Archive for the ‘Regulatory Studies’ Category
You Keep Using the Word ‘Affordable.’ I Do Not Think It Means What You Think It Means.
The federal government gave a $10 million “affordability” prize to a giant corporation for manufacturing a $50 lightbulb. The Washington Post:
The U.S. government last year announced a $10 million award…for any manufacturer that could create a “green” but affordable light bulb.
Energy Secretary Steven Chu said the prize would spur industry to offer the costly bulbs…at prices “affordable for American families.”…
Now the winning bulb is on the market.
The price is $50.
Retailers said the bulb, made by Philips, is likely to be too pricey to have broad appeal. Similar LED bulbs are less than half the cost.
This is the same federal government that refers to ObamaCare, which costs more than $6 trillion, as the “Affordable Care Act.”
Why Is Massachusetts Trying to Ban Truthful Information About Hedge Funds?
The Massachusetts Uniform Securities Act prohibits general solicitation and advertising by anyone offering unregistered securities, ostensibly for the purpose of furthering state and federal disclosure schemes. Yet this ban on public communications has been applied so broadly that it has undermined those purported disclosure goals. For instance, the ban has prevented individuals who have no interest in investing in any security — such as journalists, academics, students, and others who are not wealthy or financially sophisticated — from receiving truthful, non-misleading information about hedge funds.
In Bulldog Investors v. Massachusetts, an investment company maintained an interactive website that provided information about its products. Because Bulldog was not registered in Massachusetts, however, the State filed an administrative action against the firm, demanding it take down its online content.
In response, Bulldog joined a group of other firms and individuals — including some who have no interest in investing but wish to read the website information — in a lawsuit claiming that the Massachusetts ban violates their First Amendment rights. The Supreme Judicial Court of Massachusetts upheld the ban, so the plaintiffs have asked the U.S. Supreme Court to take the case.
Cato, along with the Competitive Enterprise Institute and a group of journalists and academics, has now filed an amicus brief supporting that request and arguing that the Massachusetts law is an unconstitutional ban on free speech. We show that the state’s claim that the ban furthers a larger federal regulatory scheme ignores the judgment of many federal officials (from both parties) who have concluded that such bans undermine these goals.
The state’s alleged disclosure interest is just a pretext for coercing companies to register in Massachusetts, and is therefore an unconstitutional attempt at circumventing federal preemption. But even if the ban furthers a legitimate state interest, it is so broad that it is has substantially chilled both truthful, non-misleading commercial speech and noncommercial speech alike.
A law so repugnant to the First Amendment cannot stand.
Here Come the Disabled-Employee Quotas
I’ve got a new op-ed in the Daily Caller about one of the most significant employment-law initiatives out of Washington in years (also reported on by Melanie Trottman in today’s WSJ): the Obama administration is preparing to order federal contractors to comply with a quota (sorry, “required…hiring goal”) of disabled employees, perhaps as high as 7 percent. Businesses have flooded the Regulations.gov comments site with negative reactions to the idea, but to no seeming avail. As I explain, one of the scheme’s maddening aspects is that you’re supposed to achieve the quota even though you’re not allowed to ask employees whether or not they’re disabled:
So the rules contemplate a fan dance of “invited self-identification” in which workers are given repeated chances at successive stages of the hiring process to announce that they are disabled. Unfortunately for quota compliance, even after getting the job an employee may be too shy to offer such a self-identification, which means the employer may lose any “credit” for the hire. Perhaps equally frustrating, an employee hired with the quota in mind may turn out not to have any disability at all (“Dang it! And she looked so disabled!”).
The employment provisions of the Americans with Disabilities Act (ADA) and its associated Rehabilitation Act are already rife with absurd results. Last week, after a Colorado school bus driver who hit three middle school students turned out to have been hired though recently in rehab, a spokesman for the school district explained that the law was at work: “It is illegal under state and federal disability laws to deny employment solely on the basis of a history of treatment for alcohol or substance abuse.” Non-discrimination against school bus drivers with a taste for booze is bizarre enough, but not bizarre enough for Washington. Time for preference!
There Is No Objective Definition of ‘Medical Necessity’
California regulators are coming down on Kaiser Permanente. According to HealthLeaders Media, the regulators reviewed a batch of coverage denials and “found that in excess of 75% of the cases the services indeed were medically necessary, and 10% were not.” Indeed?
