Suchergebnisse

Gabriella Beaumont-Smith


On July 4th, many Americans will take to the outdoors to celebrate the Declaration of Independence from my home nation, Great Britain. These days, most people know to lather on sunscreen when spending time outside in the summer (though dermatologists insist sun protection is necessary year‐​round). However, sun protection is not only about safety and avoiding painful sunburn but an anti‐​aging procedure. Now that you can safely tan from a bottle, SPF is ubiquitous—in skincare products, lip balms, and makeup. You can even protect yourself from harmful UV rays with special clothing and umbrellas.
While the sun care aisles in stores make it look like the variety in sunscreen and sun protection‐​related products is diverse, the truth is that the actual UV blockers in products available in the U.S. have barely evolved in the last 40 years. The reason is that the Food and Drug Administration has not approved a new active ingredient for sun care products in decades.
The FDA regulates sunscreen as an over‐​the‐​counter drug, and the agency must evaluate and approve the ingredients before the product can be marketed. To reduce the level that UVA and UVB rays can penetrate skin, active ingredients called "filters" are used. In the U.S., only some physical and chemical filters are permitted, but they tend to either leave that chalky residue or make your skin feel greasy. Many consumers have reported that sunscreens available in other countries, primarily the European Union (EU), Australia, and Japan, are much better. The EU allows 27 different active ingredients to block sunburn and skin damage, whereas the FDA has only approved 17. The number of approved ingredients matters because not all filters can seamlessly be formulated into sunscreens or other suitable products for skin application. Moreover, some of the ingredients approved in the EU and Japan but not the US are more effective and long‐​lasting. As a result, the products do not need to be applied as often, giving consumers more bang for their buck.
But, without FDA approval for new and improved active ingredients, foreign companies selling better sun protection products cannot gain access to the U.S. market, and therefore impede consumers from buying superior sun protection. These types of regulations are known as "non‐​tariff barriers (NTBs)," and are an unfortunate response to the considerable trade liberalization that has occurred in the last 75 years. It is estimated that over 75 percent of U.S. industrial imports (essentially everything but agricultural products) are affected by some type of NTB, compared to 50 percent of U.S. industrial imports that are subject to tariffs. Put differently, one‐​quarter of U.S. industrial imports are free from NTBs and one‐​half are free from tariffs. Thus, the coverage of barriers to U.S. imports remains high, costing consumers.
So, as you celebrate America's Independence Day, remember the importance of liberty because it affects everything, even the quality of your sunscreen.

Adam Kovacevich, Founder and CEO of Chamber of Progress, shares his trade association’s goals for progressive advocacy in the tech sector. We discuss the politicization of ‘Big Tech’ and recent opinion polls about Midterm voters’ attitudes towards tech regulation. We also discuss how First Amendment rights apply to tech companies, misperceptions of the techlash, and...
The post #158: Progressive Big Tech Regulation and Advocacy, with Adam Kovacevich appeared first on Social Media and Politics.

The “merger guidelines” that have been published by the Federal Trade Commission and the US Department of Justice since 1969–with updates happening every 10-15 years–serve an unusual role. They are not federal regulations like, say, rules about what level of pollutants can be emitted from the Environmental Protection Administration. Instead, the merger guidelines seek to … Continue reading Antitrust and the Consumer Welfare Goal
The post Antitrust and the Consumer Welfare Goal first appeared on Conversable Economist.

As companies become increasingly big through mergers and acquisitions -- especially in technology, health care, and several other industries -- how should rules and regulations change with the times?

Freshly minted and hot off the press: The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently released an updated set of draft "Merger Guidelines," which could reshape the landscape of corporate mergers and acquisitions both in the U.S. and globally. Esteemed Stanford professor and Chief Economist at the DOJ's Antitrust Division, Susan Athey, joins Bethany and Luigi to discuss these changes. Why did the DOJ and FTC make them? How will they impact the way companies approach mergers and acquisitions? And what do they mean for consumers, competition, labor, and the broader economy?

My government does not believe that its purpose is to be re-elected. It is instead to improve the life and liberties of the people of this realm. Accordingly, it has set forth an agenda to achieve that. I commend these proposals to Parliament.1. We intend to achieve energy independence by authorizing the use of hydraulic fracturing to release the treasure-trove of natural gas under our land. We will compensate those locally affected with cash sums and reduced fuel bills if ever tremors above the raised allowable limits occur. 2. We intend to improve the NHS by establishing a link between the medical procedures its personnel perform and the pay they receive. Doctors will be paid for each consultation with a patient, with greater remuneration for appointments in person than for telephone consultations. Hospital staff will be paid for each procedure they perform. Patients will be free to choose which doctors and which hospitals they wish to be treated by, and the state's funds will be directed accordingly. We will use the tax system to encourage widespread use of additional private insurance.3. My government will empower and encourage local councils to purchase non-verdant land on the green belt, including non-verdant agricultural land, and give such land planning permission for housing. Those affected by the new developments will be offered financial compensation in addition to the improvement of local infrastructure and services. Current restrictions on the size of houses and the square footage inside them will be removed.4. State schools in England and Wales will be given their independence and freedom to determine their own budgets and their curricula. They will be required to teach a basic national curriculum in reading and writing skills, mathematics and the sciences.5. We will ensure that no foreign court shall have authority over the highest court in the UK. The UK will no longer be subject to the European Court of Justice or the European Court of Human Rights in any area.6. Recognizing that domestic tariffs are paid by UK consumers, my government will establish the principle of free trade wherever possible, and will seek to negotiate reciprocal free-trade agreements that encourage our trading partners also to recognize the principle of free trade.7. My government will establish a Council on Competitiveness. Its purpose will be to report the likely effect on UK competitiveness of any regulations and requirements that may be proposed or requested.8. My government will similarly establish a Council on Freedom. Its purpose will be to report the effect on personal liberties of any regulation that is proposed. It will examine in particular the effect of any attempts to direct the lifestyle of UK citizens.9. We will take steps to ensure the free speech prevails on our university and college campuses, and will withdraw state funding from any such institutions that do not act to uphold free speech.10. We will appoint a body to investigate the spread of non-elected quangos and will dissolve those that claim legislative and regulatory powers that more properly belong to this Parliament.

