What's Next for Detroit?
The Census Bureau reports that more Americans have three cars than none at all. Americans' storied love affair with the automobile is well known, but its ardor for the "big three" domestic manufacturers has cooled. Now that the Senate has voted the bailout measure down, the auto companies will need to rethink strategies to return to viability.
Toward a New Global Financial System? On November 14-15, 2008, leaders of the G20 economic powers gathered in Washington to discuss the financial crisis. British prime minister Gordon Brown and French president Nicolas Sarkozy had been championing a new global financial architecture with international institutions to regulate the markets. The leaders took modest steps toward developing regulating credit derivatives and increasing multilateral banking oversight. The assembled governments also agreed on the need for significant fiscal stimulus and pledged to avoid protectionist measures for another year.
- Desmond Lachman concludes that by failing to address forcefully the global recession, the G20 leaders have called into question whether such a forum is the right place to address international monetary and economic policy matters.
- In a recent paper and at an event at AEI, Allan H. Meltzer discussed what the recent economic turmoil portends for international economic institutions, arguing that major changes are needed in them and that the period of U.S. leadership may be coming to an end.
- In a new International Economic Outlook, Lachman argues that one of the prominent casualties of the current crisis will be any further expansion of the European Monetary Union. He believes the crisis will mark the end of any serious challenge by the euro to the dollar as an alternate reserve currency. The strains in the eurozone are already apparent and will grow as the financial crisis deepens.
The Financial Crisis Takes No Holiday
 | |
| iStockPhoto/Simon Smith | |
U.S. and world stock markets rallied on the Columbus Day holiday as the G7 finance ministers meet this weekend in Washington and as the Treasury Department announced a $250 billion plan to recapitalize banks. The $700 billion bailout passed by Congress had much less of an effect on the markets, which suffered record-breaking declines in the days after its passage. As yet, there has been no thawing effect on frozen credit markets. World leaders have rushed into action, with Germany guaranteeing deposits and Britain announcing a £400 billion rescue plan. The leading economies' central bankers cut interest rates by as much as 500 basis points, but the bleeding continues.
- Click here for a list of AEI scholars who are available to comment on the financial crisis.
- For a collection of AEI scholars' research on the financial crisis and its roots years ago, visit www.aei.org/FinancialCrisis/.
A Financial Rescue Plan Takes Shape
 | |
| President George W. Bush meets with congressional leaders in the Cabinet Room at the White House on September 25, 2008. Photo by David Bohrer / White House. | |
Just two days after the House of Representatives voted down the $700 billion financial rescue plan and triggered a record fall by the Dow, the Senate passed a package brimming with sweeteners to attract enough supporters on a second go-round in the house. On Friday, October 3, 2008, the rescue bill was approved by the House and sent on to the president for his signature. AEI scholars have been reporting on the crisis and monitoring the shape and substance of the administration's proposal and the alternatives. While the administration's willingness to consider bold action was useful, many of the provisions in the package were cause for concern. Procedural and political considerations will dominate the discussions in the hours and days to come, and some hard questions need to be answered so that we are able to protect the financial system and taxpayers.
Click here for AEI scholars who are available to comment on the financial crisis.
The Cascading Financial Crisis
 | |
| Treasury Secretary Henry M. Paulson at AEI. | |
In multiple appearances on Sunday talk shows on September 21, 2008, Treasury Secretary Henry M. Paulson underscored the seriousness of the problems ripping through the financial system and the need for swift action to deal with the crisis. The few weeks prior have changed the structure of the U.S. financial system, with the federal government intervening in unprecedented ways to shore it up and proposing an eye-popping rescue package that gives the Treasury unparalleled powers. The Federal Reserve took the extraordinary step of agreeing to convert Morgan Stanley and Goldman Sachs into traditional bank holding companies. As Wall Street and Washington responded to the news, the work of AEI scholars provided ideas about what steps need to be taken next to protect the financial system.
