Tobacco Regulation

http://online.wsj.com/article/BT-CO-20090612-710944.html

Brian Davies Alejandro Siquieros

In this article they talk about the new regulations that are being put onto tobacco products. It is going to allow the FDA to be able to regulate the tobacco products that are being manufactured to this day. Both the President and the House both approved this law. The President is glad to see that the parties can finally come to an agreement on how to regulate tobacco. Also, he is glad that there is finally some noticable change in Washington because they have not been able to come to an agreement before this. This is a good idea because if there is nobody that is going to regulate the tobacco industries then they are just going to be able to do what ever they want and be able to advertise where ever they want. They need to be regulated by a government branch so that they will be carefully watched over. The only drawback I see to this is that if the government gets to regulate this industry then that means that there are going to be more taxes put on tobacco products. This is just another way for the government to try and control peoples lives and get them to quit smoking. I believe that it is neccesary for the government to regulate this industry but not to single out smokers and keep on raising the prices and implimenting more taxes on them.

Stricter Labeling Urged for Bottled Water

Bottled water companies might be looking at new standards for the information that needs to appear on their labels.  As many people know, the water we get from our tap and the water coming  from bottling companies is processed differently.  People assume that because it is “purified”/ “spring” water that comes in a bottle, that it must be better than the water from the sink.  However tap water is regulated by the Environmental Protection Agency (EPA) and strictly enforces the rules and standards for their water.  Bottled water on the other hand is regulated by the Food and Drug Administration (FDA) and although their policies on water regulation are similar to the EPA’s, the FDA’s does not have the power to enforce them.

Information on municipal water is readily available and that is water we get for almost free.  For as long as bottled water has been around one would think that it would be more closely monitored and regulated than it is.  For a “$16 billion” industry, it would be a devastating blow if information was released stating the water they were bottling was not as clear or pure at the municipal tap we receive.  The FDA is now going to required that a label be put on every bottle stating where consumers can find information about how the water is processed and regulated.  If we are paying such premiums for this water I think it is necessary that the processing of it is more rigorous that EPA’s regulation of municipal tap water. I mean that is what we are paying for isn’t it?  In such an economic recession maybe the better option is to back off of this bottled water, especially if it might not be that beneficial for you anyway.  The labeling regulations that will be the new standard for bottled water might be just enough incentive for the companies to actually make sure their water is processed properly.  If consumers see information that is dissatisfactory it could leave the industry with a big problem on its hands and a great loss in revenue. 

Stephen Killion and Jason Kletzky

http://www.time.com/time/health/article/0,8599,1909297,00.html

Monopoly Ends? Another Monopoly Start?

German pharmacy firm plans to open more than one hundred pharmacies in Sweden, since Swedish government decided to end forty years of state monopoly and deregulate the pharmacy industry. Some people may think that it would be good for Swedish pharmacy market and social welfare, and the market may competitive and social welfare will be increase.

But, it may be start of another monopoly. Since the market was monopolized by state, new firm trying to enter the market may have less strategies and less economic scale. If German pharmacy firm finished setting up their pharmacy market, they will do something like advertise more, decrease the price and offer better service to make new firms difficult to enter the market. Also, social cost may be more increase than the social cost when market was monopolized by state. When state controlled market they would probably tried to minimize the social cost because they are also part of government and know what part of government should do over social welfare.

But German pharmacy firm is different than state. They will try to maximize the profits and they may success to have monopoly power over Swedish pharmacy market which will increase deadweight loss. Swedish government should think about that before German firm encroach Swedish pharmacy market.

