January 2012

Court Rejects Obesity Class-Action Against McDonald’s

by Hans Bader on December 9, 2010

in Health and Illness, Legal, Nanny State, Personal Liberty, Precaution & Risk, Regulation, Sanctimony

A New York court has refused to certify a class-action lawsuit against McDonald’s by people claiming it made them obese. As Ted Frank notes, the whole case should have been dismissed as baseless long ago, without even getting to the issue of class-certification. Earlier, a Brazilian judge ordered McDonald’s to pay a fat employee $17,500, in a truly moronic ruling. Never mind that eating at McDonald’s doesn’t make skinny people fat (I lost 10 pounts while working at McDonald’s).

The Obama administration is now barring poor mothers from using taxpayer (WIC) money to buy white potatoes, even though baked potatoes are more nutritious than apples or bananas. But they can still use the money to buy all kinds of things with little nutrition.  Meanwhile, the Obama administration used $766,000 of your tax money to subsidize the opening of an International House of Pancakes (IHOP) in Washington, D.C., even though IHOP food is no healthier than McDonald’s. The money was a discretionary grant from the Secretary of Health and Human Services (HHS). Another branch of HHS foolishly encouraged mothers to stock their refrigerators with apple sauce (which has no nutritional value at all unless vitamin C is added to it, since an apple’s natural vitamin C is lost when it is processed into apple sauce).

The New York Times earlier reported that the Agriculture Department is subsidizing the development of fatty foods to benefit large restaurant chains.

Liberal municipal officials want to ban the opening of new McDonald’s restaurants under the theory that they are racist for making minorities fat, and that McDonald’s is guilty of “food apartheid.” (Yet when fast-food restaurants refuse to deliver to poor sections of town, liberal trial lawyers claim that that, too, is racist. No matter what they do, fast-food restaurants get accused of racism.)

The Insanity of Ethanol Policy

by Marc Scribner on December 9, 2010 · 2 comments

in Video

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

Child-Snatching to Reap Federal Funds: The Adoption and Safe Families Act of 1997

by Hans Bader on December 9, 2010 · 8 comments

in Legal, Nanny State, Personal Liberty

An article called “The 7 Most Horrifying Cost-Cutting Measures of All Time” decries the role of the Adoption and Safe Families Act of 1997 in children being snatched from loving families by state officials and then put into foster homes by Child Protective Services (CPS).  According to the 1997 law, “for each child adopted into a foster family, the responsible state receives $4,000 to $6,000, with an additional $20 million bonus if it exceeds the average number of adoptions from previous years.”  The article says that that incentive “encourages CPS to make an increasingly liberal interpretation of the term ‘rescue.’  Consider that, a few years ago, CPS employee Pat Moore was fired for refusing to put a child in a foster home simply because everyone in the foster family had a felony conviction, and the family occasionally hired a convicted sex offender to babysit. “  Similarly, the article alleges that “when Vanessa Shanks’ child was taken away and she fought the decision in court, CPS responded . . . by taking away children of her relatives, and after Shanks finally won in court, they took away her attorney’s children.”

The problem of government officials seizing children and adopting them out to receive bonuses is even more severe in England, as I explained a few years ago at Point of Law.  But improper seizures of children from loving parents is also a problem in the United States, as I previously chronicled.

English children have been taken from their parents based on mere speculation that they may abuse them in the future, even if the government concedes the child has never actually been abused.

Most newspapers and legal commentators don’t cover this sort of thing, assuming that such actions are either non-existent, or isolated aberrations, and that CPS officials are omniscient and wise when they seize children from their parents.  A few exceptions are the Washington Examiner, and Walter Olson, the dean of law bloggers.  Olson has discussed the subject, and the devastating effects when parents are not in fact abusive or dangerous yet are put through investigations, or worse yet see their children taken away, at his web site Overlawyered, the world’s oldest law blog, which has been cited by federal court rulings on other subjects.