Many people take drugs because they like the feeling they experience by doing so. This is a more extreme version of why some people smoke cigarettes or drink alcohol. Most do so because they like it and most don't become addicts.Because most drugs are illegal, they are traded on the black market, setting their users and suppliers at odds with the law. Because they are illicit and underground, there is little to no quality control, leading to deaths from adulterated or over-strength supplies.Their illegality makes them expensive as suppliers risk prosecution and punishment, as well as considerable price gouging. The profits to be had from their sale leads to violent turf wars, as gangs fight for control of the trade. It echoes what happened in the United States during the prohibition era. People in the UK, especially young people, are killed in the street by members of rival gangs fighting for control of a very lucrative business.Several US states and Canada have joined the growing list of countries that have legalized the recreational use of cannabis. If the UK were to do the same, it would lead to better quality control and enable age checks to be made as the illegal market would dry up if the legal market were allowed to prosper through light regulations and licensing. It would free up much of the logjam on courts and prisons, and end the conflict between recreational users and the police. The Treasury, rather than the criminals, would gain revenue.The legalization of cannabis would take one widely used recreational drug off the black market. The same could be done with cocaine (8.7% of the population) and MDMA (Ecstasy), (1.9% of the population) both in quite widespread use. Their legalization would free up large numbers of police to deal with more serious crimes in which other people are victims.Heroin was once available on prescription to registered addicts to consume at home, and it was seen as a problem that it could circulate to others. This could be resolved by setting up clinics manned by medical personnel, in which hard drugs such as heroin could be obtained for consumption on the premises, after medical inspection and advice. This would treat addiction as a medical, rather than a criminal, problem, and address it by medical personnel instead of with law enforcement officers. It would bring quality control and safety to the fore, and remove the current illicit drugs trade that underlies so much crime.It could be argued that legalization would lead to increased use, just as the ending of prohibition led to increased alcohol consumption. US voters went for repeal because the alternative was Al Capone and his ilk. The UK is in an Al Capone situation with illegal drugs, and could similarly end it by repealing the prohibition of them.

On this day in 1790, the great economist, moral philosopher and social psychologist AdamSmith died. The story is that he was entertaining friends at his home, Panmure House offEdinburgh's Canongate, when he felt unwell, rose and said: "Friends, we will have tocontinue this conversation in another place." He died soon after.It's a nice story, though greatly exaggerated for effect. Adam Smith's religious beliefs are amatter of debate, and it unlikely he believed in an afterlife anyway. Indeed, though he diedseventy years before Darwin's Origin of Species, he was grasping towards an evolutionaryexplanation of why human life, in economics, morality and other areas, seems to serve us ingenerally beneficial ways, without the need for any conscious direction from governmentsor anyone else. As if directed by an Invisible Hand, he wrote, though he knew there was noconscious entity moving that hand. Or Providence, he suggested. How it generated theharmony that F A Hayek would later call spontaneous order was a mystery to Smith, and tohis friend David Hume and other scholars of the age.Smith ordered that, on his death, all his papers should be burned, apart from one essay onThe History of Astronomy. It was not such an uncommon request at the time: people did notwant to be judged on the basis of their random notes and half-though-out jottings. But wewere lucky he spared The History of Astronomy, which is a remarkable essay in thephilosophy of science, advancing a trial-and-error thesis that would not be lost on thetwentieth-century author of The Logic of Scientific Discovery, Sir Karl Popper.The fact that Smith wrote on scientific method demonstrates how wide his interestsand his expertise were. As well as the economics for which he is most remembered today, he alsowrote and lectured on the use of language, on the arts, on justice, on politics and on moralphilosophy. In fact it was his first book on ethics, The Theory of Moral Sentiments, that in1759 made him internationally famous — and guaranteed him a generous income for lifethat would give him the freedom to think about economics and write his 1776 masterpieceAn Inquiry into the Nature and Causes of the Wealth of Nations, which he referred to as hisInquiry, but to us is known as simply The Wealth of Nations.In this, Smith offers an explanation of why, in economics, the spontaneous order ideaworks. For centuries, people imagined that the only gainers in any economic transactionwere those who ended up with the money. But Smith noted that their customers benefitedtoo, by getting goods or services that they valued more than the cash. Indeed, the tradewould not happen unless both sides thought they were getting value from it. To maximisethe creation and distribution of value, he concluded, we need to be facilitating freeexchange — not thwarting it with protectionist measures against foreign imports ordomestic regulations on what and how people are allowed to trade.This simple 'system of natural liberty', explained Smith, was what allowed the spontaneoussociety to flourish and raised nations from poverty to prosperity. It enabled individuals tostrive to 'better their condition', and that of their families. By contrast, regulations and lawswere too often laid down by politicians and their business cronies: to promote their owninterests, most generally in opposition to the interests of the working poor.Smith would have regarded a government that controls nearly half the economy, spendingnearly half the nation's GDP — a concept that he introduced to the world on the very firstpage of The Wealth of Nations — as the greatest tyranny. Taxes, he thought, were anotherway in which established interests skew things in their favour and block potentialcompetition. Taxes, he argued, should be as low as possible, should encourage rather thanrestrict free trade and innovation, and should be simple, understandable and convenient topay. One can imagine what he might have thought of a tax code like the UK's, which islonger than The Wealth of Nations itself, and a regulatory rule book that is even longer.When economic freedom, tempered by Smith's moral virtues of prudence, justice,beneficence and self-control, has been allowed to flourish, it has led to the greatestincrease, and spread, of human prosperity. The free trade era of the nineteenth centuryenriched much of the world and brought humanity cheap food and manufactures. Theglobalisation of the twentieth and twenty-first brought nearly all nations into the worldtrading system and thereby pulled a billion people out of dollar-a-day poverty.Adam Smith's intellectual and practical legacy is plain enough. The issue is whether theworld's governments will ever stop frittering it away.