GooYong Chung
http://www.forbes.com/feeds/ap/2009/07/01/ap6608646.html

Pedicab regulation

It has passed three weeks since a pedicab collide with an automobile while riding on the streets of New York, this ended with serious injuries of the driver and the passenger. There is a bill that is going to be passed in the next days that willl regulate the number of pedicab and their right to ride over bicycle lines. The taxi driver community is a big interested group in passing through this regulation, and even implementing greater sanctions for pedicabs who may be irresponsible when driving.
In a big city such a New York there certainly must be regulations that will enforce the security of the drivers and the passengers. They should be allow to use the biking lines in order to prevent further collisions, it is common sense that this type of transportation can not use the same roads as automobiles. The terms of the regulation are still not clear; for example they don’t mention if a prior pedicab course should be taken before going into the actual business. It also lacks regulation regarding traffic problems such as the distance that a car must have from a pedicab; or streets that may be to congested and dangerous for pedicab drivers. The benefits of a good regulation can be as great as saving lives, therefore it should cover not only the number of pedicabs driving through New York but also other possible problems.

http://cityroom.blogs.nytimes.com/2009/06/29/pedicabs-roll-toward-regulation/?scp=1&sq=regulations&st=cse

Written by:
Paola and Matthew

Should Hedge Funds Face Harsher Regulation?

Joseph Chadwick

Jonathan Jackson

James Petkovski

Throughout this entire economic downturn managers of hedge funds have received heavy criticism regarding the welfare of their clients over their own. The E.U. is already requiring that hedge funds meet higher standards of regulation that are much tougher than previous rules. AIMA, a London investing group, calls the new rules bureaucratic and argues that these policies will only cost society more. Kinetic Partners, an investing consulting group, claims that more than five billion dollars would be lost. This is also harmful to managers around the world because foreign managers would not be able to advertise their funds to E.U. investors if they do not meet these strict regulations. More criticism is argued by politicians as well claiming that hedge and private funds were not the reason for the financial collapse. Regulating private and hedge funds in this market would only be harmful to the global recovery. Blaming the hedge funds is inefficient and is only happening due to political pressures says Mats Odell Sweden’s Financial Markets Minister.

Along with domestic investment managers, the E.U. is afraid of foreign hedge funds as well. There is almost no equivalence between hedge fund regulations in Europe and the United States. Andrew Baker, the CEO of AIMA says that this could lead to a lock out of all American investment managers, or at least those that do not adhere to the new more stringent standards. The fact that British citizens would be limited to only domestic investments would be very harmful to total social welfare and therefore has sparked immense scrutiny from the European parliament and the European Council. Sweden’s Odell believes that the bill can be passed if it is highly amended and polished to be more realistic. Myner’s, Britain’s minister has vowed to get the bill amended and passed while lobbying groups have begun campaigning against any form of the bill passing. The plausibility of the bill passing has diminished but there is still hope; no force from the bill would actually take place until at least 2011.

http://www.time.com/time/business/article/0,8599,1909026,00.html

DOJ Probes Telecom Giants

     July 6—The Antitrust division of the US Justice Department has
started an informal probe of large US telecommunications
companies such as AT&T Inc. and Verizon Communications to
determine whether they are abusing their market power in the
form of exclusive agreements with handset manufacturers (such
as AT&T’s contract with Apple Inc to offer the iPhone).

Lawmakers are mainly concerned with whether such
agreements are deterring competition from smaller wireless
service providers and taking advantage of consumer
preferences for popular phones. The (ongoing and unresolved)
economic debate of the ideal extent to which an oligopolistic
industry should lean towards perfect competition or monopoly
to produce efficient outcomes and promote technical progress
is at the heart of this issue, as the telecom industry is certainly
an oligopoly in which technology and product development
occur at a relatively fast pace.

On the one hand, the general gut reaction seems to be that
more competitive industries are not only more efficient, but
create greater incentives for innovation. Elementary
economic theory maintains that as a market’s structure
strays further from perfect competition, resources are
increasingly misallocated and outcomes are increasingly
inefficient. Lending further support, intuition says that the less
influence firms have over their market, the more inclined they
are to compete for market share through price, quantity, and
product differentiation channels. Thus, protecting a firm’s
monopolization over certain markets within their industry
reduces the role of exhibiting competitive behavior to their
survival.

