COMPETITIVE ENTERPRISE INSTITUTE

VOL. 29, NO. 3 | SUMMER 2016

FEATURED ARTICLES

The Morality of Capitalism

Must Be Defended
4
IAIN MURRAY
Brexit Vote is the End
of the Beginnig

5
TREY KOVAKS
Obamas Overtime Rule was
Never Intended to Raise Wages

8 BY STEVE FORBES
KENT LASSMAN
Giving Thanks for the Enduring
Principals of Liberty
ALSO IN THIS ISSUE
Presidential Canidates Should Talk
about Regulation, by Clyde Wayne Crews,
Jr. and Ryan Young. . . . . . . . . . . . . . . . . . . 7
Remembering Julian Simon
by Bruce Yandle . . . . . . . . . . . . . . . . . . . . . 9
The Good, the Bad, and the Ugly. . . . . . 14
Media Mentions. . . . . . . . . . . . . . . . . . . . 15
End Notes . . . . . . . . . . . . . . . . . . . . . . . . . 16
I ts an honor to be here. Kent, thank you.
Fred, thank you for all the work that
youve done over the years in making this
institution what it is.
CEIs work is now more important than
ever beforebecause once this election
ends, I believe the importance of ideas will
come to the fore again.
Therefore, we have a task before us.
We all know capitalism works. One of our
tasks, however, is to emphasize the moral
basis of capitalism.
Why are free markets moral? Because
in a true free market you succeed only
by meeting the needs and wants of other
people. As Steve Jobs once said when
asked if he used marketing surveys, he
said, No, because people dont know
what they want until I show them. Thats
the essence of entrepreneurshipputting
something out there. You dont know if
people are going to take to it or not, but
your success is their success, that is, the
great new product or service.
The thing is, in a real free market, even if
you have the kind of personality that makes
babies cry and dogs bark when you walk
down the street, even if you lust for the
money, you wont get it unless you provide
something that somebody else wants or
feels they need.
(continued on page 3)
 Shakeup in Subpoena Land
By Sam Kazman
T he last week of June turned was a momentous
FROM THE GENERAL COUNSEL
one in the saga of the climate change subpoenas.
It started with three pending subpoenas; it ended
with none. In between there was a court hearing on
our motions for sanctions against the Virgin Islands
Attorney General. And despite the demise of the
subpoenas, we still have a fight on our hands.
CEI was originally served with a subpoena on
April 7. The document, issued by Virgin Islands AG
Claude Walker, via a District of Columbia court clerk,
demanded a full decades worth of CEIs work on
climate change and energy policy, much of which
would have contained confidential information on our
donors. This was an outrageous violation of both our
First Amendment rights and those of our supporters,
and we made it clear that we wouldnt comply.
On May 13, Walkers local attorney sent us a
letter rejecting our legal arguments. She said Walker
would withdraw the D.C. subpoena, but that hed
made no decision about the underlying Virgin Islands
subpoena. And she graciously noted that Walker
might reissue the D.C. subpoena if he changed his
mind in the future.
As far as we were concerned, this meant that we
were still under legal threat. We moved for sanctions
in D.C. Superior Court, which held a hearing on
Tuesday, June 28. In opposing our motion, Walkers
attorney argued that he was conducting an ongoing
investigation of ExxonMobil for fraud, and that he
had legitimate interest in CEI documents. The judge
stated that shed be issuing a ruling in due time.
One day later, Walker announced that he was
withdrawing his ExxonMobil subpoena, as well as
an accompanying one to the companys PR firm.
Publisher
Kent Lassman
Editor
Marc Scribner
Editorial Director
Ph (202) 331-1010
Ivan G. Osorio
Fax (202) 331-0640
info@cei.org Contributing Editor
Keara Vickers
ISSN#: 1086-3036
2 CEI.ORG
And one day after that, Walker announced he was
withdrawing the Virgin Islands CEI subpoena as well.
So where does that leave us? First, were still
under legal threat. After all, Walker is part of a
coalition of state AGs determined to shut down the
global warming debate. He could still issue a new
subpoena to us in the future, and so could any of his
fellow AGs. And as his own subsequent filing with
the court ominously states, subpoenas arent the only
way in which to carry out an investigation.
But our case for sanctions against Walker is now
stronger than ever. Walkers decision to yank his
subpoenas in the face of legal challenges indicates
he had no valid reason to issue them in the first
place. And that makes the need for sanctions even
clearer. When a law enforcement officer violates the
First Amendment in this manner, its not enough for
him to simply stop behaving badly. An injustice like
this requires compensation, because thats the best
way of ensuring that it doesnt happen again.
Meanwhile, one of the administrations climate
alarmist agencies has been in the forefront of evading
public access to government documents. The agency
is the Office of Science and Technology Policy
(OSTP). Its head, Dr. John Holdren, uses a private
email account that the agency has treated as off-limits
to Freedom of Information Act requests. On July 5,
ruling in the case of CEI v. OSTP, a D.C. Circuit panel
put an end to this practiceand, we suspect, to similar
practices by agency officials elsewhere. Ironically, the
ruling came one day after the Freedom of Information
Acts 50th anniversary. This administration claims to be
the most transparent in history, but it seems to confuse
transparency with invisibility.
The CEI Planet is produced by the Competitive Enterprise
Institute, a pro-market public interest group dedicated to
free enterprise and limited government.
CEI is a non-partisan, non-profit organization incorporated in the
District of Columbia and is classified by the IRS as a 501 (c)(3)
charity. CEI relies upon contributions from foundations, corporations
and individuals for its support. Articles may be reprinted provided
they are attributed to CEI.
COMPETIVE ENTERPRISE INSTITUTE
 Capitalism, continued
So without people even knowing
it, a free-market system forces us to
interact with our fellow human beings
in ways we didnt do before. It brings
about cooperation. You all know
the story of what it takes to make the
pencil. People cooperate without
having to be ordered to by someone in
charge; a free-market system works.
Capitalism is about humanity. You
may not love your neighbor, but you
sure want to sell to your neighbor. So
you figure out how to do it, how to get
that person excited about what youre
offering. Capitalism brings out the
better angels in our nature.
Now, bad things can and do
happen. Well, with human beings, bad
