Think tanks wrap-up

WASHINGTON, June 20 (UPI) -- The UPI think tank wrap-up is a daily digest covering brief opinion pieces, reactions to recent news events and position statements released by various think tanks.

The Pacific Research Institute

(PRI promotes individual freedom and personal responsibility as the cornerstones of a civil society, best achieved through a free-market economy, limited government, and private initiative. PRI researches and analyzes critical issues facing California and the nation, and crafts strategies for policy reform.)

WASHINGTON -- Old Thinking About "New Source Review" by Steven Hayward

Last week the Bush administration announced new regulations designed to speed up maintenance and upgrading of electric power plants to make them more energy efficient and expand generation capacity. And there followed the predictable result: all hell broke loose from environmentalists.

At issue is a set of arcane regulations under the Clean Air Act known as "New Source Review" or NSR. Under NSR, any potential "new" source of air pollution, such as a new factory or power plant, has to meet strict emission limits prescribed by the Clean Air Act.

But when the first versions of the Clean Air Act were written back in the 1970s, Congress faced a serious dilemma. It would have been prohibitively costly to require all existing factories and power plants to meet the tough new emission standards. Electricity bills would have tripled or quadrupled overnight to meet the new standards, and if that had been done public support for the Clean Air Act would have collapsed.

So existing sources were "grandfathered," and would be required to meet the new emission standards only when being replaced or upgraded in a significant way. In the abstract this makes a lot of sense. Most factories and power plants will be replaced in the fullness of time anyway, as they reach the end of their designed life-span, so emissions reductions would come in the future as new low-emitting factories and power plants replaced the old ones. In practice, however, this has become a regulatory nightmare.

In the exact opposite of the intention of the Clean Air Act, NSR rules had the perverse effect of keeping old, high polluting power plants online far longer than anyone expected. Because many modifications to existing power plants to make them more energy efficient or to expand generation capacity triggered "new source review" by the EPA, the NSR rules became a disincentive for upgrading power plants, even in cases where upgrades might reduce air pollution or conserve fuel. NSR for power plants has become the subject of contentious litigation, and the whole mess has dragged on for years.

So the Bush administration decided recently to relax the cumbersome and counterproductive NSR requirements on power plants and other industrial facilities, in large part because the president's "Clean Skies" initiative of February will reduce pollution from power plants by more than 70 percent during the next decade. It will achieve these reductions through a tradable emissions program that many environmentalists have endorsed. In such a program, the NSR regulations are archaic and an impediment to cleaner air.

Indeed, the Progressive Policy Institute, the think-tank arm of the Democratic Leadership Council, called last year for NSR regulations to be abolished under the tradable emissions program Bush has embraced, because "NSR no longer provides any significant emissions reductions, and eliminating these NSR provisions for new sources has the potential to actually boost cleaner energy technologies..."

So when you hear environmentalists kvetching about Bush rolling back the clock, remind them that he is following a Democratic prescription, and offer a wager with environmentalists that pollution from power plants will be lower in five years than they are now. It is the easiest bet you'll ever win.

(Steven Hayward is a senior fellow in the Center for Environmental Studies at the Pacific Research Institute.)

The Reason Public Policy Institute

LOS ANGELES -- Supersize Me, Baby!

By Dr. Kenneth Green, chief scientist, Reason Public Policy Institute

Only in the world of public-health extremists do you learn that paying less money for more of what you want is a bad thing.

That, in essence, is what the National Alliance for Nutrition and Activity, known as NANA, claimed in a recent report about the cost and calories found in various fast foods. (the report is available on NANA's parent Web site at cspinet.org/new/waistline_061802.html.

Among the horrifying findings:

-- A large order of McDonald's fries cost 62 percent more than the small, but included 157 percent more calories.

-- A Starbucks Venti Caffe Latte with whole milk cost only 35 percent more, but 67 percent more calories.

-- A Classic Cinnabon costs 24 percent more than the Minibon but has twice as many calories and three times the fat.

