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Deregulation
By any objective measure, the rollout of broadband services to the country is going phenomenally well, and is largely being done with private capital and without involving taxpayer dollars. As you might expect, broadband providers have focused on areas where demand and market forces sufficiently incentivize private network companies. But there obviously remains the problem of areas where, for reasons of geography, population density, or other issues, making a business case for deploying broadband is a challenge.
The Federal Communications Commission (FCC) is about to reveal it’s recommendations to Congress regarding a National Broadband Plan. As part of the FCC’s efforts, they have solicited ideas from the public on what should be the elements of the plan.
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In the federal government, regulators are not directly accountable to the electorate. While an elected official must account at every election for their actions, typically regulators, such as FCC commissioners, are appointed by elected officials and hence do not answer directly to the people.
This simple fact may explain the FCC’s seeming determination to assert increased government control of the Internet, or at least the belief by pro-government control activists that the FCC deliver their agenda on a silver platter.
Years ago, the FCC determined broadband would be regulated as an “information service” rather than a “telecommunications service.” So, the FCC decided, and later the Supreme Court agreed, that broadband is not to be burdened with antiquated “common carrier” regulations, rules created in 1934 to impose heavy government control of the then monopoly telephone system. Read More...
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In testimony March 8 before the United States Senate Banking Committee, New York Insurance commissioner Eric Dinallo said he isn’t opposed to federal regulation of insurance; its giving insurance companies the option to choose federal regulation over state regulation that he opposes:
I can have a serious conversation about a federal regulator. My view is it shouldn’t be an optional federal regulator…you shouldn't be able to choose the regulator. I'm not steadfastly against any federal involvement in insurance regulation. I feel very uncomfortable about optionality (sic).
A careful examination of Dinallo’s argument reveals that his opposition to allowing insurance companies the same option banks have to choose which level of government regulates them is really all about protecting states’ current regulatory monopoly over insurance regulation, not about achieving the optimal regulatory arrangement. Read More...
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In this weekend’s San Angelo Standard Times, IPI senior research fellow Bill Murchison discusses the re-regulation of Texas electric utilities.
A study by a coalition of Texas municipalities - the Cities Aggregation Power Project, whose members include San Angelo, Odessa and Abilene - says the state needs "meaningful reform" of its electric deregulation policies to compensate for what it calls generally higher electricity prices since deregulation began 10 years ago. The power industry responds that the Texas Electric Choice Act of 1999 is achieving what it was meant to achieve - the replacement of regulation with "fierce competition" that not only enhances investment in new power sources but maintains downward pressure on prices. Read More...
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IPI senior research fellow writes today in the Waco Tribune Herald:
“A study by a coalition of Texas municipalities — the Cities Aggregation Power Project, whose members include Robinson and Lorena — says the state needs ‘meaningful reform’ of its electric deregulation policies to compensate for what it calls generally higher electricity prices since deregulation began 10 years ago.
The power industry responds that the Texas Electric Choice Act of 1999 is achieving what it was meant to achieve — the replacement of regulation with “fierce competition” that not only enhances investment in new power sources but maintains downward pressure on prices.
Who’s right?”
To read the full op/ed, please visit the Waco Tribune Herald online. Read More...
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A study by a coalition of Texas municipalities—the Cities Aggregation Power Project—says the state needs “meaningful reform” of its electric deregulation policies to compensate for what it calls generally higher electricity prices since deregulation began 10 years ago.
The power industry responds that the Texas Electric Choice Act of 1999 is achieving what it was meant to achieve—the replacement of regulation with “fierce competition” that not only enhances investment in new power sources but maintains downward pressure on prices.
Who’s right?
A good way to think about the perpetual problem of energy prices is to recall that price regulation is a game governments play in order to appear protective of voters who also happen to be consumers.
Government just thinks it knows a commodity’s right price. Read More...
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IPI senior fellow Dr. Lawrence Hunter will appear Thursday morning on Ft. Lauderdale’s WFTL Morning News.
Tune in live at 7:40 am EST as Hunter explains to host Russ Morley how consumers may be impacted by news of State Farm’s departure from the Sunshine State’s homeowners insurance market. Read More...
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IPI senior fellow Dr. Lawrence Hunter appeared today on the “Burnie Thompson Show,” heard in Northwest Florida on WYOO-Panama City, to discuss how homeowners will be impacted by the departure of State Farm from the Florida homeowners insurance market.
To listen to the full half-hour interview, click here. Read More...
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IPI senior fellow Dr. Lawrence Hunter will appear on Panama City’s “The Burnie Thompson Show,” to discuss how Florida homeowners will be affected by the departure of the Sunshine State’s largest property insurer.
To listen live, tune in from 7:00 to 7:45 am CST to NW Florida’s WYOO 101.1 FM, or click here to listen live online. Read More...
