COMPETITIVE ENTERPRISE INSTITUTE

VOL. 32, NO. 4 | FALL 2019

FEATURED ARTICLES

Green New Deal Is No Deal at All

BY KENT LASSMAN AND DANIEL TURNER

4
BY PATRICK HEDGER W hen Rep. Alexandria Ocasio-Cortez
(D-NY) and Sen. Ed Markey (D-MA)
unveiled the Green New Deal in February,
In Its Stores, Walmart Behaves
the Same Way Amazon they instantly changed the conversation on
Does and No One Cares environmental policy. What in times past
would be generally perceived as an intrusive,
radically transformative proposal is now at
the center of the Democratic Party’s platform.
The Competitive Enterprise Institute and
Power the Future recently published a joint
study that shows households in five states can
7 expect tens of thousands of dollars in higher
costs for energy, housing, transportation, and
BY RYAN YOUNG shipping if this proposal is implemented.
More than Jobs: the Minimum Despite the astronomical costs, many of
Wage’s Many Tradeoffs the 2020 Democratic presidential candidates
have endorsed the proposal. No longer is it
“climate change” but “climate emergency.” would cost up to $93 trillion. Green New
As such, small measures are unwelcome to Deal supporters quickly lambasted that
Green New Deal supporters. Only the most number.
radical environmental proposals, paired with Our study sought to understand the
a progressive wish list including single-payer costs of implementing just part of the Green

8 health care, a jobs program, and decar-

bonization of the economy within a decade
could possibly be enough.
BY MICHELLE MINTON
Never let a “crisis” go to waste, indeed.
E-cigarette Flavor Ban Would Be But most have seen from the beginning
Ineffective and Dangerous what the Green New Deal really is—a big-
government spending boondoggle and a
threat to American freedoms, once again
ALSO IN THIS ISSUE justified under the guise of environmentalism.
But what does it cost?
Packing the Court Is a Real Threat. . . . . . . . . . 5 The framework rolled out by Ocasio-
Union Wish List Bill Would Harm Workers Cortez neglected to include any financial
and the Economy . . . . . . . . . . . . . . . . . . . . . . . 6 estimate of its implementation. Since it is a
Marijuana Industry Bank Reform on Capitol resolution, not an actual bill, the nonpartisan
Hill Agenda. . . . . . . . . . . . . . . . . . . . . . . . . . 10 Congressional Budget Office has not esti-
Stakeholders Matter (and Always Have). . . 11 mated the costs of the proposal.
CEI Events and Public Appearances. . . . . . . 12 Some organizations have estimated the
The Good, the Bad, and the Ugly. . . . . . . . . 14 total costs of the plan, with the American
Media Mentions. . . . . . . . . . . . . . . . . . . . . . . 15 Action Forum finding that at the high end, it
End Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
New Deal. Specifically, we looked at the
costs associated with additional electric-
ity demand, changes to the shipping and
logistics industry, acquisition of Green New
Deal-compatible vehicles, and the costs to
retrofit buildings. We limited our research
to a manageable five states representing
diverse geographies: Alaska, Florida, New
Hampshire, New Mexico, and Pennsylvania.
At a minimum, the Green New Deal
would impose enormous and recurring costs
on American households. We conclude that
in four of the five states analyzed, the Green
New Deal would cost a typical household
more than $70,000 in the first year of imple-
mentation, approximately $45,000 for each
of the next four years, and more than $37,000
(continued on page 3)
 David Koch (1940-2019), RIP
by Kent Lassman
F riend, philanthropist, inventor,
and industrialist David Koch has
died at the age of 79. He was a
father and husband. Known best
for his pro-liberty activism and
involvement in national politics,
he also improved countless lives
with more than a billion dollars in
FROM THE PRESIDENT
philanthropic donations to artistic,
cultural, and medical charities. His
generosity, optimism, and commit-
ment to a freer world will continue
to bear fruit for many generations.
David Koch got his train-
ing in chemical engineering at
the Massachusetts Institute of
Technology before eventually
joining the family business, Koch
Industries, in 1970. Over the next
half-century or so, he played
an integral role in building what
had been a moderately success-
ful regional oil company into the
second largest privately held firm in
the United States. Forbes reported
in 2005 that, since the late 1960s,
Koch Industries had grown 100
times in value, during a period
when the S&P 500 only increased
13-fold. Today the company makes
everything from cutting-edge
polymers and agricultural fertilizers
to car components, forest products,
biofuels, and pollution control sys-
tems, serving millions of customers
every day.
His political opponents often
attempted to portray him as a kind
of reactionary, but nothing could
2 CEI.ORG
be further from the truth. When he
ran for vice president of the United
States as a Libertarian in 1980,
the party platform called for drug
legalization, an end to all business
subsidies, eliminating the doctrine of
sovereign immunity, “the cessation
of state oppression and harassment
of homosexual men and women,”
and executive pardons for anyone
previously convicted of a victimless
crime. This kind of socially progres-
sive agenda would be considered,
by conventional political analysis, to
the left of many elected Democrats
today. Forty years ago, it was
revolutionary.
As is the case with most third-
party presidential campaigns, David Koch.
David’s 1980 run didn’t change the
world. The rest of his life, however,
most certainly did. Working closely more burdensome, and overwhelm-
with his older brother Charles, ingly less conducive to human
David Koch helped create the flourishing.
modern free-market movement of David Koch was a good man
think tanks and activist advocacy and a great American. He believed
groups, of which the Competitive it was a duty to engage in civic
Enterprise Institute is one. life and we are all better for it. The
Known for generous giving Competitive Enterprise Institute
himself, David also played a large family will miss him.
role in encouraging other liberty-
minded individuals of means to
invest in reforming policy and the A version of this article was origi-
political process. If David Koch had nally published in OpenMarket.
simply stuck to his university train-
ing in chemical engineering and
eschewed public life, the federal
government today would almost
certainly be far bigger, most costly,
The CEI Planet is produced by the Competitive Enterprise
Publisher Institute, a pro-market public interest group dedicated to
Kent Lassman free enterprise and limited government.
Editor
CEI is a non-partisan, non-profit organization incorporated in
Ivan Osorio
the District of Columbia and is classified by the IRS as a 501
Associate Editor (c)(3) charity. CEI relies upon contributions from foundations,
Richard Morrison corporations, and individuals for its support. Articles may be
reprinted provided they are attributed to CEI.
COMPETITIVE ENTERPRISE INSTITUTE
 Green New Deal, continued
each year thereafter. In Alaska,
estimated costs are much higher: more
than $100,000 in year one, $73,000
in the subsequent four years, and more
than $67,000 each year thereafter.
Our analysis does not include a host
of expensive government programs
included in the Green New Deal,
such as single-payer health care and
guaranteed jobs, among many others,
as costs for such programs are nearly
impossible to accurately estimate.
Furthermore, the Green New Deal is
reliant on technologies that have not yet
been invented, and such science fiction
is impossible to calculate. How would
we measure what doesn’t even exist?
Yet even without these immeasur-
able costs, our Green New Deal
analysis can best be described as
this: unfathomably overwhelming. The
true cost of the Green New Deal is
well north of our findings. Our report
represents a floor of expectations for
the costs associated with the imple-
mentation of the Green New Deal
in the short to medium term. A basic
takeaway is that the Green New Deal
would drive the American economy
into a serious economic depression.
Regardless of the urgency, or lack
thereof, of the climate issue, the Green
Antitrust Policy Needs to Move
on from the Smokestack Era
The Green New
Deal is reliant on
technologies that
have not yet been
invented, and such
science fiction
is impossible to
calculate.
New Deal is not something America
can remotely afford to implement.
Such an unserious proposal leads one
to surmise its authors and proponents
do not take climate change seriously
either.
Kent Lassman (kent.lassman@cei.org)
is president of CEI. Daniel Turner is
executive director of Power the Future.
A version of this article was originally
published at FoxNews.com.
Help the Competitive
Enterprise Institute carry
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Politicians and pundits across the