NANA argues that customers are getting a raw deal on super-sizing because larger portions and higher fat or calorie counts promote overeating, and weight gain.

It's equally interesting to consider what NANA chose NOT to focus on, namely volume, choice, the potential savings from portion sharing, and the potential to obviate health-harms via exercise.

While NANA talks about the caloric gains of super-sizing, they don't point out that diet-soda consumers get the same volume discounts. NANA mentions that Latte drinkers get more calories, but they don't observe that regular black coffee drinkers at Starbucks also get more volume without any more calories.

Here's another view of the same three values that NANA finds so appalling:

-- A large order of fries at McDonald's cost 62 percent more than the smaller version but gets you 91 percent more fries.

-- A Starbucks Venti Caffe Latte with Whole Milk cost only 35 percent more, but gives you 67 percent more to drink.

-- A Classic Cinnabon cinnamon roll costs 24 percent more than the Minibon but is 67 percent bigger.

Personally, though I miss out on most of the fast-food supersize benefits (I'm allergic to wheat), I wish the super-size phenomenon was as popular for the other things I do consume. Imagine paying only 50 percent more money for 300 percent more gasoline! Or maybe super-sizing mobile phone service and getting 500 percent more minutes for only 50 percent more money!

The really interesting question though, is why consumers don't get these kinds of benefits in governmental 'services.' When was the last time the post office said they were raising your rates 10 percent, but giving you 100 percent more of the specific services you just went in to buy? When did the federal government last explain a tax hike by saying "Yes, but for only 2 percent more taxes, you personally, and immediately receive 50 percent more of the specific products that you've voluntarily chosen to purchase!"

Think that NANA will study that?

( Kenneth Green is the chief scientist at the Reason Public Policy Institute.)

LOS ANGELES -- Burn the rich: a recent study suggests that envy comes naturally. By Ronald Bailey.

An old Russian joke tells the story of a peasant with one cow who hates his neighbor because he has two. A sorcerer offers to grant the envious farmer a single wish. "Kill one of my neighbor's cows!" he demands.

Research by two British economists, Daniel Zizzo of Oxford University and Andrew Oswald of Warwick University, suggests there is a good bit of truth behind that joke. In a recent study, Zizzo and Oswald ask, "Are People Willing to Pay to Reduce Others' Incomes?" "The short answer to this question is: yes. They report: "Our subjects gave up large amounts of their cash to hurt others in the laboratory."

Zizzo and Oswald set up an experiment in which groups of four subjects were initially given nearly equal amounts of money. They then played a computerized gambling game. During the game two of the players received an extra endowment of cash, a fact to which all of the players were alerted.

At the conclusion of the gambling sessions, each player was given the chance to spend his own money to anonymously "burn" some of the cash won by his fellow participants. It was made clear that there was no prospect that burning his fellow player's winnings would in any way make him richer. In fact, if he chose to burn another player's money, he had to pay between 2 cents and 25 cents for each dollar subtracted from the other player's take.

Zizzo and Oswald found that nearly two-thirds of players happily paid for the privilege of impoverishing their fellow participants. Even as the price of burning went up, the percentage of people who chose to burn other players did not fall substantially.

Why would people pay to hurt others without any benefit to themselves? Is it not the height of irrationality for a person to harm himself just so he can harm another more? Zizzo and Oswald believe the desire to burn other people's cash "appears to be strong evidence for the existence of some kind of envy or concern for fairness."

The poorest players chose to burn more of the winnings of the wealthiest, but big winners also burned other players, in their case indiscriminately. The researchers speculate that winners may have chosen to burn others as a way of maintaining their rank: They wanted to be first more than they wanted to maximize their cash holdings.

Apparently, it matters a great deal whether people believe that others deserve their good fortune. If they don't believe they do, then less well-off people will further impoverish themselves to bring the rich bastards down a peg or two. Perhaps the opposition in the Senate to eliminating the death tax on estates over $625,000 can be traced to the sense that trust fund heirs are undeserving.

