May 2012

Will gas prices keep dropping? A recent drive I took ended with a very strange coincidence.  If I were superstitious, I’d regard it as a sign that we’re in for cheaper gas. 

Two weekends ago we drove our daughter to college in central Virginia.  As we started heading out, I noticed that regular at the neighborhood gas station had dropped to $3.65.  That was nice, since the price had been above $3.80 only days before. 

We got off I-66 at Gainesville, which two years ago had been the scene of a locally famous price war that for a while led to gas below $2.00!.  Filling up at that price back then had been a memorable event for me, since gas had nearly hit $3 only months before. 

Further down the road we found prices below $3.50.  We filled up—not quite as good a feeling as $1.98, but not bad.  And then, at the very end of our trip, one station was selling regular at $3.39.  I liked this trend. 

Of course, the trend didn’t continue on the way back—duh.  But then something strange happened.  We pulled into a Gainesville station just before the last stretch home on I-66, and lo and behold—there was a van parked right in front of us with this message stenciled on its rear windshield: 

“CRUISING IN LOVING MEMORY OF CHEAP GAS” 

Googling this phrase turns up nothing, so it’s not like this is a ready-made window stencil purchased by scores of people.  The van we saw may well be the only one in the country carrying this message, and we just happened to pull up behind it after driving all day idly noting gas prices. 

I’m a fan of cheap gas.  It’s good for my wallet, and it’s good for people universally.  If this was an omen of lower prices to come, it was a good omen.

Related links: 

Why fans of cheap gas are more honest than warriors against “oil addiction”

Stop kvetching about Exxon (1-minute video)

On Friday, a divided appeals court rejected a constitutional challenge to a powerful board set up by the Sarbanes-Oxley Act to regulate the accounting industry.  The court’s decision was internally-inconsistent and illogical.  It also provoked a strong dissent from Judge Kavanaugh.  The challenge argued that the Public Company Accounting Oversight Board (PCAOB) violated the Constitution’s Appointments Clause, as well as separation-of-powers safeguards.  Eminent legal scholars have questioned the PCAOB’s constitutionality, such as Law Professor Donna Nagy, an expert on securities regulation, and Professor Stephen Bainbridge, a leading authority on corporate law.  The PCAOB has “massive power,” “unchecked power by design,” according to a Senator who voted to create it.  But it was nevertheless upheld in a 2-to-1 vote by the D.C. Circuit.

The red tape generated by the PCAOB has been very costly to investors and our economy.  $35 billion is the estimated annual cost of complying with just the PCAOB’s rules governing “internal controls.”   A University of Rochester study estimated overall costs of the law to shareholders at $1.4 trillion.  The 2002 law did nothing to protect shareholders: many of the mismanaged companies now engulfed by the mortgage crisis, like Countrywide Financial, were paragons of Sarbanes-Oxley compliance, using compliance with its red tape to mask underlying problems.  The law has driven businesses and jobs overseas, virtually drying up I.P.O.s.  And the PCAOB’s unaccountable, unconstitutional structure gives it an incentive both to overregulate small business, and to shy away from taking meaningful steps that would actually protect the investing public.

The constitutional challenge is a case called Free Enterprise Fund v. Public Company Accounting Oversight Board.

…to promise much and deliver little, if anything — all the while making themselves feel just great. The Israeli news site Ynetnews.com reports:

A Gaza activist told Ynet Saturday that local residents were disappointed by the small quantities of food brought in by two boats carrying international leftist activists.

“Many people thought these boats will make a significant contribution to break the siege, not only politically but also in terms of brining in goods, equipment, food, and medicine,” he said. “However, once it turned out these boats contain too little food and mostly activists…some people left the beach disappointed.”

I bet they were really into being “green,” too. Wonder how much litter they left behind? (Thanks to Margaret Griffis for the Ynet link.)

In response to my two posts on the Service Employees International Union (SEIU), I got forwarded this story. Pro-union student activists, in a recent open letter to SEIU head Andy Stern, angrily denounced what they see as SEIU’s undermining of their efforts, according to Insidehighered.com. The big point of contention is an alleged secret agreement between SEIU and the hospitality union UNITE-HERE on one side, and the “Big 3″ food service catering companies — Aramark, Sodexho, and Compass Group — on the other.

Under the terms of the alleged agreement, Aramark will not oppose union organizing drives at certain locations, in exchange for SEIU agreeing not to unionize other locals. Apparently, this took some student activists at the University of North Carolina, Chapel Hill, by surprise.

Student activists have proven reliable allies to labor groups in recent history, and SEIU eagerly solicited their support at Chapel Hill. But, according to the letter, students did SEIU’s bidding on campus only to be left in the lurch.

According to the letter, North Carolina students began organizing workers — at the behest of SEIU — in 2005. They were joined in these efforts by workers from the Southwest Workers Union, a joint labor venture of SEIU and Unite Here. But after working side-by-side with the students, who said they were subjected to Aramark executives’ intimidation, the union leaders abandoned the cause, the letter states.

