Archive for January, 2011

Mandates For Thee, But Not For Me

Going over the latest list of HHS waivers to the new health care requirements, I notice both the Robert Wood Johnson Foundation and the Pew Charitable Trusts.  For those of you who listen to NPR even occasionally, these should be familiar names.

That’s right.  Two of the largest underwriters of the largest cheerleader for this turkey are getting a waiver from its requirements.  Wonder how that happened.

UPDATE: Also included, the SEIU Health & Welfare Fund, with its 1620 enrollees.  But I can understand.  They probably ran up a lot of injuries beating up people at Tea Party rallies.

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Kudos to Shawn Mitchell and Ted Harvey for voting against Ellen Golombek to head the State Department of Labor and Employment.  After all, it’s what she advocated when opposing Bill Owens’s appointment of Vicki Armstrong in 1999.

But the Denver Post story more or less missed the point.  Again.  Not all unions are created equal.  She headed up the state AFL-CIO, sure.  But that’s an organization that’s been declining in membership and importance for pretty my entire lifetime.  It did damage in its day, but can do far less now, given than less than 7% of the private workforce is unionized.  There’s a case to be made against unions in general, but that case has been already been won.

Golombek is far more dangerous because of her political strategizing as the SEIU’s director of government affairs, which goes completely unmentioned in the Post report.  Public employees can do valuable work, but their unions are designed to use your tax dollars to pick negotiating partners willing to make you work until 70 so they can retire at 55.

Colorado WINS’s efforts to unionize state employees have thus far been a bust.  Expect them to get a boost from political advocates with their hands on the levers.

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Selling The Cure For The Disease They’ve Caused

According to the New York Times, the federal government, apparently unhappy with drug companies’ productivity in the last 15 years, has decided to go into business for itself:

The Obama administration has become so concerned about the slowing pace of new drugs coming out of the pharmaceutical industry that officials have decided to start a billion-dollar government drug development center to help create medicines.

The new effort comes as many large drug makers, unable to find enough new drugs, are paring back research. Promising discoveries in illnesses like depression and Parkinson’s that once would have led to clinical trials are instead going unexplored because companies have neither the will nor the resources to undertake the effort.

The Times then goes on to note that, “drug companies have typically spent twice as much on marketing as on research, a business model that is increasingly suspect.”  NIH has long been involved in basic research, but this is the first time that the government will get into the business of actually developing and conducting clinical trials of drugs.

We’ll dwell for a moment – but only for a moment – on the Times’s, and by implication, the Administration’s, utter neglect of the possibility that the FDA’s culture of risk-aversion, insistence on testing for efficacy (as opposed to just safety), and the WTO’s failure to protect intellectual property have all contributed to a risk-aversion on the part of the drug companies.

But there may be something else going on here, too.  It’s entirely possible that we’re seeing a short-term phenomenon that’s being mistaken – or portrayed – as a long-term one.   In, City Journal (“Hooray for Blockbuster Drugs“), Paul Howard argues that the development of incremental improvements is a good thing. for a variety of reasons.  It’s certainly something that the regulatory regime encourages.  But aside from that, it’s the logical filling-out of major advances that came very quickly, based on basic research that was done much earlier.

Eventually, the diminishing returns from this sort of thing, and the increasing costs and uncertain returns of marketing them, should lead one or more major drug companies to take the leap and try to productize some of the results of gene-based research.  The first efforts are likely to be more risky and more expensive, and our current policies have probably exacerbated a reluctance to take large risks in a down economy by raising those costs, both certain and uncertain.

The worst part?  Paul Howard:

Some of these investments have been overhyped, but others will eventually produce breakthrough innovations, just as the investments of the sixties and seventies did. And when they do emerge, new technologies (including much more sophisticated diagnostics) will allow doctors to choose drugs for patients most likely to benefit from them. The advent of personalized medicine will also give companies powerful new marketing and pricing leverage. The size of the market for particular drugs may shrink—and drug companies may become smaller and more nimble to exploit fast-moving scientific discoveries—but insurers and governments will find it much more difficult to ration access to targeted therapies. (Emphasis added.)

