The Bureaucrats Who Deserve Lumps of Coal for Christmas (Corruption at The Federal Mediation and Conciliation Service)

By Craig Eyermann of The Independent Institute.

"There are many stories about bureaucrats behaving badly within the U.S. government. But did you know some of the worst of the worst all worked for a single federal agency?

The Daily Wire‘s Luke Rosiak’s investigative report into the abuses tolerated at a small federal agency in which bureaucrats exploited a lack of oversight to their extreme personal benefit is both eye-opening and extremely frustrating. Here’s an excerpt introducing what was allowed to pass as business-as-usual at the agency during the last ten years:

The Federal Mediation and Conciliation Service (FMCS) occupied a nine-story office tower on D.C.’s K Street for only 60 employees, many of whom actually worked from home, prior to the pandemic. Its managers had luxury suites with full bathrooms; one manager would often be “in the shower” when she was needed, while another used her bathroom as a cigarette lounge. FMCS recorded its director as being on a years-long business trip to D.C. so he could have all of his meals and living expenses covered by taxpayers, simply for showing up to the office….

FMCS seemed, quite clearly, to exist for the benefit of those on its payroll, and not much else. One employee told me: “Let me give you the honest truth: A lot of FMCS employees don’t do a hell of a lot, including myself. Personally, the reason that I’ve stayed is that I just don’t feel like working that hard, plus the location on K Street is great, plus we all have these oversized offices with windows, plus management doesn’t seem to care if we stay out at lunch a long time. Can you blame me?”

As a taxpayer, I want accountability for how the money taken out of my pay is spent. I don’t want to see it wasted with nothing positive to show for it. My answer to the FMCS employee’s question is yes.

But wait, it gets so much worse than employees taking long lunches.

Top FMCS official George Cohen used a “recreation and reception fund” to order champagne and $200 coasters for his office, and to purchase artwork painted by his wife. The tiny agency commissioned paintings of its top employees — as one employee told me, “like they were reigning kings or something… I’ve never seen anything like it before.” It spent $2,402 retouching the portrait of someone who briefly held the top job in an acting capacity.

FMCS employees “unblocked” their government credit cards to turn off typical abuse protections, then used them to apparently fund personal expenses and simply bill anything they’d like to the government. One employee leased a BMW; another (IT director James Donnen) billed the government for his wife’s cell phone, cable TV at both his home and his vacation home, and even his subscription to USA Today.

But wait, it gets so much worse than employees using their government credit cards to pay for their personal expenses.

FMCS used federal jobs as a spigot of cash for friends and relatives. Allison Beck, a former union lawyer who became a top FMCS official, employed her sister-in-law as a “special assistant,” and an inspector general found evidence that she tried to create a high-level job for a friend.

FMCS employees allegedly steered contracts to friends, allowing them to write the “statement of work” that would be used to choose the contract winner — resulting in, of course, their own selection. Such “trainers” were paid $1,500 per day per person to train FMCS’s staff, plus $163 an hour for travel.

But wait, it gets so much worse than employees abusing their positions to lavish jobs and rewards on their friends and family members.

Scot Beckenbaugh, a top agency official, was paid $174,000 a year, but that wasn’t enough: He had his “duty station” listed as Iowa so that he could have all of his living expenses and food paid for in D.C., where he lived and worked, as if he was on a six-year-long business trip. When an employee raised the issue to an agency lawyer, the lawyer told him he “should not raise these issues … it would open a can of worms.”…

Paul Voight, a human resources official, was listed as living in D.C. even though he actually lived in Wisconsin, in order to fraudulently obtain higher cost-of-living pay. Voight’s boss was Artur Pearlstein, who left the agency to become a law professor, and was then re-hired after his academic career imploded in a plagiarism scandal. His first move in his new job was terminating an independent investigation into FMCS staff abusing taxpayer funds for personal gain.

But wait, it gets so much worse than bureaucrats grafting excessive income benefits for themselves at taxpayer expense.

It funded constant travel of its employees to exotic locales, on the pretext that it was drumming up business for the federal agency — an admission that there was little demand for the agency’s existence.

In one month, Beck traveled to Italy and Switzerland, where she conducted a business meeting — over video chat. Then she went to Tunisia and an island off the coast of Georgia. She flew first class and forced the agency to reimburse her for mileage when she drove to her vacation home in Maine.

But wait, it gets so much worse than bureaucrats merely taking exotic vacations on the taxpayer’s dime.

Rosiak investigated the agency nearly a decade earlier, finding many of these abuses and more, which should have led to a criminal investigation. He recounts what happened instead:

What surprised me most about my FMCS investigation was what happened afterward: nothing. An inspector general made a referral to the FBI, but there were no prosecutions. Instead, President Barack Obama nominated a chief subject of the investigation to the top job.

This is the worst part of the story. The message former President Barack Obama sent with his official action is that public corruption would not only be tolerated but welcomed at the FMCS. Is it any surprise that all the abuses of the badly behaving bureaucrats got worse in the decade that followed?

The FMCS lasted until March 2025, when the agency became one of the first to be axed by President Trump’s DOGE initiative. The badly behaving bureaucrats who lived like “reigning kings” were fired.

For taxpayers, that’s the beginning of a happy ending. An even better ending would involve criminal investigations and restitution. Until then, these bureaucrats truly deserve lumps of coal in their Christmas stockings."

This 1,300-Page Anticapitalist History Gets a Few Things Wrong

Sven Beckert's Capitalism: A Global History is...not a reliable history

By Phil Magness.

"Adam Smith, widely considered the first major theorist of capitalism, abhorred the institution of slavery. "Whatever work [a slave] does…can be squeezed out of him by violence only, and not by any interest of his own," he wrote in 1776. In an earlier lecture, Smith indicted laws that "strengthen the authority of the masters and reduce the slaves to a more absolute subjection." The plantation system at the core of this economy was not a competitive market; planters had secured a state-sanctioned "monopoly against all the rest of the world" and "indemnif[ied] themselves by the exorbitancy of their profites for their expensive and thriftless method of cultivation." Smith singled out the exceptional cruelty found in the British colonies of "Jamaica and Barbadoes, where slaves are numerous and objects of jealousy [and] punishments even for slight offences are very shocking."

Yet in Capitalism: A Global History, Sven Beckert calls colonial Barbados "an almost perfectly Smithian economy, with utility-maximizing individuals creating a newly productive division of labor"—indeed a model of market capitalism. A simple contrast of those two characterizations is enough to raise the question of whether Beckert bothered to consult what Smith actually wrote about West Indian slavery.

In the 19th century, slaveowners and abolitionists alike noted the tensions between the emerging industrial economy and the plantation system. The former depended on freedom of movement and on choice in career and industry. The latter grafted elements of feudal hierarchy and coerced labor onto a fixed model of agrarian mass production. Proslavery theorists such as George Fitzhugh saw the two systems as irreconcilable. "Laissez faire," he argued, was "at war with all kinds of slavery, for they in fact assert that individuals and peoples prosper most when governed least." Such testimonies complicate Beckert's interpretation of slavery as a fundamentally capitalistic institution.

Beckert's book, a sweeping 1,300-page history, synthesizes bits and pieces of the academic literature to recount the emergence of capitalism over the last millennium, tracing it from the port cities of Yemen in the Middle Ages to the global economy of today. But that literature is uneven and selectively curated. Standard works on the "Great Enrichment"—the sustained worldwide explosion in wealth and living standards over the last two centuries—receive scant mention. Despite the centrality of slavery to Beckert's narrative, he relegates the vast body of empirical analysis on this question to a single footnoted reference to an unremarkable synopsis by another author.

