‘The Science Guy’ and Facts

Bill Nye and the EPA’s ‘endangerment finding.’

Letter to The WSJ. 

"Bill Nye “The Science Guy” invokes everything except science in his criticism of the Environmental Protection Agency’s rescission of its 2009 finding that greenhouse-gas emissions endanger public health (“The EPA Is Wrong About Greenhouse Gases,” Letters, Feb. 25).

Contrary to the EPA 2009 predictions: There has been a decline in smog levels from 1980 to 2024. There has been no trend in hurricane numbers or intensities since 1973. The Intergovernmental Panel on Climate Change finds no change in global flooding. There has been no trend in the EPA heat wave index since 1895, except for the 1930s. Several studies show a decline in net mortality from heat and cold. U.S. wildfires have declined sharply since 1926, and global wildfire acreage declined 24% between 1998 and 2015. Global droughts have declined about 0.5% per decade since 1950. Global per capita food production has increased 40% since 1980. And the latest peer-reviewed research reports no acceleration globally in sea-level rise. The Science Guy’s argument is fact-free.

Benjamin Zycher

Senior fellow, American Enterprise Institute" 

Our Trade With China Has Helped Americans

Tens of millions of U.S. households gained from lower prices for shoes, clothing and other household necessities

Letter to The WSJ. 

"In his review of “Red Dawn Over China,” (“A Maoist Myth Debunked,” Books, Feb. 14), Tunku Varadarajan asserts that China’s admission to the World Trade Organization in 2001 had “devastating consequences for every economy except China’s own. (Thank you, Bill Clinton.)” The facts say otherwise.

It’s true that the U.S. economy shed a net five million manufacturing jobs in the years that followed, but even the “China shock” analysis attributes only one million of those to expanding trade with China. Most of the rest were lost due to automation and productivity gains. Meanwhile, tens of millions of U.S. households gained from lower prices for shoes, clothing and other household necessities. The painful recessions of 2001-02 and 2008-09 were homegrown.

If Congress had rejected the accession protocol negotiated by the Clinton administration in 2000, China would likely have joined the WTO anyway, but U.S. companies would have lost out on the increased market access it required. From 2001 to 2017, before the Trump trade wars began, the average duty China applied to goods imported from the U.S. dropped from 25% to 7%. U.S. exports to China during that time grew eight-fold and sales by U.S. majority-owned affiliates in China soared more than 10-fold—totaling more than $500 billion annually.

Trade with China has been tough on certain U.S. companies, but for most Americans—including farmers, high-tech exporters and consumers—the consequences have been positive.

Daniel Griswold" (retired from Mercatus)

The Medicaid Autism Racket

Behavioral therapy payments are an easy target for fraud.

WSJ editorial. Excerpts:

There was "a Minnesota man pleading guilty last week to bilking Medicaid by setting up a sham autism center."

"Medicaid autism treatment has become an open vault for fraud and abuse."

"Behavioral therapy is an especially ripe target for people looking to game Medicaid. Diagnostic standards can be elastic, and states provide little oversight of providers and pay claims without requiring verification of treatment or benefits. While insurers that administer Medicaid benefits have an incentive to police fraud, autism treatment has become a fee-for-service free-for-all."

"Abdinajib Hassan Yussuf set up a fly-by-night autism center [in Minnesota] claiming to provide one-on-one therapy for autistic children . . . and paid kickbacks to parents to enroll them in his center."

"99% of Colorado’s Medicaid payments in 2022 and 2023 for autism treatment were improper or likely improper, totalling $285.2 million."

"Many autism centers billed Medicaid at more than $50 an hour for autism “treatment” when children were playing games, napping or eating."

"the state failed to do a “postpayment review of payments” to verify compliance with state and federal requirements."

"treatment was often “provided by staff who did not have the appropriate credentials”"

"states have little incentive to police waste and fraud because they get paid more for enrolling more of their citizens in Medicaid." 

America’s Natural-Gas Bounty Is Cushioning U.S. Markets From Global Shocks

Prices for the heating and power-generation fuel have surged around the world, but not in the U.S.

By Ryan Dezember of The WSJ. Excerpts:

"Natural-gas prices around the world surged this past week after the largest LNG export facility on earth was shut down by an attack from Iran. Prices in the U.S. climbed a relatively tame 11%.  

Americans aren’t likely to feel much pain from higher power bills as they did four years ago when energy markets were shocked by Russia’s invasion of Ukraine, analysts say. They can thank ample domestic inventories, record production and capacity to export LNG from the U.S. that is—for now, at least—pretty much maxed out."

"It’s another story overseas. Benchmark gas prices jumped 67% this past week in Europe, which became more reliant on LNG to keep the lights on after shunning Russian suppliers four years ago. Prices rose sharply in Asia as well, where most LNG shipments from the Persian Gulf wind up.

