Blockchain technology has upended traditional finance. To outsiders, take your pick of cryptocurrency and it appears you are doing nothing more than pulling the handle on a slot machine. The payouts are just as large too if you pick the right token and pay as little as possible. This is the reason why a couple of provisions in the Infrastructure Spending Bill were so fraught with danger to this new industry. The first was aprovision requiring crypto-miners, developers, wallet companies and others who deal with tokens to register and send 1099’s to those who bought, used or sold them. This directly impacts the anonymity of using currency rather than say, a check, to purchase goods or services. The second is more egregious and when combined with the first provision spells out why and how Uncle Sam will end the panoply of tokens and possibly institute a virtual dollar as the preferred cryptocurrency in the US.

The recent infrastructure bill that passed the House this week contained a provision requiring “Brokers” in cryptocurrency to be knowledgeable about their customers.They would be required to obtain their customer’s name, address, phone numbers and Social Security numbers. Resulting transactions that the broker performs would result in a 1099 being sent to the account owner at the end of the year, much like a stock. Owners of cypto had to know this was coming after much debate during the Trump administration. Recently,SEC chair Gary Gensler stipulated that nearly all cryptocurrencies are a security and should subject to reporting of initial purchase date and price, quantities and sale date and price.The market has had time to digest this and, well frankly, expected it given the large bull market that has hit tokens. If there is income, you can be sure that Uncle Sam wants his cut. There was a second provision waiting in the wings that makes things far worse.

A recently added piece of text now makes electronic assets including NFTs and cryptocurrency subject to 26 USC Section 6050i. This section of the Internal Revenue Code governs cash transactions of over $10,000. This means that that should an asset or collection of assets used in a transaction be valued at over $10,000, it must be treated as cash. If a person in the transaction were to conceal or be unable to provide the buyer/seller information associated with this transaction, they are guilty of a felony punishable up to 5 years per offense. Not only that, no person may assist in an effort to make a transaction fall under the $10,000 limit, have omission or misstatement about the assets or block a person in the transaction from filing with the IRS. If they do, that’s the same 5-year felony. If this sounds like a provision to prevent money laundering, it is!

Once President Biden signs the bill, the Treasury will have until 2024 to implement these rules. Typically, this is a very public process where a Notice of Potential Rulemaking (NOPR) is posted. Industry stakeholders and the general public are allowed to provide comment on the rules, regulators are supposed to take them under advisement and then provide the actual rule. Two years is a very accelerated timeline for many administrative regulations. Treasury Secretary Janet Yellen has already stated that she wants to tax unrealized gains. Now that NFTs and cryptocurrency are now deemed “cash”, it would be a very small stretch to implement a provision that any increase in a virtual asset’s value is not an unrealized gain but rather akin to a dividend or interest payment. Dividends and interest are subject to taxation even when the initial asset is never sold. It is my belief that Secretary Yellen will deem any increase in value in any token or cryptocoin as such and taxable at year end.

Should the US Treasury or Federal Reserve create the virtual dollar, how do they get everyone to convert to it? There are several stable coins already in existence and how does one go about seizing them without the lengthy battle over private property. Also, the developers of the winning stable coin get a nice payout from Uncle Sam. Enter President Biden’s nominee for Comptroller of the Currency Saule Omerova. Ms. Omerova has proposed a shadow unelected Congress called the National Investment Authority as well as a virtual currency system. In a recent white paper titled “The People’s Ledger: How to Democratize Money and Finance the Economy”, she details that the Fed should hold the actual bank accounts of people while community banks are merely pass-through organizations accepting physical deposits. She also advocated for the virtual dollar as a means of commerce and controlling the population’s spending habits.

“The core idea here is simply to allow all U.S. citizens and lawful residents, local governments, nonbanking firms and nonbusiness entities to open transactional accounts directly with the Federal Reserve, thus bypassing private depository institutions. In this sense, it is a variation on the familiar FedAccounts – or FedCoin or “digital dollar wallets” etc. – theme.”The People’s Ledger

Should a virtual dollar be created with bank accounts at the Federal Reserve, Treasury Secretary Yellen may simply write a letter stating that virtual dollars are exempt from 6050i as the Fed already has the person’s information on file. This is explicitly allowed in the statute. This gives the virtual dollar an enormous market advantage while reducing other electronic assets to transactions conducted entirely outside the United States. These transactions are exempted from 6050i per statute. No vote from Congress or action by the President required. The American Public will have been bypassed and robbed at the same time.

If Ms. Omerova is confirmed, and it thankfully doesn’t look good, she could certainly create the provisions and developer documents necessary to create the virtual dollar. The Comptroller of the Currency was actually created to supervise banks and implement a uniform bank note. It is up in the air if the Comptroller could unilaterally require the Fed to create bank accounts for individuals or implement other ideas from “People’s Ledger”. Most of this would have to be passed in Congress which is looking wearily at the 2022 midterms. Even if Ms. Omerova’s nomination is withdrawn or voted down, Secretary Yellen certainly now has what she needs to tax all cryptocurrency accounts on an annual basis as they are now fungible “cash”. Much like the Sales and Local Taxes (SALT) cap, once these revenue generators are created, they are very difficult to get rid of.

So how can the crypto community fix this or prevent it from coming to fruition? There are two alternatives left. One is to flood the NOPR process with comments and possibly cause enough rancor to slow the rule implementation. Second, and more importantly, help elect Libertarian Party members to Congress. Please hear me out on this.

The Republican Party is rather clueless when it comes to crypto and has a similar outlook on the industry. They may tax it less but they still want to tax it. Only the Libertarian Party understands that your cryptocurrency, and certainly your NFTs, have value and you are entitled to keep it! It’s the value the community or market places on it and it shouldn’t be devalued or cancelled by our Federal Government. They had no part in creating it.

Think of it this way, if I trade a rare football card for some rare baseball cards, there’s no taxable event and no records. Trading these assets should be no different. The Democratic Party has now instituted a system where I must pay taxes both on the gain in value of the card from when I bought it AND when I exchange it for something else. I must now also tell the government what other cards I own tell the government who I traded with. If I don’t, I face 5 years in prison. Libertarian Party candidates run on issues like these and they need this community’s help to get elected. Republicans will assuredly do nothing or make it even worse.

Enjoy the crypto-boom while it lasts. Help where and when you can. If things don’t change, please don’t be stuck in 2024 holding crypto-coins that will be subject to heavy reporting requirements the next time you make a trade or purchase.

The post Making Blockchain Infrastructure appeared first on Larry Sharpe, Libertarian.

USA Today columnist Hemal Jhaveri began the call with an article calling for the ban because ORU follows “an archaic religion” and that “the university’s deeply bigoted anti-LGBTQ+ policies can’t and shouldn’t be ignored.” Jhaveri then calls for any university with such language to be banned from all NCAA activities. Jhaveri didn’t call out #1 seeded Baylor for having similar language or Creighton, Gonzaga, or Loyola Chicago for being Catholic institutions which do not support LGBTQ+ policies either. Just ORU so why? I’ll circle back to it.

ORU’s student handbooks specifically ban homosexual behavior in 2 locations. It also bans alcohol, drugs, gambling, dancing, skateboards, roller skates and water balloons. ORU never had a football team because Dr. Roberts found it to bring unsavory elements on campus. As a former Tulsan and having known people who were in Oral Roberts’ inner circle, this may be shocking to you but it isn’t a surprise to any of us. Dr. Roberts’ brand of Christianity was very fundamentalist. His ministry carried over into much of Tulsa’s political and social life during the 1970’s and 1980’s. I can tell you it had an impact on economic development. Tulsa lost many oil and gas company headquarters to Houston and Dallas during this time and they cited a lack of ability to attract talent as one of the reasons to leave. When the first ministry scandal occurred in the 1980’s, it broke the spell of the ministry’s hold on the city. The city council was reformed, economic development wasn’t subject to a moral veto and Tulsan’s began to plan for a future without Dr. Roberts. The Roberts family’s continued malfeasance with ORU funds in the subsequent years hasn’t been much of a surprise to many Tulsans.

