January 2012

Liberal Senators Make False Claims About Supreme Court’s Ruling in Ledbetter v. Goodyear, During Kagan Confirmation Hearings

by Hans Bader on June 30, 2010

in Economy, Employment, Labor, Legal, Politics as Usual, Regulation, Sanctimony, Zeitgeist

Liberal Senators like Ben Cardin (D-Md.) and Dianne Feinstein (D-Calif.) are peddling fables about a Supreme Court ruling, Ledbetter v. Goodyear Tire & Rubber Co. (2007).

In its Ledbetter ruling, the Supreme Court said that employees who choose to sue under the federal discrimination law with the shortest deadline (Title VII) should generally sue within 180 days, at least where they could have discovered the discrimination in time to do so.  It rejected as untimely a discrimination claim by Lilly Ledbetter, who had known for years of the pay disparity she later sued over.

That’s a far cry from how Senator Cardin describes the case.  Today, in the Supreme Court confirmation hearings for Elena Kagan, Cardin made false claims, both about what the Supreme Court said in the Ledbetter case, and about plaintiff Lilly Ledbetter and her lawsuit.  In claims echoed by Senator Feinstein, Cardin alleged that:

“The Court said Mrs. Ledbetter had to file her case within 180 days after the beginning of the discrimination, and since she did not do that, her claim was barred by the statute of limitations. This defies logic. How can a person bring a claim when they don’t know they are being discriminated against? It makes no sense.”

The Supreme Court said no such thing, as National Review’s Ed Whelan, a lawyer, notes, pointing out that Ms. Ledbetter knew for years of the alleged discrimination before she chose to sue over it.  The claims made by Senator Cardin were long ago debunked by the Wall Street Journal’s James Taranto, legal scholars like David Copus, legal commentators like Stuart Taylor of the National Journal, and lawyers like Paul Mirengoff.

Plaintiff Lilly Ledbetter lost her pay discrimination case because she filed her complaint too late. The Court said that in most cases, employees should file an EEOC complaint within 180 days of their first discriminatory paycheck, if they want to sue under Title VII of the Civil Rights Act.

But the Court also specifically left open the possibility that employees could sue later simply because they didn’t know of the discrimination at the time — a situation it said did not apply to Ledbetter’s case (she testified in her deposition that she knew of the pay disparity in 1992, but only filed her complaint with the EEOC in 1998, around the time she retired). The Court pointedly noted that plaintiff could have pressed her claim instead under the Equal Pay Act, which has a longer deadline for suing. (Moreover, as lawyer Paul Mirengoff notes, the Supreme Court has long allowed hoodwinked employees to rely on equitable tolling, waiver, and estoppel to sue beyond the deadline, when employer deception keeps them from suing within 180 days, as it made clear in its Zipes decision.)

As Stuart Taylor, a legal commentator for the National Journal, has noted,

“Ledbetter admitted in her sworn deposition that ‘different people that I worked for along the way had always told me that my pay was extremely low’ compared to her peers. She testified specifically that a superior had told her in 1992 that her pay was lower than that of other area managers, and that she had learned the amount of the difference by 1994 or 1995. She added that she had told her supervisor in 1995 that ‘I needed to earn an increase in pay’ because ‘I wanted to get in line with where my peers were, because… at that time I knew definitely that they were all making a thousand [dollars] at least more per month than I was.’”

The Supreme Court did not create a rigid deadline that applies regardless of whether an employee could have discovered the discrimination.  Instead, it expressly left open the possibility that plaintiffs can wait to sue until after learning of discrimination, under the so-called “discovery rule.” It noted in footnote 10 of its opinion, “we have previously declined to address whether Title VII suits are amenable to a discovery rule. . . .Because Ledbetter does not argue that such a rule would change the outcome in her case, we have no occasion to address this issue.” In short, since Ledbetter didn’t even claim that a lack of knowledge had prevented her from suing in time, relaxing the deadline for her would have done her no good. (Moreover, if she had lacked knowledge as a result of being hoodwinked by her employer, she could have had the deadline extended under the Supreme Court’s longstanding doctrine of equitable tolling, which applies somewhat more narrowly than the discovery rule.)

