Thursday, November 20, 2014
By Timothy P. Carney
Federal policy often tilts the playing field, picks winners and losers, and rewards well-connected insiders, contributing to the public perception that the ‘game’ is rigged and harming economic growth. AEI scholars have identified a few policy changes that lawmakers can pursue if they want to combat cronyism and corporate welfare.
Policymakers in both major US political parties have increasingly condemned “crony capitalism” and “corporate welfare.” Many House and Senate candidates in the 2010, 2012, and 2014 election cycles gained considerable support by promising to combat policies that favor narrow interests at the expense of the broader public interest.
There is plenty of debate as to what counts as corporate welfare and crony capitalism, and there is no consensus definition for either of these words. But they are real phenomena: much federal policy tilts the playing field, picks winners and losers, and rewards well-connected insiders. This contributes to the public perception that the “game” is rigged and harms economic growth and innovation.
Scholars at the American Enterprise Institute have identified a few policy changes lawmakers can pursue if they want to combat cronyism and corporate welfare. There are dozens of programs, policies, and tax provisions beyond those mentioned here that could count as crony capitalism or corporate welfare. The ones here are just a start.
Repeal Obamacare’s Insurer Bailout (“Risk Corridors”), or Make It Budget Neutral. The Affordable Care Act (ACA) distorts the marketplace by promising open-ended subsidization of insurer losses from policies sold on the law’s federal and state exchanges. Insurers are taking more risk and cutting their premiums to gain market share because they know the federal government will pick up the tab if they experience large losses. The effect of this policy is to force taxpayers to provide a backdoor subsidy of insurance companies. Eliminating this subsidy would push insurers toward more realistic pricing of their products, AEI Visiting Scholar James Capretta argues.
AEI Resident Fellow Thomas Miller says Congress could leave the risk corridors in place but protect taxpayers by making them budget neutral.
The Affordable Care Act distorts the marketplace by promising open-ended subsidization of insurer losses from policies sold on the law’s federal and state exchanges.
End the Individual Mandate. The individual mandate forces people to buy a product from a private industry even if they do not want to buy it. This is the epitome of corporate welfare, Miller argues. Miller suggests Congress should repeal the individual mandate and provide other incentives for individuals to remain covered, such as protections against rate hikes or exclusions for changes in health status for anyone who maintains continuous insurance coverage.
Take Away States’ Exclusion Authority. Under the ACA, states can bar otherwise qualified and licensed insurers from offering policies on the exchanges. This authority allows states to protect incumbent providers and stifle competition. Capretta believes it should be eliminated.
End Guaranteed Payments, and Reform the Doctor Cartel. Various health laws provide unwarranted market protections for some suppliers of services. Among them are required payment rates by Medicaid programs for so-called Federally Qualified Health Centers and indirect and direct subsidization of a limited number of hospitals and medical schools through Medicare. Medicare and Medicaid law could be scrubbed for other unjustified distortions of the marketplace, Capretta argues.
Joseph Antos, AEI’s Wilson H. Taylor Scholar in Health Care and Retirement Policy, suggests that Congress could increase the supply of doctors by adopting a national compact recognizing doctors’ medical credentials wherever they were issued and allowing them to practice across state lines.
End the Ethanol Mandate and Ethanol Tax Breaks. The ethanol mandate (Renewable Fuel Standard) picks winners and losers in the fuel market. It is likely to drive up prices for drivers, ranchers, and grocery shoppers. It seems to add to contamination of water, too.
Congress could fix these problems by killing the mandate, argues AEI Resident Scholar Ben Zycher. Congress should also end the cellulosic biofuel producer tax credit, the alternative fuel mixture tax credit, the alternative fuel infrastructure tax credit, and the special depreciation allowance for cellulosic biofuel plant property.
End Renewable Energy Subsidies. Congress has created many programs to subsidize alternative sources of electricity, such as wind and solar. Although Congress should insure it does not block innovative technologies, “green energy” subsidies distort the market, waste taxpayer dollars, and benefit the companies selling a product at a price higher than market forces would support. Congress could alleviate these harms, Zycher argues, by refusing to resuscitate the production tax credit, ending all government loans and loan guarantees for renewable energy. To aid innovation in this regard, Congress could explore opportunities to support basic research on renewable-energy technologies that are not patentable.
End Oil Subsidies. Oil production suffers from federal restrictions, but that alone does not justify federal subsidies for oil. Congress could create a level playing field in energy by killing both the enhanced oil recovery tax credit and the marginal well production tax credit, Zycher suggests.