Just at the time when the new drugs have the chance to democratize medicine in a way that the Internet has democratized political debate, the government is going to step in and make sure that doesn’t happen.

The $1 billion committed to the project so far is about 2% of what drug companies already spend on R&D.  It’s hard to believe that this is a better answer than lowering regulatory costs and uncertainties.

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The Revolution Eats Its Own

We may have to wait a little longer to start breaking China’s stranglehold on the world’s supply of rare earth metals.  Something called the Western Watersheds Project has filed a lawsuit to derail a solar project in San Bernadino County, and that same lawsuit may have the effect of shutting down a spur from an existing gas pipeline that Molycorp will need to power its mine.  The offended species?  Tortoises.

Concerning Molycorp, Connor pointed to an 8.6-mile pipeline proposed to carry natural gas to Mountain Pass for power generation. The so-called Mountain Pass Lateral will, if allowed, carry gas from an existing line owned by Kern River Gas Transmission Line near the Ivanpah Solar Project. “The lateral will pass by the Ivanpah Power Plant, the area where the tortoises are to be relocated, Connor said. “They were given no consideration.”

George Kenline, San Bernardino County’s mining geologist, who issues mining permits and other relevant county permits, praises Molycorp’s new direction. Once a major polluter, Molycorp, he said, “It (Molycorp) decreases the amount of impact because it eliminated the evaporation ponds,” which were a major problem before and have been completely removed from the new project.

Ironies about, the most obvious of which is the attack on a solar project by an environmental group.  But then, there’s the fact that the Watersheds Project is seeking to derail a mining operation that has completely changed the way in which is uses water, recycling almost all of its water and getting rid of evaporation ponds.  As well as the fact that the rare earths are used extensively in high-power magnets in hybrid vehicles, electric vehicles, and wind turbines.  Environmental groups, which enjoy specially-granted standing to file these sorts of suits, are now standing in the way of the kind of change they claim will save us all from catastrophe.  Revolutions do eat their own, after all.

Molycorp may have the permits to operate the mine, but it can’t do so without natural gas.  It’s further evidence that while a strategic stockpile of rare earths might be a good idea, the real solution is clearing away the regulatory underbrush that ties down useful projects in the first place.

In the meantime, engineers are trying to create high-power magnets that don’t use rare earths at all.  This is equally big news in the longer-term, but for the moment, as in so many other similar efforts, the problem will be scaling the magnets up to useful sizes, which may take years.  In the meantime, it would be nice to know that these new magnets are competitive in their own right, and not merely because the cost of their competition is being driven up by regulation.

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Ghosts of Constitutional Debates Past – Part III

So, a couple of weeks ago, we left the Constitutional debate with William Findley’s detailed, 22-point objection to the document.  The editors of the Library of America volume include a similarly detailed, point-by-point rebuttal, by an anonymous respondent under the pseudonym “Plain Truth.”  Some of his responses are weak, others are off the mark, but other score some points, and it’s interesting to see which are which.

Two of the themes that evolved early on were the lack of a Bill of Rights, and the stability of the tension between the states and the federal government.  While the concern is among the most serious, the argument here back and forth is among the weakest, in part because of the lack of historical reference points.  The Dutch and the Swiss had federal republics, but they were small, and the great threats came from outside, not inside.  The Roman Empire – always a point of reference – was more useful is worrying about the concentration of power in the executive, a completely different mal-distribution of power.

But the question of whether or not the tension between the states and the federal government could be maintained, or would eventually either consolidate or fracture the Republic, is one that has to be conducted almost entirely in hypotheticals.  It makes for a debate that we can evaluate in retropect, but one which must have been frustrating for those who weren’t committed to one side or the other.  The federal-state split also manifests itself in odd ways.  One letter in opposition to the Constitution, a “Letter from An Old Whig,” argues that the amendment process is too cumbersome, and that either no amendments will ever pass, or the country will tear itself apart trying to pass them.