After she lost her case, Ledbetter claimed to Congress that she had not learned of the discrimination until the end of her career — a claim parroted by gullible politicians and journalists before it was debunked.

But in Ledbetter’s deposition, she admitted she knew by 1992 – years earlier — that she was paid less than her male peers, notes David Copus in page 8 of the online version of his October 2008 law journal article “Pay Discrimination Claims After Ledbetter.”

Similarly, Washington lawyer Paul Mirengoff notes that “Ledbetter testified that she knew by 1992 that her pay was out of line with her peers. In 1995, she spoke to her supervisor about the problem, telling him that ‘I knew definitely that they were all making a thousand at least more per month than I was and that I would like to get in line.’ Yet Ledbetter waited until 1998 to file her EEOC complaint.”

Moreover, although the Supreme Court dismissed Ledbetter’s claim under Title VII, the discrimination law with the shortest deadline, it pointed out that the plaintiff could easily have pressed her claim instead under the Equal Pay Act, which has a much longer deadline for suing. As it noted, “Petitioner, having abandoned her claim under the Equal Pay Act, asks us to deviate from our prior decisions in order to permit her to assert her claim under Title VII.” She might have won her case had she simply appealed based on the Equal Pay Act, something she inexplicably failed to do.

Anti-stripper law could create more prostitution

by Michelle Minton on June 30, 2010

in Economy, Employment, Odds & Ends, Personal Liberty

As so many journalists have punned, recently passed anti-stripping legislation makes the “Don’t Show Me” state a far more appropriate nickname for Missouri. Yesterday, Gov. Jay Nixon ‘s signed into a law a bill that significantly restricts the operations of adult entertainment establishments for the purpose of protecting the “vulnerable people who are being coerced into being the fodder for some of these places,” said state Senator  Matt Bartle.

Among other things, the new laws prohibit total nudity, restrict semi-nudity to state areas six feet away from patrons, prohibit touching, ban alcohol, and limit the hours of operation of such establishments.

What most people don’t realize is that strippers usually aren’t under contract with any particular club and, generally, operate like contractors, paying a stage fee or a house fee to the club which is deducted from whatever they earn while dancing. These laws simple mean that strippers will have less time to work, fewer clubs to dance at, and fewer customers.

Proponents of the bill claim that liberal laws regarding adult entertainment in the state contribute “demeans women and contributes to prostitution.” But treating women as if they are children or mentally incapable of making their own choices is better? In addition, these restrictions will simply result in less income for current strippers which could very likely result in more prostitution not less.

A quote from a representative of the Missouri Coalition Against Domestic and Sexual Violence says it all:

“One of the ironies is that, for many young women, it is the way that they can support themselves, maintain custody of their children, or escape an abusive relationship.”

If regulators really wanted to help the poor strippers they should decrease regulations and taxes on other industries so that more businesses will open in the state. Maybe then strippers will have more opportunities to switch into another profession, if they want.

Proponents of this law aren’t trying to help women, they are trying to control them.

USA prevents effective oil spill cleanup

by Carolyn Homer on June 30, 2010 · 2 comments

in Energy, Environment, Regulation

As readers may recall, a brouhaha erupted three summers ago concerning BP’s planned expansion of its Whiting Refinery near Chicago, Illinois. BP had received permission to release marginally more pollutants, including ammonia and mercury, into the water. Facing public outcry, BP held a press conference explaining that the water they were releasing was actually cleaner than the Lake Michigan water from which it came. The public remained unconvinced, insisting that regardless of the net effect, BP should still comply with the strict original standards.

Ironically, that same rabid devotion to EPA standards has made the current BP Gulf oil spill worse. As the Financial Post explains, the Netherlands and other foreign countries with highly developed cleanup vessels offered their services to the United States in the days after the Deepwater Explosion – but the US turned them down. Even though foreign technology far eclipsed our own, and would have resulted in far less oil polluting our shores, we nonetheless rejected it because the clean water it produced did not quite meet EPA standards. Chalk this up as yet another example of regulations accomplishing the opposite of their intended purpose: instead of benefitting the American public, they magnified the harm.

