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Enabling Manufacturing vs. Tilting the Playing Field

Thomas A. Hemphill - January 29, 2015

In December, Congress passed an omnibus spending bill that included the Revitalize American Manufacturing and Innovation (RAMI) Act of 2014. The RAMI Act requires the secretary of commerce to establish a national network of "centers for manufacturing innovation," each with a special focus -- be it a manufacturing process, a novel material, etc.

The commerce secretary is authorized to appropriate up to $5 million annually for administrative expenses over the next decade. Also, the secretary of energy may transfer up to $250 million in total over the same period to match state and private funding to establish the centers. Federal funds for a given center must be discontinued after seven years, and the amount of financial assistance to a center must decrease after its second year of funding and in each year thereafter, being replaced by non-federal sources of funding.

How aggressive is this, as far as government intervention is concerned? Fortunately, there's a simple way to tell. In 2010, the McKinsey Global Institute developed an industry- and sector-based approach to evaluating national competitiveness. In the MGI framework, two categories ("Setting the Ground Rules" and "Building Enablers") designate what can be described as "innovation policy," and the second two ("Tilting the Playing Field" and "Playing the Role of Principal Actor") describe "industrial policy." The president's Council of Advisors on Science and Technology defines an "innovation policy" as a strategy that creates the conditions that support innovation, and an "industrial policy" as having the federal government "making bets" on specific companies and industries.

The RAMI Act straddles the line between the two. Yes, it builds enablers by expanding infrastructure, assembling a skilled workforce, and supporting R&D. But it also tilts the playing field by designating "key advanced technologies" it aims to promote (such as nanotechnology, advanced ceramics, and photonics and optics), backed up by the provision of "financial incentives for local operations" -- the $250 million in federal financing for the centers.

This reflects a significant departure from the past. In 2012, using the MGI framework, Mark Perry (of the University of Michigan-Flint and the American Enterprise Institute) and I published a study in Business Economics of 11 different manufacturing-strategy proposals developed by business associations, coalitions, think tanks, and academic and government institutions over a three-year period (2009-2011). We found that, of 21 specific policies identified in two or more of these proposals, the overwhelming majority (17) focused on "Setting the Ground Rules and Direction" (13) and "Building Enablers" (4). The four remaining policies were classified as "Tilting the Playing Field"; two focused on actively intervening on behalf of "green technology/energy" industry development.

Unlike many policy issues, advanced manufacturing has become something both parties can support. "This bill is an opportunity for the United States to bring jobs back to our shores, so we can make it here and sell it there," said Rep. Tom Reed, the House RAMI bill's lead Republican sponsor. With the passage of the act, however, Republicans have moved from a philosophy of "Setting the Ground Rules" to now embracing "Building Enablers" and "Tilting the Playing Field."

To be fair, congressional Republicans did win some concessions -- for example, Democrats agreed not to authorize new appropriations for this legislation, but instead to transfer the project's $250 million in center funding from the U.S. Department of Energy's Energy Efficiency and Renewable Energy account. Also, the original proposal from the Obama administration was for $1 billion in mandatory funding, whereas the RAMI Act limits authorizations to a total of $300 million of discretionary funding. Republicans also emphasized that the RAMI Act must ensure that the results of the program reach small and medium-sized firms -- an important stakeholder constituency for them.

There are other problems with the program as well, though. For example, while federal funding for a center has a declining match over the seven-year period allowed, the secretary of commerce may make an exception to this requirement in various situations -- if the center is otherwise meeting its stated goals, if unforeseen circumstances have altered the center's anticipated funding, or if the center can identify future funding sources. These exemptions offer wide discretion for preferential funding.

Moreover, if a center is not considered self-sustaining after the seven-year period is exhausted, under the RAMI Act no additional financial assistance may be given. The question remains, however, whether this requirement will be maintained, as Congress in 1998 amended the Manufacturing Extension Partnership to allow its centers to continue receiving limited federal funds if they earned a positive independent evaluation. With the precedent established, will the RAMI Act's financial self-sufficiency requirement of seven years be honored?

In conclusion, while Democrats have long favored an assertive "industrial policy" approach to manufacturing, the passage of the RAMI Act is a noticeable bipartisan tipping point for an increased degree of government intervention.

Thomas A. Hemphill is an associate professor of strategy, innovation, and public policy in the University of Michigan-Flint School of Management.

Stay-at-Home Parents: Economics and Fairness

Robert VerBruggen - January 28, 2015

There's quite the debate raging about the tax treatment of stay-at-home versus working moms. Obama would like to hike federal tax relief for working parents who pay for child care. Many conservatives are saying that's discriminatory against mothers who stay at home, but both Josh Barro and John C. Goodman have pushed back against that argument.

Here's Goodman:

One of the amusing anecdotes that all students learn in Econ 101 relates to the fact that house work is excluded from the official estimate of GDP. "If a man marries his maid and she continues doing exactly what she did before, GDP goes down," professors tell their students.

The tax code works exactly the same way. If a man marries his maid and continues giving her the same financial support that he did before, federal income taxes go down. We tax the value of productive labor only if it's sold in the marketplace. Services performed in the home are entirely tax free.

This no small matter.

He goes on to note that, according to one estimate, if we counted home productivity in GDP, GDP would rise 26 percent.

I actually agree with Barro and Goodman that dual-earner couples should not be taxed as much as single-earner couples with the same income. But the best argument for this proposition stems from basic fairness, not some broad principle that work we do for ourselves should be treated exactly like work we do for pay.

Barro concedes that comprehensive "efforts by the government to measure how productive we are at home would be intrusive and inaccurate, not to mention politically toxic." But it goes beyond that: Even if we could overcome the political difficulties and find an accurate way of tallying up this work, we usually shouldn't tax it.

Why? Think through a few of the implications. You have to send a check to the government if you spend the day cleaning, but not if you spend the day sleeping. If you mow your lawn more often than your bad neighbor does, you pay more in taxes than he does. If you're unemployed and use your time to fix the sink, you owe taxes on that value -- we wouldn't want to treat you differently than we'd treat someone who can afford a plumber, but we do want to make sure you're taxed more than an unemployed person who sits around playing video games. And if one stay-at-home mom teaches her kids the alphabet while another has them watch TV, the first mom pays more in taxes. After all, higher-quality child care is worth more.

To be sure -- and here's what makes this idea attractive to economists -- these problems are present to some degree with the income tax too. You don't owe it if you don't bother to work, and the more and higher-quality work you do, the more you owe.

But there are key differences. First, in addition to reflecting the effort each person puts in, income taxes target the various ways that luck contributes to our fortunes, giving some people higher intelligence, better connected parents, and so on, than others. Home-productivity taxes may capture some of this (some die-hard do-it-yourselfers are inherently capable of doing things the rest of us are not), but in general they're just taxing people who take pride in their homes over people who don't, and they might even be regressive, seeing as the poor rarely hire maids or gardeners.

Further, the incentive effects of income and home-productivity taxes could be quite different; it's hard to predict how much DIY lawn-mowing wouldn't get done if DIY lawn-mowing were taxed, but there's no reason to assume it's the same reduction that's caused by the taxes on professional lawn-mowers. I sure wouldn't mind an extra excuse as to why I didn't do my share of the chores around the house.

In other words, there is a fundamental difference between unpaid work and paid work, and the tax system has to treat them differently. When it comes to unpaid work, we have to look at each situation and decide what is fair and efficient, rather than simply assuming that the ideal solution (practical concerns aside) would be to tax unpaid and paid work equally. But I do think Barro and Goodman have a point in the particular case of stay-at-home moms, as I wrote in the Fall 2014 issue of National Affairs.

