January 2012

FDIC Prepares for “an even-larger number of bank failures” in 2010

by Daniel Compton on December 17, 2009 · 1 comment

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

In a display of supreme confidence in the strength of the American economy, the Federal Deposit Insurance Corporation announced a 2010 budget increase of close to 54% earlier this week.  The FDIC’s annual operating budget grew from $2.6 billion in 2009 to $4 billion for 2010.  The largest portion of the increase is devoted to funding takeovers of failed banks.  The 2009 budget allotted $1.3 billion for this purpose, while the new budget devotes $2.5 billion—nearly twice the amount.  Also in the budget is an increased allocation for staffing.  The FDIC intends to bring on over 1,600 new employees, most of whom are to be hired on a temporary basis, increasing their total staff by about 24% to 8,653.

And what is the impetus for this greatly increased budget?  The press release accompanying the new budget makes it clear that the increase is intended to “ensure that [they] are prepared to handle an even-larger number of bank failures” in 2010.  A total of 133 banks have failed so far in 2009, up from just 28 the previous year.

Clearly, the FDIC must not have gotten word that the recovery has begun.

Comprehensive Immigration Reform Helps Highly Skilled Immigrants

by Alex Nowrasteh on December 17, 2009

in Economy, Employment, Labor, Mobility, Regulation

Section 320 of the  The Comprehensive Immigration Reform for America’s Security and Prosperity Act of 2009 H.R. 4321 (CIR ASAP) is fantastic.  It exempts from numerical caps on employment based green cards those aliens who have earned a master’s or higher from an accredited university in the U.S., those who received postdoctoral and medical training in the U.S., and those who earned a master’s in science, technology, engineering, or mathematics.

Currently, the H-1B visa allows 20,000 such graduates annually to work in the U.S. temporarily.  Many of them seek green cards upon the completion of their short stint on an H-1B visa.  This section of CIR ASAP allows an alternative avenue for these highly skilled and highly paid workers to work in the U.S. after graduation and to stay after the completion of their H-1B visas.

The number of highly skilled immigrants allowed into the U.S. yearly would increase under CIR ASAP.  If this section was the entire bill, it would be one of the best bills of 2009.

Chavez (and Marx) a hit at Copenhagen

by Fran Smith on December 17, 2009 · 1 comment

in Environment, Global Warming, Personal Liberty

Venezuelan President Hugo Chavez couldn’t resist another opportunity to bash capitalism — and the COP15 Copenhagen Conference on global warming gave him a perfect setup. Protesters against globalization, capitalism, energy use, and other aspects of modern life thronged in the streets, while in the conference center, leaders from rich nations that want to “level the playing field” for CO2 emissions and poor countries looking for massive handouts gave Chavez a warm response.

In his harangue posted on YouTube, Chavez hit the “group of countries who think they’re better than us” and that provide a “world imperial dictatorship.” He, of course, made reference and deference to his hero Karl Marx:

There’s a ghost lurking…and Karl Marx said…a ghost running through the streets of Copenhagen.  And I think that ghost is silent, somewhere in this room…amongst us…coming thru the corridors and underneath.  And that ghost is a terrible ghost.  Nobody wants to name him or her…it’s capitalism.  Capitalism is that ghost.  (applause)

Chavez got a lot of applause here too. He tied capitalism to the degradation of the earth: “the destructive model of capitalism is eradicating life.”

President Robert Mugabe, credited with destroying the economy of his own country,  Zimbabwe, also railed against Western countries and capitalism:

“When these capitalist gods of carbon burp and belch their dangerous emissions, it’s we, the lesser mortals of the developing sphere who gasp and sink and eventually die.”

And this is the conference where “world leaders” are supposedly coming together to plan the world’s energy future?  It’s a scary thought.