So, why pick on ORU and make them the example? For one, their conservative philosophy and prior scandals make them an easy target. Second, they are small. The school’s enrollment has always been between 3,000 and 6,000 students at any particular time. This means the institution carries outsized influence within the NCAA.The NCAA rules are promulgated with every member having equal weight. The Ohio State with an enrollment of nearly 70,000 has just as much say on the rules of the tournament as ORU with 4,100. While the larger members certainly decide what rules are voted on, the votes themselves require many of the smaller schools to agree with them since they can, and do, out vote them. The third is likely more likely. It’s the attention the school gets from upset wins in the tournament. People learn the school exists and may see a university founded by a Native American and actively pursues students from impoverished communities as being diverse and tolerant. The media wants to dispel that belief as quickly as possible and serve as a reminder to other people of color that the “new” tolerance is the only tolerance for them.

What is a surprise is to what lengths the “new” tolerance is intolerant of any policy or institution that doesn’t kowtow to it. For example, a recent bill passed the House called the Equality Act. The Bill’s synopsis:

This bill prohibits discrimination based on sex, sexual orientation, and gender identity in areas including public accommodations and facilities, education, federal funding, employment, housing, credit, and the jury system. Specifically, the bill defines and includes sex, sexual orientation, and gender identity among the prohibited categories of discrimination or segregation.

The bill expands the definition of public accommodations to include places or establishments that provide (1) exhibitions, recreation, exercise, amusement, gatherings, or displays; (2) goods, services, or programs; and (3) transportation services.

The bill allows the Department of Justice to intervene in equal protection actions in federal court on account of sexual orientation or gender identity.

The bill prohibits an individual from being denied access to a shared facility, including a restroom, a locker room, and a dressing room, that is in accordance with the individual’s gender identity.

While this all sounds well and good, there is no exclusion for religious facilities or institutions. By holding assemblies and gatherings, every church and religious facility will be determined to be a public accommodation and subject to the bill’s ban on discrimination. Remember the LGBTQ+ event last year where Elizabeth Warren and a number of other Democratic presidential candidates promised to punish churches for not being on the LGBTQ+ bandwagon? Well, here’s the effort to do so under the guise of making it so the trans community can use a bathroom.

This is a bona-fide case to eliminate the First Amendment prohibition on the establishment of a government religion. Religion being that all churches in the United States answer to the Government, not a higher power. Churches, synagogues, mosques, and other religious buildings will be required to follow government rules and implement the government’s priorities. It reminds me of Cromwell’s confiscation of churches in the 1649 or the dissolution of churches during the French Revolution.Cromwell may be more apt as religious activity was allowed as long as it was the Government’s version (Protestant) and ministers were government approved. This was specifically what our Founders sought to avoid when they banned a government church.

If you have never called your senator or written them a letter, now is the time.The Equality Act is one of the bills being cited as a reason to remove the filibuster and make the Senate operate just like the House. The Equality Act will actually take us to the brink rather than promote harmony. What observant Catholic wants any President to dictate who can receive communion? Why should an Orthodox synagogue be forced to house those who are not Jewish? Why should a conservative masque be forced to have co-ed services? Religious bodies have always been held in separate regard in our society as being able to deem who is fit or unfit to use their facilities. The closely held beliefs of deeply religious people should be allowed in church, where they are most dear to them. It is wrong and cruel to force beliefs on others and call it “Equality.” There is a competing bill called the Fairness For All Act and is supported by many church leaders of all different faiths. I would encourage you all to contact your senator and have them support this legislation rather than an “Equality” bill that is creates more inequality than ever before.

The post The New Tolerance appeared first on Larry Sharpe, Libertarian.

The mess in ERCOT is best described as a five-failure event with a single cause: a massive polar vortex creating temperatures far below freezing across the grid.  What are the five failures?

Failure 1: Immobility of Power

Texas started to segregate itself from the larger electrical grids in 1935 when the Congress passed the National Power Act. This act stated that transmission of power over state lines was to be regulated by the Federal government and created the Federal Power Board. The FPB is the predecessor agency of the Federal Energy Regulatory Commission (FERC) that provides regulatory oversight of pipelines, electrical lines and other energy systems today. A total of 7 Texas electric utilities did not want Federal oversight and agreed to not send power over state lines, but did set up a system of interconnects between themselves. This system of interconnects is what morphed into the Independent System Operator, Electric Reliability Council of Texas (ERCOT). ERCOT’s mission is to balance the smaller regional grids for electrical generation and electrical demand.

Since ERCOT was dealing with legacy systems and a method of operation that no power be sent out of the state, there are only four interconnect sites. There are two connections with the Eastern Grid, one with Mexico and another with the Western Grid. These sites simply do not have enough capacity to carry the majority of the load for large areas of Texas. It is also difficult to transmit energy across the grids as each electrical grid operates on a different alternating current wavelength. Variable Frequency Transformers (VFTs) must be used to isolate and sync the wavelengths. The transformers are expensive and cause large energy losses through resistance and heat. So, the electrical grid of Texas is best thought of as an island with a couple of boats. Texans and Texas operators also have preferred it historically.

When massive interruptions like the 2021 polar vortex hit, they cannot rely on others for large supplies.

Failure 2: Natural Gas Freeze-Offs

ERCOT is now more reliant on large abundant supplies of natural gas to supply its grid with power. Most of these plants are supplied from large intrastate and interstate natural gas transmission lines crossing the state, as well as supplies from its many oil fields and gas fields. During prior cold weather events, ERCOT was more reliant on coal fired power plants. While Texas has a very pro-fossil fuels stance, the population in Texas has grown substantially today. Thanks to shale fracturing, the supply of natural gas has grown to feed the system but these wells are relatively new. What has not increased is the natural gas storage capacity to feed these new homes and power plants.

When natural gas is produced at the production oil or gas well, it is processed through a plant to remove impurities like H2S and separate out heavier hydrocarbons like propane (C3H8) and butane (C4H10). The heavier hydrocarbons are then processed or shipped off to be processed. The remaining mixture of methane (CH4) and a small amount of ethane (C2H6) is then compressed and put into a large interstate transmission pipeline that is connected to other pipelines and eventually delivered to a user to be used to make plastics, burned for heat or stored by a utility for use during the winter. This storage is typically an underground formation that is geologically stable and capable of storing large amounts of natural gas.

When natural gas comes out of storage, it is saturated with water as these underground formations do get some amount of groundwater in them. The wellhead gas must be processed just like when it was produced from the production well but its just less intensive as there’s usually no propane or butane to remove. In both cases, production and storage, the gas is water saturated and must go through a choke valve to move to the processing plant. This is where the majority of freezing occurs. When gas or liquids move through a small orifice or valve, the venturi effect cools it. If the external temperature is low enough, the gas mixture going through the valve will begin to form liquid droplets and eventually ice will form. The ice clogs up the orifice making it smaller and smaller until the well ceases to flow.

Oil and gas operating areas in the northern part of the county take this into account when they build their wellheads. They purchase heat trace electrical wires to provide heat to the choke valve and small diameter gathering lines to keep them flowing. Some operators also put their wellheads in temporary shelters for the winter to eliminate wind shear from robbing the heat from the valve. If the gas isn’t flowing, the operator isn’t being paid. In much of Texas, it is rare that any operator would put heat trace on a valve as the ambient temperature rarely gets cold enough for the well to be frozen. Unfortunately, this polar vortex impacted most production and storage wells in the state and the natural gas system was in short supply of physical gas to supply to anyone. Supplies had to be brought in from other states to try and serve existing customers on the spot market.

