January 2012

Friday Regulation Roundup

by Ryan Young on June 18, 2010

in Deregulate to Stimulate, Economy, Nanny State, Regulation

-Postal Service pays incompetent employees over $20 per hour to not work. They can’t be fired because of union rules. So they come to the office and take naps, play cards, and fill out coloring books. And get paid for it.

-It is apparently against regulations to sell burgers and porn together without a permit.

-NSF funds research to identify star soccer players.

-Illinois high school administrator had $885,327 salary; retires with $601,978 annual taxpayer-funded pension. Total value of the pension? More than $26 million. Watch your back, Greece. America is right behind you.

-Ever want to have a web chat with the federal government about combustible dust? Here’s your chance.

-Arizona spends $1,250,000 to save 250 squirrels. That’s $5,000 per squirrel.

Congress Destroys Free Checking Accounts by Blocking Overdraft Fees for the Irresponsible

by Hans Bader on June 17, 2010 · 10 comments

in Bailout Watch, Economy, Legal, Politics as Usual, Regulation, Sanctimony, Zeitgeist

Banks can afford to offer free checking accounts with no minimum balance, to responsible people, only because they can charge overdraft fees to irresponsible people.  But Congress has now prohibited many overdraft fees, which will result in many banks eliminating free checking, and also require responsible people to subsidize irresponsible people.  This is chronicled in a Wall Street Journal news story entitled “End Is Seen to Free Checking.”

As the Journal notes,  “Bank of America Corp. and other banks are preparing new fees on basic banking services as they try to replace revenue lost to regulatory rules, in a push that is expected to spell an end to free checking accounts for many Americans. Free checking accounts, which have been widely available for more than a decade, have been a boon to middle-class consumers and attracted low-income customers to the banking system for the first time. Customers will likely be required to pay new monthly maintenance fees on the most basic accounts that don’t generate a lot of activity. To avoid a fee, customers will have to maintain certain account balances or frequently use other banking services, such as credit and debit cards, automated teller machines and online accounts. ‘If you put $1,000 in a checking account and don’t do anything with it, it will be hard to get that for free,’” thanks to the new rules.

This is becoming a pattern for Congress, passing laws forcing responsible people to subsidize irresponsible people.  It did the same thing with the bailouts, and with the CARD Act of 2009, which effectively forced responsible credit cardholders to subsidize irresponsible credit cardholders.  That credit card law, which limited what banks could charge irresponsible credit holders,  led to the return of annual fees on some credit cards, and wiped out many cash-back and rewards programs.

The elimination of free checking thanks to Congress’s unwise restrictions on overdraft fees will harm low-income people by driving them back to check-cashing stores that charge them money to cash every check. “The offers of free checking without any minimum balance requirements attracted a new wave of low-income customers, who previously went to check-cashing stores.”

Mordor Looks For More Wealth For Its Orcs

by Iain Murray on June 17, 2010 · 12 comments

in Deregulate to Stimulate, Economy, Regulation, Zeitgeist

John Gapper has a very good column in the Financial Times today.  He issues a timely warning that governments are on the prowl, looking for any company that might give it an excuse to rip its wealth from its investors’ hands:

Willie Sutton, the robber, sagely observed that he raided banks because that was where the money was, and US politicians know this lesson well. The voters do not have a lot since they are recovering from a loss of paper wealth in the housing bust and governments around the world (as well as US states) face yawning budget deficits.

Who does have cash? Large, dividend-paying corporations such as BP. They include energy producers and utilities; consumer goods brands; food, drink and drugs companies – all of the mature businesses that cluster in indexes such as the FTSE 100 and the Standard and Poor’s 500.

Nor should any other company think they are safe from this rampaging mob of legislators.  Remember Cinna the Poet in Shakespeare’s Julius Caesar?  Corporations should:

Other companies may look at all this and believe that they and their investors are liability-free because they have not spilled oil in the gulf, sold cigarettes, made cars that do not brake or constructed synthetic collateralised debt obligations.