Children seized by CPS often experience devastating harm. In Doe v. Lebbos, 348 F.3d 820 (9th Cir. 2003), Judge Andrew Kleinfeld’s dissent described the tragedy that befell a little girl who was seized from her father as a result of false abuse accusations:

After being bounced around in the agency and foster parent bureaucracy for over a year, Lacey . . . was ‘diagnosed with Post-Traumatic Stress Disorder, hearing voices, and suicidal ideation.’ She was put on anti-psychotic medication. She had taken to smearing feces and to other abnormal and highly disruptive behavior. . . what the county did to her to ‘protect’ her apparently destroyed her. Something in this experience, perhaps being ripped away from her father for whom she consistently expressed love during the whole miserable period, perhaps having strangers strip her and search her heretofore private parts, perhaps being put with caretakers instead of her father, amounted to a trauma that was too much for her.

Ironically, after CPS seizes your kid and places him or her with a foster family, it will sometimes argue that the child should not be returned to you even if you prove you did nothing wrong and that the allegations were false.  Why?  They’ll argue that the kid has bonded with the foster family and thus would suffer emotional harm from being returned to you.  Yet the emotional harm that kids experience being taken away from their parents in the first place seems to be given little weight.

Why Insurance Rates Rise in Calm Seasons

by Michelle Minton on December 9, 2010

in Insurance

This year’s hurricane season, which officially ended at the beginning of this month, was the third most active season on record for the Atlantic. However, few of those hurricanes made landfall and thus the U.S. experienced little damage in the unusually active season. Despite none of the 19 named storms making landfall in the U.S., homeowners in coastal states are seeing their premiums rise. Particularly in Florida, where the government has to approve rate increases, people are asking why rates should rise when the state hasn’t had a major storm in five years. What some observers fail to understand or choose to disbelieve is that insurance companies, particularly in states with rate controls, are still playing catch-up from the years of charging rates that were far too low. In addition, many insurance companies are increasingly investing in back-up insurance, known as reinsurance.

Safety net:

The way insurance works is that a company will charge an individual a “premium” based on the perceived likelihood that this person will need to make a claim on his or her insurance. In Florida, despite the years of luck, the likelihood that someone will need to make a claim on their property insurance is much higher. If there is a good year and no hurricanes, the insurance company will retain a “profit.” But that extra money doesn’t just get dolled out to shareholders; it is reserved for future disasters or allocated to claims around the country. And based on a recent report from The Tropical Meteorology Project at Colorado State University, we may not be so lucky in the next hurricane season:

Their “extended range” forecast calls for 17 named storms in the 2011 season, of which 9 will become hurricanes, and five will reach “major” hurricane strength at 111 mph  (Cat. 3) or higher. And while no 2010 hurricanes crossed the U.S. coastline, the CSU team said, “We would expect to see more landfalling hurricanes in 2010. The average is 1 in 4 Atlantic hurricanes making a landfall in the U.S.

Insurers need to prepare for future losses. And despite several years of no significant hurricane damage, many insurers cover all types of damages around the country. Their losses are usually not limited to one state or line of insurance.

Insurance on a global stage:

While some insurers are strictly based in one state and provide limited types of coverage, many insurers operate throughout the nation providing many different kinds of insurance (property, auto, etc). This is so that a hurricane in Florida can be paid by premiums of Californians and a mudslide in California can be paid by homeowners in Minnesota. This way an insurance company can remain “solvent,” that is, it can have enough money to pay all the claims year round. The greater diversity an insurance company has among its policy holders, the less likely it is to experience a disaster that depletes all of its funds at once. However, not all insurance companies can spread the risk around the nation and even those that do can purchase extra insurance, known as reinsurance, to further protect against catastrophic claims. Reinsurers provide insurance for insurance companies around the world.