Also, foreign oil exploration may receive a tax benefit because foreign royalties are often treated as foreign corporate income tax, thus making them eligible for a tax credit instead of a deduction. Zycher suggests Congress could fix this loophole. (At the same time, oil producers face a risk that producers of ethanol and renewables do not: the possible imposition of price controls, whether explicit or implicit, during a future international supply disruption, increasing prices sharply. These subsidies might serve as a rough offset for this problem.)
Make Corporate Taxes Simpler, Lower, and More Neutral. The corporate tax system generates a small fraction of the total share of federal revenues yet disproportionately harms the US economy. The cause is twofold: the high 35 percent federal corporate statutory rate and the myriad of special preferences that litter the corporate tax code. AEI Resident Fellow Alex Brill argues that tax simplification, tax neutrality, fewer corporate tax preferences, and a lower corporate tax rate are sound strategies for encouraging growth.
Reform the Research and Development Tax Credit. The Section 41 Research and Experimentation Tax Credit (the R&D tax credit) was established in 1981 to incentivize private-sector research and development. That is arguably a laudable goal, and a feasible one. But the current R&D tax credit, argues AEI Resident Scholar Stan Veuger, is designed quite poorly — largely because it came into being as a temporary measure. Now, it effectively subsidizes some firms’ R&D at 25 percent while taxing other firms’ R&D at almost 25 percent. Congress could eliminate this unfairness by scrapping the current credit and, if it wants to encourage R&D, crafting a new one from scratch.
Abolish or Rein in Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac have forced a systemic industry-wide loosening of underwriting standards, which was the major cause of the US financial crisis, argues Edward Pinto, codirector of AEI’s International Center on Housing Risk. Pinto says Congress could protect the housing market from future instability by abolishing the bailed-out government-sponsored enterprises and pulling the government out of at least 80 percent of the housing finance market. If Congress decides to provide favorable financing terms for low-income borrowers, it can do so in a transparent and fiscally responsible manner, in contrast to doing it through Fannie and Freddie.
AEI Resident Fellow Alex Pollock agrees that Fannie and Freddie are prime examples of cronyism. Through these GSEs, a complex web of politicians and their constituents, investors, the housing industry, securities firms, and recipients of off-budget affordable housing subsidies all benefit from the economic rents created by organizations that run on the taxpayers’ credit with little or no capital and excessive leverage. Even after taxpayers bailed out Fannie and Freddie, the 2010 Dodd-Frank Act did not address these problems.
Fannie and Freddie reform bills have grown long and complex, but Pollock’s recommendation is not complex: simply treat Fannie and Freddie exactly the same as all big banks. That means imposing the same capital requirements, the same requirement to pay the government for its support of their debt, the same designation as a systemically important financial institution (SIFI), the same tax treatment, and the same prudential and consumer protection regulation. This would take away Fannie and Freddie’s unique privileges and make them as private as every other big bank. Fannie and Freddie should thus become only two of many competitors, instead of the utterly dominant duopolists they have been.
Shrink the Moat of Regulations That Protects Big Banks from Competition. Excessive regulation is often the most effective crony capitalism. After Congress passed Dodd-Frank in 2010, JPMorgan Chase Chairman Jamie Dimon said that regulation was good for his bank because it builds a “bigger moat” against competition. He noted that the heavy regulation in the act was a negative for JPMorgan Chase, but not as much as it was for smaller banks that have to bear relatively higher regulatory costs to compete on a level playing field. Peter Wallison, codirector of AEI’s program on financial policy studies, suggests Congress open banking up to more competition by repealing regulations that give large incumbent banks advantages over smaller ones.
Kill Dodd-Frank’s Too-Big-to-Fail Designation. Dodd-Frank established the Financial Stability Oversight Council (FSOC), made up of all the federal financial regulators, and gave it the authority to designate nonbank financial firms such as insurance companies as SIFIs. There are no known standards for designation, but the law says that the FSOC should designate those firms whose “material distress” could cause “instability” in the US financial system.
That is simply another way of saying that these firm are “too big to fail.” Thus, Robert Benmosche, then-chairman of AIG, said his firm’s SIFI designation was great news, thinking of it as a “seal of approval” from the government. The SIFI designation undoubtedly imposes costs on the regulated, but it also may act as a moat, protecting the big guys from competition.
If large companies begin to take this attitude, there will be many more designations. That would be fine with the government, which wants more power, and with the large financial companies that want the government’s seal of approval, but this would create in every financial industry — including insurance, securities, and asset management — the same problems the government has created in banking.
Large companies regulated by the Fed because they are considered too big to fail will get favorable treatment from creditors because these firms will be seen as protected by the government, warns Wallison. Competition in all these industries will suffer. Before the FSOC does further harm to competition, Congress should repeal its authority to designate large financial firms as SIFIs.