That would be a mistake. Many of S&P’s dividend aristocrats rely on the goodwill of consumers and politicians to keep accumulating cash for payouts. The mood following the bail-out of Wall Street is now so hostile to corporations, and public budgets so strained, that any slip would make them vulnerable.

Is there any hope for corporations?  Well, possibly.  There are signs that the general public is beginning to realize who the real robber barons are.  If something like this can appear in the New York Times, there is hope:

What this means for Mr. Obama is that an anxious populace is now less likely to see his clash with BP as an instance of government’s standing up to a venal corporation, but rather as an instance of both sprawling institutions having once again failed to protect them. In a poll conducted last month by the nonpartisan Pew Research Center, 63 percent of respondents rated BP’s handling of the oil leak as fair or poor. But the government fared only modestly better, with 54 percent giving it the same dismal marks.

In other words, voters perceive both business and government as part of an interdependent system, and it is hard for them to separate out the culpability of either. Mr. Obama acknowledged as much in his speech Tuesday, when he asserted — in his lone criticism of government’s role in the crisis — that the bureau in charge of monitoring the oil companies had effectively been colluding with them instead.

All of which leaves the old kind of anticorporate populism — “the people versus the powerful,” as Al Gore put it — a beat behind the times, sort of like “flower power” or the Laffer Curve [up to a point, Lord Copper - ed.]. Mr. Obama and his party are probably right to presume that voters don’t trust BP or any of the powerful companies the president has taken to castigating on a regular basis. The problem is that they don’t trust Washington to stand up for them, either.

And with even liberal anger against the President growing, perhaps the analogy at the end of this Daily Show segment is worth considering further. The orcs who are despoiling the free enterprise system draw power from the One Ring, the might concentrated in Washington DC and which corrupts even the most noble souls (to be charitable to the President).  In order to stop the orcs, we shouldn’t just change the Ringbearer(s) every few years, we need to destroy the Ring itself.

America’s Failed Domestic Ethanol Policy

by Brian McGraw on June 16, 2010

in Agriculture, Ethanol

I had a piece in yesterday’s Washington Times critiquing U.S. ethanol policy. My main points:

  • Price subsidies are generally bad–they encourage overconsumption and distort the efficient allocation of resources. Ethanol is one of those cases–the “green” fuel is  (presently) costly and inefficient. If this wasn’t the case it is unlikely that the ethanol industry would need to rely on government support to survive. This is a clear case of a wealth transfer from taxpayers to a powerful, special interest.
  • Taxing foreign ethanol imports is just as damaging to our economy. We don’t refuse to buy clothes, electronics, food, etc. from other countries. Energy is no different. The U.S. would be much worse off if we were unable to get energy from a variety of sources abroad.
  • The foreign ethanol tariffs are used to offset the tax subsidy. Our beloved government decided to not only subsidize domestic production but also foreign production that is sold in the United States. The tariff, however, is larger than the subsidy so there is still a net tax on importing ethanol. The solution here is to not subsidize domestic production in the first place.

See here and here for more information on U.S. ethanol policy.

Obama Uses Oil Spill to Push Failed Energy Policies

by Hans Bader on June 16, 2010

in Agriculture, Economy, Employment, Energy, Environment, Ethanol, Global Warming, Health and Illness, International, Legal, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

In his speech last night, President Obama used the massive oil spill in the Gulf of Mexico to push his failed energy policies, such as a “green jobs” program that has replaced American jobs with foreign “green” jobs, and a climate-change bill that includes ecologically-devastating ethanol subsidies.  Meanwhile, Louisiana residents rated Obama’s inept response to the oil spill as worse than Bush’s much-criticized response to Hurricane Katrina, in a public opinion poll–perhaps because Obama delayed the clean-up of the oil spill by blocking assistance from many foreign experts.