Local Distribution Companies (LDCs) are responsible for delivering natural gas to homes and small commercial businesses. They are responsible for procuring natural gas storage so that supplies of natural gas are available to meet winter demand. Some LDCs own and operate their own storage while others contract it with other large midstream companies. Surveying the EIA information for the past 5 years, Texas has not increased its natural gas storage to accommodate additional demand during winter.

Market Aside:

Natural gas is sold on a firm or interruptible basis and this is important for the rest of the paper. Firm means that a buyer wants a specific volume of gas delivered at a specific meter on a specific day and time. Interruptible service means that the buyer wants a specific volume of gas delivered at a specific meter but it can be delivered at the leisure of the shipper, the pipeline company. Both types of sales have their use. If power is expensive, a natural gas turbine electric generator will want gas and want it delivered specifically. They need it to make money right now. If a public electric or gas utility is purchasing the gas for storage, they may not care what time the gas is delivered since they are just going to put it away for later use. In some instances, they may shift the delivery to another gas storage field to accommodate their own operations. ERCOT does not have rules for natural gas fired generation suppliers to have firm or interruptible service for natural gas, only that there are interconnect agreements (i.e. Suppliers) that can provide the gas to be burned.

Failure 3: Renewables Don’t Operate During Freezing or Snow Events

Now it is time to blame those “evil” renewables. ERCOT has roughly 20% of its power supplied by renewables. The vast majority of this supply is from wind turbines but Texas does have some significant solar and hydroelectric power supply as well. Both solar cells and wind turbines do not operate during freezing and snow events and that is the crux of the reliability issue.

Covering solar cells first, during most ice and snow storms, there is little to no sunlight available to power the solar cells. It is also a little-known fact that solar cells are actually more efficient during colder temperature events. The issue is winter output is lower because the sun is at a less than optimal angle for the panel and there’s less sunlight available to produce energy. The polar vortex event also started at night with snow and ice so there was no solar generation during the storm. This was known and forecasted.

Wind turbines are a bit different. Wind farms do operate during some rain storms but not all the time. This is due to the fact that as the wind moves across the surface of the blade, the temperature drops just like it drops in a choke valve. Wind blades as well as airplane wings experience a venturi-like effect as air moves around them. Just like that choke valve, if there is moisture, ice can form on wind blade and begin to add weigh down the blade. This additional weight will do two things. It can cause internal stress to the wing and cause it to deform. It will also add additional sheer forces on the gearbox which turns the turbine. This gearbox must be able to handle the additional stress from the weight of the ice on the blade. As the blade continues to turn, more and more ice develops on the blade. Hopefully, a sensor in the gearbox will trip and cause the wind blades to stop spinning. If it doesn’t, the blade will eventually break and fly apart, possibly injuring people or causing property damage.

Wind turbines in Texas are not rated or constructed for cold weather conditions. Basically, it is cheaper to not operate them during freezing conditions which does happen in across the state every year. Operators then restart the wind farm after the cold weather has passed one or two days later. What made this storm different is that there were wind farms that chose to operate as the storm came in. This is evidenced by one photo where ice had formed on much of the leading edge of the blades in a perpendicular manner to the wind flow. This would indicate the blade was operating with that additional weight. The blades, at least on this particular turbine, will need to be inspected and possibly replaced. Some wind turbines are operating now that the storm has passed but it is slow, and is therefore slowing the full recovery of the electrical supply for ERCOT.

Failure 4: Power Generators and Electrical Equipment in Texas Isn’t Often Rated for Deep Cold Conditions

What also made this storm different is that prolonged cold conditions existed after the power outage. Most storms in Texas last for a day or two around freezing and then followed by warmer weather. This storm came with below freezing temperatures that were forecasted for 6 to 7 days. In events like this, electrical equipment must be insulated and rated to operate in those conditions. Most gas equipment such as compressors and turbines, are not sheltered from the elements in a building. They may have a roof to prevent the sun from heating surfaces during the summer but cold temperatures are an afterthought or even viewed as advantageous as compressors operate more efficiently in colder weather. There is a limit to this since more viscous (i.e. cold) compressor oil or gas turbine oil will cause the machine to shut down unexpectedly.

All of this insulation costs money and housing gas equipment in buildings ads a lot of expense as there are safety features that become necessary when this equipment operates in a building. It also makes the environment uncomfortable for workers during hot Texas summers. For wind turbines that are not damaged, the turbine housing and other components are also not rated or insulated to operate in colder conditions. Typically, these components would have electric space heaters nearby to keep them warm so they could function properly. These space heaters cost extra and have to be purchased with the unit. Since most operators don’t purchase them, wind generation must wait for temperatures above freezing to try and start back up again.

There is also the issue of electrical switchgear and other electrical components of the operating grid. Most of this equipment does not have the space heaters inside to keep the components running properly. Water may condense or even freeze inside these components and cause electrical damage since high voltage and water don’t mix. This adds to the time delays and expense of restarting the grid since some gear may be rendered inoperable by ice and may have to be dried out before it can be restarted.

Downtown Building Aside:

There are some quite famous complaints made about large empty high rise office buildings in the downtowns of Texas having their lights on and having heat. The reason these buildings have light and heat is because it is common for these buildings to have back-up generators powered by natural gas or diesel. The local electric providers are not “stealing” power to keep these buildings on. There are very clear guidelines for critical electric and gas services in Texas. Hospitals and government buildings are on this list, not high-rise office buildings. Hospitals typically have these resources as well but that’s a function of their business managers.

Failure 5: Not Appropriately Planning for the Increased Population and Demand in Natural Gas

The backbone the natural gas supply has not been upgraded to keep up with demand from a growing population. Texas has led the nation on net inflows of people from other states and the majority of this growth is in the top 20 population counties and rural counties have suffered a population drain. So, the system is faced with high demand periods in concentrated areas while much of the renewable energy and natural gas is brought in from rural areas. Much of the new natural gas production in the state has been constrained as there was not enough pipeline capacity to take it out of the Permian Basin where it is produced and deliver it to large population centers in the east.

Texas gas utilities have not increased their natural gas storage to accommodate the increase in population. This is in part because it was cheaper to simply buy additional supply from the large diameter pipelines crossing the state. The massive market imbalances of the past few years lulled LDC’s into a false premise that additional supplies would always be available on the larger transmission pipelines to meet periods of high demand. They also did not account for their own storage field wells would freeze off and prevent gas from getting to market when it was needed most.

So Why is NY ISO Next?

NYISO, the New York Independent System Operator, has some of the same big issues that Texas has. Right now, New York imports roughly 30% of its electricity from various sources. It is also becoming natural gas constrained as Gov. Cuomo continues to fight any expansion of natural gas resources or supplies from coming into the state. Should a major demand event occur in New York after the closure of Indian Point, its possible the system could go down. I will cover how New York fairs against ERCOT’s 5 failures.

Failure 1: Immobility of Power

NYISO does not have issues here. NYISO is fully integrated into the Eastern power grid and has several connection points between PJM in Pennsylvania, NEISO in Vermont and Connecticut as well as importation interconnects with Canada in Buffalo, Cedars and Chateauguay. The issue is that during peak demand times, power is crossing these interconnects at over $100 MWh. The grid is being balanced but at a high cost relative to what is costs to generate power inside of New York State.