For Whom the Dell Tolls

by Carolyn Homer on June 30, 2010

in Odds & Ends, Regulation, Tech & Telecom, Trade

Less than fifteen years ago, Dell computers were the hot desktop brand. In a rapidly growing market, Dell developed a unique business model which helped to price out competitors. By 2004, Dell had become the market leader in desktop computer sales. Business school case studies focused on Dell’s extraordinary success.

With this prominence, Dell found itself implicated in antitrust lawsuits brought by the FTC against Dell directly (1996), against Microsoft (1998), and most recently against Intel (2009).

Yet these antitrust lawsuits had little effect on the dynamic personal computer market. The FTC ‘s suits had the pretense of promoting competition – a measure that was unnecessary in an industry where competition is already fierce. Consider the graph above tracking the market share of various desktop brands since 1997. Note that even the industry leaders only comprise about 50% of the total market.

dellmarketshare 

Dell’s decline started when it failed to perpetuate its initial successes and respond to the changing market. As the New York Times wrote yesterday, Dell is currently embroiled in a lawsuit against Advanced Internet Technologies, which alleges that Dell knowingly sold defective computers in the mid-2000s.

This should serve as a reminder to the FTC. Before jumping to accuse businesses of anti-competitive conduct, they should remember to look at the state of the actual, thriving, competition. Corporations that seem abundantly successful today often self-destruct or fall prey to unanticipated market forces tomorrow. Competitors lie in wait to take advantage of any weakness. From the New York Times:

“Dell, as a company, was the model everyone focused on 10 years ago,” said David B. Yoffie, a professor of international business administration at Harvard. “But when you combine missing a variety of shifts in the industry with management turmoil, it’s hard not to have the shine come off your reputation.”

Before diving into antitrust investigations against Google, Apple, or any other tech company, it would behoove the FTC to remember that important lesson — markets change.

Celebrating Bastiat

by Fran Smith on June 30, 2010

in Economy, Odds & Ends

Economist Don Boudreaux reminds us that 209 years ago today, the great economic journalist Frédéric Bastiat (1801-1850) was born.  F.A. Hayek in his introduction to some selected Bastiat essays wrote that he was “a publicist of genius” and quoted Joseph Schumpeter ‘s assessment of Bastiat as “the most brilliant economic journalist who ever lived.”

On his birthday, it’s worth rereading some of his most memorable essays, such as “What is seen and what is not seen,” “The broken window,” and the “Petition of the candle makers against the Sun.”

Here’s a short excerpt from “The broken window”:

From which, by generalizing, we arrive at this unexpected conclusion: “Society loses the value of objects unnecessarily destroyed,” and at this aphorism, which will make the hair of the protectionists stand on end: “To break, to destroy, to dissipate is not to encourage national employment,” or more briefly: “Destruction is not profitable.”

Supreme Court Dooms Chicago Gun Ban; Obama Judicial Nominees Oppose Gun Rights; Religious Clubs Lose First Amendment Case; Removal of High-Ranking Bureaucrats Made Easier

by Hans Bader on June 30, 2010

in Intellectual Property, International, Labor, Legal, Nanny State, Personal Liberty, Politics as Usual, Regulation, Sanctimony, Zeitgeist

The Supreme Court doomed Chicago’s handgun ban Monday by ruling 5-to-4 that the Second Amendment applies to state and local governments like Chicago, not merely the federal government.  (Most guarantees in the Bill of Rights are deemed so fundamental that they apply to both state and federal governments, but a few rights deemed trivial, like the right to a jury trial in lawsuits seeking over $20, only are applied by the Courts to the federal government, not the states.)  In 2008, the Supreme Court ruled that the Second Amendment protects the individual right to possess a handgun in a federal enclave, in striking down a handgun ban in Washington, D.C., in District of Columbia v. Heller.  Chicago’s ban is quite similar to the one found unconstitutional in Washington, D.C., so the Supreme Court’s ruling Monday in McDonald v. City of Chicago dooms Chicago’s gun ban.

