Government – Page 100 – artdiamondblog.com

Unclear Regulations Reduce Energy Innovation Investment

“Source of graphic: online version of the WSJ article quoted and cited below.

(p. R3) Bill Gates reshaped the computer industry by pumping out new versions of Microsoft Windows software every few years, fixing and fine tuning it as he went along.

He’s now betting that he can reshape the energy industry with a project akin to shipping Windows once and having it work, bug-free, for 50 years.
Thanks to his role funding and guiding a start-up called TerraPower LLC, where he serves as chairman, Mr. Gates has become a player in a field of inventors whose goal is to make nuclear reactors smaller, cheaper and safer than today’s nuclear energy sources. The 30-person company recently completed a basic design for a reactor that theoretically could run untouched for decades on spent nuclear fuel. Now the company is seeking a partner to help build the experimental reactor, and a country willing to host it.
It’s a long-term, risky endeavor for Mr. Gates and his fellow investors. The idea will require years to test, billions of dollars (not all from him) and changes in U.S. nuclear regulations if the reactor is to be built here. Current U.S. rules don’t even cover the type of technology TerraPower hopes to use.
“A cheaper reactor design that can burn waste and doesn’t run into fuel limitations would be a big thing,” Mr. Gates says. He adds that in general “capitalism underinvests in innovation,” particularly in areas with “long time horizons and where government regulations are unclear.”
. . .
The company has made pitches in France and Japan, Mr. Myrhvold says; both have big nuclear-power industries. He’s also made the rounds in Russia, China and India, he says. So far, there have been no takers.
One country he is certain won’t be a customer anytime soon is the U.S., which doesn’t yet have a certification process for reactors like TerraPower’s. It would likely be a decade or more before the reactor could be tested on U.S. soil. “I don’t think the U.S. has the willpower or desire to build new kinds of nuclear reactors,” Mr. Myrhvold says. “Right now there’s a long, drawn-out process.”
. . .
Mr. Myrhvold says he hopes the process will speed up and spark innovation to meet the world’s growing energy demand. “Let’s try 20 ideas,” he says. “Maybe five of them work. That’s the only way to invent our way out of the pickle we’re in.”

For the full story, see:
ROBERT A. GUTH. “A Window Into the Nuclear Future; TerraPower–with the backing of Bill Gates–has a radical vision for the reactors of tomorrow.” The Wall Street Journal (Mon., FEBRUARY 28, 2011): R3.
(Note: ellipses added.)

Defending the Right to Bear Arms

(p. 20) State Representative Jack Harper, who introduced a bill allowing professors to carry guns, said an Arizona State University professor, whom he has refused to identify, first raised the issue with him. “When law-abiding, responsible adults are able to defend themselves, crime is deterred,” Mr. Harper said in a statement.

That is the philosophy in Arizona as a whole, where gun laws are among the least restrictive in the country. If law-abiding people can carry guns one step outside the campus to keep criminals at bay, supporters ask, why not allow them to enter a university with their firearms? That is already permitted in Utah, alone so far in allowing guns to be carried on all state campuses.
“I think that every person has the right to bear arms no matter what the circumstances,” said Ashlyn Lucero, a political science student at Arizona State University who has served in the Marine Corps, is the daughter of a sheriff and grew up hunting.
Ms. Lucero carries her Glock pistol whenever possible and would carry it on campus if she could. “If I’m going out to eat somewhere, I usually have a gun with me always,” she said. “It’s just one of those things that you never know what’s going to happen.”
Thor Mikesell, a senior majoring in music who grew up hunting, is also a backer of allowing guns on campus. “There’s no magic line, there’s no magic barrier that makes me more safe on the campus than it is when I’m being a real person in the real world outside of the school,” he said.
. . .
“This is not the 1890s’ O.K. Corral shoot ’em up, bang ’em up,” he said. “These are not vigilante kind of people. Their interest is their personal security and the security of their family.”
The State Senate president, Russell Pearce, who recently said he would not prevent senators from taking guns into the Senate chamber despite rules against it, is an advocate for loosening as many gun restrictions as possible.
. . .
“Guns save lives, and it’s a constitutional right of our citizens,” Mr. Pearce said of the guns-on-campus proposal. Speaking of the Tucson shooting, which took place at a shopping center and not on a university campus, Mr. Pearce, a former sheriff’s deputy, said, “If somebody had been there prepared to take action, they could have saved lives.”

