January 2012

NC court might block insurance rate drop

by Michelle Minton on January 15, 2010

in Odds & Ends

Coastal residents in NC are trying to fight a deal that would allow insurance companies to increase the rates for property insurance in these high risk regions. Of course, the flip side of the deal is that residents living far from the coast in the west of the state will see their premiums cut by a third.

The municipalities argued Long approved the increases before coastal residents knew insurers had requested them and set rates at unreasonably high levels.

…The General Assembly last summer was forced to shore up the overextended Beach Plan by capping potential costs to insurers and putting every property owner in the state on the hook from a disastrous hurricane season. Some insurers had threatened to quit doing business in the state to limit their exposure to Beach Plan losses unless the program was bolstered, current Insurance Commissioner Wayne Goodwin warned last summer.

Sure it will hurt those living along the coast when their rates go up, but really, they should have been that high (perhaps higher) from the start. When insurers can’t charge rates that truly reflect the risk of the properties they insure they have to charge everyone more. So safer folks far away from the beach end up paying for the riskier decisions of beach homeowners.

If the rates hadn’t been artificially suppressed by interventionist government policy for political reasons, the need for an increase might not be necessary. In fact, had the rates been higher to begin with some of the coastal residents now complaining that they can’t afford the increase might never have purchased homes on the beach in the first place.

Flu Watch Jan. 14 – What Swine Flu ISN’T Doing this week

by Michael Fumento on January 15, 2010

in Health and Illness

Infections are down, hospitalizations are down and deaths are the same. But given the reporting time lag it should prove that these were all about the same as last week. Last week one state reported widespread flu, this week none do. As I’ve written, we’re now at an endemic stage where cases pretty much trot along at the same pace. Again, it might pick up some in February because that’s when it gets coldest and flu, unlike your humble blogger, loves cold weather.

Only 1.4% of infections reported were clearly not swine flu, indicating that so far, as I’ve reported has been the case in Australia and New Zealand, swine flu is muscling aside the deadlier seasonal flu strains – and hence will make for a light flu season.

The CDC has also released a new estimate of infections and deaths, namely 55 million and 11,161 respectively since last April. That keeps the death rate about about 1 per 5,000 or a third to a tenth that of seasonal flu. Meanwhile the World Health Organization is defending itself against charges that it created a phony pandemic, including using the predictable line that one reason the flu has proved so mild is because the WHO did such a splendid job! I address that lunacy elsewhere.

It’s getting kind of dull in here, folks. So I’m discontinuing the weekly watch but I will keep blogging and otherwise writing on the faux pandemic.

TSA Security Playset

by Brian McGraw on January 14, 2010

in Personal Liberty, Privacy

The Playmobil Security Check Point has experienced a new surge in popularity (so much so that it is currently out of stock) on Amazon in a response to nationwide security talks concerning the attempted bombing of Northwest Airlines Flight 253 on December 25, 2009 by Umar Farouk Abdulmutallab.

Daniel Solove over at Concurring Opinions offered (from 2005) a humorous review of the product:

I was a bit disappointed in the toy’s lack of realism. There was only one passenger to be screened. Where were the long lines? The passenger’s clothing wasn’t removable for strip searching. The passenger’s shoes couldn’t be removed either. Her luggage fit easily inside the X-ray machine. There were no silly warning signs not to carry guns or bombs onto the plane. And there was no No Fly List or Selectee List included in the playset.

Another oddity was that the toy came with two guns, one for the police officer and one that either belonged to the X-ray screener or the passenger. The luggage actually opened up, and the gun fit inside. I put it through the X-ray machine, and it went through undetected. Perhaps this is where the toy came closest to reality.

On a more serious note, airline security is likely to re-emerge as an important issue in 2010. President Obama labeled the incident a mix of “human and systemic error,” noting that U.S. authorities possessed intelligence indicating that Abdulmutallab might have been dangerous. He has ordered a review of security policies.

