WASHINGTON, May 15 (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 Cato Institute
Poverty and Personal Choice
by Doug Bandow
Poverty is hard. Welfare is a poor palliative. Welfare-to-work is no panacea. These are the most obvious lessons of "Hands to Work," a sobering look at three families caught in the welfare system.
"The poor you will always have with you," warned Jesus Christ (Matthew 26:11), and they remain with us after the 1996 welfare reform. Indeed, helping those in need may be harder now than before, with the least able recipients remaining on welfare and the economy running more slowly. Congress must decide whether to reauthorize its earlier handiwork, a prospect about which Columbia University's LynNell Hancock is decidedly unenthusiastic.
The author follows three people on welfare. They differ greatly, but all find navigating the system to be a challenge. The book is written in the context of the 1996 legislation, requiring work for benefits and limiting welfare receipt. The women's stories, the author notes, "can be viewed in many ways to justify one political view of welfare or another." But there's little doubt what she thinks.
In fact, the law can be arbitrary, penalties can be counterproductive, hearings can be unfair, and bureaucrats can be dismissive. Yet the starting point of any analysis of poverty should be poverty itself. The people covered in the book are not the proverbial widows and orphans, upon whom poverty descends circumstantially. Instead, all made bad decisions.
Brenda has a child with a live-in boyfriend who is a violent former criminal. Alina's family leaves Moldova for America, in hopes of a better life but with no guaranteed means of support. Christine squanders an inheritance, uses drugs, drives away her stable, employed boyfriend and ends up in jail after stealing and selling drugs.
Neither justice nor efficiency suggests that an open-ended public entitlement is the right response in any of these cases. To the contrary, welfare exacerbates such problems. People may not engage in self-destructive behavior in order to win government benefits. But the availability of a public dole enables them more easily to engage in such behavior.
The lives of the three women are complex, frustrating, difficult, and sad, though mixed with moments of happiness and even triumph. No bureaucratic, rule-bound system could adequately account for the differences among the three, let alone among the millions on welfare.
Indeed, the vagaries of the system detailed in the book are real. And burdensome. But these costs offer a benefit of sorts, pressuring recipients to work, study and look for a way out. Even seemingly irrational restrictions demonstrate that welfare is a mark of a compassionate society seeking to aid those in need, not an entitlement for those who prefer impoverished dependency to uncertain independence.
In her overall portrait, the author shows why the system so needs reform. One strategy she appears to favor is unlimited goals and nonexistent rules: "The public needs to embrace a new goal for welfare reform -- erasing poverty, not just eliminating the dole. In Britain, a voting majority supports the Labor Party's New Deal, which increases welfare spending in order to end child poverty. Single parents are not expected to work."
This is a utopian vision. Spend a little more money and poverty will disappear. But, poverty will exist so long as people make bad personal decisions. As long as government creates barriers to economic advancement. And as long as people lack sufficient skills to thrive in a market economy.
Fighting the poverty that inevitably results is certainly a worthy endeavor. Unfortunately, however, experience demonstrates that while abundant government spending might alleviate some material poverty, it will simultaneously encourage other material poverty, by rewarding lack of marriage, illegitimacy and unemployment. And any limited gains will come at a high price: encouraging dysfunctional behavior and creating endless dependence.
An alternative strategy is to start with private aid. One reason is that compulsory compassion is an oxymoron: One does not demonstrate generosity by taxing other people. Another reason is more pragmatic. Private groups can effectively speak to the whole person, addressing spiritual needs and behavioral problems, for instance, and insisting on personal reform. Government, through initiatives such as workfare, can offer only a pale imitation of such private efforts.
Public programs should be only a last resort, a final safety net. Those in need should not look at welfare as an alternative to work; those able to give to others should not look at it as a substitute for private charity.
LynNell Hancock's story should be read by anyone tempted to try to wall off his less fortunate neighbors. Our common humanity makes that impossible. But welfare will always be a second-best alternative. Attempting to reform it will never be easy. Failing to reform it will sacrifice another generation to poverty and dependency.
(Doug Bandow is a senior fellow at the Cato Institute and a former special assistant to President Ronald Reagan.)
The Independent Institute
(II is an independent public policy research organization whose goal is to transcend the political and partisan interests that influence debate about public policy. II aims to redefine the debate over public issues, and foster new and effective directions for government reform, by adhering to the highest standards of independent scholarly inquiry, without regard to political or social biases.)