QatarEnergy halted LNG production after its Persian Gulf facilities were targeted, pulling the plug on about 20% of the world’s capacity. Even if running, it’s unclear when its explosive cargoes could pass through the Strait of Hormuz without risking an Iranian attack."

"Unlike in Europe, where gas inventories are unusually low, the U.S. is ending the winter heating season with plenty in storage."

"U.S. gas exporters don’t have capacity available to ship much more LNG abroad than they already are, and much of their current output is spoken for in 20-year supply deals." 

Does Competition Reduce Discimination?

Evidence from College Football

By Jeffrey Miron. 

"A standard economic view holds that markets will moderate some kinds of discrimination because “profit” maximizing organizations will recognize that discrimination is costly to their bottom line or other goals.

A recent study looked to the integration of college football in the 1970s for supporting evidence. By comparing conference-wide rankings and team win percentages before and after a team integrated, the study found that

poorly performing teams, potentially seeking to improve their win rate, choose to integrate.

Also,

worse teams were more likely to integrate than better teams… A likely explanation … is that poorly performing teams integrated to attract talented players.

These results indicate that

firms with low profits stop discriminating, or discriminate less, in a bid to increase profitability.

Somewhere, Gary Becker is smiling."

Entrepreneurs Take on the Funeral Monopoly: When Selling a Box Becomes a Crime

Oklahoma’s protectionist casket laws block competition and inflate costs. But some entrepreneurs are fighting back, taking their case to court to defend economic freedom

By Patrick Carroll of AEIR. 

"In 2017, Candi Mentink and her husband, Todd Collard, of Calvin, Oklahoma, launched Caskets of Honor, an innovative business selling caskets wrapped in vinyl graphics to honor the deceased. Todd, a graphic designer, created designs ranging from religious and patriotic themes to sports and hobbies.

The business grew quickly, but after four years, they discovered something surprising: in Oklahoma — one of only three states alongside Virginia and South Carolina — it is illegal to sell caskets without a funeral director’s license.

Candi and Todd learned this lesson the hard way. When they advertised their caskets at the Tulsa State Fair in October 2021, an Oklahoma Funeral Board investigator posed as an interested customer. After Todd told him he would be happy to sell him a casket, the investigator informed them that they were breaking the law. The investigator proceeded to file a complaint with the Board, which pursued an administrative action against the couple, resulting in a $4,000 fine, among other requirements.

To continue operating their business, Candi and Todd had to do some creative maneuvering. Obtaining a funeral director license was out of the question. That would require two years in a mortuary science program, a one-year apprenticeship, and thousands of dollars in fees. On top of that, to fully comply with the law, they would also have to transform their workshop into an official funeral home, which would be prohibitively expensive — not to mention wasteful, since they don’t plan on becoming funeral directors or running a funeral home.

Their workaround was moving the company’s legal home to Texas and requiring online orders. This allowed them to operate under interstate commerce rules, though Oklahoma law still bars them from selling or advertising to Oklahomans from their shop, cutting into sales.

Lawmakers have repeatedly tried to repeal the restriction, but pushback from the Funeral Board and a private trade association has stalled reform.

As a result, Candi and Todd have decided to sue. Working with the Institute for Justice (IJ), they filed a lawsuit on February 4 challenging the law as unconstitutional under Oklahoma’s protections of economic freedom.

Commenting on the lawsuit, IJ Attorney Matt Liles highlighted the absurdity of the current law. “At the end of the day, a casket is just a box. It serves no health or safety purpose,” he said. “You shouldn’t need to spend years studying unrelated topics just to sell a box.” 

The lawsuit drew particular attention to the protectionist nature of the current legal regime. “Oklahoma’s licensure requirements for casket sales have the intent and effect of establishing and maintaining a cartel for the sale of caskets within Oklahoma,” IJ writes. “…This anti-competitive cartel limits the lawful sale of caskets in Oklahoma to those who provide all other funeral services, while preventing individuals who do not wish to provide funeral services from offering caskets directly to the public. This scheme creates arbitrary and unreasonable barriers to conducting a lawful business and serves no legitimate interest related to public health, safety, or welfare.”

Vested Interests and the Power of Public Opinion 

In his 1949 treatise Human Action, the Austrian economist Ludwig von Mises warned about the ever-present threat of special interest groups that wish to stifle competition through legislation. 

“There were and there will always be people whose selfish ambitions demand protection for vested interests and who hope to derive advantage from measures restricting competition,” he wrote. “Entrepreneurs grown old and tired and the decadent heirs of people who succeeded in the past dislike the agile parvenus who challenge their wealth and their eminent social position.”

It’s easy to see why Oklahoma’s funeral industry wants to block up-and-coming competitors like Caskets of Honor. Less competition allows them to charge higher prices and ignore evolving consumer preferences — such as customized casket designs. The Institute for Justice notes that “the average funeral in Oklahoma costs $5,671 — 18 percent higher than the cost in neighboring states.”