A Flailing Financial System?
 | |
| Lehman Brothers' headquarters in New York City, September 14, 2008. Photo credit: Flickr user tschein / Creative Commons | |
From the Bear Stearns bailout in March, which he said tarnished the Fed's reputation, changed its relationship to nonbank lenders, and increased the likelihood of government intervention and regulation, through Merrill Lynch's troubles in August, when he wrote that the United States "must accept the fact that our national economy is hostage to the financial system," Vincent R. Reinhart has been analyzing the cascading financial crisis. On September 9, 2008, he praised the U.S. government's decision not to bail out Lehman Brothers: "This was the right time for the government to draw the line." Reinhart and other AEI scholars have been writing almost daily about the financial crisis. This week, as Wall Street continues to respond to the weekend news about Merrill Lynch, Lehman, and AIG, their work will provide ideas about what steps the Treasury and other agencies should take next to protect the financial system.
Fannie and Freddie as the Dust Settles
 | |
| The headquarters of Fannie Mae in Washington, D.C. Photo by Matti Mattila / Creative Commons | |
In its September 8 editorial on the government takeover of Fannie Mae and Freddie Mac, the Wall Street Journal says that "the tragedy is that [Henry Paulson] and Congress didn't act 18 months ago." But perhaps the real tragedy is that Washington failed to heed the warnings of two decades from Peter J. Wallison and others. Wallison has been writing about the structural flaws of the giant government-sponsored enterprises (GSEs) for more than two decades and the dangers they posed to taxpayers. In his most recent Financial Services Outlook about what should happen next, Wallison reviewed the options and suggested that the best course from the standpoint of taxpayers would have been to allow them to go into receivership, which would have allowed the management to wipe out shareholders and minimize taxpayers' losses, unlike the conservatorship proposed by Paulson, which Wallison characterized as "a gift" to shareholders. Wallison's prophetic work on Fannie and Freddie merits the attention of the next president and Congress as they struggle with the daunting task of reforming the GSEs.
Doing Business with Latin America
 | |
| iStockphoto / Levent Abdurrahman Cagin | |
Contentious issues in Latin America are bursting into the U.S. presidential campaign as John McCain visits Colombia and Mexico. The U.S.-Colombian free trade agreement, strongly supported by Colombian president Alvaro Uribe, has been held up by Congress over concerns about antilabor violence in that country, even though Uribe has made striking progress in pacifying the drug-fueled conflict there--including a stunningly successful hostage rescue mission just hours after McCain's visit. Drug-related violence also affects the U.S.-Mexican relationship. In our southern neighbor, more than 1,500 deaths have been attributed to violent drug cartels. To combat these, the Senate has approved the Merida Initiative, a proposal to provide equipment and training in support of law enforcement operations in Mexico and Central America. Trade issues illuminate a sharp contrast between McCain, who champions free trade in general and the North American Free Trade Agreement (NAFTA) in particular, and Barack Obama, who opposes the Colombian trade pact and thinks NAFTA should be amended.
The Bottom of the Housing Market?
 | |
| iStockphoto/Tony Casanova | |
The Commerce Department reported that housing starts declined 3.3 percent after an unexpected jump in April. The new figures were the lowest total starts since March 1991, indicating that this key sector of the economy is still suffering. Unsold housing inventories are at record levels, foreclosures are sharply on the rise, and housing prices are now declining at an accelerating pace. AEI's Desmond Lachman has argued that "the prospects for the U.S. housing market hold the key" to the economy's future direction, particularly at a time when the economy is being hit by a major oil price shock. A continued slump in housing construction activity, he says, could directly subtract a full percentage point from GDP growth in 2008, just as it did in 2007, while further declines in home values could also materially affect consumers' willingness to spend. AEI scholars have been monitoring economic indicators closely and bring a variety of perspectives to the meaning of current economic data.
- In March, Alex J. Pollock moderated the latest event in AEI's conference series on the deflating housing bubble.
- Six AEI economists with widely divergent assessments of current economic conditions addressed the extent to which housing is dragging down the economy and the credit markets at an April forum.
- In the Harvard College Economics Review, Pollock pins the housing bubble on "economic enthusiasm."
