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By: Jim Hoft and Rachel Pulaski
The 2012 Legatum Prosperity Index found that the "American Dream is in jeopardy" and "The national ethos of the U.S. is under threat." The assessment of prosperity is based on material wealth and personal well-being. The Prosperity Index benchmarks countries in eight categories: Economy, Entrepreneurship & Opportunity, Education, Governance, Personal Freedom, Health, Safety & Security, and Social Capital.
The Unites States dropped out of the global prosperity ‘top ten’ for the first time to the twelfth position in the worldwide prosperity rankings and fell eight places in ‘Entrepreneurship & Opportunity’. The assesment found fewer US citizens agree that "hard work gets you ahead."
"The London-based public policy institute pegged the precipitous drop in the U.S. to a decline in consumer and voter confidence, along with a bleak economic and entrepreneurial outlook; four percent fewer citizens believe that "hard work gets you ahead," and business startup costs as a percentage of Gross National Income (GNI) have doubled in the past two years.
In fact, the U.S. economy sub-score dropped to twentieth and its personal freedom score dropped four points to fourteenth, just above Uruguay."
The report was first released on October 30, 2012, the group was hoping the report would have "electoral implications" but as always MSM remained silent:
"As the US struggles to reclaim the building blocks of the American Dream," Gedmin noted, "now is the time to consider who is best placed to lead the country back to prosperity and compete with the more agile countries that have pushed the U.S. out of the top ten."
List of the top 20 countries:
The Top Ten Bad Votes of Rep. Pete Sessions
1. Pete Sessions Voted for the Wall Street Bailout (T.A.R.P.)
Rep. Sessions voted for the over $700 billion bailout of Wall Street, leaving taxpayers to pay for the big banks’ bad decisions. He voted for both the original bailout plan (2008, Roll Call Vote 674), which failed, and then a second time to pass it (RCV 681).
2. Pete Sessions Voted for the Ineffective “Super Committee” Debt Hike
(2011, RCV 690) Rep. Sessions voted for the Budget Control Act, which allowed President Obama to raise the debt ceiling by over $2 trillion. In return, taxpayers got stuck with the “super-committee”, which failed to come up with any agreement on targeted spending cuts and gave us sequestration instead.
3. Pete Sessions Voted for the Fiscal Cliff Tax Hike
(2012, RCV 659) Rep. Sessions voted for the infamous New Year’s Day 2013 “fiscal cliff” deal that raised taxes on 77 percent of U.S. households, with extra tax hikes on higher income earners.
4. Pete Sessions Voted against Reining in the NSA
(2013, RCV 412) Rep. Sessions voted against the Amash Amendment to rein in the NSA. The amendment would have defunded the NSA’s ability to conduct blanket data collection on Americans without a warrant.
5. Pete Sessions has Consistently Voted for the PATRIOT Act
Rep. Sessions first voted to pass the intrusive and anti-4th Amendment USA PATRIOT Act in 2001 amidst the fearful environment of 9/11. However, after several years passed and significant privacy concerns about the act began to gain steam, Sessions nevertheless voted to make most of the Patriot Act permanent (2005 RCV 627), and to reauthorize the rest in 2006 (RCV 20) and again in 2011 (RCV 376).
6. Pete Sessions Voted for Medicare Part D
(2003, RCV 669) Rep. Sessions voted to pass Medicare Part D, a massive entitlement expansion that conservatives rightly predicted would tremendously expand the deficit and add trillions of dollars in long term unfunded liabilities to the federal deficit.
7. Pete Sessions Has Voted to Raise the Debt Ceiling Eight Times
Since entering office in 1997, Rep. Sessions has voted to raise the debt ceiling eight times. Raising the debt limit only encourages reckless spending in Washington. Congress needs to cut spending and balance the budget—not continue to increase our national debt without any spending reforms or reductions.
8. Pete Sessions Voted for Big Agriculture’s Corporate Welfare Bill
(2013, RCV 286) Rep. Sessions voted for the initial 2013 Farm Bill, which created a brand new crop insurance entitlement program while achieving no measurable reforms to the rampant corporate welfare contained within the bill. Worse, as Chairman of the House Rules Committee, Rep. Sessions engineered a floor procedure that prevented almost any of the best conservative amendments to the Farm Bill from even coming to a vote on the House floor.