Instead, Beckert mixes a peculiar amalgam of anticapitalist authors. Some are familiar. Beckert treats Karl Marx's writings as an obvious diagnostic manual for how capitalism operates, complaining only that their 19th century milieu and Eurocentric focus precluded a more universal application. He has similar affinities for Karl Polanyi, calling the socialist writer "one of the twentieth century's most perceptive observers of capitalism" while evincing little awareness of the withering empirical criticism that Polanyi's 1944 manifesto, The Great Transformation, has attracted. When Beckert draws from economists, they are almost invariably from the fringes of the profession. He credulously repeats the inequality theories of Thomas Piketty, for example, showing no familiarity with the critiques of their shaky empirical footing or the heavy contestation around Piketty's "laws" of capital stock concentration.

The core of the book's themes and general style comes from a more obscure source: the German Historical School of Gustav von Schmoller and Werner Sombart. Beckert's new study bears more than passing resemblance to Sombart's Der Moderne Kapitalismus, a huge untranslated work published in successive volumes from 1902 through 1927. There are differences and updates. Whereas Sombart adopted a Eurocentric framework, Beckert's approach emphasizes the role of capitalism in the "Global South" of postcolonial studies. Yet both works purport to trace capitalism through distinctive historical "stages" of development. Here capitalism functions not so much as a system of exchange but as a tumultuous, violent "process" that organizes all economic life around the "ceaseless accumulation of privately controlled capital." Beckert presents his product as a global extrapolation on the Historical School's approach, but its message is ultimately a sustained derogation of capitalism and the academic discipline that he sees as doing the capitalists' bidding: mainstream economics.

The source of Beckert's grievance goes back to the marginal revolution of 1871, when William S. Jevons and Carl Menger developed near-simultaneous solutions to the longstanding problem of value in economic theory. Earlier classical economists theorized that the value of a good is instilled by the labor performed to improve upon it. This simple intuition breaks down in practice, as Smith noticed when looking at cases where the circumstance of a transaction caused differences in how goods were priced. The marginalists deduced that value is a function of individual subjective preferences, as exercised at the moment of a transaction by the parties to an exchange. This created a stumbling block for Marxist economics, which relied on the labor theory of value to calculate the "surplus value" that capital owners allegedly appropriate from their labor force without fair compensation. It also sparked a methodological feud between Menger and Schmoller, who attacked the marginalist approach as overly abstract and deductive.

Beckert unintentionally reveals that he does not grasp the logic of marginalism. He interprets subjective value theory as a crude attempt to "quantify the pleasure that goods provided for consumers," which he deems "ahistorical" and blames for "shift[ing] the primary question of economics" from labor-centric production "to the problem of how scarce resources should be allocated." In a few ambiguous steps, Beckert migrates to the 1960s writings of the post-Keynesian economist Piero Sraffa, who attempted to construct a theory of value from labor and commodity inputs that claimed to resuscitate this older approach, sans marginalism. Few mainstream economists cared, finding Sraffa's approach tendentious and empirically irrelevant. Beckert nonetheless proceeds as if the marginal revolution failed at its objectives, or at least warrants discarding today on the grounds that it allegedly ignores "history, power, culture, and even ethics" in favor of claimed universal laws of economic rationality.

For all his complaints, it is Beckert who whiffs on the historical context of this debate. Ignoring price theory, or perhaps not understanding its complexity, he scoffs that the heirs of marginalism "were all utopian thinkers with an almost religious belief in markets." His attempted history of economic thought omits the fact that an observed breakdown in the labor theory of value (David Ricardo, for example, noticed that wine pricing defied an aggregation of its labor components) precipitated this new approach. He glosses past marginalist critiques of the German Historical School's lack of evidentiary rigor. And as his treatment of slavery shows, Beckert appears unaware of mainstream economic scholarship on the very topics he claims as a historical specialization. 

Ultimately, Beckert's grievance comes down to politics. He believes that marginalism's triumph imposed an "intellectual enclosure" that "divorced economics from other social science disciplines." Conveniently, those other disciplines tend to display greater normative alignment with Beckert's own beliefs about inequality, labor, and class conflict.

These methodological complaints culminate in a lengthy treatment of "neoliberalism," the supposed pinnacle of this "intellectual enclosure" from the mid–20th century to the present. Here Beckert adopts the ideologically loaded frameworks of scholars who view "neoliberalism" as a cohesive project to wall off the capitalist economy from "democratic" will, by which they invariably mean a socialist model of economic redistribution.

Beckert's account repeats many common errors of this genre. He depicts 20th century trade liberalization as the quintessential neoliberal project, ignoring that its main institutional faces, the General Agreement on Tariffs and Trade and later the World Trade Organization, grew out of the New Deal. While characterizing the "neoliberal" postwar economy as an institutional veneer for coercive economic violence, he almost entirely neglects its historical context amid a geopolitical struggle with the Soviet Union's coercive applications of Marxist doctrine. And in a final twist, Beckert cannot resist impugning capitalism with another form of violence. "Fascism never broke with a fundamentally capitalist organization of economic life," he contends, citing its alleged entrancement with the "commodification of inputs, outputs, and labor" and, above all, private property.

These features transmitted into "neoliberalism" after the war, he argues, because of the "absolute primacy of securing the workings of the price mechanism" in its doctrines. This produces a high "neoliberal" tolerance for authoritarianism, even "admiration for fascism"—a point he attempts to sustain with an out-of-context quotation by Ludwig von Mises in 1927 that credited interwar fascist governments for halting Marxist political violence.

Compare that with Beckert's assessments of Sombart, whom he praises as "incisive" and visionary. Beckert omits the final turn in Sombart's career. In 1934, this student of Schmoller, former correspondent of Friedrich Engels, and prophet of capitalism's evolutionary procession would forever discredit the reputation of the German Historical School by linking it to the Third Reich. Sombart's Deutscher Sozialismus demarcated this moment as an "age of late capitalism, which at the same time is early Socialism" and prophesied the rise of a new socialist economic order rooted in a Germanic "Volksgeist."

It is not in the myth of a Smithian Barbados where we find the historical value of capitalism. It is the terrifying alternatives that emerge when voluntary exchange is supplanted by an illiberal convergence between the socialist left and nationalist right."

Related posts:

*Capitalism: A Global History*, by Sven Beckert (By Tyler Cowen) (2025)

Slavery Did Not Make America Rich: Ingenuity, not capital accumulation or exploitation, made cotton a little king (By Deirdre Nansen McCloskey) (2018)

Jacob Levy Review's Sven Beckert's Empire of Cotton (2016) 

The Case for Retracting Matthew Desmond’s 1619 Project Essay (By Phillip W. Magness) (2020) 

America’s Seniors Are Overmedicated

A Wall Street Journal analysis of Medicare data found one in six seniors enrolled in Medicare’s drug benefit were prescribed eight or more medications at the same time

By Anna Wilde Mathews, Christopher Weaver, Tom McGinty and Josh Ulick of The WSJ. Excerpts:

"One in six of the 46 million seniors enrolled in Medicare’s drug benefit, which pays for most drugs taken by older Americans, were prescribed eight or more medications."

[there is] "a widely used list of medications that might be dangerous for seniors. The guidelines, maintained by the American Geriatrics Society and named the “Beers Criteria” after the doctor who first led their development, suggest some drugs should almost never be taken by older patients."

"Among the seniors in the Journal analysis who were taking eight or more drugs, 3.6 million had prescriptions for at least one medication that geriatricians say elderly patients should generally avoid."