A Healthier America
The National Center for Health Statistics reported last week that death rates declined significantly between 2005 and 2006 and that life expectancy hit another high, reaching 78.1 years. The preliminary statistics also showed that death rates for eight of the ten leading causes of death dropped significantly. The age-adjusted death rate from AIDS also declined. Although there were disparities between blacks and whites, life expectancy for white and black males and females hit record highs. The data provide additional evidence of the "Hispanic paradox," showing that Hispanics as a group are healthier than their income or educational status would suggest. AEI scholars have written about these trends and their implications.
Geoengineering: Thinking Outside the Climate Change Box
Democrats in the U.S. Senate have pulled the climate bill sponsored by Senators Joe Lieberman (I-D-Conn.) and John Warner (R-Va.). It is unlikely that the legislation can be revived this year. AEI scholars have raised serious questions about the cap-and-trade system the legislation includes, arguing that it is unlikely to work and excessively costly. Given the poor prospects for a successful global emissions reduction effort, many scholars are wondering whether other approaches to controlling global warming might be feasible. A new project at AEI is examining the merits of geoengineering, a method of changing features of the earth's environment to offset the warming effect of greenhouse gases. Geoengineering is not a panacea, but many scientists agree that it may buy time until we can reduce our reliance on fossil fuels and should be studied further. At a conference at AEI this week, Samuel Thernstrom and Lee Lane, who direct the project at AEI, urged the administration to explore the feasibility and desirability of geoengineering and support further scientific research into its risks and rewards.
The Tenth Anniversary of the Microsoft Lawsuit
Ten years ago this week, the Justice Department and twenty state attorneys general filed suit against Microsoft, charging it with illegally thwarting competition to protect and extend its monopoly on software. The tortured history of antitrust policy has occupied AEI scholars since the 1960s, when the Institute published The Federal Antitrust Laws, a primer for businessmen on "why these laws are and probably will continue to be, an irrational thorn in his commercial flesh." In 1977, legal scholar Robert Bork came to AEI to finish writing The Antitrust Paradox, one of the most influential books in this area. In a new essay, Robert W. Hahn, director of AEI's Reg-Markets Center, and the Milken Institute's Peter Passell note the European Competition Commission's recent decision to fine Microsoft $1.35 billion in a long-running antitrust dispute. They argue that the "ever-briefer period in which companies with clear leads in technology and marketing seem able to sustain the advantages" make treating Microsoft, Google, and their successors like the monopolists of the past a real loss to advanced industrial economies, a boon to lawyers who try antitrust cases built around traditional tests of market power, and a significant barrier to productive change.
The "Threatened" Polar Bear?
On April 29, a federal judge gave the Bush administration two weeks to make a final determination about whether the polar bear should be protected under the Endangered Species Act (ESA). On May 14, the administration announced its decision to list the bear as "threatened" under the act. Interior Secretary Dirk Kempthorne said that "[t]he ESA is not the right tool to set U.S. climate policy" and that the decision "should not open the door to use of the Endangered Species Act to regulate greenhouse gas emissions," something Kenneth P. Green expressed concern about in a recent Environmental Policy Outlook. In the Outlook, Green examines what we know about the nineteen subpopulations of these charismatic megafauna. Green, an environmental scientist, then looks at the evidence that global warming has caused--and will cause--a reduction in sea ice and that the bear populations will dwindle because they are dependent on sea ice to hunt for prey.
Barely Growing
 | |
| AEI's Charles W. Calomiris and Desmond Lachman assess the condition of the economy at an April 28 conference. | |
Newly released figures show that the U.S. economy grew by 0.6 percent in the first quarter of 2008, identical to the final quarter of 2007. The official figures do not meet the classic criteria for a recession--two or more quarters of negative GDP growth--but they make it clear that the economy is slumping. In other worrying news, wages and compensation grew by 0.7 percent in the first quarter, less than expected, and consumer spending grew by its lowest rate since 2001. The Federal Reserve, battling the twin specters of recession and inflation, cut interest rates by a quarter of a point while promising to watch inflation closely. Although "economic stimulus" payments began flowing to taxpayers this week, they are unlikely to provide much of a boost to the economy. At a Monday conference, AEI economists were divided about the economy's prospects. Desmond Lachman said he expects "several quarters of negative growth going forward." Charles W. Calomiris, along with other economists on the panel, was more optimistic, saying that we are not in a recession and that should one occur, it would be "short and shallow."