Regulation of the Day 86: Cockfighting Advertisements

by Ryan Young on December 17, 2009

in Deregulate to Stimulate, Regulation, Regulation of the Day

If you’re thinking of sending out advertisements for a cockfight through the mail, you should be aware that a new regulation allows the postal service to refuse to deliver it.

The same rules also covers advertisements for a “knife, a gaff, or any other sharp instrument attached, or designed or intended to be attached, to the leg of a bird for use in an animal fighting venture.”

Animal fighting is barbaric. And it is illegal in most places. The underground nature of animal fighting makes one wonder how many cockfight promoters actually advertise their events by putting fliers in the mail. Wouldn’t that just make it easier to get arrested?

If so, the USPS should be encouraging such advertising, not banning it. Driving animal fights further underground only makes them harder to eradicate.

The Big Business of Illegal Gambling

by Michelle Minton on December 16, 2009

in Culture, Legal, Nanny State, Personal Liberty, Privacy

Tonight at 9pm CNBC will investigate the horrors of illegal gambling . It will doubtlessly delve into the shady underground economy of gambling, where billions of dollars flow from hand to hand and international borders, where “contracts” are enforced with violence, and innocent small fish are victimized with no legal protection available. I just hope that the report takes note of why illegal gambling is dangerous and I certainly hope that the report highlights why illegal gambling is shady and why victims have no legal protections, namely because the activities *are illegal*.

When the report makes its way to discussing online gambling, which they’ll undoubtedly claim is illegal despite the fact that there are no active federal laws banning Internet wagering (except for sports betting), let’s just hope they also talk about how the Department of Justice has been using the pseudo-ban on Internet gaming to persecute and extort money from legitimate Internet casinos that happen to be based outside the US.

People like to gamble and they aren’t going to stop because the government tells them they can’t–clearly they can. But they shouldn’t have to stop. Most of the ills associated with gambling can be directly tied to the fact that it has been forced underground, but even disregarding that fact, it isn’t for the government to tell citizens what to do so long as they aren’t harming anyone else.

What Nanny Doesn’t Want You to Know

by Angela Logomasini on December 16, 2009 · 1 comment

in Nanny State, Personal Liberty

Nanny state regulators got it all wrong back in 1977 when the feds placed a warning label on the sugar substitute saccharine. They said it could cause cancer, but their underlying science was flimsy. It took them more than 20 years to admit to that mistake and remove saccharine from the list of carcinogens.

And federal health officials have long warned us all to cut back on salt because they say it might contribute to heart disease. Most people trust this advice, but it’s most likely not true for everyone. Salt appears to be a problem largely for individuals with hypertension, but not so much for the rest of us. Those of us who like salting our veggies and other things to make them more palatable, probably would like to know the whole story.

Yet Nanny statists at National Institutes of Health (NIH) don’t want to give us the whole story. They apparently refuse to release research that might contradict their warnings. Since 2003, that data has been subject to a Data Quality Act petition–a process that is supposed to ensure that the federal government doesn’t base policy on faulty science. Accordingly, regulators are supposed to release data when petitioned, but they usually don’t comply with the law, which lacks a good enforcement mechanism. The feds have managed to keep this research a secret for a long time. That way they can set whatever policies and recommendations they please–without any accountability.

In this case, they start by urging everyone to cut back on salt. Then local and state governments may start regulating salt based on such specious recommendations. As those laws grow, the feds might even step in. Such is the progression of many nanny state regulations.

The recent Climategate scandal underscores this point. The absence of scientific transparency gives regulators free reign. Then regulators and their collaborators can finesse the science in a way that best suits their regulatory aims while concealing inconvenient findings. Personal liberties and economic freedoms are eventually wiped out along with the facts. Bureaucrats end up more powerful, and life for everyone else is less palatable.

Photo attribution: Duchamp’s photostream on flickr.

