Archives for November, 2007
Celebrate the Repeal of Prohibition, YouTube Style
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Raise a glass to 21st Amendment!
Pruning Walled Gardens with the Shears of the Free Market
In an unexpected announcement on Tuesday, Verizon Wireless announced that it will allow any device or application to access its network starting in mid-2008. This decision marks a water-shed moment in the history of wireless communications, as never before has a national network allowed such a wide range of devices to communicate on a shared medium.
Whether Verizon Wireless can live up to its bold claims remains to be seen, but at the very minimum we’ll witness a proliferation of original wireless devices ranging from cameras to appliances.
Liberal supporters of government intervention will no doubt argue we should thank the FCC for Verizon’s decision. But in truth, market pressures are to thank for giving private companies incentives to relax proprietary platforms.
Rewarding Short-Sightedness: The Grasshopper Exploits The Thrifty Ant
The federal government is rewarding irresponsible people who chose to live for the moment, on borrowed time. It is planning to bail out people who used adjustable-rate mortgages to buy homes bigger than they needed or could afford, in the myopic belief that interest rates would never rise.
When I obtained a home mortgage in March 2004, I had a choice between a fixed interest-rate mortgage with a 5 percent interest rate that would never rise, and an adjustable-rate mortgage that would start at well under 5 percent but might rise considerably if interest rates rose in the future. I knew interest rates would rise, so I got the fixed-rate mortgage. I was planning for the long term, and was willing to pay more in the short-run to ensure lower payments in the long run. To afford those payments, I bought a little two-bedroom house that I could afford even on a fixed-interest rate.
LOST: Let’s Regulate Warp Drive While We’re at It.
In recent years, conservatives and libertarians have gone up in arms over the United Nations Law of the Sea Treaty (LOST). CEI’s own take on it, from Doug Bandow, is found here. I am a bit torn over the treaty because a number of Navy friends, all of whom I like and respect, tell me that LOST really will make the seas a lot safer.
But, whatever the case, I’ve always had the most interest in the treaty provisions related to seabed mining operations. They’re silly and collectivist in any number of ways but, for me, that isn’t really even the point.
The real point, I think, is that we’re trying to write regulations for something we have no idea how to do. Regulations for warp drives, indeed, have about as much relevance as those on deep sea mining.
Getting up ANYTHING from the deep seabed is really, really hard. Let’s take the most successful treasure hunt of modern times, the recovery of the gold-laden Central America that Gary Kidner discusses in his excellent Ship of Gold in a Deep Blue Sea.
Bond Rating Meltdown
Yesterday, I wrote about the “Massive Bond Rating Scam,” and how irresponsible bond-rating agencies, shielded by regulation against competition, have contributed to the mortgage meltdown by giving high credit ratings to risky mortgage-backed securities and reckless bond-insurance companies, even while giving poorer credit ratings to reliable borrowers who pose no risk of defaulting.
Here’s an additional perspective on how bond-rating agencies like Moody’s and Standard & Poor’s have failed their task. I don’t agree with everything in it (for example, the bond-rating agency practices it likens to “payola” imply that payola is always a bad thing, when in fact it can be economically sensible in the music business), but much of it is right on the money, and quite damning. It is ridiculous that borrowers with good credit pay money to have their bonds “insured” by bond-insurance companies (like MBIA and Ambac Financial) many of which are themselves in bad shape.
More on Indictment of Dickie Scruggs, Tobacco Settlement Lawyer
Overlawyered has more coverage of the indictment of Dickie Scruggs, the rich trial lawyer who helped bring about the tobacco Master Settlement Agreement that settled lawsuits by 46 states. I earlier discussed how the settlement made undeserving trial lawyers obscenely wealthy, and how it ripped off consumers — in whose name many of the lawsuits leading to the tobacco settlement were brought — here. Even the American Bar Association’s publication has taken a dim view of the settlement, as you can see here.
Cyber Cold War? Probably Not
McAffee, a company that makes cyber security software, has released a report warning of a new “cyber cold war.”
I’m skeptical of how big a deal this is from a national security standpoint. Many businesses that have neglected security may face real problems. But I think most have done a decent job. On the whole, however, things that are really important (say, the electric grid, nuclear missile launches) are probably less vulnerable to outside attack than they were before computer systems. Although traditional espionage could always do in these systems (infiltrate the agency, steal codes, bribe employees), nearly everything really critical simply can’t be accessed from outside of certain secure facilities. Particularly post-9/11, even systems that probably aren’t truly mission critical have been physically firewalled in just this way. For example one well-known security related government agency I’ve worked for requires biometric identification of its own supervisors to manage its scheduling systems. The systems, furthermore, simply can’t be accessed over the public Internet.
I also don’t see a physical way to bring it down without physically destroying each node. Sure, cyber-attack is possible. But I don’t believe it’s a major national security threat.