things are always going to happen. Go
back to the Bible; people were doing
bad things long before Adam Smith
came along. You cant blame that on
capitalism.
We have to also emphasize that
capitalism is about creatingabout
turning scarcity into abundance.
Take the automobile. A typical
car 110 years ago cost more than
$100,000 in todays dollars. Along
came Henry Ford, with his gifted
engineers and his moving assembly
line, and he turned a toy for the rich
into something that every working
person could afford. Cell phones:
The first ones 30 years ago were as
big as a shoebox and were as heavy
as a brick, had a 40-minute battery
life and cost $3,995. Today theyre
given away as a promotional item.
Its amazing how quickly we become
spoiled. You know, if it takes more than
six seconds, using a cell phone, to
reach a shepherd in Outer Mongolia,
we say, What a piece of crap; this is
taking too long!
But in that sense, we need to learn
to be happy warriors and not be on
the defensive, saying, Well, it works.
It works better than government.
Julian Simon was right, and Bruce
is right. One thing Bruce and Julian
Simon had wrong was overpopulation.
COMPETIVE ENTERPRISE INSTITUTE
There is overpopulation. They just didnt
refine it down to mean the regulators
and the bureaucrats. Thats where the
overpopulation is.
But they understandand we
have to emphasize thisthat the real
wealth of society is the human mind.
As George Gilder, Tom Sowell, and
others have asked and answered:
Whats the difference between us
today and people in the Stone Age?
Same human bodies, same planet,
same appetites, same resources. The
difference is that we know more, we
have more knowledge.
As somebody said about things
like Solyndra, its not just about the
waste of resources. Its that it makes us
stupider: Because its not a free market,
we dont learn from what went wrong.
CEIs unique mission of combining
analysis with advocacy and litigation
is why its the target of the attorney
general from a place called the Virgin
Islandsprobably a better name
would be Devils Island. But the fact
that the attorney general picked CEI is
very telling; it means youre a worthy
foe. And the fact that they have to go
to suppressing free speech tells you
all you need to know about where
theyre at. They look strong today.
But remember, communism looked
strong in the late 1970smammoth,
powerful, and never giving up
anything it took. But with a few well-
placed prods, the whole Soviet Union
was brought down.
Yes, there are still zillions of
regulations around. But by winning a
few well-placed battles, the regulatory
agencies will be under moral assault, if
we dont let up.
As you appreciate and our
Founders understood, tyranny isnt
likely to come through a foreign
invasion but through the step-by-step
erosion of our basic freedoms by an
ever-expanding government. You see
this in two ominous threats to us today.
One is the enormous growth of the
regulatory state, the administrative
C E I . O R G 3
state, in which such so-called
independent agencies as the FCC,
EPA and others promulgate rules. In
2014 Congress passed 114 laws; the
regulatory agencies, 3,400, with
another 3,000 in the pipeline. Thats
where the lawmaking is done today.
And these laws are created with a
minimal observation of facts.
If Uncle Samand lets call him his
real new name, Uncle Tyrantwants to
get you, he can. Harvey Silverglate, a
defense lawyer and a writer for
Forbes.com, wrote a book titled
Three Felonies a Day. Because of
the vast number of regulations, any
professional in this country, during
the course of his day-to-day work,
commits a federal crime.
Look at the numbersin the early
1980s, they tried to count them. How
many of these types of offenses are
there? They estimatedthey couldnt
get an exact numberthey estimated
3,000. Today that number is over
5,000.
The regulatory agencies have gone
berserk. Nothing exists in America
today that the regulatory state cant
sink its claws into and find a rationale
for doing so. So, you have to take on
the regulatory battles, but you also
have to win the battle of ideas.
Theres no such thing as ultimate
philosopher kings, experts. What
youre doing in fighting that
subpoenawhat youre doing in
fighting unconstitutional rulesis not
only essential, but also an inspiration
to others.
We can work and join together to
change back Uncle Tyrants name to
Uncle Sam.
Thank you very much.
Steve Forbes is Chairman and Editor-
in-Chief of Forbes Media. This piece
has been adapted from his keynote
address to the 2016 CEI Annual Dinner
and Gala.
 Brexit Vote Is the End
of the Beginning
BY IAIN MURRAY
I n the end, it wasnt close. People had
expected a clear win for the Remain
side in the popular vote on whether
Britain should continue its membership
of the European Union. Yet, over a
million more Britons voted to Leave than
to Remain. That clear victory, however,
is just the beginning of a realignment
of Britainsand the worldspolitical political project.
landscape.
The initial shockwaves are now
being felt in British politics. Prime
Minister David Cameron stepped
down. The leader of the opposition
Labour Party, Jeremy Corbyn, lost
a no confidence vote 172 to 40.
Scottish First Minister Nicola Sturgeon,
whose country voted strongly for the
Remain side, has already reopened
the question of another referendum
on Scotlands membership in the
United Kingdom. Democracy has
consequences.
Britains political disruptions will not
affect the timetable for British with-
drawal, the terms of which will take at
least two years to be hashed out. Yet,
it is what happens in Europe that is the
more interesting question.
Euroskepticism is on the rise all
over Europe. There have already
been calls in the Netherlands, Italy
and even France for similar referenda.
The unelected technocrats in Brussels
will be worried, if not shaking in their
boots, over the possibility of a wave of
popular rejection of their top-down rule
by regulation.
So it is entirely possible that Brussels
will try to be as punitive as possible in
the British exit negotiations, in an effort
to dissuade other nations from follow-
ing suit. If that is the case, global trade
will suffer. German captains of industry
4 CEI.ORG
have already warned they
do not want to lose access
to Britains market of 60
million people. Britain is
highly unlikely to erect
trade barriers with Europe
on its own, so the ball is in
Europes court, as its lead-
ers decide whether they
really want to risk economic
catastrophe to maintain a
As for Britain, its got
options. The countries of the
Commonwealth of Nations stand ready
to benefit. Canadians, Australians, and
New Zealanders all can look forward
to easier travel and work in the U.K.