9. Pete Sessions Voted for Massive Pork-Barrel Spending
(2005, RCV 453) Rep. Sessions voted for SAFETEA-LU, the infamous 2005 transportation spending bill that contained over 6,000 earmarks (including the infamous “Bridge to Nowhere” in Alaska). This massive pork spending bill became the defining symbol of the out-of-control government spending that led to the Republicans losing the House in 2006.
10. Pete Sessions Voted for Gas Mileage Standards and Massive Subsidies for Green Energy
(2007, RCV 1177) Rep. Sessions voted for the 2007 Energy Independence and Security Act, which raised mandatory fuel mileage standards, provided for extensive subsidies to all manner of green energy projects and alternative fuels, and created new green building and appliance standards. This is also the bill that effectively banned the production of the incandescent light bulb in the U.S.
The Top Ten Bad Votes of Rep. Pete Sessions1. Pete Sessions Voted for the Wall Street Bailout (T.A.R.P.) Rep. Sessions voted for the over $700 billion bailout of Wall Street, leaving taxpayers to pay for the big banks’ bad decisions. He voted for both the original bailout plan (2008, Roll Call Vote 674), which failed, and then a second time to pass it (RCV 681).2. Pete Sessions Voted for the Ineffective “Super Committee” Debt Hike
Top Ten Ways ObamaCare Sticks It to Young Adults
By Dean Clancy
[Note: a .pdf version of this post can be found at the bottom of this page]
ObamaCare should really be called the Unaffordable Care Act, especially when it comes to adults in their twenties and thirties. ObamaCare’s “individual mandate,” which takes full effect on January 1, 2014, requires all Americans to purchase expensive government-controlled health insurance, even if they don’t want or need it. (1) The defenders of this mandate, and especially the health insurance lobby, claim a mandate on all of us is necessary to “help the uninsured.”
In fact, the mandate’s real purpose is to prevent the system’s new government-run “health exchanges” from collapsing. Young adults are being singled out as the group who will have to bear the brunt of preventing this collapse. They’re being asked to sacrifice their dollars and their freedom.
Eighty percent of 20-somethings who earn more than about $18,500 a year will see their health insurance costs go up as a result of ObamaCare. In California, the cost of a basic plan for a 25-year-old male will jump as much as 92 percent, in Ohio as much as 700 percent! Meanwhile, the Administration is enforcing ObamaCare selectively, having granted more than 1,200 waivers to politically connected labor unions and corporations over the past three years, and more recently exempting all large businesses.
In short, ObamaCare is unfair, unnecessary, and harmful to our health. No wonder it’s so unpopular, even before it has been fully implemented. We call on all Americans, and especially millennials, to “burn their ObamaCare card,” join the “health care draft resistance” movement, and help us hasten the replacement of government-centered care with patient-centered care.
Here are the top ten ways ObamaCare sticks it to young adults:
1. Raises insurance costs for adults under 40 (on purpose)
2. Reduces access to workplace health insurance
3. Shrinks workplace health benefits
4. Reduces work-hours
5. Kills jobs
6. Increases debt
7. Raises taxes
8. Is unfair
9. Is unnecessary
10. Is insulting
1. Raises insurance costs for adults under 40 (on purpose)
ObamaCare sticks it to young adults by driving up their health insurance costs. On purpose. That’s right, the law is designed to drive up costs for people in their twenties and thirties, in order to keep the new ObamaCare exchanges from collapsing.
Unless a lot of young, healthy people sign up to pay for insurance through the government exchange, premiums will spiral upward as too many old and sick people sign up, which will cause the system to collapse. Thanks to ObamaCare’s numerous mandates, the health insurance in most cases will cost more than it’s actually worth, especially for young adults. Hence the need for a mandate requiring people to pay into the system. The young are, in effect, being drafted into compulsory national service.
