unwanted fetus? One never knows -- maybe in certain school districts, the concern is rooted in worry as to whether Planned Parenthood vans will have to make more than one trip to accommodate chubby underage passengers.
Never mind the fact that nutritional experts maintain that "flavored milk can make a difference in how much milk ... children drink." The issue isn't cow juice. The problem is the hypocritical self-righteousness of school administrators who taint childhood purity while they worry at the same time about BMIs being impacted by unwholesome beverages.
Think about it. The Sugar Patrol is being run by the same bureaucrats who control and police America's offspring. In the more liberal school districts across the nation, social activists disguised as educators exhibit zero compunction when circumventing parental dictates and eagerly install themselves as proxy parents in order to instruct youngsters on how to get an A+ in moral turpitude.
Take for example Provincetown, Massachusetts, where school superintendent Dr. Beth Singer insisted that five-year-olds should have access to condoms and be afforded a constitutional right to privacy as well. Yet in an effort to ensure a slim frame and relaxed pancreas, one would venture to guess that Dr. Singer would likely be reluctant to serve first-graders artificially flavored dairy products.
Forbidding chocolate milk is merely a symptom of a larger, more pervasive problem. The same meddling school administrators who reserve the right to hand out birth control to minors and shuttle underage youngsters to abortion clinics are now amongst those who conclude that chocolate milk is unhealthy for other people's offspring.
Either public school control freaks are unaware or they don't care that a study presented by the School Nutrition Association showed that "[e]liminating chocolate and other flavored milks from school cafeteria menus resulted in a dramatic drop in milk consumption along with a substantial reduction in nutrients -- which are not easy or affordable to replace."
Nutritional studies aside, a statistic that bodes well for the burgeoning "Bosco Ban" reveals that thanks to the careful tutelage of a publicly funded educational system, as of 2006, "46% of fifteen to nineteen year olds have had sex at least once." Goaded on by success rates like that, and based on the prior achievement of other liberal social engineering/educational crusades, Milk Monitors remain undeterred in their virtuous crusade to exorcise chocolate milk from the midst of defenseless schoolchildren.
Rest assured: in due time, the anti-flavored-milk movement stands to be just as successful as the system-wide public school effort to encourage teenage promiscuity. The test as to whether the ban is flourishing or not will ultimately be determined if fifteen-year-olds recovering at the Ballard Teen Health Center discontinue requesting sugary cartons of chocolate milk to help regain strength following a school-sanctioned field trip to an abortion clinic.
Author's content: www.jeannie-ology.com
September 27, 2010
Make Way for the Milk Monitors
By Jeannie DeAngelis
The hardest thing to figure out is the dichotomous mind of a liberal. Liberals are so confused that destroying a child's innocence is considered a virtuous accomplishment, but allowing M&M's in the cafeteria is an abomination. Liberals remove soda from vending machines to protect the well-being of children and then, in some school districts, insist on teaching kindergarteners sex education couched in confusing stories like "Gloria Goes to Gay Pride."
Truth is, sanctimonious liberal educators believe they are fulfilling a higher calling if middle-school students are shielded from drinking Yoo-Hoo while being instructed how to properly place a condom on a cucumber.
Thanks to a curriculum being influenced by Obama's Safe School Czar, Kevin Jennings, schoolchildren are geniuses when it comes to identifying the date for GLSEN's scheduled April 2011 Day of Silence, but oftentimes those same students graduate lacking the ability to read at grade level, write a coherent sentence, or make change from a five-dollar bill.
Now, in an effort to feel better about substituting moral bankruptcy for academic excellence, educators and government bureaucrats have joined forces in a campaign to expose the evils of Nesquik.
That's right -- chocolate milk is on the way to being off-limits on school grounds because liberals who are unconcerned with morality are presently overly concerned with obesity. The same Food Police who, as a benevolent contribution to society, are in the process of emptying vending machines of pretzel sticks are now targeting cafeteria milk carts and discriminating against cocoa-infused foodstuffs.
Instead of being allowed to choose their own beverage, kids who supplied budget-challenged school districts with toilet paper are being given the non-choice of plain room-temperature milk as a reward. The argument against chocolate milk is this: "One 8-oz. serving of reduced-fat chocolate milk has nearly as many calories and sugar as a 12-oz. can of Coke. Encouraging students to regularly consume the drink," experts say, "is contributing to an already worrying childhood obesity crisis."
In fact, states like Florida are leading the way by banning chocolate milk from school premises in an effort to ensure that nationwide, American youngsters in more liberal school districts are safe from the harmful effects of corn syrup while being instructed in private-body-part pronunciation.
Standing in solidarity with Michelle Obama's "Let's Move" healthy kids campaign, public school systems are making it a priority to eradicate freedom of choice when it comes to milk. Is choice a right liberals guard only if a teenage girl needs assistance disposing of an unwanted fetus? One never knows -- maybe in certain school districts, the concern is rooted in worry as to whether Planned Parenthood vans will have to make more than one trip to accommodate chubby underage passengers.
Never mind the fact that nutritional experts maintain that "flavored milk can make a difference in how much milk ... children drink." The issue isn't cow juice. The problem is the hypocritical self-righteousness of school administrators who taint childhood purity while they worry at the same time about BMIs being impacted by unwholesome beverages.
Think about it. The Sugar Patrol is being run by the same bureaucrats who control and police America's offspring. In the more liberal school districts across the nation, social activists disguised as educators exhibit zero compunction when circumventing parental dictates and eagerly install themselves as proxy parents in order to instruct youngsters on how to get an A+ in moral turpitude.
Take for example Provincetown, Massachusetts, where school superintendent Dr. Beth Singer insisted that five-year-olds should have access to condoms and be afforded a constitutional right to privacy as well. Yet in an effort to ensure a slim frame and relaxed pancreas, one would venture to guess that Dr. Singer would likely be reluctant to serve first-graders artificially flavored dairy products.
Forbidding chocolate milk is merely a symptom of a larger, more pervasive problem. The same meddling school administrators who reserve the right to hand out birth control to minors and shuttle underage youngsters to abortion clinics are now amongst those who conclude that chocolate milk is unhealthy for other people's offspring.
Either public school control freaks are unaware or they don't care that a study presented by the School Nutrition Association showed that "[e]liminating chocolate and other flavored milks from school cafeteria menus resulted in a dramatic drop in milk consumption along with a substantial reduction in nutrients -- which are not easy or affordable to replace."
Nutritional studies aside, a statistic that bodes well for the burgeoning "Bosco Ban" reveals that thanks to the careful tutelage of a publicly funded educational system, as of 2006, "46% of fifteen to nineteen year olds have had sex at least once." Goaded on by success rates like that, and based on the prior achievement of other liberal social engineering/educational crusades, Milk Monitors remain undeterred in their virtuous crusade to exorcise chocolate milk from the midst of defenseless schoolchildren.
Rest assured: in due time, the anti-flavored-milk movement stands to be just as successful as the system-wide public school effort to encourage teenage promiscuity. The test as to whether the ban is flourishing or not will ultimately be determined if fifteen-year-olds recovering at the Ballard Teen Health Center discontinue requesting sugary cartons of chocolate milk to help regain strength following a school-sanctioned field trip to an abortion clinic.
Author's content: www.jeannie-ology.com
Subscribe to:
Posts (Atom)