In 2009, President Obama’s first Supreme Court nominee, Sonia Sotomayor, claimed before her confirmation to accept the Supreme Court’s ruling in Heller as binding precedent.  But on Monday, she joined a dissent by the Supreme Court’s four liberal justices calling for the Heller decision to be overruled.  Second Amendment scholar David Kopel says that Sotomayor was not candid, noting that her opinion “contradicted” what she told the Senate before the Senate confirmed her to the Supreme Court.  It is likely that future liberal Supreme Court nominees will pretend to support gun rights until they are confirmed, then vote against such rights once on the Court.

Obama’s current Supreme Court nominee, Elena Kagan, lumped the NRA together with the KKK as “bad guy orgs” while serving in the Clinton administration, suggesting that she will consistently rule against gun owners if her nomination is approved by the Senate.  Kagan failed to defend federal laws protecting crime victims while serving as Solicitor General.

As a Harvard dean, Kagan blocked the military from recruiting, in defiance of a federal law requiring access for military recruiters.  Kagan claimed her opposition was based on the military’s exclusion of openly-gay soldiers, not hostility to the military in general, but this is hard to square with the fact that she had no problem letting the Saudis sponsor an Islamic studies program at Harvard Law School, even though the Saudis flog and execute gay people, and she had no problem serving in the Clinton administration, even though Clinton signed into law both the restrictions on gays in the military she claimed to object to (the Don’t Ask, Don’t Tell policy), and the ban on federal recognition of gay marriages contained in DOMA.

The Supreme Court Monday also ruled that religious clubs can be forced by colleges to admit atheists and others who disagree with the club’s religious perspective as members, as long as the college requires this as part of a general policy of banning clubs from discriminating based on any characteristic.  The Supreme Court’s four “conservative” justices dissented against this ruling limiting the First Amendment’s freedom of association, while moderate Anthony Kennedy joined the Supreme Court’s liberal bloc in ruling against the religious clubs in Christian Legal Society v. Martinez.

In Free Enterprise Fund v. PCAOB, the Supreme Court, in a 5-to-4 ruling, cut back on restrictions on the ability to remove high-ranking bureaucrats, ruling that provisions of the Sarbanes-Oxley law that kept anyone from removing members of the Public Company Accounting Oversight Board except for willful misconduct unconstitutionally infringed on the constitutional separation of powers, which requires that important government employees be subject to some degree of accountability to higher-ups in the executive branch.  However, the Supreme Court left intact the bulk of the Sarbanes-Oxley law.  The red tape adopted by bureaucrats under Sarbanes-Oxley has driven many IPOs and American jobs overseas.  The red tape costs the economy $35 billion a year, according to the American Electronics Association, and it did nothing to prevent the mortgage meltdown, Bernard Madoff’s $50 billion fraud, or the faulty valuation of sub-prime mortgage-backed securities that helped spawn the financial crisis.

The Supreme Court overturned a ruling that allowed business methods to be treated as exclusive property under the patent laws, but did not definitively rule out the patenting of business methods, in Bilski v. Kappos.

Wayne Crews on Cybersecurity and the Presidential “Kill Switch”

by Ryan Lynch on June 30, 2010

in Video, Zeitgeist

[youtube:http://www.youtube.com/watch?v=ZJHmrHAxkVY 285 234]

Blowout Prevention Act — or Oil Production Prevention Act?

by Marlo Lewis on June 30, 2010 · 2 comments

in Global Warming, Natural Resources

That’s the question I address today on the free-market energy blog, MasterResource.Org. 

This morning, the  House Energy and Commerce Subcommittee on Energy and Environment is holding a hearing on the Blowout Prevention Act. The bill text says that the federal government “shall not” issue a permit for an offshore oil well unless the applicant can “demonstrate” that he has the “capacity to promptly stop a blowout in the event the blowout preventer and other well control measures fail.” However, as the ongoing disaster in the Gulf makes painfully clear, once “the blowout preventer and other well control measures fail,” there is no way to “promptly stop” oil from spilling into the ocean. At that point, physics (two fluids coming into contact) takes over.

In short, the Act sets a standard that no oil company can meet. As written, the bill would effectively prohibit all future offshore drilling. Logically, moreover, it implies that all existing permits to drill should be revoked.

Two points should be kept in mind.

First, although oil spills are bad, oil is good. Without oil, there would be no modern commerce and no mechanized agriculture. Life for most people would be nasty, poor, brutish, and short. Many of us would not even be alive.

