COMPETITIVE ENTERPRISE INSTITUTE

VOL. 27, NO. 4 | FALL 2014

FEATURED ARTICLES

Obamacare and Affordability

Not as Connected as You Think
4 BY TOM HAYNES
MICHELLE MINTON
Sports Gambling
Wont Ruin the Game T he U.S. Supreme Court will
soon resolve a dispute with
potential major consequences
for the future of American health
care in the case King v. Burwell,
which CEI coordinated and
funded. The justices inter-
pretation of a few short pas-

6 sages in the 1,000-plus page

Affordable Care Act (ACA) the
Obamacare lawwill deter-
JOHN BERLAU mine whether federal agencies
Obamas Peanut-Brained are bound by the laws Congress
Attack on MetLife writes and whether unelected
bureaucrats can hand out subsi-
dies to millions of ineligible consumers.
One of the Obama administrations
central arguments in defending the nation-
wide subsidies will be that the ACA had a
single overriding purposeto increase the
10
affordability of health insurance. For that
reason, it claims the ACA should not be
interpreted to deny subsidies to people in
nonparticipating states, even if thats what
IAIN MURRAY
the plain language of the act saysand,
Minimum Wage, in fact, what most of the judges who have
Maximum Damage looked at that language agree that it
appears to say.
However, neither the ACA nor the
ALSO IN THIS ISSUE administrations implementation of it sup-
ports the notion that affordability trumps
other aspects of the law, even when the
CFPBs Loan Report Attacks Lenders
Rather than Empower Students, administration could have chosen to pro-
mote affordability instead.
by Carrie Sheffield. . . . . . . . . . . . . . . . . . . 8
First, the ACAs requirement of com-
Remembering Gordon Tullock,
by Fred L. Smith, Jr.. . . . . . . . . . . . . . . . . . . 9 munity rating, which made carriers over-
charge young and healthy Americans
The Good, the Bad, and the Ugly. . . . . . 14
and undercharge older and less healthy
Media Mentions. . . . . . . . . . . . . . . . . . . . 15
End Notes . . . . . . . . . . . . . . . . . . . . . . . . . 16
consumers, led to reduced affordabil-
ity for the supposed poster children for
Obamacarethe young and healthy unin-
sured. Based on my professional underwrit-
ing experience prior to the ACA, under-30
healthy consumers could obtain good
individual coverage for $100 per month
or less in most states. The ACAs community
rating requirement has more than doubled
that amount. Subsidies have not offset that
price increase, except for young people
hovering around the minimum wage. The
administration claimed to have broad
power to delay nearly every other aspect
of the ACA, but it did nothing to delay this.
Second, the administrations postpone-
ment of the employer mandate gutted one
of the central affordability planks of the
ACA, namely incentives for employers
without coverage to adopt it and assist their
workers with health care costs.
Third, President Obamas promise of If
you like your plan you can keep it raised
(continued on page 3)
 In Memoriam: Leonard Liggio
by Lawson Bader
A t the end of the film Amazing Grace, Lord Charles
Fox honors William Wilberforces tireless crusade
to abolish the transatlantic slave trade. When people
speak of great men, they think of men like Napoleon
FROM THE PRESIDENT
men of violence, begins Fox. Rarely do they think of
peaceful men .
A peaceful, and indeed great man died October 14.
Leonard Liggios passing was not mentioned in Politico,
National Journal, Roll Call, or The Washington Post. And
thats OK. For Leonards accomplishments were far too
important to be summed up in headlines.
Clashes of large egos and personal antagonisms
seem to dominate Washingtons policy making process.
Leonard would not have fit that bill. He understood that
ideas matter and are passionately worth defending, but
he also recognized that civility matters as well.
Leonard was long the Don of the free market intel-
lectual community. And Im proud to say that he played
an important role at the Competitive Enterprise Institute,
which I now lead.
Years ago, realizing that CEI needed to move out of
its infancy stage and create a board of directors, founder
Fred Smith approached Leonard, who quickly agreed to
serve on that inaugural team. He continued to carry out
that board role for several decades, moving to emeri-
tus status only last year. Leonard was whimsical in his
conversation, grounded in his idealistic commitment, and
often bemused by CEIs temerity in translating classical
ideas into actual reform. And he was always supportive.
In 1996, I joined the Center for Market Processes
now the Mercatus Centerat George Mason University.
Our office was located in a nondescript building a mile
from campus that was shared by several organizations.
We also shared Leonard, whose office was below mine.
I used to joke with him that if I stomped my feet hard
enough, pieces of dust and debris might rain down on
his head. Good times.
To me, those years seem like a long time ago, but
for Leonard they were but a blip in a career spanning
many decades and continents, and including personal
Publisher
Lawson Bader
Editor
Marc Scribner
Editorial Director
Ph (202) 331-1010
Ivan G. Osorio
Fax (202) 331-0640
info@cei.org Contributing Editor
Keara Vickers
ISSN#: 1086-3036
2 CEI.ORG
interactions with every hero and villain the libertarian
movement has had to offer.
Leonards knowledge about economic historyactu-
ally history in generalwas amazing. One time Henri
Lepage sought to do a series of interviews with Leonard
on the classical liberal movements attitude toward war
in the interval between the two world wars. Fred offered
his weekend home in southern Maryland as a peaceful
environment for that project. Over that weekend, Henri
asked Leonard questions while Fred and his wife Fran
(neither of whom Id characterize as wallflowers!) sat in
amazement as their roles were relegated to ensuring the
two were well fed.
Leonard knew just about everything about classical
liberalismand just about everyone who helped build
the movement. There are many more yet to come who
will be worth knowing. But they, alas, will only read him,
and of him. To know Leonard was to absorb the richness
of his ideas and breadth of his insights.
It was also a pleasure. Todays libertarians are often
typecast as a cantankerous lot. Leonard was certainly
not. He was friends with all. Such is the power of legacy
as generations move on.
I close by echoing Freds words about Leonard:
All creative lives are fascinating lengthy volumes
with many chapters. I, like most, had the opportunity
of perusing only a few selective chapters. But those
that Ive read have been fascinating. And when I talk
to others and ask about Who to ask, they always
respond, Ask Leonard. He was a friend and col-
league, his contributions were many, and his knowl-
edge and wisdom cannot be replaced. His challenge
to us at CEI, and to all who cherish liberty, is to do
our best to keep its flame burning brightly.
Leonard, euge serve bone et fidelis.
A version of this column originally appeared in Human
Events.
The CEI Planet is produced by the Competitive Enterprise
Institute, a pro-market public interest group dedicated to
free enterprise and limited government.