On the other hand, however, giving companies the opportunity
for monopolizing certain product markets may in fact promote
competition, stimulate technical development, and protect and
grow smaller firms with exclusivity rights phones that prove
immensely popular. Telecom firms, in competing through their
prices for service and products and through differentiation of their
service and products, have multiple channels through which they
might extract market power. One firm’s monopolization over a
popular product may, by capitalizing a larger share of the overall
market, incentivize other firms to cut prices or to invest in
developing and improving their own services and market offerings
in attempt to augment their own respective market shares.
Further, the opportunity for product monopolization that
exclusivity agreements provide for, creates a barrier to market
entry to outside firms that may induce prospective firms to offer
a product that might not have otherwise by protecting them from
the information and technological cannibalization effects that
emerge in markets without such exclusivity mechanisms.

Authors: Brian McGuckin, Ka-Wa Chan

Article:
http://www.reuters.com/article/newsOne/idUSTRE5654LK20090706?pageNumber
=1&virtualBrandChannel=0

This week, the F.D.A. publically warned consumers about possible suicidal thoughts and extreme depression associated with two popular drugs that aid in quitting smoking, Chantix and Zyban. The makers of both drugs have agreed to put warnings on these products to inform consumers of the recently discovered potential hazards.
These revelations concerning Chantix and Zyban are coming at a time when several other over-the-counter and prescription drugs are being cited for extremely harmful side effects. In all cases, the FDA has either required new warnings to be affixed to the products’ packaging or additional testing to take place. However, since all of these consequences have occurred after the products have been available in the market for some time, this may represent a partial failure of the FDA to detect dangerous substances before they are released. In order to protect itself from harsh public scrutiny and also to protect consumers in the long run, the FDA may decide to force new products to undergo more strenuous tests and trials before they are approved for general sale. This would represent an increase in costs and the time it takes to release a product for firms, which would therefore increase the cost of these products to society. The question is, will an increase in the cost of all new pharmaceuticals be worth the greater certainty that an extremely small percentage of these products will not harm a small portion of society?

Meredith Shores
Zach Ogaz
http://www.nytimes.com/2009/07/02/health/02drug.html?scp=2&sq=fda&st=cse

Taxing to benefit firms?

California is considering raising taxes on sales of medical marijuana, in an effort to increase the states revenue. The interesting aspect of this article is that the proposed increase was suggested by the vendors who sell the marijuana. This seems counter intuitive, as businesses want to decrease costs, and this would do the opposite and raise costs. Their rational is that by imposing a higher tax, the government will see and treat the vendors like other industries, and this leads the way to legalize marijuana, which is their ultimate goal.

This regulation seems shady, primarily because it was proposed by the firms themselves. This leads me to believe that they are proposing this not for the benefit of societal welfare, but rather for the benefit of the firm itself. That's true in this situation as well: the vendor industry wants this regulation to pass to increase their viability as a real business. They did a cost benefit analysis, and they have have accepted the costs of taxes because the benefits outweigh them. However, this may not lead to society being better off, as it only directly helps the firms.

California will have to closely monitor the vendors and how the new higher taxes affect them, in order to determine whether or not consumer are made better off. This seems unlikely though, as the state will get their higher revenue from taxes, and that will be a major plus from this policy. Because of this, the state is less likely to monitor welfare, as they will be getting more money, which is a main goal of the state. If the state can use those extra benefits to help improve the consumers, then that would make this a viable and effective policy. But they will also have to do a cost benefit analysis, and determine whether the revenue outweighs the possible consequences.

http://www.npr.org/templates/story/story.php?storyId=106071214

Tim Booth

Regulation to Regulate Personal freedom? or Social Welfare?

Chinese government introduced new regulation that every personal computers or official computers should mandatorily install new filtering software "Green Dam" to block pornographic content. This regulation may impact not only on internet industries, but also may impact on other industries and personal users in China. According to the some bloggers in china, he hacked the program and found that it may have ability to block not only pornographic content and word, but also have ability to shut down computers or close e-mail if some words appear that are against government.

The internet industry in china is really big since population in china is highest in the world. There are many firms based on internet. If all computer come out with the program porno industry based on internet will go out of business. I guess, porno industry based on internet is really big not just China, but all over the world. It may good for who want to control their children to stop search and use adult content. But, what about people who are old enough to use those adult contents and people who want to search something like sex health?

Also, people's freedom to speak out their pieces will regulate. The program may block harmful content and increase social welfare, but freedom of express one's opinion will also block. The Chinese government has to consider how it can affect to those things.

