January 2012

Poker and Private Property in South Carolina

by Michelle Minton on October 20, 2010 · 1 comment

in Nanny State, Personal Liberty, Property Rights

In South Carolina, the fate of five men has hung in the balance for the last four years. They crime they have been accused of is running an illegal house of gambling from the home of one of the defendants. In actuality, the five men were playing a twice weekly, kitchen table game of poker, in which they paid an agreed upon fee (a “rake) in order to pay for drinks and snacks.

At first blush, the case seems like an inconsequential example of a backward law in a conservative state, but as it has wound through the judicial system in South Carolina it has sparked debate about landmark issues and the decisions could have reverberating implications for the rest of the country.

In 2006, the five men were arrested and convicted for illegal gambling. In 2009, however, Judge R. Markley Dennis reversed the gambling convictions and declared that the particular game the men were playing, Texas Hold ‘Em, is a game of skill and not one of chance. The men were still convicted of operating a gambling house, but the ruling was seen as a victory by poker players. In particular, online gamblers saw it as a step towards defending their favored game on the Internet (as case could be cited as precedent in future hearings on the legality of online gambling).

In South Carolina it is illegal to play a game of chance. Games of skill, however, are legal.

The state’s laws regarding gambling are out of date and incredibly vague.

The 1802 law in South Carolina regarding gambling states that any game with cards and dice is illegal. That does not just mean poker, it involves games such as Chutes and Ladders, Yahtzee, and even Go Fish.

But interpretation of the the law has been left largely in the hands of law enforcement. This most recent case has lawmakers and legal scholars to question the wisdom of leaving the topic so ill defined. Earlier this week Senior Assistant Attorney General Sonny Jones said that low-stakes, friendly games of cards are not illegal under South Carolina law:

“It is our position that this statute does not encompass the Friday night poker game or the penny ante” get-together…Occasional games of bridge are also safe.”

Assistant Attorney General Havird Jones said it is up to law enforcement to decide if a poker game has drifted into an illegal house of gaming.

He said common sense, purpose and legal language should help police determine what is at hand.

While the statement seems promising for the right to play poker, leaving the definition vague and for cops to determine on the seem leaves the legality of individual behavior within his or her own home that much more opaque. It does, however, get to the heart of the issue under debate with this case. When does one’s private residence become “public” because of the activities they choose to engage in within the privacy of their own home?

Henry McMaster, an attorney general in the state, is challenging the Charleston judge’s ruling that Texas Hold ‘Em is a game skill. If he is successful, they may not need to address the limitation of private property rights in the state of South Carolina. While a decision is not likely to be issued for several months, South Carolinians — as well as poker players — ought to watch the proceedings carefully, as they will have broad implications for both gaming and property rights on residents in the state and the rest of the country.

Rent Is Too Damn High

by Kathryn Ciano on October 20, 2010

in Property Rights, Regulation

Not much to add to this brilliant insight: The rent is too damn high!

Jimmy McMillan doesn’t get into details about what he intends to do about such high rent. The answer is clear: Let the markets go!

Sure it’s nice to live in a safe, high-rent neighborhood. Hopefully Jimmy McMillan understands that the problem with rental price caps (like rent control) and regulations (like banning food trucks) is that these policies create spikes and troughs across abutting rent districts. This artificially ghettoizes neighborhoods rather than permitting rents to rise and fall naturally to reflect the more nuanced actual rent prices people are willing to pay.

If he intends to fix the “too damn high” problem by mandating a maximum rental price, neighborhoods will suffer. From a 2004 CEI paper:

Price controls are, historically, a dismal failure; in the short-term they may produce a drop in prices, but they also destroy the incentives to produce more goods. Under rent control, housing stocks deteriorate[.] A survey of economists 20 years ago demonstrated that the destructive effect of price controls is more widely recognized by economists than is practically any other regulatory effect. As a Swedish(!) economist once noted, “rent control appears to be the most efficient technique presently known to destroy a city–except for bombing.”

Even that bastion of conservative thought the New York Times filled its latest article decrying the “disappearing rent-controlled treasures” with tale after tale of sad disrepair. The simple truth is that when housing boards prevent landlords from earning market price for the apartments they rent, landlords cannot afford to fix apartment problems as they arise.

After all, city-imposed rent control may keep the rent from getting too damn high, but the price of plumbing, masonry, flooring, repairing a leaky roof, bread for the landlord, plumber, et al–none of these fall under a price cap.

That’s how markets work, kids, in a nutshell. Prices aren’t pegged to anything; they simply reflect information.