Imagine two couples. Both earn $60,000 -- but one does this with a single full-time worker, while both individuals in the other couple work at $30,000 apiece. The first couple has no daycare expenses, more free time, and roughly half the commuting expenses. Is it really fair to tax them both the same when one couple is plainly better off?

Weighing in from the corner opposite Barro and Goodman, my old National Review colleague Ramesh Ponnuru responded to this argument last week:

One [argument for helping dual earners] is that two-earner couples have higher costs than single-earner couples making the same income, so it's harder for them to pay the same taxes. But that seems like using the tax code to counteract the efficiency advantages of a particular way of dividing a family's labor, which doesn't make much sense. And it seems like an especially weak argument since, in the real world, single-earner couples have smaller incomes.

I disagree. The difference between our two $60,000 couples is almost certainly not how they "divid[ed] a family's labor." Except in rare circumstances, someone earning $30,000 isn't earning $30,000 because he chose to earn that instead of $60,000; he's earning that because it reflects the value of his skills in the labor market. We're treating these couples differently because one is more fortunate than the other, not merely because they made different decisions about whether one parent should stay at home. If one of the individuals in the dual-earner couple did stay at home, it would become a $30,000 couple, not another single-earner $60,000 couple.

And I don't see the significance of the fact that the typical single-earner couple makes less than the typical dual-earner couple: There are plenty of both types of couples with all sorts of different incomes, and the tax system must apply to all of them. There really are, to return to our hypothetical couples once again, both single- and dual-earner families with incomes of exactly $60,000, and so we really do need to think about whether their equal household incomes should override all other considerations on Tax Day.

Family taxation is one of those endlessly debatable topics, because the same rules must apply in countless situations, and what may seem obviously fair to some is obviously discriminatory to others. With the wide diversity of family structures and working arrangements we have today, it's good we're starting to grapple with these questions.

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

Update Privacy Laws for the Digital Age

Sen. Patrick Leahy & Sen. Mike Lee - January 28, 2015

Americans routinely are bombarded with news stories about invasive new surveillance technologies. But Congress has yet to pass even the most basic legislation on the issue: a bill to ensure that law-enforcement agents cannot read Americans' private e-mails without search warrants.

In the coming weeks, we will reintroduce legislation to update the Electronic Communications Privacy Act (ECPA) and safeguard the privacy of e-mail and other information stored in "the cloud." In the last Congress, the Senate Judiciary Committee unanimously approved this bipartisan bill, but it has yet to become law. Today is Data Privacy Day, reminding everyone of the work that needs to be done.

The Constitution guarantees "the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." But that guarantee is at risk when the government can search and seize vast troves of our private e-mails, texts, and social-media posts without our knowledge or consent -- and without a search warrant.

Almost 30 years ago, Congress enacted ECPA to protect the privacy of these communications. At that time, no one could have imagined how the Internet and mobile technologies would transform the way Americans communicate and exchange information. There was no World Wide Web, no cloud computing, and no social media -- much of the technology that we take for granted today. After three decades, it is time to update this law.

The proposal we will soon introduce requires the government to obtain a search warrant, based on probable cause, before searching through the content of Americans' e-mail or other electronic communications stored with a service provider such as Google, Facebook, or Yahoo!. The government is already prohibited from tapping our phones or forcibly entering our homes to obtain private information without warrants. The same privacy protections should apply to our online communications.

Our legislation will take into account privacy interests, law-enforcement needs, and the interests of our thriving American tech sector. In our global economy, American technology companies are competing internationally and need to rebuild consumer trust. And just like the bill that garnered broad support in the last Congress, our bill will include balanced exceptions to the warrant requirement to address emergency circumstances.

Support for ECPA reform continues to grow. We have been joined in the effort by senators from both sides of the aisle, and last year 273 members of the House of Representatives supported this legislation. A diverse coalition of more than 100 leaders in the privacy, civil-liberties, civil-rights, and technology communities, including Americans for Tax Reform, the ACLU, the Heritage Foundation, the Center for Democracy and Technology, and many major technology companies, also support our bill. 

Just last week, many of these organizations joined together to urge the Senate to pass ECPA reform. In a letter to the Judiciary Committee, these organizations said that not only would ECPA legislation "allow law enforcement officials to obtain electronic communications in all appropriate cases while protecting Americans' constitutional rights," but it also would "provide certainty for American businesses developing innovative new services and competing in a global marketplace."

Many Americans are frustrated that Congress seems more interested in partisan bickering than in getting things done. By working together, as a Democrat from Vermont and a Republican from Utah, we hope that all senators will join us to pass meaningful and bipartisan legislation that benefits all Americans. Congress should pass ECPA reform this year, and President Obama should sign these important privacy reforms into law. 

Sen. Patrick Leahy (D., Vt.) serves as ranking member of the Senate Judiciary Committee and authored the original Electronic Communications Privacy Act (ECPA) in 1986. Sen. Mike Lee (R., Utah) is also a member of the Judiciary Committee.

The Crushing Burden of Government Regulation

Gregory Conko - January 27, 2015

Anyone concerned about the future of jobs and economic competitiveness in America must have been disappointed by the litany of free lunches and new government regulations and taxes President Obama proposed in his State of the Union address last week. Is this the same man who, just a few years ago, admitted that government regulation too often raises costs, adds excessive burdens, and imposes "absurd and unnecessary paperwork requirements that waste time and money"?

Regulatory reform no longer seems to be a White House priority -- if it ever really was. Fortunately, there is a growing recognition among legislators from both parties that overregulation stifles the economy, suppresses job growth, and inhibits innovation. Across the political spectrum, it's become clear how important it is to rein in the regulatory Leviathan.

Earlier this month, Rep. Collin Peterson (D., Minn.) joined Rep. Bob Goodlatte (R., Va.) to introduce the Regulatory Accountability Act of 2015. And according to the Washington Post, a band of moderate House and Senate Democrats appear willing to work with the new Republican majorities on a broad range of issues, from authorizing the Keystone XL oil pipeline to alleviating some of the worst impacts of Obamacare. This is good news since, as the saying goes, admitting you have a problem is the first step to (economic) recovery.

And what a problem it is. As the Competitive Enterprise Institute's Wayne Crews reports, the Obama administration finalized more than 3,600 new regulations last year and proposed over 2,300 more. Along with the countless other regulations already in place, those rules and restrictions impose a drag on the American economy of at least $1.9 trillion. And the federal Office of Management and Budget estimates that government information requests alone require over 9 billion (yes, billion with a "b") hours of paperwork annually.

The total impact is probably far higher than these estimates because, as Crews points out, economic costs are calculated for only a handful of the rules government imposes each year. And in the era of Obama's "pen and phone" governing strategy, countless more restrictions are imposed through presidential memoranda, executive orders, guidance documents, and other non-rule mechanisms whose costs are not scrutinized at all.

Making the regulatory process more transparent, so we the people can hold our government more accountable, would be a great first step for the 114th Congress to take. Passing the Regulatory Accountability Act should be an easy win.

While they're at it, Congress should enact the Regulations from the Executive In Need of Scrutiny (REINS) Act, reintroduced in the 114th Congress last week by Sen. Rand Paul (R., Ky.) and Rep. Todd Young (R., Ind.). REINS would make the unelected bureaucracy more accountable by requiring Congress to ratify all proposed rules with estimated annual costs of $100 million or more.

But the need for regulatory reform doesn't stop with procedural rules. On a whole host of issues, from banking and finance, to energy and transportation, to labor and employment, there are dozens of low-hanging opportunities for commonsense reform that should attract bipartisan support. Here are just a few.