For the full story, see:
MARC LACEY. “Lawmakers Debate Effect of Weapons on Campus.” The New York Times, First Section (Sun., February 27, 2011): 14 & 20.
(Note: ellipses added.)

What a Picture Is Worth

“In Cairo, Egyptian youths used laptops to post video they had shot earlier Tuesday in Tahir Square. The group has been collecting accounts of the demonstrations and voices of the protesters, putting them on social networking sites like Facebook and Twitter.” Source of caption and photo: online version of the NYT article quoted and cited below.

The photo above was at the top of the first page of the New York Times on Weds., Feb. 9, 2011. You have a group of lively, engaged, young people intoxicated with the idea that they may be helping to bring their country freedom. And in the center of the dark picture, amidst the conversations, is one youth looking with concentration at an Apple laptop, the sole source of color and illumination.
If I was Steve Jobs, I would value this one photo at more than a whole hour’s worth of Superbowl ads.

The photo above was placed above the following story on the front page of the NYT:
DAVID D. KIRKPATRICK. “As Egypt Protest Swells, U.S. Sends Specific Demands.” The New York Times (Weds., February 9, 2011): A1 & A12.
(Note: the online version of the article is dated February 8, 2011.)

Occupational Licensing Adds Billions a Year to Cost of Services

Source of graph: online version of the WSJ article quoted and cited below.

(p. A1) . . . economists–and workers shut out of fields by educational requirements or difficult exams–say licensing mostly serves as a form of protectionism, allowing veterans of the trade to box out competitors who might undercut them on price or offer new services.

“Occupations prefer to be li-(p. A16)censed because they can restrict competition and obtain higher wages,” said Morris Kleiner, a labor professor at the University of Minnesota. “If you go to any statehouse, you’ll see a line of occupations out the door wanting to be licensed.”
While some states have long required licensing for workers who handle food or touch others–caterers and hair stylists, for example–economists say such regulation is spreading to more states for more industries. The most recent study, from 2008, found 23% of U.S. workers were required to obtain state licenses, up from just 5% in 1950, according to data from Mr. Kleiner. In the mid-1980s, about 800 professions were licensed in at least one state. Today, at least 1,100 are, according to the Council on Licensure, Enforcement and Regulation, a trade group for regulatory bodies. Among the professions licensed by one or more states: florists, interior designers, private detectives, hearing-aid fitters, conveyor-belt operators and retailers of frozen desserts.
. . .
Mr. Kleiner, of the University of Minnesota, looked at census data covering several occupations that are regulated in some states but not others, including librarians, nutritionists and respiratory therapists. He found that employment growth in those professions was about 20% greater, on average, in the unregulated states between 1990 and 2000.
Licensing can also drive up costs to consumers. Licensed workers earn, on average, 15% more than their unlicensed counterparts in other states–a premium that may be reflected in their prices, according to a study published by the National Bureau of Economic Research and conducted by Mr. Kleiner and Alan Krueger, an economist at Princeton University.
Mr. Kleiner estimates that across the U.S. economy, occupational licensing adds at least $116 billion a year to the cost of services, which amounts to about 1% of total consumer spending. In a look at dentistry, Mr. Kleiner found that the average price of dental services rose 11% when a state made it more difficult to get a dental license.

For the full story, see:

STEPHANIE SIMON. “A License to Shampoo: Jobs Needing State Approval Rise.” The Wall Street Journal (Mon., February 7, 2011): A1 & A16.
(Note: ellipses added.)

“Some of the jobs that require licensing in one or more states.” Source of caption and table: online version of the WSJ article quoted and cited above.

Property Rights Arise When Labor Creates Scarce Value

Marking snow-cleared parking spaces is a wonderful example of Demsetz’s theory of how property rights tend to emerge when the efficiency gains are large enough.
I remember when I was a graduate student in Chicago sometime in the mid-to-late 1970s, there were a couple of very snowy winters in which Chicagoans would similarly claim spaces from which they had cleared the snow.
I remember, but alas did not save, an article (probably in the Chicago Tribune) documenting how someone “stole” a marked space, and later returned to find that a garden hose had been used to cover their car in a considerable layer of ice.

(p. 8A) CHICAGO (AP) — A blizzard that dumped nearly 2 feet of snow on Chicago last week has revived a city tradition: Break out the patio furniture. Or, if none is available, suitcases, garbage cans, strollers, bar stools and milk crates work, too.

