January 2012

Left-Wing Politician Faces Ethics Charges for Improperly Using Influence to Aid Bank

by Hans Bader on August 3, 2010

in Bailout Watch, Economy, Legal, Nanny State, Personal Liberty, Politics as Usual, Regulation, Zeitgeist

Rep. Maxine Waters (D-Calif.) is facing ethics charges after she improperly used her influence to get special favors from regulators, and costly taxpayer bailouts, for a mismanaged bank whose executives gave her money and enriched her husband (and then lied about it).

Waters, notorious for her race-baiting and hard-left ideology, earlier praised the Los Angeles race riots that destroyed scores of Korean-owned businesses as an “uprising” against injustice. Waters once told a CEO in a public congressional hearing, “This liberal will be all about socializing . . . would be about, basically, taking over and the government running all of your companies.”

Waters made sure that the financial “reform” law recently signed by President Obama contained costly racial preferences and discrimination.  The bill ”imposes race and gender employment quotas on the financial industry — at a time the job market is stalling and economic growth is slowing,” writes economist Diana Furchtgott-Roth.  Its ”Section 342 states that race and gender employment ratios must be observed by all government agencies that regulate the financial sector, as well as private financial institutions that do business with the government.”  That provision was Waters’ brainchild.

The so-called financial “reform” bill is actually 2,315 pages of special-interest payoffs.  The bill does nothing to reform the biggest bailout recipients, the government-sponsored mortgage giants Fannie Mae and Freddie Mac, even though administration officials admit they were at the “core“ of “what went wrong.”  Fannie and Freddie helped spawn the mortgage crisis by buying up risky sub-prime mortgages and repackaging them as prime mortgages, thus creating an artificial market for junk.  Now they are getting a $400 billion bailout.

Minneapolis’ Block E: The Failure Continues

by Marc Scribner on August 3, 2010 · 2 comments

in Economy, Politics as Usual, Stimulus to Nowhere

The Twin Cities have a long history of expensive, poorly planned development projects. Notable cases include the Hubert H. Humphrey Metrodome in Minneapolis’ Downtown East neighborhood, St. Paul’s downtown revitalization efforts, and various aborted urban renewal projects in impoverished north Minneapolis. The Minneapolis-St. Paul metro area is home to approximately 2.87 million people, with less than a quarter of them residing in Minneapolis and St. Paul proper. City officials see this as a problem, and have launched several development public-private partnerships designed to attract new residents, businesses, and retail customers from the suburbs as well as from other regions.

Downtown Minneapolis’ Block E remains one of the most controversial projects ever undertaken by the city. In 1987, the city council voted to condemn the entire block, after years of redevelopment saber rattling. Prior to its razing, the block was dominated by adult-oriented businesses which attracted a clientele that city officials found undesirable. And nearly overnight, Block E went from a somewhat seedy business district to full-blown urban wasteland, complete with gang-controlled open-air drug markets. The neighborhood’s astronomically high crime rates (according to police statistics, about 25 percent of all downtown crime took place on Block E in the late 1980s) likely led to local residents dubbing the city “Murderapolis.”

Over the past few decades, strange crime-fighting and urban development programs have ensued, which include blasting Italian opera music over large speakers on the street corners to annoy drug-dealing gang members, and the construction of a new $148 shopping mall and a hotel—with $39 million in public support—when the entire downtown was watching its retail consumer base dry up.

Predictably, Block E has been a complete failure. On December 31, 2009, McCaffery Interests Inc., the original developer of the retail complex, sold its stake to Union Labor Life Insurance Co. (ULLICO), the notoriously mismanaged union-owned financial services company. The Minneapolis Star Tribune, whose editorial page ranks among the chief cheerleaders for public real estate investment in Minneapolis (due to its editors being stuck in a 1960s Hubert-H.-Humphrey-liberal mindset, like much of the state?), was optimistic about this change in ownership:

The new ownership arrangement at Block E should help the struggling entertainment and retail complex capitalize on two big changes in downtown Minneapolis: the new Twins ballpark opening in April, and a redesigned Hennepin Avenue that includes two-way auto traffic and pedestrian improvements.

However, within four months, ULLICO announced it was selling Block E to Minneapolis developer Bob Lux. The new Minnesota Twins stadium, Target Field, has since opened, but retailers continue to vacate their spaces or file for bankruptcy (the notable exception being Kieran’s Irish Pub, which opened its new location in March).

The Environment is a Luxury Good

by Iain Murray on August 3, 2010

in Environment, Global Warming, Politics as Usual, Private Conservation, Regulation

One of the central insights of Free-Market Environmentalism is that people treat the environment as a luxury good.  They are willing to pay for it when they have spare money, but not when they don’t.  That’s why treating the environment as a tax, which is how statist environmentalism works, arouses resentment, while treating it as a privately-owned asset, like FME does, promotes stewardship and conservation.