"Among seniors prescribed 8+ drugs, 1.6 million got benzodiazepines, sedatives that appear on the Beers list.

In addition, 568,000 of those seniors were prescribed gabapentin or a similar drug. Gabapentin can have sedating effects.

More than 310,000 of the benzodiazepine patients also received muscle relaxants, another type of drug the Beers guidelines say seniors should avoid.

The Journal found 147,000 seniors took all three categories of drugs at once.

Mixing multiple medications that affect the central nervous system can magnify their side effects, leading to falls, say the Beers guidelines."

"The Journal analysis found that, among seniors taking eight or more drugs, it was common for the prescriptions to come from a large number of doctors.Some doctors prescribe medications to their patients at alarming rates, at times single-handedly ordering eight or more drugs for a single patient."

"process known as medication therapy management, is supposed to be a requirement under Medicare. The insurers that sell drug coverage must provide the service."

"The federal mandate applies to only a limited subset of enrollees"

"comprehensive medication reviews mandated by Medicare didn’t affect the average number of drugs prescribed to patients." 

The History of Hubristic U.S. Ethanol Policy

Letter to The WJ. 

"Mario Loyola and Derrick Morgan are generally right about the Renewable Fuel Standard, or RFS, but they omit key facets of the mandate’s history (“Can Trump’s EPA Break the Ethanol Habit?” op-ed, Dec. 5).

The RFS was established under the 2005 Energy Policy Act, which called for the annual blending of 7.5 billion gallons of ethanol into the gasoline supply by 2012. The real expansion, however, came in 2007 with the Energy Independence and Security Act, a response to soaring gasoline prices.

EISA upped the ante, raising the desired ethanol amount to 36 billion gallons by 2022. Fifteen billion would be derived from food crops like corn, but much of the rest was to come from the development of cellulosic ethanol: fuel from wood chips, switch grass and the like. President Bush assured us the technology would be ready by around 2012. With billions of gallons of cellulosic ethanol around, the auto industry would produce cars that could take a blend of 85% ethanol, leading to greater U.S. energy self-sufficiency.

EISA passed with bipartisan support, but the thinking behind it was the same hubris that Congress had shown in supporting other energy panaceas like synfuels: the notion that if government demanded technological change, it would happen. Cellulosic ethanol has never proved economically viable, but the RFS remains. It is too much a farm bill for politicians to repeal it, though surely they should.

Em. Prof. Peter Z. Grossman

Butler University"

 

 

Democrats Shout Into the Wind

Now they know how it feels when they kill oil and gas projects

WSJ editorial. Excerpts:

"West Virginia’s Mountain Valley Pipeline was more than 90% complete when Fourth Circuit Court of Appeals judges canceled its permits. Congress had to pass a law to let the developer finish the pipeline so more gas could flow from Appalachia to the Southeast.

A liberal federal judge in 2020 ordered Energy Transfer to halt the oil flow and empty the Dakota Access Pipeline, which had been operating for three years. The D.C. Circuit stayed the order, but the legal battles continue. The Army Corps of Engineers on Friday issued a new 464-page environmental review for the pipeline."

"Democrats have used phony environmental concerns to block natural-gas pipelines. Former New York Gov. Andrew Cuomo nixed a permit for the Constitution pipeline, which would have delivered cheap gas from Pennsylvania to his state"

"In 2022 Massachusetts Gov. Maura Healey boasted she had “stopped two gas pipelines from coming into this state.”"

"Gas plants can produce electricity at some 80% lower cost than offshore wind"  

China’s Sprint for Tech Dominance Can’t Hide an Economy Full of Holes

Self-sufficiency push has made China a tougher competitor to the U.S., but it comes with enormous waste

By Brian Spegele of The WSJ. Excerpts: 

"Factory robots run by artificial intelligence churn out products that jobless college graduates cannot afford. State technology funds throw billions of dollars at money-losing startups even as the national debt surges to unprecedented levels."

"Beijing’s gains are coming at a steep cost, with the state’s heavy-handedness in directing investments wasting colossal amounts of money. The hundreds of billions of dollars China spends each year on domestic technology also eats away at the money for rural education, reinforcing the social safety net and other programs economists say are needed to put growth on a firmer footing."

"Of the 129 brands selling electric cars and plug-in hybrids in China as of last year, only 15 are expected to be financially viable by 2030"

"Home prices are down 17% since the pandemic"

"Per capita disposable income in cities is less than $700 a month, while in the countryside as many as several hundred million people subsist on just a few dollars each day."

"In Mianchi County . . . spending on science and technology rose nearly 50%, even as government revenue fell more than 10%."

"Yet some government workers aren’t getting paid."

"Government debts across China are estimated to have roughly doubled between 2019 and 2024, hitting as much as $23 trillion"

"productivity growth is slowing"

"state aid, such as cash subsidies, tax breaks and cheap credit to businesses, has reduced China’s overall GDP by as much as 2%, and cost around $800 billion in 2023"

"Throttling back state support for companies would allow the market to play a bigger role in more efficiently directing China’s money to where it is needed, she said." [IMF Managing Director Kristalina Georgieva]

"Provincial officials poured tens of billions of dollars into government-favored sectors. Much of it has gone to waste"

"tech investments and state subsidies are flowing to sectors that aren’t creating nearly enough jobs. One out of six young people in Chinese cities is out of work." 

Peter Navarro Takes Down a Tariff Straw Man

No serious economist predicted that the levies would ‘immediately crash the economy’ or ‘ignite runaway inflation.’

Letter to The WSJ.

"Peter Navarro begins his op-ed “Tariffs Are a Discipline, Not a Press Release” (Dec. 22) by knocking down a straw man. No serious economist predicted that the levies would “immediately crash the economy” or “ignite runaway inflation.” We said they’d make Americans poorer by forcing them to pay higher prices or accept inferior substitutes—which is exactly what’s happening.

Mr. Navarro claims victory because we haven’t seen a recession. But his colleague, Commerce Secretary Howard Lutnick, promised in March that the economy would be “humming” by now. Instead, manufacturing employment has declined for nine consecutive months, business optimism is depressed and consumer sentiment nears historic lows.

Notice the pattern: When tariffs don’t deliver the promised renaissance, administration officials push back the timeline. First it was weeks, then months. Now, we need “the right timeline” and must not grade policy “on a news cycle.” This isn’t economic analysis—it’s buying time until the economy improves despite tariffs, at which point the administration will claim victory.

Mr. Navarro says that a slogan, “Who pays the tariff?,” is misleading. The data say otherwise. The Harvard Pricing Lab finds that after six months U.S. consumers are eating 20% of the tariffs on average in the form of higher prices. For President Trump’s first-term tariffs, the pass-through rate stayed under 5% for a full year. Mr. Trump 2.0’s tariffs are hitting us harder and faster, and there’s evidence that this pass-through rate will climb.

Tariffs don’t “discipline” foreign producers. They discipline American families, businesses and workers who must now pay more for less. No amount of rhetorical repackaging will change that.

David Hebert

American Inst. for Economic Research

Grand Rapids, Mich."

The EU Fights Carbon and Loses

The bloc considers establishing a subsidy to offset a tariff meant to offset a tax

By Carlo Stagnaro. He is the research and studies director at the Bruno Leoni Institute. Excerpts:

[The EU] "announced a €600 million temporary fund to help domestic businesses cope with a new carbon border tax"

"During the transitional phase, 2023-25, importers of some carbon-intensive goods (cement, iron and steel, aluminum, fertilizers, electricity and hydrogen) were required to report the embedded emissions of their imports. Next year, they will pay a fee linked to the price of carbon allowances in the EU Emissions Trading System. The distribution of free allowances—set up to protect energy-intensive, trade-exposed industries from foreign competition—will be phased out."