The shutdown of Indian Point is a large risk event as there is no generation coming online to replace it. This is a 1,040 megawatt/hour facility that is responsible for a quarter of the nuclear generation in New York or 1/16^th of all electric power generated in the state. This leaves a large gap of dispatchable (ie. On-demand) power that will need to be replaced by other sources from Canada or the US. NYISO has not installed additional interconnect capacity to accommodate for this lost generation. This is also significant as the majority of grid power supplied to New England is routed through NYISO first. If the New England grid becomes unstable, power at Indian Point is now unavailable to be dispatched to areas to shore up supply on the NYISO grid. In other words, New England’s instability could cascade into New York and take down its grid as well.

Failure 2: Natural Gas Freeze Offs

New York does have some significant underground natural gas storage facilities (229,238 million cu ft) but it has become increasingly reliant on pipeline supplies and some Liquified Natural Gas storage to meet additional demand. This additional demand arose when New York replaced its coal fired power plants with natural gas. New York hasn’t added additional underground storage capacity since 2009. This means during a period of high demand; it is reliant on suppliers in Pennsylvania having wells that don’t freeze off. Fortunately, the wells in closest to New York are “dry” gas meaning there are few hydrocarbons other than methane. This reduces the likelihood of freeze offs but they can and will do so if demand is high enough and temperatures are near or below freezing. This means that additional pipeline supplies will be at risk of not being able to meet demand IF a large system were to hit New York.

Failure 3: Renewables Don’t Operate During Cold Weather

Renewables in New York are rated for cold weather however, they may not be operating during high demand. I have not found significant indications that the blades of wind farms in New York are heat traced. Heat tracing is built into the fiberglass blades would allow some operation during snow and freezing events. This is common in Scandinavia but is not anywhere else, including the far northern parts of Scotland which get very cold. If a storm were to hit, those windfarms would not operate as the blades would be damaged due to a build up of ice on the blade. Solar panels also would not produce electricity as there would be little or no sunlight available. New York does have significant hydroelectric power resources and these will operate during times of in climate weather.

Failure 4: Electrical Generation and Equipment is Not Rated For Cold Weather Conditions

This is not an issue for NYISO. Generators and electrical equipment are rated for cold weather.

Failure 5: Not Planning for Increased Demand of Natural Gas and Electricity

Governor Cuomo has thwarted increases in the supply of natural gas to New York during his terms as governor. He has banned hydraulic fracturing and additional pipeline capacity projects. He then complained that natural gas suppliers cannot serve the needs of New Yorkers. The pipelines feeding New York and New England are at capacity and cannot serve additional customers. FERC has stated that without additional natural gas capacity, New England will face rolling winter time blackouts as early as 2024 due to the increases in population on its grid and service territory. This is a failure to plan at the very top level and Governor Cuomo is largely to blame.

What Can New York Operators and NYISO Do Now to Prevent this Once Indian Point Closes in April?

There are actions that can be taken now to begin the process to ensure the NYISO grid has dispatchable power for a storm event. However, they are not easy solutions to deploy due to regulations and environmental permitting issues.

Upgrade Existing Interconnections and Construct New Ones

New York currently imports roughly 20 to 30% of its energy from surrounding grids. There is a need for additional capacity to meet peak demand if a major weather event occurred as renewable energy would likely be curtailed or unavailable. The Champain Hudson Power Express was one such project. It would deliver hydro-electric and wind energy to New York City but was fraught with many fights over labor and construction of voltage lines along the route. A better option would be to expand existing interconnects or build new ones near those existing ones. There are currently 2 other projects, one in Buffalo and one in the Eastern Hudson Valley, that NYISO would like to perform. The Governor’s office should support these projects.

Increase Natural Gas Storage and Delivery Capacity to New York

New York has not increased the delivery and storage of natural gas in years. This has been a very top-down rejection of the fuel by the Governor’s office in favor of a 100% renewable strategy with battery backup. Today, the world’s largest battery center is located in Otay Mesa, CA. It is at 250 MW rating for 1 hour. This is not feasible for implementation in the near term. Also, as more of the vehicle market shifts to electric vehicles, the grid will be required to deliver more energy over larger periods of time. This solution is not viable as 250 MW for one hour is a drop in the bucket for New York’s winter and summer demands.

New York’s best option in the medium and long germ is to increase the delivery capacity and storage capacity of natural gas. There are two natural gas pipeline projects that are being halted by the Cuomo administration. The administration has also been hostile to increasing natural gas storage outside of the 20% onsite storage mandate for energy producers. This is a bad policy as this onsite storage is either LNG or diesel fuel. The plants that burn diesel for additional energy actually increase New York’s carbon footprint during the peak cold weather demand. The governor’s office should support increasing natural gas supplies and reduce New York’s carbon footprint.

Welcome the New Nuclear

New nuclear designs like thorium salt reactors offer new promise for clean energy without some of the large faults of water reactor designs. While they are not fully tested, New York should be open to these new forms of energy when they become commercially available. They are likely to be safer and cheaper as well. Currently, New York’s laws do not recognize nuclear as a viable “renewable” or “no carbon emission” option. Given that energy demand is still growing and if electrification of vehicles does occur, New York can’t afford to turn its back on this particular energy option.

In conclusion, I hope that the next New York Governor will consider energy stabilization and supplies to be of high importance. The ERCOT outage has shown that a 100% renewable grid is NOT a viable solution for the modern age as renewables are unavailable during ice or snow weather events. Commercial batteries are not ready to supply a large city for one or two days with electrical power, much less an entire state. Critical infrastructure like the electricity grid needs to have an “all available” option to meet times of peak demand, not the icy frozen choices based on one man’s whims.

The post Why Does ERCOT’s Mess in Texas Mean That New York is Next? appeared first on Larry Sharpe, Libertarian.

Small Business Ownership

Larry said that there is a systemic lack of ownership that’s noticeable in lower-income, Black and Brown communities and among immigrants. Business-minded people come to the United States with a high level of enthusiasm, and visions of a better life than the one they left. People everywhere imagine owning their homes and starting businesses. Yet, our system of governance puts major obstacles in the way of their success.

Here in New York, they are faced with a wall of regulations and occupational licenses for everything you can imagine, from braiding hair at a whopping $20,000 required spend on education and other prerequisites, to its crackdown on unlicensed dog-walkers. Seriously?

How is a person expected to respond to such entrepreneurial spirit-killing over-regulation? Unsurprisingly, Larry says that with limited choices, these impoverished people begin looking at high-risk activities and crime. Those people who turn to crime will prey on their neighbors, where these crimes often go unreported, particularly in immigrant communities where undocumented people fear deportation, or where previously incarcerated individuals don’t want to increase their own risk of recidivism. According to Larry, this endless cycle continues, increasing incentives for human trafficking, the illegal drug trade, protection rackets, and sweatshops.

Larry believes that one approach to reducing poverty in these communities is by creating incentives for business ownership. For example, licensing requirements can be replaced with non-compulsory credentials. A hair-braider can just braid hair if they want to, without a license, or they may take the courses necessary to qualify for credentials in which some people may find value. This is especially true for low-risk jobs that do not involve dangerous activities. In this regard, a hair braider or dog-walker may get to work right away to earn an honest living, and they may also choose to get credentialed after they have the necessary funds in hand. As a result, consumers have more choices and can make rational decisions. They may choose the lower-priced, non-credentialed dog-walker, or they may choose to pay more to the dog walker who took a 12-hour class on animal care.

Home Ownership, and Poverty

According to Larry, wealthy, and often middle-class people are able to give their children an edge with the savings they accumulate through homeownership, but impoverished people have no corresponding equity. This leaves their children in a cycle of dependence and poverty, where money spent is money lost, as is the case with rent,  and a community that encourages the use of government programs that are funded by taxpayers.

Larry wants to see these communities thrive. People from every background are eager for homeownership, business ownership, and self-ownership. Yet because of barriers to ownership, people stay on welfare and stay poor.