CEI is a non-partisan, non-profit organization incorporated in the
District of Columbia and is classified by the IRS as a 501 (c)(3)
charity. CEI relies upon contributions from foundations, corporations
and individuals for its support. Articles may be reprinted provided
they are attributed to CEI.
COMPETIVE ENTERPRISE INSTITUTE
 Obamacare, continued
Neither the ACA nor
the administrations
implementation of it
supports the notion that
affordability trumps
other aspects of the
law, even when the
administration could
have chosen to promote
affordability instead.
costs for an even broader cross-section
of consumers (though by amounts yet to
be fully noticed). Regulators and every-
one in the industry knew the president
couldnt possibly make good on that
promise. Because carriers were being
forced to market new ACA-compliant
plans, they were not interested in
undercutting those new plans with the
lower-cost, non-ACA-compliant ones
COMPETIVE ENTERPRISE INSTITUTE
people preferred. To make matters
worse, the administration threw carriers
that did want to continue those plans
into the political briar patch, labeling
those plans as lousy coverage.
Fourth, the administrations own
backtracking undercut the ACAs
risk-pool model. As the political fallout
from people losing their lousy plans
grew, the administration allowed states
to grandfather in these lower-cost
plans and exempt them from most ACA
provisions, including the supposedly
sacrosanct community rating rules
perhaps forever. Since then, carriers
have stated publicly that these grand-
fathered plans have diverted people
away from the exchange pool, thus
driving costs higher than projected. So,
everyone buying insurance through
the exchanges will have to pay more
because of the presidents careless
rhetoric. This is yet another strike against
affordability as the guiding principle of
the ACAs implementation.
Finally, in 2013 the administra-
tion declared that employers could no
longer contribute to cover their employ-
ees insurance costs, either pre-tax or
C E I . O R G 3
after-tax. As a result, employers that
previously made individual market
coverage more affordable had to
stop, and those that would have done
so could not. This may be the least
understandable blow to affordability
as Obamacares guiding principle.
This decision reversed a decades-long
practice of small employers contribut-
ing to the cost of insurance purchased
by their employeesa practice which
the IRS had already ruled would be
not be taxed. Nothing in the ACA even
remotely suggested that this longstand-
ing practice would become a problem.
So heres hoping when the Supreme
Court justices listen to the representa-
tives of the administration wax poetic
about affordability as the ACAs central
overarching goal, theyll look at the
millions of Americans for whom health
insurance today is, for no good reason,
less affordable and less available.
Tom Haynes is a member of the CEI
Board of the Directors. A version of this ar-
ticle originally appeared on CNBC.com.
 Sports Gambling Wont Ruin the Game
BY MICHELLE MINTON
O n October 17, New Jersey
Governor Chris Christie signed
into law a bill legalizing sports gam-
bling in his state. But just as casinos
and race tracks began preparing to
take bets, the four major sports leagues
and the NCAA filed a motion to stop
the law from taking effect, claiming it
violates a federal ban on sports gam-
bling. Now its up to a federal judge to
decide.
Its a legal matter, but earlier in
October Mark Varga argued in The
New Republic that central issue is the
integrity of the game: that legalizing
sports gambling in America would
lead to scandals like match fixing.
Theres no evidence to support his
argument. In fact, legalizing gambling
would make the game even cleaner
and more transparent.
4 CEI.ORG
As Varga notes, state-sanctioned
sports gambling is illegal in most states
under the Professional and Amateur
Sports Protection Act (PASPA). When
it passed in 1992, PASPA prohibited
states from sanctioning sports gam-
bling unless they had laws regulating
the activity within a year of the bills
enactment (it excluded gambling on
jai alai and pari-mutuel horse and dog
racing).
This could all change if New Jersey
has its way. Proponents of legalized
sports betting hope the case will reach
the U.S. Supreme Court, and that
the Court will agree with the position
detailed in a letter to Congress by the
Department of Justice in 1992that
PASPA is an unconstitutional violation
of states rights (the current DOJ sup-
ports the constitutionality of the law).
That would lead the Court to overturn
it, leaving it up to states to decide
whether they want to legalize sports
betting within their borders.
Original supporters of PASPA
hoped that limiting sports betting
would prevent minors from gambling
and help reduce crime along with
preventing match fixing. But Varga
argued otherwise. Betting should stay
illegal not because it poses a danger-
ous moral hazard to individuals but
because it leads to a marked increase
in match-fixing, he wrote. To support
this conclusion, he pointed to European
countries where sports betting is legal
that have had high-profile cases of
match-fixinglike Greek soccer, where
match-fixing is institutionalized. But
correlation isnt causation. There are
also countries like Britain and Australia
where sports betting is also legal and
widespread and match-fixing is rare.
Sports betting is a $1 trillion
industry globally, Varga noted. Why
should the U.S. be left on the sidelines
while the rest of the world profits?
COMPETIVE ENTERPRISE INSTITUTE

Vargas argument
rests on the notion that
if refs, coaches, and
players can legally
gamble on sports they
will be motivated to
throw or call games
for financial gain.
But America isnt on the sidelines.
Americans spend about $380 bil-
lion on illegal sports gambling every
year, according to some estimates.
That means in 2012 Americans spent
more on illegal sports betting than on
prescription drugs and nearly five times
that years lottery sales. Why hasnt this
led to match-fixing in U.S. sports (as
far as we know)?
Vargas argument rests on the
notion that if refs, coaches, and players
can legally gamble on sports they will
be motivated to throw or call games
for financial gain. But illegal betting
poses the same risk. If gambling were
done through legal channels, it would
Learn more at RealClearRadio.org.
COMPETIVE ENTERPRISE INSTITUTE
be much easier for the leagues to
spot those connections and discipline
offenders. Additionally, bribery of
an athlete is already a federal crime
and that will not change if states were
allowed to legalize sports betting.
Varga raised the specter of orga-
nized crime, but the international
examples he cited have little bearing
for the U.S. The very same orga-
nized crime syndicates that engage
in match-fixing in other nations, such
as the Triads in China, operate within
the U.S., yet match-fixing is rare here.
Perhaps there are more differences
between U.S. sports and the rest of the
world beyond the legal status of sports
gambling?
For an answer, we can look to
the black sox scandal, the White
Sox team that conspired to throw the
1919 World Series. Varga warned of
a repeat of this episode if we legalize
sports betting. But this story serves a
good example of why match-fixing
is an anomaly in U.S. sportsand
will remain so even with legalized
sports betting. All eight players
involved in the scandal were banned
from Major League Baseball for life.