Second, banning offshore drilling would increase consumers’ pain at the pump, destroy tens of thousands of high-paying jobs, cripple the economy of the gulf states, and make the United States more dependent on OPEC oil.

Can Businessmen (and Women) Make Good Politicians

by Fred Smith on June 29, 2010 · 1 comment

in Culture, Odds & Ends, Politics as Usual, Zeitgeist

Mickey Edwards, former congressman from Oklahoma and guest lecturer at the Harvard School of Government, has written an interesting blog on the case for business leaders moving into politics. To Edwards, operational skills acquired in the private world are not easily translated to the political world:

I do have a problem, however, with the continued promotion of business success as a qualifier for public office. Success in the market is not an automatic disqualifier for public service, but it is a far different undertaking with different purposes and different values.

On this point, Edwards is absolutely correct, but I disagree with his conclusion that:

The business of business is business and the goal of business is to earn a profit in the provision of goods and services.

The goal of business is not merely to profit, but to create value for its shareholders. A firm must balance short and long term goals to produce wealth in both equity appreciation and dividends. How this is achieved depends on the interests of the shareholders. More importantly, the goal is not “profits” but “sustainable profits.” Firms that invest in productivity and new product development do so because they recognize that they live in the Schumpeterian world of creative destruction. Nothing they’re doing today will remain profitable in a decade. The firms who fail to acknowledge this fact do not survive, witnessed in the high turnover of the Fortune 500. The simple profit motive is a short-term, unsustainable notion of business practices.

To be sustainable, corporations must develop and maintain a good reputation with their customers, their employees, their suppliers, their shareholders, and any other group with whom they are economically-linked. The views of these groups can (and do) affect the ability of the firm to remain profitable over time. Moreover, a good reputation is hard to acquire, easy to lose. Considering these motivations, businesses are far more “political” than Edwards recognizes.

Business, however, is not guided by the benevolence Edwards attributes government:

The business of government is service- well managed, one hopes, and not wasteful, but never at a profit. There is no such thing as government money. Governments have no money; they have only what they take from their citizens, either in taxes or by inflation. And if government accrues profit, it can only have done so by taxing too much or eroding the value of the citizens’ income and savings — in either case doing harm, not good, to the people who have created it for the advantages such a common effort is presumed to bestow.

As a former congressman, Edwards certainly knows the appetite of government is infinite. Surplus revenues are never rebated to the taxpayers but spent without oversight on marginal projects. Increased cost of living allowances, earlier retirement programs, pork barrel spending to benefit local special interests. If government actually sought to advance the “public good”, the record would be far different.

Businesses seek maximum efficiency; governments seek sufficient efficiency. We might well save a considerable amount of money by delegating our national security to mercenary armies drawn from other countries (as opposed to keeping a high-cost standing army and paying U.S. wages to private combat zone contractors), thus erasing the need to maintain a perpetual and costly military infrastructure. We could assign the processing of Social Security checks and welfare payments to low-wage workers in Madras or Oaxaca. State governments could close welfare offices and require that all transactions with government be conducted electronically, with no recourse to potentially sympathetic human beings. These are choices governments make reluctantly and businesses make routinely.

This understates the problem. The concept of efficiency requires a metric. For business, it’s “sustainable profitability” whereas government is a grab bag of special programs, each administered by a siloed agency with a “mission” but no responsibility for the general public good.

Business cannot make utopian promises as government frequently does- social security, universal health care, generous cost-of-living increases, a cure for cancer, energy independence, zero pollution. And that lack of a metric can lead nations-and certainly firms- to bankruptcy. The plights of Greece and Illinois, to mention but two, are examples of the need for the “sustainability” virtue that business can offer to politics.

Even agencies with a clear mission- say the Department of Defense – are hindered by the political process and the 435 congressional districts continually second guessing their actions.

Yet, he is right. Those who’ve entered government from business have no great track record. Mitt Romney created a non-sustainable “universal” health care plan in Massachusetts allowing Obama his success at an even less sutainable plan at the federal level. Business doesn’t understand that the competitive forces that disciplined him in the private world are less present and much weaker in politics. Edwards argues that political leaders should ensure that government doesn’t impede profit-making unduly. But they do – and former business leaders freed of the sustainability restraints that made them successful in the private world may exacerbate the problems already extant.