GooYong Chung
http://www.nydailynews.com/tech_guide/2009/06/22/2009-06-22_web_protest_planned_as_chinese_government_introduces_green_dam_filtering_program.html

But This One's Natural!

Trying to determine the eco-fabulous nature of goods on store shelves is not as easy as glancing at product labels. The reason: terms like “green” and “natural” have no reliably instructive meaning. This fact has real consequences for the market and seems to just beg for federal regulation.

Firms use wholesome-sounding phrases and pro-environment assertions to differentiate their products and woo consumers. In turn, consumers are not only willing to switch to greener products, but they also appear prepared to dig deeper into their wallets to buy such goods because they expect an added benefit—like reduced negative externalities—that justifies the added cost. This increased demand and willingness-to-pay presumably translates into gains for innovative firms that can develop truly environmentally-friendly products. However, without a clear way to discern the extent to which products live up to their green claims (if at all), society cannot realize as much (or any) of such anticipated benefits. To put it another way, consumers lack a rubric with which to sort through all the “green noise” in the market, and so they end up opting (and paying) for lesser products without making an informed choice. Innovative firms then watch their potential gains get competed away not by imitation that is equivalent in its benefits, but by imitation that is gray-green at best.

A way to diminish this market-frustrating asymmetric information problem is through the establishment of a national standard that (a) prescribes criteria for determining how “green” a product is—and how that measure is to be displayed on packages—and/or (b) spells out concrete definitions for what can be called “natural” and the like. Consumers would then have a more trusted and meaningful mechanism for evaluating goods, while firms looking to capture a share of this market would have an incentive to pursue R&D in hopes of introducing new products that could earn top-level environmental ratings or the right to use formerly ambiguous terms.

A green* post by Matthew Zawadski with support from Paola Durango.

*Refers only to the picture of basil

“American shoppers mislead by greenwash, Congress told” [The Guardian]
(Photo Credit: Matthew Zawadski)

Reform Needs Healthy Life Incentives

Jonathan Jackson

Joey Chadwick

James Petkovski

As of lately, healthcare 'reform' seems to be a hot political topic. This article addresses the regulatory cost and benefits related to health insurance. House Democrats hope that their major legislation will decrease the costs of healthcare, regardless of health status. Critics argue that the 'risk adjustment' associated with the legislation and the proposed regulations will impose higher costs on society, the private insurance market, and individuals in good health.

Economically, there are two questions that need to be addressed. First, why is regulation needed to reform healthcare in terms of cost related to health status? Second, do the inefficiencies of healthcare justify governmental invention? Inefficiencies in healthcare spawn from a variety of economic problems. One in particular is asymmetric information. Asymmetric information exists in the healthcare market, because insurers can't distinguish the healthy and unhealthy individuals. Therefore, the insurers have one premium they use as a fixed price for everyone, if the healthy people are paying the same as the unhealthy people they have incentive to drop out of the insurance policy and find a cheaper one. This phenomena will then represent a loss of profits, leading to inefficiency.

The justification of the House Democrat's legislation is whether in some way it can eliminate the information asymmetry in the heathcare market, and move to a more socially efficient outcome. If the private insurance market can do this by offering financial incentives to healthier people, then economics tells us government regulation is not needed. Although, this is a good method towards obtaining such efficiency, measuring and offering financial incentives towards healthy individuals is a difficult task.

Determining whether the House Democrat's solution will move society to a more optimal position in the healthcare market is really a function of what the private market operations are. The problem exist in the operation of offering financial incentives to different members under different insurance plans. Quite clearly , the Democrats proposed regulations are not pareto efficient as they will leave the private-sector worse off than before. However, the proposed legislation may clear up information asymmetry and market inefficiencies. Yet, that is to be determined.

http://online.wsj.com/article/SB124623169143066199.html

Regulations Equals Monopoly?

Independent gas stations are facing one of the hardest crisis since 1970s. In California, Philip Elder, the gas station manager, claimed that regulations squeezing him too hard. Gasoline sales down, economic down term and new regulations almost push his Independent gas stations out of business. Under the new regulations, Philip Elder need to invest $11,000 per pump to meet the air-resources agency requirement before May 15.