"The direct and indirect emissions of imported goods are difficult to estimate even in countries with strong, transparent reporting frameworks"

"When California introduced its cap-and-trade system and a carbon border fee on imported electricity, generators in neighboring states rerouted low-carbon electricity to California while sending carbon-intensive electricity elsewhere."

"creates a perverse incentive to outsource production of downstream goods. If the cost of EU-made cars or wind turbines rises because the law increases the price of steel, it may become cheaper to import finished cars or turbines."

"importers will need to assess the direct and indirect carbon content of every component"

"exporters will face higher domestic input costs for products under the law, and the announced fund, which is likely incompatible with trade rules under the World Trade Organization, is too small to do much good." 

No Evictions, Less Affordable Housing

That’s what happened in Tacoma, and even public housing is suffering.

WSJ editorial. Excerpts:

"“Since the moratorium has taken effect, people are going a year or more without paying rent,” April Black, executive director of the Tacoma Housing Authority, told the local press this month. Some 38% of the public housing authority’s tenants have fallen behind on the rent, up from 15% before the ballot measure, the Seattle Times reports.  

Before the restrictions, landlords could start eviction proceedings to nudge tenants into repayment agreements. But now “when we get to eviction, the debts are so high that they can’t resolve those debts and they do get evicted,” Ms. Black said.

The housing authority has had to tap more than $400,000 in reserves to cover losses—“dollars that could have otherwise been spent to serve households on our waiting list” for affordable housing, Ms. Black said."

"The eviction rules have regulated the small providers that we represent out of the market" 

"more than 80% of Tacoma’s remaining landlords said they are tightening their tenant screening."  

To Win the Senate, Democrats Should Embrace Big Oil (title of print version)

See Obama Supported It. The Left in Canada and Norway Does. Why Don’t Democrats? by Matthew Yglesias of The New York Times. Excerpts:

"Natural resource extraction offers good-paying blue-collar jobs. It also generates useful tax revenue. In more abstract terms, it improves the country’s terms of trade — when foreigners are buying oil from us rather than us from them, it reduces the cost of our imports of foreign-made food, clothing and other products, in that way driving down the cost of living for everyone."

"Center-left parties in other major energy-producing countries do not position themselves as enemies of domestic production."

"oil and gas trade in global markets and individual nations cannot clean up the planet with unilateral supply-side measures. American oil production is less carbon-intensive than the oil production of its competitors in Russia, Iran, Iraq and Venezuela. Supplying oil to global markets is a win-win for the economy and the global environment."

"the utility of fossil fuels is not something the oil and gas industry tricked the public into. There is not currently any technologically viable substitute for oil as a fuel for the airplanes and large oceangoing vessels on which global commerce depends."

"Electric trains work extremely well, but a majority of America’s freight lines rely on diesel, and building the infrastructure to electrify them would require time and money."

"E.V.s are not yet price competitive when it comes to the kinds of large trucks that American consumers tend to prefer."

"natural gas . . . is much cleaner than coal, consumption of which is still high and rising globally. Increased gas production, by displacing coal, has been the single largest driver of American emissions reductions over time."

"the value of gas is that unlike wind or solar power, it is dispatchable on a moment’s notice."

"Insisting on a majority of renewable electricity raises costs dramatically, slows the pace of electrification and ultimately leaves us further from a low-carbon future. Renewable boosters are optimistic that improvements in batteries and technologies to improve demand flexibility will ultimately overcome the cost barriers to 100 percent renewable grids. Others believe strongly that alternative zero-emissions forms of energy, like advanced geothermal or a new generation of small modular reactors, will be the solution. These are all promising ideas that are worthy of public sector support.

But until that happens, responsible environmental policy is inseparable from sustainable political strategy."

"Since this [global net zero by 2050] would require a very rapid phaseout of fossil fuel use in rich countries, no new fossil fuel infrastructure is permissible even when the infrastructure would — like new pipelines to the northeastern United States or new liquefied natural gas export terminals — likely make emissions lower by promoting more rapid electrification." 

Why the Affordability Crisis Is Most Severe in California

The state’s policies make it inevitable that prices will rise, especially for housing and energy

By Allysia Finley. Excerpts:

"the four metro areas where prices on average have increased by more than 3% [are] Philadelphia (3.3%), Los Angeles (3.6%), San Diego (4%) and Riverside, Calif. (4.5%)."

"Among the reasons for higher CPI readings in California’s metro areas are fast-rising housing costs."

"Yet the housing supply in Riverside . . . hasn’t kept up with demand." 

"Blame . . . environmental laws and strict zoning"

"Shelter prices have risen by 4.4% in Riverside and 5.6% in San Diego over the preceding 12 months, versus 0.1% in Dallas and 1.1% in Houston. In Phoenix, shelter prices have declined by 0.1%."

"Only 118,000 building permits for new homes were issued for the Los Angeles metro region (population 12.8 million) between 2021 and 2024, versus 163,000 in Atlanta (6.3 million), 187,000 in Phoenix (5.1 million), 276,000 in Houston (7.5 million) and 281,000 in Dallas (8.1 million)."

"The state’s melange of climate policies have driven up energy prices in San Diego (8.7% year over year), Riverside (7.9%) and Los Angeles (7%), even as they have been falling in places like Atlanta (by 2.3%), Phoenix (0.8%), Detroit (3%) and Houston (3.4%) that haven’t sought to banish fossil fuels."

"The Perryman Group estimates its local “tort tax” at $3,658 a person."

"Mandatory insurance costs make up about 45% of the average Uber fare in Los Angeles County, versus 10% or less in most places in the country."

"The cost of eating out has climbed by 14.4% in San Diego and 12.4% in Riverside since September 2023, when Democrats increased the state minimum wage for fast-food employees to $20 an hour. Restaurant prices nationwide have increased only 8.3%." 

By All Means Raise Mitt Romney’s Taxes: But please spare the middle class trying to become rich like him

WSJ editorial. Excerpts:

"Democrats eliminated the income cap for Medicare payroll taxes of 1.45% (2.9% including employer) in 1993, but have you noticed a Democratic desire to reform Medicare? They ran against Mr. Romney in 2012 by saying his modest reform amounted to throwing grandma off a cliff.

The Medicare tax increase has merely become another marginal-rate tax hike on work. The Social Security payroll tax is 6.2% each for employee and employer, so lifting the income cap on that tax on the working middle class would be even more onerous."

"The top 1% paid an average tax rate of 26.1% in 2022. Their top marginal income-tax rate is far higher, and in New York and California can exceed 50%. The top 10% paid an average tax rate of 21.1%, while the bottom 50% paid 3.74% on average."

"As a share of total adjusted gross income reported in 2022, the top 1% earned 22.4%, but they paid 40.4% of total income taxes. They paid in taxes nearly double their share of income."

"And the bottom 50%? They reported 11.5% of AGI but paid only 3% of all income taxes."

"The numbers would be less progressive if you include payroll taxes, but not by all that much. Even that 3% overstates how much the bottom 50% pay because “refundable” credits paid to those with no tax liability are treated as spending and aren’t reflected in the IRS numbers." 

Obesity Economics: How Subsidies Distort the American Diet

Federal subsidies drive food production, consumption, and — unintentionally — chronic disease. Now we’re being asked to subsidize weight loss drugs to fight what farm policy broke. 