Our Environmental Condition
On April 22, 1970, the first Earth Day gave a boost to the nascent environmental movement. Since then, as Steven F. Hayward has demonstrated in his yearly Index of Leading Environmental Indicators, the United States has made great and largely unheralded progress in addressing environmental problems. The drivers of the improvement, according to Hayward, are economic growth, increasing resource efficiency, innovation, and deepening popular environmental values. Government regulation, he says, has often been needlessly costly. In a recent AEI Environmental Policy Outlook, Hayward compares U.S. environmental progress to that of other nations, arguing that the United States will likely continue as the world's environmental leader. In assessing greenhouse gas emissions, he details consistent U.S. improvements in energy efficiency.
- Joel M. Schwartz and Hayward document dramatic progress in reducing air pollution in Air Quality in America (AEI Press, 2007). Hayward writes in a recent article that with such progress on the environment in recent years, the public may soon tire of the issue.
- Kenneth P. Green believes that debates over global warming will be about stringency and means.
- Robert W. Hahn, who has studied the costs and benefits of biofuels, believes that grotesquely expensive renewable fuels may gain a permanent place at the subsidy trough.
- Samuel Thernstrom writes that President Bush's recent speech on U.S. climate policy offered neither justification for nor a plan to achieve his new environmental goals.
Congress versus Colombia?
On Monday, President Bush sent Congress the free trade pact with Colombia under "fast track" provisions that would require Congress to approve or reject the measure within ninety days. On Thursday, Speaker Nancy Pelosi orchestrated a procedural vote that will now delay the vote indefinitely. In an interview with the Wall Street Journal last week, Colombian president Alvaro Uribe described the possible failure to pass it as "very serious," noting that he could not understand why Congress would balk given the historic ties between his country and the United States and Colombia's cooperation in fighting terrorism. AEI scholars agree. Norman J. Ornstein urged passage, arguing that it was time for the Democratic leadership in Congress and the Democratic presidential candidates to step up to the plate. Ornstein believes that passage of the FTA will be a "test of whether the Democratic Congress is ready to accept the responsibilities of the majority." Philip I. Levy has written that the impact of the treaty on domestic employment would be muted in part because Colombia is a small country (its economy is less than 3 percent the size of the U.S. economy, he says) and also because the United States is already open to trade with Colombia, with 92 percent of U.S. imports from Colombia entering duty free. Roger F. Noriega argues that "Uribe's record of rescuing the rule of law along with the rights and security of Colombia's citizens speaks for itself." Uribe's administration, he says, has "more than pulled its weight" in the global struggle against illegal drugs.
The Treasury's New Financial Services Blueprint
On March 31, Treasury Secretary Henry M. Paulson unveiled a major overhaul of U.S. financial regulation. His report, which began as an effort to respond to concerns about the competitiveness of U.S. companies, has become a far more ambitious blueprint for change. In an interview with the Wall Street Journal describing the effort, the secretary said that everywhere he looked, the "plumbing hasn't changed to meet the realities." How much attention the plan will receive in an election year with a deeply divided Congress and adminstration remains to be seen, but the debate is long overdue. AEI scholars are steeped in the issues the report addresses.
- Peter J. Wallison has written about regulatory and litigation burdens facing Americans firms and has urged an optional federal charter for insurance companies, all components of the Treasury plan. Wallison has been particularly critical of the weakness of the Securities and Exchange Commission, an agency slated in the Treasury plan to be merged with the Commodity Futures Trading Commission. In two recent Financial Services Outlooks, he responded directly to one of Paulson's questions in taking on the reform effort: "If you could start over, what regulatory model makes sense?"
- AEI scholars, including Desmond Lachman, John H. Makin, Alex J. Pollock, and Vincent R. Reinhart, have been watching the housing market's turmoils and thinking how best regulatory agencies and the Fed should respond.
- R. Glenn Hubbard and Allan H. Meltzer have cautioned about how a crisis mentality can produce adverse regulation.