Gabriella Beaumont-Smith


Senators Christopher Coons (D‑DE) and Kevin Cramer (R‑ND) introduced a bill, the PROVE IT Act, on June 7, 2022, that lays the groundwork for a carbon tariff. A carbon tariff is a tax on imports based on their carbon intensity, a measure of carbon dioxide and other greenhouse gases (GHGs) per unit of activity (e.g. manufacturing). The PROVE IT requires the Secretary of Energy "to conduct a study and submit a report on the greenhouse gas emissions intensity of certain products produced in the United States and in certain foreign countries." Presumably, this report would be used to compare the intensities of similar products produced in the United States and elsewhere, and then a carbon tariff would, theoretically at least, be used to tax imports from countries whose products have higher intensities to offset any economic benefits gained from producing in countries with fewer environmental restrictions.
However, carbon tariffs are not the only proposal for taxing imports based on their carbon intensity. For example, the European Union recently implemented a carbon border adjustment mechanism (CBAM), a device designed to "adjust" for the fact that companies headquartered in different countries face different levels of environmental regulation. The CBAM is also a tax on imports, but the "border adjustment" piece requires a domestic carbon tax to adjust (and a pure border adjustment should also include a rebate for exports). The U.S. does not have a federal carbon tax, so any "CBAM" implemented without one would simply be a carbon tariff.
Regardless of the name, there are several reasons to be highly skeptical of a consequential U.S. carbon tariff bill and to be worried that it would do more economic harm than environmental good. Here are three:
First and most obviously, a carbon tariff would impose significant new costs on American consumers, companies, and workers. For example, recent U.S. tariffs on more than $350 billion worth of imports have been found to cost Americans over $50 billion per year. The PROVE IT Act targets over $600 billion worth of imports, suggesting the cost of carbon tariffs could be even higher than the Trump‐​Biden tariffs. Import taxes hurt Americans by increasing prices, particularly those in the lowest income brackets, and U.S. companies' competitiveness by raising their production costs or insulating protected firms from market competition. For example, President Trump's imposition of tariffs on imported steel inflicted significant damage on steel‐​consuming U.S. companies (like nail manufacturers)—the new taxes cost their workers directly through layoffs and the companies became less competitive as they were forced to either share the costs with their customers by raising prices, reduce production, or decrease investment. As a result, the tariffs did little to "level the playing field," instead the President surrendered home‐​field advantage and gave the edge to foreign competition, who faced no such taxes.
Second, the history of U.S. tariff policy raises serious concerns that a carbon tariff would not be administered in a sound and impartial manner. Instead, these tariffs would simply be a vehicle for rote protectionism. A prime example of such protectionism is the steel tariffs imposed or maintained under the Bush II, Trump, and Biden administrations, which had political motivations far exceeding any economic ones. At the same time, U.S. trade remedies (antidumping and countervailing duties (AD/​CVDs)) law utilizes a process to calculate dumping or subsidization of imports that "injures" domestic industry but can be "remedied" by imposing duties (tariffs). Similar calculations are likely to be used for carbon intensity. However, AD/​CVDs law is notorious for being strongly biased against imports and American consumers. Even worse, in reality, the law is used as a way to deliver protectionist rents to a handful of well‐​connected companies (including, again, steel).
Indeed, some already propose that the CVD law—the remedy for U.S. industry alleged to be injured by unfairly subsidized imports—could be used to impose carbon tariffs and thus avoid the need for new legislation. Doing so, however, would subject carbon tariffs to the same problems—regulatory capture, rent‐​seeking, etc.—that already afflict U.S. trade remedies proceedings, and worse, invite abuse in similar proceedings determining carbon tariffs. For example, one major problem with AD/CVDs law is the discretion they give to the government when data is missing: if the Commerce Department deems information provided by a foreign company during an investigation to be unreliable or insufficient during an AD/CVD investigation, the agency will use various methodologies to fill it in, inevitably resulting in import duties that unreasonably favor the U.S. companies who lobbied for relief. If Commerce followed similar procedures for carbon intensity, similarly biased results are sure to emerge. In other words, the U.S. government could easily make foreign businesses look like they emit more carbon or GHGs than they truly emit, resulting in high tariffs on foreign products in the name of climate change that really serves to protect American businesses from competition.
Thirdly, U.S. carbon tariffs would likely violate the World Trade Organization (WTO) non‐​discrimination rules, which state that WTO members must treat like imported products equally and give imports the same treatment as the same products made domestically. Many legal scholars argue that a border adjustment imposed uniformly on all imports and in concert with an equivalent carbon tax applied to domestically‐​produced goods/producers—similar to the EU's CBAM—might not violate these WTO rules. However, the PROVE IT Act, if turned into carbon tariffs, would satisfy neither condition: the envisioned report applies to only certain countries, and the United States today has no federal carbon tax. Thus, many of the same trade experts who think the CBAM passes the WTO must think a U.S. carbon tariff would fail.
Finally, it is far from certain that carbon tariffs would provide significant climate benefits. The consensus on the efficacy of carbon taxation, including through a CBAM, to reduce carbon or GHG emissions is mixed. While economic theory supports that taxing an item would reduce emissions production, the likelihood of calculating the "right" price for emissions and appropriately administering it is low. Indeed, the level (country, industry, factory) at which a tax is applied could have the opposite effect by encouraging more carbon‐​intensive production and there are myriad other factors affecting carbon intensity; energy prices and subsidies (making production cheaper), to name a couple. Moreover, carbon and GHG emissions are not limited to the countries that tax them or the imports from countries chosen for a tariff.
Policymakers would do well to remember that freer trade promotes cleaner environments. Thus, a more effective solution to reducing emissions would be a multilateral commitment such as finalizing the WTO's environmental goods agreement that reduces tariffs on environmental goods. Making it cheaper to adopt cleaner technologies will increase the availability of products to improve the environment and create a sustainable tree with branches ripe for new opportunities in the trade and environment nexus. Although reducing emissions should be a global effort, Congress and the Biden administration should do their part and breathe some (clean) air into the U.S.'s trade and climate policies by resisting the protectionist path which continually demonstrates the dirty business of rent‐​seeking and will do little for clean and renewable technologies innovation.