How does ObamaCare drive up rates? Primarily by forcing insurance companies to accept all applicants, regardless of age or health status (“guaranteed issue”) and by forcing them to charge all applicants roughly the same price (“community rating”). These mandates make insurance more expensive, especially for healthier folks, some of whom naturally respond to the higher expense by becoming uninsured -- the opposite of the law’s alleged goal. Younger people tend to be healthier. That’s why they also tend to be uninsured -- the high cost isn’t worth it for them, relative to the benefit. The largest negative effects of guaranteed issue and community thus fall on younger people.
ObamaCare imposes a host of other mandates. One is to make insurers cover adults up to age 26 on their parents’ policy. That sounds nice, until we realize that it costs each of us an additional $100 to $400 a year on our health insurance premiums. (And by the way, since when it a 26-year-old a child?) Another mandate requires insurance companies to cover all services deemed by the government to be “preventative,” including “reproductive health services,” “free of charge.” That too sounds great, until we remember that there’s no free lunch. Mandates raise prices. Period.
How much will premiums rise for folks under 40? (2)
The uninsured (two out of three of whom are under 40) have average annual health care expenditures of around $800 to $1,200. Since health insurance will cost a good deal more than that, they have an incentive to be uninsured. They need low-cost, economical coverage. ObamaCare gives them the opposite. (6)
By the way, premiums will only go down for older folks if young adults voluntarily swallow ObamaCare’s big rate hikes. If young adults opt instead to take a pass on the insurance and just pay the law’s $95 tax penalty “user fee,” rates will go up for older folks. (7)
You can’t defy the laws of economics. If we want to get more Americans insured, we have to enable insurance to cost less. ObamaCare makes it cost more, for the majority of Americans, and especially for young adults
2. Reduces access to workplace health insurance
ObamaCare sticks it to young adults by incentivizing many employers to stop offering health benefits. When an employer stops offering health benefits, workers must either: a) rely on a relative’s health insurance; b) go into the ObamaCare “health exchange,” b) enroll in Medicaid or other government program for which they may be eligible, or c) join the ranks of the uninsured. Younger workers will often find themselves in the last category: uninsured.
About 156 million Americans (roughly half the U.S. population) get their health insurance through the workplace. Credible experts predict ObamaCare will cause anywhere from 7 million to 35 million Americans to lose their workplace health benefits over the next few years.
Wait. Would employers really do that? Would they really drop coverage? Yes, it seems, they would:
Most of this “employer dumping” will occur among small businesses. That will disproportionately affect adults under 40. (12)
3. Shrinks workplace health benefits
ObamaCare sticks it to young adults by incentivizing employers to offer stingier workplace benefits. Those employers who choose to offer health benefits will be under pressure to try to save money by making the benefits “thinner.” We already have reports of some employers switching to “skinny” plans, which are plans that don’t cover certain items, such as hospital stays. (13) Yes, “skinny” plans are allowed under the statute. (14)
4. Reduces work-hours
ObamaCare sticks it to young adults by causing employers to cut back on workers’ hours. (15) The law’s “employer mandate” requires all employers with 50 or more full-time employees, beginning January 1, 2014, to offer expensive, government-regulated health insurance. (16) “Full time” is defined under the law as 30 or more hours a week. (The average American works about 32 hours a week.) So unsurprisingly, many firms are reducing workers’ hours to 29 hours or below, in order to avoid the expense. According to the Los Angeles Times:
[B]ig restaurant chains, retailers and movie theaters are starting to trim employee hours. Even colleges are reducing courses for part-time professors to keep their hours down and avoid paying for their health premiums. Overall, an estimated 2.3 million workers nationwide, including 240,000 in California, are at risk of losing hours as employers adjust to the new math of workplace benefits. (17)
5. Kills jobs
ObamaCare sticks it to young adults by causing employers to eliminate jobs, especially low-end, minimum wage positions. ObamaCare is causing a hiring slowdown. Part of the problem is uncertainty: employers are afraid to hire because they still don’t know how exactly the extremely complicated law will be enforced. But the bulk of the problem is the employer mandate itself: firms are avoiding new hires to avoid hiring that incredibly costly 50th employee. A health insurance plan can cost anywhere from $8,000 to $20,000 a year. The law says that if you offer coverage, it must be “affordable,” as defined by the government. That means you, the employer, must pay for roughly 92 percent of the plan’s cost. Many small firms simply can’t afford that. Right now, unemployment among Americans under 24 is a staggering 16.2 percent, and thanks to our economy’s anemic 2 percent a year growth rate, these Americans’ employment prospects are dismal. The ObamaCare-induced hiring slowdown only makes this problem worse, disproportionately affecting entry- and lower-level positions and thus younger adults trying to get their start in life.