ideological spectrum often call for
greater competition in the marketplace.
Today, the view that current antitrust law
is necessary to ensure competition is
common across the political landscape.
Yet, as CEI experts demonstrate, a
rethink of antitrust law is long overdue.
To find out more, go to
https://antitrust.cei.org/
If you would like to join the Legacy
of Liberty Society or learn more
about the impact you can make
through one of CEI’s giving societies,
please contact CEI’s Philanthropy
team at (202) 331-1010 for more
information.
Andy Yuan
Philanthropy Department
andy.yuan@cei.org | (202) 331-1010

COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 3

 In Its Stores, Walmart Behaves the Same
Way Amazon Does and No One Cares
BY PATRICK HEDGER
T he Wall Street Journal recently
detailed how Amazon uses its
algorithms to prioritize its brands and
products that are more profitable
for the company. Amid the flurry of
antitrust scrutiny and investigations into
big tech, this seems like a big deal. Yet
outside of big tech, prioritizing your
own products and the products that
make you the most money is called the
basics of staying in business.
All technology policy debates fall
victim to the same general fallacy—that
Internet-based businesses are fundamen-
tally different than those with four walls
and a front door and therefore ought to be
held to different standards.
We increasingly take the wonders
that tech companies have given us for
granted. The convenience and end-
less selection provided by businesses
like Amazon are so incredible that our
expectations of these firms have become
completely detached from reality.
Yet Amazon is a business that faces
the same fundamental challenges that
4 CEI.ORG
brick-and-mortar stores like Walmart
face. Let’s look at the parallels. Walmart
and Amazon are retailers that sell
products made by other companies as
well as products under their own brand.
The complaint against Amazon is that it
structures its algorithm to prioritize certain
products that are either its own brand
or generate the most profit. Yet Walmart
does the same thing in how it decides to
physically structure its store.
If there were no rhyme or reason to
the inside of a Walmart, it would just be
a giant pile of unorganized products.
Yet a great deal of resources have been
dedicated by brick-and-mortar retailers
in studying how to position and stock
products inside of their stores. Around
certain holidays, products related to those
holidays, such as hot dog buns around
the Fourth of July, can usually be found
right as you walk in the door. Throughout
the year, the stores are constantly reor-
ganizing. Different products are put on
display while some are left on the shelves
or in the warehouse.
Brick-and-mortar stores also prioritize
products through pricing. Generic or
store-brand products are usually cheaper.
Stores will also provide you with discount
cards and coupons. These prioritize the
purchase of certain products over others.
This is all to say that Walmart and all
other retail stores want you to see cer-
tain products in certain places at certain
times at certain prices. For example,
there might be a certain brand of jeans
that makes Macy’s more money than
others. Those jeans are likely to be the
ones put on a mannequin in the store
window tagged as on sale. How is this
any different than when Amazon uses its
algorithm to put certain products near
the top of the search results?
Following this logic, one ought to
realize that Amazon’s business model
is decidedly more pro-consumer and
pro-competition than that of brick-and-
mortar retailers. Amazon doesn’t face
COMPETITIVE ENTERPRISE INSTITUTE
the kind of shelf-space limitation that a
physical Walmart location does. So if a
certain brand of product doesn’t make
Walmart as much money as another, it
may choose not to carry that product
in its stores at all. Yet on Amazon, the
accusation is not that the less profitable
and non-Amazon brand products are
unavailable, but rather are (*gasp*)
two clicks on the mouse wheel down.
With Amazon and other online
retailers having this enormous selection
advantage, Walmart and other brick-and-
mortar retailers are well along the way to
ramping up their online businesses as well.
This is all great news for the consumer.
Not long ago, if the local retail store
didn’t have the specific product you
wanted, you’d likely go without it or be
forced to buy the substitute product or
brand that the store determined made
the most business sense for them to stock.
Today, Amazon, Walmart, and all other
retailers are vigorously competing to stock
as wide of a selection as possible to best
satisfy consumers. In short, the individual
consumer experience has gone from a
limited selection to a near limitless selec-
tion, but certain products might show up
a few tiny movements of your hand away
from the one you may actually want.
As my colleague Jessica Melugin
recently pointed out on CNBC, the stan-
dard for antitrust violations under U.S.
law is consumer harm. To suggest con-
sumers are somehow worse off because
their preferred selection is a mere click
away, when it used to be in the back of
the store or not available at all, is both a
damning indictment of the weak cases
being pursued against big tech and a
credit to the incredible conveniences
these companies have provided.
Patrick Hedger (patrick.hedger@cei.org)
is a Research Fellow at CEI’s Center for
Technology and Innovation.
 Packing the Court Is a Real Threat
BY MARIO LOYOLA
D emocrats are threatening to pack
the Supreme Court by enacting leg-
islation to expand its size if they take the
White House and Senate in 2020. That
would instantly replace a 5-4 conserva-
tive majority with a left-leaning one that
would be irreversible for decades unless
Republicans win control of the govern-
ment and expand it even further. As in
1937, when Democrats first mooted the
idea, such legislation is unlikely to pass.
Yet as in 1937, the threat itself may be
enough to produce the desired effect by
intimidating the justices.
Eighty-two years ago, Franklin D.
Roosevelt had won reelection in a 61
percent landslide. The Democrats had
secured enormous majorities in both
houses of Congress. The people were
behind the president and his New
Deal programs to restrict the labor and
agriculture markets and thereby lift
wages and prices for politically power-
ful groups.
FDR had a problem, however. His
signature New Deal programs clearly
exceeded Congress’ power to regulate
commerce “among the several States.”
COMPETITIVE ENTERPRISE INSTITUTE
For 150 years, the Constitution’s
Commerce Clause had been under-
stood to reach only transactions that
crossed state lines. Thus the justices
struck down as unconstitutional virtually
every New Deal program passed in
FDR’s first term. FDR began referring to
the justices as “the Scorpions.”
The 1936 election seemed to
enhance FDR’s mandate to implement
the New Deal. And nowhere in the
Constitution is it written that the court
must have nine justices. Thus the presi-
dent proposed expanding the Court
to 15 justices. The six new ones would
make a four-justice minority into a 10-5
majority.
Democratic lawmakers balked.
“A liberal cause was never won by
stacking a deck of cards, by stuffing
a ballot box, or by packing a court,”
said Sen. Burton Wheeler (D., MT). But
the justices seemed to get the message.
In 1937, starting with NLRB v. Jones &
Laughlin Steel Corp., a majority began
to surrender to the New Deal pro-
grams, ruling that the federal govern-
ment could regulate economic activity
that didn’t actually cross state lines.
In the ensuing five years, leading
to Wickard v. Filburn (1943), the court
C E I . O R G 5
effectively put its imprimatur on a new,
progressive constitution. Limited and
enumerated powers gave way to ple-