Chicagoans use all these items in a time-honored yet controversial system of preserving parking spots, a system known as “dibs.”
. . .
Actually, a city ordinance makes the practice illegal.
. . .
Even the city’s top police officer sympathizes with those who do it.
“Think about it, you spend a couple hours clearing a spot, and somebody from another block takes it?” Superintendent Jody Weis said Friday.
. . .
“This is my spot because I worked hard to dig my car out,” said Max Rosario, 27, just before he put his patio chair on the street. It joined 16 chairs, one slab of plywood, a plastic kids table, three bar stools and a TV dinner tray, among other things.

For the full story, see:
AP. “Chicagoans calling dibs after digging out; Chairs and other objects save precious parking spots that have been shoveled.” Omaha World-Herald (Sun., FEBRUARY 6, 2011): 8A.
(Note: ellipses added.)

The Demsetz paper is:
Demsetz, Harold. “Toward a Theory of Property Rights.” American Economic Review 57, no. 2 (May 1967): 347-59.

Kappos Says Private Company Would Have Run Patent Office Better

“David Kappos of the Patent Office, with an Edison bulb.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) “There is no company I know of that would have permitted its information technology to get into the state we’re in,” David J. Kappos, who 18 months ago became director of the Patent and Trademark Office and undersecretary of commerce for intellectual property, said in a recent interview. “If it had, the C.E.O. would have been fired, the board would have been thrown out, and you would have had shareholder lawsuits.”

Once patent applications are in the system, they sit — for years. The patent office’s pipeline is so clogged it takes two years for an inventor to get an initial ruling, and an additional year or more before a patent is finally issued.
The delays and inefficiencies are more than a nuisance for inventors. Patentable ideas are the basis for many start-up companies and small businesses. Venture capitalists often require start-ups to have a patent before offering financing. That means that patent delays cost jobs, slow the economy and threaten the ability of American companies to compete with foreign businesses.

For the full story, see:

EDWARD WYATT. “U.S. Sets 21st-Century Goal: Building a Better Patent Office.” The New York Times (Mon., February 21, 2011): A1 & A3.
(Note: the online version of the article is dated February 20, 2011.)

Paul Romer Looking to Found a “Charter City”

Romer’s idea of setting up a Charter City sounds like a more advanced version of a free trade zone. It might work if you could find a well-governed nation to serve as guarantor of the city’s charter. That’s a big “if.”
Still, it’s a more intriguing idea for advancing economic development than most of the default policies (like sending foreign aid to be stolen by corrupt dictators).

(p. A2) For the past couple of years, economist Paul Romer has been hopscotching the globe looking for a country desperate enough to try his audacious notion: Start a new “charter city,” an enclave free of old laws and practices, as William Penn did in Pennsylvania. (Think “charter school,” a school free of union contracts and school bureaucracy.)

. . .
About a decade ago, he walked away from academia, started an online teaching company, sold it and then turned to his next big idea: To create jobs to lift millions out of poverty, take an uninhabited 1,000 square-kilometer tract (386 square miles), about the size of Hong Kong, preferably government-owned. Write a charter: the all-important rules. Allow anyone to move in or out. Invite foreign investors to build infrastructure for profit. And sign a treaty with a well-governed country, say Norway or Canada, to serve as “guarantor” to assure investors and residents that the charter will be respected, much as the British once did for Hong Kong, and–. . . .

For the full story, see:
DAVID WESSEL. “CAPITAL; The Quest for a ‘Charter City’.” The Wall Street Journal (Thurs., FEBRUARY 3, 2011): A2.
(Note: ellipses added.)

Bloggers See Bad Conditions for Entrepreneurs

The chart above and the one below are from the recently-released results of the First Quarter 2011 influential blogger survey conducted by the Kauffman Foundation. (Tim Kane gave permission to put the charts on my blog.) artdiamondblog.com is one of the blogs included in the survey.

The results above show a perception that conditions are currently tough for entrepreneurs. The chart below displays one of the main reasons: the current economy is perceived as uncertain and fragile. There are many reasons for the uncertainty, but one of them is surely that the bloggers have doubts about the depth of support in government for the institutions and policies upon which entrepreneurship depends (like private property, restrained regulations, and low taxes).

For a full PDF report on the 2011 Q1 survey results, see:
http://www.kauffman.org/uploadedfiles/econ_blogger_outlook_q1_2011.pdf

Insider Training Increases the Efficiency of Markets

(p. W2) As argued forcefully by Henry Manne in his 1966 book “Insider Trading and the Stock Market,” prohibitions on insider trading prevent asset prices from adjusting in this way. Mr. Manne, dean emeritus at George Mason University School of Law, pointed out that when insiders trade on their nonpublic, nonproprietary information, they cause asset prices to reflect that information sooner than otherwise and therefore prompt other market participants to make better decisions.