By Laura Williams of AIER. 

"Let me introduce you to Sam. Sam has obesity, Type 2 diabetes, heart disease, and high blood pressure. His diet consists mostly of refined grains and trans fats. He’s got cabinets full of dirt-cheap junk food and sky-high healthcare costs to address its effects. He takes home $27,000 a year, but spends $36,000. He’s in debt up to his jaundiced eyeballs, and he wants his niece to foot the bill for weight-loss medication.

As a real-life niece of my Uncle Sam, I’m concerned about his diet. Some 56.2 percent of the daily calories consumed by US adults come from federally subsidized food commodities: corn, soybeans, wheat, rice, sorghum, dairy, and livestock. While these calorie-dense foods once made sense for a government preparing for famine or total war, in recent decades they’ve instead helped make us fatter and sicker. 

Obesity is a top driver of healthcare costs. One study compared the health of people who eat mostly foods the federal government subsidizes to those who eat fewer. Those who follow the revealed preferences of what the government subsidizes (rather than the diet it consciously recommends) are almost 40 percent more likely to be obese and face significant diet-related health issues. Those with the highest consumption of federally subsidized foods also have significantly higher rates of belly fat, abnormal cholesterol, high levels of blood sugar, and more markers of chronic inflammation. All these are increasing contributors to the most common causes of death in the developed world.

The negative impact of subsidized crop consumption on health — while it can’t be called causal — persists even after controlling for age, sex, and socioeconomic factors. But life does not control for those factors.

The Great Grain Giveaway

The federal government recommends one diet to Americans, and subsidizes another. The Dietary Guidelines for Americans from the USDA and HHS promote eating fruits, vegetables, whole grains, protein, and moderate dairy, while limiting saturated fats, sugars, salt, and refined grains. According to data compiled for Meatonomics, American agribusiness receives about $38 billion annually in federal funding, with only 0.4 percent ($17 million) going to fruits and vegetables. Just three percent of cropland is devoted to fruits and vegetables, despite USDA guidelines’ insistence that they should cover half of your dinner plate. Just 10 percent of Americans consume the recommended amount of fresh produce, and the poor consume the least. (Fruit and vegetable producers’ exclusion from the federal direct payments program provides a valuable example of a food industry thriving without significant subsidies. They do, however, rely heavily on migrant labor to lower costs.)

Instead, the US spends tens of billions annually to subsidize seven major commodities. The three largest farm subsidy programs contribute 70 percent of funds to producers of just three crops — corn, soybeans, and wheat. Approximately 30-40 percent of US corn, over half of soybeans, and nearly all sorghum feed livestock, heavily discounting high-fat, lower-nutrition meat and dairy (especially compared to grass-fed options). The prevalence of grain-fed livestock generates demand for commodities used to feed them, completing the circle. 

Subsidies also contribute to our consumption of refined grains, sugary drinks, and processed foods. About five percent of corn becomes artificially cheap high-fructose corn syrup (which allows it to compete with tariffed natural sugars), and half of soybeans are processed into oils, which also contribute to obesity.

My Uncle Sam is sick because he eats the food the government makes artificially more affordable. Those foods are poorer in quality and more harmful to health than their unsubsidized alternatives. We are paying to make ourselves sicker.

Diet-Related Health Issues Fuel Healthcare Costs

For more than 20 years, the FDA has known that trans fats and refined grains harm health, damage metabolism, and cause disease. Diet-related illnesses like obesity, Type 2 diabetes, and high blood pressure are increasing, while heart disease remains the leading cause of death. These epidemics are intertwined at the artery level, and both contribute hugely to rising US health care costs.

In an economic order awash with subsidies and regulation, agricultural policy is health policy. Government subsidies for agricultural products have shaped the current American nutritional environment, and they are exacerbating obesity trends.

An article in the American Journal of Preventive Medicine confirms: “Current agricultural policy remains largely uninformed by public health discourse.”

Johns Hopkins physician (and current Commissioner of the US Food and Drug Administration) Marty Makary called out the disconnect clearly. “Half of all federal spending is going to health care in its many hidden forms,” he told an interviewer in October, but Americans continue “getting sicker and sicker… Chronic diseases are on the rise. Cancers are on the rise. And we have the most medicated generation in human history.”

We’re getting more medicated every day — and more of it is at taxpayer expense. 

A Better Answer Than Ozempic?

Government spending on healthcare now exceeds the entire discretionary budget. Excess weight is a significant risk for older Americans, who are also the most likely to both have high healthcare costs and to rely on government health care. Forty percent of Americans over 60 are classified as having obesity, which is a contributing or complicating factor in diseases that kill older Americans: cancers, heart disease, infection, stroke, and cirrhosis.

Late last year, the Food and Drug Administration approved the weight-loss drug Wegovy as a treatment for people at risk of heart attack or stroke. Medicare is forbidden by statute from covering prescription drugs for weight loss alone, but in 2021 regulators approved Wegovy for reducing weight-related risks in patients with diabetes. Medicare Part D plans spent $2.6 billion last year on related compound Ozempic to keep 500,000 patients with diabetes stable. Wegovy’s list price is around $1,300 per month, but that’s still small compared to the $1.4 trillion Americans spend on direct and indirect costs from obesity.

It has a certain economic logic. Instead of waiting for a patient to develop a cascade of expensive comorbidities like heart failure or diabetes, we could consider asking Medicare to pay for anti-obesity meds on the front end. That wouldn’t work as well as lifestyle changes, but all our health and activity messaging over the past several years doesn’t seem to have moved that needle, and significant evidence suggests our efforts are counterproductive. 

The Tangled Web of Farm Subsidies

To understand the insanity of American agricultural and health policy, it’s hard to do better than comedian-illusionists Penn & Teller, who in characteristically salty style (really — you’ll want headphones and a sense of humor to watch the video) explained it this way 15 years ago: 

High fructose corn syrup is a dirt-cheap way to add sweetener and extend shelf life. And why is it so cheap? Because we subsidize corn farmers! Our government gives about 10 billion of our tax dollars to corn farmers every year so they can produce more corn than we need. They then sell the corn at artificially low prices. They spend our money to make corn syrup cheap, and now the same government that uses our tax money to keep soft drinks cheap wants more of our tax money to make soft drinks more expensive. Does anyone else think this is incredibly f—d up?

Yes, Penn. We do. And since that clip aired, obesity rates have worsened 50 percent, and rose 78 percent in children. Medical spending on the consequences of obesity doubled. Over the same period, subsidies to corn growers (which includes disaster aid and insurance) have tripled. 

Rather than cut back on his terrible diet, Uncle Sam wants us to pony up for weight loss drugs — to undo what our food policy has done."

Canada’s median health-care wait time hits 28.6 weeks—second longest ever recorded

By Mackenzie Moir and Nadeem Esmail of The Fraser Institute.

