December 20, 2005

Passage of the Day: John Stossel on DDT Lunacy

It’s really offensive how much loss of life is tolerated in the name of reactionary environmentalism (bolds are mine):

Should the law promote human life, or should it sacrifice human beings and their quality of life on the altar of Gaia? Two to three million people die of malaria every year, Uganda’s health minister has said, because the U.S. government is afraid of a chemical called DDT. The United States does spend your tax dollars trying to fight malaria in Africa, but it won’t fund DDT. The money goes for things like mosquito netting over beds (even though not everyone in Africa even has a bed). The office that dispenses those funds, the Agency for International Development, acknowledges DDT is safe, but it will not spent a penny on it.

Why? Fifty years ago, Americans sprayed tons of DDT everywhere. Farmers used it to repel bugs, and health officials to fight mosquitoes that carry malaria. Nobody worried much about chemicals then. People really did just sit there and eat in clouds of DDT. When the trucks came to spray, people often acted as if the ice cream truck had come. They were so happy to have mosquitoes repelled. Huge amounts of DDT were sprayed on food and people, who just breathed it in.

Did they all get cancer and die? Nope.

Amazingly, there’s no evidence that all this spraying hurt people. It killed mosquitoes. (DDT also kills bedbugs, which are now making a comeback.) It did cause some harm, however. It threatened bird populations by thinning eggshells. In 1962, the book “Silent Spring” by Rachel Carson made the damage famous and helped create our fear of chemicals. The book raised some serious questions about the use of DDT, but the legitimate nature of those questions was lost in the media feeding frenzy that followed. DDT was a “Killer Chemical,” and the press was off on another fear campaign. DDT was banned.

But fear campaigns kill people, too. DDT is a great pesticide. The amount was the reason for the DDT problems. We sprayed far more than is needed to prevent the spread of malaria. It’s sprayed on walls, and one spraying will keep mosquitoes at bay for half a year. It’s a very efficient malaria fighter. But today, DDT is rarely used. America’s demonization of it caused others to shun it. And while the U.S. government spends tax money fighting malaria in Africa, it refuses to put that money into DDT. It might save lives, but it might offend environmentalist zealots and create political fallout.

DDT was banned in America after we started celebrating Earth Day. Environmentalists made a lot of claims then — I have an amusing clip of an environmentalist exclaiming, “You are breathing probably the last of the oxygen!” Soon after that the environmentalists mounted their campaign against DDT. The result? A huge resurgence of malaria, more than 50 million dead, mostly children.

….. (Scientist Amir) Attaran is leading a campaign of hundreds of scientists urging the use of DDT to combat malaria. It’s needed especially in Africa, he says, because malaria kills thousands there every day. “If I were to characterize what USAID does on malaria,” he said, “I’d call it medical malpractice, I would call it murderous.”

If True, Bush Derangement Syndrome Therapists Will Be Busy for Years

Filed under: Taxes & Government — Tom @ 1:46 pm

From the Harvard Crimson (HT Lucianne; bold is mine):

Bob Woodward, the Washington Post’s distinguished reporter and associate managing editor, has already faced scrutiny for his role in the disclosure of Valerie Plame’s undercover status at the CIA. But in a conversation at Harvard earlier this month, Woodward hinted that he knows the identity of yet another key player in the case: Robert D. Novak’s original source for his July 2003 column on Plame, which touched off the scandal in the first place.

“His source was not in the White House, I don’t believe,” Woodward said of Novak over a private dinner at the Institute of Politics on Dec. 5. He did not indicate what information, if any, he had to corroborate the claim.

Dec. 20: Outside the Beltway Jammer.

Yet Another Congressional Broken Promise

Yes, I realize the title is redundant.

CardWeb reports (“Rate Burn”):

For the first time in the U.S., punitive interest rates charged by the top U.S. general purpose credit card issuers will slip past the 31% barrier. Due to the increase in the prime rate this week to 7.25%, Chase, Citibank, and Bank of America will begin charging some cardholders next month an annual interest rate of 31.24%. The three issuers set their rates at prime +23.99% for cardholders who miss payments, exceed the credit line or whose credit score deteriorates.

Wait. I thought those “friends of the little guy” in Washington were going to get around to doing something about this before the end of this year. Didn’t they tell us this when “Bankruptcy Reform” passed?

Oops.

Relaxation of SarBox Requirements for Smaller Public Companies Is Long Overdue

Filed under: Economy,Taxes & Government — Tom @ 9:40 am

Leon Gettler of SoxFirst points to a side effect of the Sarbanes Oxley corporate accounting and reporting law passed in the wake of the Enron blowup roughly four years ago:

Last week, Thomson Financial figures showed that more non-US companies were now choosing to list on the London Stock Exchange instead of New York.

Go to the link for the Thomson Financial figures and you see that the margin is nearly 5-to-1 in money raised ($16 billion in London vs. $3.4 billion on the NYSE), and this troubling quote:

(London lawyer Kenneth) Lamb says his clients don’t have New York on their radar screen. “They don’t want do deal with regulatory requirements and the issue of personal liability for directors and officers that you now have in the U.S.,” he says. “I hear this constantly.”