Oddly, the debate between Findley and the rebuttal on this point could be about slavery – but isn’t, at least not in the way we think of it later.  Findley objects that Congress can’t ban the slave trade until 1808, and his respondent says that he agrees this is too long, but since the matter can’t be much worse than it is now, maybe at least by then it will be better.

The question of a Bill of Rights is rebutted with much the same logic that Wilson used in his original speech defending the new Constitution: it isn’t necessary, since we assume that Congress’s powers are exclusive, while state constitutions are inclusive.  Findley’s objection isn’t that this is wrong, but that he doesn’t trust that the Framers really mean it, or that future generations will live by it.  The debate over the Banks of the United States would show there was some real risk on this point, but even that debate was carried on with the assumption of enumerated power, that the burden of proof was on the Bank’s advocates.

And for you 2nd Amendment fans – and who among us isn’t a 2nd Amendment fan – there’s the response to Findley’s worries about a standing army.  “Plain Truth” claims that a standing army shouldn’t be a concern, since every man is a member of a militia, and what standing army could pose a threat to that?  For those of you who think that guns are only for personal defense, consider that long and hard.

Two other points about the tenor of the debate stand out, as well.  There’s another letter from Cincinnatus which reads like a blog screed.  The “Old Whig’s” letter starts off professing that he really wants to be persuaded of the Constitution’s goodness, at least as an experiment.  It’s not apparent whether he’s sincere, or is the Revolutionary Era equivalent of a seminar caller.  The “Plain Truth’s” point-by-point refutation reads like an expert Fisking.  In short, this is what robust, healthy political debate looks like.

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We Could Start By Repealing ObamaCare

President Obama claims in this morning’s Wall Street Journal to want to reduce the regulatory burden on American business, and so has ordered a review:

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.

I can remember hearing this sort of thing from every President since Jimmy Carter.  You’ll note that the government is now considerably larger, more restrictive, and more intrusive than it was 35 years ago. Their failure is, in part, explainable by the nature of bureaucracy.  Agencies fight interminable turf wars, and any attempt to systematically get them to play well together is doomed to failure.  The FCC, for instance, insists on trying to regulate the Internet even in the face of specific Supreme Court decisions denying them the authority.  Imagine how much more combative they are when the only opponents are other bureaucrats.

Philip Howard in his classic, The Death of Common Sense, notes how the USDA requires floors in certain food operations to be clean, while OSHA requires them to be dry.  Good luck with that one.

The EPA has become a mini super-government unto itself, its authority reinforced by the automatic standing that many professional environmental lobbying groups have to bring suit on behalf of, “the environment.”  Aside from trying to limit our breathing, ot currently is preventing the Border Patrol from patrolling parts of the border, meaning it’s exercising control not only over every aspect of manufacturing, it’s arrogating the right to regulate other federal agencies.

The FDA has tried, and will no doubt try again, to use price as a measure for approving medicine.  As the president professes to be worried about medical innovation.

Of course, regulation isn’t even the major retardant of economic growth – government spending is.  Obamacare amounts to a gigantic increase in the percentage of GDP explicitly devoted to government spending.  The so-called stimulus hasn’t even been spent yet, largely because the same government didn’t know that there was no such thing as a “shovel-ready” project.

Coming after a miserable electoral repudiation of his policies, Obama’s comments recall President Clinton’s 1995 State of the Union Address.  Realizing that he wouldn’t be able to push through large pieces of legislation, he famously declared that “the era of big government is over,” and embarked on a program of increasing regulation.  Obama realizes much the same thing, but also recognizes that it will take years for bureaucracies, new and old, to absorb their new powers under Health Care reform, financial regulatory reform, and his expansive readings of executive authority.

Either Obama realizes this, and knows that he can give the appearance of understanding the problem without really giving substantive ground, or he doesn’t really understand the problem.

The subhead on his oped reads, “If the FDA deems saccharin safe enough for coffee, then the EPA should not treat it as hazardous waste.”  Maybe we can get him to do the same thing with carbon dioxide.