Kill the Export-Import Bank. The Export-Import Bank (Ex-Im) is the official export credit agency of the United States. It finances the exports of American companies through taxpayer-backed loan guarantees, among other means. It is the very definition of corporate welfare, argues AEI Resident Scholar Michael Strain. US taxpayers should not be on the hook so that large US companies have an easier time finding foreign customers for their products. The distortions Ex-Im creates raise costs for nonsubsidized businesses.
Congress could end these distortions and cronyism by winding down Ex-Im, Strain adds. Instead of a full reauthorization of the agency this year, Congress could pass a sunset bill for the agency, setting a date certain for the agency’s termination, prohibiting Ex-Im from offering new credits, and limiting the agency’s activity to management of deals already authorized. “If you oppose corporate welfare and crony capitalism,” Strain says, “you should welcome this outcome.”
Abolish the Overseas Private Investment Corporation. The Overseas Private Investment Corporation (OPIC) is a federal agency that subsidizes US companies with taxpayer-backed financing when they set up business overseas. It places taxpayers at risk and creates inefficiencies by steering capital toward politically favored activities. It is private profit built on public risk. Congress could wind down OPIC by barring all new deals and giving the Department of Commerce authority to administer all outstanding deals previously approved.
Repeal the Jones Act. A century-old shipping law known as the Jones Act is an outdated and harmful protectionist policy, argues AEI Scholar Mark Perry. The 1920 Jones Act requires that any shipment of goods from one US port to another be transported only on US-flagged vessels built in the US, owned by US citizens, and operated by a crew of US citizens. In other words, this is pure protectionism for the domestic shipping industry, which has not had to face any lower-cost foreign competition for almost 100 years. This drastically increases costs for American businesses and consumers.
Especially in a new era of energy abundance in America, the Jones Act is an unnecessary relic of the past, Perry argues. A change in policy that would allow foreign-flagged tankers to transport light sweet crude oil from Gulf of Mexico ports in Texas and Louisiana to East Coast refineries for one-third the current cost of Jones Act vessels would save millions of dollars in transportation expenses for US oil companies and would lower energy costs for American consumers.
The next logical step, Perry says, would be to lift the outdated ban on US crude oil exports and allow market forces to allocate America’s abundant energy resources.
End the Sugar Program. The US sugar program ensures consumers pay, on average, an additional $3 billion a year for the sugar they use. The benefit goes to a relatively small number of sugar beet and sugar cane producers.
Although the cost of the US sugar program to the average American household is only about $25 a year, the benefits to sugar processors and sugar beet and cane farmers is substantial. Through price supports and import restrictions, the US sugar program increases the prices of those beets by several dollars per ton.
The biggest victims of the program are businesses that use sugar. The food processing industry, for instance, has been severely hampered with respect to its competitiveness with processed food imports and in key export markets, with employment losses estimated in the tens of thousands of jobs.
Congress could end these distortions, argues AEI Visiting Scholar Vincent Smith, and save consumers money by winding down the sugar program over the next two years.
Reform or Abolish the Federal Crop Insurance Program. Every year, as the US Government Accountability Office has reported, a substantial number of wealthy farmers and land owners receive individual crop insurance premium subsidies in excess — and, in many cases, well in excess — of $100,000. The owners of some very large farms are given taxpayer-funded annual premium subsidies of more than $1 million.
Although large farmers benefit along with the financial institutions that issue the subsidized insurance, the federal crop insurance program is a disaster from a broader social-welfare perspective, argues Smith. Not only does the program transfer taxpayer funds to wealthy farmers and landowners, but it also encourages economic waste: for example, farmers who purchase the heavily subsidized crop insurance products use fewer inputs that reduce their risk of crop loss.
Moreover, partly because of provisions in the 2014 Farm Bill, the federal crop insurance program is anything but transparent with respect to who receives the subsidies and in what amounts. At the very least, Congress should enhance transparency in the crop insurance program, Smith argues. Ideally, Congress should stop subsidizing crop insurance altogether.
Many more policies could qualify as corporate welfare or crony capitalism. These are just a few that AEI scholars identified as particularly distorting, unneeded, or easy to remedy.
Fighting crony capitalism and corporate welfare today mostly involves repealing old policies. Going forward, the best way to avoid such special-interest favors is to apply a test of neutrality to future policies: Is Congress choosing one company, industry, or technology instead of leaving the choice to market actors?
The Chinese government should drop all criminal charges against Gao Yu, a veteran journalist accused of having leaked an internal Chinese Communist Party (CCP) document calling for greater censorship of liberal and reformist ideas.
China's economy is riddled with vested interests, while free speech is suppressed. No wonder the regime is cracking down on. But it won't be easy to maintain the current political model or to reform it. And failure to do either could knock the economy off its extraordinary trajectory. Xi Jinping declares anticorruption efforts should target low-ranking flies as well as powerful tigers.