Three years ago, Democrats and Republicans joined together to enact the Jumpstart Our Business Startups (JOBS) Act to reform U.S. securities law and make it easier for small businesses to raise capital. That law was a good start, but more needs to be done. So, Rep. Patrick McHenry (R., N.C.) is building support for a JOBS Act II, whose passage should be a no brainer for legislators of both parties.

Next, Congress should take on giveaways to business cronies that have long been rationalized as necessary for market efficiency. Last year's fight over reauthorization of the Export-Import Bank showed just how fed up the American public is with billion-dollar transfers of taxpayer cash to politically connected businesses. Congress just barely reauthorized Ex-Im, wind-power subsidies, and various other boondoggles in 2014. But a bipartisan coalition should seize the opportunity to kill off these white elephants as they expire later this year.

On health care, Energy and Commerce Committee Chairman Fred Upton (R-Mich.) has teamed up with Ranking Member Diana DeGette (D., Colo.) to bring needed reform to the Food and Drug Administration's regulation of the drug and medical-device development process. FDA's rules for testing and approving new drugs have changed little in the past 60 years. They should be streamlined to take advantage of new computational tools, better understanding of disease pathways, and other technological advances that can help speed promising new medicines to market while improving patient safety.

These examples, and many others not listed here, show that Democrats and Republicans can work together to reduce the crushing burden of government interference in our economy. This kind of bipartisan regulatory reform is just what we need to stimulate America's economy, reinvigorate job growth, and move our country forward with a real pro-growth agenda.

Gregory Conko is executive director of the Competitive Enterprise Institute.

Time for Washington to Start Working

Steven Law & Brian Walsh - January 27, 2015

Now that the 2014 elections are behind us, the big question is: What will Washington do with its time? A new national-priorities survey commissioned by American Action Network and Crossroads GPS found surprising agreement among voters of all political stripes regarding the issues they see as most pressing for President Obama and Congress to tackle this year.

That's mostly good news for Republicans, who now control both houses of Congress and have pledged to advance a reform agenda by restoring the collaborative legislative processes that were mothballed by former Senate leader Harry Reid. It's also a warning flare for President Obama: Americans are eager for results, not more speeches and veto threats.

But Republicans need to tread carefully as well. While GOP priorities like budget reform, eliminating the inheritance tax, and rescuing Medicare from bankruptcy get broad support, voters are likely to splinter over specific policy prescriptions. There's also a wide enthusiasm gap between Republicans and other voters on Obamacare: The law remains as unpopular as ever, but repealing it is a less urgent priority for independents (and Democrats) than it is for Republicans. That's why the government shutdown over Obamacare flopped: Voters want the law scrapped or changed, but not by precipitating a national crisis.

Does that mean Republicans in Congress should chart a muted middle course? Not at all. Many of voters' top-ranked issue priorities share a common theme: It's time to clean up Washington's festering messes. Issues like requiring the federal government to adopt an annual budget, tackling fraud in entitlement programs, and drug testing and work requirements for welfare all speak to the public's growing intolerance for the dysfunction, incompetence, and waste they see in Washington. This is where Democrats face the greatest risk. Harry Reid's solution-stopping obstructionism yielded them nothing but an electoral knockout punch. Democrats should think twice before buying tickets to the sequel.

Our national poll identified two other front-burner issues that Republicans and Democrats shouldn't ignore: rising college costs and immigration reform. Democrats wisely seized on the first issue, but their solution would exacerbate the problem. Instead of just subsidizing college more, Republicans should formulate market-based responses to automatic tuition increases and out-of-control compensation, like Elizabeth Warren's $429,000 salary at Harvard.

Then there's immigration reform, which voters across the spectrum rate as a top priority for action. It could even be an opportunity for bipartisan cooperation. In our poll, voters gave high marks to GOP initiatives like stricter border security and cracking down on employers of illegals. But they also want to resolve the status of immigrants who are here illegally.

Surprisingly strong majorities of Republicans, independents, and Democrats would support an immigration plan that combined real law-and-order improvements with a framework for earning legal status -- but with far more exacting conditions than those in 2012's "Gang of Eight" bill. There is also solid support across the political spectrum for protecting the ability of states to require personal identification to vote, despite the Obama Justice Department's campaign to invalidate and stigmatize such requirements.

Overall, Americans are in a sober and strikingly unified frame of mind: concerned about the direction of the country and impatient for change. If the president and Congress take those concerns seriously and act on them together, we could begin to solve a number of important problems -- and restore a little faith in our democratic system.

Steven Law is president and CEO of Crossroads GPS, and Brian Walsh is president of the American Action Network.

The FDA's Weak New Drug Quality Office

Roger Bate - January 26, 2015

After more than two years of deliberation, the FDA has finally launched a new Office of Pharmaceutical Quality to standardize, centralize, and improve the agency's efforts to safeguard America's supply of medicines.

It is a real pity, then, that the new office is crippled from the beginning. There are no plans to publicize the data collected, so physicians and patients will remain in the dark, unsure of the true quality of the medicines they prescribe or ingest. The new office merely amounts to bureaucracy as usual, just under another name.

I hope I'm wrong. But the fact is that FDA has presided over lapse after lapse on drug quality in the past decade, opaque to the public, hostile to critics in the medical community, lacking access to combat the biggest offenders -- namely Indian pharmaceutical companies -- and firewalled from any real consequences for its failures.

Less than two years ago, Ranbaxy Laboratories, one of the largest Indian generic-drug manufacturers, pled guilty to seven felonies for deliberately masking the production and sale of substandard medicines and paid a record $500 million fine. In the time since, another half-dozen Indian companies have admitted major problems with processes and data quality and numerous product withdrawals.

In 2014, Dr. Reddy's Laboratories, the largest Indian drug manufacturer, recalled 13,500 bottles of a blood-pressure drug due to problems with pill solubility. Wockhardt, another leader Indian manufacturer, recalled 110,000 bottles of the same blood-pressure medicine for the same reason. Bloomberg News revealed that a lab technician at an Indian research facility run by Sun Pharma deleted negative testing data for a major drug line. The medicine was ultimately cleared and sent to America.

FDA inspections did uncover some of these problems -- but the agency was initially alerted to the worst of them by whistleblowers. Worse still, the agency has ignored many efforts by credible whistleblowers to sound the alarm on certain FDA-approved medicines. For example, medications that have a time-delay mechanism (such as the antidepressant budeprion) or a narrow therapeutic window (such as the transplant medication cyclosporin) can pass current FDA standards and still not work properly.

Joe Graedon of the People's Pharmacy website and radio show has been receiving complaints about these types of medications for years; antidepressants that don't stop people feeling suicidal are just the most common. But the FDA has largely ignored his appeals for transparency measures that would put more of this information in the hands of doctors and patients.

Under current rules, medications can be considered interchangeable (bioequivalent) by FDA if they range from 80 percent to 125 percent of the active ingredient availability of the innovator product. But for many medications, this range is simply too wide, especially if one is switched from one generic at the low end of the range to another at the high end. Narrowing the allowable range probably makes sense for the most sensitive drugs, and this is what Graedon wants. But as a start, the FDA could simply publish the bioequivalence data that all companies have to file with the agency. These data are not proprietary in any business sense, but publication would allow physicians to advise at-risk patients to not take certain products. To be fair, these data are not always easy to interpret, but surely physicians have the right to know them and to advise patients accordingly.

Right now most patients, and probably most physicians, don't even think about which generic medicine to choose. The substitution is typically automatic or at the discretion of a pharmacist. My team's ongoing research of the cholesterol-lowering medication atorvastatin (the generic of brand Lipitor) has found that in many pharmacies, patients are routinely bounced from one product to another, with the patient none the wiser.