Larry believes that public housing should have a path to ownership, too. Renting housing to low-income families is a bandaid, even when rental costs are low. Instead, Larry believes that we should give people the chance to purchase their public housing units. Instead of throwing away money on rent every month, people can invest in their property. In addition, when people own their property, they take better care of it. This is a win for society, and for the new homeowner. London already has a similar model for homeownership, where low-income families can have shared ownership in property, without investing the full market rate.

Fixing Families and Prison Reform

Larry Sharpe applies this concept to the idea of taking ownership of your life. This is most apparent in Brown and Black populations, where men are incarcerated at a considerably high rate. These people–predominantly men get convicted for nonviolent crimes like drug-related offenses, resulting in fatherless homes. The other people in these populations who actually have productive lives are incentivized to work for the government, where their lives aren’t self-owned, either.

Larry believes that we can do a lot of good by eliminating the fear among potential employers when it comes to hiring less-skilled, minority, and immigrant employees. Presently, employers may be targeted by the government if they fail at complying with any number of regulations, and so they hire the “safer” employees.

Want to know more? Watch the video, below:

The post How to Decrease Poverty in America appeared first on Larry Sharpe, Libertarian.

The Second Amendment protects the First Amendment. It’s always a good time to point that out.

By Dan Smith

I personally don’t like guns. I’ve had a few run-ins with angry people who’ve used a gun to make a point and criminals who’ve used one to coerce others to their will. No one got hurt, but it was scary each time.

I wish no one had a gun. But wishing doesn’t make it so. That’s not operating in the real world.

Guns exist, and we have to rationally deal with that fact. Notably, the government has guns—lots and lots of them.

In the wake of shooting tragedies, pundits and politicians often tell us that it’s not the time to discuss rights. People are told it’s a time to grieve . . . for thoughts and prayers.  That seems reasonable.

However, lately, many have rejected the thoughts and prayers. They are calling on people instead to pressure our representatives to address the violence. On those occasions when they get specific about how that’s to be done, it typically involves making it harder to get a firearm and taking guns away from people who’ve done nothing wrong.

And the speed with which pundits and legislators move to promote laws which would necessarily infringe on your right bear arms is astounding. Florida was voting on legislation within days of the Parkland shooting.  

The legislation to take guns is already written, awaiting the right moment to be introduced. And that moment is when emotions ride high from a tragedy—praying on people’s understandable shock, anger and grief.

But Due Process demands a legislative body rationally deliberate the merits of legislation—including its legality. And almost all gun legislation fails that test in several ways.  The Second Amendment exists and it’s quite clear—the right of the people to keep and bear arms shall not be infringed.  The Fourth Amendment protects your right to privacy which mandatory background checks violate. The Fifth Amendment protects against self-incrimination and many gun registry laws violate this right.  And like all other parts of The Constitution, these protections apply to all levels of government—including state and local. These are laws which our representatives have sworn an oath to defend.

The founders of our country had seen that freedom was the exception in history. Kings, priests or other autocrats ruled absolutely over their subjects. Whenever a ruler’s power was challenged, they would invariably take away more of their subjects’ rights. The founders saw that the ultimate check on such power was a free people who could defend themselves to preserve those unalienable rights.

Even after most of the World moved away from the rule of monarchs and priests, some 320 million people were killed by their governments during the 20th century—many more subjugated, jailed and starved by governments which stopped recognizing individuals’ rights to life, liberty and pursuing happiness.

Many of those new governments used the tools of fear and jealousy to get their people to surrender their rights of free speech, privacy, Due Process and right to firearms with which to protect themselves.

If you don’t think that Americans could be forced to give up such rights, I suggest you look at our history:  how the Native American population was treated, how people were jailed for speaking against the President following the Sedition Acts of 1798 & 1918, how Japanese Americans were interned in concentration camps during WWII and how African Americans were treated under the Jim Crow Laws, among many other examples.

A primary reason the United States has the greatest right to free speech is because of the population’s ability to defend itself. Just like the different branches of government are checks on one another, the People are the ultimate check on all levels of government—via the ballot box and, if needed, personal defense against government injustice.  Although we’ve allowed our freedoms to slowly erode, we are the oldest republic with the greatest freedom of speech, religion, press and right to assemble because of our right and our ability to defend ourselves.

In other words, the Second Amendment protects the First Amendment. And it’s always the right time to point that out.

The post It’s Always Time to Defend Our Rights appeared first on Larry Sharpe, Libertarian.

Your property can be taken by the police for no reason—and it’s guilty until you prove it innocent.

By: Dan Smith

Civil asset forfeiture is an area of law which permits local, state or federal law enforcement to seize your money or other property (car, home, etc.) if they suspect you might be involved with a crime.

The practice is nicknamed, “Policing for Profit,” by critics who see that law enforcement officials have highly questionable incentives in this arrangement. If police come across money (or other assets) in nearly any situation, they may take it and there’s almost nothing the owner can do about it. Your money or property is presumed guilty whether or not you are charged or convicted of a crime. Some estimates say that’s the case more than 80 percent of the time.

Even more egregious is that the police get to keep the funds if you don’t initiate the complicated and expense legal process to prove your property innocence within 270 days (per New York’s law).

So, the police are clearly incentivized to profit from such situations. They find the money and then they are the judge, jury, executioner and beneficiary of the taken property.

It’s wrong on a great many levels.

Many law enforcement officials feel that civil forfeiture is an important tool for them, particularly in the War on Drugs—where they feel they can cripple narcotics distribution operations by taking perpetrators’ cash.

Such an explanation runs into the highly questionable War on Drugs.

Further, the victims of civil forfeiture tend to be the poor and minorities—as they are more likely to be carrying cash when they encounter police. Individuals from these groups are less likely to initiate negative publicity against the police and have the least ability to defend themselves.  

How Is This Even a Thing?

Besides being unjust from the common-sense viewpoint of ‘innocent until proven guilty,’ one can legitimately ask: ‘How is this practice constitutional?’.

The Due Process Clause of the United States Constitution under the Fifth Amendment states:

“No person shall . . . be deprived of life, liberty, or property, without due process of law.”

So, it certainly sounds unconstitutional.  Unfortunately, this practice has not faced a serious constitutional challenge at the Supreme Court in over 40 years (and that case is quite likely no longer applicable). Prosecutors typically yield before the question can reach federal appeals court and since this is a civil proceeding, your property does not have the right to an attorney, making challenging the law quite costly.  

One might ask:  why is the process of seizing funds a civil procedure, when the crimes themselves with which they’re associated almost always criminal or traffic violations? The answers one gets to that question are highly dissatisfying (e.g., a “thing” cannot commit a crime). But cutting through the legal bull, it seems to be related to the fact that it’s easier for the police to keep your property under this lower standard of proof and our legal system is often about making policing easier on the police.

What’s also ironic is that when people do fight and get their property back, the police often don’t give back or repay what was taken, much less face any punishment. The money for restitution often comes out of general taxpayer funds—so the police really face no penalty for being wrong. Taxpayers’ lose, as usual.

These clear police abuses have been written about more and more in recent years. And some states have rewritten laws to curb some abuses. But much of it is window dressing. President Obama’s DOJ used this tool widely—much more than any past administration, to the point that more money was taken by police in a given year than was taken by burglars committing crimes.  Under some pressure for civil rights groups, Obama announced the practice would be curbed, but then sadly reversed many of those rule changes when he came under pressure from powerful law enforcement groups who profit from the seizing of people’s property.

President Trump has fully backed the practice and his Attorney General, Jeff Sessions,is aggressively using it, and will likely beat Obama’s records. As I write this in March 2018, the DEA is about to hold an auction to sell off $25 million worth of Bitcoin, primarily seized via cases of civil asset forfeiture where no charges were filed.

