254 Ss Biz Con Addendum

Biz Con Addendum DDI 2008 SS Taylor and Richie

Table of Contents TABLE OF CONTENTS...........................................................................................................................................................................1 INCENTIVES = FLEXIBLE....................................................................................................................................................................2 INCENTIVES ARE BAD FOR SMALL BUSINESS.............................................................................................................................3 REGULATIONS ARE GOOD FOR BUSINESS....................................................................................................................................4 REGULATIONS EXPENSIVE................................................................................................................................................................5 LINK MAGNIFIERS................................................................................................................................................................................6 BIZ CON HIGH - MONEY SHOT..........................................................................................................................................................7

Why So Serious?

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Biz Con Addendum DDI 2008 SS Taylor and Richie

Incentives = flexible Incentives are good for individual businesses Michael De Alessi, senior fellow at the Reason Foundation, 4-2001 The World and I “Entrepreneurs and the Environment” The program was proposed by the Bush administration in 1990 in response to the acid rain scare of the 1980s and put into effect in 1994. The Environmental Protection Agency (EPA) says it has resulted in a 30 percent fall in sulfur and nitrogen oxide emissions from large polluters such as electric power plants. The reason for the program's success is that it leaves it up to individual companies to decide the most cost-effective ways of cutting pollution. So instead of government regulators attempting the near- impossible, omniscience-requiring task of deciding pollution-control targets for each of the myriad companies in a region--each corporation being unique in terms of industry, organization, management style, capitalization, and R&D capability--firms, which know their own needs and abilities best, can develop their own optimum solutions.

Incentives allow flexibility for corporations The Ecologist, June, 2008, The Ecologist “CO2rnering the market” Emit less than your allocated permit allows and surplus credits can be sold on the market: so polluters are paid to emit less carbon. Emit more than your allocation and you need to buy new credits, a financial punishment for overpolluters. The price is then set by the interaction of supply and demand for the credits. If all traders are emitting too much carbon, the price of permits will sky rocket. The higher the price of carbon credits, the greater the incentive for these industries to rein in their emissions. That's the theory, at any rate.

Why So Serious?

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Biz Con Addendum DDI 2008 SS Taylor and Richie

Incentives are bad for Small Business Small businesses hate MBI’s SETEL 2k, Small Enterprise Telecommunications Centre Limited [“SETEL’s Submission to Telecommunications Service Inquiry,” http://www.setel.com.au/site.php?id=216] However, it has become increasingly clear that for some telecommunications markets, direct intervention by regulators, from time to time, will be necessary to address market failures, at least in respect of service performance. Market-based incentives and “light” penalties simply have not proven to be effective in achieving desired outcomes from a small business perspective. The giving of a direction by the ACA to ensure that CSG standards are met will be necessary from time to time.

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Biz Con Addendum DDI 2008 SS Taylor and Richie

Regulations are good for business Command n control maintains economic certainty for companies investing Curtis A. More ‘3, has followed global climate change since serving as Counsel to the U.S. Senate Committee on the Environment [“RECLAIM: Southern California's Failed Experiment With Air Pollution Trading ,” http://healthandcleanair.org/emissions/reclaim.rtf] Increased Uncertainty In addition, rather than lowering uncertainty and economic risks associated with environmental improvement programs, RECLAIM had precisely the opposite effect. Under RECLAIM there were big winners (those who had been allocated excess credits and sold them at astronomical prices in mid- and late-2000) and big losers (those who "guessed wrong" about credit prices and were forced to pay more for credits than controls, and in some cases violated the RECLAIM rules, thus incurring penalties). The citizens in the Basin also suffered by enduring increased smog associated with higher emissions, and by paying somewhat more for electricity because power producers passed these costs along into California's other experiment with "market" mechanisms (electricity deregulation). 8 The only consistent winners in the RECLAIM system were the brokers who made money through the RECLAIM trades, and the owners of power plants and refineries that benefitted most from their initial allocations, and, in the case of power plants, had a mechanism to readily pass along increased credit costs. Southern California is now attempting to place emission reduction programs back on a sound footing, but that may prove difficult even in a state that was among the first jurisdictions to recognize and combat the threat of air pollution.

Big biz’s love command n control Dwight R. Lee ’1, Foundation for Economic Education [“Economic Notions: The Perverse Popularity of Command and Control,” September, Vol. 51 No. 9, http://www.fee.org/publications/the-Freeman/article.asp?aid=3690] The public may believe that the command-and-control approach is the best way to get tough on big-business polluters, but businesses are among its most enthusiastic and politically influential supporters. True, businesses often object to environmental regulations, but most of these objections are like Br’er Rabbit’s begging the fox not to throw him into the briar patch. True, businesses don’t like all environment regulations (they don’t want to be thrown just anywhere in the briar patch), but some types of regulation are just fine with them, especially big businesses. Command-and-control regulation typically increases the costs of doing business. But those costs are often easier for a big business to handle than a small business, because large firms already have legal departments to deal with the inevitable litigation that comes with environmental regulation, and they can spread the costs of pollution control over more units of output.