nary federal authority subject only to
the whims of transient political majori-
ties and the malleable individual rights
of a “living constitution.”
For decades, Republicans have
campaigned on calls for judicial
restraint, and in the past few decades
the court has at least sometimes
inclined in that direction. But the trans-
formation of 1937 left the Supreme
Court on thin ice, and Chief Justice
John Roberts jealously guards its “polit-
ical legitimacy.” In cases such as NFIB
v. Sebelius (2012) and Department of
Commerce v. New York (2019), deal-
ing respectively with Obamacare and
the census, he has cast the deciding
vote for liberal outcomes that seem
at odds with his legal reasoning. As
in 1937, mere threat may prove as
transformational as a constitutional
amendment.
Mario Loyola (mario.loyola@cei.org) is
a senior fellow at CEI. A version of this
article was originally published in The
Wall Street Journal.
 Union Wish List Bill Would Harm Workers
and the Economy
BY TREY KOVACS
I n August, the Competitive Enterprise
Institute published a report that
analyzes the Protecting the Right to
Organize (PRO) Act of 2019 (H.R.
2474), which recently passed out of the
House Education and Labor Committee.
The bill overhauls labor relations law
and tilts the playing field in favor of
unions without regard to the negative
consequences on workers, employers,
and the economy.
Despite the pro-union bias of the
Obama administration, any regulatory
victories that labor unions realized then
could be short-lived. As has long been
the case, precedent at the National
Labor Relations Board (NLRB), the
agency governing private sector labor
relations, swings like a pendulum
depending on which party holds the
executive office. The Obama NLRB
took this concept to the extreme and
overturned a collective 4,559 years of
precedent, nearly all to the benefit of
labor unions.
To secure gains made during the
prior administration, the PRO Act seeks
to codify several regulatory actions
implemented by the Obama NLRB and
other long sought-after union priorities.
To ease union organizing, the PRO
Act codifies an Obama-era regulation
known as the “ambush election” rule.
The underlying purpose of the ambush
election rule is to shorten the time frame
between the filing of a petition and the
date on which an election is conducted
to what could be as little as 10 days.
Yet historically, NLRB elections have
been conducted efficiently with the
median number of days from petition to
election being 38 days.
6 CEI.ORG
Union election data show that
labor unions win more elections when
they take place quickly and workers
only get to hear about the benefits of
union representation, not any of the
potential downsides. The decision to
select a union representative impacts
nearly every aspect of an individual’s
work conditions. Workers need ample
time to mull it over and hear from both
sides.
The PRO Act would also codify a
provision of the ambush election rule
that requires employers to hand over
workers’ private information, includ-
ing personal cell phone numbers,
email addresses, and work schedules,
without any opportunity for workers
to opt out of their employers sharing
their personal data with third parties.
Even the Obama NLRB acknowledged
problems associated with this policy. In
an NLRB guidance memo, the Board
warned that that releasing employees’
private information may lead to the
lists being used to sell to telemarketing
services and to “harass, coerce, or rob
employees.”
The PRO Act would also require
compulsory dues payments by effec-
tively repealing all state right to work
laws, which prohibit unions from charg-
ing fees to non-members. Eliminating
such laws removes a crucial check on
labor unions’ coercive powers.
Once a union successfully orga-
nizes a workplace, it is certified as the
exclusive bargaining representative of
all employees in the bargaining unit,
including workers who voted against
unionization. As an exclusive represen-
tative, the labor union has the authority
to represent and negotiate a contract
that sets work rules for all employees.
As such, right to work laws rep-
resent a compromise. Unions may
COMPETITIVE ENTERPRISE INSTITUTE
represent dissenting workers, but right
to work laws provide a check on this
union authority by providing them
with the ability to opt out of paying for
representation they do not want.
Right to work laws offset another
problem that arises from exclusive
representation. Under current law,
labor unions never face reelection.
This creates a situation known as
“inherited unions,” where workers are
represented by a union chosen by past
employees and which they had no say
in selecting. As little as 10 percent of
private sector workers voted for the
union that represents them.
In addition to lessening the nega-
tive impact of exclusive representation,
right to work laws enable workers
to hold union officials accountable.
Right to work laws place the burden
on union leadership to continually
prove the organization’s value to their
membership.
Even some union officials under-
stand the benefits of right to work laws.
United Auto Workers union official
Gary Casteel once stated, “This is
something I’ve never understood, that
people think right to work hurts unions.
To me, it helps them. You don’t have to
belong if you don’t want to. So if I go
to an organizing drive, I can tell these
workers, ‘If you don’t like this arrange-
ment, you don’t have to belong.’”
Overall, the PRO Act takes away
workers’ right to choose how they
spend their earnings, limits flexible
work arrangements, and threatens
workers’ privacy.
Trey Kovacs (trey.kovacs@cei.org) is
a policy analyst at CEI. A version of
this article was originally published at
OpenMarket.
 More than Jobs: the Minimum Wage’s
Many Tradeoffs
BY RYAN YOUNG
T he House of Representatives
recently passed legislation to raise
the federal minimum wage to $15 per
hour by 2025. Much of the debate
has concerned the proposal’s effect
on employment. The Congressional
Budget Office (CBO) estimates the
Raise the Wage Act would cost 1.3
million to 3.7 million jobs, but that is
only one negative effect. Additional
tradeoffs would affect workers who
remain employed, and many of these
are not in the CBO’s calculations.
Workers are paid more than just
wages. They often receive non-wage
compensation such as employee dis-
counts, free meals or parking, flexible
hours, insurance, tuition assistance, and
more. One way employers can find a
way to afford government-mandated
higher wages is to cut this non-wage
pay. Some workers might see a higher
paycheck, but they wouldn’t neces-
sarily be better paid. They would also
have less flexibility in how they are
paid.
The tax impact is also important.
Wages are taxed, while much non-
wage compensation often is not. For
example, a restaurant that allows
employees to have free or discounted
food on the job can easily be giving
them the equivalent of several hun-
dred dollars of untaxed income per
year. Converting that benefit to wage
instead would subject employees to
the 15.3 percent FICA tax for Social
Security and Medicare and likely sales
taxes, as well as state and federal
income taxes.
Adding insult to injury, a recent
survey of 574 New York City restau-
rants found 87 percent of respon-
dents planned to raise menu prices in
response to higher minimum wages
COMPETITIVE ENTERPRISE INSTITUTE
there, while 75 percent planned hour
cuts and 47 percent planned staff cuts.
Affected employees would potentially
lose not only both wage and non-
wage pay but would have fewer tip-
paying customers due to higher prices.
Some employees take jobs they
don’t necessarily enjoy because of
the non-wage compensation, such as
helping to pay for skill certifications or
tuition assistance that could help down
the road. Or maybe a store happens