The bottom line is that the police like it. And in this country, the police get the benefit of the doubt. The police are highly organized and make a lot of money from this practice.  And no public official wants to appear ‘soft on crime.’ So, while the practice is heinous and corrupt and while there have been attempts to reduce the practice, it largely continues.

New York Is An Average Offender of Rights

The Institute for Justice, who regularly defends victims of forfeiture abuse (having won dozens of such cases), rates New York State as an average offender of people’s civil rights in this area, giving us a “C” grade.  Among other factors influencing that grade: New York law enforcement gets to keep 60 percent of the property they seize (the remainder is sent to other agencies), New York’s standard of proof for keeping the funds (“clear and convincing evidence”) in trial is higher than standard civil proceedings, but lower than “beyond a reasonable doubt”—as in criminal proceedings.

However, New York has been particularly opaque about its forfeiture activities. In 2013, a rare disclosure from the NYPD, via being forced to by Freedom of Information filings, showed that they’d seized many tens of millions of dollars from New Yorkers, all with no Due Process. In reality, no one knows how much money has been taken—the NYPD complained to a judge that if they tried to figure out how much, their computer systems would crash.

Statewide information is even harder to come by.

New York has made some strides to investigate and potentially reduce abuses. In 2017, the New York City Council passed a law to demand civil forfeiture data from the NYPD. This led to the NYPD agreeing to new rules limiting seizures in February 2018.  

New York Can Do Much More to Improve

New York State Police and local police, including the NYPD, can do more to track their seizures, to give the public better information about how much the police are seizing and what is happening with the funds.

Ending the failed War on Drugs would eliminate much of the practice.

New York should remove the clearly corrupting incentive of allowing police to keep the property. Police and officials at all levels should turn the property over to the state treasury—the Department of Taxation and Finance, or some other entity unconnected with the seizures or their adjudication. Law enforcement should not be compensated in any way, other than via taxes from their jurisdiction.

Most importantly, New York should require a conviction of criminal activities related to the asset seizure. If a prosecutor can’t make a case or convict the person, why should his or her property be forfeited? It should be returned, with interest.

These changes might be a challenge for the police and the justice system. But “innocent until proven guilty” is a burden which the state must bear. A free society demands it.

The post Civil Asset Forfeiture appeared first on Larry Sharpe, Libertarian.

The post The War On Drugs appeared first on Larry Sharpe, Libertarian.

Embracing the Future of Transactions

By Dan Smith

Most people don’t know much about cryptocurrencies. They know even less about blockchain.

But a lot of people have heard about Bitcoin—it’s that computer money that made some geeks multimillionaires in 2017, but then its price came way back down. And, sadly, to many that proves it was all just a bubble (and must be controlled by our government).

Many hear “cryptocurrency” and that sounds scary to them. They may have heard that Bitcoin bankers went to jail for helping drug dealers to do business on the Silk Road on the “dark web.”

Why so scared of “crypt”-o-currencies? . . . muh-ha-ha-ah

There are grains of truth to the popular stories out there, but much is also quite false. And there are plenty of facts left out of those stories—often the key parts. Much of what the media, the unknowledgeable and those who favor the status quo are pushing is that we must run to our mommies and daddies: politicians and bureaucrats, to protect our fellow man and therefore the economy.

These sketchy criticisms are never clear as to how new technologies will wreck our economy. Perhaps they’re suggesting Arnold Schwarzenegger will rise with the machines to terminate us all. Facts and your freedom don’t matter much to those who push such narratives—they just insist that you be afraid and let the “experts” stop or regulate this thing so it’s “safe.”

No, the Terminator is not coming for you.

The wild price swings are real. Some of it is because there a few new cryptocurrency offerings and bankers which are weak or frauds, as happens in any new industry. But the swings are largely driven by government action. If you look at the recent quick price drops, they coincided exactly with: China’s announcement that they were shutting down certain cryptocurrency activity, then South Korea announced its plans to prohibit cryptocurrency, and then the US Senate’s announcement it would hold hearings on cryptocurrencies. Each of these led to a separate quick, big fall. But then the price bounced back quite a bit when Korea reversed its plans and then again even more when congressional hearings gave us the news that the US has no plans to stop Bitcoin and many existing cryptocurrencies.

Ask yourself: wouldn’t the value of the US dollar tumble if China or South Korea declared they were outlawing it?  

So it’s important to understand WHY governments are looking to prohibit, limit or heavily regulate cryptocurrency activity.

But let’s back up. I apologize, but I feel must give you a bit of explanation about cryptocurrency. I’ll spare you the long explanation and just give you the medium-length explanation (there is no short one). Suffice to say that Bitcoin and other cryptocurrencies are just new forms of money, digital money, that people can use to buy goods and services if they agree to it. And that’s the key—people agree to trade in the currency, just like they do with dollars. No one is forcing anyone to do it.

In a sense, neither dollars nor cryptocurrencies are “backed” by anything—not gold or anything tangible.  Technically, dollars are backed by the United States government: it can force its citizens to give you their assets—homes, cars, food, etc. (as if that’s a good thing, but I digress). Cryptocurrencies have no such “guarantee.” But the US government can also decide to “print” unlimited amounts of dollars for whatever reason it wishes, while that can’t happen with cryptocurrencies. At any time, there is a known quantity out there of each cryptocurrency, no more and no less. The US government has a board of appointed bureaucrats which decide how many dollars to create or destroy, based on their economic views, and also based on their personal and political biases. Sadly, those views have proven to be destructive many times—very destructive.

There’s also this: no one knows exactly how many dollars are out there or where they are—literally no one knows. Bureaucrats guess how many dollars exist. With cryptocurrencies, everyone knows when every transaction happens. That’s what the “blockchain” is. It’s a record of every transaction going back to the beginning of time. And everyone who trades in the currency has that ledger (hence why it’s said to be, “decentralized”).

Blockchain eliminates middlemen but at the same time provides more security. If I trade Bitcoin with you, it’s directly you to me. Everyone knows it, as the transaction is verified and tracked—by everyone. That eliminates the need for a payment processor and commercial bank on each side, as well as a central bank (in the US: the federal reserve system). And it means the transaction could be instantaneous—no waiting a week for a check to clear, or a day or two for a wire transfer. But it’s also anonymous—no one asks your real identity. Everyone can see the transaction, but they don’t know who you or I are, which makes it appealing to those of us who don’t like Big Brother watching (yes, including drug dealers—who also still feel quite comfortable dealing in US cash for 99+% of their transactions). The US government has been working hard for decades trying to remove your privacy from dollar transactions—they want to watch all that you’re doing and the Supreme Court says they can—for the reason that you chose to put your money in the bank and can expect no privacy. With cryptocurrency to you can expect and you get privacy from Big Brother’s eye.

The Supreme Court says that putting money in the bank means no privacy for you.

Best of all, blockchain can be used for much more than money. It could be used for shares of stock, other securities, intellectual property, real estate titles, contracts and much more. As happens too often, at any point in time multiple people say they own the same share of stock, bond or dollar because of these delays. It happens all the time, and it’s costly.  Blockchain eliminates this problem and has the potential for eliminating the need for bankers, stockbrokers, real estate agents, lawyers and many other costly middlemen.

The media and pundits and politicians and big bankers have tried to sell the public on scare tactics, ideas such as:  the lack of established middlemen makes cryptocurrencies unsafe, the anonymity makes it a tool for terrorists or drug dealers, that the use of cryptocurrencies can bring down our economy because of the wild price swings. But they’re goal is not to protect you, it is to maintain their grip on power, which means maintaining the status quo.

And to preserve the status quo, men of power always wish to destroy innovation . . . and with it, destroy future prosperity.