Obama used the oil spill to push for more so-called “green jobs” programs, deceptively boasting that “over the last year and a half,” the government has subsidized the so-called “clean energy industry.”  This was a reference to the February 2009 stimulus package, which contained so-called “green jobs” funding, 79 percent of which went to foreign firms, replacing American jobs with foreign green jobs.  (The administration never bothered to define what a “green job” is, and some so-called “green jobs” turn out to be harmful to the environment.)  The stimulus package also contained regulations that destroyed jobs in America’s export sector.

In his speech, Obama also used the spill to push the so-called “comprehensive energy and climate bill” passed by the “House of Representatives” late “last year.”  That bill expands ethanol subsidies, which cause famine, starvation, and food riots in poor countries by shrinking the food supply.  Ethanol makes gasoline costlier and dirtier, increases ozone pollution, and increases the death toll from smog and air pollution.   Ethanol production also results in deforestation, soil erosion, and water pollution. Subsidies for biofuels like ethanol are a big source of corporate welfare: “BP has lobbied for and profited from subsidies for biofuels . . . that cannot break even without government support.”

Obama said nothing about waiving the Jones Act, a law that bans foreign ships from working in the U.S. waters unless the President waives the ban.  Past presidents have waived the ban after hurricanes to allow foreign experts to assist the U.S., and speed shipping of relief to hurricane victims.  But Obama refused to do so after the spill, report Voice of America News, the Washington Examiner, and Canadian, Australian, and European newspapers, even though it would make obvious sense to accept help from oil-producing, maritime countries like Norway that have big fleets and expertise in handling oil-drilling and oil-spill issues.   As a result, the Obama administration rejected various offers of assistance from Norwegian, Belgian, Dutch, and Mexican firms.

(The Obama administration has belatedly accepted some foreign equipment for use in fighting the spill, although it continued to block ships with foreign crews, delaying the foreign equipment’s use.  As Voice of America notes, although ”the Netherlands offered help in April,” such as providing ”sophisticated” oil “skimmers and dredging devices,” the Obama administration blocked their crews from working in U.S. waters, and as a result, this crucial ”operation was delayed until U.S. crews could be trained” in June.  “The Dutch also offered assistance with building sand berms (barriers) along the coast of Louisiana to protect sensitive marshlands, but that offer was also rejected, even though Louisiana Governor Bobby Jindal had been requesting such protective barriers.”)

In April 2009, the Obama administration granted BP, a supporter of Obama, a waiver of environmental regulations.  But after the oil spill, it blocked Louisiana from protecting its coastline against the oil spill by delaying rather than expediting regulatory approval of essential protective measures.  It has also chosen not to use what has been described as “the most effective method“ of fighting the spill, a method successfully used in other oil spills.  Democratic strategist James Carville called Obama’s handling of the oil spill “lackadaisical“ and “unbelievable“ in its “stupidity.”

Choosing individual liberty is no gamble.

by Michelle Minton on June 16, 2010

in Legal, Nanny State, Odds & Ends, Personal Liberty, Tech & Telecom

On June 1st the Oregonian published an opinion piece by the editorial staff, titled “Legalization would be a gamble, too”

The basis for the editorial board’s logic as well as some of the facts cited in the article are questionable, if not downright incorrect.  The main argument the editors make is that legality of an activity should be based, not on the constitution, free will of man, or other such concepts, but rather “public” perception of the activity; if the general public finds distasteful an activity that a minority enjoys it is perfectly fine to prohibit the activity.

We still aren’t convinced that what this country needs is more legalized gambling…There are still too many unanswered questions and unknown social impacts with legalizing online betting.

Basing the law on such a tenuous foundation is only a good bet if you plan to always be in the majority, otherwise the editors at the Oregonian might one day find their favorite activities have been prohibited, say for example, off-the cuff opinion articles that haven’t been fact-checked?

According to the article:

Like alcohol during Prohibition, Internet gambling is rampant even though it is banned in the United States. Thousands of online gambling sites are available to anyone anywhere with Internet access. All of them are based in other countries outside the reach of U.S. laws and law enforcement.