to have an owner who is lenient about
employees sometimes showing up late
or leaving early—a valuable informal
benefit for workers with small children,
or who live in areas with unreliable
transit. If these benefits are reduced
or eliminated, affected workers would
not necessarily be made happier by a
slightly higher paycheck they could get
elsewhere. and McDonald’s. They can absorb
We should also be concerned higher costs and automate some jobs,
about young workers. Pay is tied to while a mom-and-pop store or restau-
productivity, so younger and part-time rant might not be able to.
workers would be disproportionately Every policy has tradeoffs. With
harmed. Teenagers who are still in minimum wages, those tradeoffs go
school or fresh out of it haven’t yet had well beyond a couple million lost jobs.
the time to build the skills they need They range from non-wage pay cuts to
to command a high wage. Making it a tax increase on low-income workers,
harder for them to enter the workforce to fewer opportunities for young and
in the first place can hurt their earning part-time workers, to an artificial com-
power for years to come. petitive advantage for big businesses.
Part-time workers, even if they have If the goal is to reduce poverty,
experience, have fewer hours in which Congress should instead focus its
to develop job-specific skills. They may energy on lifting regulatory burdens
have higher training costs and make that disproportionately affect low-
more mistakes as a result. Many part- income families to the tune of as much
time workers also have family respon- as $3,500 per year.
sibilities that take priority over work
and may have more needs for flexible
hours and other non-wage benefits that Ryan Young (ryan.young@cei.org) is
a full-time worker might not ask for. a senior fellow at CEI and author of
Another minimum wage tradeoff, the CEI study “Minimum Wages Have
and one that should resonate with pro- Tradeoffs—Unintended Consequences
gressives, is that a $15 minimum wage of the Fight for 15.” A version of this
would give an unfair advantage to big article was originally published at
businesses such as Walmart, Amazon, Inside Sources.
C E I . O R G 7
 E-cigarette Flavor Ban Would Be Ineffective
and Dangerous
BY MICHELLE MINTON
N ever let a crisis go to waste. That
could be the official motto for
the anti-tobacco industry, which has
irresponsibly exploited this summer's
sudden outbreak of “vaping-related”
lung ailments.
With the aid of sloppy news report-
ing and biased announcements from
federal officials, anti-tobacco advocates
have successfully deceived the public
into thinking that vaping is to blame.
They have also used the confusion they
helped create to railroad the political
process and enact new regulations on
the legal e-cigarette market.
These measures, like the recently
announced ban on e-cigarette flavors
in Michigan, will not only fail to improve
public health but also put consumers at
greater risk.
Michigan Governor Gretchen
Whitmer (D) announced that her state
8 CEI.ORG
would be the first in the nation to enact
a total ban on the sale of all e-cigarette
flavors (except tobacco-flavor), which
she believes "hook young people on
nicotine." She also believes banning
these flavors will protect kids and the
health of other Michigan residents.
She is wrong on both counts. Bans
don’t work. Bans never work. All bans
do is push consumers to make different,
usually more risky, choices. In this case,
the likely outcome of banning e-liquid
flavors is that people will seek to obtain
them through the black market or simply
return to smoking cigarettes. As a result,
many more will die of smoking-related
diseases or from tainted products.
Despite the repeated claim that this
summer's outbreak of lung diseases is
linked to vaping or e-cigarettes, not one
of the more than 400 cases has been
connected to legal, nicotine-containing
e-cigarettes. On the contrary, state
health departments have revealed that
most of the cases appear linked to the
COMPETITIVE ENTERPRISE INSTITUTE
use of black market cannabis e-liquids,
many of which have tested positive for
vitamin E acetate, which when inhaled,
can damage the lungs. In New York
state, for example, the health department
announced that all of the patients in the
outbreak who submitted products for test-
ing had used a vitamin E-tainted product.
This does not appear to be a problem
with cannabis products bought through
licensed retailers. The majority of the cases
have occurred in states and counties
where cannabis is not legally available
and, as such, consumers are more likely to
take their chances on the black market.
After some pressure, federal
authorities finally acknowledged that
the outbreak was not linked merely
to “vaping,” but to vaping unlicensed
marijuana. Yet, some, like the Centers
for Disease Control and Prevention,
continue to exploit the crisis to spread
unwarranted fears about e-cigarettes.
And anti-vaping advocates are capi-
talizing on the confusion to promote
 million Americans die each year from ill-
nesses caused by combustible tobacco.
Evidence indicates E-cigarettes, which deliver nicotine
without combustion, have a significantly
that the risk lower risk. Research also repeatedly
shows that e-cigarettes are an effective
associated with way for cigarette smokers to quit, more
effective even than traditional nicotine
e-cigarettes is small, replacement therapies.
Anti-tobacco advocates focus on
smoking rates in evidence that supposedly supports the
existence of an “epidemic” of youth
all age groups vaping, even though that same evi-
dence shows that only 0.2 percent of
are declining, non-smoking, underage high school
students regularly use e-cigarettes. They
and flavored also avoid mentioning the fact that even
amid this so-called epidemic, the rate
e-cigarettes play of smoking among all age groups has
dropped to the lowest on record.
an important role in The claim that Big Tobacco is using
fruity flavors to hook a new generation
smoking cessation. on nicotine is compelling. Big Tobacco
makes for an easy target, after all. But
scientific data indicate that e-cigarette
restrictions and outright bans on these flavors do not attract non-smoking
products that have helped millions of adolescents. On the contrary, the wide
American smokers quit their deadly array of flavors, produced by thou-
habit over the last decade. sands of vapor companies around the
We don't yet know what caused this country appear to help in persuading
outbreak. We also don’t know all of the smokers to try vaping and preventing
long-term effects of vaping. But we do e-cigarette users from returning to their
know that smoking kills. Nearly half a deadly e-cigarette habit.
Concerns about the potential risk
e-cigarettes may pose to adoles-
cents is warranted, but the life-saving
potential of e-cigarettes for adult
smokers merits an objective weigh-
ing of the risks and benefits posed by
regulating these products. Currently,
the evidence indicates that the risk
associated with e-cigarettes is small,
smoking rates in all age groups are
declining, and flavored e-cigarettes
play an important role in smoking
cessation. The specter of possible,
“unknown” risks to adolescents simply
isn’t enough to justify a ban.
As a society, we have found
satisfactory ways to address youth
access to many adult products, like
alcohol and marijuana. Given that
e-cigarettes have the potential to save
lives, regulators have a responsibility to
find a similarly sophisticated solution to
the youth vaping problem. Or they can
follow Michigan’s lead and learn the
same lesson repeated throughout his-
tory—prohibition always causes more
problems than it solves.
Michelle Minton (michelle.minton@cei.
org) is a senior fellow at CEI. A version
of this article was originally published
in The Orlando Sentinel.