Getting Life-Saving Drugs from Lab to Bedside
 | |
| FDA commissioner Andrew C. von Eschenbach, M.D. | |
More than half a million people in the United States are expected to die of cancer this year. Beginning on March 13, AEI held a two-day conference on the Food and Drug Administration's (FDA) role in the development and commercialization of innovative kinds of new drug treatments for cancer and other illnesses. Moving these new drugs from the lab to the bedside is taking longer than expected, given advancements in molecular biology, new thinking about clinical trials, and statistical analysis that have made faster development possible. At the conference, FDA commissioner Andrew C. von Eschenbach, M.D., gave the keynote address. The commissioner has said that "the FDA of the 20th century is not adequate to the food and drugs of the 21th century," arguing that the agency needs to be "recreated." Former FDA commissioners Mark B. McClellan, M.D., and David Kessler, M.D., spoke at the conference, as did AEI scholars John E. Calfee and Scott Gottlieb, M.D.--himself a former FDA deputy commissioner. All are deeply involved in researching the FDA's structure and performance, particularly FDA oversight of oncology drug development.
Beginning the 2009 Budget Process
On Monday, the Bush administration released its budget for 2009, with an eye-popping $3 trillion bottom line. The budget comes amid deepening concerns about the nation's economy. In a speech last week, President Bush described "troubling signs," including a new Bureau of Labor Statistics report that shows the economy shed jobs last month--the first monthly loss since 2003. President Bush urged Senate action on the stimulus plan that Democrats and Republicans in the House have passed. The administration's budget reduces entitlement spending by more than $200 billion over the next five years, but Democrats in Congress are already balking at some of the cuts, particularly in Medicare spending. Government spending grows during wartime, and the budgets during Bush's tenure reflect that reality. The deficit as a percentage of GDP reached 3.6 percent in 2004, and the new budget projects a deficit of about 2.8 percent in 2009. AEI scholars have examined budget and fiscal policy issues in the Institute's Tax Policy Outlook and Economic Outlook series.
Stimulus Response
Although U.S. markets were closed on Monday, worldwide stocks fell sharply--in some cases the biggest drops since 9/11. The drops came on the first day of trading after President Bush announced a $140 billion economic stimulus package, including temporary but broad-based tax relief, that he will send to Congress. Investors fear that the president's plan is too little, too late, especially with several economic indicators suggesting that a recession is at hand. The Commerce Department reported Thursday that new home construction last year was at its lowest level in twenty-seven years and nearly 25 percent lower than in 2006. Losses related to the mortgage meltdown at large institutional banks, now topping $40 billion, have sent the Dow reeling in recent weeks. In congressional testimony this week, Fed chairman Ben Bernanke cautioned Congress not to use the stimulus package to put into place long-term policies that would harm the economy in the long run. Both President Bush and House leaders have indicated their willingness to move quickly. House leaders suggested that they could have a plan to the president before the January 28 State of the Union message.
The "R" Word
A slew of economic indicators are pointing south, and President Bush is expected to announce an economic stimulus package to address deepening concerns. The stimulus, currently being negotiated by Congress and the White House, might be as large as $150 billion. The package would be aimed at alleviating the fallout of the credit crunch, housing market collapse, and rise in oil prices. Two weeks ago, the markets took a dive after a rise in the unemployment rate and a small increase in jobs. The Institute for Supply Management reported that its index of factory activity--a key measure of U.S. manufacturing health--dropped to its lowest reading since April 2003, suggesting a contraction in manufacturing activity. The housing market's volatility continues as home prices fall and foreclosures rise. Residential construction spending is down 17.5 percent from a year ago. To the subprime problems we can add concerns about prime-credit solvency. Oil flirted briefly with $100 per barrel. The rise in the core inflation rate was larger than expected, and consumers are feeling the pinch. Gasoline prices have been high, and a new report from the Department of Labor shows the biggest jump in food prices in seventeen years. The cost of a dozen eggs has risen 38 percent since last December, and milk 30 percent.
- Not all the indicators are negative, as Kevin A. Hassett noted in a year-end roundup of economic statistics.
- In his most recent Economic Outlook, John H. Makin suggests proposals that could contribute to economic improvement in 2009.