African and Asian nations can look to
the U.K. as a market for its agricultural
products, once it is free of the Common
Agricultural Policy; the net result could
be a significant fall in the price of food
for Britons. Britains fishing industry
will revive, managed in a sustainable
fashion that is likely to delight environ-
mentalists and fishermen alike.
As for Britains special relation-
ship with America, President Obama
raised eyebrows when he appealed
for a Remain vote and appeared to
threaten the U.K. with pushing it to the
back of the queue for a future trade
deal. In fact, polls show his intervention
may have moved the needle in favor
of Leave. And when Britons voted for
Leave, the president simply walked
back his pseudo-threat. The people
of the United Kingdom have spoken,
and we respect their decision, Obama
said. The United Kingdom and the
European Union will remain indispens-
able partners of the U.S. So much for
back of the queue.
And while the U.S.-EU Trans-Atlantic
Trade and Investment Partnership trade
agreement looks dead in the water, a
bilateral trade deal with the U.K. would
be much easier to negotiate and could
probably be done quickly. The next
president should make it a priority.
Freeing the U.K. economy from
burdensome EU regulations was a big
part of the Leave campaigns message.
If British lawmakers follow through,
the U.K. could set an example for
the world, demonstrating the wealth-
creating, welfare-enhancing capability
of competitive market discipline, rather
than the cold hand of regulation. Thats
a lesson of which U.S. policy makers
could use a refresher.
There is still much to decide. And
while the reaction of the worlds politi-
cians might be like that of legendary
Democratic operative Dick TuckThe
people have spoken, the bastards
they should consider the opportunity
Britains beautiful exercise in democ-
racy has provided. If the EU is con-
ciliatory and America and the world
receptive, Britains vote could be seen
as the start of a new age of free, global
commerce.
Iain Murray (iain.murray@cei.org) is Vice
President for Strategy at CEI. A version
of this article was syndicated by Inside
Sources.
COMPETIVE ENTERPRISE INSTITUTE
 Obamas Overtime Rule Was Never
Intended to Raise Wages
BY TREY KOVACS
T he Obama administration claims
millions of salaried workers will
get a raise under the new Department
of Labor overtime rule. But a wage
increase for salaried workers was
never the purpose of the rule, as the
agency acknowledges.
The final rule, released May 18, says
that requiring overtime for hours worked
over 40 per week is grounded by
two policy objectives: 1) to spread and restrict flexible work sched-
employment by incentivizing employ-
ers to hire more employees rather than
requiring existing employees to work
longer hours; and 2) to reduce over-
work and its detrimental effect on the
health and well-being of workers.
Notice that giving workers a raise is
not mentioned. And the second policy
objectivereduce overworkis not a
problem most salaried workers face.
According to the Labor Departments
own data, 60 percent of salaried
workers do not work more than 40
hours a week, and only 20 percent
regularly work overtime.
Technically, the overtime rule
greatly increases the number of sala-
ried workers who qualify for overtime
pay, raising the salary threshold from
$23,660 to $47,476. That amount
will rise every three years to match the
40th percentile of salaried employees
in the lowest income region, mainly the
Southeast. The administration projects
4.2 million employees will become
newly qualified for overtime pay. That
level of increase is unprecedented in
the near 80-year history of the Fair
Labor Standards Act (FLSA).
As regulators seem to tacitly
acknowledge, employers will face
COMPETIVE ENTERPRISE INSTITUTE
pressure to avoid those huge cost
increases. In fact, employers can
take various measures to comply
with the rule other than increasing
wages. They can reduce salaries
to offset the cost of overtime or
demote workers to hourly status
and reduce workers hours. People
who remain salaried employees
and qualify for overtime may see
benefits disappear. To control
costs, employers will likely cut back
on health care benefits, paid leave,
ules, as more employees hours will
need to be tracked and recorded.
One big problem with the Obama
administrations policy objectives is its
interference with peoples ability to
determine their own work goals and
choices. For example, driven employ-
ees seeking to work long hours to get
ahead will find the overtime rule a
roadblock to their career pursuits. Not
to mention, employee morale is likely
to take a hit as salaried employees
who have not punched a clock in years
are forced to do so.
The rule also foists regulatory
compliance costs on employers. With
more employees no longer exempt
from overtime pay, the pool of workers
whose hours employers will be respon-
sible for tracking and recording will
increase. The agency estimates direct
costs to employers at $677 million in
the first year. Another cost, which the
agency mentions in its final rule, is that
employers will face a surge of lawsuits.
Bloomberg BNA recently reported that
plaintiff lawyers are already preparing
outreach to employees to educate them
on the new overtime rule.
Will Congress save us from the
regulators? House Speaker Paul Ryan
C E I . O R G 5
One big problem with the
Obama administrations
policy objectives is its
interference with peoples
ability to determine their
own work goals and
choices.
(R-Wisc.) called the overtime rule an
absolute disaster for our economy,
and said Republicans are com-
mitted to fighting it. Already in the
hopper is the Protecting Workplace
Advancement and Opportunity Act
(PWAOA), sponsored by Sen. Tim
Scott (R-S.C.) and Rep.Tim Walberg
(R-Mich.), which would nullify the
overtime rule and require the Labor
Department to go back to the draw-
ing board and take into account the
vast cost-of-living differences across
the country and impact on small
businesses.
The new overtime rule is misguided
and a poor vehicle to increase wages.
Instead of benefiting workers, it
reduces flexible schedules, leads to
demotions, and significantly burdens
small businesses and non-profits that
are ill-equipped to handle the added
costs of doing business.
Ultimately, the overtime rule does
more harm than good.
Trey Kovacs (trey.kovacs@cei.org) is a
Policy Analyst at CEI. A version of this
article originally appeared on
FoxNews.com.
 Why Prosecuting Google Will Hurt
Consumers
BY RYAN RADIA
I n April, the European Commission
brought new antitrust charges
against Google, alleging the com-
pany unfairly favors its own services