Police detained Gao, 70, on April 24, 2014, for illegally obtaining a secret document issued by the Central Committee of the Chinese Communist Party and providing it to a foreign-based website. According to a November 18 statement by Gao’s lawyer, Gao’s trial, which will be closed to the public and her family, is expected to begin on November 21.
Gao Yu’s case is a frontal assault on the freedom of expression and access to information. China should drop the charges immediately or face widespread international condemnation.
The alleged state secret is a document issued by the Central Committee warning its members against seven perils including universal values, civil society, and a free press, referred to as Document Number 9. Under China’s draconian state secrecy laws, internal Communist Party documents are deemed state secrets. Gao initially confessed to the charge but later told her lawyers that her confession, which was aired on state TV on May 8, 2014, was extracted under duress by the police. During her first two months in detention, Gao was repeatedly denied access to legal counsel. The media company to which Gao allegedly supplied the document – the US-based Mingjing Magazine – denied that the information had come from Gao.
The charge of illegally providing state secrets to institutions outside China’s borders carries up to life imprisonment for serious cases.
China’s state secrets laws apply far beyond the scope of national security to include economic, social, and political matters such as secrets in national economic and social development, and other matters affecting social stability. Since 1989, the agency in charge of enforcing the state secrets system, the State Secrets Bureau, has issued more than 100 regulations which define the scope of classification for all government ministries and state institutions. Some of these regulations are themselves classified as state secrets.
The state secrets laws and regulations drastically curtail the rights of defendants. All contact between a lawyer and client is subject to the approval of the investigating authorities, and the defense can be denied access to evidence. The trial can be conducted behind closed doors. There is no mechanism to challenge the State Secrets Bureau if it classifies a matter as a state secret, making the bureau’s authority absolute – and making it impossible for anyone to disprove charges of violating state secrets.
If convicted, this would be Gao’s third time in prison. Gao, who worked for the state press in 1989, was an active participant in the pro-democracy protests. She was jailed for more than a year following the massacre. Gao was sentenced for the second time in 1994, to six years in prison for “leaking” policy decisions taken by senior officials of the CCP in early 1993, decisions that were already reported in the Hong Kong press.
Inequality is high and rising. If this inequality were merely a reflection of the market, the fact that some Chinese are more talented and hard-working than others, it could be motivational. But a lot is also a result of economic goodies being grabbed by insiders, sometimes via corruption and in other cases by excluding outsiders from opportunities. Populations can grow restless when they think rulers and their cronies are enriching themselves unfairly.
In China, the class system operates on several levels. At the top of the socio-economic scale are the princelings, children of important party officials, who have become multimillionaires by trading on their contacts. Then there are bureaucrats, who enjoy attractive lifestyles funded by the people's taxes and bribes. State-owned enterprises, meanwhile, benefit from monopolies or oligopolies and pay minimal dividends. The fruits of their economic activity are therefore largely enjoyed by those who run them.
Xi Jinping is himself a princeling, as a descendant of a revolutionary fighter and vice premier, and so are most members of the ruling Politburo Standing Committee. Xi’s extended family has amassed total assets of two billion euros.
Most Chinese think political corruption is the biggest problem of China. Sinokleptocrat Wen Jiabao's relatives have accumulated three billion euros. Most of this wealth has been accumulated in areas of the economy over which Wen had direct authority. Wen family's investments span several sectors. Ping An, an insurance company, had benefited from reforms enacted in 2004 by a state body over which Wen had oversight. A growing wealth gap is causing public discontent, as are the frequent corruption scandals involving government officials.
All top officers of the People’s army have huge offshore accounts! The procedure is very tricky. A big part of money budgeted for purchasing guns is channeled through creative accounting and the help of princelings to derivatives trading! God forbids of a war, there wouldn’t be enough guns around!
Chinese authorities have often used state secrets charges to prosecute individuals for actions that are not criminal under any other laws. One of the best known cases of such abuse of the law includes the jailing of journalist Shi Tao, who was imprisoned for 10 years under state secrets charges in April 2005 for passing to overseas websites Chinese government instructions to media organizations on how to cover the 15th anniversary of the Tiananmen Massacre.
State secrets laws have been a perfect weapon for prosecuting activists and whistleblowers like Gao Yu. Internal Communist Party ideological directives mandating further restrictions on free expression cannot be legitimately protected by state secrecy laws.
Gao is one of hundreds of human rights activists and dissidents detained during the current crackdown on civil society, which is possibly the largest in scale since the Tiananmen Massacre in 1989. In the past 20 months since President Xi Jinping came to power in March 2013, there have been three major waves of crackdown, targeting activists involved in the New Citizens Movement in 2013, those who commemorated the 25th anniversary of the Tiananmen Massacre around June 2014, and those who expressed support for the Hong Kong Occupy protests in October and November 2014.