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Biz Con Addendum DDI 2008 SS Taylor and Richie

Regulations Expensive Enforcement costs 100 billion Lata Gangadharan 2k, Department of Economics @ The University of Melbourne [“Pollution Reduction Policy Intruments,” 6/20, http://www.economics.unimelb.edu.au/TLdevelopment/econochat/GangadharanEcon11.html] In 1990, the U.S. EPA estimated that more than $100 billion was spent annually to comply with Federal environmental laws and regulations and this amount is expected to increase in the future. As expenditures rise, policymakers search for more effective tools so as to maintain and improve environmental quality in a cost-effective manner. Market based instruments like tradable permits have potentially an important role to play in this discussion. New tradable permit programs are being initiated all around the world and an emission trading scheme is likely to be adopted to meet the greenhouse gas targets established under the 1997 Kyoto Protocol. Given the interest in these market-based programs and the history of transactions costs incurred by firms, do we need to initiate policies to encourage participation in the permit market? Some of the ways of encouraging participation would be to increase information dissemination using electronic mediums like the internet, sponsor the development of electronic bulletin board systems that reduce the search costs incurred by firms and have a well designed centralised trading mechanism. The regulatory authority could play a more active role in these markets to reduce information costs by analysing the transactions data monthly and circulating the summary statistics to participants. The initial years of the program would be the toughest for the firms and some help from the regulatory authority could go a long way towards creating an efficient pollution market.

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Biz Con Addendum DDI 2008 SS Taylor and Richie

Link magnifiers Decrease in Bizcon can magnify economic decline by preventing investment Michael A. Bernstein, phD in economics from Yale, professor of History at UCSD, summer 2001, OAH magazine of history, vol 15 no 4, The Great Depression as Historical Problem All short-run analyses of the Great Depression shared a common attribute. They focused on the immediate causes and impacts of the New York Stock Market collapse of 1929, and they asserted that the resulting devaluation of wealth and disruption of the banking system explained the intensity of the crisis. The "business confidence" thesis was perhaps the best example of this school of thought. It held that regardless of the mechanisms that caused the collapse, the dramatic slide of the stock market created intensely pessimistic expectations in the business community. The shock to confidence was so severe and unexpected that a dramatic panic took hold, stifling investment and thereby a full recovery

Business confidence is key to the econ and causes quick ass downturns – key to investment and employment Ben Bernanke, Ph.D. Chairman of Council of economic advisers at Macroeconomic advisors Washington Policy Conference, 9/8.2005, http://www.whitehouse.gov/cea/outlook-20050908.html An important reason for the recovery has been improved business confidence. To an extent unusual in the postwar period, the slowdown at the beginning of this decade was business-led rather than consumer-led. Homebuilding and purchases of consumer durables did not decline as they typically do in cyclical downturns; instead the primary source of weakness was the reluctance of businesses to hire and to invest. Supported by appropriate fiscal and monetary policies and by the economy’s innate strengths, business confidence has risen markedly in the past few years. The effects are evident in the investment and employment data. From its trough in the first quarter of 2003, business fixed investment has increased over 21 percent, with the biggest gains coming in equipment and software. Since the labor market bottomed out in May 2003, more than 4 million net new payroll jobs have been added. So far in 2005, payroll jobs have been added at a pace of more than 190,000 per month. The unemployment rate—my second key indicator, you will recall—has fallen to 4.9 percent, below its average level of the 1970s, 1980s, or 1990s. News from the jobs front has thus been quite encouraging.

Bizcon key to econ Jan Dennis, Business and Law Editor of news bureau at University of Illinois, 7/25/08 http://www.news.uiuc.edu/news/08/0725economy.html, CHAMPAIGN, Ill. — Restoring confidence in the sputtering U.S. economy is at the heart of recent moves to shore up the nation’s lagging financial and housing markets, a University of Illinois economist says. Anne Villamil says propping up faith in an economy teetering on the brink of recession is as important as more tangible initiatives such as financial lifelines for cash-strapped mortgage lending giants Fannie Mae and Freddie Mac. “Savers must be confident that they will have access to their funds,” she said. “Borrowers must be confident they can obtain credit. Maintaining the confidence of foreign lenders is especially important.”

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Biz Con Addendum DDI 2008 SS Taylor and Richie

Biz Con High - Money Shot Biz con high – cash flow proves Angus Loten, staff at inc, magazine for entrepenuers, 7/28/2008, Small-Business Optimism Up, http://www.inc.com/news/articles/2008/07/discover.html After falling to record lows, economic confidence among the nation's small-business owners picked up in July, as fewer owners struggled with cash-flow issues, Discover reported this week. In a survey of 1,000 small-business owners nationwide, only 33 percent said they've faced cash-flow problems over the past three months, down from 42 percent last month. More owners also said the economy was improving, prompting many to boost spending plans for the months ahead, the survey found. "Cash flow is one of the key indicators that affects small-business owners' confidence in the economy," Ryan Scully, director of Discover's business credit card, said in a statement. "Given the substantial decrease in cash flow concerns that were reported this month, it’s not surprising that economic confidence also rebounded." Last week, Opinion Research reported a similar upturn in small-business confidence. About a third of 500 owners surveyed said business conditions in their market were good, while half said they expect the economy to recover within a year, the Princeton, N.J.-based database firm said.

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