January 2012

Utah Gov. Vetoes Bad Gaming Bill, Self-Regulation Triumphs

by Nick Brown on March 26, 2009 · 1 comment

in Regulation, Tech & Telecom

Last night, the first amendment, self-regulation, consumers, parents, entrepreneurs, gamers, and business won a huge victory in Utah.

In early March, I posted about the “Truth in Advertising” bill running through the Utah legislature.  The bill, in effect, would have made the voluntary Entertainment Software Ratings Board (ESRB) rating system for video games a mandatory system by adding stiff fines ($2,000 per incident) for businesses that sold restricted games to teens or children that did not meet the age requirement for purchase.

The proposed enforcement for this rule was wrapped up in advertising.  So, if a business didn’t advertise that they followed the ESRB system—they didn’t “card” customers buying adult-rated games—they’d be off the hook if they eventually did sell a violent or graphic game to a minor.

Essentially, the bill created a huge incentive for businesses to avoid advertising that they were kid-friendly as it made them responsible for any future failure to card.

This is an obvious and serious flaw in the bill.

On top of that, the bill has been shown to be largely unnecessary.  ESRB President Patricia Vance in an open letter to the Utah legislature explained that,

…the most recent such study reported in May 2008 found that national retailers refused to sell M-rated games to customers under 17 a remarkable 80% of the time, far surpassing the comparable rates of compliance for movies, DVDs, or music CDs rated for a mature audience…according to a recent audit, Utah video game retailers enforce their store policies regarding the sale of M-rated games an impressive 94% of the time — without any laws or requirements that they do so.  That level of compliance took many years to achieve, and speaks to the strong commitment of video game retailers to do the right thing.

To try to improve a 94% adherence to a self-regulated policy, especially with law that encouraged non-compliance, is nothing short of absurd.  As mom would say, “That’s just silly!”

The Salt Lake Tribune called it, “A bullet dodged”.   Adding,

The bill ignored the fact that industry ratings of movies, books, music, video games and the like are voluntary and not meant to restrict anyone from buying the items.  The ratings can provide helpful information to parents, but should not supersede a parent’s decision to let a child buy a game or DVD. In that, HB353 flew in the face of Utah’s traditional support of parents’ rights and would have forced parents, as well as the state, to accept the judgment of an industry rating panel about whether a movie or book is suitable for a child of a certain age.

It was anticipated that the Utah Governor, Jon M. Huntsman Jr., who is rumored to have presidential aspirations, would use the opportunity of the bill as his “save the children” moment for his future political career.  But surprisingly enough, Huntsman and his staff studied the bill carefully and saw its obvious flaws.  The Governor released a statement following the veto:

After careful consideration and study, I have decided to veto HB 353…

While protecting children from inappropriate materials is a laudable goal, the language of this bill is so broad that it likely will be struck down by the courts as an unconstitutional violation of the Dormant Commerce Clause and/or the First Amendment.

The industries most affected by this new requirement indicated that rather than risk being held liable under this bill, they would likely choose to no longer issue age appropriate labels on goods and services.

Therefore, the unintended consequence of the bill would be that parents and children would have no labels to guide them in determining the age appropriateness of the goods or service, thereby increasing children’s potential exposure to something they or their parents would have otherwise determined was inappropriate under the voluntary labeling system now being recognized and embraced by a significant majority of vendors.

A rare moment of sanity in the political world.

Read More: Jack Thompson, the disbarred anti-violent games attorney from Florida and bill’s writer, attacks me in the comment section of an earlier post.

Can he terminate protectionism?

by Fran Smith on March 26, 2009

in Economy, Trade

It seemed like California Gov. Arnold Schwarzenegger didn’t have guts, despite his super-macho screen image.  Yesterday, however, he wrote to  members of the California Congressional Delegation, the country’s most powerful delegation in terms of the key leadership positions they hold, where he urged them to restore the pilot Mexican trucking program to avert trade retaliation.

Schwarzenegger pointed out how Congress’ termination of the program will hurt the economy and jobs, particularly in California:

. . . we must not allow safety to serve as a smokescreen for protectionist measures that cause more economic harm at a time when this country already has serious challenges to overcome. . . .  The termination of the pilot program has not made U.S. roads safer, but it has hurt the economy of California and the nation as a whole.