For cardiologist Harry Lever, of the Cleveland Clinic, this is a problem. Dr. Lever routinely argues with insurers and pharmacists to ensure his patients get better medication, usually asking them to allow his patients to choose generic medications that are not manufactured in India. Most patients are not lucky enough to have Dr. Lever as their physician.

If we make quality data publicly available, physicians and patients could make better-informed decisions about their health. But, alas, that would undermine the FDA's facade, which is that all of the generic products it approves are identical. On numerous occasions Dr. Janet Woodcock, the key FDA official overseeing the new office, has said that she believes the public would not benefit from having access to drug-quality information.

Nonsense. When it comes to quality data on the medicines that we all consume, transparency should be a right. If FDA could ensure no defective products were on sale in US then its paternalism might be justified, but that is simply not the case.

Roger Bate is an adjunct fellow at the American Enterprise Institute and the author of Phake: The Deadly World of Falsified and Substandard Medicine.

Tools for Transparency in Copyright Law

Molly Schwartz - January 23, 2015

Over the span of one week in October 2014, Google received requests to remove more than 11 million URLs from its search engine due to copyright-infringement claims.

Enshrined in Article One of the U.S. Constitution, the purpose of copyright is to provide incentives for innovation by creating financial rewards for new creations. But in the more than two centuries since the Constitution was written, we have witnessed radical evolution in the methods of creation and the rise of lucrative industries that profit from the commodification of creative works.

The result has been a complex and sometimes dizzying web of copyright rules, unevenly and erratically enforced, particularly in the digital realm. For the average Internet user, it can be difficult to discover what materials are in the public domain, and which can be freely accessed and reused. When does fair use apply? What material has been removed from the Internet and on what legal grounds?

Luckily, the same technologies that complicate copyright law also provide us new methods for collecting, analyzing, understanding, and distributing data about how our world operates, both in terms of copyright enforcement and beyond. APIs and Twitterbots continuously scrape information sources and deliver real-time updates, such as every time a congressional staffer edits a Wikipedia page.

By collecting and publishing data about takedown requests, digital platforms like Google and Wikimedia are beginning to provide insight into the ways that rights holders are enforcing copyright law. The reports showcase aggregate trends on how much content is being removed over time and which copyright owners are requesting the most takedowns.

The details reveal some of the unusual and, in some cases, unfair ways that concerned parties try to apply intellectual-property law. Wondering why you've had difficulties finding recipes for "Derby Pie"? Kern's Kitchen trademarked the name and has litigated tirelessly to make sure sites do not post recipes using that name without permission.

The Chilling Effects clearinghouse functions as a searchable archive of requests to remove purportedly copyrighted information from the Internet, most of them made under the Digital Millennium Copyright Act. Though a popular tool for researchers, advocacy groups, journalists, and interested individuals, the project has been criticized as a tool for pirates as well, as the takedown notices contain links to the allegedly offending content -- and it recently removed its individual notice pages from search-engine results. The decision was met with harsh criticism from online news publications TechDirt and TorrentFreak, prompting Chilling Effects to issue an explanation:

Given increased public attention on the project, the wide variety of notices and types of claims that we catalog, and the sheer number of notices included in Chilling Effects database, we decided to take the interim step of de-indexing the site's individual notice pages from search engines' search results. Now that we have taken this step, we are hard at work building new tools and workflows that will allow us to better achieve the balance we are constantly seeking to strike between our dual missions of transparency and educating the public (on the one hand) and the strongly-felt concerns of those who send takedown notices (on the other).

That workflow overload attests to the growing appetite for transparency reporting mechanisms. Increased public awareness about how copyright laws are enforced has spurred activism by those who want to develop reasonable copyright solutions for today's information environment. Transparency sites have changed the game by drawing public scrutiny to information that certain parties have tried to suppress, in accordance with a phenomenon known affectionately as the Streisand effect.

Copyright law does not exist in a vacuum, and transparency mechanisms let us all be part of the debate. Increased access to creative works has the potential to foster new creativity and economic growth. Transparency reporting is just one tool in an ongoing process to reform copyright law to strike a fair balance between the right to freedom of expression and the right of copyright owners to receive compensation for their work.

Molly Schwartz is a senior fellow with the R Street Institute.

SCOTUS's New Race Case: Housing Discrimination

Nikole Hannah-Jones, ProPublica - January 21, 2015

This week, the U.S. Supreme Court will take up one of the most important civil rights cases of the last decade. If you've never heard of Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, you have company. The issue of housing segregation has never captivated the nation's attention like affirmative action or voting rights.

But today, two days after the Martin Luther King Jr. holiday, the court will hear arguments in the Texas case that many fear could gut the Fair Housing Act, the landmark 1968 law that was passed just days after King's assassination.

"This case has as broad of a reach as anything the court has decided in the last 10 years," said Myron Orfield, director of the Institute on Metropolitan Opportunity at the University of Minnesota Law School, because housing segregation is the foundation of racial inequality in the United States.

The case concerns whether the Fair Housing Act, which sought to end the longstanding segregation of America's neighborhoods, should be read to only bar intentional discrimination. For four decades, federal courts have held that the law should be interpreted more broadly, ruling again and again that if the policies of governmental agencies, banks or private real estate companies unjustifiably perpetuate segregation, regardless of their intent, they could be found in violation of the Fair Housing Act.

All 11 of the federal circuit courts that have considered the question have seen it that way. As well, the U.S. Department of Housing and Urban Development, the agency charged with administering the act, issued a regulation enshrining the principle in 2013.

The nation's highest court does not typically intervene in cases unless there's been disagreement in the lower courts. But this court has been determined to have its say on the housing issue and the legal theory that has come to be known as "disparate impact." The Texas case marks the third effort in as many years by the current justices to consider the intent and reach of the housing act. The other two cases were withdrawn or settled in deals reached before oral arguments, as fair housing advocates feared they would lose before the Roberts Court.

"It is unusual for the Court to agree to hear a case when the law is clearly settled. It's even more unusual to agree to hear the issue three years in a row," said Ian Haney López, a University of California, Berkeley law professor.

The Texas case involves a nonprofit organization that works to promote integrated communities and the Texas state housing authority. The nonprofit, Inclusive Communities, showed that nearly all the affordable housing tax credits approved by the Texas housing agency had been assigned to Dallas' black neighborhoods and almost none of it to white neighborhoods. A federal judge did not find intentional discrimination on the part of Texas officials, but held that the outcome unacceptably increased housing segregation and that the housing agency could have taken steps to ensure that affordable housing units were allotted more equally.

Texas appealed the ruling, raising the stakes when it decided to challenge whether the Fair Housing Act allowed such "disparate impact" rulings at all.

For many, the Supreme Court's persistence signals a determination to install intentional discrimination alone as the standard for such cases. The Roberts Court is considered by a host of scholars and others to be the most conservative since the 1930s, and so such an outcome would be consistent with its more narrow interpretations of laws governing voting rights and school segregation.

"Those who care about eradicating housing discrimination have to be very concerned about the Supreme Court taking this case," said Erwin Chemerinsky, dean of the University of California School of Law, where he is a constitutional scholar.

Elizabeth Julian, president of the Inclusive Communities Project and the former Assistant Secretary of Fair Housing and Equal Opportunity at HUD, is among those who are worried.

"Reversing essentially four decades of case law would send a message that is very concerning," Julian said.