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 Marijuana Industry Bank Reform Advances
on Capitol Hill
BY MATTHEW ADAMS
W hile the continued legalization
of recreational and medicinal
use of marijuana at the state level has
undoubtedly been a win for liberty,
there remains much work to do as to
normalize the burgeoning marijuana
industry in the broader legal and eco-
nomic fabric of the nation.
In September 2017, Regina
Liszanckie received a license in
the State of Washington to open
Plantworks, a legal marijuana “pro-
ducer-processor” plant specializing in
high-end “craft” product. Four months
later in January 2018, the 2,500
square foot facility in Seattle’s North
End was targeted by thieves who made
out with 26 pounds of premium mari-
juana valued at $52,000. Her case is
just one example chronicled in a recent
Politico Magazine piece that details
the slew of robberies at dozens of legal
marijuana growers and dispensaries
across the Pacific Northwest as of late.
The piece goes on to note that while
legalization of the drug in these states
has brought about a great deal of gov-
ernment oversight, it seems to have also
had an adverse effect on the safety and
security of the industry. For example,
one aspect of the regulation around
the industry requires businesses to file
reports with “detailed floor plans show-
ing where plants are grown, inventory
is stored and security cameras are
located as well as delivery-route mani-
fests.” Besides being overly burden-
some, hackers have exploited data like
this in weak government databases and
used the info to burglarize mom-and-
pop pot shops up and down the West
Coast.
In addition to stealing weed, the
thieves often find access to thousands
of dollars in cash, since only 30 percent
10 CEI.ORG
of marijuana related businesses use a
bank or similar depository institution.
Not the fault of the businesses them-
selves, the federal government still clas-
sifies marijuana as a Schedule I drug,
the same as heroin. Given the often
risk-adverse nature of banks, many
are hesitant to offer services to these
businesses out of fear of breaking either
federal drug laws or money launder-
ing laws. This has left most to conduct
their dealings in cold, hard cash. The
situation was further worsened last
year when then-Attorney General
Jeff Sessions reversed an Obama-era
policy that eased federal enforcement
of marijuana laws, which made it easier
for banks to do business with the legal
marijuana industry.
As noted in Politico, “federal prohi-
bition and the lack of traditional bank-
ing services have created the largest
security risk for cannabis businesses.”
Clearly something needs to be done,
especially when considering the legal
marijuana industry currently stands at
$13.8 billion and is expected to grow
at a compound annual growth rate of
23.9 percent—reaching $66.3 billion
by 2025.
Legislators should act to clarify the
legal and regulatory questions around
marijuana banking. Luckily, there are
some options already on the table to
do just that. The SAFE Banking Act, for
example, overwhelmingly passed the
House in September.
The Secure And Fair Enforcement
(SAFE) Banking Act (H.R. 1595)
provides safe harbor protections for
financial firms engaging with marijuana
businesses. Unlike past iterations of
the legislation, the current version also
includes provisions that extend protec-
tions for ancillary businesses such as
real estate owners and accountants.
While a divided Congress usually
presents challenges that can stymie
COMPETITIVE ENTERPRISE INSTITUTE
legislative action on controversial
issues, marijuana banking reform has
overwhelmingly bipartisan support.
Led in the House by Reps. Ed Perlmutter
(D-CO), Denny Heck (D-WA), Steve
Stivers (R-OH), and Warren Davidson
(R-OH), the SAFE Banking Act passed
321 to 103. An accompanying bill in
the Senate, S.1200, has 33 cosponsors.
Thirty-eight state attorneys general
have signed a letter backing the bill.
Beyond that, the legislation is sup-
ported by a number of industry trade
associations such as the American
Bankers Association, the Independent
Community Bankers of America, and
the Credit Union National Association.
Additionally, in July, the Competitive
Enterprise Institute and other free-mar-
ket groups signed onto a coalition letter
urging the Senate to pass the proposed
law. Broadly speaking, the Trump
administration seems open to such mea-
sures as both Attorney General William
Barr and Treasury Secretary Steven
Mnuchin have expressed support for
reforming the laws around marijuana
banking.
In ballot boxes and state legislatures
across the nation, citizens and their rep-
resentatives have done a great deal to
take marijuana out of the illegal under-
ground. The federal government should
follow their lead and at the very least
enact legislation that respects states’
authority and the ability of a bank and
a private business to engage in free
commerce with one another. Passage
of the SAFE Banking Act would do just
that, while also helping business owners
sleep in peace knowing that their hard-
earned money is protected.
Matthew Adams (matthew.adams@
cei.org) is a policy analyst at CEI. A
version of this article was originally
published at OpenMarket.
 Stakeholders Matter (and Always Have)
BY RICHARD MORRISON
T here was considerable news cover-
age recently about the Business
Roundtable’s (BR) release of a public
statement on “the purpose of a cor-
poration.” Whereas previous versions
stated that “corporations exist princi-
pally to serve their shareholders,” the
new statement emphasizes the way
in which the signatory CEOs “create
value for all our stakeholders, whose
long-term interests are inseparable.”
Opinion writers like The Washington
Post’s Steven Pearlstein consider this
shift in language “significant,” but it
seems more a clarification of what
has always been true for American
businesses than any real change in
direction.
The statement lists five categories
of stakeholders to which all members
“share a fundamental commitment,”
including customers, employees, sup-
pliers, communities, and (listed last)
shareholders. None of these constitu-
encies are new, however, and it’s hard
to see how any of the descriptions
listed in the new document contradict
what went before.
The statement also says that the sig-
natories commit to “dealing fairly and
ethically with our suppliers” and “com-
pensating [employees] fairly.” Have
Honeywell and Best Buy been treating
their suppliers unethically up to now?
Are General Motors and PepsiCo just
now starting to pay their employees
fairly? Surely the companies listed as
signatories would insist that they have
long observed such standards, whether
it’s “supporting” employees, “serv-
ing as good partners” to suppliers, or
showing “respect” to the communities
in which they operate—as have most
companies that have existed long
enough to have their CEO become a
member of the Business Roundtable.
In many contemporary conversa-
tions about corporate responsibility,
COMPETITIVE ENTERPRISE INSTITUTE
we’re left with the implication that
companies could, if their management
so wished, prosper indefinitely while A company with no
maintaining an attitude of malicious
disrespect toward their stakeholder customers wouldn’t
groups. The “good” companies that
sign on to a statement like this one are survive for long.
thus set apart from the “bad” com-
panies that, we are left to assume,
Even with shareholders ostensibly
embrace dishonorable motives and
demoted from number one to one of
unethical behavior. However, with
five equal claimants, the corporations
a few atypical exceptions like Enron
in question will continue working to
and WorldCom—which have long
be as profitable as possible. There’s
since been punished by both markets
nothing in the new statement that
and the law—we search in vain for the
would require managers to make any
supposedly successful companies that
specific tradeoff in the interest of any
don’t conform to at least the mini-
other group, and no way to enforce
mum standards that the BR statement
such a requirement if there was. More
demands.
importantly, the ultimate discipline
The statement ends with the obser-
remains—investors invest in companies
vation that “each of our stakeholders
that they think will generate returns, not
is essential.” I assume the stakeholders
companies whose press releases have
in question are supposed to consider
the most feel-good rhetoric.
that a gesture of respect, but it’s so
close to a tautology that it’s essentially
meaningless. Rather, it’s largely a
Richard Morrison (richard.morrison@
cost-free exercise in courting posi-
cei.org) is senior editor at CEI. A
tive media attention. A company with
version of this article was originally
no customers or employees wouldn’t
published at OpenMarket.
survive for long.
C E I . O R G 11
 CEI EVENTS AND PUBLIC APPEARANCES