6. Increases debt
ObamaCare sticks it to young adults by driving up the national debt. The national debt has recently soared above $16,000,000,000,000 (sixteen trillion dollars), an historic high. Uncle Sam has additionally racked up nearly $100,000,000,000,000 (one hundred trillion dollars) in future, unfunded promises. That mountain of debt must be paid back by current and future generations. The cost of the law’s coverage provisions alone, over the first ten years of full implementation (2014 to 2023), is around $2,400,000,000,000 (two trillion four hundred billion dollars). The law will likely drive the deficit up by more than $700,000,000,000 (seven hundred billion dollars). (18) The problem boils down to basic math. As one analyst has summed up the problem:
Health spending now averages about 21 percent of households' personal income ... [but the] health care legislation presumes that those in an exchange shouldn't have to pay more than 10 percent of their income for a health insurance policy. (19)
That means someone is going to have to subsidize people who get their coverage through an exchange. Who is going to be on the hook for that subsidy? Current and future taxpayers, of course. How will it be paid for? Mostly through borrowing. (Uncle Sam currently borrows more than one-third of every dollar he spends.) So now young adults, who already carry historically high levels of student-loan debt, will have to help pay for the massive ObamaCare debt as well. (20) How thoughtful.
7. Raises taxes
ObamaCare sticks it to young adults by increasing taxes. ObamaCare imposes eighteen new taxes, including an expensive tax on medical devices and the first-ever tax on workplace health benefits -- even a new tax on the sale of your home. Those new taxes are projected to bring in a total of $514,000,000,000 (five hundred fourteen billion dollars) in additional federal revenues over ten years.
ObamaCare’s 18 New Taxes
8. Is unfair
ObamaCare institutes basic intergenerational unfairness. Sixty-four-year-olds typically spend six times as much on health care as 18-year-olds. Logically, their health insurance rate should be six times higher. But ObamaCare says insurers can charge older folks no more than three times what it charges a young person. This 3:1 community rating forces millennials to pay about 75 percent too much for insurance, so folks in their early 60s can underpay by about 13 percent. Nice! (21)
9. Is unnecessary
The tragedy of ObamaCare is that it isn’t even necessary. There are less coercive, less expensive ways to help the uninsured. Here are some simple ways to reduce health care costs and thus increase the number of insured people, without costly government mandates or price controls:
This robust agenda would benefit young adults and indeed all Americans by promoting patient power in the health care marketplace. It would help lower the excessive cost of health care, which is the real problem, by reducing meddlesome government mandates, which are the real culprit.
10. Is insulting
ObamaCare insults young people’s intelligence by trying to make them believe they are benefiting from a policy that actually targets them for the biggest pain.
P.S. There’s an eleventh reason ObamaCare sticks it to young adults: its inevitable negative effects on the quality and availability of medical care. With the new system’s top-down, centralized approach, there will be higher costs, longer wait times, and incentives for doctors and hospitals to scrimp on care.
Conclusion: Burn Your ObamaCare Card!
ObamaCare was rammed through Congress in the name of “helping the uninsured.” What it really does is hurt the young. Two-thirds of the uninsured today are in their twenties and thirties. Most of the uninsured make a rational choice to go without insurance because government policies have made it too expensive, relative to its value for them.
The individual mandate, ObamaCare’s linchpin, will hit young adults the hardest. Eighty percent of 20-somethings who earn more than about $18,500 a year will see their health insurance costs go up as a result of ObamaCare. In California, the cost of a basic plan for a 25-year-old male will jump as much as 92 percent, in Ohio as much as 700 percent! The individual mandate, ObamaCare’s linchpin, is unjust, unnecessary and harmful to our health.