Gas station industry has a similar market structure as beer industry. Beer industry looks like a perfect competition but actually it isn’t. Few big firms control more than half market share. Market power is highly concentrated into few big firms. Under the new regulations, independent gas stations will be hurt and they will become victims. Probably, big firms are the winners under this regulation because big firms can keep expanding their business and they have less competition. In short, regulations have tendency to push small firms out of business and push industry closer to monopoly side.

In this case, government has the responsibility to correct the side effect from the regulations. As Philip Elder pointed out, loans only the things they request.

Ka Wa Chan

NFL and Others Hope for a Favorable Supreme Court Ruling

June 29—Supreme Court Justices agreed to hear an antitrust case against
the National Football League regarding its exclusive licensing
agreement with Reebok. Having been thrown out at the federal appeals
level, American Needle Inc. has been seeking Supreme Court intervention
to its lost right to sell hats with NFL logos, alleging that the
NFL-Reebok deal violates antitrust regulations.

In taking a seemingly strange course of action, the NFL (along with the
NBA and the NHL) echoed American Needle’s requests for a S.C. ruling,
hoping that our highest court will extend its 1972 antitrust exemption
for Major League Baseball to their respective leagues. Antitrust
immunity, if asserted, will solidify Chicago Circuit Court’s previous
judgment warranting collusive marketing practices between the 32 NFL
teams and will provide precedent preempting costly, timely, and arduous
antitrust suits in the future.

Support for freeing our largest professional sports leagues from
antitrust regulation will largely depend on how the Supreme Court
defines the market in which they participate. Exemption is most likely
to be granted should markets be defined in terms of the broader scope
of the entertainment industry as a whole. Such market definition is
certainly feasible if sports are seen as sufficiently substitutable
with other forms of live and televised entertainment; the compass of
which can be extended to include live concerts, movie theaters, theater
productions, and beyond.

Increased inclusion of firms said to be competing within the same
market affords for increasingly conservative estimations of HHI and
price-cost margin—lower values for which indicate lesser concentrated
markets limiting firms’ ability to price above marginal cost, and
consequently their incentive for anticompetitive pricing strategy. The
computation of such indices represent potentially significant weight on
DOJ judgment, as there have been numerous rulings previous setting
precedent that defines anticompetitive behavior in terms of higher
price-cost margins and regards 1000 as the critical value for HHI,
maintaining higher industry concentrations are characterized by an
exceedingly undesirable ability for monopolistic behavior.
It should therefore be evident that the extent to which the market for
professional sports is defined from a macro perspective, judgment will
be more inclined to rule in favor of exempting sports leagues from
antitrust regulations within their boundaries.

Authors:
Brian McGuckin
Ka-Wa Chan

Article:
http://www.bloomberg.com/apps/news?pid=20601205&sid=aBLIFIr.jAhE

Regulation and Google

Google is taking an offensive against government regulators who are claiming that the internet search engine is an unshakeable monopoly. Google’s rivals claim that Google’s market power has decreased competition for ad revenues in the market. Google believes that its market extends beyond search engine websites and considers all advertising to be in direct competition. Competitors range from Amazon.com and Web.md to television and radio advertising.

Google attained its market power by delivering better products and continued growth through innovation. Several of Google’s programs, such as Google Analytics, have caused controversy. Many claim that this information collecting program violates their privacy rights granted in the constitution. Despite these hurdles, Google has continued to innovate and dominate the internet search market. Currently, 2/3 of all internet searches are made using Google.