Trey Kovacs Breaks Down the Dangers of a Union-Backed Legislative Proposal Capitol Hill
On September 26, Policy Analyst Trey Kovacs spoke on
the panel, “The Case against the PRO Act,” part of a
Capitol Hill briefing cohosted by CEI and the Institute
for the American Worker. Rep. Virginia Foxx (R-NC),
ranking member of the House Committee on Educa-
tion and Labor, provided an overview of the Protecting
the Right to Organize (PRO) Act of 2019 (H.R. 2474),
a union wish-list bill that threatens to radically alter
labor relations law at the state and national level.
If implemented, it would undermine worker choice
and cause economic harm. Kovacs and the other
panelists—coauthors of the recently released CEI
report, “The Case against the Protecting the Right to
Organize Act”—discussed various aspects of the bill.
Also on the panel were Austen Bannan of Americans
for Prosperity, Russell Brown of the Center for Inde-
pendent Employees, Olivia Grady of the Center for
Worker Freedom, Patrick A. Hollrah of the Coalition to
Promote Independent Entrepreneurs, and F. Vincent
Vernuccio of the Mackinac Center for Public Policy.
Trey Kovacs

CEI Luncheon and Book Discussion with Dr. Oonagh McDonald

On September 19, CEI hosted a private luncheon with Dr. Oonagh McDonald, author of Holding Bankers to
Account: A Decade of Market Manipulation, Regulatory Failures, and Regulatory Reforms, at the 21 Club in New
York City. CEI Vice President Iain Murray interviewed McDonald regarding her forensic assessment of the worl-
wide London Interbank Offered Rate (LIBOR) manipulation crisis. In her book, McDonald details how major banks
manipulated financial benchmarks, while regulators entrenched these measures. McDonald, a former regula-
tor in the United Kingdom, offered ideas on how to improve oversight and secure the financial services industry
from future abuse.