Millennials would be better off “burning their ObamaCare card” and resisting the “health care draft.” We call on Americans who can do so to “opt out” of the ObamaCare mandate and instead pay the small penalty tax “user fee” for being uninsured (or for not having ObamaCare-compliant coverage). (23) If enough Americans join the resistance movement, we can hasten the collapse of the exchanges, reverse the Washington takeover, and pave the way for a health care system that works for, rather than against, patients. (24)
1. Tens of millions of Americans are statutorily exempted from the individual mandate, including prisoners, illegal immigrants, certain religious sects, Native Americans, Americans living overseas, Americans who don't have to file a tax return, Americans whose employer offers them coverage that would cost them more than 8 percent of their income, and any American granted "hardship" status at the discretion of the Health and Human Services secretary. Patient Protection and Affordable Care Act, section 1501.
2. The following estimates are for insurance in the individual or nongroup market. That is, not for coverage received through the workplace or the government.
4.Louise Radnofsky, “Ohio Complains of Higher Health-Insurance Premiums,” Wall Street Journal, June 6, 2013, http://blogs.wsj.com/washwire/2013/06/06/ohio-complains-of-higher-health...
5. Avik Roy, “The War On Bros: Exchange Subsidies Won't Protect Young People From Obamacare's Higher Insurance Premiums,” Forbes, June 7, 2013, http://www.forbes.com/sites/theapothecary/2013/06/07/the-war-on-bros-exc...
6. ObamaCare supporters try to downplay “rate shock” figures like these, by noting that costs will go down for some older folks. True. But how much comfort is it for a millennial faced with a 92 percent premium increase to know that his 64-year-old neighbor will enjoy a 10 percent decrease? Supporters of the law also say that folks earning up to about $45,000 a year will get a relatively generous subsidy, on a sliding scale, to help them afford the premiums (courtesy of the taxpayer), if they buy coverage in the government exchange. Also true. But that taxpayer subsidy is only available to people whose employer doesn’t offer “affordable” coverage, as defined by the government (and whose state doesn’t offer Medicaid to people earning more than 100 percent of poverty). It’s hard for anyone to know for sure whether he qualifies for the subsidy and will remain qualified for it, since third parties (employers, state policy makers) are the ones making the critical decisions affecting his eligibility.
7. Here is now the individual mandate penalty works. The IRS will levy penalties on individuals who don’t buy government-approved insurance. The annual fines will equal the greater of $95 per adult or 1 percent of income (in 2014); $325 or 2 percent (in 2015), $695 or 2.5 percent (in 2016); and then will rise with inflation. The fine for uninsured children equals one-half the adult fine. Additionally, many people are exempted from the mandate, such as those for whom premiums exceed 8 percent of household income. Hence, as premiums increase, more and more people will be exempted from the mandate.
8. Seven million figure comes from: CBO, Effects of the Affordable Care Act on Health Insurance Coverage—February 2013 Baseline,” February 5, 2013, http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900_ACAIns.... Twenty million figure from: CBO, “The Effects of the Affordable Care Act on Employment-Based Health Insurance,” March 15, 2012, http://www.cbo.gov/publication/43090. See also: CBO, “How Has CBO’s Estimate of the Net Budgetary Impact of the Affordable Care Act’s Health Insurance Coverage Provisions Changed Over Time?” March 20, 2013, http://www.cbo.gov/publication/44008. CBO does think it possible that the number of people in employer-based coverage could go up, by 3 million; but the agency designates as its “best estimate” a 7 million person drop in workplace coverage
9. Douglas Holtz-Eakin and Cameron Smith (American Action Forum), “Labor Markets and Health Care Reform: New Results,” May 2010, http://americanactionforum.org/files/AAF_Labor%20Markets%20and%20Health%....
10. McKinsey & Company, “How US health care reform will affect employee benefits,” June 2011, http://www.mckinsey.com/insights/health_systems/how_us_health_care_refor...
11. Deloitte, “2012 Deloitte Survey of U.S. Employers: Opinions about the U.S. Health Care System and Plans for Employee Health Benefits,” July 2012, http://www.deloitte.com/view/en_US/us/Insights/centers/center-for-health....