Unfortunately, new TSA policies will likely lead to longer lines and less privacy at security checkpoints, with the likely addition of full body scanners. It’s also possible that these policies merely force potential attackers to begin hiding materials in body cavities. Rather than now requiring passengers to remove their underwear while going through security, consider an alternative solution: returning airline security operations to the private sector. Privatizing airline security would lower costs while providing higher levels of customer service and privacy. Competition would breed innovation in finding effective security methods that are affordable and minimally invasive.

Airlines have a natural incentive to minimize security issues that the TSA does not: the TSA will receive funding regardless of what happens (and they will likely receive increased funding if another strike were to occur). Additionally, allowing multiple security strategies to emerge would serve as a deterrent in comparison to a nationwide TSA standard, which one of our caring government employees leaked to the Internet.

Obama Bank “Responsibility Fee” Is Destructive, Hypocritical and Likely Unconstitutional

by John Berlau on January 14, 2010 · 1 comment

in Bailout Watch, Economy, Regulation

The so-called Financial Crisis Responsibility Fee is a tax in search of a target. Today, the President declared, “We want our money back.” Yet his proposed tax on financial institutions with assets of $50 billion or more would be levied on the banks that paid back the bailout money – with interest – and on institutions that may not have even taken TARP funds, while most likely exempting Fannie, Freddie and the car companies that still owe billions upon billions to taxpayers.

The hypocrisy doesn’t end there. At a time when President Obama and his administration have been cajoling banks to make more loans, this tax would directly hit that ability, particularly if it’s levied – as the President suggested today – on the level of debt an institution has. This would be contractionary and put a big crimp on economic expansion. And as a multitude of economic studies have shown, taxes on corporation are nearly always passed on to consumers. These taxes would likely hit bank depositors in the form of new fees and lower interest payments.

CEI stood against the bailouts and thought the government should have let poorly managed firms fail. Some of the TARP recipients, like BB&T Corp., hadn’t engaged in the foolish mortgage and credit practices, yet were pressured by the government to take the bailout money so the “bad banks” wouldn’t be stigmatized by taking TARP money. Regardless, being a recipient of a government subsidy should not allow the government to control the firm’s profits and compensation any more than a stadium subsidy should allow the government to cap the wages of superstar athletes.

Finally, by taxing some businesses and not others, and casting the tax as a penalty for past misdeeds, the Obama administration has raised constitutional issues of whether this tax runs afoul of the equal protection clause and is a “bill of attainder” that singles out certain people for punishment. A New York federal court recently ruled that Congress’s singling out of the group ACORN for defunding because of past actions was a punishment that could only be levied by a court, violating the bill of attainder clause. Under this expansive interpretation, this tax too could be considered punishment without trial and also a bill of attainder.

Health Insurance and Campaign Contributions

by Ryan Young on January 13, 2010 · 1 comment

in Health and Illness, Healthcare, Politics as Usual, Regulation, Zeitgeist

Congressional Democrats are thinking of revoking the health insurance industry’s antitrust exemption; some insurers have spent as much as $20,000,000 opposing the current legislation.

Of course, insurers also gave $20,175,303 to President Obama’s 2008 campaign, roughly triple what McCain netted.

On one hand, this might look like the dog biting the hand that feeds. But really, it isn’t.

If the health care legislation passes, there is a good chance that every American would be required to purchase health insurance.

Suppose that happens. $40 million and change plus some antitrust troubles is a really small price to pay for a legal guarantee of vastly increased business, forever. Plus looking like you didn’t want the favor.

As my friend Jeremy Lott is so quick to remind, it is a wonder that politicians can be bought off so cheaply, given what they could charge for their services.

It is just as surprising that insurers would spend $20 million opposing legislation that would yield many times that in profit. As economist Bruce Yandle notes, “industry support of regulation is not rare at all; indeed, it is the norm. And in the United States it is as American as apple pie.”

New York Salt-Slashing Op-Ed in NY Post

by Daniel Compton on January 13, 2010 · 2 comments

in Health and Illness, Healthcare, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation

Here is my op-ed published in the New York Post on January 13th.

As-salt on science

On Monday, city officials rolled out an initiative to curb the salt content in manufactured and packaged foods. But the idea behind it — that salt intake has reached extreme levels in America — is a myth, and this “solution” wouldn’t work, anyway.