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In a new op/ed featured today in the South Florida Sun-Sentinel, IPI senior fellow Dr. Lawrence Hunter writes:
"Two years ago, Gov. Crist dared insurance companies to leave Florida if they couldn't do business under regulations that essentially forced them to lose money. Last week, State Farm Insurance Company, Florida's largest writer of homeowners' insurance, announced it is going to discontinue writing homeowners' policies in the state.
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IPI senior fellow Dr. Lawrence Hunter will appear Friday on Florida’s “The Marc Bernier Show” to discuss what’s caused State Farm Insurance to leave the Florida homeowners insurance market, and what the impact will be for consumers.
To catch the discussion, listen live online at 5:35 pm EST at http://www.wndb.am/. Read More...
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The last time an American president dared someone to "make my day," he and the American people lived to regret it. Now, the governor of Florida is reaping the whirlwind, and Floridians are suffering, for his challenging insurance companies two years ago to make his day by pulling out of the Sunshine State. He found it detestable that they might want to flee a state that was forcing them to write actuarially unsound homeowners' insurance policies and face financial ruin if they continued doing business in the state.
Governor Crist blustered: "When these insurance companies threaten us with this "We're going to leave your state stuff,' we say, 'Go ahead.' We don't need that kind of business in Florida."
The governor's bravado rings hollow today. Yesterday, State Farm Insurance Company, Florida's largest writer of homeowners' insurance (933,000 policyholders) announced it is going to discontinue writing homeowners' policies in the state.
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In a new op/ed featured today in the DC Examiner, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson write:
“Everyone’s favorite New Year’s resolution (aside from “quit smoking”) is to get thin, slim, or at least less fat. Statistics show that will power is in rare supply, but good intentions abound.
If good intentions can’t cut it, how about a kick in the rear from your government? Our politicians have many plans to help you lose weight. San Francisco Mayor Gavin Newsom proposed (not enacted) taxing soft drinks on anti-fat grounds, and New York’s Governor David Paterson counts on similar Cola-revenue in this year’s budget.
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The so-called "stimulus" bill that came out of the House last week contains federal subsidies for companies that will use the money to rollout broadband networks to areas determined to be under served in some way. Many of these companies are salivating at the prospects of these subsidies, and many of these companies are my friends. I like companies that are in the business of providing broadband access, and are constantly rolling out new products and services, higher speeds, and doing it all through market processes and with their own money. These are the champions of the information age, in my opinion, and I vigorously defend them against government and activist attempts to regulate their businesses and dictate their business models. Read More...
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In the January 12 edition of Forbes magazine, Dr. Merrill Matthews, resident scholar with the Institute for Policy Innovation, discusses why India’s economic policies have led to the nation’s shortage of vitamin C.
Matthews writes:
“The Times of India reports that the country is facing a growing shortage of vitamin C. The reason? The Indian government imposed price controls on the vitamin in an effort to make it more affordable. But pharmaceutical companies making vitamin C tablets have seen the cost of the raw ingredients soar by 300% or more. That means it's costing the companies more to make the tablets than they can charge for them. So they've quit making them. While that vitamin C shortage may not affect the U.S., the economic policy behind it could. Democrats in Congress think price controls will lower the cost of prescription drugs here. Read More...
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In a new op/ed featured in American Spectator online, IPI director of entitlement and budget policy Peter Ferrara discusses what free market conservatives should now do with the dawn of the New Year.
Ferrara writes:
“…We don't need a lot of new ideas here. Our substantive agenda is intellectually well developed and sound. And a lot of the supposed new ideas for conservatives we are hearing about these days are not good.
The fundamental theme for conservatives is freedom and prosperity, including the freedom for those who believe in traditional religious and moral values to live their lives in accordance with those values. For long-term political success, the emphasis needs to be on economic growth, because that is what moves conservative political support from the mid-40s toward 60%, enough for a governing majority.
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If ever there was a real world example that puts the lie to arguments against regulatory competition and in favor of regulatory centralization, Bernie Madoff's Ponzi Scheme did. As Wall Street expert Pam Martens puts it:
"Naturally, the Madoff money trail of special favors and exceptions leads straight to Washington. From 1998 through 2008, Bernard L. Madoff Investment Securities paid $590,000 lobbying Congress and the SEC, according to the Center for Responsive Politics. His lobby firm for most of those years was Lent, Scrivner & Roth, with Norman F. Lent III signing the disclosure documents in the House and Senate. One of Madoff's hot button issues during those years according to the disclosure documents was getting a single regulator. Read More...
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IPI director of entitlement and budget policy Peter Ferrara is featured with a new op/ed in American Spectator discussing the ailing U.S. auto industry, entitled “Big Three Weekend at Bernie’s.”
