Archive for the ‘Regulatory Studies’ Category
How, Again, Is This a Good Use of My Tax Dollars?
This week, Robert Cresanti, the under secretary of commerce for technology, presented the first-ever “Recognition of Excellence in Innovation” award to ODIN Technologies of Dulles, Virginia.
Why on earth a federal bureaucrat should run around giving awards to local firms is beyond me. Perhaps Technology Under Secretary Cresanti could have taken the day off. Or maybe just retired, if no actual work is pressing for his time.
Let’s make the “Recognition of Excellence in Innovation” award a really special honor by discontinuing it. (Tell ODIN that nobody could ever reach the standard they’ve set.)
I mean, really. Mad as hell and not gonna take it any more. Happy Friday.
The Sun: Attracting Global Warming Complaints?
Would you believe the sun’s magnetic field is a culprit?
According to a new study from the Danish National Space Center, cosmic rays created by the explosions of distant stars play an important role in cloud formation in the earth’s lower atmosphere. Those clouds have a cooling effect on the planet. The sun’s magnetic field, however, interferes with this process to some degree, and that field has doubled for some reason in the 20th century.
According to the Space Center’s website:
The resulting reduction in cloudiness, especially of low-altitude clouds, may be a significant factor in the global warming Earth has undergone during the last century.
Grist for the mill. I’m sure it will only be a matter of time, however, before someone claims that the Danish National Space Center is secretly on the Exxon take.
Debating Darwin
Michael Shermer, a leading skeptic and bestselling author, will speak at Cato on October 12 on his new book, Why Darwin Matters: The Case against Intelligent Design. Providing highly critical commentary will be Jonathan Wells, author of The Politically Incorrect Guide to Darwinism and Intelligent Design. Shermer, once a creationist himself, argues that evolutionary theory is the foundation of modern biology. He concludes, “Darwin matters because evolution matters. Evolution matters because science matters. And I liked this line: “Of the three intellectual giants of that epoch–Darwin, Marx, and Freud–only Darwin is still relevant for the simple reason that his theory was right.” Join us next Thursday, or watch it on the web.
Dust in the Wind
For those of you still under the impression that federal environmental regulators are sober-minded professionals who cooly and reasonably guide regulatory policy in the public interest with both emotional detatchment and common sense, I offer you this story, which reports that farmers will now be required to control the amount of dust kicked up from their fields.
Iowa Senator Charles Grassley was quick to tag the rule profoundly “idiotic.” While I agree, it’s hard to muster much sympathy for farmers given the economic assault they have launched on non-farmers via federal and state ethanol subsidies and consumption mandates. So in this case, I root for mutually assured destruction.
White Coats Über Alles
Last week, a group of scientists announced the formation of a new coalition — Scientists and Engineers for America (SEFA) — to campaign for politicians “who respect evidence and understand the importance of using scientific and engineering advice in making public policy.” While the group professes to be nonpartisan, “the group will discuss the impact the Bush Administration’s science and technology policies have had in their fields and the need for voters to consider the science and technology policies by candidates in this year’s mid-term elections.”
I imagine that most people would agree that, in the words of SEFA, “Scientists and engineers have a right, indeed an obligation, to enter the political debate when the nation’s leaders systematically ignore scientific evidence and analysis, put ideological interests ahead of scientific truths, suppress valid scientific evidence and harass and threaten scientists for speaking honestly about their research.” But there’s more than a whiff of the sentiment here that Americans should just shut up and let the guys in the white coats run the country.
What irks me about the increasing bossiness of the self-appointed guardians of “science” is the lack of humility about their own profession.
First, there is disagreement among scientists about many of the issues they are concerned about — like global warming — and it’s not clear even to scientists exactly what is going on in the atmosphere. Assertions to the contrary are simply dishonest.
Second, scientists of all people should know that scientific truth is not determined by a show of hands. Theories stand or fall on hard data and evidence, not majority votes within politicized professional bodies. Virtually every single thing that the scientific “consensus” believes today was once a fringe minority perspective. Would we ever have arrived at our present intellectual location had minority dissenters been run out of town on a rail or burned at their professional stake? Scientific theories demand criticism to fulfill their promise. Scientists should welcome a public “kicking of the tires” and not try to punish those who engage in it.