Pegging one item’s price to an arbitrary number will either destroy the market for that item or it will require such extreme control over all related markets that even a Stalinesque dictatorship can’t keep it together. Only when the government lets go of price control entirely do prices correctly reflect what things are worth to the relevant market.

Rent is high. When rent is too damn high people move. Relate to your people all you want, Mr. Politician, but keep your hands off of price control!

Malthusian Indoctrination of Children Funded with Your Tax Dollars

by Lee Doren on October 20, 2010 · 1 comment

in Environment, Natural Resources, Private Conservation

Many people are familiar with Annie Leonard, creator of “The Story of Stuff,” a factually inaccurate viral video being shown in classrooms throughout America. In the video, Leonard argues that we are running out of resources, using too much stuff, destroying the planet and anti-capitalist values are the solution to the problem. It is bad enough that “Green Journalists” push Leonard’s falsehoods, and some teachers think her work has educational value, but now I just learned that your tax dollars are funding Annie’s latest project.

Loop Scoops is a new kids program on PBS where Annie is the content director. The cartoon is geared to children 6 to 9 years of age where they are taught that juice boxes are destroying the planet, consuming less is inherently good for society and we are using too many resources. Sadly, the Corporation for Public Broadcasting and the Environmental Protection Agency provided the funding, which means your tax dollars are paying for it.

The video below highlights one of the videos within Loop Scoops.

I’ve heard some people ask me why we shouldn’t teach kids to recycle. The answer is because we are not running out of landfill space, we are not running out of resources and recycling is not always the right thing to do. Just read the Eight Great Myths of Recycling to understand why tax dollars should not be used to indoctrinate kids to fear their juice boxes.  Kids should be able to enjoy their childhoods without being bombarded with Malthusian propaganda.

Say Goodbye to Free Checking

by Hans Bader on October 20, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Regulation

“Say goodbye to traditional free checking, as banks feel squeeze from new regulations,” reads the AP headline. “Free checking, a mainstay of American banking in recent years, will be nearly unheard of” at the banks that do business with most of the households in America.

“Almost all of the largest U.S. banks are either already making free checking much more difficult to get or expected to do so soon, with fees on even basic banking services. It’s happening because of a raft of new laws enacted in the past year, including the financial overhaul package, have led to an acute shrinking of revenue for the banks.”

Bank of America just wrote off $10 billion in losses due to the recently-passed Dodd-Frank financial overhaul law, and its stock value has shrunken over the last six months from over $19 to less than $12 per share, shrinking the value of millions of 401(k)s that Americans rely upon for their retirement.

Citibank is now charging Ted Frank $15 a month for his previously-free checking account, along with $0.50 per check written.

While imposing heavy new burdens on self-supporting, productive private banks, the Dodd-Frank Act harms the economy, reduces liquidity and the ability to hedge against risk, and does nothing to reform the corrupt government-sponsored mortgage giants, Fannie Mae and Freddie Mac, which helped spawn the mortgage crisis by engaging in fraud,  misrepresenting subprime mortgages as prime, and creating artificial demand for those junky mortgages (and now are collecting a bailout that may reach $400 billion).

Of Mice and Men and Christine O’Donnell

by Michael Fumento on October 20, 2010

in Nano & Biotech

A recent exchange between Christine O’Donnell and Bill O’Reilly, with a lack of scientific information on both sides.

O’REILLY: Everybody knows that scientists have enough knowledge to clone a human being if they wanted to.

O’DONNELL: Right.

O’REILLY: But they’re not, at least not that we know of. And now they’re in the monkey realm. And I don’t understand, if that’s the possibility that people might be cured, why the objection. Because I never buy the slippery slope….

O’DONNELL: By their own admission these groups admitted that the report that said, “Hey, yay, we cloned a monkey. Now we’re using this to start cloning humans.” We have to…

O’REILLY: Let them admit anything they want. But they won’t do that here in the United States unless all craziness is going on.

O’DONNELL: They are – they are doing that here in the United States. American scientific companies are cross-breeding humans and animals and coming up with mice with fully functioning human brains. So they’re already into this experiment.

Fact check:

Presumably O’Donnell was misremembering a 2005 report about growing human brain cells within mice. Not the same as an actual functioning human brain. Yes, it has been demonstrated that some mice are more intelligent than members of Congress but no genetic manipulation was required.

Regarding O’Reilly, as per usual when you see the term “everyone knows” it’s a hint of something untrue. It is possible that scientists now have the capability of cloning a human being.

But cloning mice proved fairly easy, sheep much harder, and monkeys much harder yet. Until somebody actually does clone a human being, we won’t know whether scientists have enough knowledge. But of course at some point they will have the knowledge and the will clone humans. And it won’t be the end of the world. We already have human clones. They’re called identical twins.