Although the world’s economy continues to struggle, Google has consistently obtained large profits and comes out with new and better programs annually. As Google continues to excel in the world market, it is able to employ and insure many people. Due to the current state of our nation, now is not the time to add regulations, costing large amounts of money that is not available. Google is a flourishing company that is not only popular, but has simply been successful due to hard work and shrewd business practices.
http://www.nytimes.com/2009/06/29/technology/companies/29google.html?pagewanted=1&_r=1&sq=google&st=cse&scp=2
Meredith Shores
Zach Ogaz

Regulating to minimize negative externalities

In a article i read on msnbc.com, the state of California passed regulation this week mandating that all new cars use heat reflective windows beginning in 2012. It starts with just windshields, but will expand to all car windows in following years. The main idea behind the regulation is to reduce the heat inside cars, especially parked cars, in order to reduce the use of air conditioning. Since air conditioning reduces gas mileage, if the use of air conditioning is reduced, cars will use less gas per trip, and emissions will be lowered overall.

In terms of economics, the main goal of the regulation is to minimize the negative externality of air pollution. By implementing mandates that try to reduce the use of air conditioning, California is attempting to decrease the level of air pollution, and is passing this regulation ex post to remedy the current problem. This is a good method for regulation, as we see there is a negative externality that lowers welfare, and we are fixing the problem. This prevents any further welfare loss, and there will be a lower cost to government and society. While an ex ante regulation would be more efficient economically, we can't forsee all problems, and therefore we need to observe the problem before we are able to fix it. This is the case with the problem of air pollution due to car exhaust. As well, an ex ante policy might be harder to implement, since firms will be more likely to fight it as it will increase production cost and there is no current problem to use as motivation, as the problem hasn't occured yet. At least with an ex post policy, there is a current externality that is a strong motivation for a policy.

As with most regulation, there are people against the policy, as the mandate increases the cost of production to firms, and firms are trying to minimize costs. Along with the car industry, the cell phone industry is against it, as they say that the thicker glass would block cell signals, and people would not be able to call from their car. Along with these people against it, the policy might not be effective in reducing pollution, as people will still choose whether or not to use air conditioning when they drive. Despite this, the policy was passed, and only time will tell if the regulation suceeds in its goal of reducing pollution.

http://www.msnbc.msn.com/id/31566034/ns/us_news-environment/

Tim Booth

Stock Options Opened for ‘Call Writing’

http://online.wsj.com/article/SB124595453317955285.html#articleTabs%3Darticle

 

The SEC has made a ruling that will allow employees to sell their stock options. Before this ruling, employees could not exercise their share holdings unless they owned actual shares.

 

There are pros and cons to this ruling that the SEC has passed.  The most obvious pro would be that now, the employees can create income for themselves through these stock options that their employer has given them.  If this ruling was passed earlier, a lot of people would have money to fall back on in these hard economic times that our country is dealing with at the moment.  That is, if they decided to exercises their rights to sell their stock.  Of course, many people lost a lot of money due to the fact that they couldn’t exercise their stock options before the market crashed in 2008 because it was illegal.  However, if they were allowed to exercise their stock options many people would have before their companies folded.  Since this was illegal, employees of the companies whose stock crashed didn’t even have an option to sell their stock, and ultimately lost all the money they had invested in the company they work/worked for.

 

The one downside to this law being passed is the purpose behind stock options.  Companies give employees these stock options so that their intentions are parallel with the stockholders of this company.  The question I pose is:  Will people that exercise their stock options have less interest in the path the company is taking?  And although I don’t think this will increase insider trading since scandals such as insider trading usually come from higher up on the chain, I do think that this could affect the allied interests between the employees and employers.

 

POSTED BY JASON KLETZKY and STEVE KILLION

New Regulation for Independent Retailer and Competitive Market

Israel's Communication Minister made a new regulation over cellular service companies that customer can have benefits of usage discounts whether they purchased cellular phone from cellular service companies or from the independent retailer. Customer could have benefits of usage discounts only by major cellular compaines before the reform of law.

In this case, Communication Minister of Israel is the regulator and cellular service companies are regulated. The Communication Minister looks like they want to protect individual retailer and make market more competitive. Reform of those law means that entry conditions of cellular service will be easier than before for third party retailer since third party's cost to enter cellular service market will not really decrease, but they expect to have more revenue since they have same ability to offer benefits to customers as major cellular service companies have.

