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It's time to wake up from oil price shock and create an effective U.S. energy policy, warns Severin Borenstein in Milken Institute Review
For Immediate Release
Oct 16, 2008

LOS ANGELES — Washington has largely ignored energy issues in recent decades, focusing only when confronted with huge spikes in oil prices. It's way past time, argues Severin Borenstein, director of the University of California Energy Institute, to get a grip on the realities of our narrowing options.

"There is little that the United States could do on its own to drive down the price of oil," Borenstein writes in the latest Milken Institute Review (4th Quarter 2008). "But there is much we could do to minimize the risks created by heavy dependence on petroleum. A good place to start is to drop the rhetoric of energy independence and focus on the appropriate, more achievable goal of energy security."

Also in this issue:

- Julia Isaacs and Belle Sawhill of the Brookings Institution take on the myth that America is the land of opportunity.

"Americans, fortuitously, seem to care more about fairness — equality of opportunity — than about equality of outcomes," they point out. "But America doesn't do particularly well on this score: class-ridden 'old Europe' does better on critical measures."

- Nicholas Eberstadt of the American Enterprise Institute calls for abandoning the "official poverty rate."

"While the OPR numbers say that the proportion of the American population living in poverty has changed little — indeed, has slightly increased — since the early 1970s, data on household spending show substantial and continuing growth in consumption among those reporting very low incomes. Indeed, it is becoming increasingly clear that the OPR is of no help in figuring where we are today or even where we've come from."

- Ray Kopp of Resources for the Future offers a no-tears guide to the coming battle over climate change legislation.

"The die is cast; our planet is going to get warmer," he writes. "But the decisions we make — or don't make — will determine how fast and how hot it will get. Both presidential candidates are committed to a serious effort to slow the rate of climate change. However, the success of any program will require good policy choices in the teeth of public skepticism and well-organized interest-group opposition."

- Roger D. Blair (University of Florida) and James Mak (University of Hawaii) take a swat at the U.S. Maritime Administration's badly outdated regulations protecting American ships — in particular, cruise ships — from foreign competition.

"While the cruise business is growing by leaps and bounds, only one U.S. flagship is still in service," they state. "The story of how its owners and unions have been waging political war to keep it in service at the expense of tourists, port workers, taxpayers and the Hawaiian tourism industry is a cautionary tale for anyone naive enough to take the Maritime Administration at its word."

- Andy Zimbalist of Smith College examines whether salary caps really level the playing field in professional sports.

"Both players and owners share what amounts to a myth in the power of salary caps to determine the division of the pie between labor and management," he writes. "The evidence suggests that owners can live without salary caps, while players can thrive with them."

- Allen Sanderson (University of Chicago), John Siegfried (Vanderbilt) and Peter McHenry (Yale) cast a skeptical eye on the inclination of universities to ignore economics in justifying expansion plans.

"Higher education needs all the support it can get in raising money, pressing for local zoning variances and pleading for new public infrastructure, not to mention help in fending off criticism for reducing taxable property, displacing street parking and disrupting residential neighborhoods with party-crazed students. But the fact that such research has the imprimatur of institutions of learning doesn't necessarily imply that it is accurate."

The Milken Institute Review is sent quarterly to the world's leading business and financial executives, senior policy-makers and journalists. It is edited by Peter Passell, former economics columnist for The New York Times