Many of those detained have been formally arrested and prosecuted, some facing trial, and others imprisoned. So far, one of the harshest sentences handed down was against prominent Uighur scholar Ilham Tohti, who was sentenced to life in prison for “separatism” in September 2014, in retaliation for his criticism of the government’s minority policy towards Uighurs.
At the same time, the government has moved to tighten control over key pillars of Chinese civil society including the internet, nongovernmental organizations (NGOs), and the media. The government detained major social media opinion leaders known as big Vs who have voiced critical opinion; issued judicial interpretation extending existing laws to criminalize online expression; and shut down websites, microblogs, and WeChat accounts. The government has also arrested journalists, purportedly for accepting bribes and creating disturbances, and issued new rules banning journalists from sharing unpublished information through their work on the internet or with foreign media. The party has also identified ideological challenges posed by the West as a major threat and has strengthened ideological training for influential sectors of society, including university lecturers, researchers, journalists, and party cadres.
The party may think it is restoring public legitimacy by reining in the nascent and critical civil society. But in doing so, it sets back progress, risks increasing social pressure, and forecloses the possibilities of peaceful criticism that can help resolve grievances.
Your government is your #1 enemy. Brutal police and kangaroo courts are tools to enslave you to your government. But badges and benches do not grant extra rights. It’s your duty as a citizen to become a popopaparazzo, recording police misconduct. Use your smartphone to unmask cops, kangaroos, marilizards, godzillas, and other bastards of kleptocracy.
EU practices double standards on civil rights. It’s freakish for EU to interfere in the civil rights of foreigners, but condone the abuse of my civil rights, a citizen of EU! EU should get its own house in order before lecturing others. EU should rein in barbaric Greece, the most corrupt country of Europe with prisoners of conscience, testilying police, malevolent prosecutors, perjurers, and stupidest jurists. Basil Venitis, firstname.lastname@example.org://venitism.blogspot.com
Greece is an incivil nation with kangaroo justice, overcriminalization, brutal police, huge political corruption, persecution of dissident bloggers, huge bureaucracy, huge taxation, and 23% VAT. Freakish Graecokleptocrats use the kangaroo justice as a political tool to gag political opponents.
I accuse the government of Greece for:
· Persecuting me for four years
· Stealing my life
· Stealing my computer and files
· Spreading lies about me on all Greek media
· Using the kangaroo justice as a political tool
· Postponing my trial eight times
· Locking me in jail without toilet and pillow for a night
· Taking away my hypertension pills
· Making me urinate in a bottle
· Humiliating me with handcuffs, fingerprints, and mug shots
AN UNCONSCIONABLE SILENCE
The political philosopher Edmund Burke once remarked that all that is necessary for the triumph of evil is for good folks to do nothing. A glaring example is my persecution by the government of Greece, which grossly violates my civil rights.
THEN THEY CAME FOR ME!
Martin Niemöller said: First they came for the Socialists, and I did not speak out, because I was not a Socialist. Then they came for the Trade Unionists, and I did not speak out, because I was not a Trade Unionist. Then they came for the Jews, and I did not speak out, because I was not a Jew. Then they came for me, and there was no one left to speak for me!
CORRUPT GOVERNMENT STOLE MY LIFE
It’s been now four years since the government of Greece stole my life, my computer, and my files. Nobody cares, nobody gives a damn! I have done absolutely nothing, and I am being persecuted by the Greek government without any real reason. My ordeal is against all rules of civil society and treaties that Greece has signed. Greece, a corrupt country without a functioning justice system, has gone bananas. Graecokleptocrats use the kangaroo justice as a political tool to gag political opponents. Graecokleptocrats think the laws exist to give them whatever they want! Basil Venitis, email@example.com://venitism.blogspot.com
GEORGE ORWELL’S MINILUV AND MINITRUE
BARBARIC MINISTRY OF PUBLIC DISORDER AND CITIZEN HARASSMENT
BRUTAL POLICE STEALING COMPUTERS!
On October 18, 2010, a gang of six brutal cops of the violent Greek Cyber-Crime Unit (CCU), a real godzilla, supervised by a dishonest prosecutor, a disgusting liar, raided my home in Athens and stole my computer, software, files, documents, and personal data.
The brutal policemen locked me in jail for a night, they humiliated me with handcuffs, fingerprints, mug shots, and lies, leaked false information to the media parrots, and the corrupt Greek government initiated sham ex-officio court proceedings for a stack of freakish trumped-up charges!
URINATING IN A BOTTLE!