Beyond my concerns related to this particular episode, I am troubled by the disturbing signals it sends to our most valued trading partners.  In times of economic distress, the one sure way to worsen the plight of American workers is to retreat behind arbitrary and disingenuous protectionist walls.  Now is precisely the time for Congress to further open markets to American products rather than raising additional barriers to trade.

See earlier posts on Mexican trucking here, here, and here.  Will Democratic leaders stand up to the Teamsters on this issue?  Don’t count on it — too many are indebted to the unions for their 2008 win.

Losing talent in these perilous times

by Fran Smith on March 26, 2009

in Bailout Watch, Economy, International, Nanny State

We’re beginning to see the talent exodus from TARP-funded financial institutions.  Yesterday in an op-ed Jake DeSantis of AIG-Financial Products wrote his “resignation letter” saying why he was leaving AIG.  One major reason was the raging mob calling for the heads of those who received retention payments, now called bonuses, and the tepid defense that AIG’s $1-per-year chairman gave before Rep. Barney Frank’s rabid committee.

Today we learned from the Wall Street Journal that several top managers at Banque AIG in France are leaving, which experts say could cause defaults in $234 billion of derivative transactions.  That’s because Banque AIG has to get French banking regulators to approve their replacements.  If the regulators instead put in their own manager that could lead to defaults, since under the derivative contracts, such an appointment would mean a change in control and could null the contracts.

On top of that, two top Merrill Lynch strategists are leaving Banc of America Securities-Merrill Lynch research unit.

Retention payments to try to keep good managers in these trying times — to help resusitate ailing and failing financial firms — seem like a good idea, but not in the face of mob frenzy whipped up by policymakers and so-called community groups like ACORN, which has been leading protests and bus tours to point out “bonus” recipients’ homes.

An earlier post had speculated that London’s financial center could grow in power with U.S. financial talent being driven out.  But that was before vandals attacked the Edinburgh home of the former head of the Royal Bank of Scotland, where they broke windows in his house and his car.  Is London still safe from the anti-capitalist mobs that have threatened chaos at the G-20 meetings next week?  Don’t bet on it.  They too have been stoked up by policymakers’ — and world leaders’ — anti-capitalist rhetoric.

Reverse Tea Party to Reverse Freedom?

by Angela Logomasini on March 26, 2009

in Environment

This says it all: Green groups held a “reverse tea party” by dumping bottled water (minus the bottles of course) into the Boston Harbor. Why? They don’t like private enterprise or private water provision. They want the government to take more of your hard-earned dollars to spend on government water systems.

Yes, indeed, the term “reverse tea party” is oh so appropriate. Our founding fathers protested tyranny and called for freedom with their forward-thinking Boston Tea Party. Today, greens do the reverse. They protest freedom, private enterprise, and your right to choose. They call for more government, more mismanagement of our resources, and less freedom!!

The problems with government water systems (see section on drinking water in the Environmental Source) today have nothing to do with bottled water and privatization. They relate to politics. The federal government forces localities to spend limited precious resources (thanks to the green lobby) to widdle down inconsequential trace levels of certain chemicals in our tap water, greatly reducing funds to address much bigger, serious infrastructure problems.

The solution is not more government. It lies in more flexible standards—and yes—the “dreaded” (according to the greens) American way: free enterprise. Privatization could bring in the financial resources needed for upgrades. Unfortunately, local governments outlawed private provision of tap water decades ago when infrastructure of piped water was first under development. It’s a long road back to fixing that problem, but rather than call for the reverse of freedom and free-enterprise, we should employ the forward thinking of our forefathers whose advocacy for freedom understands the value of human creativity and achievement.

Geithner Seeks More Power to Ruin Our Economy

by Hans Bader on March 26, 2009 · 6 comments

in Bailout Watch, Economy, Politics as Usual, Stimulus to Nowhere

Treasury Secretary Tim Geithner wants a “vast expansion” of his power over the financial system. This is the same guy whose bungled $170 billion AIG bailout gave billions of dollars to wealthy AIG clients like Goldman Sachs, which admits it neither needed nor expected the money it got from taxpayers.

