Keeping you up-to-date on the latest by Manhattan Institute scholars
December 6, 2013
State and Local Budgets
Why Detroit Needs Bankruptcy
Stephen Eide, POLITICO, December 4, 2013
Detroit is now literally bankrupt. And though they might not realize it, residents of the Motor City should celebrate this happy outcome. . .Bizarre, that any city should want to be bankrupt--but there aren't many places like Detroit, for which ordinary fixes can't suffice. . .
WGY 810 AM's "The Read Shepherd Show," 12-4-13
FBN's "Markets Now," 12-3-13. Watch video.
Business News Network Toronto, 12-3-13
PSI Q&A with David Skeel on What's Next For Detroit
Stephen Eide, PublicSectorInc.org, December 5, 2013
David Skeel is the S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Law School. A leading authority of bankruptcy law and corporate law, Prof Skeel has published widely in a variety of scholarly law journals, more popular publications such as the Wall Street Journal and Weekly Standard, and he has also written three books. In public finance circles, he is probably best known for his arguments about the underappreciated benefits of bankruptcy for cities, and maybe even state governments as well. . .
READ THE INTERVIEW
Who Really Betrayed Detroit?
Steven Malanga, City Journal Online, December 4, 2013
. . .Most press accounts note that city-worker pensions in Detroit are modest. They rarely mention that, for two decades, the city supplemented those pensions with annual, so-called "13th checks" for retirees--an additional monthly pension payment. Pension-fund trustees--themselves city workers, retirees, city residents, and elected officials--handed out nearly $1 billion in these annual payments to retirees in the city's general pension fund. . .
FBN's "After the Bell with David Asman," 12-5-13. Watch video.
TRN's "The Jerry Doyle Show," 12-4-13
FBN's "Connell and Dagen," 12-3-13. Watch video.
Bloomberg TV's "Street Smart with Trish Regan," 12-3-13. Watch video.
Binding Arbitration Has Hurt, Not Helped, Struggling Cities
Steven Malanga, Investor's Business Daily, December 4, 2013
In the last five years, fiscal troubles in places like Vallejo, Calif., Detroit and Scranton, Pa., have focused attention on high government employee costs, especially from retirement programs that aren't properly funded. But behind the crushing outlays that these and some other distressed cities have faced is another feature of modern municipal government -- binding arbitration. . .
Public Pensions: Investment Risk and Contribution Risk
Andrew Biggs, PublicSectorInc.org, December 3, 2013
Last month I presented at paper at a Cleveland Fed conference on public employee pensions. The whole conference agenda is worth checking out, but my paper focuses on how the risk of public pension investments filters through into volatility of contribution rates. . .
Do Other Big City Balance Sheets Resemble Detroit's?
Steven Malanga, PublicSectorInc.org, December 3, 2013
With the federal bankruptcy judge's ruling today that Detroit is, indeed, insolvent and can remain in bankruptcy, the media are again asking, what other cities may come under the kinds of fiscal pressures Detroit faces? . .
CalPERS Must Be Shuddering At Detroit Judge's Words
Steven Greenhut, PublicSectorInc.org, December 3, 2013
The California Public Employees Retirement System (CalPERS) has no doubt been watching the Detroit bankruptcy proceedings closely, and it cannot be pleased by what the judge ruled. . .
Holiday Sales Slump Threatens State Budgets
Steven Malanga, PublicSectorInc.org, December 3, 2013
The mediocre start to the holiday shopping season isn't just bad news for retailers. It's likely to add more pressure to state budgets, too, because states rely on robust sales tax receipts from holiday shopping to bolster their budgets. . .
A Timely Webinar On Public Pensions
E. J. McMahon, PublicSectorInc.org, December 4, 2013
Just in time for the Detroit bankruptcy ruling aftermath, Stanford University's Graduate School of Business (GSB) will host a webinar on Thursday featuring some of the nations leading experts on the crisis in public pension financing. . .