Today, American sports leagues take
gambling by players and match-
fixing very seriously. The NCAA has
C E I . O R G 5
a zero-tolerance policy for athletes
gambling; the MLB and NFL prohibit
gambling by players, coaches, and
referees; and the NBA prohibits betting
on NBA games. Match-fixing carries
serious consequences such as lifetime
bans and civil lawsuitsas happened
to Tim Donaghy, the NBA referee
who in 2007 was accused of betting
on and fixing matches. And lets not
forget Pete Rose, baseballs all-time
hits leader, who was banned from the
game and remains ineligible for the
Hall of Fame.
This is what is working for American
sports: the leagues self-interested moti-
vation to weed out anything that will
lessen fans interest and players and
officials desire not to risk destroying
their lucrative careers. The teams and
leagues, for the most part, are private
businesses interested in preserving the
perceived fairness of the game so that
they can keep making money. Thats
why its their responsibility. And that is
where the regulation of sports integrity
should stay.
Michelle Minton (michelle.minton@cei.
org) is a Fellow at CEI. A version of this
article originally appeared in The New
Republic.
Realclear Radio offers listeners a
fresh perspective on political and
social issues of the day through
informative interviews and dis-
cussions. Brought to you by the
Competitive Enterprise Institute
and RealClearPolitics, and hosted
by CEI Fellow Bill Frezza.
 Obamas Peanut-Brained Attack on MetLife
BY JOHN BERLAU
O ne day while sitting on the roof of
his doghouse, Snoopy supposedly
penned a letter to our nations tax col-
lectors that read, Dear IRS: Please take
me off your mailing list! (The storys
provenance is a matter of debate, but
its become a part of Peanuts lore.)
Now, however, an arbitrary action by
an unaccountable government entity
may prompt MetLifes longtime spokes-
dog to revise his apocryphal letter:
Dear FSOC: Please take MetLife off
your too-big-to fail list.
The Financial Stability Oversight
Council (FSOC), a secretive, unac-
countable task force of financial
bureaucrats from various agencies, was
created by the Dodd-Frank financial
reform bill that was rammed through a
Democrat-controlled Congress in 2010.
In October, FSOC designated MetLife
as a systemically important financial
institution (SIFI). This means the federal
government considers MetLife to be
too big to fail, making it subject to the
same Dodd-Frank bailout regime set up
for big Wall Street banks like Goldman
Sachs and JPMorgan Chase.
As CEI argues in a legal challenge
to the Dodd-Frank Act (including the
FSOCs role of identifying risk), the SIFI
designation confers on a firm a strong
competitive advantage, as investors and
creditors know the government wont let
it fail. Thats why big banks and MetLife
competitor American International
Group (AIG), which have already
received billions in taxpayer bailouts,
have eagerly embraced their SIFI status.
But MetLife, to its credit, has publicly
stated that it is not too big to fail and
does not want the special privileges that
come with SIFI status. MetLife chair-
man and CEO Steven A. Kandarian
declared in 2013, I do not believe
that MetLife is a systemically important
financial institution. The insurance
6 CEI.ORG
company, in fact, recently informed its
shareholders that it may sue the Obama
administration to escape the systemi-
cally important designation that some
competitors covet.
Unlike AIG and the big banks,
MetLife has never taken a dime in
taxpayer bailouts. It is asking not for a
handout, but for the federal government
to keep its hands off of the success-
ful business model it has used to serve
customers for over a century.
To use another Peanuts analogy,
the FSOC designating MetLife a SIFI is
like a bully taking Charlie Browns lunch
money to subsidize Pigpen rolling in the
dirt, because under Dodd-Frank, when
one SIFI fails, all the other SIFIs pay its
bailout costs. As my CEI colleague Iain
Murray explains:
[T]here are two classes of SIFIs1)
the high-rolling institutions that may
be tempted to take unreasonable
risks with the money people have
entrusted to them, and 2) the large
stable firms that actually have the
money (again, entrusted to them by
clients) that can be expropriated by
government to pay for the mistakes
of the first class.
Given the fact that the FSOC did
not publicly acknowledge its action
or give any reason for itnews of the
SIFI designation came from MetLife
itselfits reasonable to conclude that
the conservatively managed MetLife is
in the second category. For MetLife cus-
tomers, this will mean higher premiums
and fewer services.
And thats not the worst part. Under
the Federal Reserves interpretation of
Dodd-Franks Collins amendment, spon-
sored by Senator Susan Collins (R-Me.),
insurance companies with a small thrift
operationor even those, like MetLife,
without any banking component but
deemed systemically important by
the FSOCwill face the same capital
standards as banks.
This practice strikes even an arch-
liberal lawmaker like Senator Sherrod
Brown (D-Ohio) as absurd. I want
strong capital standards, but they have
to make sense, Brown said recently.
Applying bank standards to insurers
could make the financial system riskier,
not safer.
Imposing bank-capital standards
on insurers would raise costs for life-
insurance consumers by $5 billion to
COMPETIVE ENTERPRISE INSTITUTE

Unlike AIG and the big
banks, MetLife has never
taken a dime in taxpayer
bailouts. It is asking not
for a handout, but for the
federal government to
keep its hands off of the
successful business model it
has used to serve customers
for over a century.
$8 billion, according to the economic
consulting firm Oliver Wyman. These
costs could hit policyholders through
both higher premiums and reduced
benefits. And some policies simply
could become unavailable as insurers
exit certain product lines, the Oliver
Wyman study found.
Among the product lines that could
disappear or become prohibitively
expensive are variable annuities, an
increasingly popular retirement option.
MetLife CEO Kandarian remarked
last year, It is hard for me to see how
life insurers living under [bank-centric
rules] could remain in the variable-
annuity business.
And, perversely, such bank-like
standards would probably heighten
risks for insurers, according to risk-
management professionals. In a June
5 letter to Congress, the American
Academy of Actuaries warned that
forcing insurers to follow bank-capital
rules assigns risks to insurers that are
not necessarily significant to them
and understates risks that may be
more significant to insurers than to enti-
ties such as banks.
Federal Reserve Chair Janet Yellen
doesnt seem to disagree with these
assessments, but says the language of
Dodd-Franks Collins amendment ties
COMPETIVE ENTERPRISE INSTITUTE
the Feds hands. The Collins amend-
ment does restrict what is possible for
the Federal Reserve in designing an
appropriate set of rules, Yellen said at
a Senate hearing.
For her part, Collins, one of three
Senate Republicans to vote for Dodd-
Frank, says her provision has been
misinterpreted. Since I am the author
of the Collins amendment, since I am
Senator Collins, I think I know what I
meant, she stated at a Senate hearing
in March. Yet there has been complete
silence on this from Obama and his
Treasury Department.
Fortunately, a piece of legislation is
hovering around the Capitol that, like
R.M.