Back in the 1990′s, Geithner, working with the IMF, destroyed Indonesia’s economy, by prescribing disastrous economic policies. The result was massive increases in child malnutrition, riots, and mushrooming poverty, in a major country that once boasted annual economic growth rates of 7 percent. Australia’s long-time Prime Minister Paul Keating has chronicled Geithner’s central role in this disaster repeatedly, but to no avail (Keating was the leader of his country’s Labor Party, so he’s not exactly a doctrinaire conservative. And his rule was marked by economic growth.).

Now, Geithner wants more regulatory power in his own hands, even though unregulated financial institutions (like hedge funds) are doing better than regulated ones, so much so that unregulated financial institutions are being relied upon to bail out regulated financial institutions in Geithner’s toxic-asset buy-up program!

Geithner sent the dollar tumbling yesterday by foolishly suggesting that the dollar might be losing its role as the world’s reserve currency. The head of the European Union yesterday called the Obama Administration’s policy of unprecedentedly massive deficit spending the “road to hell.” The prominent liberal economist Jeffrey Sachs says that the Administration’s toxic-asset buy-up program will “rob the taxpayer” by “buying up toxic assets from the banks at far above their market value.”

Historian and engineer Clayton Cramer has a fascinating analysis of how the mortgage crisis was spawned by regulations adopted under the Community Reinvestment Act, and special interest groups that learned how to game those regulations, like ACORN (a group Obama long worked with). ACORN, a beneficiary of the stimulus package, helped spawn the mortgage crisis by promoting “liar loans.” It has also engaged in extensive financial fraud and vote fraud. The Obama Administration has chosen ACORN to help conduct the 2010 census, which will be used to reallocate seats in Congress.

Obama Chief of Staff Rahm Emanuel received $320,000 while asleep at the switch as a director of the mortgage giant Freddie Mac, a fraud-ridden GSE that helped spawn the mortgage crisis and ended up being bailed out by taxpayers at a cost of over $100 billion.

James Piereson has insightful comments about Geithner’s demand for new regulatory powers (and unnecessary bailouts) here. He also notes that Fed Chairman Ben Bernanke has been essentially refighting the last war, applying remedies that might have been helpful in the Great Depression but are positively harmful now.

Perhaps Bernanke’s most controversial policy has been to print vast sums of money to buy up government bonds, under the rubric of “quantitative easing.” Congressman Ron Paul says this policy, and the massive bailouts, are an inflationary disaster, and that it would have been better for the government to do what it did in response to the sharp 1921 recession — nothing. “He cites the mini-depression of 1921, which lasted just a year largely because insolvent companies were allowed to fail. ‘No one remembers that one. They’ll remember this one, because it will last’” much longer, because the “government just won’t allow the correction the economy needs.”

The 1921 recession speedily ended, without any bailouts or government intervention, although it started out as a very nasty recession, with suffering much worse than in the early days of the Great Depression. The 1921 recession was followed by an economic boom, including 6 percent annual growth rates in the 1920s.

The Obama administration has never explained why such vast powers should be bestowed on Geithner, who cheated on his taxes, lacks expertise in economics, and receives a failing grade from economists. Yet it has relied on him to sell its economic policies, such as its proposed budget (which will add $4.8 trillion in additional debt), $8 trillion in bailouts, a trillion dollar toxic-asset buy-up program, and an $800 billion, economy-shrinking “stimulus” package, all of which contradict Obama’s campaign pledge of a “net spending cut.”

Obama’s Policies Are “A Road to Hell,” European Leader Says

by Hans Bader on March 25, 2009 · 3 comments

in Bailout Watch, Deregulate to Stimulate, Economy, International, Regulation, Stimulus to Nowhere

“The president of the European Union on Wednesday slammed U.S. plans to spend its way out of recession as ‘a road to hell.’ Czech Prime Minister Mirek Topolanek, whose country currently holds the rotating EU presidency, told the European Parliament that President Barack Obama’s massive stimulus package and banking bailout ‘will undermine the liquidity of the global financial market.’”