An Introduction To Act 47, PA's "Roach Motel" For Distressed Cities
Gary Lewis, PublicSectorInc.org, December 3, 2013
Pennsylvania is home to 26 officially "distressed" municipalities (and Philadelphia). Nearly three quarters of a million people - approximately 6% of the state's population - reside in these cities, towns and boroughs. Altogether, three of the six largest cities in Pennsylvania are struggling: Scranton, Reading and Pittsburgh. These are not good stats. . .
Is Puerto Rico America's Greece?
Daniel DiSalvo, PublicSectorInc.org, December 2, 2013
The analogy seems apt. As the Economist has remarked, Puerto Rico is a small economy, reliant on tourism and weighed down by a bloated public sector that is locked in a currency union with a larger economy. The basic facts are startling: Puerto Rico has $70 billion in debt, which is 70% of the commonwealth's GDP. That is more debt than any American state. . .
Book Review: 'The Cure in the Code,' by Peter W. Huber
THE CURE IN THE CODE REVIEWED IN THE WALL STREET JOURNAL
Ronald Bailey, The Wall Street Journal, December 4, 2013
We are at a turning point in medicine. Knowledge of the individual's genetic makeup will soon allow molecular medicine to reach deep inside each of us to cure most of the maladies that afflict us--and perhaps even slow the rate at which we age. First we will learn to understand each person's genome; then we will learn to craft treatments tailored to his or her genetic constitution. . .
WSJ's "Opinion Journal with Mary Kissel," 12-4-13. Watch video.
FBN's "The Willis Report," 12-4-13. Watch video.
MSNBC's "The Cycle," 12-3-13. Watch video.
Building a 21st Century FDA: Advancing Science, Saving Lives
Through one man's story, Project FDA's new video shows how new technology can enable us to triumph over once-intractable diseases --if the FDA can adapt outdated regulations to fit a new medical reality. The video features interviews with Manhattan Institute senior fellow Peter Huber, author of Cure in the Code: How 20th Century Law is Undermining 21st Century Medicine, 23andMe co- founder Linda Avey, and others.
WATCH THE VIDEO
READ THE BOOK
FDA Overreach Has Heavy Costs
Richard Epstein, Washington Examiner, November 29, 2013
On Nov. 22, the Food and Drug Administration flexed its regulatory muscles by sending a warning letter to a genetic-testing company that goes under the stylish name of 23andme. . .
Re: Should We Ban Thanksgiving?
Paul Howard and Yevgeniy Feyman, Politico, November 27, 2013
A "leaked" memo from the FDA.
From: Dr. E. Scrooge, Associate Director, Center for Food Safety and Applied Nutrition (CFSAN)
To: Dr. Michael Landa, Director, CFSAN
While the CFSAN staff is overjoyed at the commissioner's recent announcement that the Food and Drug Administrations will ban trans fats, because they are unsafe at any level of consumption, we are disappointed that it took the FDA so long to get around to it. . .
Economy & Finance
The Income-Inequality Problem Is Overblown
Diana Furchtgott-Roth, The Wall Street Journal's Marketwatch.com, December 6, 2013
Ask almost anyone the most important economic facts about income distribution in America, and you are almost certain to hear that income distribution has worsened dramatically over the past generation and over the past decade in particular, with people at the top getting a bigger fraction. . .
Great Jobs Report, Still Poor Recovery
Editors, Economics21.org, December 6, 2013
Who would have thought that Americans would cheer a 7 percent unemployment rate, well over four years after the beginning of the economic recovery? But the jobs report issued today by the Bureau of Labor Statistics is one of the best in years, with the unemployment rate declining from 7.3 percent to 7 percent, 196,000 private sector payroll jobs created, and the labor force participation rate rising to 63 percent from 62.8 percent. Another 8,000 jobs were added in revisions from September and October. . .