The government should do more business with McKinsey & Co. — one of the world's largest consulting firms — says a Pentagon presentation: "Leverage [the] consulting firm's expertise and objectivity – outsourcing is a positive action." While this might sound like a talking point from lobbyists, it actually came from an active-duty naval commander who spent almost a full year working at McKinsey & Co. with you, the taxpayer, footing the bill.
It's no secret that major defense companies spend millions to influence the U.S. government in hopes of securing contracts, favorable treatment, and higher profits. What's less known is that the military has a program that subsidizes these efforts. A new Quincy Institute report I co-authored with Ben Freeman, director of QI's Democratizing Foreign Policy program, provides the first ever in-depth look into a Pentagon program that gives big businesses a unique avenue for influencing senior military policymakers.
Each year, the Pentagon sends military officers to work for major corporations through the Secretary of Defense Executive Fellows (SDEF) program. The intention is for fellows to gather insights about how these companies are organized and then present their findings to high-ranking military officials, along with recommendations for reforms that the military should consider. In practice, however, the reforms suggested to the Pentagon represent a free opportunity for the large contractors hosting fellows to push the government towards adopting corporate-friendly policies.
Since its creation in 1995, the largest beneficiaries of the SDEF program have been some of the nation's largest defense contractors, including Lockheed Martin, RTX (formerly Raytheon), and Boeing. These companies receive nearly a free year of labor from their military fellows, direct insight into the activities of both the government and their competitors, and a unique method through which they can push self-interested suggestions upon their largest customer: the Department of Defense (DOD).
It is no coincidence that many of these suggestions are proposals that would benefit companies involved in the program.
SDEF recommendations to the government are packed full of glaring conflicts of interest. For example, the contractor-dominated program advised the Pentagon to hire more contractors, subsidize them directly, reduce oversight and transparency, and give contractors more political power so that they can "Help craft National Security Strategy."
We documented numerous examples of fellows making policy recommendations that would specifically benefit the company they worked for. Fellows at companies who export billions in weapons each year called for the government to loosen arms trade regulations. A fellow at a railroad company suggested that the DOD consider using railroads more, a fellow at a machinery rental company suggested the DOD rent more machinery, and a fellow at a private utility suggested the DOD continue buying energy from private utilities. In perhaps the most glaring example, one fellow had company officials craft some of his recommendations, including suggestions to modify outsourcing rules and make it easier for the firm to work with DOD. That firm was Enron, and the recommendations were made just six months before the company imploded.
Many of the participating companies have not been shy about using the program to advance their agendas with the government. At least 18 companies participating in the SDEF program have assigned their fellows to work in public sector contracting and "government relations" positions, essentially using them to develop closer relationships with the military. One fellow at a biopharmaceutical company was assigned the task of "Exploiting DoD value from [the] biotech sector;" naturally, they recommended that the DOD invest more in biotech.
The effects of the program do not end here; it also appears to encourage a revolving door between industry and government. Looking at a large sample of former SDEF fellows, we found that 43% have worked for a government contractor since leaving the program. Comparing this sample to a study of all Pentagon officials done by the Government Accountability Office, former SDEF fellows appear to pass through the revolving door to work for large government contractors at more than twice the rate of other DOD personnel.
In some cases, fellows even go on to work for the exact same companies where they had been assigned, essentially using this government program as a launching pad for a lucrative career in the private sector.
Revolving door practices threaten the integrity of the government by creating an open invitation for corruption and unethical behavior. Still, the SDEF program shows no signs of recognizing this as a problem. In fact, the SDEF once advised that it should be easier for military officials to pass back and forth between the military and private industry, despite the tremendous accountability problems such a reform would produce.
The SDEF program is based on the idea that national interests and corporate interests are closely aligned. It aims to, according to an SDEF PowerPoint presentation, "Treat corporate sponsors as potential extensions to the [national] security apparatus," arguing that powerful companies help to create a "safe and secure world." They therefore believe that the military should not only partner with industry, but should actively "promote industry."
Yet the behavior of the companies participating in the SDEF program makes it clear that the national interest often takes a back seat to the firm's interests, namely its profits. When given the opportunity, firms will push for policy reforms that have little to do with an effective defense strategy, but everything to do with their bottom line. Allowing big businesses such a privileged opportunity to influence military policymakers serves to benefit shareholders and executives, not the American people.
The DOD should reconsider the SDEF program as it currently exists, either by reforming the way it functions, downsizing it, or eliminating it entirely. Until then, it will continue to serve as a corporate handout and a tool for the military-industrial complex to maintain its grip on U.S. defense policy.
The director of the SDEF program did not respond to multiple requests for comment.

The Treasury, high on pre-budget coffee fumes, has floated the idea of removing tax relief on foreign investments on international ISAs. To the Treasury, this would increase investment in British companies, reviving our ailing capital markets and support equities. To everyone else, this would decimate wealth and growth opportunities. We hope that this is the Treasury launching kites and seeing what does not fly - without a doubt, this policy would slam straight back into the ground.Not only is this an unpleasant return to mercantilism, the idea that we get wealthier by just keeping our money in the economy rather than from consumption and trade, but it would wallop households at a time of acute financial uncertainty.Let's step back and look at why this policy should be consigned to the shredder. Individual Savings Accounts (ISAs) provide a tax-free account of up to £20,000 in tax savings for equity, bonds, and fund shares, and they have proved immensely popular. In 2022, ISAs had a market value of £741.6bn, with £459.8bn of that being in stocks and shares ISAs. This forms a solid base for participation in British capitalism and a core component of our financial and relatively high wealth.No wonder the Treasury is hungry to divert a lot of this money into Britain's markets.However, by essentially tariffing international investment and outward FDI, British ISA holders will be left much worse off. As HMRC data shows, it's everyday Brits who would be most affected. Over 6 million holders of ISAs are in the £10,000 to £20,000 income bracket, and a further 4.8m are in the £20,000 to £30,000 bracket, too. Those on low salaries, who use their ISAs as safety net pools of cash, or the almost £1bn a year withdrawn to buy a house, will be hit hardest.Additionally, the scheme would create yet another barrier to the efficient allocation of capital. By removing tax relief on foreign investments ISA holders would be artificially incentivised to invest into less efficient UK firms. This would be reasonable in a world without international trade, but when the UK imports 33 percent of all its goods consumed, it's a bad idea. Investment in German cars, French wine and American oil will bring far greater gains, in terms of quality of product and price to UK consumers than investment into UK based alternatives. But this is exactly what such a policy would encourage. Free trade, allowing for the efficient allocation of capital not only within but across nations, has improved standards of living across the globe, it's what made Britain rich in the first place. Policy today should be encouraging this process, not restricting it to score political points. If the Treasury wanted a more British focussed financial product, they would do well to listen to UKFinance's call for a British ISA, and advertise it widely. With UK households only holding around 11% of their assets in equities, compared to much higher percentages in the G7, this would be a fantastic opportunity for British savers. However, a tariff led approach to investment simply will not work. As ASI Senior Fellow Sam Bowman has pointed out, "The FTSE 350 is up 6% over the past five years. The S&P 500 is up 80%." Why invest in Britain, when the world is giving much better returns?






















































































