Snoopy the flying ace, could partially
save the day. The Insurance Capital
FREEDMAN
Standards Clarification Act of 2014
(S. 2270), which the Senate passed SOCI ET Y
unanimously on June 3, would revise
Dodd-Frank by clarifying that it was
not Congress intent to apply bank- Help the Competitive
capital rules to insurers.
Now all the House has to do in the
Enterprise Institute
lame-duck session is pass an identical carry on its work for
companion measure, the bipartisan generations by joining the
H.R. 4510, and send it to President
Obamas desk. Forcing Obamas
R.M. Freedman society.
hand here will make it politically easier
to repeal the law, or at the very least In 2013, CEI established the R.M. Freedman
grant relief from other harmful parts Society in honor of Robert M. Freedman,
of it. a business owner from West Bloomfield,
But the main reason to pass this Michigan, who placed CEI in his estate
bill is to prevent the not-so-good grief and, in 2009, sadly passed on and gave
among the insured that will occur if CEI its first legacy gift. We named the
the FSOC is left unchecked. We have society in appreciation of his generosity.
already seen what happened when
Many of CEIs extended family choose to
the football was pulled away in the
include CEI in their estate plans through:
health insurance market thanks to
Obamacare. Bequests,
Charitable Remainder Trusts,
Charitable Lead Trusts, or as a
John Berlau (john.berlau@cei.org) is a Life insurance beneficiary.
Senior Fellow at CEI. A version of this
article originally appeared in National If you make the decision to include CEI in
Review. your estate plans, please reach out and let
us know.
While these sorts of decisions should be
undertaken with the help of an estate
planner, Lauren Avey and Al Canata of
CEI can be a resource to you. You can
reach them anytime at 202-331-1010.
C E I . O R G 7
 CFPBs Loan Report Attacks Lenders
Rather than Empower Students
BY CARRIE SHEFFIELD
T he Consumer Financial Protection
Bureaus (CFPB) recent annual student
loan ombudsman report aims to help
people falling behind with private lenders.
However, its reactive approach would
simply stifle flames rather than prevent
their initial burst by proposing shortsighted
policies that could lead vulnerable stu-
dents to take on more debt.
CFPB Student Loan Ombudsman Rohit
Chopra announced the reports release
with a dire warning: This is something
were taking very seriously, and we do not
8 CEI.ORG
want to see a repeat of what happened in
mortgages happen here. The comparison
is appropriate, but probably not in the Defaults are most
way Chopra intended.
The report identifies an increase in the common among
number of complaints filed with the CFPB
related to companies offering private stu-
students attending
dent loanssome 5,300 in the past year, community colleges
a 38 percent increase from the previous
year. and for-profit colleges,
The CFPB points out that in 2005 the
bankruptcy code was amended to exempt
according to a recent
all loans made for a qualified education Moodys Investors
expense from discharge in bankruptcy
without undue hardship to the debtor. Service report.
The agency essentially blames lenders
COMPETIVE ENTERPRISE INSTITUTE

In 2014, just 16
states require high
school students get
tested in economic
principles, while
a mere six states
mandate personal
finance testing.
for the rise in complaints, saying the
expected present value of payments in a
modified payment plan, less any one-
time costs with modifying the loan, may
be less than the expected present value
of a borrower self-curing or through
recovery by third-party debt collectors
and litigation.
While not explicitly calling for a com-
plete rollback of the 2005 changes, the
CFPB report recommends changes that
would allow more borrowers to discharge
their debt. This is the wrong approach to
dealing with consumer credit problems
and could lead to the unintended con-
sequence of more unprepared students
taking on even more debt.
It would also undo the modest reform
thats been achieved. The 2005 policy
change was meant to offer lenders
greater protection in exchange for offer-
ing loans to less creditworthy borrow-
ersand thats what evidence suggests
happened.
Seen this way, Chopras analogy
with the subprime mortgage crisis is
CEI is going to the Supreme Court!
Your gift now will make it possible for CEI to take our case to
the Supreme Court to score a victory for the rule of law and
against Obamacare. Please go to ww.cei.org/donate
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COMPETIVE ENTERPRISE INSTITUTE
fitting: Government policies to promote
homeownership (such as the Community
Reinvestment Act) forced lenders to
extend housing loans to less qualified
borrowers. The ensuing lending binge
triggered a domino effect with global
repercussions. Lender greed may have
played a role, but the underlying prob-
lems were insufficient consumer educa-
tion, lack of preemptive risk mitigation,
and government-driven loosening of
lending standards. Encouraging more
risky lending for student debt would have
similar results.
Counterintuitively, as American
Enterprise Institute scholar Andrew Kelly
points out, students with lower debt bur-
dens are the ones most likely to default.
Students with the highest burdens are the
best equipped to pay them back since
they typically have the greatest post-
collegiate earnings. Defaults are most
common among students attending com-
munity colleges and for-profit colleges,
according to a recent Moodys Investors
Service report.
These students are clearly the ones
most in need of financial counseling. And
its no wonder that so many of them are
woefully unprepared to grasp the risks
they are undertaking. In 2014, just 16
states require high school students get
tested in economic principles, while a
mere six states mandate personal finance
testing, according to the Council for
Economic Education. Laxer repayment
policies, such as Chopra calls for, would
merely subsidizing unsustainable con-
sumer behavior.
Contra Chopras warning, overall Carrie Sheffield (carrie.sheffield@cei.org)
student loan defaults are on the decline.
A June 2014 Brookings Institution study
finds:
C E I . O R G 9
[T]he monthly payment burden faced
by student loan borrowers has stayed
about the same or even lessened over
the past two decades. The median
borrower has consistently spent 3 to
4 percent of their monthly income on
student loan payments since 1992,
and the mean payment-to-income
ratio has fallen significantly, from 15
to 7 percent. The average repayment
term for student loans increased over
this period, allowing borrowers to
shoulder increased debt loads without
larger monthly payments.
As the Brookings study also notes,
some students take on private student
loans before they have tapped out
their eligibility for federal debt, a huge
mistake since private loans tend to have
higher interest rates and fewer borrower
protections.
Shortsightedly, the CFPB report fails to
call for empowering policies and educa-
tion that would ensure students conduct
a robust analysis of the expected present
value of their education vis-a-vis the cost
and risk. Chopras Band-Aid prescriptions
fall under what Harvard professor Ronald
Heifetz calls cheap, technical fixes for
adaptive challenges.
Rather than taking lenders to the
woodshed and expanding a culture of
reckless lending, the CFPB should proac-
tively push for better consumer education
prior to loan creation. This would put
student borrowers on a long-term path of
sustainable financial choices.
is the Warren T. Brookes Journalism Fellow
at CEI. A version of this article originally
appeared on Forbes.com.
