The Heritage Insider: How net neutrality can shut down competition, more states should be like Texas, Firestone's Ebolo success would be against the rules in the USA, and more

November 29, 2014

Latest Studies
42 new items, including a Show-Me Institute report on why state economies grow, and a Reason review of why the Fed got big

Notes on the Week
How net neutrality can shut down competition, more states should be like Texas, Firestone's Ebolo success would be against the rules in the USA, and more

To Do
Figure out our growth problem

Latest Studies

Budget & Taxation
• Top 5 Things Congress Should Consider During Lame-Duck Session – Competitive Enterprise Institute
• Benchmarking New York: Counties, Cities, Towns and Villages – Empire Center for New York State Policy
• The Logic of Pension Valuation II – Pioneer Institute for Public Policy Research
• Pension Debt: Omaha’s Billion Dollar Problem – Platte Institute for Economic Research
• Federal Liabilities: They’re Bigger than You May Think – Private Enterprise Research Center

Crime, Justice & the Law
• Wheels of Fortune: A Report on the Litigation Industry’s Disability Practice – Manhattan Institute

Economic and Political Thought
• The Age of Endarkenment – Centre for Independent Studies
• The Enlightenment Made Us – Centre for Independent Studies

Economic Growth
• Is There a Link Between Economic Freedom and State Economic Growth? – Show-Me Institute

Foreign Policy/International Affairs
• Russia and the South Caucasus: A Situation the U.S. Cannot Ignore – The Heritage Foundation
• Russia’s Invasion of Ukraine: The U.S. Needs a Strategy – The Heritage Foundation
• U.S. Election Should Energize Asia Policies – The Heritage Foundation
• KTO KOVO? – Hoover Institution
• Moral Hazard and the Obama Doctrine – Hoover Institution
• Why China Will Not Become the Dominant Power in Asia – Hudson Institute

Health Care
• What Ebola Tells Us about Our Health Care System – American Action Forum
• Physician, Heal Thyself: Doctors in a Pluralist Democracy – American Enterprise Institute
• Waiting Your Turn: Wait Times for Health Care in Canada, 2014 Report – Fraser Institute
• Medicare and the Free Market – Hoover Institution
• Patient, Heal Thyself: Why Congress Should Repeal the Medicine Cabinet Tax on Over-the-Counter Drugs – National Center for Policy Analysis

Immigration
• The “Most Favored Nation” Approach in America’s Immigration Policy – Center for Immigration Studies

Information Technology
• Where’s the Beef? – Free State Foundation
• Beyond Hypothetical: How FCC Internet Regulation Would Hurt Consumers – The Heritage Foundation

Labor
• Primer: Overtime Pay Regulation – American Action Forum
• Raising Wisconsin's Minimum Wage: Who Would Be Helped? Who Would Be Hurt? – Wisconsin Policy Research Institute

Monetary Policy/Financial Regulation
• How the Fed Got Huge – Reason Foundation

National Security
• Mexico’s Security Crisis: Will Iguala Be a Wake-Up Call? – American Enterprise Institute
• Nuclear Negotiations with Iran: U.S. Must Avoid a Rush to Failure – The Heritage Foundation
• Deterrence in the Drone Age – Hoover Institution
• Managing the Cyber Security Threat – Hoover Institution
• Thoughts on Unconventional Threats and Terrorism – Hoover Institution

Natural Resources, Energy, Environment, & Science
• Hucksterism and Self-Dealing at the Sierra Club – Capital Research Center
• The Justice Department’s Green Raid on America – Capital Research Center
• A Legal Analysis of Oregon’s Trust Obligations in Managing the Elliott State Forest – Cascade Policy Institute
• Global Petroleum Survey 2014 – Fraser Institute
• Merchants of Smear – Heartland Institute
• Impacts of Carbon Taxes on the US Economy – The Heritage Foundation
• A Model to Evaluate Vehicle Emission Incentive Policies in Japan – Private Enterprise Research Center