A few generations ago, most housing discrimination was overt. Banks openly refused to lend to black homebuyers. Public housing officials used to announce that certain developments were for white residents, others for Latinos. But the nature of housing segregation has evolved over the years, and the fight against it has had to change as well. Today, banks may well charge higher loan rates in certain communities, but they can also insist it has nothing to do with those neighborhoods being black or Latino. Local planning boards can concede that most affordable housing efforts have been placed in black neighborhoods, but maintain that it was not by malicious design.

The theory of disparate impact, then, has often been the only tool to address ongoing housing discrimination. Landlords or lenders who implement policies or practices that disproportionately impact racial minorities can be found in violation of civil rights law if they cannot justify those practices – even if no one can show they acted out of racial animus.

The U.S. Department of Justice has used disparate impact to win record settlements from banks that charged higher rates to black and Latino borrowers with similar credit histories as white borrowers, but could not justify the practice.

A fair housing group used disparate impact to topple a "blood relative" ordinance passed by nearly all-white St. Bernard's Parish in the wake of Hurricane Katrina. The ordinance barred homeowners from renting to anyone who was not kin. Civil rights lawyers were convinced officials passed this law to keep out black renters, but could not prove racist motivations. But when St. Bernard's Parish could not come up with a plausible justification for the ordinance, a court struck it down.

This tool, for the first time, is in real jeopardy.

The Supreme Court has been weakening many civil rights protections for decades. The Rehnquist Court, for instance, was known for getting the courts out of the business of addressing racial inequities. But the Roberts Court has gone a critical step further, severely curbing efforts undertaken by Congress and the executive branch to address our nation's long history of discrimination.


In 2007, the Roberts Court came down against two school districts that were trying to maintain gains in integration. In 2009, the court ended the attempts of New Haven, Conn., officials to ensure that the city's promotion practices were fair after no black firemen passed a promotion exam, saying the efforts discriminated against white firefighters. In 2013, it held that a key provision of the Voting Rights Act intended to address the disenfranchisement of black voters had expired. And last year, it upheld Michigan voter-approved ban on affirmative action.

"The Supreme Court is newly aggressive in the area of race," said Haney López. It is targeting efforts by other branches of society to remedy segregation and is striking them down."

Strikingly, if it ultimately rules against Inclusive Communities, in under a decade the Roberts Court will have limited pivotal protections in each of the three landmark civil rights laws passed in the 1960s: the 1964 Civil Rights Act, the 1965 Voting Rights Act and the 1968 Fair Housing Act.

The Court's aggressive tack has been welcomed by conservative groups, who believe the 14th Amendment of the Constitution, intended to ensure former slaves equality under the law, requires strict legal colorblindness.

The Pacific Legal Foundation, an advocacy organization that promotes individual rights, has long looked forward to a showdown over the Fair Housing Act. It filed an amicus brief in support of the Texas housing agency.

Ralph Kasarda, a lawyer at the Pacific Legal Foundation, said that disparate impact puts an unfair burden on landlords, lenders and local governments.

He gives this example. A landlord requires a certain credit score for renters in order to ensure that they will pay their rent. For a host of societal reasons, African Americans and Latinos tend to have lower credit scores. The landlord could find himself defending against a fair housing suit for a race-neutral policy.

"The problem that I have is imposing liability on someone for doing something without any intent to harm someone," Kasarda said.

Of course, even under the legal theory of disparate impact, legitimate business practices that can be justified do not violate the law even if they lead to different results among different racial groups.

But the Pacific Legal Foundation's chief gripe is race consciousness itself.

In order for Texas housing officials to ensure they were allotting subsidized housing in a racially balanced way, they would have had to take into account the racial makeup of the communities where the housing was to go. Kasarda and others argue that race-conscious policies designed to help racial minorities are no better than those designed to harm them.

"You have the case where a government or organization might resort to race-based decisions to avoid disparate impact," he said. "The Pacific Legal Foundation believes that is unconstitutional."

Julian, of Inclusive Communities, doesn't buy the conservative argument. The Fair Housing Act was designed to address the effects of racial segregation, she said.

"It doesn't require getting into the hearts and minds of people and motives of individuals because at the end of the day the motives don't matter. It's the perpetuation of segregation that is the harm," Julian said.

She offered an analogy: Say a driver is texting and hits someone with her car and puts them in the hospital.

"The fact that you did not mean to is beside the point," Julian said. "No, you didn't mean to hit them, but you are going to be held accountable because you engaged in behavior that you knew could cause harm, and you did it anyway."

The end of disparate impact policies and cases, she argued, would severely hamper advocates' ability to go after systemic housing discrimination in a nation where the segregation of black Americans has barely budged in many cities and where it is growing for Latinos. "It would be taken as a greenlight to say you can do anything you want, as long as you do not have the offending email."

This piece originally appeared at ProPublica, where Nikole Hannah-Jones is a reporter. For more about the fate of the country's fair housing efforts, read Nikole Hannah-Jones' story about how the government betrayed a landmark civil rights lawProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Once, Same-Sex Couples Couldn't Wed; Now, Some Employers Say They Must

Julie Appleby, KHN - January 21, 2015

Until recently, same-sex couples could not legally marry. Now, some are finding they must wed if they want to keep their partner's job-based health insurance and other benefits.

With same-sex marriage now legal in 35 states and the District of Columbia, some employers that formerly covered domestic partners say they will require marriage licenses for workers who want those perks.

"We're bringing our benefits in line, making them consistent with what we do for everyone else," said Ray McConville, a spokesman for Verizon, which notified non-union employees in July that domestic partners in states where same-sex marriage is legal must wed if they want to qualify for such benefits.

Employers making the changes say that since couples now have the legal right to marry, they no longer need to provide an alternative. Such rule changes could also apply to opposite-sex partners covered under domestic partner arrangements.

"The biggest question is: Will companies get rid of benefit programs for unmarried partners?" said Todd Solomon, a partner at McDermott Will & Emery in Chicago.

It is legal for employers to set eligibility requirements for the benefits they offer workers and their families -- although some states, such as California, bar employers from excluding same-sex partners from benefits. But some benefit consultants and advocacy groups say there are legal, financial and other reasons why couples may not want to marry.

Requiring marriage licenses is "a little bossy" and feels like "it's not a voluntary choice at that point," said Jennifer Pizer, senior counsel at Lambda Legal, an organization advocating for gay, lesbian and transgender people.

About two-thirds of Fortune 500 companies offer domestic partner benefits, but only a minority is changing the rules to require tying the knot, said Deena Fidas, director of the workplace equality program at the advocacy group Human Rights Campaign.

Because same-sex marriage isn't legal in all states, "many employers operating in multiple states ... are retaining their partner benefit structures," said Fidas.

Most companies making the changes, including Verizon, are doing so only in those states where same-sex couples can get married. And most give workers some time to do it.

"We gave them a year and a quarter to get married," said Jim Redmond, spokesman for Excellus BlueCross BlueShield, which made the change for employees shortly after New York allowed same-sex unions.

Employers that offer domestic partner benefits -- for both same-sex and opposite-sex partners -- generally allow couples in committed relationships to qualify for health and other benefits upon providing documents, such as financial statements, wills, rental agreements or mortgages, proving they are responsible for each other financially.

Such benefits were particularly important before the federal health law barred insurers from rejecting people with pre-existing medical conditions.

"We had clients over the years who were living with HIV … the only health insurance they had, or had hope of getting was their partner's, through a job," said Daniel Bruner, director of legal services at the Whitman-Walker Health clinic in Washington DC. "Now folks have more health insurance options."

After the Supreme Court ruled the federal Defense of Marriage Act unconstitutional in 2013, the portion of the health insurance premium paid by employers on behalf of the same-sex spouse was no longer taxable under federal rules, although state taxes often applied where such marriages were not legal. When state marriage laws change, so do those tax rules.