Waiting Your Turn: Wait Times for Health Care in Canada, 2025 Report

• In 2025, physicians across Canada reported a median wait time of 28.6 weeks between a referral from a GP and receipt of treatment; down from 30.0 weeks in 2024.
• This is 208% longer than the 9.3 week wait Canadian patients could expect in 1993.
• Wait times have decreased in Alberta, Saskatchewan, Ontario, New Brunswick and Prince Edward Island, while increasing in the other five provinces.
• Ontario reported the shortest total wait (19.2 weeks), followed by British Columbia (32.2 weeks) and Quebec (32.5 weeks).
• Patients waited longest in New Brunswick (60.9 weeks), Prince Edward Island (49.7 weeks) and Nova Scotia (49.0 weeks).
• The national 28.6 week total wait comprises two segments: 1) Referral by a GP to consultation with a specialist: 15.3 weeks, an increase over the 15.0 weeks recorded in 2024. 2) Consultation with a specialist to receipt of treatment: 13.3 weeks, a decrease from the 15.0 weeks recorded in 2024.
• Among the various specialties, patients waited the longest for Neurosurgery (49.9 weeks) and Orthopaedic Surgery (48.6 weeks)
• By contrast, patients faced shorter waits for Radiation Oncology (4.2 weeks) and Medical Oncology (4.7 weeks).
• After seeing a specialist, Canadian patients waited 4.5 weeks longer than what physicians consider to be clinically reasonable (8.8 weeks).
• Patients also suffered considerable delays for diagnostic technology: 8.8 weeks for CT scans, 18.1 weeks for MRI scans, and 5.4 weeks for Ultrasound.
• Across 10 provinces, the study estimated that patients in Canada were waiting for 1.4 million procedures in 2025.

 

Nothing Fails Like Prohibition

By David R Henderson. Excerpts:

"First, is killing people carrying the drugs, rather than arresting them, justified? Second, should those drugs be illegal or should we instead allow a free market in drugs with restrictions on purchases by minors?"

"My answer is that the drugs should be legal for adults. If my answer is correct, then I have also answered the first question. If drugs should be legal, then there is no justification for killing people who transport them."

"The main principle is freedom. Because we own our bodies, we should be free to ingest whatever we wish, even if it can be harmful. But the drug war doesn’t destroy just our freedom to consume what we want. Fighting the drug war has led the government to restrict many of our other freedoms.

The pragmatic reason for legalizing drugs is that criminalizing the industry has caused many harms. Our experience with prohibition of alcohol for thirteen years has a lot to teach us, if only we’re willing to learn. Prohibition worked in the narrow sense of reducing consumption of alcohol but caused horrible side effects. It shifted alcohol production and distribution away from law-abiding citizens to hardened criminals; it reduced respect for the law; and it caused many deaths. Drug prohibition does the same. If drugs were legalized, they would be sold by law-abiding people who have an incentive to care about quality. Organized crime would exit the industry. And the deaths from gang wars, which often include deaths of completely innocent people, would end. Would legalization be problem-free? No. But the problems would tend to be for those who use drugs, not for those who are innocent victims."

"before the Harrison Narcotic Tax Act of 1914, marijuana, cocaine, and heroin were all legal. Some of these drugs were widely used. Yet there was no drug epidemic with these drugs. Second, most people favor allowing activities that are much riskier than the consumption of drugs. Google “the fatality rate in climbing K2” and you’ll learn that historically, fatalities have been about 23 to 25 percent of successful climbs of that peak. Yet the vast majority of people seem to accept that climbers have a right to take this risk." 

SNAP Has an Eligibility Loophole. Congress Needs to Close It.

By Romina Boccia and Tyler Turman of Cato.

"The Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, served 41.7 million Americans and cost taxpayers $100 billion in fiscal year 2024.

Congress established firm income and asset limits to target households with the greatest financial need. Yet, states have found a way around these rules.

Through a policy called broad-based categorical eligibility (BBCE), states can bypass federal eligibility standards and draw down more federal dollars. The result: Millions of people are receiving SNAP benefits that Congress never intended.

Congress has so far failed to close this loophole, so United States Department of Agriculture (USDA) Secretary Brooke Rollins is considering taking action. But only legislation can fully restore SNAP’s eligibility standards. Representative Ben Cline’s (R‑VA) No Welfare for the Wealthy Act (H.R. 416) would require all households on SNAP to meet the program’s federal income and asset requirements.

How States Exploit Categorical Eligibility

Federal law provides two pathways to qualify for SNAP:

• Statutory eligibility: gross income at or below 130 percent of the federal poverty level (FPL)—$2,292 for the average two-person household—net income (gross income minus deductions for certain expenses) at or below 100 percent of FPL, and countable assets under $3,000 ($4,500 for elderly or disabled households).
• Categorical eligibility: automatic qualification for households receiving or authorized to receive benefits from other welfare programs, such as Temporary Assistance for Needy Families (TANF).

Congress made categorical eligibility a permanent feature of SNAP to reduce paperwork. But over time, the USDA stretched this authority to broaden SNAP far beyond Congress’s intent. The USDA currently recognizes three types of categorical eligibility:

• Traditional categorical eligibility: Households receiving specifically cash benefits from programs such as TANF are SNAP-eligible. Federal law requires states to implement this form of categorical eligibility. Eligibility requirements for TANF cash assistance are more restrictive than SNAP in many states.
• Narrow categorical eligibility: States can confer categorical eligibility through noncash TANF benefits, but these are primarily limited to services such as childcare or counseling.
• Broad-based categorical eligibility: States can make most, if not all, low-income households categorically eligible for SNAP if they receive or are authorized to receive minimal noncash TANF benefits or services. The USDA’s 2000 regulation allowed states to raise gross income limits up to 200 percent of FPL when determining eligibility for noncash TANF benefits aimed at reducing out-of-wedlock pregnancies or promoting two-parent families. In 2009, the USDA added that even pamphlets and hotline referrals could qualify as noncash TANF benefits. Another memo clarified that states could, in addition to raising gross income limits, also increase or eliminate asset limits for these noncash benefits through BBCE. By 2011, even notices of eligibility could count as a benefit. States that use BBCE are not required to impose net income tests, but households would still be subject to the gross income limit.

As of 2025, 43 states and the District of Columbia have seized the opportunity to grow their SNAP rolls at federal taxpayers’ expense by adopting BBCE. The Foundation for Government Accountability recently estimated that 5.9 million people are on SNAP through BBCE despite not meeting federal eligibility criteria. This costs taxpayers almost $11 billion in annual benefits.

Setting the Rules Straight

Congress nearly took a step toward eliminating BBCE during debate on the One Big Beautiful Bill Act (OBBBA), but Representative Michael Cloud’s (R‑TX) amendment to close the loophole was excluded from the final legislation.

The USDA now appears ready to act through regulation. A preliminary notice indicates that the department would limit categorical eligibility to “ongoing and substantial” benefits from TANF-funded programs “designed to assist households and move them towards self-sufficiency.” This would eliminate states’ ability to use BBCE to trigger SNAP eligibility for those beyond SNAP’s gross income and asset limits with “token TANF” benefits.

This would be an improvement, but it is not enough. Any changes that the USDA makes through regulation can be undone through regulation. Case in point: Trump’s USDA proposed reining in BBCE in 2019, but Biden’s USDA withdrew it in 2021. The No Welfare for the Wealthy Act would align SNAP eligibility with federal law without loopholes and, more importantly, establish durable boundaries that can be reversed only by another act of Congress, unlike agency regulations that can flip-flop with every administration.

Aligning Authority with Accountability

States’ abuse of BBCE has allowed people with six-figure assets, millionaires, and lottery winners to receive SNAP benefits. It should be abolished.

Defenders of BBCE argue that it gives states the necessary flexibility to adjust income and asset limits to reflect their local economic conditions. But SNAP is a program funded almost entirely by the federal government. Asking Uncle Sam for more “flexibility” in spending taxpayers’ money is akin to a teenager asking Dad for the “flexibility” to use his credit card.

The states are free to experiment with eligibility rules for welfare programs as they please—if they’re willing to pay for them. Congress can further empower states by devolving welfare programs and having them take more fiscal responsibility for how they are run. This would align authority with accountability and give states the flexibility to tailor their programs to local needs but with the fiscal incentive to manage them judiciously. Additionally, devolution would eliminate the perverse incentive states have to maximize enrollment through loopholes such as BBCE because the federal government would no longer be footing the bill.