City Health Commissioner Dr. Thomas Farley aims to lead a national campaign to reduce the amount of salt in manufactured foods by 25 percent over the next five years. Cutting salt intake is supposed to reduce hypertension-related health problems. But while doctors may advise particular patients to cut down on salt, the science tells us that this is not a public-health problem.

Nutritionists at the University of California/Davis just published the first and only study to address salt intake and public policy. They found that people are naturally inclined to regulate salt intake to physiologically determined levels by unconsciously selecting foods to meet their needs — and even the most extreme interventions don’t do much.

The UC Davis study (published in the October issue of The Clinical Journal of the American Society of Nephrology) looked at data from more than 19,000 individuals from 33 countries worldwide. It determined that daily sodium intake ranges only from 2,700 milligrams to 4,900 mg, with the worldwide average of 3,700 mg.

It also determined that the average American consumes about 3,400 mg a day — disproving the claim spread by advocates such as the Center for Science in the Public Interest that US salt consumption is out of control.

In other words, Farley’s trying to fight a problem that doesn’t exist. Worse, his new guidelines say that daily sodium intake for most people shouldn’t exceed 1,500 mg — which is a ridiculous 45 percent below the bottom of the normal consumption range the UC Davis study identified, and a full 60 percent lower than the worldwide average.

The researchers also cite decades of research describing the specific mechanism by which the central nervous system, acting together with several organ systems, controls our appetite for salt. One of the studies they cite involved hundreds of participants in what was to be a three-year sodium-intake intervention, with the goal of reducing daily intake to 1,850 mg.

But after six months, researchers noted that participants were simply unable to cut sodium intake below about 2,750 mg a day — close to the bottom of the range the UC Davis study identified.

Another study had used intensive dietary counseling to get participants to cut daily sodium intake to an average of 1,775 mg over four weeks. After that, the subjects, while still receiving counseling, were randomly split into two groups — one getting a sodium tablet, the other a placebo.

Those who got the placebo still raised their intake by nearly 1,000 mg, while those on the sodium tablet actually cut their dietary-sodium consumption to compensate.

These people didn’t know how much sodium they were getting — they unconsciously changed their diets to match what their bodies “knew” they needed.

The UC Davis study also cites surveys showing that sodium intake in the United Kingdom has “varied minimally” over the last 25 years, despite a major government campaign to reduce it.

Overall, the researchers found, salt intake “is unlikely to be malleable by public policy initiatives,” and attempts to change it would “expend valuable national and personal resources against unachievable goals.”

The New York guidelines are voluntary — for now. But the city’s ban on trans fats started that way, too. And the federal Food and Drug Administration has also been looking to get in on the action — it may classify it as a “food additive,” subject to regulation, sometime this year.

But this campaign isn’t about public health — it’s about grandstanding on a pseudo-issue ginned up by activists, when science clearly shows that there’s neither a crisis nor a way for the government to actually alter our salt intake.

All these initiatives do is win headlines for ambitious policymakers (New York’s last health commissioner parlayed his trans-fat activism into a promotion to FDA chief), while making food slightly more costly and leaving a bad taste in the mouths of consumers — literally.

Daniel Compton is a research associate at the Competitive Enterprise Institute and contributor to OpenMarket.org

A French Kiwi wine? New Zealand and Australia say “non”

by Fran Smith on January 13, 2010

in Intellectual Property, International, Regulation, Trade

Nice article in the Wall Street Journal today by Anne Jolis on a trademark brouhaha between France and Australia that highlights some of the absurdities of the French (and other countries’) protection of geographic designations. Usually France is the country protecting its local food, wine and even chickens by ensuring that other countries’ imports can’t use a French geographical or place name description, such as Roquefort cheese or Champagne.

But this time the Australians and New Zealanders have decided that turnabout is fair play.  Acting on a New Zealand complaint, Australia’s trademark office has refused to okay the import of a French wine called “Kiwi Cuvee 2007 Sauvignon Blanc” because using the name could deceive or confuse consumers into thinking it was produced in Kiwi Country, i.e., New Zealand.