In Arizona, Dena Sidmore and her wife, Cherilyn Walley are saving more than $300 a month in taxes on the health insurance from Walley's state job, which covers them both. The savings came after the state's same-sex marriage bar was thrown out by the courts in October.

They didn't marry for benefits. They already had coverage under domestic partner requirements affecting Arizona state workers. They simply wanted to be married. Indeed, they tied the knot in September 2013, after driving all night to Santa Fe, N.M., where same-sex marriage was legal.

"It was lovely," Sidmore said of the ceremony at the courthouse. But for her, the real change came when Arizona's bar on same-sex marriage was overturned by the courts. She remembers thinking: "This is real. It's not just a piece of paper."

After the courts lifted the same-sex marriage ban, Arizona dropped its domestic partner program. State workers had until the end of last year to marry if they wanted to keep a partner on benefits.

Sidmore has no objection to employers requiring a marriage license for benefits because "spousal benefits require marriage," although she thinks there should be exceptions for older residents who might face the loss of pensions or other financial complications if they remarry.

Benefit experts recommend that employers consider what it might mean for workers if benefits are linked to marital status — especially those that operate in states where same-sex marriage is not legal.

While some couples, like Sidmore and Walley, may be willing to travel to tie the knot, others may not want to, or may be unable to afford it. Additionally, some workers may fear if they marry, then move or get transferred to a state where same-sex marriage is barred, they would face discrimination.

Joe Incorvati, a managing director at KPMG in New Jersey, married his partner, Chuck, in 2013 when it became an option. "We'd been together for 38 years, so it just seemed natural," he said.

KPMG offers domestic partner benefits and does not require employees to be married for eligibility. While he's comfortable in New Jersey, Incorvati said it could be a problem if his company wanted to transfer him to a state where same sex marriage is not legal.

Even though his work benefits would remain the same, "Would I have the same rights as in New Jersey?" Incorvati asked. "The answer may be no."

The piece originally appeared at Kaiser Health News (KHN), a nonprofit national health policy news service, where Julie Appleby is a senior reporter. jappleby@kff.org | @Julie_Appleby

Ohio's Energy Efficiency Fiasco

Robert Michaels - January 21, 2015

Winter is here, and Americans are coping with more than just the cold -- many are dealing with a yearly spike in their energy bills. As rational consumers, they can be trusted to make efficient choices, and they benefit from doing so. Unfortunately, misguided policies often get in the way. Take, for example, Ohio's recent attempt to reduce energy use.

According to my research, a 2008 law drove utility bills in the state higher -- even as the law's energy-efficiency goals were in doubt. As of late last year, most energy-industry reports indicated that SB 221 was on track, but the evidence said otherwise. Accordingly, at the beginning of 2015, SB 221 was suspended for two years pending evaluation of its effects by an independent panel.

If it desires, the state will restore the law's efficiency requirements when the evaluation is finished. Before doing so, lawmakers should carefully note the key problems with the legislation as it was written and implemented.

Under SB 221, the Public Utilities Commission of Ohio (PUCO) must enforce an "Energy Efficiency Resource Standard" on Ohio's utility companies (municipal and cooperative systems are exempt). By 2022, utilities are required to facilitate a 22 percent reduction in energy use.

To accomplish this, they can spend up to 3 percent of their annual revenue on efficiency programs such as rebates on energy-efficient appliances, tune-ups of HVAC systems, or energy-efficient light-bulb subsidies, and then recover what they spend through customers' bills. To date, Ohio customers have paid more than $1 billion.

Aside from light-bulb subsidies (which cannot be tied to specific consumers and are addressed below), few of these programs are affecting very many consumers. In April 2013, for example, only 2 percent of FirstEnergy's business customers participated in its efficiency programs, leaving the remaining 98 percent to shoulder the costs. Only 7 percent of its residential users benefited from programs aimed at them.

Energy efficiency is important, and advocates of the law might argue that it's worth the billion-dollar public expense. They started with high hopes that innovative programs would benefit Ohio and the nation. But, expensive or not, the law doesn't appear to be working.

Utilities have complied largely by subsidizing retail sales of energy-efficient light bulbs. In 2012, lighting programs accounted for 83 percent of Dayton Power and Light's alleged energy savings, a lower percentage than some other utilities. Among the company's residential customers, lighting was 88 percent of the total.

Here's the catch: Most of those energy-efficient bulbs would have been purchased with or without SB 221. If you buy a subsidized bulb but would have paid full price, the industry calls you a "free-rider." Most other states account for free-riders in their measurement; Ohio does not. (A few years ago, PUCO, with the backing of utilities, ruled that free-riding is a form of saving, claiming that "gross" rather than "net" effects are what matters.) California calculates that about 70 percent of bulb buyers free-ride, and there is no reason to assume that Ohio is much different. It's clear that the great bulk of Ohio ratepayers' $1 billion has wound up in the pockets of free-riders.

If SB 221 is reinstated in its original form, these problems will become bigger, and quickly. PUCO rules require each utility to retain a consultant for its program. In 2013, most of their reports found the same thing: Opportunities for additional efficiency are rapidly diminishing. Dayton Power and Light's consultant reports that cost-effective programs are likely to run out before it achieves half of the law's required 2022 savings. The American Council for an Energy Efficient Economy acknowledges a need to devise new programs.

No one wants to break one of the biggest secrets in Ohio: Its energy-savings figures thus far are grossly in error, and opportunities to make up for it look scarce. The future belongs to the energy-efficient, but Ohio will never get there until its policymakers understand the difference between free-riding and true efficiency.

Robert Michaels, a professor of economics at California State University, Fullerton, is author of "Ohio's Energy Resource Standard: Where are the Real Savings?", a recent study published by the Mercatus Center at George Mason University.

Reforming Obamacare: Start With the Young

Earl L. Grinols - January 20, 2015

After the lofty promises that led to passage of the Patient Protection and Affordable Care Act, young people are waking up to how much the law targets them with higher costs. Yes, those lucky enough to be covered on their parents' health plans can postpone the consequences until they are 26. But for the rest, the situation is grim: Young people face disproportionately high costs to pay for coverage and a crushing burden of taxes that could impede their future prosperity.

Young people 20-35 constitute about 20 percent of America's population, but they represent 46 percent of the uninsured -- and, according to an analysis by Manhattan Institute scholar Avik Roy and colleagues, a 25-year-old male living in California and earning just $29,000 a year pays more than $1,140 more per year for health insurance due to the ACA. More broadly, the study analyzed the situation for childless, unmarried young men and found that "more than 90 percent of the subsidy-eligible population would face higher premium costs under Obamacare, even when you take the subsidies into account."

Let's look at the interests of young people realistically. Buying health insurance is not a priority for most young adults precisely because they are young and healthy. They have many pressing demands on their resources in furthering their educations, paying off student loans, raising families, and perhaps buying a home or starting a new business. We need to give young people the freedom to use more of their money as they choose.

There is a better path. Imagine a world in which young Americans are truly free to make their own health-care decisions. They are free to choose their own health insurance and buy it through less expensive competitive national markets. They can voluntarily join groups to buy the health insurance that best suits their needs. And they are guaranteed coverage at fair prices.

This health-insurance market would also give people a choice in the design of their health-insurance policies, prohibit denial of coverage by participating insurance companies, and allow young people to keep the coverage they now have or select a different policy from competing plans. But insurers would not be forced to discriminate against young adults, as they are in Obamacare, which requires insurers to charge the young at least a third as much as the old. And since we are envisioning all this happening in a real market, it would be feasible for insurers to profit by offering this insurance to young people.