Retirement/Social Security
• Why Don’t Americans Save Their Money? – Reason Foundation

The Constitution/Civil Liberties
• Brief of Amici Curiae In Support of Petitioner in Hickenlooper v. Kerr – Cato Institute
• A Quartet of Freedoms: Freedom of Religion, Speech, Association, and Conscience – Centre for Independent Studies

Transportation/Infrastructure
• Using Transportation Public-Private Partnerships to Improve Mobility and Increase Value to Taxpayers – Washington Policy Center

How net neutrality can shut down competition: Google is a major advocate of net neutrality, but did you know the company itself has been accused of violating net neutrality principles? James Gattuso and Michael Sargent recount the controversy:

The 2013 contretemps involved Google Fiber, a broadband ISP run by Google. Under the terms of service issued by Google Fiber, subscribers were not to run “servers” on Google Fiber connections. Google Fiber, the company explained, was intended as a consumer service, not a business service. Still, a consumer in Kansas filed a complaint against Google with the FCC, citing the neutrality rules’ ban on blocking “non-harmful devices.”

Despite its dominant position in the search engine market, Google is a new entrant into the ISP marketplace. Google Fiber is a major initiative by the firm, intended to challenge the incumbent broadband providers by creating a new competitor to their networks.

The complaint posed an obstacle to this pro-consumer effort. But rather than reduce unnecessary barriers to this welcome competition, the FCC’s interference would simply have added another roadblock. And, given Google’s total lack of market power in this marketplace for broadband access, there was no plausible benefit for consumers.

Google argued in response to the FCC that the server ban was “reasonable network management,” exempt from regulation. The FCC took no further action. Google Fiber has since continued to expand, challenging the leading ISPs in a small but growing number of cities. [Internal citations omitted.]

For 11 more examples of how net neutrality could thwart business practices that are beneficial to consumers, see Gattuso and Sargent’s paper, “Beyond Hypothetical: How FCC Internet Regulation Would Hurt Consumers.” [Heritage Foundation, November 25]

There are a lot of states that should be more like Texas.

Mark Perry:

The chart and data tell a powerful and remarkable story of job creation in the Lone Star State of more than 1.36 million new jobs added since the start of the Great Recession, compared to a net deficit of 354,000 jobs for the other 49 states combined. Much of the economic success of Texas in recent years that has fueled job creation in the state is a direct result of the shale oil and gas boom taking place in areas like the Permian Basin in west Texas (1.8 million barrels of oil per day) and the Eagle Ford in south central Texas (1.6 million barrels per day). Texas is now producing almost 37% of America’s total crude oil production, and as a separate country would be the world’s 8th largest oil-producer. Further, Texas has done a great job of attracting businesses like Toyota because of the state’s “employer-friendly combination of low taxes, fair courts, smart regulations and world-class workforce.” [American Enterprise Institute, November 21]

Is there an escape from Common Core? Common Core is probably a bigger threat to your child’s education than you realize, but there is momentum for change, too. A panel at The Heritage Foundation discusses how the effort to homogenize curricula came to be, and what are the prospects for families and students to break free.

A “Doc Fix” that helps both taxpayers and patients: Every year, Congress worries about a so-called Doc Fix—reversing Medicare fee cuts in order to make sure enough doctors remain willing to provide services to beneficiaries. David Henderson suggests a better concept for a doc fix, one that could be applied to Medicaid, as well: “[I]nstead of having taxpayers cough up this amount, we keep the Medicare fee where it would have been but allow doctors to charge up to 31.6 percent more.”

My “doc fix” would have three good effects. First, doctors would be paid amounts that they have come to expect. Second, because Medicare beneficiaries would have to bear some of the cost themselves, many of them would say no to some marginal procedures; this would free up doctor time and ease the shortage of doctors. Third, because the higher fees would cause patients to demand somewhat fewer services, taxpayers would save money.