on smartphones running its Android
operating system. In a separate
European case, Google stands
accused of manipulating its search
engine to harm rival firms. Both cases
rest on the assumption that Googles
dominant position creates a monopoly
that merits exacting government
regulation to prevent the online search
giant from trampling competition. But
this premise overestimates regulators
abilitiesand understates the resil-
iency of dynamic markets.
Industries dominated by one or
two firms tend to stagnate, or so goes
the conventional wisdom. But real-
world experience belies this view. The
worlds Web users have preferred
Google to other search engines
since the early 2000s, and Android
smartphones to all other phones since
2010. In this time, search results have
moved far beyond a series of blue
links. For many queries, users now
get an actual answer, rather than
a list of Web pages to investigate.
Meanwhile, todays smartphones are
much bigger and faster than their pre-
decessors from six years ago, offering
desktop-like multitasking and even
virtual reality experiences.
Google is no stranger to overtak-
ing dominant firms by entering new
markets. When Google launched
Android in 2008, most smartphone
buyers opted for an iPhone or
BlackBerry. While the iPhone remains
popular among affluent consumers,
Android is now on topespecially in
6 CEI.ORG
the developing world, where Android
devices are much more affordable.
Does Androids success mean
it should be illegal for Google to
promote its other services on Android
devices? Not at all. Were Google
to exert too much control over the
Android ecosystem, it would risk
alienating independent developers of
Android appsand, in turn, consum-
ers who value alternatives to Googles
own apps.
To antitrust regulators, competition
suffers when too few viable firms exist
in a market. Yet even a hyper-domi-
nant incumbent wont rest on its laurels
while enjoying monopoly profits if
doing so will create market openings
for newer, nimbler entrants. In fact,
Googles risky bet on Android could
be seen as an attempt to prevent
rivals like Microsoft and Apple from
dominating the fast-growing smart-
phone market. Competitive discipline
comes from many angles, and dreary
monopolies are not born simply
because dominant firms lack head-to-
head rivals.
Some economists dismiss the
threat of competition as effective in
deterring harmful behavior only in
markets with minimal entry barriers
and sunk costs, but this presumes that
would-be entrants focus on markets as
they exist today. For example, when
Uber upended the local transporta-
tion market, it didnt need to buy an
automobile fleet or get permission
from city taxi commissions. Had taxi
companies foreseen the vulnerability
of their business model, cabs might
have flocked to smartphone apps and
electronic payments years ago.
Even some of the European
Commissions antitrust counter-
parts recognize the pitfalls of going
after Google. Canada dropped a
multi-year probe of the company
just last week, while the U.S. Federal
Trade Commission accepted modest
concessions from Google in 2013
to settle a wide-ranging investiga-
tion. In American competition law,
determining whether a dominant firm
has harmed consumers in a particu-
lar case is rarely clear-cut. Wrongly
punishing a company for beneficial
conduct, however, is far more danger-
ous than letting it get away with anti-
competitive behavior, as U.S. Court
of Appeals Judge Frank Easterbrook
explained in a seminal 1984 article.
How should governments react
to successful, disruptive firms as they
seek to reap the fruits of their innova-
tion? This question will only grow in
importance as technology advances.
As PayPal co-founder Peter Thiel has
observed, the best entrepreneurs look
to escape competition, not defeat it.
Creating new markets, or reinvent-
ing existing ones, is the path to riches
that Google, Facebook, and Apple
all have followed. Some fear that this
winner-take-all trend portends less
innovation and greater economic
inequality. But this pessimism ignores
humans limitless capacity to desire
moreto create unforeseen oppor-
tunities to supply us with products and
services we never knew we wanted.
Yes, meeting this demand makes
some people incredibly rich, but it
enriches consumers in ways that con-
ventional metrics struggle to measure.
If governments reward such success
with a regulatory straitjacket, we will
pay a steep price.
Ryan Radia (ryan.radia@cei.org) is
Associate Director of Technology Studies.
A version of this article originally ap-
peared in The New York Times.
COMPETIVE ENTERPRISE INSTITUTE
 Presidential Candidates Should Talk
about Regulation
BY CLYDE WAYNE CREWS, JR. AND
RYAN YOUNG
T he current elections lowering of
the rhetorical bar to levels that
challenge even the most nimble limbo
dancer is more than an affront to good
taste. It is a squandered opportunity
to spark debate on how to address
the heaviest burden holding back our
still-sluggish economy: the thousands of
regulations and miles of red tape that
inhibit hiring and recovery.
We hear a lot about spending in
candidate debates and speeches. But
federal regulations impose estimated
total costs on the economy of $1.88
trillion, roughly half the size of the fed-
eral budget, according to our findings,
published in the 2016 edition of the
Competitive Enterprise Institutes annual
Ten Thousand Commandments report.
So while politicians from both
parties loudly complain about waste,
fraud, and abuse in taxing and
spending, the costs of regulation mean
the federal government is 50 percent
more bloated than even the most
strident stump speech would suggest.
Indeed, if federal regulations were their
own country, they would comprise the
worlds 10th largest economy, ahead
of Russia and behind India.
In the past year, 3,410 new fed-
eral regulations covered everything
from a 122-page definition of the term
solid waste to energy standards for
walk-in freezers. More are on the way
this year, as the Obama administra-
tion likely prepares a possible mid-
night rush of new regulations before
leaving office.
Most rules get published in the
daily Federal Register, which last
year ran for 80,260 pages, the
third-highest level going back to
COMPETIVE ENTERPRISE INSTITUTE
As people become more aware of the sheer size
and scope of the federal regulatory state, they
are likely to become more interested in reform
1936. Regulations are supposed to
go through a notice-and-comment
process, when the public can either
raise objections to or express support
for upcoming regulations. But roughly
a third of regulations get issued
without that notice, according to the
Government Accountability Office.