OAKLAND, Calif. -- The States vs. Microsoft: Does a Modular Windows Make Sense?
By Dom Armentano
Although Microsoft has all but settled its antitrust difficulties with the Department of Justice, nine hold-out states continue to demand in a D.C. courtroom that Microsoft license a stripped-down (no browser, no video player) or "modular" version of its Windows operating system to computer manufacturers.
Microsoft holds that such a regulation would compromise severely the overall quality of the Windows operating system. The states maintain that such a regulation would be good for competition and ultimately good for consumers.
Most of the states' witnesses have whined that their companies would do more business if only the federal government were to strip Windows of some of its application goodies.
Now that seems true enough; Microsoft would do less business and the competitors would do more. But so what? What does any of that have to do with increasing competition or making consumers better off?
If Judge Colleen Kollar-Kotelly accepts this absurd theory of competition she flunks Economics 101 and will be reversed on appeal.
Would independent suppliers do more business if a court ordered General Motors to ship Buicks without steering wheels or radios? Sure they would, as consumers scrambled around to put together a useable product with features that they preferred. General Motors would do less business and non-GM firms would do more. But almost no economists would claim that such a regulation would increase competition in any sensible way, make any economic sense whatever, or that consumers would benefit from such an absurdity.
In its purest form, the states' theory holds that any competitive advantage or efficiency that one firm offers consumers always excludes or forecloses some would-be rival from the market and that this hurts competition and consumers. But this conclusion is simply dead wrong.
As Nobel laureate economist F.A. Hayek correctly understood, competition is a "discovery process" where consumers decide the final allocation of scarce resources by rewarding some entrepreneurs and punishing others. In addition, consumers ultimately decide the number of suppliers and the market share of the contestants. When certain entrepreneurs are excluded by consumer choice or foreclosed by efficiency from some market, it only means that consumers are reasonably satisfied with existing suppliers and will not support additional competitors.
It does not mean that markets have "failed" or that competition is deficient and requires any antitrust meddling.
In free, open markets, advantages and efficiencies provided by successful firms help consumers directly and are the fruits of the competitive process. To deny these fruits to consumers by law with the guess that competitors will supply complimentary products or services of similar quality is pure speculation.
Besides, the disincentive effect of such a regulation to first-mover firms would be disastrous. Where is the incentive to continue to improve a product beyond some basic level if competitors, at any point down the road, can bludgeon you with antitrust and strip away the value of your investments?
Unfortunately, Microsoft has spent the bulk of its court time arguing that it is simply not practical to strip out its browser and video applications, i.e., that the entire integrity of the Windows operating system would be affected negatively by such a regulation. Certainly Microsoft is obligated to rebut the states' contention that the deconstruction they propose is simply not possible. But there are dangers to such a defense.
If any expert witness or plaintiffs' attorney convinces Judge Kollar-Kotelly that Microsoft's impracticality argument is not correct, then nothing that Microsoft has argued would preclude the judge from ordering a mini-divestiture. Having conceded to the states an entirely incorrect theory of competition, Microsoft would be left defenseless until the appellate stage of this never-ending legal monstrosity.
A modular Windows may make little practical sense, but the wider and more important issue is the faulty theory of competition that the states support. The states have been allowed to assert that a proposal to create more competitors at any cost means more "competition" and that the antitrust laws should sanction such nonsense. They have been allowed to make the interests of the competitors of Microsoft, and not those of the consumers, the primary focus of any proposed judicial remedy.
And Microsoft, despite its firm resolve and abundant resources, has missed an opportunity to expose this antitrust charade compellingly before a national audience. What a shame.
(Dom Armentano is professor emeritus in economics at the University of Hartford and author of "Antitrust and Monopoly: Anatomy of a Policy Failure" (Independent Institute, 1998) and "Antitrust: The Case for Repeal" (Mises Institute 1999).)
Institute for Public Accuracy
(The IPA is a nationwide consortium of policy researchers that seeks to broaden public discourse by gaining media access for experts whose perspectives are often overshadowed by major think tanks and other influential institutions.)
WASHINGTON-- Enron and Andersen
--Greg Palast, co-author of the forthcoming book "Democracy and Regulation."