 Minimum Wage, Maximum Damage
BY IAIN MURRAY
F ew policies are more popular than
raising the federal minimum wage. It
seems to make economic and moral sense
on an intuitive level. In a 2013 Gallup
poll, 76 percent of respondents approved
of the idea. President Obama reflected
this sentiment in his October 11 weekly
radio address, saying, We believe that
in America, nobody who works full time
should ever have to raise a family in
poverty. America deserves a raise right
now.
Yet most economists oppose the con-
cept of a minimum wage at all, and the
data back them up. In fact, the minimum
wage harms those it is intended to help.
The federal minimum is now $7.25
an hour, but it is higher in some states
and municipalities. There is a movement,
headed by the president, to raise this to
$10.10 an hour, with the ostensible goal
of reducing poverty and inequality. Some
states and cities are on board. California
will raise its minimum to $10 on January
1, 2016, and San Diego will raise it to
$10.50 on the same date, with another
10 CEI.ORG
dollar on top of that a year later. SeaTac,
Washington, the area around Seattle-
Tacoma International Airport, has already
raised its minimum to $15 an hour with
unhappy consequences.
Most economists agree that the
minimum wage cannot achieve its aim.
Harvard economist Greg Mankiws Ten
things economists believe is a list of
statements that members of the economics
profession finds uncontroversial. Here is
one of the statements: A minimum wage
increases unemployment among young
and unskilled workers. This proposition is
supported by 79 percent of economists.
James M. Buchanan, Nobel Prize
winner for economics in 1986, put it thus:
Just as no physicist would claim that
water runs uphill, no self-respecting
economist would claim that increases
in the minimum wage increase
employment. Such a claim, if seri-
ously advanced, becomes equivalent
to a denial that there is even minimal
scientific content in economics, and
that, in consequence, economists can
do nothing but write as advocates for
ideological interests.
The overwhelming majority of empiri-
cal studies into the effects of the minimum
wage find that it erodes employment. In
2007, David Neumark of the University
of California-Irvine and William Wascher
of the Federal Reserve surveyed over 100
minimum wage studies published since the
early 1990s. They discovered that over
two-thirds of them found negative effects
on employment, while only about an
eighth found positive effects. Worse, those
studies that focused on the low-skilled
people including young workers found
particularly bad damage done.
Wascher and Irvine also looked at
the quality of the studies. They found 33
studies that were robust to most criticisms,
of which 28 found negative employment
effects. (Notably, much of the evidence
for positive employment effects in the
larger sample came from the United
Kingdom rather than the United States,
and that those studies may have failed to
account for complicating factors during
the 1980s, when the UK had sector-spe-
cific minimum wages. But the more recent
evidence from the UKs introduction of a
national minimum wage in 1997 mirrors
the American evidence.)
COMPETIVE ENTERPRISE INSTITUTE
 The federal minimum wage was
raised in 2007, and again in a couple
of steps until 2009. There has been
recent research into the effects of that
increase. One study, by Aspen Gorry of
the University of California-Santa Cruz,
focuses on the effect on youth unemploy-
ment. He found that minimum wages
affect unemployment, especially youth
unemployment, because they interact
with a workers ability to gain job experi-
ence. While the minimum wage increase
pushed the general unemployment rate
by 0.8 of a percentage point higher
over the study period (compounding the
misery of the economic downturn), the
unemployment rate for 15- to 24-year-
olds surged by almost 3 percentage
points.
Gorry also looked at youth unem-
ployment in France, where the minimum
wage is about $12 per hour, consider-
ably more than in America, and where
the youth unemployment rate has
hovered around 24 percent, double the
U.S. rate. Gorry finds that the different
minimum wage levels account for nearly
the entire difference between Frances
and Americas youth jobless rates. That
means France could find jobs for about
half its unemployed young people by
reducing its minimum wage to American
levels.
Such a preponderance of evidence
is reflected in official studies. When the
Congressional Budget Office earlier this
year reviewed the probable effects of a
minimum wage increase to $10.10 an
hour, it took into account the findings of
over 60 studies on the issue. The CBO
report suggested that the increase would
help lift 900,000 families above the
poverty line, as the president touted, but
at the cost of half a million other people
losing their jobs.
The minimum wage transfers resources
not from the rich to the poor, but among
the poor. Some of Americas least well-
off workers would get a raise, but many
more others would see theirs hours cut,
or lose their jobs entirely. Obama, in
his radio address, concluded, America
should forever be a place where your
hard work is rewarded. But those whose
COMPETIVE ENTERPRISE INSTITUTE
jobs are destroyed by a minimum
wage increase have neither hard
work nor reward.
So why is the minimum wage
so popular? The answer is that only
some of its economic effects are
seen, while others are not seen, as
the great French economist Frdric
Bastiat noted. As he explained, any
new economic policy gives birth
not only to an effect, but to a series
of effects. Of these effects, the first
only is immediate, and it manifests
itself simultaneously with its causeit
is seen. The others unfold in succes-
sionthey are not seen. In the case
of the minimum wage, what is seen
is the increase in many workers pay
packets. What is not seen is workers
losing their jobs.
The public may not attribute
those job losses to a minimum wage
increase, blaming instead other factors
such as increasing automation, a compa-
nys contraction, or an employers greed.
Yet the underlying reason is the same in
all these cases: A corporation invests in
a machine because it is less expensive
than paying workers the higher minimum
wage, the company contracts because it
cannot afford to keep the same number
of workers with the same wage budget,
and the employer sees the new wage
cutting into his bottom line and therefore
chooses to do other things rather than
pay a marginally effective worker more
than he thinks he is worth.
Job losses are just the beginning of
the unseen effects. There are other work-
ers, particularly inexperienced young
ones, who will not be hired in the first
place because the cost of their wages
is too high. As Gorry found, jobs that
never come into being prevent potential
workers from gaining experience. Young
would-be workers are denied the chance
to gain basic job skills. Instead, they set
off down the road to long-term unem-
ployment. This is what is happening in
France.
Those who lose their jobs or never get
them are not the only ones to suffer. Even
those workers who keep their jobs and
are paid a higher wage and are lifted
C E I . O R G 11
Just as no physicist
would claim that
water runs uphill,
no self-respecting
economist would claim
that increases in the
minimum wage increase
employment.
James Buchanan
out of poverty often fail to account for
these changes.
One unintended consequence is that
taxes on wage earners go up. A higher
minimum wage can make employers less
inclined to offer non-wage benefits such
as generous leave policies or insurance,
as well as on-the-job perks such as free
meals and parking. Non-cash perks
like parking and food are not taxed. But
when they are converted to wages, they
become subject to income and sales
taxes. So not only do workers have to
pay for perks that used to be free, they
get taxed for them, too.