Third, scientists might be able to better inform society about the facts of various matters, but they should not be allowed to dictate to society how it deals with those facts. The judgment of scientists regarding the proper trade-offs between this or that set of policy options is no better than yours or mine. In short, they have a lot less to contribute to the policy world than many people apparently think.
Finally, asking scientists to settle our policy problems for us inevitably politicizes science and corrupts the entire endeavor.
So to SEFA, I say “zip it.”
Feariness about Data Loss
In the spirit of Stephen Colbert’s “truthiness,” here’s another useful term for the pop lexicon:
fear i ness (fir’ e-nes) n. The quality of being feared, even though logic and/or evidence indicates there is little to fear.
A prime example of feariness right now is data loss — the loss of control over confidential information that could lead to violation of a person’s privacy, identity theft, and fraud. This feariness has been fanned by the recent thefts of government and corporate computer hardware containing important data files.
Though privacy violations and fraud are worrisome, an article in today’s New York Times explains that much of the alarm over data loss is just feariness:
The veterans’ laptop episode underscores the crucial distinction between data loss and malicious data theft — a distinction that has often been glossed over or ignored in the recent wave of alarming disclosures of data breaches at government agencies, universities, companies and hospitals. In most cases, the consequences — financial and otherwise — of the data losses have been slight.
Public Health & Economic Literacy
My former research assistant is now pursuing a master’s degree in public health at Harvard. She recently blogged about her economics course:
During econ class today, the professor explained in great detail the ways in which the federal government tinkers with agricultural output, like price floors and crop restriction and so forth. A lot of my classmates were genuinely surprised at the extent to which government messes with food production to placate the farm lobby, and that, in turn, surprised me. I thought most people — or most well-educated grad students and medical residents, who make up my class — knew all about concentrated benefits/diffuse costs, and why we probably pay more for milk than we should. At one point, a student from India, astonished, said, “You mean the government actually sets aside these funds every year for this purpose?” Professor: “Of course not. We run deficits.”
Again, these students made it all the way to Harvard without any exposure to such things. Makes me wonder if any research has been done on the economic literacy of the public health profession. (E-mail me here if you’re aware of any.)
Let’s just hope that Adrienne’s econ class is a required course.
How I Learned to Stop Worrying and Love Behavioral Economics
Peter raises the threat that behavioral economics poses to free market policy. I’m less concerned about this movement, in large part because its teachings can be turned against central regulators.
Here’s law professors Stephen Choi and Adam Pritchard, from the conclusion to their excellent 2003 article Behavioral Economics and the SEC (from the Stanford Law Review; working paper version available here):
Regulators are vulnerable to a wide range of behavioral contagion. Regulators may suffer from overconfidence and process information with only bounded rationality. Heuristics play a large role in how regulators make decisions. Even with expertise, regulators may misapply heuristics across the spectrum of different regulatory problems. Regulators may also suffer from confirmation bias, supporting prior regulatory decisions whatever the wisdom of the decisions. Read the rest of this post »
A Compelling State Interest in… Fabulous Decor?
I know, this one’s outside my bailiwick, but can you blame me? Apparently New Mexico has forbidden interior designers from calling themselves “interior designers” unless they are officially certified by the government.
What, exactly, is the compelling state interest for such a ban? Are New Mexico legislators fearful that citizens will suffer irreversible harm from bad Feng Shui? “You’ve lined up your dining room table with your couch?!? Are you mad!?!”
Or have they developed such a keenly felt artisitic sensibility that they must spare New Mexicans from a return to the “Interior Desecrations” of the 1970s?
As a forthcoming Cato Institute paper reveals, state licensure of professionals is a bad idea even in important areas like teaching (“Giving Kids the Chaff: How to Find and Keep the Teachers We Need“). That it is even contemplated in interior design is, at the very least, decidedly tacky.
Hat tip, Jacob Sullum.
Watching the “Lack of Competition” Meme
Ars Technica — a wonderful publication with brief, informative, and interesting pieces on technology — is showing a little sloppliness in covering the broadband competition issue. The question whether there is sufficient competition in the provision of broadband Internet service underlies the debate about “net neutrality” — whether there should be public utility regulation of broadband.
Discussing FTC chair Deborah Majoras’ speech at the PFF Aspen Summit, an Ars reporter casually observes, “[M]arket forces really do not exist when it comes to broadband.” That’s at least overstatement. A little more caution would be good given the centrality of the issue.