"The U.S. Senate is recoiling in phony shock and horror at the games Enron played to manipulate the California power market. The rip-offs, which Enron traders called 'Get Shorty,' 'Deathstar,' 'Fat Boy,' are simply variants on games Enron has been practicing in Britain for a decade, there known as 'stacking,' 'cramming,' and 'false scheduling.' None of this should come as a surprise to the U.S. Congress, which had full knowledge and warning about the ease of 'gaming' the power market when both parties voted to deregulate electricity prices in 1992. Rather than call for an end to the electricity deregulation con game, U.S. politicians continue to spread this failed experiment to other states, believing a 'fix' is possible.... Andersen's con is not new either. In 1989, it faced possible criminal charges over cooking the books for another power firm, Southern
Company. I was on that investigation, but the first Bush's Justice Department let the power pirates off the hook, claiming that if Arthur Andersen audited their accounts, it must be fine."
--Tony Tinker, professor of accountancy at Baruch College and author of "Paper Prophets: A Social Critique of Accounting."
"The imminent demise of Andersen should serve as a wake-up call. Instead, we are witnessing yet another chapter in short-termism, scapegoating, and bandage quick fixes. Does anyone believe that audit-for-rent practices were confined to Andersen? Champagne corks must be popping in the offices of the remaining Big Four accounting firms -- after the Andersen funeral service, the Big Four will have accomplished a degree of monopoly and concentration that, just a few years back, they had tendered in merger plans, and then hastily withdrew in the face of public outrage.... The Andersen/Enron affair has exposed a raft of conflicts of interest. To take one example from my own university business school, accounting teaching and research have been severely breached by the Big Five. University professors are dependent on their income-supplements through funded chairs and research grants. The American Accounting Association is itself in the big firms' financial pocket."
--Jamie Court, a consumer advocate with the Foundation for Taxpayer and Consumer Rights.
"Our report, 'Hoax: How Deregulation Let the Power Industry Steal $71 Billion From California,' shows that California was not a victim of the laws of supply and demand, as it has been widely portrayed. The California energy crisis was a public relations hoax -- orchestrated by the power industry -- that will cost $2,200 for every Californian.... In the smoking gun memos uncovered earlier, Enron acknowledges that the manipulation of the market is standard practice. In fact, the power traders across the industry colluded in order to game the system. The Wall Street Journal reported that Dynegy -- another big Texas power company -- set up sham trades to make themselves look more of a market player than the company really was.... The lesson is that electricity should never again be
left in the hands of unregulated, private corporations."
The National Center for Public Policy Research
(NCPPR is a communications and research foundation dedicated to providing free market solutions to today's public policy problems, based on the principles of a free market, individual liberty and personal responsibility. NCPPR was founded to provide the conservative movement with a versatile and energetic organization capable of responding quickly and decisively to late-breaking issues, based on thorough research.)
CHICAGO -- Ten Second Response: Study Says Clean Air Rules More Costly for Rural Areas
by Gretchen Randall
Background: A University of North Texas study just released says the Clinton Administration's Environmental Protection Agency's interpretations of New Source Review regulations for power plants would have a costly effect on rural areas. These interpretations are being challenged in court and the Bush Administration has not yet released its decision whether to suggest changes to them.
In the past, new pollution control equipment did not need to be installed when doing routine maintenance on power plants. However, the EPA in 1999 changed the definition of "maintenance" to greatly increase the number of plants that need to install this equipment. Because more coal-fired power plants are in rural America, this added cost to power companies places a greater burden on the already struggling rural economy.
"Rural America is probably in the direst economic straits since the Great Depression," says the report. "Rising electricity costs due to compliance with the EPA's new interpretation of NSR requirements will likely fall disproportionately on rural businesses and households, especially those with the least financial ability to pay higher utility rates.
"This will add to the disincentives of rural living and may well contribute to the already accelerating loss of population, family farms, and home-based business in many rural areas of the United States."
Ten Second Response: President Bush should use the findings from this study to put common-sense rules in place to maintain clean air without raising electricity prices and putting people out of work.
Thirty Second Response: While the U.S. is still trying to recover from a slowdown in the economy, we do not need to burden power companies with regulations that will raise electric rates and cause job layoffs. What we need is common-sense clean air rules and not punitive ones that don't achieve their goals.
Discussion: "In the debate over NSR not much attention has been paid to the impact on rural communities," said Bernard Weinstein, director of University of North Texas's Center for Economic Development and Research and one of the report's authors, as quoted by E&E News. "Most of rural America is already facing hard economic times, and this is just another disincentive for living, manufacturing or relocating to rural America."
(Gretchen Randall is the director of the John P. McGovern, M.D. Center for Environmental and Regulatory Affairs at the National Center for Public Policy Research.)