SeaTac provides an informative
example. There, Northwest Asian Weekly
reporter Assunta Ng asked hotel work-
ers who had received the wage increase
whether they were happy with it:
Are you happy with the $15 wage?
I asked the full-time cleaning lady.
It sounds good, but its not good,
the woman said.
Why? I asked.
I lost my 401(k), health insurance,
paid holiday, and vacation, she
responded. No more free food.
The hotel used to feed her. Now, she
has to bring her own food. Also, no
overtime, she said. She used to work
 extra hours and received overtime
pay.
What else? I asked.
I have to pay for parking, she said.
Another interviewee, a waitress,
claimed that she had seen a decrease in
her tips. When the minimum wage was
$7, her tips increased that to more than
$15 an hour, but the differential was now
less. She now has to bring her own food
and pay for parking, both of which used
to be provided by her employer.
Annual or holiday bonuses can also
suffer. An interesting natural experi-
ment in the Westfield Valley Fair mall in
California illustrates this well. Half the
mall is in San Jose, while the other half
is in Santa Clara. When San Jose raised
its minimum wage to $10 in 2012, Santa
Claras remained at $8. The mall has two
competing pretzel shops, one in each
jurisdiction. When San Jose instituted its
raise, the pretzel shop there was unable
to raise its prices because of the competi-
tion across the mall, and the owner was
reluctant to cut staff as that would have
affected customer service. Instead, she
took the hit in the form of lower profits.
The lower profits hurt workers, too.
The store owners policy was to share 15
percent of profits in the form in an annual
bonus. Reduced profits led to smaller
bonuses. This is not the sort of outcome
that an aggregation of statistics picks up.
Consumers dont escape the effects
of increased minimum wages, either.
Prices often increase when businesses
face a shortfall in profits. Businesses that
use large numbers of minimum wage
workers, such as the fast food industry,
tend to raise their prices the most. A
2008 study by Daniel Aaronson and Eric
French of the Chicago Fed and James
MacDonald of the U.S. Department of
Agriculture found that fast food restau-
rants pass through 100 percent of the
wage increase to their customers in higher
prices. Another study by Sara Lemos of
the Institute for the Study of Labor found
that a 10 percent increase in the minimum
wage led to a 4 percent increase in food
prices and an overall increase in prices of
just over half a percentage point.
12 CEI.ORG
That may sound small, but consider
where the effects fall hardest. Workers
earning minimum wage are more likely
to patronize fast food restaurants than
anyone else, and food takes up a much
bigger share of their budgets. A signifi-
cant part of the minimum wage increase
is, literally, eaten up by higher food
prices. The effect is all the more significant
for restaurant workers who may no longer
have access to complimentary shift meals.
Obama claims that a minimum wage
increase means those who get it have
more money to spend at local businesses,
which grows the economy for everyone.
But as Bastiat makes clear, that only
provides the short run seen effect. In
the medium and long run, price increases
cancel out the minimum wage hikes stim-
ulative effect, and the gains are reversed.
Aaronson and French, in another study,
find the long-term effect on the economy
of a minimum wage increase to be virtu-
ally nil, as the unseen effects take over.
Most of the winners from a minimum
wage increase are large businesses that
can afford to take on extra payroll. The
mom-and-pop store down the road might
not be able to follow suit. If, as sometimes
happens, it is forced to close, customers
are driven to the big retailer. Big com-
panies often lobby for minimum wage
increases. Walmart publicly favored the
2009 federal increase to $7.25 per hour.
A combination of increased payroll
and reduced hours or fewer employees
hits small competitors. Costco, which pays
all of its employees well above minimum
wage, would not be directly affected by
most proposed minimum wage increases,
but its smaller competitors would. This
means higher prices and fewer employ-
ees to serve customers, which drives more
customers to Costco and other large
retailers.
There is evidence that high minimum
wage laws also increase crime because
they relagate some people to chronic
unemployment. Some turn to economic
crime, drug dealing, or fencing stolen
goods to make ends meet, while others
turn to crimes of idleness, such as van-
dalism and assault. A study by Andrew
Beauchamp and Stacey Chan based on
National Longitudinal Survey of Youth
data from 1997 to 2010 finds that, in
states that increased their minimum wages
during that time, crimes increase among
minimum wage-bound workers and most
strongly among teenagers, and that these
increases occur among both monetary
and non-monetary crimes.
Increased crime takes a toll on per-
petrators as well as victims because they
acquire criminal records, which blight
their chances of getting a job in the future.
Breaking out of poverty is difficult for
many people, and the evidence is that
a minimum wage adds to the difficulty.
Workers are fired, hours are cut, jobs are
not created, non-wage perks, includ-
ing insurance, free parking, free meals,
and vacation days evaporate, annual
bonuses shrink, prices rise, (squeezing
minimum wage earners themselves), big
businesses gain an artificial competitive
advantage over their smaller competitors,
and crime rates rise. It is a bleak litany.
Raising the minimum wage remains
popular because only the visible effects
are usually considered. Fortunately, the
public may be willing to consider the
unseen effects when they are pointed out.
Following the March release of the CBO
study, Bloomberg News conducted a poll
in which it asked people if they supported
a minimum wage increase to $10.10
an hour. With that simple proposition,
69 percent were in favor and 28 per-
cent opposed. Bloomberg then asked,
A recent report by the Congressional
Budget Office says that raising the
minimum wage to $10.10 over the next
three years would increase the incomes
of 16.5 million Americans while eliminat-
ing 500,000 jobs. Does that trade-off
seem acceptable or unacceptable to
you? When put that way, 34 percent
were in favor and 57 percent found it
unacceptable.
It is time for politicians to learn what
the public is so quick to perceive.
Iain Murray (iain.murray@cei.org) is Vice
President for Strategy at CEI. A version
of this article originally appeared in The
Washington Examiner.
COMPETIVE ENTERPRISE INSTITUTE
Remembering Gordon Tullock
BY FRED L. SMITH, JR.
G ordon Tullock, who passed away
November 3, co-founded the public
choice school of economics, the applica-
tion of economics to politics, along with
James Buchanan. While Buchanan alone
was awarded the Nobel Prize, Tullocks
contribution to the field of economics
is massive, filling a 10-volume series
published by Liberty Fund. Tullock and
Buchanan saw public choice as a theory
of politics without romance.
Bureaucrats and politicians, they
noted, are neither angels nor Einsteins.
Rather, they are influenced by their
own self-interest, while their knowledge
remains painfully limited. Given that
self-interest and bounded rationality,
their adopting policies that consistently
advance the public interest is unlikely.