The Treasury's intention misses the fundamental causes for the lack of investment in UK equities markets, and instead looks for a quick fix which is destined to calamitously explode. We know that there isn't enough liquidity in the system for firms to list in UK markets. Placing a tariff on outward FDI would only temporarily address this. Shortly after coming into effect, we would see a substantial bubble, inevitably set to burst when this capital floods the market and is poorly allocated.What the UK needs to do to address weak equity market performance is to take a serious look at reforming the supply side of the economy, addressing cumbersome planning regulations that stop real business growth, sky-high energy bills which push ever larger bills through post boxes and then SMEs into bankruptcy, and the loathsome salaries that skilled workers can expect. Liquidity is only one spoke of Britain's mangled wheels. Indeed, liquidity is the result of well-functioning markets, not the other way around. Fixing our capital markets will take more than one poorly-thought out policy.Finally, the big question is, how would this be enforced? It sounds, in the words of one financial stakeholder I spoke to, like a complete nightmare to manage. Whether retrospective, or going forward, the enforcement mechanisms would be byzantine, full of loopholes, and ultimately too expensive and ineffective.As Adam Smith himself said: "The proprietor of stock is properly a citizen of the world and is not necessarily attached to any particular country. He would be apt to abandon the country in which he was exposed to a vexatious inquisition in order to be assessed to a burdensome tax and would remove his stock to some other country where he could either carry on his business or enjoy his fortune more at his ease."​​

Gene Healy


Last week, the New York Times ran a front-page story admiring President Biden's political acumen on culture-war issues ("Biden Sidesteps Any Notion That He's a 'Flaming Woke Warrior'", NYT, July 4, 2023). You've got to hand it to him, apparently: Biden has "deftly avoided becoming enmeshed in battles over hotly contested social issues" like transgender rights. "At a moment when the American political parties are trading fierce fire," we're told, "the president is staying out of the fray."
The claim is pure malarkey. In fact, Biden has repeatedly engaged the full powers of the presidency in an attempt to impose a forced settlement on issues where the American people are deeply divided.
The analysis, by Times reporter Reid Epstein, is entirely style over substance. Being elderly and somewhat out of touch is the president's secret superpower on social issues, the argument goes. Biden is "white, male, 80 years old, and not particularly up-to-date on the language of the left"; Epstein writes; "the president has not adopted the terminology of progressive activists," and sometimes seems confused by it.
To be fair, it's tough even for non-octogenarians to stay abreast of the ever-proliferating jargon in this area. Last month, Biden's Secretary of State, Anthony Blinken, warned unsuspecting Americans of the perils of "biphobia" and "interphobia,"; and last week brought new "health equity" guidance from the Centers for Disease Control and Prevention (CDC) on "chestfeeding" infants. (Epstein got a little confused himself; the original version of the article included this perplexing sentence: "[Biden] also does not always remember the words most American politicians use to describe same-sex people.")
But even if, as the Times piece insists, "Mr. Biden has never presented as a left-wing culture warrior," what the president is actually doing with the weapons of executive power ought to count for something. For example:
the president's proposed Title IX edicts would give him the power to make national rules about which kid gets to use which bathroom and who gets to play on the girls' team for every K-12 public school and practically every college in America;
a rulemaking put forward by Biden's Department of Health and Human Services would require doctors and hospitals to provide "gender-affirming care"— puberty blockers, cross-sex hormones, and "top" and "bottom" sex-change surgeries—including for minor children. Private insurers—and the taxpayer, via Medicaid—will be required to foot the bill;
and in the president's June 2022 "Executive Order on Advancing Equality for Lesbian, Gay, Bisexual, Transgender, Queer, and Intersex Individuals," he proposes sending the Federal Trade Commission (FTC) after doctors practicing "conversion therapy," which may be defined broadly enough to include psychologists who resist immediately forking over puberty blockers.
"Staying out of the fray"? C'mon, man.
Millions of Americans believe that medical intervention for trans-identifying minors is compassionate "gender-affirming care"; millions more believe it amounts to experimenting on children in the midst of social contagion. The state of the medical evidence here is "worryingly weak"; but even if it wasn't, the debate's not likely to be settled by telling people to shut up and "trust the science."
Biden's attempt to force a settlement on transgender issues points to a larger problem with "the deformation of our governmental structure" toward one-man rule. The original constitutional design required broad consensus for broad policy changes, but as law professors John O. McGinnis and Michael B. Rappaport warn in an important recent article, "Presidential Polarization":
"now the president can adopt such changes unilaterally…. Domestically, Congress's delegation of policy decisions to the executive branch allows the President's administration to create the most important regulations of our economic and social life. The result is relatively extreme regulations that can shift radically between administrations of different parties."