We Were Right: QE Can't Cure Our Economy
Editors, Economics21.org, December 4, 2013
Some in the press have inquired about the November 2010 letter urging the Federal Reserve not to undertake a second round of quantitative easing. The letter, directed to Federal Reserve Chairman Ben Bernanke, was signed by 23 economists, including Columbia University Business School Professor Charles Calomiris, a member of the Shadow Open Market Committee; Manhattan Institute Senior Fellow Nicole Gelinas; Cliff Asness of AQR Capital; and Professor Michael J. Boskin of Stanford University. . .
e21 Asks: How to Create Jobs
Editors, Economics21.org, December 5, 2013
In our most recent poll, we asked e21 readers, "What is the most effective way policymakers could stimulate job creation?" A plurality (37 percent) believed simplifying regulations should be the top priority. "Cutting taxes" came in second place, with 26 percent of the vote total. About a fifth (19 percent) regarded immigration reform as most important. "Increase infrastructure spending" and "reduce the minimum wage" received 13 percent and five percent of votes, respectively. . .
Systemic Falsification of Jobs Data Doubtful
CNBC's "Closing Bell" interviewed Diana Furchtgott-Roth, 12-5-13. Watch video.
A Higher Minimum Wage Reduces Job Growth
Jonathan Meer & Jeremy West, Economics21.org, December 5, 2013
The question of how the minimum wage affects employment remains one of the most widely studied--and most controversial--topics in labor economics. During the recent recession, the employment rate for younger or low-skilled workers (who are more likely to be paid wages at or close to the minimum) worsened disproportionately. Following the recession the unemployment gap based on education remains large. . .
Wall Street Isn't the Problem, Benefits Are
Nicole Gelinas, New York Times "Room for Debate," December 5, 2013
As states and cities from California to Illinois to New York start to take public-sector pension costs seriously, defenders of generous benefits have taken up a new argument for keeping things as they are. They say that the problem isn't guaranteed pensions and early-retirement ages. Rather, the problem is Wall Street. Public-pension fund fees are too high, and sucking money from retirees, they say. They're right that is a problem - but it is not the main problem. . .
Fed Should Cut Interest on Reserves
Peter Ireland, Economics21.org, December 5, 2013
According to the minutes of their late-October meeting, Federal Open Market Committee members discussed the possibility of lowering the interest rate the Fed pays on reserves held on deposit by commercial banks, as a way of adjusting the stance of monetary policy. This idea has considerable merit. To see why, let us remember how monetary policy actually works. . .
Making Low Wages Livable
Diana Furchtgott-Roth, New York Times "Room for Debate," December 4, 2013
Low-wage workers need more job opportunities, not a higher minimum wage. A minimum wage hike would harm employment opportunities of teens and low-skill workers. Fewer than 3 percent of American workers make the minimum wage, but these entry-level jobs are the first rung of the career ladder. . .
Fusion TV's "America with Jorge Ramos," 12-5-13
Raising Minimum Wage Hurts Young People
Diana Furchtgott-Roth, Washington Examiner, December 4, 2013
. . .Those who would be harmed by increasing the minimum wage are young people. Half of minimum wage workers are younger than 25, and 24 percent are teens. This group's unemployment rates are already higher than the 7.3 percent average rate. . .
CCTV's "America with Phillip Yin" interviewed Diana Furchtgott-Roth, 12-4-13
How Solid is the Case for Raising the Minimum Wage?
Scott Winship, Economics21.org, December 3, 2013
Over the weekend, the New York Times published an online piece by economist Arindrajit Dube arguing for a higher federal minimum wage. Dube is a leading scholar associated with a revisionist view of how minimum-wage increases affect the employment of low-skilled workers. . .
FBN's "The Willis Report," 12-5-13
Radio Free Europe with Greg Katsenelinboigen, 12-4-13. Listen here.
Minimum Wage Meets the Political Machine
Diana Furchtgott-Roth, Economics21.org, December 3, 2013
When Dickens wrote in the 19th Century, characters such as Scrooge paid their employees next to nothing and gave little break for Christmas, and nothing at all for a Christmas bonus. American employers are not Scrooges in the 21st Century. All but three percent of U.S. employees make more than the federal minimum wage. . .