“When summer break came, the SWU organizers left, promising to return the following year,” according to the letter. “After weeks of unreturned phone calls, students and workers learned that SEIU leaders had cut a deal with Aramark.”

This begs the question: Why SEIU would seek the students’ help in the first place? The only plausible explanation I can see is to put pressure on Aramark to sign the now-controversial agreement, which, if reports about its terms are accurate, is disturbing on its own.

Union members were not informed of the deal, which specifically stipulates that secrecy is “critical to the success” of the agreement.

So what do the unions get from this deal? In the words of the agreement, the unions get “labor peace.” In short, the companies agree not to interfere with unionization efforts, as long as workers only organize on the sites the companies have approved.

Yes, managers should be able to enter into any agreements they see being in the long-term interest of the companies they run — and in this case, Aramark is within its rights to enter into whatever agreement it wishes to with SEIU or any other union. But giving in to threats of labor disruption — the politely named buying of “labor peace” mentioned above — and colluding with the union to determine employees’ decision of whether to join a union — or not — for them can only set a bad precedent. (Thanks to Ben Cunningham and Eli Lehrer for the Insidehighered.com link.)

It can’t be true.  Canada, that paragon of health equality, the place where all health shortages are shared and shared alike, might have more private health care in the future.  At least, that’s what Robert Ouellet, head of the Canadian Medical Association, wants.

Reports the Globe and Mail:

The natural next step for Canada’s health system is allowing more private delivery, which will give patients more choice, and better access to care, the new president of the Canadian Medical Association says.

“My whole career has been about resolving access issues. This is my battle horse,” said Robert Ouellet, who takes over today as president of the CMA.

“Private delivery is an accepted practice everywhere in the world and it’s time Canada accepted this reality.”

A radiologist by training, Dr. Ouellet, 62, owns and operates five medical imaging clinics in suburban Montreal. He is an unabashed promoter of private-sector delivery of medical care and keen to introduce more competition into Canada’s health-care system, and he knows this will make him a lightning rod for criticism.

Hasn’t anyone told Dr. Ouellet that Canadians are supposed to be proud of their lengthy waiting lists?

Union organizers try to recruit workers by saying that they’ll go to bat for them when things get tough for them. So it’s fair to ask how that contention squares with the story of Anyshya Sanders, a 35-year-old single mother of five, and former employee at All Pro Traffic Control in Las Vegas.

In 2006, reported The Las Vegas Sun recently, the Laborers’ union and the Change to Win federation (a group of unions that broke away from the AFL-CIO in 2005, recruited her as a spokesperson for the the deceivingly named “Employee Free Choice Act” (EFCA), and was fired for her union activity — precisely one of the things unions are supposed to protect workers against. Having had a hard life, and even spent time in prison, Sanders worked hard to put her life on the right track.

In August 2004, she landed a job as a traffic flagger with All Pro Traffic Control, making $11 an hour. The pay wasn’t much, but with some creative financing it was enough to rent a modest town house. Work went well and Sanders said she quickly became a favorite in the workplace. Some contractors, she said, requested her by name.

It was about then that the Laborers’ International Union of America entered her life. Union organizers told Sanders the laborers could deliver better wages — $18 an hour — and health care benefits. “They promised me in an aggressive fashion that I would be OK,” Sanders said. “I soaked up everything like a sponge.”

Still, with five children to feed, the money wasn’t enough and in 2006 Sanders couldn’t make rent. She sent her four young sons to relatives in California while she and her daughter moved into a small one-bedroom apartment in a gritty downtown neighborhood.

Agreeing to speak out on behalf in support of EFCA, Change to Win flew her to Washington in 2007 for a week of meetings and appearances, paid her $300 for new clothes and another $300 to make up for lost wages. Things seemed to be going well, until she returned home.

When she returned to Las Vegas, she said, the union put her through steward training in anticipation of the promised new job.

In the meantime, she continued working at All Pro, where the organizing campaign had all but flamed out and her hours were reduced. Co-workers were told not to talk to her, she said. “My name was a cuss word there.”

Two months later, Sanders said, she was assigned to a road job in a remote part of the valley. She said she turned it down because she had no way of getting there — and the company fired her for “no show, no call.” According to Sanders, George Vaughn, the head of Laborers Local 702, told her to file charges with the federal labor board, seek unemployment and, failing that, welfare.

Weeks of no work turned to months, and Sanders said she called Vaughn again. After she vented for a few minutes, Sanders said Vaughn told her, “Your 15 minutes are over,” and hung up. When Sanders called back, she said, a receptionist told her there was no work — and even if there were, she owed dues money.

Sanders, frustrated, called national union officials in DC, who got Vaughn to give her $800 in cash, but what she really wanted was a job. Then around that time, the National Labor Relations Board ruled that All Pro had harassed employees, but for Sanders, there was still no work, and things quickly turned for the worse.

She ran out of money and now she and her daughter share the spare bedroom of a friend’s North Las Vegas apartment. The other children remain in California.

Sanders is angry at the union for breaking what she saw as its promises after she put her job on the line for its sake.