Florida Governor Ron DeSantis is running for president, and he has his own views on medical treatment for gender dysphoria: he says it amounts to making children "guinea pigs" and "mutilating them." If elected, he'll certainly take inspiration from Biden's FTC move—maybe he'll even encourage a few creative prosecutions under the federal Female Genital Mutilation law.
Alexander Hamilton supposed that "energy in the executive" would lead to "steady administration of the laws." In the service of presidential culture-warring, that energy can mean whipsawing between "compulsory" and "forbidden" in four to eight-year cycles, depending on which party manages to seize the White House.
Worse still, as McGinnis and Rappaport note:
The imperial administrative presidency also raises the stakes of any presidential election, making each side fear that the other will enjoy largely unchecked and substantial power in many areas of policy.

That fear encourages the dangerous sentiment that every election is a "Flight 93 Election": charge the cockpit, do or die. The relentless growth of federal power—and its concentration in the executive branch—has made our government a catalyst of social strife.
Having a president who actually stays out of the culture-war fray isn't just a worthy goal: under current conditions it may be essential to the "domestic Tranquility" our federal government is supposed to ensure. But unless we expect them to refrain out of the goodness of their hearts, we'll need structural reforms that limit their power to intervene.

We should all be aware how public goods work. The problem is that they're extremely difficult to make money out of. Therefore there's a role for government in producing them. Not, not necessarily, that government should produce them, but that government should do some stuff to make sure they're produced. So, we get government to directly provide defence, enable excludability through copyright and therefore profit and so on. Which system works best - direct provision, regulation, law, or heck it'll all work well enough anyway, just depends upon the specifics of what is being discussed. There's nothing there even vaguely controversial about public goods.So, politics has defined the climate as being a problem that must be dealt with. There is a significant public goods problem here - given that emissions are not in market prices we at least have something hugely akin to the public goods problem. Politics has also decided that planning and subsidy are the way to deal with these - we disagree but then OK, we disagree. Now we get to an absurdity. The entire point of public goods is that it doesn't matter who produces them. By their very nature once produced all can enjoy them. That they are produced matters, who by does not.Yes, going green is akin to this. That someone develops cheap solar panels means we can all enjoy cheap solar panels. Windmills that work - when someone achieves that - similarly. Fusion only needs to be designed and proven once for us all to benefit from it.As we say, politics has decided that planning and subsidy is the way to gain these desirable things:The remarks are the first public acknowledgement by a minister that Britain could resort to trade tariffs if Chinese cars are found to have benefited from large state subsidies.Since 2009, China's central and local governments have subsidised domestic EV businesses to the tune of $100bn (£78bn), according to a study by the Washington-based Center for Strategic and International Studies (CSIS).The claims have triggered an anti-subsidy investigation by the EU, which could put pressure on the UK government to act if it is found that Chinese brands have received an unfair advantage.But this is insane.We've decided that we must subsidise all sorts of people to develop the technologies we need. Because those technologies are, once they exist, those public goods. However, the moment Johnny Foreigner subsidises something that we all benefit from then this isn't allowed. Because something or other absurd.To repeat, the current conversation insists that cheap EVs must be achieved for climate change reasons. China's taxpayers have spent $100 billion on getting to cheap EVs that we can now enjoy - and also save the climate. But we can't have those cheap EVs and save the climate because it's dirty, Johnny Foreigner, money that solved the problem?This is entirely, wholly, fruit loop, insane.This is before we even begin to consider how much of what we've expensively subsidised China will be willing to buy if we ban their stuff.Just to remind, only local things for only local people is a joke in League of Gentlemen, not a blueprint for the running of a nation nor an economy.And now really try thinking. The claim is it took $100 billion in subsidies to make EVs cheap enough to actually use. We're now rejecting those cheap EVs because what? We want to spend $100 billion ourselves? It's madness.

Thomas A. Berry and Nicholas DeBenedetto


New York City has maintained a system of rent control since the 1940s. Property owners in the City are subject to a thicket of regulations that affect their ability to rent and limit their right to exclude—arguably the most fundamental right in the "bundle" of property rights. The cornerstone of the City's rent control regime is the Rent Stabilization Law (RSL) which was enacted in 1969 and has been amended on multiple occasions—most recently in June 2019. The RSL has been the subject of several lawsuits throughout the decades.
There are approximately one million units under the purview of the RSL, comprising half of all New York City apartments. The RSL authorizes a government board to set annual maximum rent increases for stabilized units. This board is required to consider tenants' ability to pay as one factor in setting rents, alongside owners' costs and housing affordability.
The RSL severely limits property owners' rights to occupy, use, change the use of, and dispose of their property. The RSL requires owners to renew tenants' leases in perpetuity with very few exceptions, and those exceptions are entirely within the tenants' control. Additionally, these renewal rights may be passed on to any member of a tenant's family who has lived in the tenant's apartment for two years.
Once a tenant occupies a stabilized unit, an owner may not retake possession of the apartment for personal use. Only upon a demonstration of "immediate and compelling necessity" may an owner reclaim just one of his or her units. And buildings held in the name of a corporate entity have no personal use allowance at all.
The RSL also severely restricts owners' rights regarding the buildings themselves. Owners may not withdraw their buildings from residential use, change their units to commercial rentals or cooperatives, leave their property vacant, or demolish their property.
A not‐​for‐​profit trade association representing many New York City apartment building owners sued to challenge the RSL in federal court, but the Second Circuit upheld the law. Now the owners are petitioning the Supreme Court to take their case. Cato, joined by the Manhattan Institute, has filed an amicus brief supporting that petition.
Our brief makes three key points. First, the Supreme Court's recent opinion in Cedar Point Nursery v. Hassid (2021) casts serious doubt on the constitutionality of the RSL, since the City has appropriated building owners' right to exclude and granted that right to third parties. All of the Supreme Court's precedents addressing the constitutionality of rent‐​control statutes long predate the per se rule for physical takings articulated in Cedar Point, which calls for those precedents to be reexamined.
Second, there is already a circuit split between the Eighth and Second Circuits over whether property owners can allege that rent control effects a per se taking under Cedar Point. We argue that the Eighth Circuit correctly followed the Supreme Court when it held that a per se takings claim could proceed against an eviction moratorium, while the Second Circuit erred here in denying plaintiffs' claim against New York City.
Finally, we argue that the Supreme Court should take this opportunity to reaffirm the foundational takings principle that government cannot require a subset of society to privately incur costs that should rightfully be borne by society as a whole. The RSL impermissibly imposes societal costs on property owners alone when it forces them to charge lower rental rates based on tenants' ability to pay. For all these reasons, the Supreme Court should take the case and ultimately reverse the Second Circuit.