BARBARIC MINISTRY OF INJUSTICE, OPACITY, AND HUMAN DEPRIVATIONS
Greece, a country of infinite political corruption, perjury, injustice, and brutal police, must be revamped. Ex-officio law suit, αυτεπαγγελτος, the most dreadful word in justice, means the state sues somebody without involvement of the accuser. This terrible scheme has been used by the corrupt Greek government to persecute me.
Mariliza Xenogiannakopoulou, Alternate Minister of Foreign Affairs, sued me, and she wouldn’t show up in court, because the corrupt state took over her position!
DISGUSTING KANGAROO JUSTICE
PSORIASIS OF DEMOCRACY
JUSTICE DEFERRED IS JUSTICE DENIED
At the ex-officio law suit, the accuser just hits and runs! This hit-and-run justice is the most disgusting kangaroo justice on Earth. The accused must be in a position to face his accuser eyeball to eyeball. The right to confront and cross-examine one’s accuser is a sign of civility. The malicious accuser slings false accusations against you, the state takes over, the accuser disappears from the court, and the trial is postponed infinite times! This is penalty of the presumed innocent. This is penalty without trial. This is kangaroo justice of Third World countries! This is barbarity and brutality, pure and simple. Justice deferred is justice denied. Shame, shame, shame on extremely corrupt Greece.
SHAME ON EXTREMELY CORRUPT GREECE
Please email appeals to
GenSecretary@justice.gov.gr, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com@justice.gov.gr
· Calling for the immediate stop of the persecution of Basil Venitis.
· Stating that you believe these trumped-up charges to be politically motivated and intended to prevent him exercising his right to freedom of expression against political corruption.
· Seeking assurances that the civil rights of Basil Venitis will always be respected.
Harvard Stem Cell Institute scientists at Brigham and Women’s Hospital say they have found the cellular origin of the tissue scarring caused by organ damage associated with diabetes, lung disease, high blood pressure, kidney disease, and other conditions.
The buildup of scar tissue, known as fibrosis, has a number of consequences, including inflammation and reduced blood and oxygen delivery to the organ. Long term, the scar tissue can lead to organ failure and sometimes eventually death. It is estimated that fibrosis contributes to 45 percent of all deaths in the developed world.
The researchers, led by Benjamin Humphreys, found that in mice, a rare population of stem cells located outside of blood vessels become myofibroblast cells that secrete proteins that cause scar tissue. Killing these stem cells prevents the deadly complications of fibrosis, the researchers report today in the journal Cell Stem Cell online. Rafael Kramann, a postdoctoral fellow in Humphreys’ lab, is the first author on the paper.
“Under normal circumstances, myofibroblasts stimulate wound healing, but when there’s an ongoing injury to an organ [such as the liver of a hepatitis C patient, the heart of a patient with high blood pressure, or the kidney of a patient with diabetes], these proteins clog up normal functioning,” said Humphreys, a Harvard Medical School associate professor at the Brigham, who leads the Harvard Stem Cell Institute Kidney Program.
The researchers are now in discussions with a pharmaceutical firm about screening for drugs that might target and shut off these fibrosis-causing stem cells in cases of chronic organ disease. The idea of using the stem cells as targets for drug discovery began with the formation — by Humphreys, Kramann, and Derek DiRocco — of MatriTarg Laboratories, the startup that won the 2013 Harvard Deans’ Health and Life Sciences Challenge.
“We wanted to know if eradication of this very small population of stem cells would improve organ function, and both kidney and heart were completely protected from developing fibrosis-related complications [such as kidney failure and heart failure],” said Humphreys, who also heads the Onco-Nephrology Program at the Dana-Farber Cancer Institute. “This provides an important proof of principle that drugs that target the stem cells could be therapeutic.”
The cellular origin of kidney fibrosis has long puzzled researchers. It was unknown which kinds of stem cells form myofibroblasts, and where these stem cells are located. One long-held hypothesis was that the stem cells that give rise to myofibroblasts are found in the bone marrow, but Humphreys’ research disproves that. By tagging a specific protein called Gli1 expressed by the myofibroblast-forming stem cells, the scientists showed that the cells are found on the periphery of blood vessels, and also reside within organs.
Humphreys does caution that the cell population his lab found is responsible for about 60 percent of all organ myofibroblasts, which means that they seem to be the most dominant source, but there may be other cells that also contribute to the myofibroblast population.
“We haven’t disproven every hypothesis, and our results do leave room for other cells that might contribute to fibrosis,” he said.
The Humphreys Lab collaborated with fellow Harvard Stem Cell Institute member Benjamin Ebert, an associate professor of medicine at Brigham and Women’s Hospital, on the work.