There’s “one small problem with Geithner’s plan: It will bankrupt the banks,” says analyst Henry Blodgett, triggering a chain reaction of write-offs. Unless, that is, the Treasury Department deliberately and massively overpays for the toxic assets, fleecing the taxpayer, as other commentators predict. The reason is mark-to-market accounting rules, which require financial institutions to write down assets’ value when similar assets are sold by other institutions at fire-sale prices. Many commentators say these regulations should be repealed, including former FDIC Chairman William Isaac, Congressmen Ed Perlmutter (D-CO) and Paul Kanjorski (D-PA), the Wall Street Journal, John Berlau, Jeff Miller, Holman Jenkins, and Newt Gingrich.

Congress is now moving to enact a $6 billion “national service” boondoggle. Similar spending in the past has been used to hire young people to lobby for rent control and against anti-crime legislation, such as “three-strikes” laws and victims’ rights bills.

It’s hard to understand why the government is wasting money on such things, when it already will incur $4.8 trillion in additional debt from Obama’s proposed budget, and $8 trillion for bailouts (not counting another trillion dollars for the toxic-asset buy-up program) and $800 billion for the economy-shrinking “stimulus” package).

So much for Obama’s broken campaign promise of a “net spending cut.” Even his two trillion dollar “cap-and-trade” energy tax won’t begin to pay for all the new deficit spending.

Post-Modern Food Fetish

by Greg Conko on March 25, 2009 · 1 comment

in Agriculture, Culture, Environment, Nanny State, Natural Resources, Regulation, Zeitgeist

I got a good laugh reading this Slate article last night about the First Family’s new vegetable garden on the White House lawn. What struck me most was the article’s sub-title: “Of all the reasons to plant a garden, free food may be the worst.” The author, Jennifer Reese, quotes California cuisine guru Alice Waters praising the stunt. “To have this sort of ‘victory’ garden, this message goes out that everyone can grow a garden and have free food,” said Waters.

Reese doesn’t countenance that kind of, shall we say, natural fertilizer:

Gardens and the food they produce are anything but free, and to suggest otherwise is romantic pastoral nonsense. … It takes many, many hours of toil before you harvest enough “free” eggplant and bell peppers to make a bowl of ratatouille. Though I doubt the Obamas will experience much of this, gardening is incredibly messy, ruins your hands, wears holes in the knees of your jeans, ends up costing 40 times more than you think it will, sucks up whole weekends in a single gulp, takes over your dreams, and frequently breaks your heart.

I couldn’t have said it better myself. I grew up in rural Pennsylvania — spitting distance from the West Virginia border — amidst mile after mile of dairy and truck farms. My own parents were not farmers. But, as children of the Depression, they tried to save money any way they could, and they kept several vegetable gardens that in any given year dwarfed the land surface area of my first three homes combined. That, in turn, meant dozens upon dozens of hours in the spring, summer, and fall for Dad, Mom, my siblings and me preparing seed beds and planting, pulling and hoeing weeds, and picking beans, peas, tomatoes, squash, sweet corn, lettuce, parsley, onions, carrots, parsnips, beets, peppers, and various fruits and berries. Worst was the back-breaking work of digging and harvesting row after row after row of potatoes.

To a pre-teen and then teenage kid, that sort of work seemed to be the worst possible way to spend a spring weekend or summer afternoon. But, my family were pikers compared to those of many of the kids I went to school with. People who actually farm for a living have it far far worse — up before dawn to milk the cows, then off to school, and immediately back home to help with another milking. Indeed, there’s very little that’s romantic about keeping a big backyard garden, and less still about the actual practice of producing meaningful amounts of food. But, of course, last Thursday’s photo op may be the last time any member of the First Family has to actually do it. Reese writes, “By Mrs. Obama’s own admission, the White House vegetable patch will be tended mostly by the White House staff.” It would, in fact, be good for this country’s kids to know more about where their food comes from. But, the First Lady’s Potemkin Garden certainly won’t teach them.