Raising the Minimum Wage Is Not Win-Win
Jared Meyer, Economics21.org, December 3, 2013
Recent New York Times opinion articles by Arindrajit Dube and Paul Krugman suggest that raising the minimum wage will have no effects on employment. University of California (Irvine) professors David Neumark and J.M. Ian Salas and Federal Reserve Board of Governors economist William Wascher show that raising the minimum wage will result in fewer jobs for teens and low-skill workers. . .
Why It Matters Whether the Fed Targets Inflation or Unemployment
C. Calomiris & P. Ireland, Economics21.org, December 2, 2013
Today, more than four full years since analysts at the National Bureau of Economic Research declared the last recession officially over, unemployment, at 7.3 percent, remains elevated. The jobless rate still exceeds the 2001 recession peak and stands not far below the higher peak from the 1990-91 downturn. . .
Black Friday's Two-Way War On The Poor
DFW 1190 AM's "The Dan Cofall Show" interviewed Nicole Gelinas, 12-3-13
e21 Infograph: Oil Booming Despite Federal Government
Editors, Economics21.org, December 2, 2013
U.S. oil production has increased 21 percent since 2009 to nearly 6.5 million barrels a day, but federal acres leased for mineral rights decreased 17 percent over that same period. Only 37.8 million acres of federal land are now leased, whereas 131 million acres were leased in 1984. . .
Energy & the Environment
Biofuel Mandates Help Special Interests at Consumers' Expense
Jared Meyer, Washington Examiner, December 6, 2013
This month, the Environmental Protection Agency announced a reduction in 2014 biofuel mandates from 18 billion gallons to 15 billion gallons. This decision was made because gasoline consumption has fallen, and fuel mixes made with more than 10 percent biofuels can damage car engines. But there is more to the story. Since 2005, the Renewable Fuel Standard has required fuel sold in the United States to contain biofuels, of which corn-based ethanol is the most common. . .
Drilling for More Jobs in America's Heartland
Mark Mills, RealClearEnergy.org, Dec 3, 2013
With America's economy stuck in a lethargic "recovery mode" and the all-Washington all-media focus on the Affordable Care Act, President Obama took to the road last month to give a speech in Ohio about jobs and manufacturing. Buried in that speech we find a brief nod to the benefits of increased American oil and gas production. Buried and brief. . .
Green Energy Versus a Grid That's Not Ready
FBN's "The Willis Report" interviewed Diana Furchtgott-Roth, 12-3-13. Watch video.
Wind Power Is Brought to Justice
Robert Bryce, The Wall Street Journal, November 28, 2013
The Justice Department announced late last week that a subsidiary of Duke EnergyDUK -0.81% has agreed to pay $1 million for killing golden eagles and other federally protected birds at two of the company's wind projects in Wyoming. The guilty plea was a long-overdue victory for the rule of law and a sign that green energy might be going out of vogue. As Justice noted in its news release, this is the first time a case has been brought against a wind company for violating the Migratory Bird Treaty Act. . .
Blame the MTA For Train Crash, Too
Nicole Gelinas, New York Post, December 6, 2013
Gov. Cuomo wants you to blame train motorman William Rockefeller for Sunday's deadly Metro-North wreck. Well, blaming a sleepy-headed driver makes life a lot easier for Cuomo and the state-run MTA. But Rockefeller wasn't in charge of the railroad -- whose managers are supposed to protect riders from any one employee's failures. . .
Nicole Gelinas, City Journal Online, December 3, 2013
What caused Sunday's Metro-North crash, which killed four New Yorkers and critically injured 11? It's natural for people to look at two potential culprits--human error and equipment failure--and pick one of the two. Monday's late report that the train was going 82 miles an hour in a 70 mph zone as it entered a 30 mph zone has focused attention on the train's operator. But humans and infrastructure go together. . .