He adds that fees for lawyers and accounting firms in the United States that help companies comply with American rules can easily hit $1 to $2 million a year. “That’s money that would otherwise go to the bottom line,” he says.

Translation: SarBox is keeping us away from the US.

Mr. Gettler then mischaracterizes an attempt to begin solving this problem, which left untreated for a couple of decades could lead to the financial nerve center of the world being someplace other than New York. He describes what is being considered as “exempting 80 per cent of public companies from internal controls over financial reporting.” This is most emphatically not what is proposed (from the same link Mr. Gettler cited):

An advisory committee to the Securities and Exchange Commission voted overwhelmingly to recommend exempting about 80 percent of public companies from a key part of the Sarbanes-Oxley law corporate-reform legislation, saying that small companies were disproportionately burdened by the congressionally mandated requirements.

….. Under the measure (i.e., current law–Ed.), company executives are required to assess their internal controls over financial reporting and to hire outside auditors to assess those controls.

The SEC’s advisory committee on smaller public companies voted to recommend rolling back that requirement entirely for companies with a market capitalization of $125 million or less, or about half of the companies in the market. In exchange, these companies would be subject to stricter corporate-governance requirements.

Larger companies – those with a market capitalization of between $125 million to about $750 million and prior-year revenue of no more than $250 million – would also be exempt from hiring an outside auditor to test internal controls under recommendations approved on Wednesday.

This is a far cry from the “exempting 80%” characterization Mr. Gettler used.

  • First, the roughly 50% (not 80%) of companies that would be exempted from the internal control reporting requirement represent just over 1% * of the total market capitalization of all NYSE and NASDAQ stocks (and don’t forget the unexplained but apparently meaningful “stricter corporate governance requirements” intended as a partial offset).
  • The second layer, representing at most another 3% ** of total NYSE and NASDAQ market cap, is NOT being exempted from the internal control testing requirement, only the requirement that external auditors perform it. In reality, many companies will still have the external auditors do the testing, simply because they don’t have their own internal audit staff or enough other sufficiently trained accounting staff to do the testing (accounting and auditing are very separate skills).

Over 95% of the NYSE’s and NASDAQ’s combined market cap will not be affected by the proposal, and plenty of fraud prevention and detection mechanisms will still be in place. While I appreciate Mr. Gettler’s concerns, I believe what the SEC is proposing represents a nice step, but only a baby step, in rolling back SarBox’s onerous requirements without a visible sacrifice of either financial transparency or investor confidence.

I don’t believe that what is proposed will open up a noticeable increase in exposure to corporate fraud, because the annual financial statement audit by CPA firms, who by any objective measure have more clout over their client companies than they ever have, will ordinarily catch all but the most collusive enterprises, even without the internal control testing. And, contrary to popular belief, stock manipulation is not an issue SarBox addresses; that is a matter for insider-trading and other laws and regulations to deal with.

So I support what the SEC is proposing, believe that the opposition to it is overreaction, and hope that it is just the beginning of an attempt to establish a more sensible cost-benefit equilibrium for publicly-traded companies and those who invest in them.

And who knows: Maybe small public company execs can use the freed-up capital and management time to engage in a bit more innovation, growth, and market development.
_____________________________

* – Roughly 3,050 companies [half of NYSE’s 2,800 and NASDAQ’s 3,300 listed companies, at an average cap of at most $100 million per company, would be a market cap of $305 billion. The NYSE’s capitalization is $21 trillion, and the NYSE’s capitalization is 5x as big as NASDAQ’s, leading to a combined cap of about $25 trillion. $310 billion divided by $25 trillion is a bit over 1.2%. Additional companies may be exempt if their revenues are under $250 million, but I do not believe that including these likely very few companies, which I did not identify, would significantly alter the result.
** – Roughly 1,830 companies times a $400 million per-company average cap (a bit below the midpoint between $125 million and $750 million) would be $732 billion, which is a little over 2.9% of $25 trillion.

Bizzy’s AM Instant Coffee Biz-Econ Links (122005)

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 8:01 am

Quick links this morning due to time pressures:

  • Here is a book (“The Victory of Reason“) that not only proposes that Christianity is compatible with capitalism–its thesis is that Christianity caused capitalism to arise.
  • An interesting piece on Apple that chronicles what its has done to right itself in the past 5 years, and some hints at what might be coming.
  • Video game sales are in a bit of a slump blamed on the preview of the Xbox 360 — Am I the only person who thinks that the industry is near its peak?
  • Toyota and Honda both expect near double-digit increases in sales next year; Toyota may become the world’s largest car company next year; if not then, with current trends, it almost certainly will in 2007.
  • My sympathies with China’s economic statisticians are genuine. They’re trying to track the activities of over a billion people, are hampered by antiquated data-gathering techniques, and of course have The Party looking over their shoulders. All of those factors mean that despite their best efforts, the results they report have to be considered suspect. That’s especially true when they’re now telling us that the country achieved a ridiculous 16.8% GDP growth in the past year, nearly twice the percentage reported earlier.

Positivity: Back from the Dead

Filed under: Positivity — Tom @ 6:11 am

This man was clinically dead for three hours–and lived:

(more…)