Yet, the federal regulatory state is
significantly larger than it first seems.
Beyond the 3,410 rules, even more
regulating is actually done through
less accountable means, such as
agency guidance documents, notices,
bulletins, circulars, and even blog
postsa growing and troubling
phenomenon we like to call regula-
tory dark matter, because these rules
dont appear in the Federal Register.
It would help if federal agencies
were to publish annual report cards
gathering this disparate information
in one place. They dont, but Ten
Thousand Commandments provides a
useful template they could follow.
As people become more aware of
the sheer size and scope of the federal
regulatory state, they are likely to
become more interested in reforman
opportunity the presidential candi-
dates should be eager to seize.
One reform option is the
Regulations from the Executive in Need
of Scrutiny (REINS) Act, which would
require Congress to vote on all new
regulations deemed as majorthose
with annual costs more than $100 mil-
lion. It has already passed the House,
but awaits action in the Senate.
Another is the Searching for
and Cutting Regulations that are
C E I . O R G 7
Unnecessarily Burdensome (SCRUB)
Act, which would create an indepen-
dent commission to comb through
the 175,000-page Code of Federal
Regulations, assemble a package of
redundant and harmful regulations to
eliminate, and submit it to Congress
for an up-or-down vote without pos-
sibility of amendment.
Yet another idea comes from
Canada, which recently enacted a
one-in, one-out rule that bars agen-
cies from enacting new regulations
until they eliminate old rules of equiva-
lent cost.
Finally, publishing a regulatory
budget similar to the governments
annual fiscal budget would encour-
age agencies to make priorities and
recognize tradeoffs, rather than simply
seek to enact as many rules as pos-
sible, without regard for the costs they
impose on businesses and consumers.
While this years presidential
circus hasnt been the most edifying of
spectacles, the opportunity to reduce
regulatory harm is right there in the
open for any candidate brave enough
to pursue a serious economic reform
program. One can hope.
Clyde Wayne Crews, Jr. (wayne.crews@
cei.org) is Vice President for Policy and
author of the CEI paper, Toward a
Federal Regulatory Budget: The Pitfalls
in Quantifying Regulatory Costs and
How to Avoid Them. Ryan Young (ryan.
young@cei.org) is a Fellow at CEI. A
version of this article originally appeared
in The Hill.
 Giving Thanks for the Enduring
Principles of Liberty
BY KENT LASSMAN
S everal months ago, our general
counsel asked me about my
comfort speaking to large audiences.
You might think he was referring to
any garden variety speech or policy
panel. No, clearly he was testing to
see if I understood the importance of
a CEI dinner speech. I knew straight
away that CEI was no ordinary place.
At CEI, we dont limit ourselves to
making bad policy marginally better.
The challenges we face require a
much bolder approach.
For example, in energy we are
nearing the end of a decades-long
movement away from markets and
toward rationing. Likewise with public
management of land and water. Who
is poised to chart a course toward
sanity? Ill tell you whothe most
effective energy and environmental
policy team in the business.
At CEI, we are not hemmed in by
the failed regulatory strictures of the
past century. Consider the work of
Iain Murrays team on finance and
technology, plotting the way toward
economic greenspaces for entre-
preneurial activity. Or the longtime
leadership of CEIs Wayne Crews on
fundamental regulatory reform, which
is now bearing fruit. The list goes on
and onconsumer risk, telecommuni-
cations, transportation.
CEI is operating in the spaces that
make our organization well-prepared
to transform the relationship between
an unconstrained administrative
state and the way people live, work,
create, buy, and sell.
Earlier this evening, some of us
gathered down the hall where we
have on display several historic
8 CEI.ORG
artifacts. One document in par-
ticular stood out, the Thanksgiving
Proclamation of George Washington.
Washington wrote about the
peaceable and rational manner in
which laws were made, something we
dont see much in todays regulatory
agencies, where arbitrary and capri-
cious are too often substitutes.
Washington went on to offer
thanks for the civil and religious
liberty with which we are blessed; and
the means we have of acquiring and
diffusing useful knowledge. I never
guessed old George Washington was
a Hayekian.
What brought Washington to this
idea and from that how can we under-
stand the steadfast optimism of CEI?
Lets look behind that familiar story
of Thanksgiving, the very subject of his
proclamation.
As you all know, the colonists
landed at Plymouth Rock seeking free-
dom of conscience and escape from
government abuse. The Mayflower
transported Congregationalists and
Anglicans. Theirs was a community
that required pluralism. It was also
initially communitarian.
The colonists did not succeed right
away. The struggling colony faced
deprivations, disease, and death. In
the first two years, three additional
ships arrived with new settlers and
fresh supplies. Still, they failed to
flourish.
In the third year, William Bradford
took the radical step of establishing
clear property rights. Each household
was granted a plot of land, and sud-
denly, without the force of law or need
for regulatory mandates, Plymouth
began to thrive. Risk was rewarded;
innovation took root. Abundance
and plenty made possible stronger
trading relationships. Barter and
trade, newfound appreciation for
local knowledge, and clear property
rightsthese Pilgrims were our kind of
people.
So here we areoptimistic,
undaunted, looking ahead, experi-
menting with the integration of our
advocacy, communications, and
litigation strategies. Political threats
come and go, but the enduring prin-
ciples of liberty, the defining charac-
ter of CEIthese are the permanent
things.
Our mandate is individual liberty.
We gather each day to advance the
most humane, successful processes for
human development known to man-
kind. You will know us by our commit-
ment to free people making informed
decisions for their own health,
welfare, and risk. I invite you to renew
your support for the principles we
share, to defend and advance the
institutions of capitalism.
Kent Lassman (kent.lassman@cei.org) is
President of CEI. This essay is adapted
from his remarks at the 2016 CEI Dinner.
COMPETIVE ENTERPRISE INSTITUTE
 Remembering Julian Simon
when the intelligentsia were con-
BY BRUCE YANDLE vinced that we were running out of
everything. Oil was at the top of the