Jack Solowey and Jennifer J. Schulp


While the Securities and Exchange Commission (SEC) leans into regulating crypto by enforcement, lawmakers in the House are looking to lay a foundation for rationalizing U.S. crypto policy—releasing a Digital Asset Market Structure Discussion Draft last Friday and holding a pair of hearings this past Tuesday and next.
The Discussion Draft, while in early days, gets the big question right: it would determine whether crypto tokens are securities or commodities largely based on whether the networks over which they operate are decentralized. In addition, the Discussion Draft would help provide regulatory clarity to crypto marketplaces through long‐​sought pathways for lawfully registering certain crypto exchanges. While the draft would benefit from some modifications—including to the process for certifying network decentralization and the treatment of decentralized marketplaces—this legislative effort would bring much‐​needed clarity to U.S. crypto policy by tackling its thorny questions.
In a microcosm of the SEC's years long effort to use the inexact fit between legacy securities laws and modern crypto markets to declare most U.S. crypto activity unlawful, the SEC on Tuesday filed a complaint alleging that U.S.-based crypto exchange Coinbase operates an unregistered securities exchange. Congressman French Hill (R‑AR) dryly dubbed it "an interesting coincidence" that the complaint was filed on the same day the House Agriculture Committee held a hearing on the Discussion Draft. Coinbase maintains the tokens it lists are not securities and that it would be happy to register with the SEC if only the Commission would let it.
The poor fit between existing rules and reality stems from the challenge of squaring securities laws designed for centralized firms and financial intermediaries with a crypto ecosystem that includes tokens generated by decentralized networks and traded via disintermediated protocols. Compounding this challenge is the fact that centralized crypto projects can decentralize over time.
The Discussion Draft, to its credit, grasps these nettles. Understanding how is a matter of understanding the security versus commodity debate. A classic security is a share of stock—a partial ownership stake in a company and claim on assets and profits. A stock's value typically depends on how well a company and its managers perform, so securities regulation seeks to make managers share information relevant to that performance. A classic commodity, by contrast, is a piece of produce (like, say, an orange) that's standardized and interchangeable. Its value typically depends on supply and demand.
Those arguing crypto tokens are securities analogize them to stocks: they can be sold to raise funds to build out projects and also can be viewed as proxies for those projects' value.
Those arguing crypto tokens are commodities analogize them to produce. In a famous Supreme Court case on the nature of securities—which is tediously but unavoidably recounted in any crypto regulation discussion—the Court assessed whether an orange grove seller's scheme to contract with land purchasers to manage orange sales and give them a cut constituted a securities arrangement. It was a securities scheme, the Court reasoned, because the seller's efforts to manage the operation were essential. Those who argue crypto tokens are commodities point out that while certain token sales may resemble the contract in the orange grove case, the tokens themselves are best analogized to the oranges, which remained commodities notwithstanding the securities scheme.
The Discussion Draft enters this fray by identifying that crypto tokens are neither inherently like stocks nor oranges, but rather resemble one or the other depending on whether there are managers—like the executives at a company or citrus enterprise—controlling the token network.
The Discussion Draft does this through a legal test for whether a crypto project's network is decentralized. At a high level, it defines a decentralized network as one where no person could unilaterally control, materially change, or restrict general users' use of the network. In addition, the definition requires that within specific lookback periods, certain persons closely related to the network project have not held or controlled over 20 percent of the network's outstanding tokens or voting power, contributed intellectual property that materially changed network functionality, or marketed the network or its tokens or issued those tokens, and that certain token issuances were nondiscretionary.
Although it's possible to quibble over certain details—such as the arbitrariness of a 20 percent holdings cut off and who qualifies as a closely related person—the definition incorporates some key decentralization features, namely the absence of: unified and discretionary control, reliance on or susceptibility to closely related parties' material contributions or changes, and gatekeeping that excludes general users.
Decentralization is key to the regulatory framework proposed in the Discussion Draft because it is a core component (along with a network becoming "functional") of the definition of a "digital commodity." Digital commodities, as laid out by the Discussion Draft, do not require the same ongoing disclosures by issuers as other digital assets (though they are subject to listing disclosures on registered digital commodity exchanges) and may generally be offered and sold by any person other than a closely related party. Importantly, such digital commodities are expressly excluded from the definition of securities and are generally subject to the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC).
While the Discussion Draft framework is complex, this is largely an unavoidable consequence of the existing "byzantine" U.S. capital markets regulatory regime. Moreover, the framework is appropriately premised on the presence, or lack, of core risks that securities laws seek to address: information asymmetries from managerial bodies.
Even with a legal definition of decentralization that gets to the heart of managerial control, though, there's the challenge of identifying decentralization in the wild. To address this, the Discussion Draft proposes a process where any person can seek to certify to the SEC that a network is decentralized. Certification will occur by default within 30 days unless the SEC issues a stay or rebuttal explaining its decision. Notably, the SEC will be able to reconsider certifications annually and, where appropriate, cancel them. The certifying party may appeal both initial SEC rebuttals, as well as later cancellations.
It's probably inevitable that the process for certifying decentralization before a regulator is going to be an intellectually unsatisfying exercise in Gordian knot cutting. Helpfully, the certification process would allow "any person" to initiate a certification, which recognizes that in the case of a truly decentralized network, there's no single party that must be the one to provide relevant information. For that same reason, the proposed appeals process should similarly allow any person—not just the initial certifying party—to appeal an SEC rebuttal or cancellation. This is particularly important in the case of the cancelled certification of a genuinely decentralized network, where the initial certifier may no longer be in a prime, or any, position to appeal.
Another wrinkle is that leaving the process to the SEC assumes crypto projects are properly subject to SEC jurisdiction unless proved otherwise. While some projects would appropriately begin life under SEC jurisdiction, others, like Bitcoin, would not. One way to resolve this would be to involve the SEC only where the network's digital asset previously was part of a securities transaction, such as a traditional private offering or the novel exempt digital asset offering provided for in the Discussion Draft, and otherwise leave the process to the CFTC.
The Discussion Draft also grapples with the fact that, like tokens themselves, the marketplaces over which they trade also may be decentralized. And similar to how a lack of managers makes applying traditional securities regulation inappropriate, the lack of a financial intermediary in the case of a crypto marketplace makes applying traditional exchange regulations inappropriate as well.
Importantly, the Discussion Draft recognizes that decentralized finance (DeFi) is different from intermediated finance, and, in addition to defining DeFi, provides for the SEC, CFTC, and Government Accountability Office to provide DeFi studies to Congress. Further, the Discussion Draft expressly exempts from both securities and digital commodities exchange requirements certain "ancillary activities" related to operating a blockchain network, including compiling and validating transactions; operating a pool; providing computing and incidental transaction services; providing a user‐​interface to interact with a blockchain network; and developing, publishing, and maintaining a blockchain network or digital wallet software or hardware systems.
These provisions could be read to cabin off the activities of decentralized exchanges (DEXs), yet reasonable minds may disagree. For one, while SEC rule revisions under the Discussion Draft must permit disintermediated trading in covered assets, that such rules must be "consistent with what is necessary or appropriate in the public interest or for the protection of investors" suggests that at least disintermediated exchange of digital asset securities would likely face some degree of regulation. In addition, although the ancillary activities are broad enough and incorporate enough DEX‐​related concepts to be read to create exemptions for DEX activity, the fact that the definition of DeFi and listed ancillary activities are not coterminous leaves the question open to debate. To head off some of this ambiguity, the DeFi definition could, for example, state that it should not be construed to mean that DeFi is not otherwise covered by ancillary activities.
Finally, residual sources of potential regulatory landgrabs in the Discussion Draft's framework should continue to be limited and clarified. In particular, there are several points where the framework would give the SEC and CFTC the authority to set standards or impose requirements on any basis that the agencies determine to be in the public interest.
Judging by SEC Chair Gensler's recent remark that "we don't need more digital currency," one such landgrab would seem to be transforming the SEC into the merit regulator it never was meant to be. To borrow a line from House Agriculture Committee Chairman GT Thompson (R‑PA) at Tuesday's hearing, the SEC's current approach is no way "to govern a market, adequately protect customers, or promote innovation." The Discussion Draft offers an opportunity to reverse this course and bring clear thinking to crypto policy.