If the FDA deems saccharin safe enough for coffee, then the EPA should not treat it as hazardous waste.

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Caution on Rep. Giffords

Reports are that Rep. Giffords could be released from the hospital as soon as this week.  While certainly good news, we should be aware that so far, almost all the assessments have from physical neurologists.  Being able to follow commands, recognize people, move limbs, really are the least of it.  We have no idea what cognitive impairment may have resulted, and won’t until the psychological neurologists start examining her, and working through her rehabilitation.  This was a massive trauma, and often, apparent people who’ve suffered from such can mask serious neurological issues.

Obviously, everyone wishes her and her family the best, and in fairness to them, we shouldn’t allow our hopes to cloud our expectations.

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Slipshod Reporting on Rare Earths & Solar

The Denver Post this morning reports that a lack of rare earths may be inhibiting the domestic solar cell industry.  How this is so, they never quite describe.  There’s no calculation, for instance, of what percent of a solar panel’s production cost comes from rare earths.  Possibly, this is because rare earths aren’t actually used in the production of solar cells.  According to a DOE study on strategic materials, solar cells use indium, tellurium, gallium, and maybe soon, selenium, none of which is in the lathanide series of rare earths.  A briefing by the Rare Earth Industry Trade Association on the importance of rare earths to green energy applications doesn’t mention solar at all.

By coincidence, the New York Times this morning ran a piece on why solar panel manufacturers are relocating to China, and it seems that the reason has nothing to do with rare earths, which aren’t mentioned at all, and everything to do with our willingness to take the place of Germany and Spain in directing massive subsidies to the panels’ production.  And in spite of our increasing mandates on so-called renewable energy as a source of electricity, it’s also not clear that we’ll be willing to force utilities to pay the exorbitant rates necessary to make large solar arrays profitable.

That, not the absence of a local rare earth supply, is what’s threatening a domestic solar industry.

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I Volunteer Cheri Jahn

Governor Hickenlooper has deservedly won praise for his idea of a “regulatory impact statement” for new regulations.  Such a statement would estimate the costs to business of new regulations, and be a good step towards an actual cost-benefit analysis of new rules.  Legislative Council already does something similar in the form of fiscal notes to new legislation.  (Such a statement would only really be of use if the processes for determining the costs were as open as the results; it might be all to easy for a bureaucracy to game the system, or for large businesses to underestimate the costs to smaller competitors.)

So it was particularly interesting to see the following statement in this weekend’s Denver Business Journal from State Senator Cheri Jahn:

“When legislation comes through, the very first thing I am going to look at is:  How will it effect my business and my ability to operate and to expand and to maintain what I am doing.”

“And if it is going to hurt me, I am not going to support it.”

Leaving aside the furor that would erupt if a Republican were to have said this – maybe only Jahn can go to China, so to speak – the sentiment is fine one.

Sen. Jahn serves on the Business, Labor, and Technology Committee, which has a 4-3 Democrat majority.  If she really wants to have the information necessary to make the calculation she claims to want to make, perhaps she could sponsor the legislation required to make this happen.  If she can’t be persuaded to do that, perhaps Sen. Shawn Mitchell could get her to vote for it.  If it were to pass committee 4-3, it would certainly Senate Democrats in a bind on a floor vote.

As for the House, in the past, Democrats have balked at even estimating the cost of new health insurance mandates.  This year, they wouldn’t have the votes.

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Isenberg Doesn’t Run

According to the Denver Post, Sage Hospitality CEO Walter Isenberg has decided not to run in the upcoming Denver mayoral election.  Isenberg would probably have tried to use the route that Hickenlooper pioneered: businessman who knows how to create jobs and understand financials.  It would have been unique in this field of candidates, with all the other major candidates coming directly from government.  There has been some discussion about the Denver Republican Party supporting a candidate for mayor this cycle, and Isenberg would have been probably the best thing we could find in Denver.

As it stands, Michael Hancock will likely pick up a fair amount of Republican support, and James Mejia will be able to run as the only candidate with recent executive experience, albeit entirely governmental.

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