Now seems like a good time to post what University of Tennessee law professor Haavi Morreim wrote about “The Futility of Medical Necessity“ in Regulation:
Clinical artificiality The ill fit between “necessity” and ordinary medical care is immediately obvious in the question facetiously bandied about when health plans first considered what to do about a recently approved drug for male impotence: How often per month (per week? per day?) is drug-assisted sexual intercourse “medically necessary”?
As typified by that case, most medical decisions do not post clear choices of life versus death, nor juxtapose complete cures against pure quackery. Rather, the daily stuff of medicine is a continuum requiring a constant weighing of uncertainties and values. One antibiotic regimen may be medically comparable to and much less expensive than another, but with slightly higher risk of damage to hearing or to organs like kidneys or liver. For a patient needing hip replacement, one prosthetic joint may be longer-lasting but far costlier than an alternative. Of two equally effective drugs for hypertension, the costlier one may be more palatable because it has fewer side effects and a convenient once-a-day dosage.
Across such choices, it is artificially precise to say that one option is “necessary” — with the usual connotation of “essential” or “indispensable” – while the other is “unnecessary” — with the usual connotation of “superfluous” or “pointless.” Various options have merits, and often no single approach is the clear, “correct” choice. A given option might be better described as “a good idea in this case,” “reasonable, given the cost of the alternative,” “probably better than the alternative, given a specific goal,” “about as good as anything else,” or “not quite ideal, but still acceptable.”
In many cases, the real question is whether a particular medical risk or monetary cost is worth incurring in order to achieve a desired level of symptomatic relief or functional improvement, or to reduce the risk of an adverse outcome or a missed diagnosis. A huge array of treatments fits that description: more or less worthwhile, but the patient will not die without it and other alternatives (that might have some drawbacks) exist. [Emphasis mine.] Read the rest of this post »
HuffPo Oped: ‘The Illiberality of ObamaCare’
My latest:
On Friday, President Obama tried to quell the uproar over his ongoing effort to force Catholics (and everyone else) to pay for contraceptives, sterilization, and pharmaceutical abortions. Unfortunately, the non-compromise he floated does not reduce by one penny the amount of money he would force Catholics to spend on those items. Worse, this mandate is just one manifestation of how the president’s health care law will grind up the freedom of every American.
Pool Grants, Federalism, and the Wellsprings of Government Growth
As part of a 2007 law, Congress decreed the establishment of a new federal program to dangle grants in front of states that agree to enact more stringent laws on swimming pool safety. According to Consumer Product Safety Commissioner Nancy Nord, however, the multi-million-dollar pot Congress has set aside for this purpose has sat unused: “not one state has applied for a grant and not one dollar has been disbursed, despite changes made to improve the program. We will soon have paid CDC [the Centers for Disease Control] almost half a million dollars to administer a grant program with no takers.”
What do you think the odds are that lawmakers will learn from the experience and do away with the grant program? Contrariwise, what do you think the odds are that someone on Capitol Hill right now is preparing to argue that if no states have applied for grants, the amounts on offer must be too low, and new lawmaking is needed to provide for bigger subventions?
In all seriousness, this forlorn little program is a tiny and failed example of a genre of federal initiative that all too often enjoys success: using federal tax dollars to bribe states and localities into raising spending and extending regulation. The proliferation of such programs helps explain why the earlier and sounder idea of federalism — which saw the national and state governments as checking each others’ overweening powers — has given way to a spirit of mutual enablement (“cooperative federalism”) at the expense of the citizenry and its freedom. Thus the Obama administration, realizing that public opinion is not yet ready for a federal-level campaign to demonize fattening and salty foods, is happy to drop millions of dollars on local governments like Mayor Bloomberg’s in New York City to do exactly that. And for decades Congress has been creating programs subsidizing local hiring of teachers, police officers and other public employees — with the presumably unintended result of saddling localities with unsustainable payrolls and pension obligations when times turn tough.
Our friend Michael Greve has a new book out called The Upside-Down Constitution exploring how coordination between once-rival levels of government has been turned into an engine of growth for the leviathan state. You can read more about it here, here, and here at Liberty Fund’s Library of Law and Liberty site. Relatedly, Greve points out in this post something worth keeping in mind: federalism is a structure, not a balance.
Prison Terms for Not Installing ADA Ramps?