1300 AM's "Live from the State Capital with Fred Dicker," 12-5-13
WBAL 1090's "News Now with Mary Beth Marsden," 12-4-13
710 AM WOR's "The John and Ken Show," 12-2-13
New York City/State Policy
De Blasio's Hospital Bill Comes Due
Bob McManus, City Journal Online, December 2, 2013
(Linked on NRO's "Web Briefing," 12-3-13)
What does Governor Cuomo have in his Santa Claus sack for Bill de Blasio? How about a full-service hospital of the mayor-elect's very own? An empty hospital. A medically superfluous hospital. A $15-million-a-month, money-losing hospital. But a hospital, nevertheless. . .
De Blasio's Welfare Agenda
Heather Mac Donald, New York Post, December 3, 2013
(Linked on City & State's "First Read," 12-3-13)
Bill de Blasio's mayoralty will be primarily judged on whether he sustains New York's record-breaking crime drop. But keep your eye on another number, too: 348,000, the tally of New Yorkers now receiving cash welfare. . .
Say 'No' To Casinos
Nicole Gelinas, New York Post, December 2, 2013
New Yorkers voted last month 57 percent to 43 percent to OK four casinos upstate. But that doesn't mean that if you live in, say, Saratoga Springs, you must resign yourself to one-armed bandits. Massachusetts has shown that citizens can fight back against gambling -- town by town. . .
Bratton's Back: Even Progressives Need Police
Heather Mac Donald, Time.com, December 6, 2013
New Yorkers of all political stripes can breathe a sigh of relief now that mayor-elect Bill de Blasio has chosen William Bratton as his police commissioner. It's a choice laced with irony given de Blasio's all-out assault on the New York City Police Department in this year's mayoral campaign. But it's also highly revealing of the limits that now constrain even the most left-leaning urban politicians. . .
WSJ's "Opinion Journal with Mary Kissel" interviewed Heather Mac Donald, 12-5-13. Watch video.
NPR's "All Things Considered" interviewed George Kelling, 12-5-13. Listen here.
ABC 7's "Up Close with Diana Williams" will interview Fred Siegel at 11 a.m. ET 12-8-13
The Childless City
Joel Kotkin and Ali Modarres , The Epoch Times, November 29, 2013
Adapted from City Journal, Summer 2013
What is a city for? Ever since cities first emerged thousands of years ago, they have been places where families could congregate and flourish. The family hearth formed the core of the ancient Greek and Roman city, observed the 19th-century French historian Fustel de Coulanges. . .
Obama: No Repealing Health Care Law
FBN's "The Willis Report" will interview Paul Howard at 6 p.m. ET today
WTKF FM's "Viewpoints with Lockwood Phillips" interviewed Yevgeniy Feyman, 12-6-13
World News Groups "News with Jim Henry" interviewed Yevgeniy Feyman, 12-4-13
TRN's "The Jerry Doyle Show" interviewed Paul Howard, 12-4-13
AFR's "Nothing But Truth with Crane Durham" interviewed Paul Howard, 12-4-13
Fox News's "The Kelly File" interviewed Avik Roy, 12-3-13. Watch video.
CNBC's "The Kudlow Report" interviewed Paul Howard, 12-3-13. Watch video.
What If Obamacare Website Isn't Working By November 2014?
Avik Roy, Forbes.com's "The Apothecary," November 30, 2013
When President Obama appointed Jeffrey Zients to take over the troubled Healthcare.gov Obamacare website, Zients made a promise: "By the end of November, Healthcare.gov will work smoothly for the vast majority of users," he said. . .
FBN's "The Lou Dobbs Show" will interview at 7:10 p.m. ET today
MSNBC's "The Melissa Harris-Perry Show" will interview at 10 a.m. ET 12-7-13
How Medicaid Fails the Poor
WCBM 680 AM's "The Sean and Frank Show" interviewed Avik Roy, 12-6-13
KMED AM 1440's "The Bill Meyer Show" interviewed Avik Roy, 12-2-13
BOOK REVIEW: Michael Novak's 'Writing From Left to Right'
Brian Anderson, Washington Times, December 4, 2013
Catholic theologian, social thinker, diplomat, political speechwriter, journalist, influencer of prime ministers and popes, author of dozens of important books -- Michael Novak has lived an extraordinary public life. "Writing from Left to Right" is his entertaining and wise memoir of that engagement with his age, and of his movement across the political spectrum. . .