Ferrara writes:
“Washington is not bailing out the Big Three automakers. It is nationalizing them. Wake up and smell the coffee. Who do you think is going to be designing the next generation of auto products from these companies? The corporate leadership or the Congressional leadership? After being rescued by billions and billions in government handouts, will the car companies be able to deny Congressional bigwigs anything they want in the design of their cars? Fuel economy standards, hybrid technology, electric cars, cars that run on ethanol, natural gas, switch grass, Bermuda grass, fine Colombian weed. Read More...
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IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens Laurson are featured today on the dangers of economic protectionism in Atlantic Community.
Pieler and Laurson write:
“The first dangerous results from governmental overreaction to the financial crisis are beginning to show. Bailout bills have counterproductive effects as political pressure is even brought on institutions that do not need the governmental help. Following protectionist approaches could lead to a harmful and tragic economic outcome. Last month we wrote about the dangers of the well intended and plausibly-argued necessity for government intervention into the banking sector. The salient danger we cited was "[o]verreaction and overregulation. Read More...
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IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson discuss how Big Brother is bent on regulating noise throughout Europe in a new op/ed featured today in Forbes.com.
Pieler and Laurson write:
“The European Union is currently drafting a new map. It is surveying the continent for egregious noise--from street-level sounds to industrial bangs to echoes from neighbors. Big Brother, you might say, is listening. And while the E.U. is embarking on this project with excellent intentions, its drive to eradicate excess noise altogether has even dampened the music coming from Europe's concert halls. Read More...
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Markets do not fail spontaneously except in the rarest and most extraordinary circumstances; it is bad government policy that makes markets fail. Our current economic distemper is no exception. It is a direct consequence of the worst monetary policy since the Great Depression and a myriad of morally hazardous policies (e.g., Government Sponsored Enterprises such as Fannie Mae and The Community Reinvestment Act) that first sent financial markets soaring on a gale of excessive credit expansion and dollar devaluation and than sucked them into a tailspin with a down draft of credit contraction and abrupt de-leveraging.
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| IPI director of entitlement and budget policy Peter Ferrara writes in National Review Online today about the judicial landscape under the policies of an Obama administration. Ferrara writes: “The issue of judicial philosophy has been mostly overlooked in this campaign, but the differences between the two candidates are stark: Obama has the most left-wing position of any presidential candidate in U.S. history. Obama has said he would appoint Supreme Court justices like Ruth Bader Ginsburg and David Souter, two of the most liberal judges ever to serve on the Court. (Before her appointment, Ginsburg had served as general counsel of the American Civil Liberties Union, and as a member of the ACLU Board of Directors.) He openly criticized Justice Clarence Thomas. He said he would never appoint someone like Justice Antonin Scalia. Read More...
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When it comes to insurance, “the era of re-regulation is upon us,” warns IPI senior fellow Dr. Lawrence A. Hunter in a brand new op/ed featured in Insurance Journal.
Hunter writes:
"Although the nation's attention is focused on the financial crisis it is worth thinking about how this mess will affect attitudes toward government intervention. The July issue of The Atlantic magazine, published before the meltdown began, looks at the ‘11 1/2 Biggest Ideas of the Year.’ The return of regulation is one of them. After nearly three decades of growth-enhancing deregulation and regulatory reform, The Atlantic observes, ‘a major rethink is underway. ... Regulation is back.’ Not only is regulation back in vogue, but regulatory competition also appears to be on its way out of fashion…”
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The continuing collapse of financial markets has distracted attention from the prime mover in the evolution of the crisis: Lehman’s collapse, which in turn caused AIG to stumble at the precipice, the vibrations from which set off the avalanche.
As Paul Hoffmeister of Bretton-Woods Research wrote to me in a private email:
AIG collapsed because it sold CDS's [credit-default swaps] on a Lehman (LEH) bankruptcy or default; in other words, it sold insurance to other firms in case LEH would ever go bankrupt or into default. The LEH bankruptcy happened over the September 13-14 weekend. Take a look at the stock chart of AIG & LEH, both steadily decline into that weekend and then fall off the cliff Monday, September 15. Because of the new "precedent", that major financial firms were going to be allowed by the Fed & Treasury to fail, CDS prices sky-rocketed that Monday morning and the next 4 weeks. Read More...
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After refusing to regulate credit-default swaps as insurance products, the state of New York finally, in the wake of AIG’s failure, has begun planning to regulate these complex financial insurance instruments. However, on Tuesday, the superintendent of New York’s state Insurance Department, Eric Dinallo, told the U.S. Senate Committee on Agriculture, Nutrition and Forestry that he also would welcome federal regulation of these complex financial insurance products.