Can this be done? Yes. To illustrate, let's start with a simplified case in which every young adult born in 1992 is free to select a comprehensive health-insurance policy to cover all non-elective medical procedures. They are able to select each January from competing plans on a health-insurance exchange.

The policies are personal and portable and likely have a deductible, co-insurance payments, and an annual out-of-pocket limit. Young people who decide to participate in any given plan pay the same premiums as anyone else in the Class of 1992 who made the same choice.

Companies can agree to postpone some or all of the premium payments for those who currently couldn't afford them. Arrangements even can be made for Americans to help the needy pay premiums through voluntary check-off boxes on their federal income-tax returns.

As time passes, the Class of 1992 continues to pay the same premiums as others of their age who choose the same insurance, and are guaranteed that they can have continuing coverage at these prices.

Insurance companies collect the premiums and process the claims. If they choose to, the companies participate in a national reinsurance pool that helps to even out their risk by sharing it. This "insurance for insurance companies" promotes a profitable environment for the insurance providers. That is, if one company's 1992-born group spends more (or less) on health care in a given year than the national average for this group, then it receives payment from the pool (or makes a payment into the pool).

Health-care providers are required to post their prices. Insurers keep costs down and service quality high because they compete across state lines for customers who are now much better informed and more engaged in their health-care choices. Deductibles and coinsurance create the incentive for consumers to care about costs. Information about volume of services provided can also be listed, plus other quality information. Competition among health-care providers forces their prices to be honest and low.

In some cases, a young person may be on a company health-care plan. A freedom-of-choice provision for the young lets them use as they choose whatever health-care dollars are available to them -- whether through employer contributions, private charity, or government subsidies. Our 22-year-old may keep whatever insurance he (or she) has, but he also has the option of taking the employer contributions devoted to his health benefits to buy insurance. If he saves money by buying from a nationally competitive company, he keeps the difference tax-free.

An important detail involves keeping our 1992-born Americans continuously insured. Penalties for lapsed coverage and open-enrollment periods are among the tools to accomplish this. Others are available.

The reality could be even better than this simplified description: Pools could be created for each age and gender grouping, coverage for elective medical procedures for those who want them could be made available by policy riders, policyholders could be allowed to select from a range of policy options involving deductibles, and the young could be allowed to choose the best for themselves of these options, with the resulting policies priced actuarially fairly.

The ability to buy insurance and to continue one's insurance without regard to preexisting conditions would be made a reality for young adults through the reinsurance feature and inducements to continuous coverage. As time passed, the arrangements just described could be extended with adjustments (such as high-risk pools) for groups involving those over the age of 35.

When good economics, good politics, and justice merge, we should pay attention. This is more than an adjustment at the margin; it is a transformative idea for our youth. And it is doable. It would totally reform Obamacare, put the young on the side of their true defenders, and start the process of forcing the rest of the insurance market and health entitlements to actuarial fairness and genuine competition.

As we look for new and better solutions, it would be good to start with the young.

Earl L. Grinols teaches in the Robbins Institute for Health Policy and Leadership, Baylor University, and is co-author of Health Care for Us All (Cambridge University Press, 2009).

One More Reason College Is So Expensive

Thomas K. Lindsay - January 19, 2015

Those familiar with the 1978 campus comedy Animal House will recall the line from John Belushi's character, Bluto, who, on learning that he would soon be expelled from the university, lamented, "Seven years of college down the drain!"

Today, the laugh may be on us -- or more precisely, on college students, their parents, and the taxpayers who help fund higher education. Why? Because "four-year college" today takes most students significantly longer than four years, raising still higher the cost of higher education.

As the college-bound public becomes more desperate over tuition hyperinflation and the concomitant ballooning of student-loan debt, it needs also to become more aware of this additional obstacle to college affordability. Accounts in the media recently have begun to call attention to this dynamic -- and to college students' relative obliviousness to the toll taken on their financial futures by failing to graduate in four years.

UCLA's Higher Education Research Institute conducted a national survey of college freshmen, finding that nearly nine out of ten believe that they will complete their bachelor's degrees in four years. But the odds against this are formidable. According to U.S. Department of Education statistics, today, fewer than half of all students succeed in graduating in four years. Worse, even after six years in college, roughly 45 percent of students still have failed to complete their degrees. Every semester adds to a student's total college bill -- and, for a growing number, to the student-loan debt they will acquire in the process. Delayed graduation also carries an opportunity cost: Every extra semester spent in college is another half-year of lost earnings.

According to one report, citing data compiled by Complete College America, "the average added cost of just one extra year at a four-year public university is $63,718 in tuition, fees, books, and living expenses, plus lost wages each of those many students could have been earning had they finished on time." The report also cites a study by Campaign for College Opportunity, which, looking at higher-education costs in California, calculates that "the average student at a California State University campus who takes six years instead of four to earn a bachelor's degree will spend an additional $58,000 and earn $52,900 less over their lifetimes than a student who graduates on time, for a total loss of $110,900."

Why do students saddle themselves with these additional expenses? A number of factors are at play. First, too many students, though intent on graduating in four years, nonetheless fail to register for a sufficient number of course each semester. The average bachelor's degree consists of roughly 120 credit hours, which means that, to graduate in four years, a student must take, on average, 15 hours a semester, every semester, for four years.

Such rudimentary calculations would seem easily to fall within the capacity of those who qualify to attend a four-year college, but, according to a story citing the findings of the education-consulting group HCM Strategists, roughly half of today's students fail to make this calculation -- or, if they make it, fail to act on it. HCM surveyed freshmen in Indiana and California who had indicated that they intended to graduate in four years. HCM discovered that only half of these students had signed up for the number of courses needed to reach their goal.

This failure to take the requisite number of courses points to the second factor explaining why students fail to graduate to graduate in four years -- faulty advising. As someone who taught in universities in the 1980s and '90s, I can testify that part of this failure owes to the fact that, at too many institutions today, full-time tenured and tenure-track professors do less student advising than they did in the past, if they do any at all.

In some cases, these advising functions have been transferred from the faculty to "professional advising offices." Although this move is intended to free up faculty time in order to allow professors to devote more effort to research, students have suffered as a result. Professors know better what the strengths and weaknesses of their advisees are, know better which professors and which programs are stronger and weaker, and, by virtue of their training, have a deeper understanding of which courses contribute best to a meaningful college experience. Doubtless such praise may overestimate the talents and motivation of some professors while underestimating those of professional advisers, but, as a former academic as well as a parent of four college students, I've experienced how deficient "professional academic advisers" can be.

Another factor explaining students' failure to graduate in four years has nothing to do with their intelligence or motivation, and everything to do with the failure of our colleges and universities to keep up their end of the bargain. At too many schools, even students who are willing and able to take the needed 15 hours a semester cannot do so, because the courses required for graduation are not offered with sufficient regularity to make a four-year stint possible.

"State budget cuts" are sometimes cited by universities as the cause for the dearth of course offerings, but this argument does not wash here in my home state of Texas. Statistics compiled by the Texas Higher Education Coordinating Board demonstrate that, from 2000 to 2010, state funding for public higher education did in fact decline -- 15.9 percent on an inflation-adjusted, per-full-time-pupil basis. However, during the same period, public-university fees and tuition collected increased 76.1 percent. In Texas, at least, the whole truth behind the "state-budget-cuts-made-us-do-it" half-truth is that there has been a mild decrease in state funding accompanied by a comparatively wild increase in university spending. Apparently, not enough of this spending is being used to ensure that a sufficient number of courses is offered each year to allow students to graduate on time. Those outside Texas would be well advised to investigate whether this scenario applies to their states also.

