Tag: Public Citizen

Fixing the Economy Demands More Than a Stroll across Lafayette Park

President Obama’s visit with the Chamber of Commerce this week has infuriated the anti-business Left.  But short of expropriation and nationalization, what doesn’t? 

Robert Reich and NPR and the scribes at the Huffington Post just don’t get it.  Their man may be in the White House, but business holds the keys to the kingdom.  Whether the president’s priority is job creation or reelection, nothing matters more than sustained economic growth. And without business having confidence that policy in the United States will become more hospitable and predictable, investment and job creation will remain tepid.

The president doesn’t have nearly the leverage assumed in the delusions of groups like Public Citizen, which wrote: “What America needs is not olive branches to giant corporations but controls over the companies that sank the economy.”  Back here in reality, businesses have options.  Many can choose to produce and operate in other countries, where the economic environment may be more favorable.  In that regard, globalization has produced a veritable Galt’s Gulch, which serves as an important check on bad economic policy.  Governments are now competing with each other to attract the financial, physical, and human capital necessary to nourish high value-added, innovation-driven, 21st century economies.  Gratuitously punitive anti-business policies will only chase away the companies that the president exhorts to invest and hire.

According to a survey of 13,000 business executives worldwide, conducted by the World Economic Forum, 52 countries have less burdensome regulations than the United States.  Add to that the fact that the United States has the highest corporate tax rate among all OECD countries and it becomes less mysterious why U.S. businesses shift more operations abroad.

As I wrote in a December 2009 Cato paper:

Governments are competing for investment and talent, which both tend to flow to jurisdictions where the rule of law is clear and abided; where there is greater certainty to the business and political climate; where the specter of asset expropriation is negligible; where physical and administrative infrastructure is in good shape; where the local work force is productive; where there are limited physical, political, and administrative frictions.

This global competition in policy is a positive development.  But we are kidding ourselves if we think that we don’t have to compete and earn our share with good policies.  The decisions we make now with respect to our policies on immigration, education, energy, trade, entitlements, taxes, and the role of government in managing the economy will determine the health, competitiveness, and relative significance of the U.S. economy in the decades ahead.

The president is beginning to get it – though grudgingly.  He acknowledges the burdens of excessive and superfluous regulations and bureaucracy (remember his SOTU story about the jurisdictions entangled in the salmon’s journey from salt water to fresh water to the smoker?).  The president has hinted that he would like to see the corporate tax rate lowered.  He knows that businesses have options to invest, produce, and hire abroad—and that oftentimes U.S. policy chases them there.  But, so far, rather than push policies to encourage domestic investment, production, and hiring, the president has done the opposite, while demonizing businesses that follow the incentives to go abroad.

The president’s position during his exchange at the Chamber of Commerce was that he has made concessions to business by moving toward the center on tax and trade policy, and that now it is time for business to show good faith by investing and hiring.  But Obama’s small steps toward the center come after two years of sprinting to the left on economic policy.  After ObamaCare, Dodd-Frank, taxpayer bailouts, unorthodox and legally-questionable bankruptcy procedures, subsidies for select industries, Buy American and other regulations governing how and with whom “stimulus” dollars could be spent, and the administration’s tightening embrace of industrial policy, businesses want a more quiet, less intrusive, less antagonistic, predictable policy environment before they will feel comfortable playing the role Obama wants them to play.

Until that happens, the president shouldn’t expect torrents of investment and hiring from the business community.

Claybrook: All Your Data Are Belong to U.S.

I was pleased last week to testify in Congress about a draft bill that would mandate “event data recorders” in all new cars. Automobile black boxes or “EDRs” are an issue that found me a few years ago when I commented on their privacy consequences to a newspaper and heard from concerned drivers across the country.

My testimony to the House Commerce Committee’s Subcommittee on Commerce, Trade, and Consumer Protection had three main themes:

1) The Constitution doesn’t give Congress authority to design automobiles or their safety features;

2) Only a relevant sample of crash data is needed to improve auto safety—overspending on a 100% EDR mandate will keep the poor in older, more dangerous cars and undermine auto safety for that cohort; and

3) The privacy protections in the bill help, but consumers should control the existence and functioning of EDRs in their cars.

A co-panelist taking a different view was Joan Claybrook, President Emeritus of Public Citizen and a former administrator of the National Highway Traffic Safety Administration. In her testimony, Claybrook called for a near quadrupling of NHTSA’s budget to $500 million per year. She also called for the construction of what might be called “Total Auto Awareness” infrastructure.

“[T]he bill should require that the data collected by the EDR be automatically transmitted to a NHTSA database,” Claybrook wrote. She probably meant only crash data, and she paid lip service to privacy, but this represents a probable goal of the auto safety community. Our money, our cars, and our data are instruments for them to use in pursuit of their goals.

If this auto surveillance infrastructure is mandated, what EDRs collect, store, and transmit to government databases will grow over time.

They’re going to keep you alive, damnit, if it burns up all your freedom and autonomy to do it! It’s the beating heart count that matters, not the reasons for living.

The Odd Couple

Well, here’s an interesting pair. Today’s Washington Post contains an op-ed on climate change and trade, written jointly by Fred Bergsten, director of the Peterson Institute of International Economics, and Lori Wallach, director of Global Trade Watch at Public Citizen. 

The authors readily admit, quite early in the piece, that they are usually on opposing sides of the trade debate.  The Peterson Institute scholars are well-known and well-respected advocates of freer international trade. Global Trade Watch, and Wallach in particular? Not so much. She has called NAFTA a “disastrous experiment” and has a special section on her website calling on people to Take Action! on trade (example: by hosting a house party to celebrate the tenth anniversary of ” the historic 1999 Seattle protest victory of people power over corporate rule.”)

Yet here they are, claiming to agree on “a suprising number of aspects of the climate change debate and on the related need to overhaul global trade negotiations.” I am still trying to make sense of the op-ed, because it lurches around a bit, and to work out exactly how deep the agreement of these strange bedfellows really is. But for now, let me comment briefly on what I think is the main thrust of their op-ed: a proposal for launching a new round of trade talks.

The authors point out that a new treaty on global warming would “require new trade rules in intellectual property, services, government procurement and product standards.” So, hey, why not combine that into trade talks?The Obama Round (as if Obama-worship has not gone far enough) “would include, as a centerpiece, addressing these potential commercial and climate trade-offs and updating the negotiating agenda.”

That, quite frankly, would be fatal for the World Trade Organization. Developing countries, now in the majority in the WTO, are in general very resistant to the idea of bringing extraneous issues into its agenda (witness constant struggles over linking trade to labor and environment issues, to name just two). More to the point, we already have a round in progress. The Doha round has been struggling over old-fashioned trade concerns like tariffs and subsidies (remember them?)  since launching in 2001. The risks of overburdening the WTO agenda are, in my opinion, far greater than the possible benefits. It’s fairly clear to me why Wallach would advocate a new round full of poison pills, but not so clear why Bergsten would put his name to such a suggestion.

It’s not even clear to me that such an approach would “help the environment.” Why the optimism about the possibility of agreement under the auspices of the WTO when negotiations in forums designed explicitly and solely for the purpose of halting climate change have been unsuccessful?

( Speaking of which, expectations for a breakthrough at the upcoming Copenhagen conference on climate change are being rapidly scaled back, with talk of an “interim” agreement — likely some anodyne political statement — rather than the final deal that environmental groups had hoped for. The international diplomacy circus rolls on, though: conferences are planned for Mexico and South Africa — talk about a carbon footprint! — next year.)

For my take on the climate change and trade debate, the solution to which does not involve launching an Obama Round, see here.