However, some states may be ill-equipped to pay for their share of more than 40 million people’s SNAP benefits. Additionally, starting in FY 2028, many states may be on the hook to pay for part of their SNAP benefits if they have payment error rates above 6 percent due to OBBBA’s matching fund requirements. Since SNAP participants eligible through BBCE have been tied to disproportionately high payment error rates compared to other households, eliminating this policy could help states lower their improper payments and meet OBBBA’s requirements. More importantly, SNAP’s devolution to the states should begin with rightsizing the program by removing those who do not meet its statutory eligibility requirements. Congress should establish firm eligibility standards for SNAP, as Representative Cline’s No Welfare for the Wealthy Act would do."

About That ACA ‘Innovation’

It’s time to nix the CMMI

Letter to The WSJ.

"In your editorial “The Republican Clock Is Ticking” (Dec. 4), you note that a second reconciliation bill is a crucial opportunity to improve our fiscal health.

A great place to start is a program few Americans have heard of: the Center for Medicare and Medicaid Innovation. Launched in 2010 as part of the Affordable Care Act, CMMI was intended to test different payment models that would reduce healthcare costs and improve quality. Instead of saving $2.8 billion between 2011 and 2020, as the Congressional Budget Office projected, it cost $5.4 billion. One analysis from 2021 found that only four of 172 Medicare-related CMMI models met the criteria for expansion and 15% decreased costs. All this despite the program receiving $10 billion a decade.

Fifteen years is a long enough test. Americans are fed up with the waste and lack of accountability that emanates from Washington. Republicans can score an easy win by nixing the CMMI for good.

Tom Schatz

Col. for Citizens Against Gov’t. Waste"

 

How Lina Khan Killed iRobot

She blocked Amazon’s takeover, and now the Chinese will own it

WSJ editorial. Exceerpts:

"We explained at the time how Ms. Warren and progressives in the Biden Administration thwarted Amazon’s attempt to buy iRobot in 2022. They claimed the $1.7 billion acquisition would unfairly augment Amazon’s lead in robotics and home devices. They also said the Roomba would enable Amazon to hoover up data and spy on Americans. 

Amazon is “‘almost universally recognized’ as the leader in warehouse and fulfillment robotics space,” Ms. Warren and other progressives wrote to Biden Federal Trade Commission Chair Lina Khan in September 2022. The deal “would open up a new market to Amazon’s abuses.” Heaven forefend Amazon would use robots to make chores less laborious, as it has for warehouse work."

"iRobot’s main competitors were Chinese companies, which were fast stealing market share. Beijing wants to dominate robotics."

"After the deal collapsed, iRobot said it would cut 31% of its workforce and send overseas “non-core engineering functions to lower-cost regions.” Even then, the Bedford, Mass.-based company continued to struggle against Chinese competitors. Amazon’s backing might have helped it innovate into new robotics fields that Chinese firms hadn’t penetrated." 

Can Congress Finally Reform NEPA?

A bipartisan bill would fix the main obstacle to faster U.S. projects.

WSJ editorial. Excerpts:

"Federal agencies take an average of 4.5 years to approve environmental impact statements"

"Environmental Quality, and an environmental review can add more than $4 million to project costs. Lawsuits challenging the reviews force companies to revise projects multiple times, tying up capital companies are ready to deploy."

"“The unrealized returns on projects in the permitting pipeline amount to $100 billion to $140 billion each year,” McKinsey found in a July study."

"Lawsuits filed under NEPA and a review process lifted the pipeline’s [the Atlantic Coast Pipeline] cost to $8 billion from $4.5 billion." 

Why Treat Weed Differently?

Public policy shouldn’t infantilize people simply because minors might misuse a product, writes Dr. Jeffrey Singer.

Letter to The WSJ.

"It’s no surprise that adolescents can have serious psychiatric reactions to high-dose THC or otherwise suffer from severe nausea and vomiting (“Potheads Head for the ER,” Review & Outlook, Dec. 10). Clinicians have been aware of these risks associated with cannabis use for years.

They’ve also long known that alcohol can trigger acute hallucinations and psychotic reactions. Anyone who’s been to a college party also knows how easily excessive drinking leads to uncontrollable vomiting. Studies consistently show that college-age drinkers face sharply higher risks of alcohol-related injuries, car crashes and sexual or physical assault than older users.

Yet no serious person suggests revisiting prohibition. We trust adults to weigh the risks and benefits of drinking, and we rely on age restrictions and enforcement, not broad bans, to keep alcohol out of minors’ hands.

Why should we treat cannabis differently? All drugs carry some risk, but the harms of adolescent use don’t justify laws that strip adults of their right to consumption. Public policy shouldn’t infantilize people simply because minors might misuse a product. We don’t ban alcohol, driving or ordinary household chemicals on that basis, and we shouldn’t apply a more paternalistic standard to cannabis.

Jeffrey A. Singer, M.D.

Cato Institute"

ObamaCare Subsidies Could Kill Your Plan

The expansion would mean employers have an incentive to stop offering coverage

By Chris Pope. He is a senior fellow at the Manhattan Institute. Excerpts:

"The ACA aimed to help low-income working households that lacked an offer of job-based benefits. But the ACA’s reforms made policies unappealing to customers paying full price. Healthy Americans stopped buying plans, premiums more than doubled, and insurers hiked deductibles and stopped covering the best hospitals."

"whereas the ACA’s original subsidies were on average worth $293 (5%) less to households than the value of the tax exemption for employer-sponsored insurance, the expanded subsidies would be worth $3,960 (65%) more. That creates a huge incentive for employers to stop offering health benefits."

"From 2019 to 2025, the share of companies with 50 or more workers offering benefits declined from 94% to 91%, and the proportion of those with 10 to 49 workers fell from 67% to 54%." 

Small Businesses Can’t Escape Price Controls

The Biden administration’s legacy is choking off tomorrow’s small-business breakthroughs before they leave the lab, writes Casey Mulligan.

Letter to The WSJ. 

"Tomas Philipson ably details how “Biden’s IRA Is Harming Cancer Patients” (op-ed, Dec. 1). Those who had a bit of economics training would have seen that coming. It doesn’t matter whether it’s rent control, groceries or healthcare—government-imposed price ceilings curtail investment in maintaining and improving the quality of consumer products. In the pharmaceutical industry, that means fewer new drugs to improve health and longevity, and fewer discoveries of how to use existing medicines better.

Small businesses drive innovation because they are less bureaucratic and have fewer worries about protecting existing products. They are the least able to survive a policy that shortens effective patent lives and caps prices as their discoveries approach the market. According to the 2023 Business Enterprise Research and Development survey, about 2,970 small firms are engaged in U.S. biotechnology research and development. Their business models depend on a handful of potential “home run” projects. When price caps truncate the payoff window, many of their projects never get financed or are abandoned.

The Biden administration’s legacy not only harms cancer patients; it’s choking off tomorrow’s small-business breakthroughs before they leave the lab.

Casey B. Mulligan

Washington

Mr. Mulligan is chief counsel for advocacy at the Small Business Administration." 

We Haven’t Stopped Paying for the New Deal

‘Far from ‘right-sizing’ the government, FDR expanded it into areas it was never supposed to tread,’ writes Robert E. Wright.

Letter to The WSJ.