France is not alone in its protection of its local and regional products; the UK, Germany, Italy, Poland, and many other countries have their own registries.  The European Union also has its own system of registration and protection of geographic specialties, such as for the Polish Truskawka kaszubska lub Kaszëbskô malëna. Even the World Trade Organization has limited protection for certain geographic designations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights. The U.S. has a few such geographic protections in place, for instance, for Vidalia onions, Florida orange juice, and Idaho potatoes.

Jolis provides some of the arguments proponents use to defend the practice but also suggests a private standards-setting alternative to bureaucratic procedures and protectionism:

So the justification for what is effectively a trademark is that a product’s origin partly defines the product itself.

Perhaps there is truth to that. But then, nothing stops producers from these prized regions from simply applying for and defending regular trademarks. This would eliminate the temptation for every local producer in the world to seek privileged status for otherwise ordinary place-names. Producers of Parma ham or feta cheese could very easily certify their products as meeting privately developed standards of quality and brand them accordingly, without the global bureaucracy that has grown up around “geographical indications.”

Experts Question Enormous Cost and Constitutionality of Healthcare Legislation

by Hans Bader on January 13, 2010 · 1 comment

in Health and Illness, Healthcare, Insurance, Legal, Nanny State, Politics as Usual, Precaution & Risk, Regulation

The health care legislation backed by the president and congressional leaders will increase Americans’ health care costs by more than $200 billion, concludes an expert at the federal Centers for Medicaid and Medicare Services.

Earlier, Senator Orrin Hatch (R-Utah), a lawyer, argued that the “individual mandate” in the health care bill legislation, which forces people to buy health insurance, is unconstitutional.  Florida Attorney General Bill McCollum likewise is questioning whether it is constitutional to force people to do so.

This so-called “individual mandate” is unprecedented and appears to exceed Congress’s power under the Commerce Clause of the Constitution.  As the Congressional Budget Office noted in 1994, “A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States.”

As a news story notes, in Supreme Court rulings issued in 1995 and 2000, “the high court said the commerce clause is limited to economic activities that substantially affect interstate trade.”  (I was an attorney in the latter ruling, United States v. Morrison (2000).)  As UPI notes, “the weight of Supreme Court jurisprudence seems to favor a Commerce Clause challenge” to the health care legislation.

The individual mandate does not regulate activities, much less economic activities, but rather inactivity, by penalizing those who decline to buy health insurance. That exceeds Congress’s powers under the Supreme Court’s Morrison ruling, as I explained earlier.

The health care legislation also contains unconstitutional racial preferences for minority applicants, and lower standards of care for patients in predominantly-minority institutions.  These drew criticism from the Civil Rights Commission.

Most Americans oppose the health care legislation. It would reduce lifesaving medical innovation, raise taxes, drive up insurance premiums and the deficit, break many campaign promises, and impose heavy burdens on state budgets.  It  would also jeopardize the quality of medical care for many, while imposing restrictions that failed when tried at the state level, and ignoring advice from federal and academic experts, and lessons from countries with universal health care, about how to keep costs down.

Financial Crisis Hearing is Partisan Sham that Skips Over Fannie and Freddie’s Role

by John Berlau on January 13, 2010

in Bailout Watch, Zeitgeist

John Berlau, director of CEI’s Center for Investors and Entrepreneurs, offers the following thoughts on what’s missing from the first hearing of the Financial Crisis Inquiry Commission:

“The Financial Crisis Inquiry Commission, established by Congress to look into the causes of the mortgage meltdown, has the opportunity to explore the mistakes of the policy and business worlds and ensure that those mistakes aren’t made again. Unfortunately, the lineup of the commission’s first hearing today indicates that the hearing will be little more than a partisan sham that skips over politicians’ own role in enabling the crisis through the government-sponsored enterprises Fannie Mae and Freddie Mac.

Testifying at today’s hearing are executives from Goldman Sachs, JPMorgan Chase and other big banks. This is all well and good, but the commissioners called no one from the mortgage giants Fannie and Freddie, widely acknowledged to be at the center of the crisis. This suggests that the commission, formed by Congress last year with a 6-4 Democratic majority, may be trying to cover the tracks of the politicians who worked to shield Fannie and Freddie from oversight.