Onnagh McDonald and Iain Murray

12 CEI.ORG COMPETITIVE ENTERPRISE INSTITUTE

 CEI EVENTS AND PUBLIC APPEARANCES

Economist Tyler Cowen Joins CEI to Discuss His New Book Defending Big Business, “an American Anti-
Hero”
On September 5, CEI, the Prosperity Caucus,
and the Distilled Spirits Council of the United
States cohosted a book event featuring
George Mason University economics profes-
sor Tyler Cowen, who discussed his new book,
Big Business: A Love Letter to an American
Anti-Hero. A prominent pundit and bestselling
author, Cowen described his new book as a
return to basics—a restatement of the prin-
ciples of economic freedom and defense of
the right of businesses to thrive and, yes, grow
big if they succeed. “Business, quite simply,
has become underrated,” writes Cowen in
the book’s introduction. “The two words that
follow most immediately from the world of
business are ‘prosperity’ and ‘opportunity.’” Tyler Cowen

Author Mike Chase Joins Kent Lassman to Discuss His New Book on the Mind-Boggling Expansion of
Federal Crimes
On August 22, CEI hosted an evening recep-
tion and conversation with Mike Chase, author
of the new book, How to Become a Federal
Criminal: An Illustrated Handbook for the
Aspiring Offender. CEI President Kent Lassman
interviewed Chase on the many ways that over-
regulation can turn us all into potential federal
criminals—without us even realizing it. While
chances are slim that you will be prosecuted
for silly violations—such as having “offensive
personal hygiene” at the Library of Congress,
corresponding with or yielding your boat to a
pirate, brewing more than 100 gallons of beer
at home, or knowingly importing a pregnant
polar bear—Chase warns that if you are pros-
ecuted, government conviction rates approach
100 percent. Chase compellingly recommends
that we think closely about the hundreds of
thousands—and growing number—of obscure
federal crimes on the books. Chase, a criminal
defense lawyer, tweets at @CrimeADay. Kent Lassman and Mike Chase

COMPETITIVE ENTERPRISE INSTITUTE C E I . O R G 13

 THE
GOOD
Court Finds Overreaching
Federal Housing Agency
Unconstitutional
On September 6, the United States Court
of Appeals for the Fifth Circuit found the
structure of the Federal Housing Finance
Agency (FHFA) to be unconstitutional.
A majority of the Circuit ruled that
the president’s inability to remove the
agency’s director, except “for cause,”
violated the Appointments Clause in
Article II of the Constitution. In this ruling,
the court relied on a 2010 Supreme
Court case in which CEI acted as
co-counsel, Free Enterprise Fund v. Public
Company Accounting Oversight Board.
A separate part of the decision also
struck down the federal government’s
seizure of the profits from shareholders
of Fannie Mae and Freddie Mac under
the Obama administration’s 2012 “Third
Amendment” policy.
“The court was correct in ruling
both that the FHFA’s structure was
unconstitutional and that the ‘Third
Amendment’ crafted to seize nearly all
of the profits from Fannie and Freddie
in perpetuity—even after they repaid
bailout money—far exceeded the
authority given to the government in the
Housing and Economic Recovery Act,”
said CEI Senior Fellow John Berlau.
“Hopefully, this case will be a strong step
in making regulators more accountable
to the nation’s elected lawmakers.”
14 CEI.ORG
THE
BAD
State Attorneys General
Launch Political Attack on
Big Tech
State attorneys general from both parties
have launched antitrust investigations
against Facebook and Google over
supposedly “monopolistic” practices.
New York Democratic AG, Letitia James,
who is leading a multistate investigation
of Facebook, said, “We will use every
investigative tool at our disposal to
determine whether Facebook’s actions
may have endangered consumer data,
reduced the quality of consumers’ choices,
or increased the price of advertising.”
Meanwhile, Texas Republican AG Ken
Paxton, who is leading an investigation of
Google by 50 AGs, said, “When most
Americans think of the Internet, they no
doubt think of Google.”
Yet, Google and Facebook are not the
Internet. “As a method of communication,
Facebook competes with text messages,
video calls, phone calls, and emails. As
a way to spend leisure time, Facebook
competes with movies, sports, books,
music, and more,” said CEI Senior Fellow
Ryan Young. “Google’s relevant market
is larger than search. Every Uber and Lyft
ride involves an Internet search that does
not use a Google algorithm. Netflix, Hulu,
and Spotify searches do not use Google.
Ultimately, these antitrust investigations
serve the interest of attorneys general’s
political ambitions, not consumers.”
COMPETITIVE ENTERPRISE INSTITUTE
THE
UGLY
E-Cigarette Ban Makes
Quitting Harder for
Smokers
On September 11, the Trump
administration announced plans to ban
flavored e-cigarettes, citing concerns
over teen vaping and recent reports
of lung illnesses afflicting people who
vaped various substances. Health and
Human Services Secretary Alex M.
Azar II said that the Food and Drug
Administration would seek to remove
flavored e-cigarettes (including menthol)
from the market, allowing only the
sale of tobacco flavors. However, an
e-cigarette ban would be a futile feel-
good measure with no tangible benefit.
“Evidence shows e-cigarettes are
vastly safer than smoking and highly
effective at helping smokers quit a habit
that kills nearly half a million Americans
each year. E-cigarettes have the potential
to save millions of lives but not if we
destroy what makes them attractive,”
said CEI Senior Fellow Michelle Minton.
“Banning flavors won’t prevent youth
vaping but will drive adults back to
smoking or into the black market. The
resulting rise in death and disease will
be blamed on e-cigarettes and used
to lobby for even greater restrictions,
rather than placed where it belongs—
anti-tobacco advocacy groups,
misinformation, and lawmakers who base
regulations on fear instead of facts.”
MediaMENTIONS
Research Fellow Patrick Hedger
explains why U.S. antitrust fears
regarding T-Mobile’s $26.5 billion
July takeover of Sprint in are
unfounded.
But others, including T-Mobile of
course, say prices won’t rise and the
deal is good for consumers.
“Private industry has every incentive
to give American consumers what they
want: faster, better, cheaper wireless
service,” said Patrick Hedger, research
fellow at the Competitive Enterprise
Institute, a think tank that favors free
markets and limited government
intervention.
—July 26
Associated Press
Senior Fellow Ryan Young
comments on the Trump
administration’s decision to delay
trade tariffs on Chinese goods.
“The decision to delay new tariffs
on Chinese-made toys, smartphones,
laptops and other popular holiday
gifts is a tacit admission that consumers
pay for tariffs, not Chinese producers,”
said Ryan Young, a senior fellow at the
Competitive Enterprise Institute.
–August 13
The Washington Post
CEI
Summit
2020
COMPETITIVE ENTERPRISE INSTITUTE
President Kent Lassman’s study on
the true costs of the Green New
Deal gets media attention.
The right-leaning Competitive
Enterprise Institute indicated that
businesses would collectively face trillions
of dollars in costs as they upgraded
commercial and industrial buildings.
For example, the study found that the
battleground state of Pennsylvania would
face over $2 trillion in costs for upgrading
residential, commercial and industrial
buildings. Florida would encounter
a $1.4 trillion price tag and New
Hampshire, the first primary state, would
face $102.8 billion in retrofitting costs.
–August 22
Foxnews.com
General Counsel Sam Kazman
and Attorney Devin Watkins push
the U.S. Department of Energy to
allow better quality automatic
dishwashers back into the
marketplace.
The Washington-based Competitive
Enterprise … has promoted the effort to
roll back dishwasher regulations, filing
a petition that directly prompted the
dishwasher review.
The FreedomWorks regulatory
policy manager, Daniel Savickas, said
the Competitive Enterprise Institute
Join the Krewe of CEI as the
Mardi Gras season gets rolling
Ace Hotel New Orleans, February 6–9, 2020
To register or request more information, visit
www.cei.org/summit or email events@cei.org.
C E I . O R G 15
had flagged the
dishwasher issue
and the groups
had decided to
combine their efforts.
“We try and roll
back burdensome
regulations and
make life easier
for consumers and
manufacturers,” he
said.
“The dishwasher in my apartment
is absolute garbage, and I have to run
cycles multiple times,” Mr. Savickas said.
–September 17
The New York Times
Senior Fellow Marc Scribner
advocates for lifting or eliminating
federal limits on the airport
passenger facility charge.
The free market think tank
Competitive Enterprise Institute
published a new report today making
the case that Congress should eliminate
the passenger facility charge cap
for airports. It argues that the fee
offers advantages over other funding
alternatives including fairness, revenue
reliability and promotion of competition.
–August 14
Politico