“I allowed the union to dictate every move. I made a change to win and I lost,” Sanders said. “I was a celebrity. They made me believe I was in it for the long haul. It was too good to be true.”

I don’t think this needs much comment (for that, see here and here), other than to note that Change to Win still features Sanders on its pro-EFCA web page. (For more on EFCA, see here.)

Following up on my earlier post about The Los Angeles Times‘ investigation into allegations of financial malfeasance by the head of a California affiliate of the Service Employees International Union, the union head in question resigned this week.

The head of California’s largest union local has stepped aside in the wake of Times reports that the organization and a related charity paid hundreds of thousands of dollars to firms owned by his wife and mother-in-law.

Tyrone Freeman, president of a Service Employees International Union chapter in Los Angeles, said in a written statement late Wednesday that he was taking a leave of absence and that the local would be placed in a temporary trusteeship.

With embarrassing evidence piling up, Freeman seems to have found it impossible to hang on. Yet it doesn’t seem that he Freeman was about to go easily.

His departure comes as several union staff members told of being pressured by Freeman’s lieutenants to sign a petition in support of him. Some of those who initially refused were transferred to positions far from their homes, according to three staffers who asked not to be identified because they feared reprisals.

About 10 workers who balked at signing the petition had their union-provided cellphone service discontinued, the staffers said.

The petition cited recent “attacks” on Freeman and the local and said, “Let it be clear that we . . . proudly and firmly stand with President Freeman and the work of our local,” according to a copy the staffers provided.

“It’s essentially a loyalty oath,” said one of the workers. He said the atmosphere at the union has been “very tense. . . . There’s a lot of intimidation.”

That kind of intimidation will become more common if the so-called Employee Free Choice Act were to become law; EFCA would circumvent secret ballots by mandating card check organizing whenever unions demanded it — and there is no reason for them not to demand it.

For the full story, see here, here, here, and here.

Today, a divided D.C. Circuit Court of Appeals voted 2-to-1 to uphold a provision of the Sarbanes-Oxley Act, over a strong dissent by Judge Kavanaugh, in the case of Free Enterprise Fund v. Public Company Accounting Oversight Board.   But the court’s decision rests on reasoning that is disturbingly inconsistent.

This case is a constitutional challenge to the PCAOB, the regulatory board set up by Sarbanes-Oxley, as a violation of the Appointments Clause and separation of powers.  The PCAOB is enormously important: The red tape generated by the board has cost the stock market over $1.4 trillion, and annually imposes compliance costs of over $35 billion, while providing only illusory benefits for investors, and driving businesses overseas.   The PCAOB enjoys “massive power,” “unchecked power by design,” according to a Senator who voted to create it.  But rather than being picked by the President with Senate approval, the way important government officials are supposed to be, PCAOB members are picked by SEC Commissioners as a group (which led to a disorganized selection process for the first PCAOB members). 

The lawsuit says that violates the Appointments Clause of the Constitution, which requires that government officials be picked by the President or (for minor officials) by the “Head of a Department.”  The lawsuit also argued that the PCAOB members are so unaccountable to the president, who can’t remove them (the SEC Commissioners collectively can, but only for “willful” misconduct), that it violates separation of powers.

In order to reject the constitutional challenges, the court’s majority had to rely on inconsistent reasoning.  First, it claimed that the SEC’s Chairman is NOT the SEC’s head, but rather “simply one” of “several commissioners,” making the SEC Commissioners collectively the head of the SEC.  See Opinion, at pg. 20 (“The [SEC's] Chairman . . . is simply one Commissioner”); Opinion, pg. 21 (“The commission” is a body “whose ‘Head’ consists of the several commissioners”).  Only by doing that could it rule that the SEC Commissioners collectively are the “Head” of a department and thus are permitted by the Appointments Clause to make appointments.    (Never mind that the Chairman has been described by the SEC itself as its “chief executive” and “head”).

Then, just a few pages later, it suddenly suggested just the opposite: that the SEC’s chairman was, after all, the SEC’s head.  Confronted with the argument that the PCAOB is not accountable to the President through his appointees, such as the SEC’s chairman (who, unlike other SEC commissioners, serves at the president’s pleasure), the court stated that the President does have indirect influence over the PCAOB through the SEC, because the president picks the SEC Chairman, who “dominates commission policymaking.”   See Opinion, Pg. 24.  (It said that “by appointment of the Commission chairman, who serves at the pleasure of the President and often ‘dominate[s] commission policymaking,’ the President can influence Commission policy and control who directs ‘the administrative side of commission business, select[s] most staff, set[s] budgetary policy, and as a consequence command[s] staff loyalties.’”  See Opinion, pg. 24).  But if the Chairman so “dominates commission policymaking,” that is because he is the SEC’s actual “head” (its “top executive,” as the SEC concedes), not a mere figurehead. 

Perhaps it is too much to expect courts to always reach the right result.  But is it too much to ask that they at least use consistent reasoning?  Especially in a case like this, which Judge Kavanaugh noted is “the most important separation-of-powers case regarding the President’s appointment and removal powers to reach the courts in the last 20 years.”