We’ve often deplored the continued push of criminal prosecution into matters that were once considered more suitable for regulation or for the operation of civil law. A little-noted report a few weeks back in the Los Angeles Times may indicate the next milestone in overcriminalization:
The U.S. attorney has launched a fraud investigation to determine whether Los Angeles city officials ignored federal laws designed to protect the disabled when building or fixing up housing. …
The investigation spans January 2001 to the present, the letters said. If violations are uncovered, city agencies that used federal housing funds could face financial penalties, lose out on future grants or possibly become the subject of a criminal investigation, said [city official] Bill Carter…
Disabled activists sought an investigation because, to quote the LAT again,
In testimony and in person, activists alleged that doors were sometimes too heavy for wheelchair users to open, elevators were not working in at least one city-funded building, and managers either refused to rent to wheelchair users or did not have apartments available for them, [advocate Becky] Dennison said.
The activists also felt ignored because various management recommendations they made to local officials had been ignored. They already have a right to file civil suits over their grievances: indeed, shortly after the U.S. Attorney’s investigation came to light three advocacy groups did file a civil suit against the city.
There are very real problems of fraud — plain old graft and money-raking — on the L.A. public housing scene. But the idea of redefining fraud to include ADA noncompliance is a different matter. If taken seriously, it would mean exposing ordinary as well as dishonest local officials across the country to the specter of criminal liability. It’s notoriously hard to assure that either new or renovated buildings are 100% compliant with ambitious interpretations of the law; a design fix that satisfies three ADA consultants may displease a fourth. Criminal liability should arise from very clear, preannounced standards of conduct. That’s not the ADA.
Maybe the U.S. Attorney’s office is just raising the criminal issue as a bit of bravado to please its friends in the advocacy world and strong-arm the city into settling. But as playwrights know, if a shotgun is shown above the fireplace in Act I, by the middle of Act III a shot will ring out. This misguided extension of federal fraud law is worth challenging now.
Indian Gaming: The Lobbyists Always Win
One of the issues discussed in my new essay on the Bureau of Indian Affairs (BIA) is the lobbying by groups of American Indians seeking official tribal status. The BIA has the power to confer tribal status, and it does so in a non-transparent manner. With official status comes tribal access to a wide range of federal subsidy programs plus the ability to earn monopoly profits with a casino. The gaining of official status for tribes was one of Jack Abramoff’s specialty services.
The most recent BIA decision to confer tribal status is a classic case. The 221-member Tejon tribe in California received a thumbs up from the BIA in January 2012. The group’s reservation and its tribal status had been dissolved decades ago, but it hired some powerful Washington lobbyists to work their magic. An article in the Bakersfield Californian notes, “In their quest to gain recognition, the Tejons had the help of an unnamed ‘financial backer’ who had paid $300,000-plus to the tribe’s attorneys.” This financial backer was “banking on a casino.”
A Mountain Enterprise story says that once the Tejon tribe’s status was official, “speculation began almost immediately about the tribe’s plans to affiliate with Tejon Ranch Corporation and Las Vegas investors to establish a casino facility.” Famous D.C. lobby shop Patton Boggs earned $120,000 in fees on the deal.
For the Tejons, the lobbyists produced results. There are hundreds of Indian groups who have petitioned the BIA for tribal status, and the BIA only confers status to a few tribes a year. Yet somehow the Tejons managed to jump to the front of the queue. This list (and this one) appear to show that the tribe ranked low on the recognition waiting list at #230 (but I admit I’m not an expert on how the system works).
The tribes who hire lobbyists don’t always win. Here’s a story about the 450-member Muwekma Ohlone of California:
Financed by their own casino sugar daddy, Florida real estate tycoon Alan Ginsburg and his associates, as well as with proceeds from the tribe’s own archaeological consulting firm, the otherwise humble Muwekma have spent millions of dollars on the effort. Much of that money has gone toward procuring the aid of a high-powered Washington, D.C., law firm…. [R]ecognition would open the door for the tribe… to place land in federal trust as a ‘reservation’ on which it could open a casino. Indeed, should they attain recognition, the Muwekma almost assuredly will become the envy of non-gaming tribes from outlying regions of the state who’ve tried and thus far not succeeded at ‘reservation shopping’ — that is, attempting to set up casino operations in urban areas far from their aboriginal homeland.
The Muwekma Ohlone tribe lost an important court ruling last year, which has set back their search for official recognition. In this case, the only winners were the lawyers and lobbyists, who apparently pocketed huge fees from the tribe. This data source shows that lawyers and lobbyists gain about $20 million a year in fees on Indian gaming-related issues. Jack Abramoff alone raised $80 million from half a dozen tribal clients in the early 2000s for lobbying on a wide range of tribal issues.