1310 L Street NW, 7th Floor
Washington, DC 20005
...END NOTES
City Workers Trash City Streets
Illegal dumping is a problem cities often have to deal with.
Philadelphia has dedicated funding in its budget to address
it. Yet it all may be for naught when the people doing the
dumping are the city’s own employees. In September,
Philadelphia sanitation workers were caught on surveillance
video illegally dumping demolition waste on a Philadelphia
street. As reported by Philadelphia’s ABC 6, the video shows
“a big plume of dust clouds the area as they dump a pile of
drywall, mortar, and other demolition materials. The men
then quickly jump back into the truck and drive off.” The
man who called in an anonymous tip about the incident
said, “I rewound it over and over to make sure it was what
I was seeing. And yeah, it was clear it was our sanitation
department.”
Keep Calm and Ignore the Alarm
Also in September, residents of the Hawaiian island of Oahu,
which includes Honolulu, were startled by emergency sirens that
were set off by accident—across the entire island. The Honolulu
Police Department took responsibility for the false alarm, which
was set off during a training exercise for dispatchers. The
problem? It was done with live equipment, rather than training
software. “I just want to apologize the public,” said Honolulu
Police Chief Susan Ballard. “We realize we need to make sure
that we’re training on training equipment only.” Residents aired
their frustration on Facebook. “How are people supposed to
take these false alarms seriously when they all end up being
false alarms?” wrote resident Chad Husted. “This is becoming a
cry wolf scenario.” Patrick Green posted, “This time it was extra
nerve-wracking because you’re thinking to yourself, ‘It can’t be
a false alarm again.’”
16 CEI.ORG
Nonprofit Org.
U.S. Postage
PAID
Permit 425
Southern MD
City’s Anti-Anti-Gouging Crusade
The City of Sparks, Nevada, has been fighting a bar owner for
charging low prices. Johnny Eastwick, owner of the Victorian
Saloon, said that city officials have been trying to get him to
raise drink prices during events promoted by the neighboring
Nugget Casino Resort. That would force him to double, and in
some cases triple his prices, which he says would put him out
of business. Then in August, the city sent workers to haul away
the Victorian Saloon’s patio furniture. Why? Because it could.
Eastwick needs to lease sidewalk space from the city to have
outside seating. Still, he’s standing firm. “The thing is, for 20 years
people have been coming to us because we have better prices,”
Eastwick told the Reno Gazette Journal. “If all the sudden we
double our prices, we lose all our customers. I’d rather lose my
patio than lose our customers. All [the city] needs to do to stop
this is rent us our patio and leave us alone.”
Declassify It and They Will Come
Cities and towns hoping to attract business usually pin their
hopes on getting a major employer to set up shop. But what
about a recently declassified government facility? That was the
situation recently in the tiny Nevada desert towns of Rachel
and Hiko, located near Area 51, the renowned military base
at the center of many a UFO conspiracy theory. In September,
a large gathering of UFO enthusiasts set up camp next to
Rachel’s only business, the UFO-themed Little A’Le’Inn motel
and restaurant. Shrouded in mystery for years, Area 51 was
long rumored to house the wreckage of a flying saucer that
crashed near Roswell, New Mexico, and the bodies of its crew.
The government only acknowledged the site’s existence in 2013.
“This whole thing has been a shock to this little community,” said
Linda Looney, manager of a gift shop called Alien Research
Center. “It’s going to be really cool. I’m excited.”
COMPETITIVE ENTERPRISE INSTITUTE