Anti-Takings Abuse Bill Introduced in the House

by Marc Scribner on December 16, 2009

in Economy, Features, Legal, Personal Liberty, Zeitgeist

As we approach the five year anniversary of the Supreme Court’s notoriously poorly-reasoned Kelo v. New London decision, the lack of meaningful legislative progress on curbing eminent domain abuse has been disheartening. While legislation was previously introduced in the House of Representatives by Rep. John Sullivan (R-Okla.), it was nixed by an unfriendly committee referral, and proponents of property rights and economic liberty have little to show for their efforts on this front.

The good news is that Congress is making another go at eminent domain reform. The Strengthening the Ownership of Private Property Act of 2009 (STOPP Act, H.R. 4288), introduced by Rep. Stephanie Herseth Sandlin (D-S.D.), would prevent any federal economic development funding–regardless of the federal agency or program–from being disbursed to state or local governments that seize private property in order to transfer it to another private party or for another private party’s benefit. While the legislation exempts takings for utilities, roads, pipelines, and right-of-way companies, it would–if passed–cut off significant funding to governments found to have engaged in Kelo-style eminent domain abuse.

The bill is by no means perfect. For example, funds would only be withheld from abusers for two years, instead of the 10 proposed by Rep. Sullivan in the previous legislative session. There are also no strings attached to federal highway funding, which is particularly obnoxious because Congress has no problem with tying highway funds to state behavior when, say, booze is involved. But it is worth remembering that eminent domain abuse is almost exclusively a municipal issue, and Congress ultimately has little control over how state’s police their local governments. Because of this, state legislative reform should take center stage.

Previously, I described a few of the most politically feasible state-level eminent domain reforms. They are:

  1. Enacting state legislation mandating the creation and maintenance of a public eminent domain database accessible via the Internet. Currently, data on development takings are difficult to obtain due to the fact that eminent domain condemnations are ordered at the local level. Right now, an empirical analysis of takings within a state would require contacting every county clerk and requesting specific filings. A central state database would allow social scientists, journalists, and the public to examine the economic effects of eminent domain use and abuse.
  2. Enacting state legislation defining “public use” as “use by a government body,” which would deny municipalities the opportunity to claim that their takings deals with private developers serve the “public purpose” because they will ostensibly increase tax revenue at some future date.
  3. Enacting state legislation mandating that blight be determined on a parcel-by-parcel basis.
  4. Enacting state legislation mandating that Tax Increment Financing (TIF) be limited to the length of time required to complete public infrastructure improvements within a given TIF district. This would reduce the ability of rent-seeking private developers to collude with local officials to subsidize development projects.

Regulation of the Day 85: Peddlers

by Ryan Young on December 16, 2009

in Deregulate to Stimulate, Nanny State, Regulation, Regulation of the Day

It is illegal to be a peddler in Wisconsin without a license. One of the requirements is five years of residency in Wisconsin. Because clearly, no one is trustworthy unless they’ve lived in Wisconsin for at least five years. The full list of requirements is here.

You can apply for your peddler’s license here.

(Hat tip to Jim Ulbright)

Removing Antitrust Exemption Won’t Increase Healthcare Competition

by Kevin Hilferty on December 15, 2009

in Healthcare, Insurance

Last Sunday the Washington Post ran an op-ed by Senators Patrick Leahy and Sheldon Whitehouse on healthcare reform. The senators wisely state in their piece that making health insurance more affordable will require more competition in the marketplace. Unfortunately, their proposal to revoke the federal antitrust exemption from insurers will do nothing to increase competition and may actually harm it.

Leahy and Whitehouse claim “[t]he exemption, enacted nearly 65 years ago, has served the financial interests of the insurance industry at the expense of consumers for far too long.” This, however, is far from the truth.

As Gregory Conko and I point out in our recent study, health insurers are only exempt from federal antitrust oversight to the extent that there exist state enforcers. In other words, if an insurer wasn’t controlled by state antitrust laws then federal regulators would be able to step in. The main difference between state and federal antitrust regulators is that the states have found it beneficial to allow certain cooperative practices that are not allowed under federal law. These cooperative practices, like joint- rate setting boards and actuarial information sharing allow insurers to reduce premiums for consumers, help smaller insurers compete, and promote insurer solvency. So the primary benefits of the exemption go to consumers rather than just insurers.