Hilariously Hypocritical Claim of Judicial Activism
The Brady Campaign has spent years trying to convince the courts to strike down a federal law, passed with bipartisan support, that bans suits against gun makers for acts committed by criminals. It has spent great effort to get judges to override a popular law, under a novel “separation of powers” argument.
But yesterday, its head, Paul Helmke, wailed about “judicial activism” that supposedly overrides “the will of the people” in an editorial in the Atlanta Journal. His complaint is like the pot calling the kettle black.
The reason for his wailing is that the D.C. Circuit Court of Appeals struck down Washington, D.C.’s handgun ban, citing the Second Amendment “right to keep and bear arms.”
Whatever you may think of the D.C. Circuit’s decision, it is based on a plausible interpretation of the Constitution’s text.
The same can’t be said for the Brady Campaign’s bogus claim that the federal law that protects gun-makers violates the “separation of powers” — an erroneous interpretation of an amorphous concept that isn’t even mentioned in the Constitution’s text, but whose existence is reflected in specific constitutional provisions, like the Appointments Clause, that prevent conflict between branches of government, and limit the diffusion of government power.
The Brady Campaign claims that the federal law limiting gun lawsuits (known as the Protection of Lawful Commerce in Arms Act (PLCAA)) violates “the separation of powers” because it affected pending cases against gun manufacturers, supposedly infringing on judicial prerogatives. So what? Legislatures change the law in ways that affect pending cases all the time.
The classic example was the Civil Rights Act of 1964. It contained provisions that abated pending criminal prosecutions against people who engaged in sit-ins, even if the sit-ins technically violated state laws against trespassing. The Supreme Court did just that in Hamm v. City of Rock Hill (1964), overturning many convictions and dismissing many prosecutions, even though that affected pending cases. Federal laws often preempt state law.
David Boaz of the Cato Institute discusses the broader implications of Helmke’s argument.
Radiating Fear
A new report today warns that increased use of CT scans and subsequent increased exposure to radiation could account for nearly 2 percent of cancer (a figure some say is an exaggeration). The usage of CT scans has increased dramatically over the last couple of decades, and the authors of the study are apparently concerned about the public health risk that the scans pose. I doubt however that they’ve quantified the number of lives that CT scans have saved by accurately diagnosing conditions early.
These same scientists released an early study in 2001 which led to government recommendations on how to limit scans on children. This latest report may revive discussion about ways to curb the use of CT scans. But increased regulation of medical diagnostic tools is not the way to save lives. Restricting the use of CT scans will simply drive up the cost and ensure that fewer people get the right diagnosis in time.
A better solution, in response to radiation concerns, is advancing technology, which is already in process. Scientists have developed new scanners and new methods of CT scanning that retain the picture quality while reducing radiation. Because legislation moves at a much slower pace than scientific advancement, any regulation on CT scans will impede science’s progress toward more effective and safer scanners.
Tobacco Settlement Lawyer Dickie Scruggs Indicted
Dickie Scruggs, one of the lawyers who helped bring about the 1998 tobacco Master Settlement Agreement, has just been indicted on bribery charges.
Under the Master Settlement Agreement (MSA), trial lawyers received $15 billion (not million, billion) from the big tobacco companies, in a deal which also provided the tobacco companies who joined the deal with protection against competition from little tobacco companies that refused to join the deal and pay off the trial lawyers. 46 States and 6 territories entered into the deal, which gave state governments billions of dollars. CEI is challenging the deal in court.
As I noted in the Wall Street Journal, lawyers in New York State received $625 million under the deal, just for working on a copycat lawsuit.
Massive Bond Rating Scam
Even the most poorly-run state has less chance of defaulting on its debts than a typical well-run company. That’s because states, unfortunately, have the power to tax the living daylights out of their citizens — a prerogative businesses, which make money off of voluntary transactions, lack.
Yet the bond-rating agencies maintain the ridiculous pretense that states and local governments are risky creditors, by giving states low single “A” ratings while giving the municipal-bond-insurance companies that insure the states’ bonds a top “AAA” rating, even though some of these companies are in “awful” financial condition!
The bond-rating agencies only maintain this pretense domestically. In international markets, they give state governments what are effectively higher ratings, candidly explaining to investors that any American state government is unlikely to default.
Bureaucracy Isn’t the Answer
Apparently California attorney General Jerry Brown believes that bureaucracy is the answer to alleged environmental woes. He and ten other state attorney generals have launched a lawsuit against the Bush Administration for trying to cut a little bit of bureaucratic red tape for America’s small business. At issue is Environmental Protection Agency’s attempt to reduce paperwork for small companies that contribute a total of less than 1 percent of “releases” under the Toxics Release Inventory. Jerry Brown complains in today’s in The Los Angeles Times about such changes, whining: “As we swim in this chemical soup that modern society serves up, we certainly have a right to know what we are encountering.”