W hat a wonderful evening for me

and for Dot. And I must tell you
it is truly special to be introduced by a
former student. Thank you, Todd, for
your generous introduction. Can you
imagine what its like to have Todd
Zywicki in your classroom? Its hard
to tell whos teaching that class, but
Todd, we had some wonderful times
together, and we still do.
As I stand here tonight, I realize
that some things in life seem just too
good be true. This is one of those times
for me. I hope for everyone in this
room, that there will be some event or
occasion where you will say, This is
just too good to be true. Having such
experiences forms one of the rewards
for living a long time. But as the years
accumulate, you do get to celebrate
some wonderful things. A few years
ago, Dot and I celebrated our 60th
wedding anniversary. And we did
something very special. We went to
the Dairy Queen!
It is such a special honor to have
my name associated with Julian Simons
rich legacy. After receiving CEIs Greg
Conkos call telling me that I had been
selected to receive this reward, my mind
immediately went back to the 1970s
and 1980s, which were the heydays of
Julian Simons work.
I went through my library and
found Julian Simons The Ultimate
Resource, Second Edition, and read
the book from cover to cover again.
As I read through the book, I thought
about my own personal experience
during the 1970s and early 1980s
and realized again what amazing
years these were.
It was a time when the world
seemed hostile to free market ideas,
if not to freedom itself. It was a time
list along with gas, copper, iron, you
name it. It was food. It was arable
land. We were running out of every-
thing but one thing: people.
According to the critics, we were
just overrun with people. People
were the problem. Scarcity was
being discovered. And we had a
serious problem. It would be the end
of Western civilization as we have
known it. Sound familiar? Somehow
there had to be some controls put in
place to limit our unfortunate behavior
as human beings.
Julian Simon would have nothing
to do with these ideas.
Julian saw scarcity as the prelude
to plenty when markets are allowed
to operate. He insisted on looking at
data. (What a strange idea!) And he
didnt know what the data would tell
him, but as he probed, he discovered
we didnt seem to be running out of
anything except common sense. And
people? People were the ultimate
resource. The free spirit of men and
women form the solution to our prob-
lems if we allow markets and property
rights to function in a somewhat posi-
tive way.
When Julian published these ideas,
he was pummeled by the intelligen-
tsia. They couldnt stand it. The end-
of-plenty advocates saw their cause
as being right versus wrong, good
versus evil. They, perhaps unwittingly,
became the regulatory Baptists who
provided cover and political justifica-
tion for the bootleggers, industrialists
who realized that command and
control isnt such a bad idea when it
enables you to cartelize an industry or
raise rivals costs by way of rules and
regulations. And thus began the rise of
the regulatory state.
Julian Simon fanned the coals of
freedom just as CEI has done since
1984, when Fred and Fran and Sam
Kazman unfurled their flag up on
Pennsylvania Avenue. I remember
seeing it and celebrating. How many
people in the room tonight remember
when CEI first put out the flag? That
was the beginning of something won-
derful. But as we celebrate, we cannot
let up. Some things in life seem too
good to be true. And what you are
doing and what we are doing at CEI
is one of those things.
Thank you so much for this won-
derful award.
Bruce Yandle was awarded CEIs 2016
Julian L. Simon Memorial Award and is
Dean Emeritus of Clemson Universitys
College of Business and Behavioral
Science, a Distinguished Adjunct
Professor at the Mercatus Center at
George Mason University, and a
Senior Fellow Emeritus at the Property
and Environment Research Center. This
article was adapted from his Simon
Award acceptance speech delivered at
CEIs 2016 Annual Dinner and Gala.

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 9

 2016
Dinner & Gala
Mary Katharine Ham, CNN political commentator

A Night in Casablanca
and Senior Editor at The Federalist, emcees the
2016 CEI Annual Dinner.

The Competitive Enterprise Institute held its Annual Dinner

and Gala blocks from the White House in Washington, D.C., on
June 2, 2016. This years diner, themed A Night in Casablanca,
featured keynote speaker Steve Forbes, Chairman and Editor-
in-Chief of Forbes Media. Forbes Magazine is the nations
leading business magazine with a circulation of more than
900,000. Combined with Forbes Asia, Forbes Europe, and
the companys licensee editions, Forbes magazine reaches a
worldwide audience of more than 5 million readers.

Bruce Yandle was awarded the Julian L. Simon Memorial

Award. He is Dean Emeritus of Clemson Universitys College
of Business and Behavioral Science, a Distinguished Adjunct W. Thomas Haynes, Chairman of CEIs Board of
Professor at the Mercatus Center at George Mason University, directors (left) and Louisa Greve, Vice President
for Asia, Middle East, and North Africa and Global
and a Senior Fellow Emeritus at the Property and Environment Programs at the National Endowment for Democracy
Research Center. He served as a senior White House economist
during the Ford Administration and as Executive Director of the
Federal Trade Commission during the Reagan Administration.
Yandle is best known for his Bootleggers and Baptists theory
of interest group lobbying. The theory, which illuminates how
strange-bedfellow alliances promote shared political aims, is
now standard in political science and economic curricula.

Mary Katherine Ham, a CNN political commentator and Senior

Editor at The Federalist, served as the Master of Ceremonies.
Left to right: Mackinac Center Media Relations
Manager Chantal Lovell, Americans for Prosperity
Federal Affairs Coordinator James Setterlund,
and Americans for Prosperity Policy Analyst Eric
Peterson

10 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE

Left to right: Cato Institute Director of Health Policy
Studies Michael Cannon, Cato Institute Vice President for
Communications Khristine Brooks, and CEI Fellow Ryan Young

Left to right: Atlas Network Board Chairman Dan Grossman,

Cynthia Goettler, and Cato Institute President Peter Goettler

Searle Freedom Trust Program Officer Richard Tren (left) and

Mercatus Center Executive Director Dan Rothschild

Left to right: George Mason University Foundation Professor of

Law and Law and Economics Center Executive Director Todd Left to right: CEI Founder Fred Smith, Fran Smith, and Galileo
Zywicki, CEI Board Member Kerry Halferty Hardy, CEI Vice Global Advisors Managing Director and CEI Board Member Jean-
President for Policy Wayne Crews, and Claudia Ysern Crews Claude Gruffat

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 11

 Left to right: Hoover Institution Research Fellow Adam J. White, Mercatus Center Senior
Research Fellow Patrick McLaughlin, and Hoover Institution Senior External Affairs
Manager for National Security and Cyber Policy Russell Wald