Of course, major cellular service companies will not happy about reform of law. So now, they have plan to increase the price of SIM card doubled compared to before which customers can only buy that by major cellular service companies. Major cellular service companies don't want to decrease their revenue by reform of law. But if they keep oppose to Communication Minister's decision, nobody knows that Communication Minister would reform the law again that individual retailer can sell SIM card to customers

GooYong Chung
http://www.haaretz.com/hasen/spages/1095548.html

Alcohol Regulation

http://www.sciencedaily.com/releases/2009/06/090609103530.htm

This article is about the alcohol advertising industry in Australia. As of right now the advertisning industry for the alcohol industy is self regulated by the alcohol companies themselves. This was a bad idea to start. If you have a major industry in a country then there needs to be some sort of regulation placed on them. When you allow the industry itself to regulate what they do and how they go about it, that is asking for trouble. The Australian government should have regulated this industry from the start. Allowing the alcohol industry to regulate themselves means that they are able to advertise whatever they want where ever they want. They do not have any restrictions and are relying on morals and not government regulations. When you are dealing with people relying on their morals that is when people get into trouble. Everybody has their own opinion on what is acceptable and what is not. If the Australian government wants to get this under control then they need to make rules and laws on what and where they can advertise. The alcohol companies need to be under close watch on what they do or else it will start to get out of hand and more and more people will start to become upset about this.

Water Pollution, Conservation Bills Clear Senate Committee

Water conservation passes senate

James Petkovski

Jonathan Jackson

Joey Chadwick

A number of bills passed the Senate Environment and Public Works Committee on June 18^th. These bills were put forth to clean up and report overflow of sewage in the Great Lakes. The bills rose funding for these effort by close to doubling the cost put in. They were passed in hope of preserving these lakes and keeping them as a good tourism destination, where the social benefits will hopefully become greater than the cost.

This positive eternality is being used to greatly enhance the tourist industry. With the S.479 in act, “the bill helps fund a network of parks, refuges, museums, historic sites and water trails spanning the Chesapeake Bay watershed” (www.wwdmag.com). With cleaner lakes, the Committee is hoping that people will venture more towards these lakes, helping stimulate economy in these Great Lake states. They are hoping for a larger demand for visiting these tourist attractions, and with an increase in the demand for these attractions price can be increased, helping the industry grow, which in turn can be put to help keep the waters even cleaner.

Also another bill put forth was one to cleanup all “navigable waters” within “the waters of the United States” (www.wwdmag.com). Democrats claim that the word “navigable waters” should be removed from the bill, while Republicans disagree. By removing the word, the bill would be opening “the door for undue regulations on farmers, developers and other industry stakeholders” (www.wwdmag.com). Thus by helping out one industry, the bill will put restrictions and may hurt other industries. So this positive externality is now going to turn into a negative externality for other industries that would be affected by this bill having the word navigable removed.

These regulations put forth in these bills have both positive and negative externalities to offer. With some of these bills, a positive externality will help increase the tourism industry with the cleaning up and preservation of the Great Lake region. With the bill dealing with the waters of the United States, the removal of the word navigable may have some negative effects to other industries. In the end all these bills are put forth to help clean the water around the United States.

http://www.wwdmag.com/Water-Pollution-Conservation-Bills-Clear-Senate-Committee--NewsPiece18555

Regulations Increase Firms Burden during Depression

Under economic down term, more and more firms are going out of business. Gregg Industries, located in California, became one of the firms that closed down in this depression. However, Gregg Industries claimed that depression is not the only reason for it to close down. The main reason for them to close down and move which is onerous regulations and high taxes.

For this case, pollution is the externalities, which caused market failure. California State intended to remove the externalities by taxing and regulating the firms. According to supply and demand framework, when cost increases (more regulation and taxes), supply curve will shift to left. Quantity decreases and price of the goods increase. Supply curve shifts to left means that some of the firms go out of business. Price goes up means that less people can afford to buy the goods. Regulation makes consumers and firms worse off in this situation. Residents are the one who will be benefited from this regulation.

