Governor Reynolds supports crony capitalists.

Governor Reynolds has proposed legislation to make, “…biofuels the clear choice for Iowa drivers…”, by mandating a minimum of 10% ethanol in all gasoline and 11% biodiesel in all diesel fuel sold in Iowa.  (See link to Register report below.)  If her proposal becomes law, it would make biofuels the clear choice – because then there would be no other choice.

This is a shining example of how government works when a law or regulation has concentrated benefits and dispersed costs.  Those who receive the concentrated benefits, (in this case farmers and biofuel producers), will lobby heavily to get their benefits, while the cost to any individual is so small that it doesn’t justify the time or money to lobby against the legislation.  Then, those who receive the benefits become dependent on them and continue to lobby to ensure that the benefits never come to an end. Don’t call it free-market capitalism.  It’s called crony capitalism.  

Link to Register report – printed 1/27/21:  https://www.desmoinesregister.com/story/money/agriculture/2021/01/26/kim-reynolds-plans-require-10-ethanol-11-biodiesel-iowa-fuel/4259109001/

Money grab by States in anti-trust suit against Google.

As reported in The Des Moines Register, Iowa has joined 37 other states in an anti-trust suit against Google for discriminating against other search engines. (See link below.)

The purpose of anti-trust action against any company should be the protection of consumers, not the protection of competing businesses.  If consumers are not harmed, which is the case here, then anti-trust action should not be taken.  I have a strong feeling that the State governments joined this lawsuit in order to share in the billions of dollars of penalties or settlement – a money grab from a deep pocket.

Why should Google be forced to list links to other search engines in the results of their Google searches?  Why shouldn’t Google be allowed to pay smart phone makers to make Google the default search engine – which helps to reduce the cost of cell phones?  Where is the harm to consumers?  In fact, Googles actions arguably help consumers.

Link to Register report: https://www.desmoinesregister.com/story/news/crime-and-courts/2020/12/17/google-antitrust-lawsuit-iowa-joins-case-with-38-states-over-internet-search-and-advertising/3939064001/

Trump is wrong on his nationalist, anti-international trade policy

Below is the link to an excellent article by Eric Boehm from Reason magazine’s August/September issue.  It gives specific evidence that shows how international trade makes us safer in a world-wide pandemic rather than the opposite.  There is a knee-jerk reaction when we have shortages to assume that we would be better off if we did not depend on other countries for our various needed products.  This essay shows that the facts indicate otherwise.

link to Reason essay by Eric Boehm:  https://reason.com/2020/07/11/trumps-trade-war-made-the-pandemic-worse-and-nationalism-will-slow-the-recovery/

Transportation efficiency means more that just cost per passenger mile.

In a letter to the editor in The Des Moines Register, Lauren Lasswell asked, “Why do we support a transportation system that’s incredibly inefficient?”  (See link below to Lasswell’s letter published 8/14/20.)  She advocated for more public mass transit.  She wrote, “…the gas and money saved… would be astounding.”  She does not account for the fact that the vast majority of roads are paid for by fuel taxes and vehicle registration fees, much of which would go away if people moved away from passenger cars to mass transit.  Also not mentioned is that our freely made individual decisions make it clear that most people prefer the convenience and time saved by using their own passenger car to go quickly and directly from any place to another.

Our ability to pay for prescription drugs is not unlimited!

I agree with John Stanford’s essay in the Wall Street Journal today that controlling drug prices would slow biomedical innovation and and research.  (WSJ 7/2/2020 – see link below.)  When you spend less money on anything you will get less of it.  But that’s okay.  Today, we get more drug research and innovation than we want to pay for.
Most drugs approved by the FDA are required by law to be covered and  paid for by Medicare and Medicaid regardless of price! Many are required by law to be covered and paid for by private insurance companies regardless of the price!  This is true even when the drug provides little or no improvement over other existing approved drugs!  Under such a situation we, of course, get maximum research and development.
If we did the same for space exploration, we would probably already have colonies on Mars.  If we did the same for climate change, we would probably already have that problem solved.  The point is that development of new prescription drugs is not our only priority, and our ability to pay is not unlimited.
We don’t have anything close to free market capitalism in the prescription drug market in the U.S.  Government is already very involved, mostly providing subsidies, protection from competition, and other benefits to drug manufacturers.  It is not unreasonable to set a drug price ceiling that is 20% higher than what is being paid by Australia, Canada, France, Germany and Japan.  We can always make special exceptions for something like a vaccine against the Covid-19 virus.
Link to John Stanford essay in WSJ:

https://www.wsj.com/articles/price-controls-would-throttle-biomedical-innovation-11593625880?mod=searchresults&page=1&pos=1

Patents should be more restricted, not liberalized.

I disagree with Paul Michel and Matthew Dowd, (Wall Street Journal, 1/24/2020, link below), that our patent laws do not give adequate and clear protection to inventions.  Conversely, we have become too liberal in both what is allowed to be patented and the length of time that patents are granted.

They urge the reversal by Congress of the Supreme Court of rulings that prohibit the granting of patents for “abstract ideas” and “natural phenomena”.  Abstract ideas, like mathematical formulas, computer code, or simple ideas drawn on paper, and natural phenomena, like the discovery of particular DNA or naturally occurring chemical compounds, should not be patentable.