If justice delayed is justice denied, a bachelor's degree delayed is a bachelor's degree made more expensive. Students and their parents need to get the message, and universities need to devote more effort to making the "four-year degree" a practical reality once again.

Thomas K. Lindsay directs the Center for Higher Education at the Texas Public Policy Foundation and is editor of SeeThruEdu.com. He was deputy chairman of the National Endowment for the Humanities under George W. Bush. He recently published Investigating American Democracy with Gary D. Glenn (Oxford University Press).

Robert VerBruggen - January 18, 2015

President Obama wants to make community college free for everyone who can maintain a 2.5 GPA. Naturally, there's been some debate over when programs like this should be universal instead of targeted toward the poor.

But just how rich are community college kids anyway? This is hardly a cross-section of the general population: Many Americans don't pursue higher ed at all (a fifth of us don't graduate high school on time, and a third of high-school grads don't enroll in college the next fall), and 60 percent of those who enroll go to four-year schools.

Here are some numbers from a 2011-12 survey, which I pulled from the National Center for Education Statistics. For comparison, in 2012 the poverty line for a family of four was about $23,000, the median household income was just above $51,000, and the median income for a family of four was around $75,000

Two-year schools do have a higher concentration of poorer students, but there are plenty of middle-class and even wealthy kids there too. 42 percent of public two-year students come from parents who earn at least $65,000.

The NCES also has numbers relevant to that 2.5 GPA requirement:

Yikes.

Also worth noting: Obama's plan could change these numbers, for example by making community college an easier choice for kids who are too poor -- or too unmotivated -- to enroll today, or by giving students (and schools) an incentive to keep GPAs above 2.5.

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

Public-Sector Union Fixes for the States

Trey Kovacs - January 16, 2015

As states begin their new legislative sessions, lawmakers have many opportunities ensure that government works toward the benefit of the public, not the benefit of special interests like government-employee unions.

While labor law is not usually a top concern for the average citizen, it is key to controlling wasteful spending. In many states, government-employee unions -- which are private parties -- benefit immensely at taxpayer expense. Below are a few modest reforms that state legislatures should consider this year to ensure tax dollars are well spent.

Greater transparency is the first step toward making government more accountable to the public. While every state has some kind of law requiring that the public's business be performed in the open, these laws normally do not apply to collective-bargaining negotiations between the government and unions. In fact, the majority of states have little to no law relating to transparency in public-sector collective-bargaining sessions, according to a recent Goldwater Institute report.

As a result, most government collective-bargaining agreements are finalized in closed-door meetings. Taxpayers and the media should be able to attend collective-bargaining negotiations to ensure that the public's interest is being represented.

Moreover, open government is a political winner. For instance, last year, a Colorado ballot measure that proposed to open collective-bargaining negotiations at public schools passed with 70 percent of the vote. Other states should follow the Centennial State's lead.

Opening public-sector collective-bargaining negotiations to the public would bring attention to the wasteful provisions that unions frequently win, some of which should be banned outright. One such provision is union release time, during which public employees perform union business -- like contract negotiations, lobbying, attending union meetings, and defending members at disciplinary hearings -- while on the clock at taxpayer expense.

Release time is no more than a taxpayer-funded subsidy to government unions, with taxpayers receiving nothing in return. For example, the New Jersey State Commission of Investigation surveyed a number of state and local agencies and municipalities and found that, between 2006 and 2011, union release time cost New Jersey taxpayers more than $30 million. It also found that in a "recent one-year period, a limited survey found 88 government employees on full-time union leave at a total cost to taxpayers of more than $7 million." State lawmakers should pass legislation to end this abusive practice.

Automatic dues deduction is another provision that uses public resources to the exclusive benefit of government unions. Most state and local governments allow contract arrangements in which public employers collect dues payments -- including political contributions -- directly from employees' paychecks. Legislators should require unions to use their own resources to collect dues and political payments from their members.

Finally, state labor laws should require unions to stand for reelection every few years. The vast majority of public employees never had the chance to vote for the union that represents them, according to research by the Heritage Foundation. In general, once a government union organizes a public employer, it remains the exclusive representative of the workforce in perpetuity.

For example, in 1974 Florida enacted a law allowing collective bargaining in the public sector. "By 1975 the state's 10 largest school districts had unionized," notes Heritage analyst James Sherk. "Just 1 percent of current teachers were on the job in 1975. Fully 99 percent of the teachers in Florida's largest school districts had no choice about being represented by their union."

Only one state, Wisconsin, now requires union-recertification elections, as result of Governor Scott Walker's labor reforms. This newfound worker choice has been well-received by public employees in the Badger state. In 2013, the first year Wisconsin held union-recertification elections, 16,977 public employees voted against union representation, which amounted to government workers rejecting 81 unions.

Lawmakers in other states can adopt similar measures to protect worker choice. Regular elections would ensure the majority of union workers are represented by the union of their choice.

Freedom of association is a basic building block of democracy. State lawmakers owe it to their constituents to enact laws that provide public employees worker choice and ensure that the tax dollars financing public employment are well spent.

Trey Kovacs is a policy analyst at the Competitive Enterprise Institute.

Do USB Cables Need Regulation?

Eli Lehrer - January 15, 2015

Frequent travelers know the pain of being out on the road without the correct charging plugs for their phones and other electronic devices, just as parents know the difficulties of lacking the right cord to power up a child's video-game system or tablet.

In prototypically European fashion, the European Union's bureaucrats in Brussels have promised to address problems like these by regulatory decree. Under pending rules, all portable electronics sold in the 28-nation EU region must, by January 2017, use the "micro-USB" connector that's already the dominant standard for most smartphones, e-readers, and other devices.

The U.S. shouldn't follow suit -- but not for the reasons free-marketeers typically offer when arguing against regulation.

In some ways, the EU's plan appears inoffensive. Standardized connections likely will have some cost efficiencies, at least in the short term, both for device makers and for consumers. Free-market advocates are wont to point to the proliferation of "job-killing regulations," but it's hard to identify anyone likely to lose a job because of a rule like this.

Indeed, many of the purported negative consequences of regulation just simply aren't borne out in the data. According to surveys by the U.S. Bureau of Labor Statistics, employers blame regulations for fewer than 1 percent of all layoffs. This suggests the rosy projections of economic growth often offered by partisans of regulatory relief should be taken with an enormous grain of salt; deregulation simply isn't likely to create a significant number of jobs in the short term.

Moreover, much of what the regulatory state does is actually to codify ground rules that evolved from common sense and the wisdom of voluntary market institutions. Abruptly dismantling regulatory bureaucracies without serious plans to replace their beneficial functions -- food safety, basic environmental protection, enforcement of civil rights -- would almost certainly do more harm than good.

Rather than a full-bore attack on the regulatory state writ large, free-market advocates are better served to focus on where regulatory proposals most often come up short -- particularly in lawmakers and regulators' inability to anticipate unintended consequences.

Take the European USB regulations: While the micro-USB would have seemed amazing even a decade ago, it's only an incremental improvement over what came before it. Other port designs, like the "lightning" connector that Apple uses for most of its devices, can provide slimmer port openings and faster data transfer. According to many technophiles, not-yet-widespread USB-Type C ports and "universal connectors" are better still.

Even if these technologies aren't really superior, there's little reason to think that the EU's chosen standard represents the very best way that humanity will ever devise to charge and communicate with mobile devices. Mandating it as the only standard will, at best, retard progress, as there would be little incentive to develop something better.

Some regulations destroy jobs, some degrade services, and nearly all cost someone money. But the real cost of regulation is often unmeasurable, as it comes from shutting out the creative advances we never knew we were missing.

Eli Lehrer is president and co-founder of the R Street Institute.

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