Does even this step, which some would regard as modest, seem too scary? Well, guess what—we already have a modest form of balance billing. Doctors who don’t accept assignment can charge a fee up front that is 9.25 percent above the amount allowed by the Medicare fee schedule. In other words, we already have widespread experience with limited balance billing.

Moreover, consider the fact that one of the greatest success stories in modern medicine—both in cost and quality—is Lasik eye surgery. According to George Mason University economist Alex Tabarrok, in 1998, the average price of laser eye surgery on one eye was approximately $2,200. Just six years later, the price had fallen to $1,350, a 38-percent reduction. Adjusted for inflation, the price had fallen by over half! Why is that significant? Because during that time, Lasik was not covered by Medicare or Medicaid. When people spend their own money on medical care, providers are motivated to increase efficiency. Nor was this reduction in prices due to a reduction in quality. Over those six years, the quality of Lasik rose.

The same problem that exists in Medicare is also a big problem for Medicaid, the federal and state government health insurance system for the poor and near-poor. Doctors who accept Medicaid cannot legally charge more to patients on Medicaid than the amounts that CMS has set. In 2011, according to Decker’s study, 31 percent of doctors refused to take any new Medicaid patients. An even larger percent of doctors refuse to accept Medicaid than the percent that refuses to take Medicare patients because, for those doctors, it just isn’t worth it. In New Jersey in 2011, for example, only 40 percent of doctors accepted new Medicaid patients. [Hoover Institution, November 25]

Henderson’s “doc fix” is a half-way approach based on an even more radical—and perhaps politically difficult—reform: letting Medicare doctors charge whatever they want, with beneficiaries covering the difference between the government’s reimbursement and the doctor’s charges.

Video of the week: The new civics lesson: Saturday Night Live updates Schoolhouse Rock’s “I’m Just a Bill”:

Firestone’s success against Ebola in Liberia would have been against the rules in the United States. While Ebola was ravaging communities elsewhere in Liberia, Firestone prevented an epidemic at its rubber farm and processing plant—the largest such plantation in the world—less than 40 miles from the capital, Monrovia. Robert Book describes what Firestone did:

Firestone employees constructed an improvised 23-bed Ebola treatment unit—separate from the company's regular health clinic. They used cargo shipping containers and plastic wrap, and established a one-way “traffic” path for health care workers, with a place to don protective gear at the entrance and a place to remove it in a controlled manner at each exit. To protect health care workers, Firestone repurposed hazmat suits designed for cleaning up chemical spills, and respirators designed to protect against toxic volatile organic compounds. They also set up quarantine facilities in existing company housing near the new treatment facility.

Once the unit was set up, no health care workers there contracted Ebola, and no members of the Firestone community contracted it from an Ebola patient who was being quarantined or treated.

If a private company in the United States had replicated Firestone’s response, it would have more than tripled the Ebola treatment capacity that exists in the entire United States within a span of 48 hours. Unfortunately, Firestone’s on-the-fly treatment facility could not have been built in the United States.

As Book details, any one of a number of government regulations would have derailed such an effort. In the first place, in many states you need a “Certificate of Need” in order to expand or build a new hospital facility, and that takes from six to 18 months to obtain. Certificate of need laws were intended to control capital investment by private hospitals in order to keep down government health care spending. In effect, however, the laws suppress competition in hospitals. The Affordable Care Act also prohibits certain types of hospital expansion without permission from the federal government. Lab facilities have a separate certification requirement. The repurposed industrial gear that Firestone gave its health care workers provided more protection than typical hazmat suits, but they would not be approved medical devices in the United States. Zoning requirements would be difficult to meet with structures built from shipping containers supplemented with plastic wrap. The Americans with Disabilities Act would require any such facilities to have hallways of a minimum width and counters of a certain height. Finally, there is an accreditation process that all hospitals must go through.