How do vested interests get away with policies so clearly harmful to competitors and consumers? Mises explains: “Whether or not their desire to make economic conditions rigid and to hinder improvements can be realized, depends on the climate of public opinion.” In other words, they succeed because public opinion is on their side — a fact reflected in the repeated failure of three bills to end Oklahoma’s protectionist law.

Such protectionism, Mises observed, would have been largely futile in the nineteenth century, when classical liberalism prevailed. “But today,” he wrote, “it is deemed a legitimate task of government to prevent an efficient man from competing with the less efficient. Public opinion sympathizes with the demands of powerful pressure groups to stop progress.”

Changing that public opinion is challenging, but one promising approach is to tell the stories of entrepreneurs like Candi and Todd. When people see the real-world impact of protectionist policies, the injustice becomes impossible to ignore."

The Reagan White House Rejected Trump’s Tariff Power Claims

Section 122 was never meant to justify tariffs over ordinary trade deficits.

By Phillip W. Magness. Excerpt:

"Since 1976, the United States has had a near-continuous annual trade deficit. In 1984, this pattern prompted Congress to ask President Ronald Reagan to investigate its causes. The Senate Finance Committee submitted a list of questions to the White House about possible policy responses, including the following: “We would also like your analysis of the applicability of section 122 of the Trade Act of 1974 to the current [trade] imbalance, and the utility of surcharges or quotas to deal with this imbalance.”

The task of answering this question fell to Martin Feldstein, a longtime Harvard economist and a leading expert in macroeconomics, international economics, and public finance. At the time, Feldstein was serving as the chair of Reagan’s Council of Economic Advisers. He delivered the administration’s answer on Section 122 in a committee hearing on March 23, 1984:

On a more technical level, section 122 appears not even to apply to the current situation. The specific language of that section provides for the imposition of a tariff surcharge under two conditions: To deal with large and serious balance-of-payments deficits, and second, to prevent an immediate and significant depreciation of the dollar in foreign exchange markets.

Feldstein then carefully explained the conceptual difference between the “trade deficit” and a “balance-of-payments deficit” as contemplated by the statute:

Now, although we have a trade deficit and a current account deficit, we do not have a balance-of-payments deficit, in the strict sense envisioned in section 122. The technical definition for the balance-of-payments is the rate of accumulation of official reserve assets, including gold. Since net U.S. sales of other assets to foreigners, in other words net private investment in the United States, last year was more than enough to offset our current account deficit, the official U.S. reserves didn’t have to be drawn upon.

At the time of these remarks, official reserve drawdowns had become a thing of the past. Under the old Bretton Woods system, other countries maintained an official currency peg to the U.S. dollar. The dollar was, in turn, pegged to gold. Participants in this arrangement followed a complex set of rules administered by the International Monetary Fund to keep their currencies valued within the target ranges of the peg. As part of the deal, other governments could redeem their U.S. dollar holdings for gold at $35 an ounce. When a foreign government exercised this clause and exchanged dollars, it drew down on official U.S. reserves in gold and led to a “balance-of-payments deficit.”

In August 1971, President Nixon closed the gold exchange window and terminated this policy in a bid to stave off the depletion of U.S. gold reserves. The “Nixon Shock” threw the international exchange system into chaos, although for a while the United States attempted to reinstate a number of fixed exchange rate regimes. Congress passed the Trade Act of 1974, including the Section 122 tariff provision, amid this chaos in an attempt to provide negotiating leverage for a successor to the Bretton Woods system. That successor never emerged and in 1976 the International Monetary Fund formally amended its articles to terminate the fixed exchange rate system. The United States formally gave its assent to this change in October 1976, and exchange rates have floated on an open currency market ever since.

As a result of these changes to the international exchange system, the “balance-of-payments deficit” contemplated under Section 122 is now a relic of the past. Official U.S. reserves are no longer tied up in maintaining a fixed exchange system and are therefore not typically drawn down into deficit. Feldstein explained as much in his 1984 testimony:

Thus, although the current account deficit will be larger in 1984 than it was last year, there is no reason at this time to expect that there will be a balance-of-payments deficit in 1984. We will have a trade deficit, we will have a current account deficit; but there is no reason to think that we will be drawing down U.S. reserves or selling off our gold stock, and therefore we don’t have the balance-of-payments deficit that is required as a condition for triggering section 122.

Trump’s interpretation of Section 122 is not only a misreading of its terminology—it’s a misreading that past administrations investigated in response to similar trade deficit conditions. As Feldstein’s testimony shows, the Reagan Administration explicitly rejected Trump’s current argument and found that a “balance-of-payments deficit” did not exist under the current floating exchange rate system."