Morning Media Summar

by Lee Doren on October 20, 2010

in Economy, Energy, Environment, Legal, Personal Liberty, Regulation, Trade

Tech:

Privacy vs. Profits:
“The threat to privacy posed by digital technology is about to take a turn for the worse. At least, that’s what we’re hearing about HTML 5, the latest version of the computer language that is used to create Web pages. In principle, HTML 5 will allow sites you visit to know your physical location and will make it easier for them to keep track of your browsing and shopping history.”

New ACLU Report Calls for FCC To Take action to Protect Openness On The Internet:
“Protecting the Internet against content discrimination by broadband carriers is crucial to protecting First Amendment rights in the age of modern technology, the American Civil Liberties Union said today in a new report on network neutrality. In the report, “Net Neutrality 101,” the ACLU urged the Federal Communications Commission (FCC) to create strong policies that prevent Internet gatekeepers from exploiting their role for private gain. The report characterizes the need for “net neutrality” as a leading free speech issue of our time.”

Panda Security Launches Antivirus Software for Mac:
“Cloud based Internet security software firm, Panda Security, today launched Panda Antivirus for Mac. The new solution helps protect Mac users from malware affecting Mac OS and Mac OS X and scans files and email, detecting and eliminating or blocking many types of threats, including viruses, Trojans, spyware, keyloggers, adware, hacking tools, botnets, dialers, scareware and other threats.”

Global Warming / Environment / Energy:

French President Orders Lifting of Fuel Depot Blockade:
““Trying to reassert authority over the widespread protests against his plans to reform the pension system, President Nicolas Sarkozy said on Wednesday that he had ordered the authorities to break up blockades of fuel depots that have left a third of the country’s gas stations dry .”

China a surprise leader in clean energy: study:
“The world’s top polluter, China, is a surprise leader in clean energy efforts, a study showed Tuesday, outstripping the United States and Japan and leaving Australia lagging far behind.”

Feds Issued 600 Mine Safety Violations In September:
“Federal inspectors issued nearly 600 citations for safety violations found at 30 problem mining operations across the country in September, the Mine Safety and Health Administration said Tuesday.”

Obama Administration Says It Will Investigate China’s Green Tech Trade Policies:
“The Obama administration announced today that it is launching an investigation into China’s green technology trade policies. The investigation is in response to a lengthy petition filed last month by the United Steelworkers.”

Report: In Obama’s Chicago, stimulus weatherization money buys shoddy work, widespread fraud:
“Projects to weatherize homes are a key part of the Obama administration’s fusion of stimulus spending and the green agenda. But a new report by the Department of Energy has found serious problems in stimulus-funded weatherization work — problems so severe that they have resulted in homes that are not only not more energy efficient but are actually dangerous for people to live in.”

Insurance / Gambling:

State says friendly game of poker OK:
“The occasional game of private poker among friends does not violate the state’s anti-gambling laws, the state attorney general’s office said Tuesday, bringing a strange new twist to the kitchen-table-poker debate now before the S.C. Supreme Court.”

Health / Safety:

Study criticizes anti-smoking ads:
“An Oregon State University study suggests that anti-smoking ads by the tobacco industry targeted at youths and their parents do not work and might actually encourage some teens to smoke.”

Obama Argued The Premium Costs Will Go Down 14% – Instead, They Will Go Up 14%:
“During the White House Summit on health care, Senator Lamar Alexander (R-Tenn.), chairman of the Senate Republican Conference, and President Obama argued that the Democratic health care bill would cause premiums to decrease.
Obama said premiums would decrease by 14% and attacked Sen. Alexander saying:
“This is an example of where we’ve got to get our facts straight.”
Watch how angry he gets…”

Alarms over radiation from thyroid cancer patients:
“Cancer patients sent home after treatment with radioactive iodine have contaminated hotel rooms and set off alarms on public transportation, a congressional investigation has found.”

Economics:

Secretive Republican Donors Are Planning Ahead:
“A secretive network of Republican donors is heading to the Palm Springs area for a long weekend in January, but it will not be to relax after a hard-fought election — it will be to plan for the next one.”

The economic fallacy of ‘zombie’ Japan:
“Japan has been getting a raw deal from the so-called economic experts. Consider this: in the midst of the great recession, the United States is suffering through nearly 10% unemployment, rising inequality and poverty, 47 million people without health insurance, declining retirement prospects for the middle class and a general increase in economic insecurity. Various European nations also are having their difficulties, and no one knows if China is the next bubble due to explode.”
Democrats are at odds over stimulus package:
“A rift has emerged within the Democratic Party between liberal economists, who generally view the 2009 stimulus package as a success and say that Keynesian economics should remain the heart of the party’s economic policy, and elected officials, who in growing numbers have shunned affiliation with the $787 billion effort and are expressing doubts about the effectiveness of fiscal intervention.”