This achievement can have ramifications beyond a few percentage-point increases in productivity growth.
According to Mr. Manne, corporate scandals such as Enron and Global Crossing would occur much less frequently and impose fewer costs if the government didn’t prohibit insider trading. As Mr. Manne said a few years ago in a radio interview, “I don’t think the scandals would ever have erupted if we had allowed insider trading because there would be plenty of people in those companies who would know exactly what was going on, and who couldn’t resist the temptation to get rich by trading on the information, and the stock market would have reflected those problems months and months earlier than they did under this cockamamie regulatory system we have.”
Another potential benefit of lifting the ban on insider trading is explained by Harvard University economist Jeffrey Miron: “In a world with no ban, small investors might fear to trade individual stocks and would face a greater incentive to diversify; that is also a good thing.”

For the full commentary, see:
DONALD J. BOUDREAUX. “Learning to Love Insider Trading; Here’s a hot tip: Want to keep companies honest, make the markets work more efficiently and encourage investors to diversify? Let insiders buy and sell, argues Donald J. Boudreaux.” The Wall Street Journal (Sat., OCTOBER 24, 2009): W1-W2.

The book mentioned is:
Manne, Henry. Insider Trading and the Stock Market. New York: The Free Press, 1966.

Federal Regulations Hurt Small Toy Makers

(p. C12) The story begins in 2007, an unusually good year for Peapods Natural Toys and Baby Care, in St. Paul, Minn., and many similar mom-and-pop businesses. Frightened by news that toys made in China contained unsafe levels of lead, customers were looking for alternatives to the usual big-box offerings. Just as organic farmers gain market share whenever there’s a food-safety panic, the lead scare boosted sales of artisanal children’s goods. “People wanted made-in-USA products, and we were the only place in town that had them,” says Dan Marshall, the owner of Peapods.

Vendors offering organic materials and a personal touch seemed poised to prosper. But the short-term boon soon turned into a long-term disaster. In response to the lead panic, Congress passed the Consumer Product Safety Improvement Act, or CPSIA, by an overwhelming majority. The law mandates third-party testing and detailed labels not only for toys but for every single product aimed at children 12 and under.
. . .
Although big companies like Mattel could spread the extra costs over millions of toys, Mr. Marshall’s small-scale suppliers couldn’t. Unable to afford thousands of dollars in testing per product, some went out of business. Others moved production to China to cut costs. Many slashed their product lines, reserving the expensive new tests for only their top sellers. The European companies that used to sell Peapods such specialty items as wooden swords and shields or beeswax-finished cherry-wood rattles simply abandoned the U.S. market. The survivors jacked up prices.

For the full commentary, see:
VIRGINIA POSTREL. “COMMERCE & CULTURE; Small Crafts vs. Big Government.” The Wall Street Journal (Sat., January 29, 2011): C12.
(Note: ellipsis added.)

Feds Protect Us from Freshly Baked Cookies

“Schools like Omaha’s Masters Elementary, which held a recent holiday bake sale, count on the profits from selling cupcakes, caramel corn and other goodies to raise money for field trips and other activities.” Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

(p. 1A) A business club at Millard West High School peddles freshly baked cookies, raking in $15,000 annually to help send students to national conferences.

At Omaha’s Masters Elementary, cupcakes, fudge and other bake-sale treats raise $500 for field trips, rain jackets for the safety patrol and playground equipment.

But the federal government could slam the brakes on those brownies and lower the boom on the lemon bars.
A child nutrition bill passed recently by Congress gives a federal agency the power to limit the frequency of school bake sales and other school-sponsored fundraisers that sell unhealthy food.
To some, the bake sale provision makes about as much sense as leaving the marshmallows out of Rice Krispies treats.
It maybe makes sense for the federal government to monitor the quality of ground beef, eggs and milk sold in grocery stores. But caramel corn and snicker doodles whipped up by parents for school bake sales?
“Aren’t there more important (p. 2A) things for them to be worried about?” Sandy Hatcher, president of Masters’ parent organization, said of the federal government.

For the full story, see:
MICHAEL O’CONNOR. “Putting the brakes on bake sales; New federal rules on frequency during school day may affect fundraising.” Omaha World-Herald (Sun., December 12, 2010): 1A-2A.