Indian gaming and other complex regulatory schemes usually generate “rent” or monopoly privileges that groups vie for a manner that is unproductive to society as a whole. When the government confers special benefits through regulation, wealth is channeled to lawyers and lobbyists but the overall economy shrinks due to the misallocation of resources.
The best policy for gaming would be to repeal all government restrictions and to treat gaming like any other industry. That would eliminate rents and the related lobbying, and it would create an equal and competitive playing field for Indians and non-Indians alike.
The good thing about Indian gaming is that it has shown that Indians are every bit as entrepreneurial as other Americans. But gaming is not likely to be a stable platform for long-term Indian economic development. That’s because as tribal and nontribal gaming continues to expand, profit levels in tribal gaming are likely to decline.
A more durable strategy for Indian prosperity is to make institutional reforms on reservations to encourage broad-based investment in a range of industries, as discussed here.
But, But…Price Controls Poll Well!
Politico‘s Jason Millman writes:
How much does Rick Santorum hate President Barack Obama’s health care law? So much that he even opposes the parts a lot of Republicans like.
The Republican presidential candidate, talking health care across the street from Minnesota’s Mayo Clinic Monday morning, blasted parts of the Affordable Care Act that poll well even among Republican voters — like guaranteeing coverage for people with pre-existing conditions and making health insurers cover preventive care.
Santorum, who has touted free market health principles like health savings accounts as an alternative to the Affordable Care Act, defended insurance industry practices the law eliminates, like setting premiums based on people’s health status.
Sigh. I refer my right honorable friend to the smack-down I gave such silliness some time ago:
Asking people whether they support the law’s pre-existing conditions provisions is like asking whether they want sick people to pay less for medical care. Of course they will say yes. If anything, it’s amazing that as many as 36 percent of the public are so economically literate as to know that these government price controls will actually harm people with pre-existing conditions. Also amazing is that among people with pre-existing conditions, equal numbers believe these provisions will be useless or harmful as think they will help.
But as the collapse of the CLASS Act and private markets for child-only health insurance have shown, and as the Obama administration has argued in federal court, the pre-existing conditions provisions cannot exist without the wildly unpopular individual mandate because on their own, the pre-existing conditions provisions would cause the entire health insurance market to implode.
If the pre-existing conditions provisions are a (supposed) benefit of the law, then the individual mandate is the cost of those provisions. If voters don’t like the individual mandate–if they aren’t willing to pay the cost of the law’s purported benefits–then the “popular” provisions aren’t popular, either.
Or, as Firedoglake’s Jon Walker puts it, ObamaCare is about as popular as pepperoni and broken glass pizza.
Even among Republican voters? Good grief.
The Ethos of Universal Coverage
Associated Press photojournalist Noah Berger captured this thousand-word image near the Occupy Oakland demonstrations last month.
(AP Photo/Noah Berger)
Many Cato@Liberty readers will get it immediately. They can stop reading now.
For everyone else, this image perfectly illustrates the ethos of what I call the Church of Universal Coverage.
Like everyone who supports a government guarantee of access to medical care, the genius who left this graffiti on Kaiser Permanente’s offices probably thought he was signaling how important other human beings are to him. He wants them to get health care after all. He was willing to expend resources to transmit that signal: a few dollars for a can of spray paint (assuming he didn’t steal it) plus his time. He probably even felt good about himself afterward.
Unfortunately, the money and time this genius spent vandalizing other people’s property are resources that could have gone toward, say, buying him health insurance. Or providing a flu shot to a senior citizen. This genius has also forced Kaiser Permanente to divert resources away from healing the sick. Kaiser now has to spend money on a pressure washer and whatever else one uses to remove graffiti from those surfaces (e.g., water, labor).
The broader Church of Universal Coverage spends resources campaigning for a government guarantee of access to medical care. Those resources likewise could have been used to purchase medical care for, say, the poor. The Church’s efforts impel opponents of such a guarantee to spend resources fighting it. For the most part, though, they encourage interest groups to expend resources to bend that guarantee toward their own selfish ends. The taxes required to effectuate that (warped) guarantee reduce economic productivity both among those whose taxes enable, and those who receive, the resulting government transfers.
In the end, that very government guarantee ends up leaving people with less purchasing power and undermining the market’s ability to discover cost-saving innovations that bring better health care within the reach of the needy. That’s to say nothing of the rights that the Church of Universal Coverage tramples along the way: yours, mine, Kaiser Permanente’s, the Catholic Church’s…
I see no moral distinction between the Church of Universal Coverage and this genius. Both spend time and money to undermine other people’s rights as well as their own stated goal of “health care for everybody.”