$2 Trillion Tax from Obama: Hidden Costs of “Cap-and-Trade” Scheme

by Hans Bader on March 24, 2009 · 3 comments

in Bailout Watch, Economy, Energy, Environment, Global Warming, Politics as Usual, Regulation, Stimulus to Nowhere

Obama’s proposed “cap-and-trade” carbon tax on energy use and utility bills is expected to raise up to $2 trillion, more than the $646 billion the Administration earlier estimated. The Washington Examiner‘s Tim Carney explains how this hidden tax works.

(Before his election, Obama explained that electricity bills would “skyrocket” under his Administration, but the press by and large wasn’t interested in reporting it).

The $2 trillion raised by Obama’s cap-and-trade scheme may be dwarfed by the money made, at consumers’ expense, by well-connected corporations that have learned how to game such schemes.

It won’t put much of a dent in the $4.8 trillion in additional debt resulting from Obama’s proposed budget, or the $8 trillion in spending commitments incurred by the Obama Administration (not counting another trillion dollars for the toxic-asset buy-up program and $800 billion for the economy-shrinking “stimulus” package), all of which contradict Obama’s campaign pledge of a “net spending cut.”

But you sure will notice it in your electric bills if it becomes a reality.

Osorio: Specter Says ‘No’ on Card Check

by Richard Morrison on March 24, 2009

in Economy, Employment

An update from our very own Ivan Osorio:

Sen. Arlen Specter (R-Penn.) is expected to announce this afternoon that he plans to vote against cloture on the so-called Employee Free Choice Act, according to Grover Norquist, president of Americans for Tax Reform, who was called by Specter’s office. He announced this at the Capital Research Center labor conference, at which I spoke on a panel this morning.

CongressDaily is also reporting the news.

Toxic-Asset Buy-Up: “Pure Plunder”?

by Hans Bader on March 24, 2009 · 1 comment

in Bailout Watch, Deregulate to Stimulate, Economy, Politics as Usual, Regulation, Stimulus to Nowhere

People who have actually read the fine print of the Administration’s trillion-dollar toxic asset buy-up program don’t like it. One calls it “pure plunder.”

Both liberals like Nobel Laureate Paul Krugman, and conservatives like Chris Stirewalt, sum up the program as “Heads I win, Tails the Taxpayers Lose.”

Others argue it provides “public subsidies” for hedge funds that don’t need them, and for “zombie banks” that ought to be shut down to cut the taxpayers’ losses.

Even Harvard business law professor Lucian Bebchuk, who once advocated buying up toxic assets, now says that taxpayers may end up being fleeced by the toxic asset program, and that it would have been better and cheaper to let AIG go bankrupt rather than spending $170 billion bailing it out.

In essence, the U.S. Treasury will “become the new AIG. In order to get hedge funds to buy up toxic debt, Obama is proposing that the Treasury provide loans up front and insurance against potential losses on the back end.”

The Administration claims taxpayers won’t lose a full trillion, because the assets aren’t as worthless as their current market prices suggest. But if that’s true, why does it continue to enforce accounting rules that force banks to value their assets at the current depressed market prices? Either the accounting rules rightly value assets — in which case taxpayers may end up losing a trillion dollars — or they are wrong — in which case the rules should be repealed, so that banks, not taxpayers, can take on the risk of holding the assets. (If these rules, known as “mark-to-market” accounting, had been in place in the 1980s, “every major commercial bank would have collapsed.” As we noted earlier, many banking officials, economists, and lawmakers support junking those accounting rules).

Many bailouts, like the $170 billion AIG bailout, have been grossly wasteful, as former banking regulator William Seidman notes. For example, “We paid off huge debts that AIG had in the swaps market, which we probably did not have to do.” That includes paying billions to AIG customer Goldman Sachs, which Goldman readily admits it did not need to survive.

Don’t trust politicians who say their spending programs are needed to avert disaster. Obama claimed the $800 billion stimulus package was needed to avert “disaster” and “irreversible decline.” But the Congressional Budget Office admitted that the stimulus package would actually shrink the economy in the long run.

In the Asia Times, Martin Hutchinson notes Fed Chairman Ben Bernanke’s role in spawning asset bubbles and the current financial crisis, his refusal to face his mistakes, and his inflationary policies, which now threaten to erode the dollar’s status as the world’s reserve currency (impoverishing America in the process).

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