NASBE Study Finds Teacher Training and Evaluation are Left Behind in Scramble to Deliver 21st Century Education to Students:
“The current education model in the United States, a relic of the Industrial Age, is increasingly out of touch with the needs of society and the students it serves. In addition to the continued use of dated models of educating students, our systems for teacher training and evaluation have not kept up with the fast pace of change.”

DC Students Receive Dinner at School:
“Getting kids to eat three healthy meals a day can be a challenge, especially if money is tight. But D.C. Public Schools have found a way to take some of that burden off parents. They are now serving dinner at school.”
Officials hint Fed on the verge of more easing:
“A string of Federal Reserve officials on Tuesday indicated the central bank will soon offer further monetary stimulus to the economy, with one saying $100 billion a month in bond buys may be appropriate.”
Osborne unveils Spending Review:
“Unveiling his Spending Review in the Commons, Mr Osborne is expected to cut the budgets of Whitehall departments by an average of 25% – or £83bn in total.”

U.K. faces sharpest spending cuts since WWII:
“Britain’s Treasury chief George Osborne says the country’s government will make the largest cuts to public spending since World War II — slashing benefits and public sector jobs in a five-year austerity plan.”

Legal:

A Spray of DNA to Keep the Robbers Away:
“When the McDonald’s down from City Hall here was burglarized a few years ago, its managers decided they needed a new security system.”

Clarence Thomas’s Wife Asks Anita Hill for Apology:
“Nearly 20 years after Anita Hill accused Clarence Thomas of sexual harassment during his contentious Supreme Court confirmation hearings, Justice Thomas’s wife has called Ms. Hill, seeking an apology.”

Labor:

More Hope & Change… Democrats Punish Non-Union Workers in Obamacare Bill:
“During the White House Summit on health care, Senator Lamar Alexander (R-Tenn.), chairman of the Senate Republican Conference, and President Obama argued as to whether the Democratic health care bill would cause premiums to rise.”

Rioters rampage, protesters block French airports:
“Workers opposed to a higher retirement age blocked access to airports in Paris and around the country on Wednesday as hooded youths smashed store windows amid clouds of tear gas outside the capital.”

Transportation/ Land Use:

State official: Get ready Jacksonville, high speed rail is coming:
“There is no money to build a high-speed rail in Jacksonville, no plan for where it would go, and no station designated where people would be dropped off and picked up.”

Your Shriveling 401(K): Thank Financial Red Tape and the Foreclosure Furor

by Hans Bader on October 19, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Legal, Regulation

If your 401(K) has shrunken recently, it may be due to falling bank stocks, like Bank of America stock, which has fallen from over $19 a share to less than $12 a share over the last six months.   Most 401(K)s indirectly own Bank of America stock, because its stock is held both by most large diversified mutual funds, and by most index funds.

Bank of America just reported a $7.3 billion loss due to $9.87 billion in costs resulting from the restrictions on debit cards contained in the 2010 Dodd-Frank Act backed by the Obama administration.  (Those restrictions will also result in sizeable costs being passed on to consumers, while benefiting certain politically-connected businesses.  Other provisions in the Dodd-Frank Act not only harm banks and the economy, but are resulting in the return of some checking account monthly fees and per-check fees, while another costly law called the CARD Act is leading to the return of annual fees on some credit cards.)

But Bank of America’s stock value has fallen more due to the recent furor over foreclosures and the possibility that paperwork errors and securitization may thwart foreclosures against defaulting mortgage borrowers.  Bank of America temporarily halted foreclosures in all fifty states.  Leading law professor Richard Epstein explains how a permanent halt to foreclosures would be a disaster for “prudent borrowers and lenders,” as “those purchasers who bought homes out of foreclosure proceedings may well be forced to defend their titles against the original borrowers who went into default.”  At AOL News, Marty Robins gives additional reasons why a halt to foreclosures is a bad idea that would delay “economic recovery,” wipe out bank capital, reduce their “lending capacity,” and increase “interest rates” on mortgages.  A Washington Post story illustrates the negative ripple effects on the economy and ordinary citizens of halting foreclosures.