Like so many areas of life, New York state has been most active in trying to protect the status quo. In 2015, under governor Andrew Cuomo, New York instituted the nation’s toughest regulations and licensure laws when it comes to cryptocurrency. To perform many activities with or related to cryptocurrency, you have to submit to many traditional banking regulations—rules which only big banks can afford to follow. Oh, and of course there are thousands of dollars in fees (let’s be honest, it’s a tax)—just in case any startup entrepreneurs were thinking of starting a cryptocurrency business in New York.

It’s no coincidence that New York is also the nation’s banking capital—for both traditional banks and Wall Street. Bureaucrats and their cronies on Wall Street don’t want change. And if change is coming, they want to control it (to profit from it, of course).

As a result of these prohibitive rules and fees (taxes), many cryptocurrency firms have fled New York. Others have seen their license applications lost, delayed or rejected. Think of all the jobs lost in New York. Now consider the potential jobs that will never be in New York. They are just a portion of the millions of jobs lost and citizens who’ve fled New York under Andrew Cuomo’s reign.

Larry Sharpe, candidate for New York governor in 2018 is embracing cryptocurrencies and blockchain, among his many other freedom-forward policies. He wants to eliminate the rules New York has set up. He describes his plans during his recent interview with Dennis Consorte of Cryptosumer.

For fun, Sharpe has even set up his own cryptocurrency, Sharpecoin—a no-value coin which supporters can collect and trade. It’s only stated value is to trade for campaign merchandise or events. But its symbolic value is to demonstrate Sharpe’s belief in the freedom to innovate and put a stop to bureaucrats and their cronies who are looking to rob citizens with their corrupt and prosperity-killing rules and taxes.

I don’t know whether Bitcoin, blockchain or other cryptocurrencies are going to be big in the future. That’s up to the market.  They’ve had their share of early problems. But I do know that our politicians shouldn’t be trying to thwart those of us trying to find a more prosperous future through innovation. Many will fail as they experiment. That’s okay.  Thomas Edison failed at making a lightbulb a thousand of times. He even set a few fires along the way. That was okay, too. But we got the lightbulb.

Don’t let politicians prevent the next lightbulb.

The post Cryptocurrency and the Blockchain appeared first on Larry Sharpe, Libertarian.

By: Aaron Segal

In the United States, the land of the free, the champion of capitalism, and the pinnacle of innovation, you have to ask your competitors for permission to start a business. Specifically, a business that provides medical treatment to people. If you want to start a legitimate medical operation, you need consent from your biggest competitor, a written form admitting that your area needs your business. You’re smart enough that you don’t need to read an article to see how this could go horribly wrong. However, I’ll tell you why we thought this was a good idea in the first place.

These two pictures listed below are pretty self-explanatory. It appears that, with a few exceptions, states with a CON regulation make the list of highest costs of healthcare, while states without it make the list of lowest costs.

The people of the United States spend more on healthcare than any country in the world. The United States is also responsible for far more biomedical publications and innovations than any country, making up for 40% of the world’s share. And our state of New York has the highest healthcare costs in the entire nation, coupled with mediocre quality. However, the high costs of healthcare do not have to go hand in hand with a system that holds innovation on the highest pedestal, if anything, our innovation should drive prices down. Many argue that allowing companies to follow the profit motive in healthcare is immoral, as no person should profit off of the misfortune of another. This line of logic is absurdly childish, as people voluntarily pay to have their misfortune reduced effectively. Even if a socialized healthcare system existed, people with the ability to pay would still pay for private healthcare that could innovate and had to compete for customers, as long as such an institution would not be made illegal. This is the ideal of healthcare, one in which private entities compete fairly and honestly on the grounds of quality and price, in which a monopolistic company can be unseated by a tiny one that innovates better than it can.

In a truly free market of healthcare one company that refused to offer a cure for cancer and instead gave treatments that eased suffering would be put out of business by a company that found such a cure and sold it. If this company tried to charge exorbitant prices for its cancer-curing drug, a company could think in the long run and put it out of business by selling an improved version of the drug at a lower price. However, every sparkling advantage of a free market healthcare system is thwarted when long-standing healthcare enterprises have special interests in an oversized government. When the government has the power to choose which business succeeds and which fails, this only opens the gateway to companies that cannot succeed on their own merit to make a corrupt deal with the authorities to raise the barrier to entry so that these innovative businesses cannot undercut them and take their market share. In no place is this monstrosity of special interest more prevalent than in the Certificate of Need regulations, one of the greatest causes of inflated healthcare prices in the United States.

These absurd regulations state that for any healthcare facility to expand, acquire new equipment, or merge with other companies, they must pass a need screening, which requires that they prove that their community has a direct need for the services that their growth would offer, and allows locals, government officials, and most frighteningly of all, competitors to testify against their expansion. The initial passage of the CON laws was under the Nixon administration, becoming a requirement for federal funding in 1972. While they lost popularity during the 1990’s due to failure and misuse, they have remained as state law in 35 states despite being removed as a federal requirement and despite countless attempts to remove them by groups ranging from pro-consumer left-wing groups to far-right pro-business ones, and with Bob Lynn, an Alaska politician, acting as a voice for the charge against them. While the initial intent of the CON laws was decent, that any health facility could receive federal funding, and that this was being abused, so a facility would need to prove their necessity to secure this funding, this is no longer the case, and these laws are a vestige that has remained because it supports specific interests that hold power in government.

 A reasonable policy would have been to require a CON for funding, or to remove the funding altogether, but stating that making it so less healthcare facilities competing would reduce prices is a total denial of economics and reality. Many of the states without CON’s rank among those with the top cheapest healthcare, and vice versa, with notable exceptions of Wyoming and Oregon. While the CON regulations are framed in such a way that they allegedly keep too many businesses from starting and taking advantage of consumers, it is surreal to think that anyone would believe that there only needs to be as much supply as there is demand. Even if one city only requires a hospital that can treat one hundred patients at a time, there are numerous reasons why another hospital would be necessary and should certainly be allowed. Primarily that, in any sort of crisis, such as an epidemic of disease or the destruction of the main hospital, there would not be enough resources to treat everyone. However, a more realistic reason is much more serious, which is that an excess of supply is necessary to ensure selection. Even if one hospital could hypothetically take care of an entire area, it may not do so with the highest quality or the most competitive prices, in fact, it certainly will not.

To reduce prices, to spark innovation, and to ensure a standard of high quality treatments, a business must always have competition. Even if both hospitals have the capacity to treat the entire population, they both must exist, or even more than two, in order to keep each other from monopolizing the market. As long as there is no barrier to entry, people may always start innovative businesses to shatter monopolies. The problem with these monopolies is that regulations such as the CON keep companies from forming and growing to force them to be competitive. If we had a federal repeal of all CON policies, I believe that healthcare prices would massively drop, especially in states like New York, which has the highest costs of healthcare in the entire nation, and that quality would massively improve. To understand the repugnant corruption present in CON regulations and their administration, one must only view the situation of Dr. Mark Monteferrante, who had to spend $175,000 in legal fees and wait five years just to obtain a second MRI machine, as competitors and the public did not think he had a need for it. The same thing happens across the country when a long standing company can decide which companies can grow and which ones cannot.

The criticisms of healthcare that are often blamed on capitalism are generally attributable to the government’s service to special interests, which is clear here, and certainly not the fault of capitalism, but of a corrupt and overgrown government. The criticism that the profit motive keeps cures and cheap healthcare from being obtained is only valid when the profit motive is coupled with regulations like the CON laws, as the companies that provide this cheap health care and innovation could be shut down by a jealous competitor with the right connections. We can only hope that these regulations are repealed before they shut down the company that could cure cancer or heart disease.

The post Certificates of Need appeared first on Larry Sharpe, Libertarian.

By: Dan Smith

Our healthcare system is a mess. Anyone with eyes can see it.