Dinallo told committee members of his state’s difficulty in understanding the wide exposure and nationwide financial interconnections created by complicated financial insurance products such as the credit-default swaps that brought down AIG. He said he would welcome federal regulation of this insurance activity.
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| IPI director of entitlement and budget policy Peter Ferrara is featured today with a new op/ed in National Review Online discussing the truth about deregulation and today’s financial crisis. Ferrara writes: “Not all deregulation hurts, and not all regulation helps. Republicans and Democrats alike supported a 1999 deregulation that has actually made this crisis easier to handle, for example… The aforementioned 1999 legislation, pushed through Congress by then-Senate Banking Committee Chairman Phil Gramm, repealed the 65-year-old Glass-Steagall Act. In late September, Obama was blasting Gramm as “the architect in the United States Senate of the deregulatory steps that helped cause this mess.” Read More...
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The American people are being asked to spend an incredible amount of money and to yield unprecedent powers to the federal government in order to stave off a liquidity crisis being predicted by people we don't trust.
In our own lives, we expect to suffer the downside of risk and markets, and we are suspicious that politicans are climbing over themselves to insulate the well-connected from the natural consequences of their actions.
Further, we know that, if a massive federal bailout package becomes reality, the well-connected and the powerful will find ways to game the system and enrich themselves and the people they attend the opera with, all at the expense of working Americans who will pay the bill.
Further, we know that this is only the first of several such bailouts that we will be expected to fund because of the failure of our elected officials. Just as Congress and the White House have been warned for decades about Fed policy, GSE risk and Read More...
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IPI director of entitlement and budget policy Peter Ferrara will appear live Thursday morning at 10:33 am ET on ‘The Right Balance’ with Greg Allen
Ferrara will discuss how the current financial crisis on Wall Street is a result of actions from the Federal Reserve, Fannie & Freddie, and not by free market policy and deregulation.
You can read Peter’s new op/ed on this issue in the American Spectator online by clicking here. Read More...
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IPI director of entitlement and budget policy Peter Ferrara will appear live tonight at 7:30 pm ET on The David Boze Show, broadcasting from Seattle-Tacoma talker KTTH, ‘The Truth.’
Ferrara will discuss how the current financial crisis was sparked not by free market policy and deregulation, but by actions from the Federal Reserve, Fannie & Freddie.
Read Ferrara’s new op/ed on this issue in today’s edition of the American Spectator online. Read More...
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In a brand new op/ed published today in E-commerce Times, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson discuss how MEPs are benefiting from government price controls on wireless communications in Europe.
An excerpt:
Viviane Reding, Europe's info-media commissioner, has skillfully staked out her position as champion of consumers who want it cheap and now (rather than better, if later).
Her Europe-wide caps on roaming charges for mobile voice services are popular, and now Reding wants the same relief for consumers downloading data and text-messaging across the borders of EU member states. She also seems disposed to cap call-termination fees -- charges from one cell-service provider for ending a call from another provider's network.
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IPI senior fellow Dr. Lawrence A. Hunter is featured in the Fort Myers, Florida News-Press with a brand new op/ed on insurance regulation, “Gov. Crist is Trying to Play FDR.”
An excerpt:
”Would someone please tell Gov. Charlie Crist he is not Franklin Delano Roosevelt, and that he won't have any more success setting the price of insurance by executive order than FDR had setting the price of gold every morning over eggs in his White House bedroom? During the Great Depression, Treasury Secretary Henry Morgenthau would meet with President Roosevelt every morning in Roosevelt's bedroom to set the U.S. government's bidding price for gold. According to a Time magazine news account at the time, "On what principle they fixed their premium above the world (gold) price remained a deep secret." Read More...
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In a new op/ed featured today exclusively by the American Spectator online, IPI senior fellow Dr. Lawrence A. Hunter discusses how regulatory competition is the solution—not the problem—when it comes to success for the nation’s insurance market.
An excerpt:
As a frustrated Al Pacino complained in The Godfather Part III, "Just when I thought I was out, they pull me back in."
And he wasn't even in the insurance business!
Government modernizers, until recently, seemed ready to inject a modicum of regulatory competition into an industry barred from the same option enjoyed by banks -- choosing between state and national chartering and thus getting to decide who regulates them.
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Unimaginable as it may seem in today’s global economy, there exists no true national market for insurance products in the United States. Rather, there are 50 separate state-insurance markets, each one bounded by a state regulatory wall impenetrable to companies not chartered in the state who would like to sell products in the state and impervious to consumers in the state who might desire to reach outside the state to purchase insurance from companies chartered beyond their state’s boundary. It’s a system of the bureaucrats, by the bureaucrats and for the bureaucrats.