The debate in Westminster, Mass., over a plan to ban tobacco sales is an early volley in the next phase of the ongoing tobacco wars, says a Harvard expert, as tobacco opponents continue in their push to save lives.
The Westminster Board of Health voted not to implement a ban on tobacco sales after a public hearing on the sales ban in mid-November instead became a forum on liberty and government regulation, according to media reports. The raucous atmosphere in the hearing room caused board members to adjourn early and accept a police escort from the building. This week, they backed down from the planned ban, defeating it on a 2-1 vote.
But feelings are at least as intense when it comes to protecting against the proven ill effects associated with smoking and other tobacco use, said Vaughan Rees, interim director of the Harvard T.H. Chan School of Public Health’s Center for Global Tobacco Control.
We talked with Rees about the future of tobacco-control efforts in light of the Westminster clash, as well as the dramatic rise of smoking in developing countries where regulations are few.
Q: The Westminster Board of Health voted Nov. 19 against a ban on sales of tobacco products. What does that mean in Westminster and for broader tobacco control efforts?
REES: Tobacco control efforts will go on. There are a number of policy strategies, in place, that are very successful and other strategies which are being considered and which will be rolled out in the future. For example, banning sales of tobacco products in pharmacies, extending or increasing the age access laws from 18 to 21 at the local community level. So these are a couple of further initiatives we’re seeing around tobacco sales and marketing likely to be implemented across communities in Massachusetts and nationally.
Q: Does this mean that the strategy of an outright ban is not the way to go?
REES: The strategy still holds enormous promise, in terms of changing exposure to tobacco marketing among children. It’s likely to have an impact in reducing interest in tobacco use and uptake of tobacco use among young people.
But it seems that it’s only going to be promising if the community supports it as a strategy. In Westminster, it seems that it came a little prematurely, or that town officials didn’t adequately explain the policy’s rationale to members of that community.
Q: Do you see this strategy as a misstep by the Westminster Board of Health, because it generated such opposition, or is this what the tobacco war looks like these days?
REES: I think this is what the tobacco war is going to look like going forward. The tobacco-control community is now talking about the endgame, the tobacco endgame, which requires thinking about how we are going to eliminate tobacco from our communities. These are very early steps, and it seems that some of the general public are not quite prepared for this, but we’ll be seeing more and more of these kinds of debates.
Q: Is that the goal, to completely eliminate tobacco?
REES: Tobacco still causes premature death in almost a half a million Americans a year. This is a public health epidemic of massive proportions. If we’re serious about eliminating that epidemic, we have to be serious about our position on how tobacco is sold. And selling tobacco in communities is not consistent with the goals of public health to reduce the burden of disease and premature death among our communities.
Q: It seemed that this event came to be framed not as good health vs. tobacco but rather health vs. liberty. How does the tobacco-control community deal with that?
REES: I think that’s unfortunate in this case. Certainly the debate was construed as one of individual liberties as opposed to a question of public health. I think clearly we need to pursue this as a question of public health.
The board was not advocating that people don’t have the right to smoke; that wasn’t in question. The question was what the town of Westminster intends to do about the availability of tobacco products and the promotion of tobacco products in places where children have access, and where members of the general public come to buy other things.
Q: Is the issue of liberty — and the idea of government infringing on people’s lives — an issue that the tobacco-control community needs to deal with in a more direct way, or will the public health message alone win the day eventually?
REES: We do need to be more articulate about how we communicate the purpose and the benefits of these kinds of policies. If you think back to 10 years or so, we saw the implementation — in local communities initially, and then at the state level — of smoke-free ordinances, bans on smoking in public places, particularly bars and restaurants.
It was met with a lot of public opposition. People felt liberties were being taken away from them, but the debate put forward was one of protecting staff and protecting nonsmokers from the effects of secondhand smoke.
The health benefits were put first and foremost, while other concerns, such as loss of revenue to bar and restaurant owners, were, in time, shown to be mostly unfounded.
Q: One Westminster official described the problem of tobacco companies constantly coming up with new products as a game of regulatory “whack-a-mole,” with some of those products being aimed at a younger audience. How big is that problem?
REES: That’s a huge problem, and it’s the tobacco industry’s capacity to innovate, to develop new products, and to market them to specific sections of the community that have ensured its growth over decades. They’re better than ever at innovating new products, new product designs, marketing strategies; and now we see major tobacco manufacturers producing e-cigarettes.
Q: What about the situation globally? I read a 2005 paper you co-authored that said that in Indonesia, 20 percent of 10-year-old boys and 60 percent of adult males smoked.
REES: The United States has shown steady declines in the prevalence of smoking over several decades. Where we’re seeing very high prevalence and increasing prevalence of tobacco use is mostly in the developing world. That’s where the tobacco industry is focusing most of its efforts right now.