- In 2007, AEI's Economic Outlook series has touched on financial firms and risk, the credit crunch, rising interest rates, rebalancing in the global economy, U.S. consumer spending, the odds of a recession, and other topics, with an eye toward economic developments in '08.
A Bali Hai Note on Climate Change
Delegates have descended upon Bali for the 2007 United Nations Climate Change conference, where they will attempt to craft a successor to the Kyoto Protocol, which will expire in 2012. The United States signed the Protocol in 1997 but did not ratify it. Countries such as India and China, the latter of which now produces more greenhouse gas emissions than the United States, were signatories but were not required to limit their emissions. The scope of any successor agreement, and the distribution of emissions obligations and costs, will be major challenges for delegates to discuss. The White House insists that any binding emissions caps incorporate all major emitters, while also noting that developing countries have legitimate economic needs that cannot be addressed without adequate and affordable energy supplies. AEI hosted a major conference on climate policy in November at which several distinguished experts discussed approaches for thinking through the climate change problem in light of the coming important decisions the United States will make.
Singing the Housing Market Blues
U.S. home sales dropped by 8 percent in September, the biggest fall since the National Association of Realtors began tracking the data in 1999. Median home prices dropped 4.2 percent over last year, and unsold inventory rose--increasing concerns about a recession. For more than a year, AEI scholars have been warning about problems in the housing market. In March and October, AEI convened sessions with Desmond Lachman, Alex J. Pollock, and John H. Makin on the housing bubble, the credit crunch, and subprime lending. Last week, Lachman wrote that "[a]t the heart of the credit crunch are fears about mortgage lending losses that are embedded in complex financial structures. Surely one should expect those fears to be intensified as it becomes increasingly apparent that home prices will not be stabilizing anytime soon and that financial-system losses from mortgage lending are likely to be at least double the Federal Reserve's present $100 billion estimate." Fed chairman Ben Bernanke continues to argue that the economy is holding up well given the strains in the housing sector, but other economic reports last week suggest that housing market stress is spreading to other parts of the economy.
Flinching on Free Trade
 | |
| U.S. Trade Representative Susan C. Schwab speaks at an AEI conference on the future of the Doha round. | |
British historian and free trade proponent Lord Macaulay once observed that "free trade, one of the greatest blessings which a government can confer on a people, is in almost every country unpopular." In an interview last week, President George W. Bush acknowledged skepticism about free trade, saying that "the United States has been through these trends in the past. . . . This country has got to make sure that we don't isolate ourselves or try to wall ourselves off from the world." AEI adjunct scholar Jagdish Bhagwati recently addressed some alarming rhetoric about free trade as the Doha death knell sounded once again, reminding us that "free trade is alive and well among economists." The president travelled to Miami on October 12 to talk up the benefits of free trade as part of a push to promote his trade agenda, at the top of which are recently signed bilateral agreements with Colombia, Panama, Peru, and South Korea.
Climate Policy beyond Kyoto
![Steven F. Hayward in a scene from his documentary, <em>An Inconvenient Truth . . . or Convenient Fiction?</em>. Photo courtesy of Pacific Research Institute.]() An Inconvenient Truth . . . or Convenient Fiction?. Photo courtesy of Pacific Research Institute." src="https://www.aei.org/imgLib/20070927_HaywardLadder.jpg" border=0 bordercolor="gray"> | |
| Steven F. Hayward in a scene from his documentary, An Inconvenient Truth . . . or Convenient Fiction? Photo courtesy of the Pacific Research Institute. | |
On September 27, 2007, the Bush administration convened a meeting of global leaders on the challenge of climate change. The Bush gathering follows on earlier meetings this week at the United Nations General Assembly, where world leaders urged the replacement of the Kyoto Protocol, due to expire in 2012. The United States never ratified the Protocol, and developing countries--including industrial powerhouses China, India, and Brazil--are exempt from it. At the State Department conference, the Bush administration aims to engage key developing countries in climate change action and move participants toward a new post-Kyoto framework. While European leaders favor binding multilateral commitments, the Bush administration eschews a "one-size-fits-all" model and instead aims for a multifaceted approach that includes tailored strategies to promote new technology and cut emissions in certain sectors. The "portfolio" approach the Bush administration is advocating does not include binding steps, but several members of Congress are proposing legislation that will include mandatory curbs. AEI scholars are studying various approaches to solving the problem of global warming.