The latest casualty of this archaic arrangement are the 5,000 residents of Mississippi living near the Mississippi Sound and the Gulf Coast who are losing their State Farm wind coverage because the legal and business environment in the state is so hostile to insurance companies. State Farm has not raised premiums in Mississippi since 2004. Read More...
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In a new op/ed featured in the Atlantic Community, George Pieler and Jens Laurson discuss how market manipulation and the craze over biofuels have led to a growing international food crisis.
An excerpt:
Soaring prices for widely-traded (and subsidized) commodities like rice, corn, soy, - the bedrock of the global food supply, have created a short-term, we hope, hunger crisis. For the poorest of the poor, food is becoming too expensive. For the most insular and corrupt governments, food aid is a vital instrument of political control or, in sunnier dictatorships, a powerful tool in public relations.
High prices usually mean goods are scarce and demand is high, and there seems to be broad consensus that one factor is demand in the rising economies of Asia (China, India), as well as parts of Latin America, and even Russia. Read More...
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Dr. Larry Hunter and George Pieler are featured in the Austin American Statesman with a compelling discussion on who makes the decision when it comes to insurance business models.
Thanks to a Texas law that went unchallenged by the Supreme Court, government regulation, not the market, has made the choice for customers on whether or not insurance companies can be linked to auto repair shops.
If you want an object lesson in how messed up our ways of regulating insurance in the U.S. are, just take a look at a recent Supreme Court decision—or rather, nondecision. By turning down an appeal in the case of Allstate v. Abbott, the Justices de facto upheld Texas law barring linkage of insurance companies and auto repair shops. One obvious result is a reduction in the choices available to drivers seeking post-collision repairs once their claims have been honored.
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In a new op/ed featured in the Houston Chronicle, IPI senior fellows Dr. Lawrence A. Hunter and George Pieler discuss what’s blocking auto insurance choice for consumers.
In “New Roadblock in Choice of Auto Insurance,” the authors outline how consumers are prevented from making their own decisions in the Texas marketplace thanks to government legislation.
An excerpt:
If you want an object lesson in how messed up our ways of regulating insurance in the United States are, just take a look at a recent Supreme Court decision — or rather, nondecision. By turning down an appeal in the case of Allstate v. Abbott, the justices de facto upheld Texas law barring linkage of insurance companies and auto repair shops. Read More...
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Anyone who thinks insurance is an industry apart, admittedly with its own special set of problems and challenges, should carefully watch what's going on in New York State. Insurance Commissioner Eric Dinallo wants to split up mortgage bond insurer MBIA into two parts, one virtually guaranteed for success (based on investments in government-backed instruments), the other decidedly higher risks (yes, some of those subprime mortgages could be lurking behind the paper).
Why? Ostensibly to build market confidence in the mortgage backed securities market and prevent the "problem" paper from leaching its problems into the rest of the market. But wait...isn't market competition based on assuming risks, eyes open, and having to suffer the consequences of bad judgment?
Dinallo's moves may be driven by a case of Wall Street jitters. For that matter, so does much of what the Fed does these days. Read More...
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Insurance, as a public policy topic, suddenly seems to be everywhere. The House held field hearings in Florida to promote its already-passed (still pending in the Senate) national catastrophic backup program, a Florida-inspired initiative to get US taxpayers on the hook for large property losses in the wake of, e.g., massive hurricane damage. Florida--at least major elements of its political class--are eager to cushion the state from consumer outrage at not being fully compensated for storm damage in the most recent hurricane cycle (not this past year's, which was pretty quiet). Meanwhile the House Capital Markets Subcommittee reviewed the impact of the so-called subprime crisis on bond insurers and the spillover of the housing market slowdown on insurance. At the same time, the Senate is finally gearing up to look at major insurance reforms like the optional federal charter (OFC), which would let insurers themselves decide if they prefer national regulation, or Read More...
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In an article today in the Dallas Business Journal, reporter Jeff Bounds features a perspective from IPI regarding broadband network management and the net neutrality debate.
An excerpt:
Broadband carriers must be able to try different business models without regulatory interference, the Institute for Policy Innovation said Wednesday in comments filed with the Federal Communications Commission. The Dallas think tank was responding to an inquiry by the FCC into complaints that the cable company Comcast, which serves much of Tarrant and Denton county, actively interferes with file sharing by some of its customers who use the program BitTorrent. Read More...
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Has political correctness gone too far?
In a new oped published on CNET News entitled, “Snuffing Out Goofy’s Cigarette,” George Pieler and Jens Laurson discuss the new mission of Disney to edit out “offensive” smoking scenes from classic Disney films.
An excerpt: In July 2007, when Disney promised a smoking ban for its "G" and "PG" products, the news was yawn-producing. What's a little revisionism if it satisfies today's sociopolitical climate? Stalin's helpers got rid of inconvenient Trotsky-photographs with the wave of an icepick (low tech works, too). Much easier for Disney to ensure that smoking won't be seen by impressionable audiences. Read More...