Everyone agrees the system is too expensive, too complex and access to care is, at best, uneven.

While many have proposed tweaks to fix parts or providing yet more public money, few have taken a step back to look at the “system.”

At its most basic, healthcare primarily happens between a doctor and a patient. Yes, hospitals often need to be involved, as do nurses, etc. But why does my employer need to be involved? Why is an insurance company involved when I get a checkup?

Why, for heaven’s sake, is the IRS involved at all?

The “System”

The system exists for a reason. I won’t bore you with all the history of FDR’s wartime wage and price controls inspiring employers to provide health insurance which was later codified by the IRS, or LBJ’s Medicare laws which created our current fee-for-service pricing model which encourages all the useless tests and procedures that drive up our costs today, or dozens of other watershed moments.

But suffice to say that legislators and bureaucrats going back to Teddy Roosevelt have continually put forth more and more rules and taxes and subsidies, each time reacting to all the unintended consequences of previous iterations to eventually cobble together our current, but still-evolving framework in an attempt to run a $3.4 trillion per year system which consumes 18 percent of the entire U.S. economy.

18 percent!

The great philosopher and World’s first economist, Adam Smith wrote,

“The Man of System is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it.”

Smith goes on to explain that the Man of System thinks that the people in his system are like pieces on a chessboard, who exist for him to move about. He never sees their desire to move independently of him. And he is less than sympathetic to the misery and disorder he creates in society as the Man of System tries to push individuals about inside his system.

When you see our healthcare system through this lens, hopefully it gives you reason to question the wisdom of “the system.”

Our healthcare system is so complicated and cumbersome that it is not easily untangled. Every time someone tries, a Man of System puts a stop to it and tangles it even more—using fear and guilt as weapons to coax the public into submitting to his never-ending plans which always require more rules and more of other people’s money. Always.

Single Payer: the Biggest System of Them All

Some say the solution lies in having a single payer: the United States government—an all-powerful entity who will simplify and control costs. In other words, they want even more system—the biggest system the World has ever seen.

Such people say their system would eliminate the IRS’s involvement, eliminate states’ involvement, eliminate the health insurance companies and eliminate the waste that goes into advertising and lobbying, thereby improving efficiency and eliminating waste.

It sounds glorious.

But when have you ever seen the U.S. government make anything simpler or less expensive or less corrupt or more efficient with less waste? The suggestion should be considered ludicrous on its face. Savvier advocates of single payer point to other countries, but fail to see the enormous tradeoffs those countries have made, almost always including a much lower standard of living. They ignore American failed experiments in single payer, such as at the VA and Medicare’s unsustainability. And while they don’t suggest that it would be a healthcare paradise, they do not fully consider the enormous costs of the dead hand of government, sucking up resources, creating warped incentives and stifling progress and innovation. If they did, they’d surely set aside their dreams of a single payer system.

But that still leaves us with our current system and all of its waste, fraud and corruption. In fact, it’s worse than single payer, given its high cost and many of our health outcomes.

By its very nature, our system is inherently and dangerously flawed. Anyone who isn’t you or paid directly by you doesn’t have your best interests in mind. Why would they?

But maybe you need some concrete examples.

For Example

Here is a sample of health-related issues at the federal and New York state level which typify the system:

• Both the IRS and New York allow a tax deduction to employers for the cost of providing health insurance benefits, while employees aren’t taxed on those benefits. In turn, the IRS and NY state punish individuals trying to get insurance on their own. The result is that employers are compelled to provide such insurance, thereby separating patients from their doctors by putting their employer, an insurance company they didn’t choose, the IRS and the Department of Health and Human Services, among others, between you and your doctor. In other words, the system is making key decisions in your life.
• Health insurance being provided by one’s employer or the government means the patient doesn’t see all or even most of the cost. And employees don’t see the diversion of their wages to health insurance costs, which are reducing their wage increases when health insurance increases are as steep as they’ve been. People and the media complain about wages being stagnant, but fail to see how much of their compensation is actually growing—because so much of their compensation growth is going to the “system” and all of its waste.
• Health insurance should be for what all other insurance policies do: protect the policyholder against costly, unlikely events. And like life insurance, people would buy less of it as they get older (why they would do this is too complex for this forum). But our system does the opposite: it pays for routine costs and covers more and more as you get older, because the costs are not borne by the policyholder—they’re borne by taxpayers and employers, creating all kinds of unintended consequences, perverted incentives and pure waste, as doctors order up more and more tests and procedures and practice “defensive medicine”.
• In New York, we have the HCRA, which 20 years ago started as a way to bring efficiency to New York’s healthcare market, as well as a small tax on health premiums to help cover costs of the indigent. However, that tax has grown to $5.7 billion per year with indigent care being a small fraction of that and, along with similar federal taxes, is now more than 13% of private healthcare premiums in New York—all while efforts to make the market efficient have long been abandoned.
• New York is one of two states which has the pure community rating insurance rules, which make it illegal to charge insurance premiums based on the risk that you’ll use them—violating a basic precept of insurance, and which The Wall Street Journal credits for many of New York’s health insurance market woes. Vermont is the other state, and it’s no coincidence that we are the states with the two highest insurance premiums nationwide.
• Medicare and Medicaid are massive programs which consume $1.3 trillion of taxpayer money each year, 10-20% of which is estimated to be pure fraud, given the incentives and lack of fraud prevention. Their existence as the largest consumers of healthcare wield enormous influence on all healthcare pricing—often quite negative. And no matter which side of the “Medicare and Medicaid are broke” argument you are on, no one disputes they are unsustainable. The fact that reasonable people are discussing their potential failure should probably be considered a very bad signal.
• The critical shortage of physicians, especially in primary care, and all-too related issue of the high costs of physicians, are caused by government licensure and influence of the American Medical Association.
• The issues with New York’s ACA (“Obamacare”) exchanges range from glaring to insidious. So many problems persist. New York’s Obamacare insurance offerings are the most expensive in the nation, according to the Kaiser Family Foundation. And Obamacare is a political football, with patients caught in the crossfire. But beyond that, so many false promises keep getting made, including: the initial website issues, uneven access to quality insurance, the infamous being able to keep your doctor claim, as well as President Obama’s and New York Times’ claim in 2013 that New Yorkers would see a 50% drop in insurance premiums in 2014—something which clearly didn’t happen.

These are just a few of the drivers which make certain the system fails us all, while the Man of System keeps telling us we cannot live without it.

What Can be Done: Less “System”

Supporters of the system will always ask: what will replace these institutions, with all their important rules and money?

I don’t know. Fortunately, I don’t have to.

I’m not smart enough to conjure all the solutions, more “system.” In reality, no one is smart enough, especially bureaucrats and legislators who aren’t incentivized to improve the service your doctor provides to you or the cost you pay (or don’t pay).

No “system” can. That’s the point (in case you missed it).

When a doctor and patient face each other—for care AND for compensation, incentives are aligned and solutions come from everyone trying the infinite combinations of potential solutions to find out what works and throwing away what doesn’t.

It’s a fatal conceit for politicians in Albany or D.C. to believe they can solve our healthcare problems. They cannot effectively make rules for how other people live their lives and do business with one another.

And it’s dangerous for them to try, as lives are in the balance.

It’s trial-and-error-and-retrial. It’s often not about more money; and it certainly should not be about forcing people about the chessboard to do bureaucrats’ bidding. It’s about choice and the freedom to try new things.

Libertarians offer the wisdom to assure you that the absence of a central plan is not abdication to chaos. The empowerment of doctors and their patients will certainly lead to better access to quality healthcare, at a cheaper price. Empowerment of providers and consumers always does.

It just requires the bravery to allow individuals to work together to figure out the best path forward.

The post The New York Health Care Monstrosity appeared first on Larry Sharpe, Libertarian.