As the Commission’s own appointee Peter Wallison recently wrote in the Wall Street Journal, “By the end of 2008, Fannie and Freddie held or guaranteed approximately 10 million subprime and Alt-A mortgages and mortgage-backed securities (MBS)–risky loans with a total principal balance of $1.6 trillion.” Even more damning is recent data uncovered by housing expert Edward Pinto, Fannie’s former chief credit officer, that Fannie and Freddie mislabeled the mortgages they bought and resold as “prime” when many had subprime characteristics.

According to Pinto, who has presented his findings before Congress, millions of mortgages to borrowers with credit scores of less than 660 – considered by prominent researcher to be the dividing line for subprime loans — had been labeled by Fannie and Freddie as prime going back as early as 1993. Wallison noted that this misrepresentation by the government-backed mortgage giants could have itself been a major factor in inflating the housing bubble. “Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007,” he wrote.

CEI President Fred Smith had long warned about the systemic risk Fannie and Freddie posed to the financial system, warning as early as 2000 that their implosion could cause a taxpayer bailout of as much as $200 billion. That turned out to have greatly underestimated the $400 billion the bailout has already cost taxpayers and the possibly hundreds of billions more it will cost them, since the Obama administration removed the cap on Treasury Department assistance this November. But at the time, his voice was a voice in the wilderness as members of Congress pooh-poohed the notion of Fannie and Freddie ever slipping up. In 1003, Rep. Barney Frank, D-Mass., now chairman of the House Financial Services Committee, even publicly called for the mortgage entities to “roll the dice” on less credit worthy borrowers.

The Bush administration also pushed policies that tilted incentives toward home ownership, and the mistakes of politicians of both parties should be examined in thorough hearings. Unfortunately, it looks as is the commission is so far giving a pass to the fat cats from Washington.”

Gag me. Public health establishment takes credit for mildness of swine flu season

by Michael Fumento on January 12, 2010

in Health and Illness, Nanny State

Inevitably when pandemic doom fails to pan out, whether it be heterosexual AIDS, SARS, avian flu, or anything else the public health establishment that panicked everyone will claim that the only reason their predictions didn’t prevail was fast action on their part. So it was inevitable with swine flu, as we’re told in an article with the sub-headline: “If You Warn of An H1N1 Epidemic But Stop It, Do You Get Credit?”

Professor Robert Field of the Drexel University School of Public Health tells ABC News online that his poor fellows were, as the piece put it, “damned if they do and damned if they don’t.” According to the story, with the subtitle of “Public health officials faced a tough choice in May and June,” “to some extent, we may be seeing a milder epidemic than we feared because of the vaccine and other measures people are taking” says Field.

Pouring on the unmitigated gall, he added: “It’s so easy to be a victim of your own success.”

As they say in The Valley, “Gag me with a spoon!” As I’ve written, the epidemic here peaked in mid-October. Nobody had vaccine immunity in this country then. Nobody. Australia and New Zealand had incredibly mild flu seasons even though almost all of the flu was of the H1N1 swine variety and there was no vaccine even available until the seasons ended. Even now, relatively few Americans have gotten the shot and according to news accounts they’re not going to. More and more are claiming they’ve been bamboozled.

Moreover, there were people in May and June who relayed evidence that swine flu was proving to be extremely mild. Well, there was one person at least. Me.

My first published article on the subject, with the telling title “The Price of a Porcine Panic,” appeared June 1. I said it would ridiculous for the WHO to declare a pandemic, and as soon as it did I wrote why it had been ridiculous. It was obviously milder than seasonal flu, when heretofore flu pandemics were defined by extreme severity.

Later on, as the data, came in, I documented how vastly milder swine flu was. This was before the President’s Council of Advisors on Science and Technology made its incredible prediction of 30,000 to 90,000 deaths.

No, the public health establishment bungled at best and lied at worst. I’ve written 14 articles at countless blogs about it. Don’t let them off the hook this time.

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