- Samuel Thernstrom addressed the Bush legacy on climate policy this week. In Strategic Options for Bush Administration Climate Policy (AEI Press, 2006), Lee Lane argues for a "modest carbon tax" and more investment in "breakthrough clean-energy technologies."
- Kenneth P. Green, Steven F. Hayward, and Kevin A. Hassett recently weighed the relative costs and merits of emissions trading versus carbon-oriented tax reform. Green, Hassett, and N. Gregory Mankiw spoke at a forum on energy taxation. R. Glenn Hubbard has praised a prudent emissions-trading proposal.
- Green testified before a Senate committee this week on whether climate change action can produce job growth. He recently engaged in a three-part online debate on regulating greenhouse gas emissions.
- Hayward's documentary, An Inconvenient Truth . . . or Convenient Fiction? highlights gaps in scientific understanding of climate change and combats the pessimism of the modern environmentalist movement.
- Karlyn Bowman, who documents public opinion about climate change, argues that although most people are concerned about global warming, it is not a top priority for them.
Biotech Drugs Change the Patent Game
Effective biotech drugs, based on advances in molecular biology, are often justly billed as medical miracles. But they are not always miracles for the investors who finance them, putting up huge amounts of capital for very uncertain returns. In a newly released AEI Press book, Biotechnology and the Patent System: Balancing Innovation and Property Rights, Claude Barfield and John E. Calfee argue that biotechnology patents--"patenting life," if you will--are essential if we are to get yet more miracles. But spectacular advances in biotechnology, combined with a newly patent-hungry nonprofit sector, have threatened to disrupt the patent system. Amid calls for sweeping change, Barfield and Calfee say, "first, do no harm." After navigating the complex economic and legal issues surrounding biotech drug development, they support modest reforms that will facilitate medical progress and offer investors a surer promise of returns on successful drugs--the down payment on future innovation and better health. Barfield and Calfee joined several experts on the biotech drug industry and intellectual property law at an AEI conference on September 25, 2007.
Taxing Private Equity Profits
The Blackstone Group's much-talked-about initial public offering has brought unprecedented attention to the private equity sector. With their great record of success, private equity firms have become targets for lawmakers, and legislation has been introduced to increase tax rates on their profits. Senator Chuck Schumer (D-N.Y.), an influential member of the Senate Finance Committee, has resisted the calls, saying "unintended consequences often occur when you do major tax work." How should private equity firm profits be taxed and what would be the implications of potential tax changes Congress is considering on private equity firms and the larger economy? These issues were discussed at AEI on September 19, 2007, where Victor Fleischer of the University of Illinois, whose academic work made this one of the most contentious tax issues of 2007, spoke. Joining him were AEI's Alan D. Viard and David Weisbach of the University of Chicago Law School. AEI's Kevin A. Hassett moderated.
Toxic Toys and Chinese Trade
China has come under heavy criticism for exporting tainted products. In the latest instance, toymaker Mattel recently recalled several million toys made in China because of defects. The toxic toys are not alone: U.S. federal regulatory agencies have in recent months also called attention to high levels of contaminants in Chinese toothpaste, pet food, seafood, grain, and produce. Many unlicensed pharmaceuticals manufactured in China and other developing countries are also dangerous, since they frequently contain incorrect ingredients or inaccurate amounts of active ingredients. The recalls have heightened already-high trade tensions between China and the United States. AEI scholars such as Scott Gottlieb, Roger Bate, and Philip I. Levy have been writing about the deadly global trade in tainted food, copied and counterfeit drugs, and trade concerns.
The Subprime Shuffle | The International Credit Crisis On August 6, one of the biggest U.S. subprime and Alt-A lenders filed for bankruptcy as the credit crunch has left it unable to fund over $750 million in home loans. The filing was only one of several ba
(2)
|
Sunday, November 22, 2009