Internet gambling has never been banned in the US. Though no law makes it legal, no federal law criminalizes the activity. The state of Oregon does have laws governing Internet gambling that say, “Anyone engaged in Internet gambling may not knowingly accept a credit payment from another engaged in “unlawful gambling using the Internet,” but that makes the law dependent on a definition for what constitutes unlawful gambling. Since Oregon has no other laws regulating online gambling the law is not yet in effect.

Another error committed by the article is the description of “unregulated Internet gambling”

…legalizing online gambling could provide billions of federal tax dollars every year and serve to clean up some of the dark, unregulated alleyways of Internet gambling, where identity theft, sleazy financial practices and underage players are common.

While it’s true that the US hasn’t regulated the activity, most Internet casinos are regulated by the country they’re based in and the rare instances of crime occurred in regulated casinos. Laws won’t stop criminals, but criminalizing players creates victims without recourse.

A new federal law aimed at quashing Internet gambling by requiring banks to block suspected online gaming transactions took effect Tuesday. The restrictions may have some short-term impact on the Internet gambling industry, but players will get credit cards from overseas and find other ways around the law.

But if it isn’t possible to stamp out or even slow Internet gambling, does that mean the federal government should license it, tax it and profit from it?

oregonian-editorial-board1The issues isn’t about money. It is about whether or not it’s government’s role to criminalize an activity adults willingly choose to participate in and the answer is a resounding: No.

Yes, millions of Americans already are gambling on the Internet. But does anyone know whether legalization of the most accessible, convenient gambling opportunity ever invented — available with a few clicks of a mouse wherever there’s Internet access — would greatly increase gambling activity and problems associated with gambling?

So, if this is clearly an activity that “millions of Americans” want to engage in, what gives the state government, the feds, or the editors at the Oregonian the right to prevent consenting adults from playing games online with their own money?

While we don’t know the exact repercussions of explicitly legalizing online gambling in the US, we do know that sacrificing our liberty is a much riskier bet.

Note: After writing a letter to the Oregonian expressing my displeasure with the message of the article and misrepresentation of online gambling, I received an email from the public access editor, explaining that “…except in unusual instances, we reserve our letters page for local correspondence, and your letter would not qualify”

Cell Phone Cancer Scare Refuses to Die

by Ryan Young on June 16, 2010

in Health and Illness, Precaution & Risk, Regulation, Tech & Telecom

Some people are scared that cell phones cause brain tumors. There are enough of these bedwetters that San Francisco just passed a new law to “require all retailers to display the amount of radiation each phone emits.”

For most phones, that’s roughly one watt; the legal limit in the U.S. is 1.6 watts.

Studies have yet to find a link between cell phones and brain cancer. The main reason is that it is physically impossible; one watt of radiation just isn’t enough to cause any tissue damage.

The human body naturally generates about 100 times as much energy at rest, and 1000 times as much during exercise. One measly watt isn’t enough to affect anything.

One wonders why the bed-wetters are only worried about brain cancer; cell phones are held in the hand. And unlike the brain, which is shielded by hair, scalp, and skull, the hand is completely unprotected from cell phone radiation. If cell phones did cause cancer, activists should be at least as worried about skin and bone cancers in the hand.

But they aren’t. One reason is that those cancers don’t sound as scary as brain tumors do; it’s harder to get people worked up and frightened.

The other reason is that cell phones don’t cause cancer. Not in the hand. Not in the brain. Not in the face, the, jaw, or any other body part might take the brunt of the single watt of energy our cell phones emit.

Financial “Reform” Bill Engages in Racial Engineering, While Ignoring Corrupt Mortgage Giants

by Hans Bader on June 15, 2010

in Bailout Watch, Culture, Economy, Employment, Labor, Legal, Nanny State, Personal Liberty, Politics as Usual, Regulation, Sanctimony, Zeitgeist

Congress and the Obama administration refused to do anything about the corrupt government-sponsored mortgage giants, Fannie Mae and Freddie Mac, even though administration officials admitted that they were at the “core” of “what went wrong” in our financial system.  Doing so was just “too hard,” they claimed, and too time-consuming.