The extent to which they do depends on
the institutions that channel, coordinate,
and discipline their action. Public choice
scholars, thus, have championed constitu-
tional restraints, because they understand
the realities of human nature. And that
in turn leads them to the conclusion that
markets generally outperform political
arrangements.
Tullock saw economic motivations
as the dominant force guiding political
actors. For example, seeking to explain
why poverty aid programs were so costly
and why so little of the funds seemed to
reach the poor, he noted that gaining
the needed political support for poverty
programs would require providing ben-
efits to the more influential middle class.
As a result, programs initially intended to
help the poor tend to expand to provide
benefits to much of the population, using
tax revenues from one segment of the
population and transferring it to another.
The results is one so well described by
Frdric Bastiatpeople picking others
pockets through the ballot box.
Tullocks focus on economics led him
to study the costs of using the political pro-
cess, much as economist Ronald Coase
COMPETIVE ENTERPRISE INSTITUTE
were modest. This discrepancy became
Gordon Tullock
studied the costs of using the market.
Coase recognized that private parties
would have every incentive to reduce
such transaction costsof gaining trust,
gaining information about the product and
the parties interested in that exchange,
and devising secure ways of making the
exchange.
In the political sphere, Tullock argued,
the problems analyzed by Coase were
exacerbated by the challenges of reach-
ing political agreement. Much of his work
focused on the costs of rent-seeking
private benefit gained through political
privilege. He saw lobbying, trading of
favors, and logrolling schemes as costs of
using the political process. He noted that
proponents of bigger government often
ignored the costs of gaining political sup-
port for their favored programs. Therefore,
while in the private market self-interest
often efficiently advances public welfare,
in the political world self-interest is more
likely to reward special interests.
Tullock wrote extensively on the appar-
ent pervasive nature of rent-seeking. Yet,
he also noted that public choice econo-
mists would have expected far more rent-
seeking than was observed. Both theory
and experience suggested that lobbying
C E I . O R G 13
Tullock and Buchanan
saw public choice as
a theory of politics
without romance.
achieved very high rates of return, but
estimates of actual lobbying expenditures
known as the Tullock paradox.
Tullock outlined a few plausible rea-
sons for the paradox. These include the
direct costs of lobbying, the risk that others
may be seeking offsetting privileges, the
likely embarrassment of media exposs,
the likelihood that such costs must be
incurred every political cycle, the lottery
nature of lobbying in a winner-takes-all
political system, and the low probability
of success. But these economic factors
still seem inadequate to explain fully the
observed low level of rent-seeking.
Public choice has crafted a very highly
developed Theory of Sin. Yet, the Tullock
Paradox remains. While homo eco-
nomicus provides insights on many impor-
tant questions, homo sapiens presents a
much more interesting reality.
My colleague Ryan Young and I are
now in the process of exploring the Tullock
Paradox, specifically whether non-eco-
nomic factors may inhibit rent-seeking.
Perhaps many in the business world seek
to earn success, not have it given to them?
Could Public Choice help craft a Theory of
Virtue alongside its Theory of Sin?
How Gordon Tullock would answer
that is unclear, but our effort would cer-
tainly have amused him. I wish we could
have asked himwell miss him.
Fred L. Smith, Jr. (fred.smith@cei.org) is the
Founder of CEI and Director of CEIs Center
for Advancing Capitalism.
 THE
GOOD
CEI Sues White House
for Polar Vortex
Documents
On October 29, CEI sued the
White House Office of Science and
Technology Policy (OSTP) seeking
documents related to that agencys
controversial January 2014 video, The
Polar Vortex Explained in 2 Minutes,
which has been widely criticized by
scientists on both sides of the climate
change debate. Despite OSTP Director
John Holdrens claim that a grow-
ing body of evidence supports the
connection between extreme cold and
global warming, a number of published
peer-reviewed studies dispute the claim.
CEI petitioned OSTP to correct its claim
under the federal Information Quality
Act. The agency denied the petition,
claiming that Dr. Holdrens statement
was a personal opinion that was
exempt from the law. CEI then filed a
Freedom of Information Act request
for documents related to the videos
production, but the agency refused to
disclose most of those records because
they were supposedly part of the agen-
cys deliberative process. Our latest
lawsuit indicates yet again that, despite
this administrations claims of transpar-
ency, its real interest is invisibility, said
CEI General Counsel Sam Kazman.
14 CEI.ORG
THE
BAD
Federal Regulators
Move to Mandate
Talking Cars
In August, the National Highway
Traffic Safety Administration (NHTSA)
opened a rulemaking aimed at
requiring that all new vehicles come
with vehicle-to-vehicle (V2V) com-
munications technology. V2V would
theoretically enable vehicles to send
and receive road hazard warnings
that would allow drivers to take eva-
sive maneuvers before a collision. In
October, CEI Fellow Marc Scribner
filed comments urging the agency to
reject a mandate, arguing that such a
mandate premature and ill-advised,
and that requiring V2V would pose
risks to superior autonomous vehicles.
As Scribner noted, the Federal
Communications Commission is still
attempting to resolve critical issues
related to V2V spectrum usage and
NHTSA ignored cellular-based V2V
technology that could bring benefits
to consumers more rapidly than the
planned government mandate. A
mandate is not expected to take
effect until the end of the decade,
just as autonomous vehicles may be
coming to market for consumers.
COMPETIVE ENTERPRISE INSTITUTE
THE
UGLY
EPA Still Flouting
Federal Record
Keeping Laws
In October, the Environmental
Protection Agency (EPA) filed its latest
effort to dismiss a lawsuit brought by
CEI over the agencys destruction of
federal records without explanation.
This case is part of an ongoing CEI
effort to investigate the EPAs attempts
to skirt federal record keeping laws
by using text messages to circumvent
the legislative process in order to
pursue the administrations climate
agenda. Through our open-records
requests, CEI discovered that EPA
administrator Gina McCarthy not
only lost thousands of text messages
used to conduct official govern-
ment business, but that she admitted
to knowingly deleting all of them,
said CEI Senior Fellow Christopher
Horner. Now were trying to put a
stop to the EPAs illegal cyber bonfire
and force the agency to notify the
archivist so we can attempt to recover
some of the destroyed records.
MediaMENTIONS
Director of Technology Studies
Wayne Crews discusses the pen
and phone era of regulation with
The Washington Examiner:
The Costberg is large, but in the
pen and phone era of doing things
off the books, the impact of regula-
tion becomes far more ominous given
the regulatory dark matter we cant
see that doesnt get counted, and for
which no one is accountable. Congress
must address this next year, warned
the author of the report, Clyde Wayne
Crews, a CEI vice president.
Complying with Energy Department
rules and regulations alone had an eco-
nomic punch of $10 billion, he said in
the report provided to Secrets. The eco-
nomic hurt is $8 billion from USDA rules.