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The OECD, in collaboration with UK-based research institutions, says that potential damage from world-wide flooding in coastal areas will increase in value from $3 trillion today to $35 trillion by 2070. That sounds like a big increase but how big is it really relative to expected growth in the global economy?
Using International Monetary Fund statistics (“World Economic Outlook Database,”), we estimate Gross World Product to be about $58.7 trillion in 2007 (measured in 2004 dollars). That means this year’s flood damage will amount to slightly more than 5 percent of total world output. That is a relatively big number. Read More...
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The American Enterprise Institute will be holding a conference December 20 to explore whether an optional federal charter is necessary and sufficient to ease the entry of international insurance companies into the American market and in the process benefit American consumers. In its write up about the conference, AEI says:
“Thus far, the debate about an optional federal charter for insurance companies has focused primarily on whether and how federal regulation of U.S. insurers will improve services for insurance consumers in the United States. But insurance, like banking and securities, is increasingly becoming a globalized market. U.S. insurers are increasingly diversifying their risks by offering their services abroad, and the reinsurance business model requires worldwide geographic diversification. Read More...
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IPI senior research fellows George Pieler and Dr. Lawrence Hunter are featured today on Forbes.com with a new oped entitled, “Great New Idea: Subprime Insurance.”
The authors discuss the recently passed "Homeowners' Defense Act of 2007," a bill Pieler and Hunter say is “built on an open-ended financial commitment strapped to the backs of American taxpayers.”
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| In a new oped featured in the Fort Worth Star-Telegram entitled “Roughing the Cable Passer,” IPI President Tom Giovanetti says the government has no business getting involved with private business dealings between the NFL and cable providers, such as in the broadcasting of Thursday night's game between the Cowboys and Packers. “There is no role for government to intrude into the business negotiations going on between the sports networks and the video providers,” writes Giovanetti. Read More...
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IPI Director of Technology Freedom Bartlett Cleland is featured today on Forbes.com with a new oped entitled "20/20 Vision on 70/70."
In the piece, Cleland discusses how increasing government regulation by the FCC, as by invoking the 1984 Cable Act's "70/70 Rule," is not the answer to a growing marketplace.
"Nothing brings greater service and products at better prices than market competition," writes Cleland.
An Excerpt:
Industrial policy-- the idea that government, rather than private sector, knows best how a particular industry should be ordered--never seems to die, despite repeated evidence that government-controlled industries never perform as well as those left to the free market.
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USA Today makes a cogent case against the latest scheme by Florida politicians (Senator Billl Nelson, Rep. Ron Klein and Rep. Tim Mahoney) to put every American taxpayer on the hook for hurricane damage to the Sunshine state. Criticizing Senator Bill Nelson’s companion legislation (co-sponsored by Senator Hillary Clinton) to that offered in the U.S. House of Representatives by the two Representatives from Florida, USA Today says:
The measure would provide government-backed loans to states, and groups of states, stuck with major losses. Both the history of the National Flood Insurance Program — currently in need of a $20 billion bailout — and specific language in this plan strongly suggest that the likelihood of these "loans" being repaid is about the same as collecting money borrowed by a ne'er-do-well brother-in-law. Read More...
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In a series of blog entries, I have commented on the disagreements between several new sports video channels (NFL Network, Big Ten Network, etc.) and video providers (TimeWarner, Comcast, etc.).
In one of my blog entries, I described the upcoming NFL game between the Dallas Cowboys and the Green Bay Packers as "the day when the NFL's greed reaches the tipping point."
The points of my commentaries were as follows:
- These are private negotiations between the new channels and the video providers. There is no policy issue other than the importance of leaving this to private negotiation, and not involving government in settling the fight and picking winners and losers. Read More...
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Two rounds of hearings in the House Financial Services Committee later, prospects for genuine insurance reform in this Congress are...well....just a bit unclear. While there's been plenty of positive testimony for the Optional Federal Charter idea (in essence a national regulator at the option of the insurance company, but NOT a national overseer of state insurance regulation), there has also been plenty of criticism from from other quarters. Insurance agents, and state regulators of course, are not keen at the prospect of having their professional lives complicated by Washington.
What's more, Chairman Barney Frank has signalled nothing can happen UNLESS the industry is unified on a solution. As he knows full well, NO industry is ever wholly unified on regulatory questions. That's why we have a Congress, folks. Frank also suggests splitting the industry between life insurers (they could have the federal option) and property and casualty insurers (no option for you). Read More...
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If news accounts and industry sources are correct, the FCC is about to abrogate thousands of contracts all over the country, in the name of slightly-enhanced competition.