12. Some workers will lose what the law deems to be “affordable” benefits, as their employers offer “unaffordable” plans intentionally, knowing that doing so will drive their lower-income workers to look outside the firm for health coverage, which will save the employer money (because paying a $3,000 federal penalty fine is cheaper than paying for a $8,000 to $20,000 insurance policy). Some economists predict that we may see a lot of firms restructure themselves into two “sister firms”: one for higher-wage workers who will continue to enjoy company health benefits, and one for lower-wage workers who will be “dumped” into the government exchange. In other words, lower-income workers will get the short end. And guess which age group will be hardest hit by that? Yep, young adults.
13. Brett Norman, “ACA Penalties Spawn ‘Skinny’ Plans,” PoliticoPro, July 16, 2013, http://www.politico.com/story/2013/07/some-workplace-health-plans-will-b....
15. The employer mandate will take effect on January 1, 2014. In July 2013, the Obama Administration surprised everyone by announcing it was unilaterally cancelling the mandate for a year, pushing the effective date back to January 1, 2015. While this cancellation is illegal, so long as the mandate is only delayed temporarily the incentives for employers to cut back on hours and hiring will remain essentially unchanged. The one-year delay will probably cause more employers to “dump” their workers into government health exchanges in 2014 than would otherwise have been the case. This, we suspect, is exactly what the Administration intends.
16. Here is now the employer mandate penalty works. The IRS will level a tax penalty on businesses with more than 50 full-time employees who fail to offer health coverage. The fine is $2,000 per employee after the first 30 employees. Employers will also be fined for failing to offer “affordable” coverage, as defined by the law. The fine is $3,000 per employee if coverage costs more than 8.5 percent of that worker’s income.
17. Chad Terhune, “Part-timers to lose pay amid health act's new math,” Los Angeles Times, May 2, 2013, http://articles.latimes.com/2013/may/02/business/la-fi-part-time-healthc....
18. Estimate by Senate Budget Committee Republicans, based on CBO projections, for the years 2014-2023.
19. C. Eugene Steuerle (Urban Institute), "Fixing the Nation's Four-Tranche Universal Health System: Next Steps for Both Republicans and Democrats," October 28, 2010, http://www.urban.org/publications/901386.html
20. ObamaCare supporters protest that the law “doesn’t add a dime to the deficit,” citing the official CBO cost estimates for the legislation. But that claim doesn’t stand up to scrutiny. The law only appears “deficit neutral” on paper, because of massive budget gimmicks like these. In reality, ObamaCare will cost taxpayers dearly, with younger taxpayers getting hit the hardest. The law includes $700 billion in ten-year Medicare reductions (to help pay for the new entitlement) that the Chief Actuary of the Medicare program assumes are unlikely to take effect, because they would cause 15 percent of hospitals to go out of business by 2019. (Source: CMS Chief Actuary Richard S. Foster, Memorandum on Estimated Financial Effects of the “Patient Protection and Affordable Care Act,” as Amended, April 22, 2010, http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/Actuari....) Members of Congress will never voluntarily allow large numbers of hospitals in their districts to go out of business. They will move to provide federal relief. And the relief will most likely come in the form of reversing the Medicare payment reductions. The Chief Actuary also points out that the law assumes a series of deep, automatic, annual reductions in Medicare payments to doctors that Congress has historically never allowed to take place.
21. Avik Roy, “Putting the ‘Insurance’ Back in Health Insurance, Forbes, May 21, 2012, http://www.forbes.com/sites/theapothecary/2012/05/21/putting-the-insuran...
22. Dean Clancy, What Should Replace ObamaCare, July 17, 2012,
See also: Avik Roy, “The Tea Party’s Plan for Replacing ObamaCare,” Forbes, April 7, 2012,
23. For many people, especially younger citizens, it will be more financially sensible to just pay the fine than to buy overpriced health coverage. The fine is small (only $95, or 1 percent of one’s income, whichever is higher, in 2014). If you refuse or neglect to pay the fine on your yearly tax return, the statute prevents the IRS from punishing you, other than by withholding any tax refund you are owed. So you could theoretically sidestep any penalty whatsoever by adjusting your income tax withholdings to avoid being owed a refund.