There’s more evidence for this view from a new study, Environmental Concern and the Business Cycle: The Chilling Effect of Recession.  Here’s the abstract:

This paper uses three different sources of data to investigate the association between the business cycle—measured with unemployment rates—and environmental concern. Building on recent research that finds internet search terms to be useful predictors of health epidemics and economic activity, we find that an increase in a state’s unemployment rate decreases Google searches for “global warming” and increases searches for “unemployment,” and that the effect differs according to a state’s political ideology. From national surveys, we find that an increase in a state’s unemployment rate is associated with a decrease in the probability that residents think global warming is happening and reduced support for the U.S to target policies intended to mitigate global warming. Finally, in California, we find that an increase in a county’s unemployment rate is associated with a significant decrease in county residents choosing the environment as the most important policy issue. Beyond providing the first empirical estimates of macroeconomic effects on environmental concern, we discuss the results in terms of the potential impact on environmental policy and understanding the full cost of recessions.

The paper’s authors are obviously concerned that the recession means that statist environmental policies are less likely to be enacted.  It would be helpful if, instead of thinking so linearly, environmental academics could think what opportunities this gives to advance free-market environmentalism.  It is clear that low-cost environmentalism is much more likely to be supported during a recession than high-cost environmentalism.  because free-market environmentalism shifts the burdens of environmental protection from the masses to those who are willing to pay, it should be much more attractive to people during a recession.  It is indicative of the ideological blinkers of the environmental establishment that this possibility does not occur to the authors.

Regulation of the Day 145: Unregistered Chariots

by Ryan Young on August 3, 2010

in Culture, Regulation, Regulation of the Day

When King Tutankhamen’s tomb was discovered in 1922, six chariots were among the artifacts found inside. One of them even had some wear and tear; maybe Pharaoh had personally used it for hunting.

It is even possible that falling off that very chariot caused the broken leg that is believed to have ultimately killed him at the age of 18 or so. That chariot is now on display in New York as part of a traveling exhibition of Tutenkhamen’s artifacts.

Getting the chariot from Egypt to New York was quite an ordeal. At roughly 3,300 years of age, the wood is fragile. First it was carefully packed into a truck and driven to Cairo from the Luxor museum. Then it was loaded onto a New York-bound cargo jet. A curator was by its side at all times.

Once it arrived stateside, the New York Times tells of an unexpected regulatory hurdle through which the chariot had to pass before leaving JFK International Airport for its Times Square destination and painstaking reassembly:

When New York traffic officials reviewed the papers required for the oversize truck that would transport the chariot into Manhattan, they saw that the cargo inside was classified as a vehicle, and demanded its Vehicle Identification Number.

“I’m totally serious,” said Mr. Lach, the exhibition’s designer. “But we got it cleared up.”

Good for them. The exhibit is on until January 2 if you care to look for the chariot’s VIN yourself.

Paycheck Fairness Act Would Mandate Equal Pay for Unequal Work

by Hans Bader on August 2, 2010

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

The Obama administration wants to force employers to pay some people equal amounts for doing unequal work, through a deceptive bill known as the Paycheck Fairness Act. “Male supermarket managers with college degrees couldn’t be paid more than female cashiers if the college degree for the manager wasn’t consistent with ‘business necessity,’” says economist Diana Furchtgott-Roth in a July 23 column in The Washington Examiner. The bill would also radically increase damage awards for what it labels as “discrimination.”

As I noted in a July 27 letter in response to her column,

Diana Furchtgott-Roth was right to criticize a bill that would require some people who do unequal work to be paid equal amounts. The perverse ‘Paycheck Fairness Act’ is indeed a bad idea. But her column understated the case by suggesting that ‘now,’ an employer found guilty of discrimination is only required to pay ‘back pay,’ not ‘punitive damages.’ Actually, employers already have to pay not only back pay but also damages up to $300,000 under Title VII of the Civil Rights Act. The so-called ‘Paycheck Fairness Act’ would eliminate the cap on punitive damages in gender-based pay discrimination cases, leaving the sky as the limit. Other provisions in this perverse bill could force employers to pay people who do nasty, dangerous, unpleasant jobs as little as those who do nice, pleasant ones, if the unpleasant jobs are performed mostly by members of one gender, and the pleasant ones mostly by the other gender. (Examiner, Pg. 20)

The supporters of the bill falsely claim it would simply treat gender-based pay discrimination the same as other pay-discrimination cases. Lazy journalists sometimes parrot this claim. But it is simply false, as I noted earlier.

The falsehoods may well succeed. In 2009, another bill known as the Lilly Ledbetter Fair Pay Act passed Congress based on false claims about what the Supreme Court held in a pay discrimination case known as Ledbetter v. Goodyear Tire & Rubber Co. (2007). In signing the bill into law, Obama himself misstated the facts and holding of that Supreme Court decision, and broke a campaign promise dealing with transparency in the process.

Alcohol middle-men pay lawmakers to protect industry

by Michelle Minton on August 2, 2010

in Odds & Ends

An article today in the Washington Post highlights the massive amount of money the beer wholesalers have been throwing at Washington these days. The reason, apparently, is to garner support for a measure that would allow states to restrict direct sales of alcohol from out of state producers.