It is stunning that the FCC would assert the right to wave a magic wand and obliterate thousands of perfectly legitimate contracts all over the country. As a believer in limited government, it frightens me to see a federal regulatory authority assert such a right. This is precisely the kind of regulatory behavior that has made conservatives strident critics of regulators, and has made deregulation a policy priority for anyone who believes in limited government.
And it’s particularly troubling to me to see a regulatory body that is majority Republican-appointed doing such a thing. A regulatory body that has utterly forgotten the Reagan philosophy of government.
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In the wake of the first (of a promised series) of House hearings on reform of insurance regulation, two things become immediately clear. First, the insurance industry is speaking with several different voices on what should be done, but agrees that something should be. Second, Congress itself seems on the same wavelength, and indeed may just be reflecting the state-of-policy-play in the industry.
That makes the path to reform hard to predict. One piece of good news is that, on the evidence of the House Financial Services Committee hearing, while Congress is in the mood for industry-bashing (and has not left insurance alone either, especially on issues such as credit-rating inputs into insurability questions, and the ubiquitous problem of coastal hurricane damage and contested claims), it seems at first blush to have somewhat more regard for the special problems of risk-management. Read More...
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Read George Pieler and Dr. Larry Hunter’s new oped in The Hill this week making the case for a national solution to insurance regulation reform in "Avoiding A Stormy Future of State Insurance Regulation."
With concerns over climate change making waves, the authors take note of how Florida’s state policies greatly discourage competition for the insurance industry. Pieler and Hunter encourage Congress to look thoughtfully at this issue as pending Optional Federal Charter proposal is udnerway, and to ensure that the rest of the country doesn’t follow Florida’s example.
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Read George Pieler and Jens Laurson’s new oped appearing today on CNET.
In the piece, the author duo discusses how members of the European Parliament have moved to cap roaming charges for their mobile phone usage throughout the Continent.
Say George and Jens:
This is convenient for those who travel and chat a lot, but it's not actually good for the majority of consumers or the long-term health of the telecom industry.
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In his September 2, 2007 Wall Street Journal Commentary “On the Road”, John Seemens contends the current “carnage” on American highways could be reduced significantly if the insurance industry were conscripted into the regulatory army of the state and required to license drivers and certify the safety of vehicles before they are allowed on the road. Unfortunately, this ersatz privatization scheme, like so many so-called “contracting out” schemes, simply force or bribe individuals, businesses or industries to become agents of the government. Ersatz privatization possesses few of the virtues of true privatization but exhibits most of the drawbacks of government bureaucracy, with a lot more potential for graft and corruption than either pure bureaucracy or private markets.
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When is the last time anyone saw a "reach out and touch someone" advertisement from AT&T touting their long distance services? [And the under thirty group responds, "What is long distance service?"]
The FCC has now caught up to what the rest of America has known for over a decade. The segmentation of local and long distance services in wireline is not necessary.
The FCC has announced that the former Bell companies no longer have to maintain artificial distinctions and firewalls between their long-distance operations and their main operations.
Hooray. It's about time.
The truth is that there are more wireless subscribers in America than wireline (have been since the end of 2004 and the separation is growing!) and virtually all of those wireless callers have calling plans that do not differentiate between calls based on distance.
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Barry Aarons’ letter to the editor appears today in USA Today in response to an article published August 23, “Handcuffs Chafe Wireless Users.”
In "More Government Regulation Stifles Wireless Programs," while consumers complain about restrictive “handcuffs” on their wireless handsets based on wireless provider services, Aarons reminds them:
…The return on the investments made by the network providers such as AT&T, Sprint and Alltel is what enables the dynamic research, development and deployment of future wireless service.
Competition, not regulation, will determine advances in the wireless market, says Aarons.
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IPI Senior Fellows George Pieler and Dr. Larry Hunter have done it again on the issue of insurance regulation reform, their latest work featured today in a leading business daily.
Check out their new oped on Forbes.com discussing the need for U.S. insurers and legislators to pursue insurance reform dialogue like their European and Japanese counterparts in “Insurance Reform: There But Not Here.”
The authors emphasize the need for insurance regulators to undergo review and reform the insurance market, all in an effort to streamline and therefore enhance the U.S. market’s competitiveness on the global playing field.
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Read Dr. Merrill Matthews' latest oped published today in The Wall Street Journal.
Resident Scholar and health care expert Matthews discusses how government attempts to regulate costs and put price controls on the health care industry only leave society to reap the consequences of an arbitrarily-budgeted, politically-driven system.
“There is not one government-funded health care system that is considered adequately funded by those who have to deal with it,” writes Matthews, referring to nations such as Canada, England and France, often-lauded by universal-health care supporters.