Atlas Network Director of Outreach

Stephanie Giovanetti Lips gets a henna tattoo
during the CEI Annual Dinner after-party.
Left to right: Reason Science Correspondent Ronald Bailey, Asawin Suebsaeng of the
Daily Beast, Reason Associate Editor Elizabeth Nolan Brown, Reason.com Managing
Editor Peter Suderman, and Reason Foundation Director of Coalitions and Special
Projects Jordan King

Left to right: CEI Director

of Communications
Christine Hall, CEI Board
Chairman W. Thomas
Haynes, Forbes Media
Chairman and Editor-
in-Chief Steve Forbes,
and CNN political
commentator and
Federalist Senior Editor Fund for American Studies Senior Scholar
Mary Katharine Ham Don Devine (left) and Myron Ebell, Director
of CEIs Center for Energy and Environment

12 CEI.ORG COMPETIVE ENTERPRISE INSTITUTE

 R.M.
FREEDMAN
SOCI ET Y
Help the Competitive
Left to right: Cato Institute Founder Edward H. Crane, Atlas Network Operations Enterprise Institute
Manager Kristina Crane, and Forbes Media Chairman and Editor-in-Chief Steve Forbes
carry on its work for
generations by joining the
R.M. Freedman society.
Left to right:
Federalist Society
President Eugene In 2013, CEI established the R.M. Freedman
B. Meyer, CEI Society in honor of Robert M. Freedman,
Executive Director
a business owner from West Bloomfield,
Michigan, who placed CEI in his estate
Gregory Conko, and
and, in 2009, sadly passed on and gave
Federalist Society
CEI its first legacy gift. We named the
Law and Innovation
society in appreciation of his generosity.
Project Deputy
Director Devon Many of CEIs extended family choose to
Westhill include CEI in their estate plans through:
Bequests,
Charitable Remainder Trusts,
Charitable Lead Trusts, or as a
Left to right:
Life insurance beneficiary.
JM Foundation
Executive Director
If you make the decision to include CEI in
and Assistant
your estate plans, please reach out and let
Treasurer Carl
us know.
Helstrom, National
Review Publisher
Jack Fowler,
and American While these sorts of decisions should be
Philanthropic undertaken with the help of an estate
Managing Partner planner, Lauren Avey and Al Canata of CEI
Doug Schneider can be a resource to you. You can reach
them anytime at 202-331-1010.

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 13

 THE
GOOD
Court Grants CEI
Discovery of White
House Science Office
On May 9, a federal court granted
CEI discovery in its Freedom of
Information Act (FOIA) lawsuit
seeking documents related to
White House Office of Science
and Technology Policys (OSTP)
controversial video, The Polar
Vortex Explained in 2 Minutes. The
video, released in January 2014,
attempted to blame global warming
for the unusually cold winter weather.
However, it was widely criticized
by scientists on both sides of the
climate change debate, and a
number of published peer-reviewed
studies disputed the videos claim.
The court found that the OSTPs
response to CEIs FOIA request
contained inconsistent and unreliable
representations about the records
sought, raising questions about the
agencys good faith. As OSTPs
course of action here demonstrates,
theres a clear pattern when it comes
to this administration: In dealing with
global warming issues, agencies
tend to act illegally, said CEI
General Counsel Sam Kazman said.
In short, global warming poses a
risk to the rule of law.
14 CEI.ORG
THE
BAD
FAA Drone Regulations
Will Stifle Innovation
On June 21, 2016, the Department
of Transportations Federal Aviation
Administration (FAA) finalized its
operational rules for commercial use
of small unmanned aircraft systems, or
drones. The FAA failed to adequately
consider most of the recommendations
for less stringent regulations submitted
by CEI in April 2015. The new FAA
drone rules are disappointing and
overly restrictive, said CEI Fellow
Marc Scribner. Restrictions on
beyond-visual-line-of-sight, nighttime,
and other crucial operations for
emerging business models can only be
waived on a rigid case-by-case basis.
Congress should reopen discussions
on the unmanned aircraft provisions
of both the House and Senate FAA
reauthorization plans to temper
damage done by the agency.
THE
UGLY
Court Upholds FCCs
Destructive Net
Neutrality Regulations
On June 14, a federal court upheld the
Federal Communications Commissions
(FCC) so-called Open Internet rules,
which run contrary to Congresss
intent, depress infrastructure
investment, and deny consumers
choices. CEI had earlier filed an
amicus brief in U.S. Telecom v. FCC.
This ruling will hurt Americans who
appreciate faster Internet speeds at
lower prices, as Internet providers
will invest less in their networks,
as Judge Williams discussed in his
partial dissent, said CEI Associate
Director of Technology Studies Ryan
Radia. The courts decision today
should galvanize Congress to move
quickly to amend the Communications
Act to explicitly deprive the FCC of
the authority to dictate how Internet
providers manage their networks.
COMPETIVE ENTERPRISE INSTITUTE
 MediaMENTIONS
U.S. News & World Report motions to block Mr. Walkers inquiry. Enterprise Institute. By
discusses a CEI-led coalition letter The Competitive Enterprise Institute also Mr. Crewss count,
urging Congress to take action took out a full-page advertisement in some 3,300 new fed-
against the overtime pay rule: The New York Times this week denounc- eral rules are standing
The Competitive Enterprise Institute, ing what it referred to as Mr. Walkers in their own special
a libertarian think tank, also sent a letter abuse of power. lines.
to Congress this week calling on law- -MAY 20, The New York Times -MAY 26 The Wall
makers to defund, block and otherwise Street Journal
nullify the Obama administrations effort Wall Street Journal columnist
to change our nations overtime rules. Holman Jenkins cites Wayne The Washington
Industries and organizations Crewss Ten Thousand Posts Style Section
Commandments: covers CEIs annual dinner and
across the countryfrom universities
The administration is manufacturing reception, quoting CEI President
to community care providerswould
talking points and wedge issues for the Kent Lassman:
face drastic increases in labor costs as
election, in the process creating costs We dont do electoral politics,
a result of the Obama administrations
for the American people that will long explained CEI President Kent Lassman.
new interpretation of the Fair Labor
outlast the election. Why? Because Thats not what were about.
Standards Act, the letter said, voicing
Democrats must win, thats why. The only hit on the 2016 race came
support for Republican-led efforts that
So, a former FCC staffer writes that from Steve Forbes, the multimillionaire
would require the government to spend
his ex-agency is now in the near- who unsuccessfully ran for president in
more time analyzing the economic
exclusive business of shifting profits 1996 and 2000: To be blunt and since
implications of broadened overtime
among corporate giants. Im not running for anything, he told
regulations.
The Competitive Enterprise Institute the crowd, certainly on the Republican
-MAY 18, U.S. News & World Report
finds that, last year, Congress passed side, this has been the most content-free
a mere 114 laws and federal agencies campaign in history.
The New York Times discusses the
issued a whopping 3,410 regulations. Forbes spent the next 20 minutes
Virgin Islands subpoena and our
At 80,260 pages, last years Federal making the moral case for capital-
Abuse of Power advertisement
Register was the third fattest in history. ism, but no one comes to CEIs annual
in the newspaper:
-MAY 20, The Wall Street Journal
Mr. Walker has gone beyond New dinner (this year it raised a record $1.1
Yorks efforts by including subpoenas million) for the speeches. They come
Wall Street Journal columnist to meet other free-market capitalists
to private organizations like the free
Daniel Henninger considers who dont like rules and regulations, at
market-oriented Competitive Enterprise
overregulations contribution to work or at play. This years after-party
Institute, looking for evidence that the
government dysfunction: included generous open bars, lots of
company funded such groups to spread
The IRS Taxpayer Advocates 2015 vaping, casino games and more.
its message to oppose regulation and
report says that of all calls routed to the But not for Lassman, a triathlete and
sow doubt about climate science.
tax agencys customer-service rep- father of four, who made a quick pass
Noting that the company has no
resentatives, the IRS answered only through the after-party before heading
physical presence in the Virgin
about 38 percent of its callsmeaning home. As long as these people have
Islands, ExxonMobil called Mr.
about 62 percent of calls simply didnt fun, my objective is met, he explained.
Walkers actions a flagrant misuse of
get through. Saturday Im doing a 12 -mile ocean
law enforcement power.
The average hold time is more than swim. Im not drinking or staying out
The new letter from Mr. Smith, which
30 minutes, and the experience waiting late tonight. But you can get through life
he also sent to 16 other attorneys
for you isnt a cupcake. learning a lot from some really interest-
general, comes as ExxonMobils allies
We want to get to the politics, so ing people if you just say, Thats good
have intensified their own attack on the
lets stop there. But for more detail on for you, but I dont have to do that.
attorneys general.
federal sludge, we recommend read- -JUNE 3, The Washington Post
This week, Republican attorneys
ing Ten Thousand Commandments
general of Texas and Alabama filed
by Wayne Crews of the Competitive