Many developing countries don’t have the rigorous policy interventions that we’ve seen applied successfully in the United States. So bans on sales to children and promotion of tobacco products to children don’t apply in Indonesia, and consequently Indonesia has a high prevalence of smoking among even very young children.
Q: So what happens next, in Westminster and elsewhere?
REES: In the case of Westminster, I’m not sure. I think other towns and cities may consider this as a strategy, but clearly it’s only going to succeed if there’s a degree of community support and that will depend upon local officials articulating clearly the purpose and the benefit of this policy for their communities.
Q: Is it possible that these sorts of tobacco bans can go through without contention? Is a certain amount of debate and public strife just part of the deal?
REES: I think to some extent it’s inevitable. When we saw the implementation of clean indoor air laws — bans on smoking in public places — a decade ago, those were contentious. But they’re very broadly accepted now and I think many other tobacco control measures that are considered contentious today have the potential to be implemented and broadly appreciated and embraced by the general public in the future.
There’s a lesson in this. A town went early, didn’t succeed, but I think other opportunities will come along. I think it has the potential to be a game-changer.
By Sheldon Richman
Hillary and Henry sitting in a tree. K-I-S-S-I-N-G-E-R!
It says a lot about former secretary of state and presumed presidential aspirant Hillary Clinton that she’s a member of the Henry Kissinger Fan Club. Progressives who despised George W. Bush might want to examine any warm, fuzzy feelings they harbor for Clinton.
She has made no effort to hide her admiration for Kissinger and his geopolitical views. Now she lays it all out clearly in a Washington Post review of his latest book, World Order.
Clinton acknowledges differences with Kissinger, but apparently these do not keep her from saying that “his analysis … largely fits with the broad strategy behind the Obama administration’s effort over the past six years to build a global architecture of security and cooperation for the 21st century.”
Beware of politicians and courtiers who issue solemn declarations about building global architectures. To them the rest of us are mere “pieces upon a chess-board.” Security and cooperation are always the announced ends, yet the ostensible beneficiaries usually come to grief. Look where such poseurs have been most active: the Middle East, North Africa, Ukraine. As they say about lawyers, if we didn’t have so-called statesmen, we wouldn’t need them.
If I didn’t know better, I’d suspect some pseudonymous writer of having fun with irony in this review. Behold:
President Obama explained the overarching challenge we faced in his Nobel lecture in December 2009. After World War II, he said, “America led the world in constructing an architecture to keep the peace.…”
Keep the peace — if you don’t count the mass atrocity that was the Vietnam War, the U.S.-sponsored Israeli oppression of Palestinians, and various massacres carried out by U.S.-backed “leaders” in such places as Bangladesh (formerly East Pakistan), East Timor, Chile, and elsewhere.
One Henry Kissinger had a hand in all these crimes, by the way. Strangely, Clinton doesn’t mention them.
America, at its best, is a problem-solving nation.
Iraq, Syria, Afghanistan, and Libya are only the latest examples of problems America solved during Madam Secretary’s tenure, building on the glorious successes of George W. Bush’s team. Henry the K is no doubt flattered by the homage.
Kissinger is a friend, and I relied on his counsel when I served as secretary of state. He checked in with me regularly, sharing astute observations about foreign leaders and sending me written reports on his travels.
Now things make sense. That Hillary Clinton thought Kissinger — Henry Kissinger — a worthy advisor is something we should all know as 2016 looms.
What comes through clearly in this new book is a conviction that we, and President Obama, share: a belief in the indispensability of continued American leadership in service of a just and liberal order.
There really is no viable alternative. No other nation can bring together the necessary coalitions and provide the necessary capabilities to meet today’s complex global threats. But this leadership is not a birthright; it is a responsibility that must be assumed with determination and humility by each generation.
It takes chutzpah to write humility even remotely in connection with Kissinger. And if the U.S. empire is indispensable to justice and liberalism — and where are these, exactly? — we are in trouble. The record is not encouraging. Kissingerian “realism” creates global threats.
The things that make us who we are as a nation — our diverse and open society, our devotion to human rights and democratic values — give us a singular advantage in building a future in which the forces of freedom and cooperation prevail over those of division, dictatorship and destruction.
Devotion to human rights and democratic values — as shown in Egypt, where Clinton stuck by another friend, Hosni Mubarak, against a popular uprising. The woman has some friends!
“Any system of world order, to be sustainable, must be accepted as just — not only by leaders, but also by citizens,” he writes.
The suggestion that Kissinger cares what ordinary citizens anywhere think is ridiculous. What he cares about is states, which he puts in one of two categories: those that buckle under to the Indispensable Empire and those that do not.
Henry, er, Hillary in 2016? You might want to rethink that.