But they did find time in their financial “reform” legislation to push racial quotas at the Federal Reserve, requiring each Federal Reserve Bank to establish an “Office of Minority and Women Inclusion” to “increase the participation of minority-owned and women-owned businesses in programs and contracts.”  This requirement is the brainchild of Los Angeles Congresswoman Maxine Waters, the Castro-loving, left-wing ideologue who earlier praised the Los Angeles race riots that destroyed scores of Korean-owned businesses as an “uprising” against injustice.

Forget about those pesky Supreme Court decisions saying that racial preferences are presumptively unconstitutional and subject to strict scrutiny, and not permissible to promote “racial balance.”  Apparently, they are obsolete in the era of “hope and change.”  Plenty of other changes are afoot too.  Obama fired an inspector general for exposing corruption by one of his cronies.  And the Obama Justice Department illegally defied the Civil Rights Commission to cover up the fact that the administration let members of the racist, anti-Semitic New Black Panther Party get away with voter intimidation.

Regulation of the Day 142: Ladies’ Night

by Ryan Young on June 15, 2010

in Nanny State, Personal Liberty, Regulation, Regulation of the Day

Ladies’ night bar specials are illegal in Minnesota. They are unfair gender discrimination, according to the Minnesota Department of Human Rights.

Of course, few of the people actually affected by this blatant discrimination have a problem with it. Women save money on drinks. Men who buy women drinks save money. And by increasing the female-to-male ratio, ladies’ nights make men happy for other reasons.

If anything, enforcing the ladies’ night ban is a waste of state resources at a time when Minnesota is facing a severe budget crunch.

So why are regulators bothering? Blame lawyers. A separate case in New York has brought publicity to this divisive issue:

New York attorney Roy Den Hollander has for years made his living filing gender discrimination complaints for men, including himself.

Who cares? He does.

“[Men] have to pay more for the services [clubs] offer just because an accident of nature made them one sex or another?” he said. “That’s the basis of discrimination, and it shouldn’t be allowed.”

Or Mr. Hollander could simply choose to patronize bars that don’t do ladies’ nights. Other people seem to enjoy that particular form of gender discrimination. Let them.

FL property insurance: turning a blind eye is not reform

by Michelle Minton on June 15, 2010 · 1 comment

in Bailout Watch, Insurance, Odds & Ends

While deregulation is always a good thing, we shouldn’t be fooled into believing that the recent news that Florida’s office of insurance regulation has “relaxed their standards of solvency” is anything akin to deregulation or reform. Insurance companies, property owners, and taxpayers remain in a situation as precarious as a beachfront home in the middle of hurricane season.

Insurance companies in the state of Florida will now be allowed to continue operating despite having a level of funds that previously would have had their license to operate revoked. What this means is an insurance company that by industry standards (you know, the standards that actually reflect the reality of a situation) doesn’t have enough money to pay their customers in the event of a reasonably likely hurricane season, is perfectly fine by the new standards of the Floridian government.

This news comes on the heels of a veto vote by governor, Charlie Crist on a measure that would have allowed insurers to charge higher rates (a measure he worked on and supported prior to his separation with the Republican party). Allowing insurance companies to charge the rates they want would have allowed them to rebuild their underfunded coffers–the one thing that would actually represent a real step toward reforming Florida’s insurance market.

So, while it is great that the state won’t step in and shut down companies, insurers in Florida are no less prepared to weather a bad hurricane season and just as likely to find themselves needing state assistance to pay claims after a storm. And because the state has an underfunded catastrophe fund the very likely event of a bad hurricane season could send the state of Florida begging for money from the federal government and every taxpayer in the country to pay for beach homeowners who have been paying too little for insurance for too many years.

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