COMPETIVE ENTERPRISE INSTITUTE C E I . O R G 15


...END NOTES
School Cafeteria Union Bullies Church to Halt Pizza
Giveaway
Nick Steinloski, youth pastor at Bethany Community Church
in Seattles Green Lake neighborhood, began giving away
pizza to area high school students at lunchtime in 2015. We
are not telling them a Bible story before they get pizza, said
Steinloski, who began the program to foster better connec-
tions with the high schoolers and community adults. The church
estimates it spends about $600 to feed the 750 students from
three high schools who show up. Students, parents, and the
Seattle school board were pleased. But an official with the
union representing school cafeteria workers began making
threatening phone calls, accusing the church of taking its
members jobs, and aggressively proselytizing to students.
He said that if we stop serving them pizza, we would start
serving them drugs, said Steinloski. I felt intimidated by that
message. When the union threatened to picket the church,
pastor Steinloski decided to shift the pizza giveaway to after
school hours.
Police Deployed to Hunt Teenage
Turnstile Jumper
The New York Police Department launched an extensive
overnight manhunt in June involving helicopters and scent
dogs. The crime? Jumping the subway turnstiles and evading
the $2.75 fare in Brownsville, Brooklyn. The 16-year-old boy
had been detained by transit police and charged with theft of
services. However, during processing, Rhamar Perkins man-
aged to slip out an unlocked back door and escape custody.
Residents in neighboring Crown Heights reported multiple
police helicopters circling the neighborhood and several K-9
units attempting to track the teenager all night long. The man-
hunt lasted five hours until the boy turned himself in to police.
16 CEI.ORG
Nonprofit Org.
U.S. Postage
PAID
Permit 425
Southern MD
Welfare Fraud Reform Opponent Indicted for
Welfare Fraud
In February, Arizona state Rep. Cecilia Velasquez voted
against legislation that would have given the Arizona
Department of Economic Security more tools to police wel-
fare fraud. Months later, Rep. Velasquez was indicted and
charged with three felonies: unlawful use of food stamps,
fraudulent schemes and practices, and theft. Government
reform advocates noted that the measures opposed by
Velasquez earlier in the year would have enabled the state
welfare agency to immediately detect her criminal activity, in
which she is alleged to have fraudulently used $1,726 worth
of food stamps between 2013 and 2015. The indictment of
State Representative Velasquez is the culmination of an exten-
sive multi-year investigation, said Arizona Inspector General
Juan J. Arcellana. The forthcoming judicial proceedings will
ensure due process for the involved parties.
Invasive Species Turns Out to Be Native
For several years, the aquatic algae Didymosphenia gemi-
nate, colloquially known as rock snot, has been subject to
intense regulation in the Northeastern U.S. After a series of
large algae blooms, half a dozen states outlawed the use of
felt-soled waders by anglers. But in recent years, researchers
have found that rock snot is actually native to the very places
that imposed strict invasive species regulations. The fact that
we had a ban on something to avoid spreading something
that was already where we didnt want it to be spread didnt
make any sense, said Vermont state biologist Shawn Good.
Vermont became the first state to lift the ban on waders and
others are expected to follow. But some environmentalists
are not pleased. We were thinking that it was a good man-
agement strategy, said Mary Russ, executive director of the
White River Partnership.
COMPETIVE ENTERPRISE INSTITUTE