Air quality and quality of life in California may not be improved because firms cross the state boundary and build new factories next to California. Air quality will not be improved because air pollution can move back to California.

http://www.latimes.com/business/la-fi-factory23-2009jun23,0,3441163.story

Ka Wa Chan

Obama Praises Tobacco Bill But Struggles to Break Habit

Last Friday, President Barack Obama passed the regulation of tobacco and products struggling against a cigarette addiction, and signed the bill. The Tobacco control legislation was approved by House overwhelmingly a day earlier with help of the congressional effort. In this year (2009), some states of the United States have legislation pending to increase tobacco taxes. This use is the leading preventable cause of disease, disability, and death in the United States.

When the Food and Drug Administration examines the ingredients in tobacco products, they find countless ingredients that are extremely dangerous to your health. People, who smoke tobacco, are exposed to inhale tar, nicotine, carbon monoxide, and known poisons into the lungs. The goal of the Health public policy is to discourage the use of tobacco; also, this would be an increase in the state revenue. The nicotine in cigarettes is very addictive drug that causes changes in the brain and makes people want to use it more and more.

This decision will help a lot to the United States population, although, smokers probably don’t think that. The President Barack Obama had experienced these types of addictions which encourages to be in favor of the law. We think that Obama had taken this as a personal challenge because he feels the commitment with the country, since he knows that this addiction is only bad for humans and their surroundings. If he has been able to surpass this addiction, he wants others to do the same.

http://blogs.wsj.com/washwire/2009/06/12/10699/?mod=rss_WSJBlog?mod=washwire

Jason Spizer/Paulina E

Smells like regulation

Meredith Shores
Zach Ogaz

This week the FDA released a statement warning consumers about the possible loss of smell associated with using the nasal decongestant Zicam. Zicam is produced by the company Matrixx Initiatives, which also produces several other cold remedy medications. Zicam is a homeopathic cold remedy, meaning that it is taken in such minute doses that it presents no immediate danger to the general public or harmful side effects if the correct amount is taken. Because of this, one does not need a prescription and can simply buy it over the counter. There are no federal regulations requiring homeopathic cold remedies to meet certain standards and there are no federally mandated tests that must be performed before a product is mass produced and put on stores’ shelves.
However, due to the current situation, the FDA may find itself creating new regulations for over the counter medications that require firms to conduct extensive tests and present these results to the government before the product is mass marketed. This would unfortunately represent a large increase in the costs facing firms in this market, which would therefore raise the cost of their products. Then again, if these new regulations could help ensure the safety of all consumers, then it is of paramount importance that they are passed.

Gun policy sparks increase in demand

The article tells of how gun sales have gone us significantly since Obama has been president. It attributes this increased demand to new possible regulation, which would make background checks mandatory on all gun sales, instead of just on ones that are sold from licensed dealers. This article is a clear example of how some regulations work, and interestingly, what effect possible regulation can have.

By making gun permits mandatory to all gun sales, the regulation seeks to essentially screen everyone who gets guns, and make sure guns aren't sold to people who shouldn't have guns. This seems to me to be a logical policy; i know i don't want criminals, for instance, being able to buy guns, as that would only end in some very negative outcomes most likely. However, this proposed policy has had an immediate impact on gun sales. This jump in sales is directly due to the possible future higher cost of owning a gun. This higher price isn't monetary, but in time spent having a valid background check done, and the effort needed to get it done. People will buy them now rather then later to save money, which makes sense in terms of optimizing cost. More importantly, i believe this possible policy has most likely caused the people who don't have good backgrounds to purchase their guns now, as they wouldn't be able to if the new regulation passed. These people includes the criminals i mentioned earlier, as well as the other people who may not be criminals but due to their history probably shouldn't own guns. This proposed regulation has scared them into buying the guns now, so they have it while they can still get it. This, to me, seems like a bad aftereffect of a good policy.

In spite of this however, i think this regualtion still needs to go through. While it is our right to "bear arms" as the constitution states, i believe it is our responsibility to make sure people who get them are using them for correct purposes, and that we prevent sales to those who use them to hurt society. This policy would alleviate this problem. It is just very intersting to see how good regulations can produce bad immediate outcomes. It seems counterintuitive to the logical mind, but with some economical analysis, we can see how this can be.

http://www.npr.org/templates/story/story.php?storyId=105713194

Tim Booth