24. Jacqueline Bodnar, “FreedomWorks Announces “Burn Your ObamaCare Card” Campaign to Resist the Compulsory Health Care Law” (press release), July 11, 2013, http://www.freedomworks.org/press-releases/freedomworks-announces-%E2%80.... See also: Dean Clancy, “Burn Your ObamaCare Card,” Washington Times, July 10, 2013, http://www.washingtontimes.com/news/2013/jul/10/burn-your-obamacare-card/
Top Ten Ways ObamaCare Sticks It to Young Adults By Dean Clancy[Note: a .pdf version of this post can be found at the bottom of this page]
Last fall, Seattle-based RealNetworks released RealDVD, software that allows users to legally save a copy of any DVD that they own to their computer or laptop for later viewing anywhere or anytime. The motion picture studios—including Disney, Paramount, Sony, Twentieth Century Fox, Warner Bros., and Viacom—have filed a lawsuit against RealNetworks to have the new product banned, which threatens to hamper competition and technological innovation in one of the most dynamic sectors of the economy. The trial begins on April 24th.
1. RealDVD does not remove the content scramble system (CSS) that protects copyrighted material, which ensures that it does not run afoul of Digital Rights Management (DRM) requirements. In addition, a new layer of encryption is added that locks the copy to a single hard drive and eliminates the possibility of making additional copies for distribution, removing the threat of piracy.
2. Consumer rights could be dramatically curtailed or even eliminated if the courts determine that the Digital Millennium Copyright Act (DMCA) trumps the long history of legal decisions that define fair use. If the studios win their legal challenge to RealDVD, the courts, in effect, will be asserting that the DMCA adds significant new restrictions to what consumers are allowed to do with DVDs they have legally purchased.
3. The DMCA has given the content providers a virtual monopoly on platforms for the distribution of their products by requiring all new technologies be licensed by the DVD CCA. But a copyright is a negative right. That is, it is a limitation on others using the creator’s work. It does not provide the creator with the right to do something with a copyrighted work, and it certainly should not create a monopoly for the technologies that consumers may purchase.
4. The case against RealDVD is the most recent attempt by content providers to limit competition and technological innovation. New technologies have reduced costs and introduced new models of production and distribution. Rather than adapt, the studios are using litigation to defend old business models.
5. Shifting the burden of content protection to consumers and other technology sectors can have significant impacts and costs for the economy. New restrictions will affect innovation and slow the inevitable transition to a digital economy, which can threaten productivity in one of the most dynamic sectors of the economy.
6. The allegations of increased piracy made by the studios are sweeping and require empirical support before they can be used as a basis for denying consumers the use of a new product. In fact, there is little evidence that has been provided to demonstrate that RealDVD actually increases piracy and therefore harms the movie studios.
7. The impact is, in fact, just as likely to be neutral or actually beneficial to the movie studios. RealDVD includes a number of features that may, in fact, boost the demand for DVDs, raising a direct challenge to the motion picture studios’ assertions that a product like RealDVD detracts from their revenues. Allowing consumers to view their DVDs without having to carry the discs or a drive that plays DVDs increases the value of the DVD, which can increase demand.
8. While attempting to reduce copyright infringements, the DMCA has actually stifled innovation and reduced consumer choice while doing little to stem the flow of piracy. For DVD pirates, the impact of RealDVD will be minimal—it offers little advantage to those seeking to copy DVDs for widespread distribution. Banning a product that maintains the DRM encryption and adds another layer of protection will do little to quell piracy.
9. The studios, in essence, are asserting an exclusive claim not just to the creative content they provide, but to the technologies used by consumers to view DVDs, something that goes far beyond their copyright protection to spur innovation.
10. RealDVD is just the latest target of the Hollywood studios. However, their troubles go well beyond just one product or one market. Quite simply, DVD revenues—which have been a cash cow for the industry—are plummeting. Much like the music industry, the studios are scrambling to deal with new technologies and new consumer preferences. Movie studios must come to grips with the increasing prominence of the internet, a valid and growing competitor to the old model of producing for movie theaters with an aftermarket of televisions.
Click here to download the PDF version of this article
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