Why would alcohol distributors want states to discriminate against out-of-state producers? The answer is simply: they want vineyards, distillers, and brewers to have to depend on the middle man wholesalers (aka distributors).

The Comprehensive Alcohol Regulatory Effectiveness (CARE) Act springs from a long-running legal battle over the powers of states to control alcohol sales within their borders. After Prohibition, most states established a three-tiered system of producers, wholesalers and retailers.

While the article correctly highlights some of the methods bills are pushed through the legislative process by interested parties, it seems to demonize the wholesalers. While their tactics are less than honest competition on the open market, the true -market competition, the real villain in this story is any lawmaker who is selling his or her vote to the highest bidder.

On April 15, a bill backed by the National Beer Wholesalers Association was introduced in the House aimed at limiting direct sales of beer, wine and other alcohol, which the trade group views as a mortal threat to its industry.

Over the next two weeks, the group contributed more than $45,000 to the campaign accounts of Rep. John Conyers Jr. (D-Mich.), chairman of the committee considering the bill and the guest of honor at a fundraiser during the association’s annual Washington meeting this spring. The group hired as an outside consultant Conyers’ former chief of staff, who met with members of the chairman’s staff.

In addition, the group has donated nearly $300,000 this year to more than 100 House members who agreed to co-sponsor the legislation, often within days of securing the lawmakers’ formal support, according to Federal Election Commission records. More than a dozen lawmakers received donations within a week of endorsing the bill, records show.

Rep. Mike Quigley (D-Ill.), for example, received a $2,500 contribution three days before the bill was introduced with his name on it. Another co-sponsor, Rep. Pete Olson (R-Tex.), received $8,000 in donations from the group this year, including $2,500 two days after pledging his support.

Judge Lets Virginia Challenge ObamaCare’s Individual Mandate, Refusing to Dismiss Lawsuit

by Hans Bader on August 2, 2010

in Economy, Health and Illness, Healthcare, Insurance, Legal, Nanny State, Personal Liberty, Regulation

A federal judge in Virginia has allowed the state’s lawsuit challenging the federal individual health care mandate to proceed: “A judge on Monday refused to dismiss the state of Virginia’s challenge to President Barack Obama’s landmark healthcare law, a setback that will force his administration to mount a lengthy legal defense of the overhaul effort.” The judge’s ruling is here.

Ilya Shapiro of the Cato Institute, who filed a brief in support of Virginia that was joined by constitutional law professor Randy Barnett and the Competitive Enterprise Institute, issued the following statement:

Today’s ruling should finally silence those who maintain that the legal challenges to Obamacare are frivolous political ploys or sour grapes. The constitutional defects in the healthcare “reform” are very real and quite serious. Never before has the government claimed the authority to force every man, woman, and child to buy a particular product – and indeed such authority, whether claimed under the Commerce Clause or the taxing power, does not exist (as Cato’s amicus brief in the Virginia case argues). I look forward to further favorable rulings as these lawsuits progress.

I discussed Virginia’s lawsuit here, and the constitutional problems with the health care bill’s “individual mandate” here.

The so-called “individual mandate” is unprecedented and exceeds 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.”

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).)  The health care law reaches beyond that to regulate pure inactivity, namely the refusal to buy health insurance even if you don’t need it (when I was young, I went for a decade without ever going to the doctor or dentist).  As UPI once noted, “the weight of Supreme Court jurisprudence seems to favor a Commerce Clause challenge” to the healthcare legislation.

Virginia’s lawsuit only raises federalism-based objections to ObamaCare.  There are other constitutional problems not raised in its suit.

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

Law professor Rob Natelson has raised additional constitutional objections to ObamaCare’s individual mandate.

Here’s an additional constitutional issue that occurred to me. Would requiring people to buy health insurance — and thus disclose private medical information to insurers — under government compulsion violate the Constitution by infringing their privacy rights, under rulings like Roe v. Wade and Robinson v. Reed, 566 F.2d 911 (5th Cir. 1978), which allowed a public employee to sue over invasive questions she was compelled to answer in a race-relations seminar? In one respect, it’s a stronger case than in Robinson v. Reed, because that case involved the government acting in its proprietary capacity, where civil liberties are subject to greater restrictions (see Waters v. Churchill, 511 U.S. 661, 673 (1994)), whereas the individual mandate involves the government acting in its regulatory capacity, where its actions and restrictions on civil liberties are subject to tighter limits. (See Carepartners LLC v. Lashway, 545 F.3d 867, 880 (9th Cir. 2008)(“regulated entities” enjoy more protection than government employees).) The fact that private insurers rather than the government would be collecting the information would not automatically obviate a constitutional claim, since the government effectively compels people to provide such information through the government penalties associated with the “individual mandate.” (See Truax v. Raich, 239 U.S. 33 (1916) (although private discrimination does not constitute state action or violate the Constitution, when state law requires the private employer to discriminate, the discrimination by the private employer then does become state action and does violate the Constitution).)

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