Bank of America stock fell more than 4 percent today after the New York Fed and others threatened to sue Bank of America to force it to repurchase $47 billion in mortgage securities that soured.  (Earlier, the Fed pressured Bank of America into buying a collapsing Wall Street investment firm whose failure it perceived as threatening the economy.   And the New York Fed, then headed by Timothy Geithner, used the AIG bailout to make billions in unnecessary payments to politically-connected financial firms that didn’t even need the money. )

Earlier this month, perhaps to appease politicians, Bank of America suspended foreclosures in all 50 states after sloppy paperwork in some foreclosures became apparent.  Now, it’s trying to resume foreclosures in 23 states, after a review disclosed no examples of innocent homeowners being foreclosed upon by it.  But state attorneys general smell blood and are pressing the banks not to resume foreclosures at all.

Free Market Burns — Fire Department Doesn’t Help

by Alex Schibuola on October 19, 2010

in Legal, Personal Liberty

This post was coauthored by Jered Piepenbrink and Alex Schibuola.

On October 3, a home burned to the ground in Obion County, Tennessee, though it was easily preventable. This story became national news when it was reported that the South Fulton Fire Department refused to extinguish the fire because the homeowner, Gene Cranick, failed to pay a $75 fee. The department only acted when the lawn of a neighbor, who paid the fee, ignited. Soon after, liberals denounced profit-seeking, private fire departments. Conservatives argued that the (former) homeowner will be sure to pay his fees now. The firefighters were not criticized because they were only following the law.

No critics, to my knowledge, produced an accurate assessment of the situation. When criticizing free markets, a good rule of thumb is to determine whether a free market even existed in the first place. Is the tragedy a result of a government policy or greedy profiteers? The answer is clear. The fire department was a government monopoly that was funded by voluntary fees, not involuntary taxes. In a free market, the department would have competitors and would not be constrained by government legislation. How would a private fire department with competitors benefit from allowing a home to burn when competitors can step in and make an offer? All the owner need say is “put out the fire and send me the bill.”

The conservative rebuttal is equally poor because it sanctions this local government’s awful policy of not assisting people who have not paid. Cranick was willing to pay right then and there (I’m sure his homeowner’s insurance would gladly offered to pay too), but his offer was rejected because he did not follow the defined-bureaucratic procedures. The South Fulton firefighters’ actions are unsettling. Any group with the means to prevent a tragedy with all costs covered (Cranick was willing to pay after all) but does not act because of its bureaucratic interpretation of a government law should have broken that law.

China Might Halt Rare Earth Exports

by Brian McGraw on October 19, 2010

in Trade

The New York Times reports: “China Said to Halt Some Mineral Shipments.”

HONG KONG — China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of some of those same materials to the United States and Europe, three industry officials said on Tuesday.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further ratchet up already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese officials are willing to use their growing economic muscle.

China had previously signaled that they were going to be keeping increasing amounts of the rare earths (a misnomer, they are abundant just expensive to refine), though halting exports is quite different. Might this be retaliation for the continued attacks politicians have been making towards China, the currency accusations and more recently the investigation over illegal green-energy subsidies?

The irony is that the United States used to be the largest producer of rare earths in the world, at the Mountain Pass rare earth mine in California. Wikipedia claims that the mine closed due to China’s entrance into the market (and low environmental standards, etc.), though an article featuring the owner of Molycorp Minerals (the company that owns the mine) indicates that the mine closed in 2002 because of little demand for rare earths and environmental concerns. The mine is expected to re-open in 2011.

However this plays out, the U.S. might want to reconsider the ramifications of continually pushing an economy we are interdependent on.

Building Height Restrictions: Where I Agree with Matthew Yglesias

by Marc Scribner on October 19, 2010

in Economy, Property Rights, Regulation

Matthew Yglesias of the Center for American Progress links to a Washington Post article that notes that office rents in downtown D.C. are now higher on average than office rents in Manhattan. He correctly points out that Washington, D.C.’s building height restrictions are largely responsible:

Normally what happens when you get high rents is that people respond with bigger buildings. Which is why Manhattan has such big office buildings. DC office buildings, by contrast, are quite short. So are developers working on responding to the high demand by building taller buildings? Of course not! Taller buildings are illegal in Washington DC.

Consequently, instead of building up real estate developers in the DC area build “out,” putting more and more jobs in the suburbs.

By no means am I anti-suburb. Nor do I believe that minimum parking requirements and “free parking” are the evils Yglesias and Donald Shoup claim they are (that said, just like maximum parking limits, these distortionary regulations should be eliminated). But I do not support arbitrary aesthetic justifications for limiting urban development, which unfairly make the suburbs more attractive  to developers. Density and land-use patterns should be natural byproducts of development, rather than planning goals. If property owners wish to meet demand for leased space by building taller buildings, so be it.

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