Of course, it is always possible that, as with their foot soldier in Oakland, the Church’s efforts are as much about making a statement and feeling better about themselves as anything else.
Downsizing the Interior Department
Cato has published a new section on www.downsizinggovernment.org that examines the Department of the Interior.
Interior is not one of the largest departments in terms of spending, but it has huge control over the lands and resources of the western United States. It oversees more than 500 million acres of land through the Bureau of Land Management, the National Park Service, the Fish and Wildlife Service, and other agencies. The department also houses the Bureau of Reclamation, which distributes subsidized water, and the Bureau of Indian Affairs, which administers aid programs for American Indians.
Here are some of ideas discussed at www.downsizinggovernment.org/interior:
- Federal Lands: During the nation’s first century, the federal government focused on selling and giving away its lands to individuals, businesses, and state governments. In the 20th century, the government reversed course and began grabbing more land, but federal ownership has not led to sound economic or environment stewardship. A revival of federalism in land policies is long overdue.
- American Indians: The federal government has an appalling record in its dealings with Indian tribes, and since 1824 the Bureau of Indian Affairs has been one of the most mismanaged and destructive of federal agencies. The path to prosperity for Indians is not through federal subsidies and top-down regulations, but through reforms to property rights and other institutions on reservations.
- Water Subsidies: The Bureau of Reclamation operates dams and other water infrastructure in the western states. Its large subsidies for irrigation combined with restrictions on water transfers are contributing to a growing water crisis in many areas. Policymakers should focus on reforms to reduce subsidies, transfer federal infrastructure to state and private ownership, and move towards water trading in open markets.
One interesting thing about reforming the Department of the Interior is that economists and environmentalists share some common ground. Federal policies that set prices for irrigation water, grazing lands, timber, and other resources too low are both economically inefficient and harmful to the environment.
Another interesting thing about Interior is that its long history reveals that special interest lobbying, corruption, and mismanagement are nothing new in Washington. Interior’s troubles have included the “Indian ring” corruption scandals of the 19th century, the Teapot Dome scandal of the 1920s, and Jack Abramoff’s influence peddling during the George W. Bush years.
In 1828, one expert noted that “the derangements in the fiscal affairs of the Indian department are in the extreme… there is a screw loose in the public machinery somewhere.” Fast forward to 2006, and Interior’s Inspector General found that “short of a crime, anything goes at the highest levels of the Department of the Interior.”
Isn’t two centuries of federal bungling and failed policies enough? Policymakers should begin exploring ways to downsize the Department of the Interior.
Labor Law Professors Defy Death Threats in Italy
Pietro Ichino, a professor of labor law at the University of Milan and a senator in the Italian legislature, is known as the author of several “neoliberal” books and studies recommending that the Italian government relax its extraordinarily stringent regulation of employers’ hiring and firing decisions. As Bloomberg Business Week reports, that means that Prof. Ichino must fear for his life: “For the past 10 years, the academic and parliamentarian has lived under armed escort, traveling exclusively by armored car, and almost never without the company of two plainclothes policemen. The protection is provided by the Italian government, which has reason to believe that people want to murder Ichino for his views.”
They’re not just being alarmist. In 1999 and 2002 leftist gunmen associated with the Red Brigades murdered two other reformist labor law professors, Massimo D’Antona and Mario Biagi. (Details here.) Prof. Biagi, a well-known figure nationally, was shot as he arrived at his Bologna home and dismounted his bicycle. While five members of the Red Brigades are serving prison sentences for his murder, sympathizers remain at large, and Ichino’s name appears on a Brigades hit list. A few years back, reports Bloomberg, police broke up a plot on his life that they said involved two students in his own department. Last year another reformist labor law professor, Carlo Dell’Aringa, “received a death threat, written in red ink on the wall of his university’s bathroom.”
Like his slain colleague Biagi, Ichino started out as a man of the Left — a Communist parliamentarian, in fact — who became convinced that the state-enforced equivalent of lifetime job security actually worked against the interests of ordinary young workers, who were increasingly frozen out from being offered jobs in the first place. Increasingly, moderate European opinion is coming to see that view as persuasive — even if few show as much courage as Prof. Ichino in voicing it. Reports Bloomberg: “For those promoting changes to Italy’s labor laws, the day of Biagi’s shooting has become a rallying point. Sympathizers gather every March 19 to ride their bicycles from the train station to the dead man’s house.”
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