So, in the end, I do find points of agreement with Edwards. The key role of a businessman turned politico would be to reform the institutions – the laws, the regulations, the legal structure – to remove all possible impediments to economic growth. Too few business leaders have ever sought to push for that role in the private sphere when the benefits would have been direct and immediate. Why should we expect them to do so in a world where the benefits would be privatized, the costs political?

CA to criminalize Internet poker?

by Michelle Minton on June 29, 2010 · 9 comments

in Nanny State, Odds & Ends, Personal Liberty

That is, unless you play at one of the three state-sanctioned “hubs”.

Much like other proposals to “legalize” online poker and other Internet gambling activities, proposals to legalize on a limited basis such as the proposed SB 1485 in California, seem like a step forward to online poker players who, for many years, have wagered money on the Internet in a legal gray area.  But sometimes it is better to be uncertain of your legal standing than to know that an activity you enjoy has become a criminal offense.

After the UIGEA was passed in 2006, as I have written about in the past, it was thought that online gambling would soon be officially criminalized. But when the final rule came down and the implementation date arrived (the day when all banks and credit processing companies needed to abide by the new rules), poker players realized that not much had changed in their experience of online play.

However, during the interim between UIGEA’s passage and the implementation of it’s watered-down version, a few legislators initiated bills to legalize certain online gambling activities, both federally and locally in their home states.

sen-rod-wright

Making news these days is California’s latest attempt, initiated by Sen. Rod Wright introduced SB 1485, a bill that supposedly legalizes Internet gambling for residents. What it would actually do is legalize gambling only at the three online platforms and criminalize Internet poker played anywhere else online. Currently, there are no federal laws that make online poker games a crime and the DOJ has never prosecuted individual players associated with the activity. California makes 11 names games illegal to play online, but poker is not one of them. Thus, in CA, poker is not consider an unlawful Internet gambling activity at the moment. But if a law is passed that sanctions only three online providers, chosen by the state, as SB 1485 does, then playing poker online anywhere else will be a crime. The state’s DOJ will be allowed to arrest any individual caught playing poker online at a non-sanctioned site.

Currently, California law makes 11 named games illegal to play online or any game where the operator takes a rake (a cut of the money won in each hand). Thus, online poker in the state is legal at the moment.

This type of restricted legalization is, not only offensive to defenders of individual rights, open markets, or personal privacy, but also it just will not work or do what Wright and proponents hope it will.

1. First, it will not add protections for consumers because gamblers will continue to operate at non-sanctioned sites:

The text of the proposed regulations recognize that “millions of Californians” gamble at online casinos for money. Once there are a handful of state-sanctioned casinos, Californians will continue to play at the online sites that they are familiar with or that court their business.

2. It pushes gambling further into the shadows

If the Senator is concerned about these millions of gambling Californians, he should be aware that criminalizing their chosen activity will not accomplish this goal. Rather, it simply pushes them further into the shadows. Any player who is defrauded or robbed in an online game might be too afraid to speak with authorities, lest he be charged with the misdemeanor offense of playing a game online.

3. There is no way to prevent people from continuing to gamble at the online sites they want to.

Much like UIGEA before it, this type of limited access is impossible without some other major intrusion on personal privacy (such as monitoring a person’s computer activity). Online casinos in other states or other countries will continue to serve Californians.

4. The flow of money into the state’s coffers will not increase.

Sure, criminalizing an activity adults engage in freely and that violates no other person’s rights is massive breach of regulatory authority, but it won’t even increase tax revenue for California. The gamblers who play online now will continue to play unlawfully, and have greater incentive not to report income earned online. Add in the cost of enforcement and licensing the three sanctioned hubs and the final tally may end up costing Californians more money than it brings in.

With the state’s massive deficit, the promise of millions in new revenue might convince others that this is a good idea. My advice, as it often is when it comes to the Golden State, is that gamblers or anyone else who likes to make decisions about their own life, might consider moving to Nevada.

A hearing of the proposal is scheduled today at 3:30pm PST

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