We seem to be watching a new elite consensus view being formed. As ever, it's wrong, wholly wrong, but it is, we think, very fun indeed. In that forehead slapping, "No, really, they're not trying this are they?" definition of fun.So, Ireland: At the core of it were a number of key propositions. Ireland would have to embrace the idea of free trade, which meant encouraging competition and ending the protectionism that had been the hallmark of Irish economic policy under Lemass's predecessor Éamon de Valera (whose economic philosophy had once been satirised as: "Burn everything English except their coal"). Most importantly, though, the strategy required that, henceforth, Ireland would have to be welcoming to foreign capital, which essentially meant being nice to multinationals – giving them generous tax breaks, assistance in finding locations for building and generally bending over backwards to attend to their needs.Whitaker's was a bold strategy, but it worked.Ireland got rich by being standardly classical liberal sensible. OK.There's a massive shortage of affordable housing and an associated homelessness crisis: nearly 12,000 people in emergency accommodation and average monthly rents of €1,468;But there's a problem associated with those riches. Hmm. The source for this is: The national budget surplus – essentially the difference between the amount of money coming in and going out in day-to-day expenditure – is forecast to add up to €65.2bn (£56.3bn) over the next four years.Loadsamoney - Ireland is rich. This has made Ireland an "outlier", according to Prof Barrett, who pointed out more than 25% of tax revenue in the Republic of Ireland comes from corporation tax – compared an average figure of less than 10% across Europe.The money's made by stinging the capitalists. Rather a Laffer Curve there in fact - low rates means lots of capitalists and so beaucoup de revenue. Could be a plan for more countries really. Nationwide, the touchstone social and political issue is housing.Homelessness in Ireland is at a record high – with the most recent figures showing 12,600 people were in emergency accommodation in June.But the housing shortage is having wider effects.Ah, housing. So, The Observer and the BBC agree here, and that is one of those elite consensi forming. Obviously. Ireland's got rich because low taxes on corporations but this cannot be allowed - we can't have an example of actual classical liberalism working now, can we - because housing.And where the argument becomes, in the local argot, a bit of a cute hoor: Rent controls are a fiscal policy that governments around the globe incorporate to control and regulate the amount that a landlord can charge for a lease of a property. The challenge lies in finding a balance between the rights of sitting tenants, new tenants and landlords. Rent regulation that is too strict can have a negative impact on the market, but complete deregulation can also have negative effects as it will push people into home ownership even where it is not feasible.And: Government measures to control rents have backfired and in many cases have led to an increase in rents, a new report has claimed.The study by economist Jim Power suggests that rent pressure zones (RPZs), introduced in 2016 to limit rent price increases, have resulted in significant "rent rigidities" and an inefficient two-tier system where the proper maintenance of rental properties is no longer economically viable.Rent controls are not a classical liberal policy. Rent controls are what are screwing the Irish rental property market. Which is where that argument becomes so fun, isn't it? Classical liberalism makes a place rich. Not classical liberalism on rents makes housing expensive. But as the argument - that elite consensus view - is becoming it's the bit that works, the stinging the capitalists for the costs of running the state that must go and it's the idiocy of rent controls which is unquestioned and so presumably should stay.Well, it would be a fun argument if it wasn't palpably so damn stupid an argument.