The Senators’ goal of creating a fair and competitive healthcare market is an admirable one. However, the means with which they want to attempt to achieve that end will not succeed. Truly increasing competitiveness in the healthcare industry will require reductions in burdensome regulation, not adding to them.

Summary of Comprehensive Immigration Reform: Good and Bad

by Alex Nowrasteh on December 15, 2009 · 3 comments

in Odds & Ends

Today Rep. Luis Gutierrez (D-Ill.) introduced the Comprehensive Immigration Reform for America’s Security and Prosperity Act of 2009 (CIR ASAP). I was able to get an advanced outline of the bill. Here are some of its main features:

Good:

1. Prohibits creation of a national identification card (this contradicts mandated E-Verify, see below).
2. “Recapture” of unused employment based green cards from past years for next fiscal year (would be better if it included 309,500 unused H-1B visas too).
3. Exempts foreign graduate students from employment based green card caps. This de-facto expands the yearly immigration of highly skilled graduate students and helps employers who are stonewalled by the inadequate H-1B visa program.
4. Removes backlog of visas by updating system and personnel augmentation.
5. Improves infrastructure at ports of entry to smooth immigrant entry and streamline inspection.

Bad:

1. H-1B and H-2B employers must show, through more paperwork, they tried to hire American workers.
2. Allows Department of Labor to conduct more onerous and expensive workplace inspections for H-1B, L-1, and H-2 visas than they already do.
3. Recreates EB-5 visa program to bring in immigrants to blighted communities. Why do this when we can just expand existing visa programs?
4. Gives grants to subsidize English, lawyers for immigrants, and other services. Immigrants can do this on their own, they don’t need government help.

VERY bad:

1. Title II creates a mandatory federal employment verification system (like E-Verify) that will eventually apply to ALL workers and new hires (including natural born Americans). The old E-Verify flawed and prone to errors. The new E-Verify will add new burdens, regulations, and fees on a labor market already under strain. If the goal is to “Europeanize” America’s labor markets, this is a great start. This will also lead to a national ID card because there is no other way to run such a system. There is no point in letting in more immigrants if U.S. laws severely restrict employers from hiring them.

Unnecessary:

1.  Most of the rest of the bill.

Amnesty (Title IV):

To gain legal status an undocumented (some say “illegal”) immigrant must:

1. Pass a complete criminal and security background check, and
2. Demonstrate commitment to the U.S. through employment, education, military service, or other community/volunteer service, and
3. Pay $500 fine (unless entered U.S. when under 16 years of age), and
4. Register for the draft, and
5. Meet English and civics requirements, and
6. Undergo a medical examination, and
7. Pay all taxes, and
8. Demonstrate residency in U.S.

Those who do not qualify do not get a work visa that can lead to other goodies like a green card. The penalty for lying on amnesty forms is up to 5 years imprisonment.

Conclusion

Based on the summary I have this bill is a mix of good and bad. Mass legal immigration to the U.S. is a proven economic benefit to this country and I wish this bill did more to allow for increases without adding new laws and regulations.

The bill should have further limited welfare programs, eliminated or reformed EMTALA, or otherwise reformed social programs to limit immigrant access. A small tweak here or there makes a big difference, although I think the programs should be entirely eliminated for everyone–immigrant and citizen alike.

Instead of taking those steps, CIR ASAP would saddle the American economy with one of the worst and most expensive employer regulations ever proposed: E-Verify type system for everyone. A national E-Verify program will exclude millions of legal workers from the system due to errors, cost employers enormous time and resources to operate, and make hiring people more costly during a recession. Additionally, it will create a labyrinthine bureaucracy that will choke off new hiring.

Ditch E-Verify!

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