"Younger generations have learned—despite what their history textbooks have repeated ad nauseam—that government policies caused and exacerbated the Great Depression. The New Deal wasn’t only unnecessary to achieve what David M. Kennedy calls “the conditions of modern society” (Letters, Dec. 10). It hurt many Americans then and continues to do so today.

Far from “right-sizing” the government, FDR expanded it into areas it was never supposed to tread, including retirement annuities, healthcare and higher education, all of which unsurprisingly constitute the most dysfunctional parts of the modern economy. In the process, he also weakened the Bill of Rights, impoverished blacks and stymied women’s return to the workplace.

 

Devaluation of the dollar alone induced the economy to rebound strongly off the March 1933 bottom. All the rest, including the National Recovery Administration, gold confiscation, the Tennessee Valley Authority and endless other top-down tinkerings slowed or reversed the initially robust expansion.

Many other New Deal programs stymied subsequent market development. Most tragically, perhaps, rural electrification held back green-energy technologies, including windmills and batteries, for decades. In many areas, like southern Alabama, the program subsidized the electrification of the summer homes of the wealthy more than it aided farmers. I could go on.

Robert E. Wright

Mount Pleasant, Mich.

Mr. Wright is author, most recently, of “FDR’s Long New Deal.”"

Where Are Those Manufacturing Jobs?

The jobs market is so-so, but tariffs are hurting domestic companies that make things

WSJ editorial. Excerpts:

"private employers aren’t laying off workers in large numbers but they also aren’t hiring all that many. The question is why?"

"Our main suspect is the impact of tariffs and the uncertainty Mr. Trump’s willy-nilly border tax policies have caused."

"Remember when tariffs were supposed to produce a U.S. manufacturing boom? It hasn’t happened. In January BLS reported 12,755,000 workers in all manufacturing industries. The number rose by a few thousand through April, but then began to fall each month and in November hit 12,697,000. That’s a net loss of 58,000 jobs, including 19,000 in the last three months."

"Further evidence comes from the industries affected most by Mr. Trump’s tariffs of 50% on steel and aluminum and 25% on autos and auto parts. Employment in motor vehicles and parts fell 15,000 since January, while it remained flat in steel-making and aluminum manufacturing." 

Europe’s Green Energy Rush Slashed Emissions—and Crippled the Economy

Political consensus is cracking, industry is hobbled and high-profile projects are being postponed thanks to some of the highest electricity prices in the developed world

By Tom Fairless and Max Colchester of The WSJ. Excerpts:

"European politicians pitched the continent’s green transition to voters as a win-win: Citizens would benefit from green jobs and cheap, abundant solar and wind energy alongside a sharp reduction in carbon emissions.  

Nearly two decades on, the promise has largely proved costly for consumers and damaging for the economy."

"Germany now has the highest domestic electricity prices in the developed world, while the U.K. has the highest industrial electricity rates"

"Average electricity prices for heavy industries in the European Union remain roughly twice those in the U.S. and 50% above China."

"“We are hemorrhaging industry,” said Dieter Helm, an economic policy professor at Oxford University who has advised U.K. governments on energy policy. 

British chemical company Ineos said in October it would close two plants in western Germany because of high energy costs."

"a good chunk of the increase is thanks to the shift to renewables, say business executives and some economists."

"While sunlight and wind are free, harnessing them entails significant infrastructure investments, including in battery storage for when the sun isn’t shining or the wind blowing, and vast redundant capacity. These additional costs, obscured by subsidies and carbon taxes, mean energy prices in places like Germany and the U.K. are likely to remain higher than other countries for years to come, some economists say. The stubbornly high prices, Helm said, suggest it’s the overall system cost driving prices."

"a “clean power” system in the U.K. would only start saving bill payers money from 2044. It’s a similar story in Germany."

"High-profile net-zero projects are being postponed or scrapped, notably those involving green hydrogen, which the EU placed at the heart of its green plans as a possible fuel for heavy industry and means of energy storage."

"Europe  . . . raced to replace fossil fuels with solar, wind and biomass by taxing carbon heavily, subsidizing renewables and closing scores of fossil-fuel power plants."

"Britain . . . became the first large industrialized country to shut all of its coal-fired power plants. It has also banned new offshore oil-and-gas drilling."

"European consumers and businesses are . . . at the mercy of electricity prices linked to the cost of imported fossil fuels while also shouldering big upfront costs to overhaul grids to handle the intermittent renewable power." 

"British . . . electricity costs . . . are 80% higher than the U.S."

"In earlier energy transitions . . . countries continued to use the outgoing fuel while adding the new fuel on top."

"If European factories close as a result of high energy costs, their production is likely to be replaced by imports from places like China, where the carbon footprint for those products is far higher"

"Parts of the green transition have proved unexpectedly costly. When Scotland’s biggest offshore wind farm opened in 2023, it was feted as a symbol of Britain’s push into a new era of cheap low-emissions energy. But today, British taxpayers spend tens of millions of pounds a year for the Seagreen wind farm to not produce electricity. 

Why? If the wind farm was left constantly on, it would send big pulses of energy from northern Scotland to southern England that would fry the U.K.’s aging grid."   

Price controls and taxes reduce investment in the pharmaceutical industries in the U.K.

See U.S., U.K. Strike Deal on Higher Drug Prices: Move marks victory for Trump administration campaign to get other countries to pay more for drugs by Natasha Dangoor of The WSJ. Excerpts:

"the U.K. was already under pressure from some of the world’s biggest pharmaceutical companies, which said in recent months that they are pausing new investments in the country. The companies cited uncompetitive drug-pricing controls that mean Britain spends far less on medicines than its peers. The U.K. spends 9% of its health budget on drugs versus a global average of 15%, according to the Association of the British Pharmaceutical Industry"

"In September, Merck scrapped a half-built $1.3 billion London research center and AstraZeneca, the country’s largest company by market capitalization, paused a $260 million investment in Cambridge."

"it has been losing this advantage. In 2009, Swiss pharma giant Novartis operated seven sites in the U.K., two of which were manufacturing sites, and employed 4,000 people. It now has one site, focused mostly on commercial operations, with 1,200 employees."

"The pharmaceutical industry in the U.K. is also battling a high clawback tax under which as much as a quarter or more of revenues from high-value drugs are given back to the government, compared with a far lower level in most European countries" 

The Climate Crisis Clashed With Affordability, and Affordability Won

Politicians and CEOs are muting their climate alarms. The good news is, emissions are likely to decline anyway.

By Greg Ip. Excerpts:

"The share of respondents calling climate and the environment their most important issue has dropped from 14% in early 2020 to 6% now" 

"25% describe inflation that way."

"climate advocates routinely . . . cast global warming as a doomsday machine that required an immediate, whole-of-society response."

"Biden officials implicated climate in everything from racial inequality to civil strife in Syria and Yemen. Democrats pressured financial regulators to discourage lending to the fossil-fuel industry."

"In a letter to investors in March, BlackRock’s Fink wrote: “Prosperity is once again defined by our ability—and our willingness—to produce and consume more energy.” He did not mention climate."

"Roger Pielke, a longtime climate scholar at the American Enterprise Institute, notes U.S. emissions have been remarkably impervious to presidential terms: relative to economic output, they have declined steadily for decades."

"Natural gas from shale hastened the demise of coal"

"Climate advocates used to claim that without radical policy shifts, temperatures would rise 4.5 degrees. But Pielke notes that those predictions were never plausible, and today few subscribe to them."

"the statement released at the end of last month’s climate conference in Belém, Brazil said the world was headed for a rise of 2.3 to 2.5 degrees by 2100. Pielke called that “serious, but not the apocalypse.”"