And a category called federal worker
mobility restrictions cost $12 billion.
Crews has made a working proj-
ect of his Costberg report which he
regularly updates. In it, he compares
the cost of regulations estimated by
federal agencies to a much broader list
of estimates from multiple federal and
independent sources. And even then, he
said, it doesnt include hard-to-calculate
costs associated with antitrust interven-
tion, regulation of electricity networks or
the cost of constrained access to natural
resources.
SEPTEMBER 26,
The Washington Examiner
Senior Fellow Christopher Horner
takes on the EPA text message
scandal with Fox News:
Christopher Horner, a senior fellow
for the institute, told FoxNews.com in
a statement it is clear the EPA has not
learned from the IRS mistakes. The tax
agency came under fire earlier this year
after it announced it could not locate
an untold number of emails sought in
congressional probes into the agencys
targeting of conservative groups.
Here we see EPA agreeing to the
court to do an IRS, which is to say:
notify the National Archivist of the
loss of every one of Gina McCarthys
COMPETIVE ENTERPRISE INSTITUTE
thousands of text messages we have
discovered she destroyed, just as
the IRS finally agreed to notify (the
National Archives) about the emails
lost from (former IRS official) Lois
Lerners destroyed hard drive, he said.
The IRS insincere efforts at follow-
ing through on Federal Records Act
obligations drew the courts irethe
same court now hearing the EPA case.
Taxpayers should rightly expect EPA to
have learned the proper lesson from the
IRSs experience and hope for better.
OCTOBER 9,
Fox News
Vox.com interviews Associate
Director of Technology Studies
Ryan Radia on congressional
Republicans technology policy
plans for the 114th Congress:
Most Republicans in Congress have
sided with net neutrality critics. So if
[Federal Communications Commission
Chairman Tom] Wheeler establishes
strong net neutrality protections, he
could face a backlash from Congress.
But any direct attempt to overturn those
regulations would likely to be stopped by
President Obamas veto pen.
Still, Ryan Radia of the Competitive
Enterprise Institute says theres a lot that
Republicans can do to pressure Wheeler
to take a more hands-off approach to the
issue. Congressional committees can grill
Wheeler and other FCC commissioners
about their approach to the issue. And
they also have the power of the purse:
they can cut the FCCs funding, limit-
ing the agencys ability to enforce the
regulations and giving him an incentive to
change course.
NOVEMBER 6,
Vox.com
The Wall Street Journal quotes
General Counsel Sam Kazman
on the Supreme Courts review of
CEIs Obamacare exchange case:
The Supreme Court agreed to review
whether consumers can receive subsi-
dies through the Affordable Care Act for
C E I . O R G 15
insurance pur-
chased through a
federal exchange.
The need
for a quick and
final resolution
of this question is
undeniable, said
Sam Kazman,
general counsel
of the Competitive
Enterprise Institute, a conservative advo-
cacy group that is coordinating lawsuits
against the tax credits. This subsidies-for-
everyone rule affects nearly every person
across the country, he said.
NOVEMBER 8,
The Wall Street Journal
Fellow Marc Scribner argues
against a proposed connected
vehicle mandate in an interview
with CQ Roll Call:
Ive asked people, can anyone name
a networked technology where there
are essentially zero benefits for the first
purchasers. I couldnt think of any. And
that is the case for [vehicle-to-vehicle
communications], at least as its envi-
sioned by [the National Highway Traffic
Safety Administration] right now.
Thats a big challenge. The [car
and light truck] fleet turnover is slowing
down. In a weaker economy, people
are holding on to their cars for longer.
We dont know when were going to
start seeing people purchasing cars as
rapidly as they have in the past.
But maybe this is where we start
utilizing existing LTE cellular networks or
something like that where you get some
of these [advance collision warning]
benefits out of your Smart phone.
NOVEMBER 10,
CQ Roll Call

...END NOTES
Veteran Fined for Keeping Therapeutic Ducks
U.S. Army veteran Darin Welker of West Lafayette, Ohio,
was recently found guilty of keeping 14 ducks on his prop-
erty. Welker, a veteran of Operation Iraqi Freedom, was
ordered to pay a $50 fine for keeping the illegal farm ani-
mals that he claimed helped him cope with post-traumatic
stress disorder and depression. His wife, Shirley Welker, told
the court that ducks were registered with a national service
animal registry and that no neighbors had complained to
them. West Lafayette recently amended a law to permit
therapy pets, but only two per household. The new ordi-
nance tries to balance the needs of the community as well as
the need of somebody who may legitimately be in need of a
therapy animal, said Village Solicitor Bill Owens. So they
decided that two was enough.
Federal Employees Still Watching Porn at Work
In May, the Environmental Protection Agencys inspector
general disclosed that a senior agency employee was caught
spending up to six hours of his workday on pornographic
websites. In September, the employee was still employed and
collecting pay. Rep. Mark Meadows (R-N.C.) introduced a
bill just before the election recess to make a uniform federal
law prohibiting government employees from looking at porn
at work. The bill would require the Office of Management and
Budget (OMB) to issue guidelines to prohibit employees from
watching porn on government computers. An OMB spokes-
woman told The Washington Post that she was unaware of
a current porn-specific policy, while another clarified that
watching porn falls under general rules against misusing
government property.
16 CEI.ORG
Nonprofit Org.
U.S. Postage
PAID
Permit 425
Southern MD
Anchorage Mayor Vetoes Moose-Proof Fencing
Ordinance
The mayor of Anchorage, Alaska, vetoed an ordinance
approved by the citys assembly that would have banned
new spiked fences and required homeowners to modify
existing fences less than seven feet tall. The ordinance was
intended to protect moose, which occasionally impale them-
selves on palisade fences as they feed on foliage. Mayor
Dan Sullivan argued that the number of moose injured or
killed by fences is very, very low, that the measure con-
stituted an unnecessary and costly government intrusion by
requiring homeowners to replace existing fences, and that
far more moose could be saved if residents simply practiced
safer driving habits, without burdening property owners with
new requirements.
Swedish Police Ordered to Repay Man for Stolen
Liquor
In 2007, a Swedish man had his wine, beer, and spirits
stock seized by police, who accused him of illegally import-
ing the bottles from Germany. After finally being acquitted
years later, the man went to pick up his confiscated alcohol.
He noticed that some bottles were missing and out of date.
But most peculiarly, he found that 10 bottles of gin and
vodka had been emptied and refilled with water. Although
the police refuse to charge any specific officer with the theft,
the department has conceded that its officers were negligent
and will pay the man 16,000 kronor, or about $2,000, for
his troubles.
COMPETIVE ENTERPRISE INSTITUTE