Book concludes that what Firestone did in 48 hours would have taken a private company in the United States 18 months to 36 months to complete. This story is perhaps a clue as to why the American health care system is so expensive and why health care innovation lags other areas of the economy. [American Action Forum, November 25]

Toolkit: Tweet well without sitting in front of a Computer 24/7. Two suggestions for building your twitter followers, from Katerina Petropoulou:

Curate the best content

Now that you know who your Twitter audience is, the goal is to tweet content they will find interesting enough to click on and share with their followers.

A good content curation system can help you save tons of time every day discovering quality content and staying on top of news. And make sure that influential blogs in your field and trustworthy news sources are on your radar.

Keep calm and schedule

The most successful Twitter users manage to keep their accounts updated without being glued in front of a screen the whole day. How? By scheduling their tweets throughout the day.

You can build your very own sharing plan based on when your followers are online and schedule your tweets accordingly for maximum reach.

Bonus tip: Are you already using Buffer to schedule your tweets? You can easily manage and schedule your content through Twitter Counter as well, by connecting your Buffer account. [TwitterCounter, September 6]

You’ll find three more ideas in her article at TwitterCounter.com.

Bonus Toolkit: Are your leaders playing the right roles? How is your think tank’s organizational self-awareness? Are your leaders still playing the right roles to help the organization succeed? Assessing those questions can be a challenge, but it is necessary, says Jeffrey Cain:

As an organization develops, its leaders often fail to understand how their roles need to change. In its infancy, an organization’s CEO may wear many hats: senior policy analyst, chief development officer, operations manager, even events coordinator. Over time, however, the CEO must come to see his or her role not as the person with a finger in the pudding of every project, but as the person responsible for building the institution.

In this new role, the CEO need not personally raise every dime, but he does need to put into place the institutional mechanisms—the staff, policies, and procedures—for a successful development program. The CEO must, in other words, become a planner and delegator. This is a difficult transition for many founders and even long-time CEOs, as the history of many now-forgotten organizations attests.

Nevertheless, as the chief executive of a growing organization, tasking other people with responsibilities and giving them the freedom to succeed (and fail) is the very definition of management. [SPN News, May/June 2014]

Boards of directors need to ask these kinds of questions about their roles, too, says Cain.

To Do: Figure Out Our Growth Problem

• Find out if low growth is the new normal for the United States economy. The Cato Institute will host a one-day conference assessing the growth outlook and exploring options for reviving our engine of creating destruction. The conference will begin at 9 a.m. on December 4. (You can get a preview of the discussion by checking out the essays in the forum at www.cato.org/conference-forum/reviving-economic-growth.)

• Learn from and share ideas with the legislators, policy experts, and business leaders who are working to advance free market and limited government policies. The American Legislative Exchange Council’s State & Nation Policy Summit will be held at the Hyatt Regency Capitol Hill in Washington, D.C., on December 3 – 5. Speakers include Sen. Ted Cruz (R-Texas), author and commentator Mark Levin, and political consultant Frank Luntz.

• Hear some new ideas on education. Arthur C. Brooks and Frederick Hess of the American Enterprise Institute, Howard Fuller of Marquette University, and Kaya Henderson of the District of Columbia Public Schools will share their thoughts on how to fix America’s schools. This AEI Vision Talks event will be held on December 2 at 6 p.m. at the National Geographic Grosvenor Auditorium in Washington, D.C.

• Discover what Russia is up to in Eastern Ukraine. The Heritage Foundation will host a panel assessing the prospects for Ukrainian national and territorial integrity in the winter ahead. The discussion will begin at noon on December 1.

• Help the Alabama Policy Institute celebrate 25 years of promoting liberty. Louisiana Gov. Bobby Jindal will keynote the event at 3660 Grandview Parkway in Birmingham. The reception will begin at 5:30 p.m., and the dinner will begin at 7 p.m. on December 4.

• Help the Yankee Institute celebrate 30 years of promoting liberty in Connecticut. Champion of Liberty award recipient Larry Kudlow will be there! The gala will begin at 5:30 p.m. on December 4, and will be held at the Stamford Sheraton.

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