To show the existence of a duopoly (which is not inherently a competition-free situation), the report links to an earlier Ars piece interpreting a study as showing “not much” competition between DSL and cable. But that conclusion goes only to price competition. And it’s a little overstated, too.
The actual study, from a group called Kagan Research, seems to show that DSL is the low-cost option (and getting lower), while cable is the high-bandwidth option (getting higher in bandwidth while dropping in cost more slowly). That diminishes head-to-head price(-only) competition because each is focused on a different niche. But they’re still in competition.
Capitalism Saves
The Sunday New York Times has a great article — the first of a series on aging — titled “So Big and Healthy Nowadays That Grandpa Wouldn’t Even Know You.” Reporter Gina Kolata begins with this 19th-century biography:
Valentin Keller enlisted in an all-German unit of the Union Army in Hamilton, Ohio, in 1862. He was 26, a small, slender man, 5 feet 4 inches tall, who had just become a naturalized citizen. He listed his occupation as tailor.
A year later, Keller was honorably discharged, sick and broken. He had a lung ailment and was so crippled from arthritis in his hips that he could barely walk.
His pension record tells of his suffering. “His rheumatism is so that he is unable to walk without the aid of crutches and then only with great pain,” it says. His lungs and his joints never got better, and Keller never worked again.
Poker and Sausage
Forbes today posts a terrific article looking at many of the peripheral issues surrounding the online gambling debate that I touched on yesterday. A few key passages:
Big credit-card associations MasterCard and Visa have allowed issuing banks to prevent payments from going through to Internet gambling sites for several years by using specially coded computer software that identifies a vendor as an online gambling site. American Express also blocks transaction with gambling sites. The online payment service PayPal actually got into hot water over the issue and had to pay $10 million to the federal government two years ago to settle charges it helped facilitate illegal online gambling.[...]
But with billions of such payments made every year, compliance with a new set of monitoring laws will be difficult at best and financially onerous to say the least. Smaller banks would be hit harder than larger banks, which have the resources to build the compliance technology that would be needed to track payments and block them if need be. Smaller banks are already struggling with the additional costs of complying with stricter anti-money laundering rules under the Patriot Act.
[...]
Blocking wire transfers through banks would force people to be more creative if they still wanted to use the online sites–for example, opening accounts in foreign banks or using non-U.S. Internet payment services.
Certainly, the House bill, should it become law, would be a boon to PayPal because it essentially eliminates all other online payment service competitors from the U.S. market. That would include Neteller, a U.K.-based online payment service, whose stock was down 15% on the London Stock Exchange’s alternative investment marketplace, and Firepay, owned by FireOne Group, whose stock was off nearly 20% on London’s AIM market. Both those companies would have to give up their online gambling site customers if they wanted to do business in the U.S. “It’s a protectionist bill for PayPal,” says Cato Institute’s Radley Balko.
Not surprisingly PayPal, owned by eBay, enthusiastically supported last week’s legislation. Its only remaining competitor in the U.S. market would be Google’s fledgling Internet payment service.
But other financial firms have been supportive of the effort to clamp down on Internet gambling. In a statement Tuesday, MasterCard said the vast majority of its cards deny authorization for Internet gambling. “MasterCard will continue to work aggressively with all appropriate parties to combat illegal Internet gambling,” it said.
It isn’t surprising that the credit card companies are supporting the ban. They already agreed to block their customers’ access to gambling sites and offshore payment services years ago, under threats from the Justice and Treasury Departments, as well as from aggressive state attorneys general, particularly New York’s Elliott Spitzer. It’s a similar story with the larger banks, who can absorb the costs associated with the news legislation. Probably doesn’t hurt that it’ll deliver a blow to their upstart competitors, who will have to spend a higher percentage of operating costs to comply with the law than will the bigger banks.
And neither banks nor credit card companies want to incur the wrath of the ban’s supporters in Congress, who some insiders I’ve spoken with say have made clear that how these industries approach the gambling ban might well effect the outcome of what the banking and credit card industries consider to be higher-priority issues.
All of which means banks and credit card issuers are supporting the online gambling bill, even though it will raise the cost of doing business, and require them to infringe on the privacy of their customers.
Sausage-making at its finest.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