What a bunch of bunk! As pointed out before on the Open Market Blog and in CEI publications (see pages 179-182 of this document), this reporting mechanism had no real impact on public health. Instead it simply serves the agenda of the greens–and public officials like Jerry Brown–to needless hype risks about chemicals.
Searching for (perfect) safety
The Financial Times today has a very perceptive article, “Too much safety in America’s playrooms,” by Patti Waldmeir. Waldmeir points to the current issue of Chinese toy recalls, and American parents’ search for perfect safety:
Americans will never admit it, but there can be such a thing as too much safety - even when it comes to toys from China. At the best of times, America’s attitude to its children borders on saccharine sentimentality (I should know: I have two of them). But after this year’s bumper crop of Chinese toy recalls, parental hysteria has hit new levels - with emotion and politics threatening to pollute rational debate on how best to solve the toy crisis.
Waldmeir notes that in the real world, searching for “perfect safety” has some trade-offs – a point often neglected by nanny state advocates:
In the best of all possible worlds, every American child would be tested to see if their toys had harmed them. But in the real cost-benefit world we all live in, perfect safety costs money. The heart says that one child harmed is one too many. But the question is: how much we are prepared to pay to make sure that not even a single child is injured?
She points to the massive number of lawsuits that have been filed against Mattel on behalf of children who had been exposed to some recalled toys, and notes that the market is punishing Mattel for its apparent lapse in not vetting its suppliers and allowing unsafe toys to be sold under its brand: People are buying other manufacturers’ toys from other developed countries.
Her column concludes:
“We need to strike a balance between protecting our kids and protecting the capacity of corporate America to employ people so they have money to pay for the toys,” says Mike Lyle, a product liability expert at law firm Weil, Gotshal & Manges. “It’s a balancing act”.
There is no such thing as perfect safety - even in America.
Paternalism to the Nth Degree
A new bill proposed in Massachusetts would make it illegal for parents to spank their children. Much of the discussion centers on spanking and how harmful or effective it is. Toddlers don’t have the ability to reason as adults can, and they cannot comprehend why certain behavior should be avoided (often for their own safety). Spanking is a visceral tool parents can use to teach their children which actions are unacceptable.
This line of reasoning however, neglects the bigger issue at the heart of the debate: Regardless of whether or not spanking a child’s gluteus maximus is effective, the government does not have the right to interfere in this matter. Kathleen Wolf, the nurse who penned the bill, cites the fact that domestic violence laws apply to everyone in the house but children. She fails to note federal and state child abuse laws already exist across the nation. For domestic abuse, authorities can intervene only after the victim files charges or police find enough evidence to file their own charges. For child abuse, again, enough evidence must be present before the authorities can step in.
If it is child abuse, why does Massachusetts need a separate law to address spanking? The answer is, that it isn’t physical abuse. The reasoning seems to be that spanking is mentally abusive to children, therefore there wouldn’t be any evidence. Trying to regulate mental abuse is dangerous new territory for lawmakers. Ask any psychiatrist and they will probably tell you that in order to avoid mental abuse, the government would have to prohibit a good 90 percent of parental behavior (or they wouldn’t say anything to avoid losing customers).
How far can legislation like this go? There really is no limit. Will the state eventually try to regulate how hard parents can hug their children or what games they can play? Once they have a foot in the door, like nosy relatives you can’t avoid, regulators can interfere in any part of our “private” lives.
Dr. Robert Cade, RIP
At CEI, we like to celebrate inventors, innovators, and those bold souls whose unyielding curiosity help make the world better. Such a person was Dr. Robert Cade, who passed away yesterday. His invention is one so ubiquitous that today it’s hard to think of the world without it: Gatorade. Reports The Gainesville Sun:
Cade, a former professor of nephrology at the University of Florida’s College of Medicine, was something of a Renaissance man. When he wasn’t concocting the strange brew that would become the world’s best-selling sports drink, Cade was reciting the poems of Alfred Tennyson and playing the violin.
“He was a man with one of those unique minds,” said Dr. Dana Shires, who helped Cade develop Gatorade.
Cade, who had long suffered from heart and kidney disease, died at Shands at UF around 10 a.m. Tuesday.
It was Cade’s unique mind, combined with the needs of the Gator football team, that led to the creation of Gatorade and the beginnings of a multibillion dollar sports drink industry. As the now legendary story goes, the Gatorade saga began in 1965 with a seemingly silly question posed by then-assistant UF Coach Dwayne Douglas.
“Doctor,” Douglas asked, “why don’t football players wee-wee after a game?”
“That question changed our lives,” Cade told the Associated Press in 2005.
And it changed sports forever, as Dr. Cade’s invention became the favorite means to rehydrate athletes of every major major American sports league.
Of course, as a UF grad myself, I’m glad he lived long enough to see his drink put to a use he probably never envisioned — to celebrate his drink’s namesakes winning the national championship by the now-traditional Gatorade soaking of the coach. RIP
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