The College-For-All Model Isn't Working
Tamar Jacoby, Los Angeles Times, December 3, 2013
(Linked on RealClearPolicy, 12-3-13)
Instead of going through Congress and making the initiative bipartisan, President Obama acted alone in mid-November, promising $100 million in grants to specialized high schools -- such as New York City's Pathways in Technology Early College High School -- that prepare students for technical careers. The president's on the right track, but why make it partisan? Schools like P-TECH are an idea whose time has come -- one that can be adopted by both parties and by business as well as government. . .
READ THE FULL MI REPORT ON THIS TOPIC
Universal Preschool Won't Solve Inequality
Kay Hymowitz, Orange County Register, November 26, 2013
"Would students in the United States benefit from universal preschool?" The answer is a very weak maybe. For decades now, advocates have been looking to preschool as a way to compensate for the disadvantages suffered by poor children. And it's true that researchers have often found that attending preschool can generate some gains. Reading and math scores sometimes go up; the kids might become more "school ready." . .
Judge Sanctions Porn Troll
Jonathan B. Wilson, PointOfLaw.com, December 5, 2013
In a victory for corporate defendants that often face baseless suits intended to extort a quick settlement, a judge this week imposed sanctions on so-called "porn troll" Prenda. . .
CFTC's Latest Invitation to Court
Hester Peirce, PointOfLaw.com, December 4, 2013
The Commodity Futures Trading Commission was sued again today. The complaint alleges that the CFTC undertook a major rulemaking effort without complying with the procedural requirements in the Commodity Exchange Act and the Administrative Procedure Act. . .
100 Days at the SEC
Hester Peirce, PointOfLaw.com, November 29, 2013
The Securities and Exchange Commission's newest commissioners--Kara Stein and Michael Piwowar--gave speeches last Friday to mark their first three months in office. These speeches provide useful insight into the direction the new commissioners would like to take their agency. . .
PointOfLaw.com Named to ABA Journal's Blawg 100
Thanks to your nominations, PointOfLaw.com has made the ABA Journal's list of the top 100 legal blogs in the nation. The voting isn't over yet! PointOfLaw.com is in the running for the best litigation blog. Click here to vote. Polls close December 20th.
ABOUT POINT OF LAW
PointOfLaw.com is a website sponsored by the Center for Legal Policy at the Manhattan Institute. Focusing on America's civil justice system, the site includes original discussions featuring some of the nation's top legal scholars, an ongoing forum on liability issues, a bibliography of important books and articles, and links to topical legal news stories.
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A Watered-Down Boycott Resolution on Israeli Institutions
David E. Bernstein, MindingTheCampus.com, December 5, 2013
From the bowels of academia comes news that the National Council of the American Studies Association has voted in favor of boycotting Israeli institutions. The boycott resolution goes to the full membership for an up or down vote. . .
The Student Loan Debacle: A Clear Moral Hazard
Gary Jason, MindingTheCampus.com, December 3, 2013
Here, in a nutshell, is the human toll of the student-loan mess: it is forcing many recent grads to defer marriage and having children; it is hobbling many prospective entrepreneurs that our economy badly needs and may well delay the retirement of new grads by 11 or 12 years. . .
Michelle Obama: Get Thee to College
Peter Wood, MindingtheCampus.com, December 2, 2013
Michelle Obama would like more students to attend college. In a speech on November 12, which was immediately recognized by the media as a major shift in policy emphasis, Mrs. Obama told students at a Washington, D.C. high school that the administration would work hard to increase the number of low-income students who pursue college degrees. . .
Going for the Gold: Universities Gamble Big-Time on Research
Richard Vedder, MindingTheCampus.com, December 1, 2013
Like compulsive Las Vegas gamblers, many university presidents like to make big bets hoping for large payoffs. And like most gamblers, they usually lose. . .