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The Wall Street Journal's most compelling columnist, Holman W. Jenkins, has done it again.
Today, Jenkins has almost completely nailed Google's machinations to use the power of the federal government to preserve its business share and market power by re-regulating wireline telecom and by, for the first time, regulating wireless.
This is all being done for the financial interests of the Google corporation.
Jenkins details Google's attempt, and apparently Kevin Martin's acquiescence, to having the FCC set new rules for the 700Mhz auction that reduce the value of the spectrum and force whoever owns the spectrum to give Google defacto free access to the spectrum.
Make no mistake: Google understands that restricting a wireless operator's ability to design its own business model can, by definition, only reduce its incentive to invest. But Google has bigger fish to fry. It wants to make sure it can continue to free-ride on your broadband subscription bills, even in the mobile world. It wants to make sure it won't have to share the proceeds of its massive search and advertising dominance with suppliers of network capacity. Read More...
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In the Bible the "Good Samaritan" became known as “good” because he helped a man who had recently been assaulted and robbed by providing for his care with his own money – in other words provided aid immediately and in the future without any expectation of a return. The spyware legislation potentially moving through Congress currently turns this notion on its head – instead of encouraging would be “good Samaritans” it instead protects “Samaritans” from the consequences of their inequitable, and often self-serving, acts.
Examples already exist of those that would gain greater protection for their bad acts and one recently came to light, as recently posted on the spamnotes blog:
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Picking up on the narrative (and theme) of our May 14 post, Eli Lehrer of the Competitive Enterprise Institute writes in the May 18 Tampa Tribune that Florida Gov. Charlie Crist may have created an untenable situation by bulking up the state-run Citizens Property Insurance Corp. (He and the legislature also have put an artificial cap on premiums that will compound the financial pressure on insurers, private and public.) Lehrer suggests federal intervention (the legislative kind) could be the only way to fix the problem.
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There is little doubt that Florida's Governor, Charlie Crist, sincerely cares about the high cost and inconsistent coverage of insurance plans that protect Floridians against huge losses from hurricane and flood damage. To express that concern he's pushed through legislation to control insurance rates more stringently, expand Florida's government-run 'fail safe' back-up plan (Citizens Property Insurance), and boost public and industry subsidies for the state's guarantees. As a consequence, some insurers are considering pulling out of Florida because given the magnitude of storm risk Florida property owners confront these companies don't believe they can provide adequate levels of insurance coverage at the rates Florida regulations will now allow.
The Governor summed up his feelings this way: "When these insurance companies threaten us with this 'We're going to leave your state stuff,' we say, 'Go ahead.' We don't need that kind of business in Florida." Read More...
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When unexpectedly huge claims hit property owners and insurers--as happened in the wake of the 2005 hurricane season--who should pick up the tab, or bear the loss? Florida Gov. Charlie Crist—subject of a Wall Street Journal editorial highlighting his aggressive intervention in his state’s insurance markets-- thinks it's the responsibility of all of us, as taxpayers, and supports legislation to create a national catastrophe claims fund to compensate claimants who have inadequate coverage, or whose claims are in dispute with their insurance company. Ed Lazear, President Bush's chief economic advisor, disagrees--Lazear thinks a new, national catastrophic insurance fund will just crowd out private-market insurance, and create endless fiscal headaches for years to come.
From an equity standpoint, both sides have legitimate arguments. Read More...
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There is a new move afoot to change the very complicated and counterproductive way property and casualty insurance regulation is done in the United States.
In the last Congress, U.S. Senators John Sununu (R-NH) and Tim Johnson (D-SD) introduced a bill that would allow life and property/casualty insurers to choose federal rather than state-by-state charter under an "optional federal charter" system.
The optional federal charter, one possible reform candidate for the modernization of insurance regulation, is patterned after banking regulation, also a dual system where banks can be chartered either on a state or a federal basis.
It's thought by many that reform of insurance industry regulation is long overdue. Obviously the Hurricane Katrina disaster drew a lot of attention to the shortcomings of our insurance system, but nothing much was done as a result except to bash insurance companies and call for even more regulation. Read More...
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In a letter published in the Kansas City Star, IPI's Barry M. Aarons reveals how the Missouri Public Service Commission is attempting to regulate certain VoIP services over others. Such regulation is bad for consumer choice and prices.
Internet voice service The Missouri Public Service Commission is wrong as it moves to regulate new technologies, thus harming advances in technology, service to customers and state competition. The commission’s opinion is that an Internet voice product being offered by Comcast should be heavily regulated while other similar voice products are not. The Federal Communications Commission has already declared that state regulation of Internet voice products was pre-empted by federal authority. Read More...
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Author: Bartlett Cleland || Location: Lewisville, Texas, USA