Originally, U.S. patents had a maximum life of 14 years, then 17 years, and then 20 years.  Companies that earn billions of dollars in profits every year on their patents are very willing to spend many millions of dollars to lobby congress to extend their monopolies.  Who spends money lobbying to reduce the term of patents?  Shouldn’t the term of monopoly protection granted depend in part on how much it costs to meet government regulations related to the invention?  For example, prescription drugs may deserve a long patent term because of the cost to meet government regulations.  But there is no logical reason why all patents should be granted for the same length of time.  (Design patents are granted for shorter periods, but why should they be granted at all?)

The concept of “intellectual property” is man-made.  Since time immemorial, humans have copied one another.  For millennia legally protected private property was limited to physical property which could only be possessed by one person at a time.  Ideas can be possessed by many people at the same time without infringing on the physical property of others and without the use of force.  Monopolies, including the exclusive use of inventions, were originally granted by Kings to favored subjects through the use of force.  Our government protects patents through the use of force.  Contrary to the Founder’s intent, some patents appear to slow innovation rather than encourage it.  The case can be made that no patents should be granted.  In this case, Congress should expand patent protection.

Link to Wall Street Journal opinion:

https://www.wsj.com/articles/americas-innovators-need-clear-patent-laws-11579824646

Open letter to our federal legislators – please try to balance costs and benefits during this pandemic!

An open letter to our federal representatives  (I emailed this to my three federal representatives:
As you consider how much the federal government should spend in response to the current pandemic, please consider the following:
One trillion dollars equals about $3,000 per person for every man, woman, and child in the U.S., or about $12,000 per family of four!  Please be careful not to spend our tax money on anything that is not needed and not directly caused by the pandemic.  Specifically, there should be no money spent on the following:

  • Seniors and others on Medicare, disability, pensions, and other fixed incomes – they will continue to be paid.
  • People who have had no reported W-2 earnings during the past year – since they have been getting by on unearned income
  • People who have household earnings around or over $75,000 per year – they qualify for unemployment benefits.

Don’t give grants, but make low-interest rate loans available.  We can decide later whether or not to forgive any loans.  Don’t allow unrelated “riders” on any pandemic response bill.  For example, don’t’ forgive student loans, don’t add any permanent employer mandates such as child care, sick pay, paid family leave, etc.  Watch out for and deny other special-interest legislation trying to take advantage of this crisis.

Please try to balance costs versus benefits.  We have lived normally with the flu killing tens of thousands of U.S. citizens every year.  I am a senior – age 66 – and I don’t need any bailout.

Iowa needs to eliminate licensing laws and regulations that protect existing practitioners rather than their customers.

I agree with Valerie Stallbaumer in her letter to the editor in The Des Moines Register, (See link below), that the purpose of professional licensing requirements by government is to help protect the public from harm.   I disagree with her that it also is to guarantee quality. Safety issues are usually objective: we know pretty well what kind of things can hurt people.  Licensing should assure us that the licensed person knows and follows safe procedures.  But for many licensed professions, quality is subjective. If acupuncture is not effective for some people, what is the harm as long as they don’t get an infection?  The only reason I can think of why government would require a four-year program for acupuncturists is that acupuncturists and their schools lobbied for licensing to protect themselves against competition and to appear more professional.  Acupuncturists, physical therapists, tattoo artists, and ear piecers probably can learn proper safety procedures related to “needling” in just a few days.  We do need a complete review of licensing requirements and regulations in Iowa to eliminate those that prevent competition rather than protect people.

Price gouging can be a good thing.

Sometimes, price gouging can be a good thing.  If there is a sudden surge in demand for something, say face masks or hand sanitizer, is it better to keep prices low and encourage hoarding that can result in complete outages, or is it better to let prices go up as the market demand allows to discourage hoarding and encourage rapid increases in production?  Why would businesses pay for overtime, or expedited shipping, or other higher costs to quickly increase supplies if they are not allowed to increase prices?  There are certainly extreme situations where price gouging would be considered by most people to be immoral.  (For example, it would clearly be immoral to charge $1,000 for a glass of water to a person dying of thirst when you have plenty of it.)  But there are many other situations where allowing prices to go up significantly and quickly helps to make vital products available for important purposes to more people more quickly.  Private efforts to keep prices low and to prevent hoarding in an emergency are to be commended, but be careful before you call for laws or regulations to prevent price gouging.

No end to subsidies for favored industries?

The $1 per gallon tax credit for biodiesel producers just passed the U.S. House and appears likely to become law.  The credit, which expired at the end of 2017, will be extended retroactively 2 years and forward for 3 years through 2022.  This tax credit started in 2005.  How long must the welfare continue?  Biodiesel producers are no different than most other businesses and industries in that they become dependent on subsidies and lobby heavily to prevent the subsidy from ever ending.  We need to pass laws that phase out all forms of energy subsidies, as well as subsidies given to other favored industries.  We need free-market capitalism, not crony capitalism.

Link to related Register report:  https://www.desmoinesregister.com/story/news/2019/12/17/spending-bill-includes-long-sought-biodiesel-tax-credit-renewal/2677476001/