Oswald and Zizzo's findings may be related to those of a study in which two Swiss economists, Ernst Fehr from the University of Zurich and Simon Gachter from the University of St. Gallen, determined that people will incur substantial costs to punish cheaters. Such subjects engage in what the researchers call "altruistic punishment."

Fehr and Gachter set up a public goods game with a common pot in which all the players could invest. After all the players were given an opportunity to invest in the pot, the amount in the pot was increased and then split between all players at the end of each round. The game was set up so that defectors could increase their total winnings by not investing at all, then taking a quarter of whatever was in the pot once the round was over.

In the games in which players had no opportunity to punish defectors, cooperation soon broke down completely and no one invested. But once the ability to punish -- say, by fining cheaters -- was added, cooperation became widespread. Even if punishers lost more than the cheaters they punished, they still deterred cheating.

It turns out that cooperation depends not just on reciprocity--"I'll scratch your back and you scratch mine" -- but also on retribution -- "If I scratch your back and you don't reciprocate, I will punish you, no matter the cost to me." The fear of vengeance keeps would-be cheaters in line.

Perhaps players who received extra cash in the game devised by Oswald and Zizzo, analogous to the inheritors of great fortunes, are seen as somehow "cheating." This perception may incite the leveling instincts that apparently lurk within the human heart.

Socialists often claim that capitalism is based on humanity's worst impulses, greed and selfishness, despite the fact that people who live in societies that participate in markets tend to be more generous and cooperative than those who don't. Oswald and Zizzo's research suggests that socialists who believe that their ideology appeals to humanity's better instincts have it backwards. Envy is behind the leveling spirit of socialism. A truly generous and rational soul would wish others well, especially if they have done no one any harm.

Only an open society in which people clearly see that they have an opportunity to rise seems capable of containing and channeling humanity's envy instinct. The task for champions of freedom is to encourage people to want more cows for everybody.

(Ronald Bailey is Reason magazine's science correspondent and the editor of Earth Report 2000: Revisiting the True State of the Planet.)

The Cato Institute

WASHINGTON -- Bush and Ashcroft assail habeas corpus, scholar says.

On Wednesday, the Bush administration asserted sweeping new police powers over the American people. In a legal brief filed with a federal appellate court, the Department of Justice asserted that Yaser Esam Hamdi, who is an American citizen, can be held incommunicado on a military installation as an "enemy combatant."

A lower court ruled that Hamdi should have access to an attorney, and the Justice Dept appealed that ruling to the Fourth Circuit Court of Appeals. Timothy Lynch, director of the Cato Institute's Project on Criminal Justice had the following comments on the issue:

"The implications of the federal government's brief go far beyond the Hamdi matter. The Bush administration has now asserted that (a) citizens can be taken into custody as enemy combatants; (b) that, beyond such battlefield detainees, citizens can also be taken off the streets of any American town; and (c) that civilian courts cannot intervene to inquire into the legality of such arrests and detentions. When these propositions are taken together as a whole, the implications are very disturbing.

"The bottom line is that President Bush and Attorney General Ashcroft are attempting to suspend the 'Great Writ' of habeas corpus, which allows Americans to get into a court of law to challenge the legality of their arrest and to have their liberty restored if the court agrees that the arrest was unlawful. Without judicial review, the police can arrest people without warrants and jail people without trials.

"The controversial 'military order' that Bush issued last November has, in effect, now been extended to American citizens--and the writ of habeas corpus is now under assault. President Bush seems to believe that his commander-in-chief power gives him the authority to ignore every other part of the Constitution when he deems it necessary. The president is profoundly mistaken about that-and the judiciary should resist this power grab."

Lynch is the author of the new Cato Institute report, "Breaking the Vicious Cycle: Preserving Our Liberties While Fighting Terrorism," which is available on the Cato Institute Web site at cato.org/pubs/pas/pa-443es.html.