Why rates rise:

Insurance rates rise when insurance companies can get state governments to allow them to rise. The goal of most insurance companies is to estimate risk and charge a rate that brings loss and income to an almost 1 to 1 ratio. This allows them to charge the lowest amount, to be competitive with other companies, while still having enough funds to pay claims and not lose money. Basically, insurance companies would like to “break even” when it comes to insurance premiums. (A big misconception about insurance companies is that they draw the majority of their profits from unused premiums; this is not the case. Insurance companies make the majority of their profits through “holding” premiums and investing them in other products.)

The reason insurance companies in states like Florida are constantly harping for a rise in the premium rates is because the state government has forced insurance companies to operate at a loss for many years. In addition, insurers in Florida were forced to give “mitigation credits” for homeowners who took steps to prevent damage. While mitigation is a good thing and something that insurers would normally reward with lower premiums, in Florida the rates are so depressed that mitigation only reduces the amount insurers are likely to lose; forcing them to give credits puts them back at square one in terms of loss-risk.

“In the short term, it was great for consumers. Premiums on homeowners’ policies were reduced anywhere from 20 to up to 70 percent…The long-term thing was that companies like Allstate and State Farm were being forced to give back 60 to 70 percent of the earnings they made the year before because of the discounts that were made available to consumers.” This according to Brad Emmons of Vero Insurance.

Despite common belief that insurers are flush with money and reports that claim shady dealings, two-thirds of insurance companies in Florida are operating at a net loss and non-hurricane-related costs are on the rise. According to one report, non-hurricane costs accounted for 65 percent of Florida insurers losses.

In the end, Florida is a risky place to live and government interference has decimated the insurance environment in the state. The answer is to continue to let rates rise until they represent true risk. Eventually, private insurers will re-enter the state’s market (once it is profitable again), reserve money will be secure, and rates will fall to a level that reflect the actual risk of building a home on a coastline that is prone to hurricanes and other natural disasters.

Afternoon Links: December 9, 2010

by Nicole Ciandella on December 9, 2010

in Zeitgeist

1. Don’t donate Harry Potter or Twilight toys to the Salvation Army! Instead of being given to needy children, the toys will be disposed of because they “are not in line” with the charity’s Christian principles.

2. EU officials are criticizing the Czech Republic for making gay asylum seekers go through a sexual arousal test before being granted asylum.

3. Four New York women — three of them former city employees — are facing charges for stealing $8 million in food stamps.

4. A Cyprus Hill back-up singer is suing the makers of Grand Theft Auto for using his life story as inspiration for Grand Theft Auto: San Andreas.

5. This ink cartridge description is either a brilliant advertising gimmick or an insane rant by a bored employee–either way, well done!

Photo Credit: Sigismund von Dobschütz

Stimulus Impact: Zero, or Less Than Zero?

by Hans Bader on December 9, 2010

in Economy, Employment, Energy, Stimulus to Nowhere, Trade

In The Wall Street Journal, economists John F. Cogan and John B. Taylor argue that the impact of the $800 billion “Obama stimulus” was “zero” in terms of increasing economic growth.

I think its impact was less than zero — that it actually shrank the economy in several ways. One way was its use of “green jobs” subsidies to send American jobs overseas: 79 percent of the subsidies went to foreign firms, such as an Australian firm that imported Japanese wind turbines. Another was how it wiped out jobs in America’s export sector.

But it’s good to see more economists demonstrating that Obama was wrong when he claimed that economists support his stimulus package. In 2009, 200 economists signed a statement publicly opposing the stimulus package in an ad published in The Washington Post and New York Times. The “‘stimulus’ is not the road to economic recovery. It’s the problem, not the solution, wrote Nobel laureate economist Vernon L. Smith.”

Even the Congressional Budget Office admitted that the stimulus package would shrink the economy in the “long run” by driving up the national debt and thus crowding out private investment through increased debt-service costs.

17 Million Unnecessary College Degrees; Obama Administration Seeks to Increase the Number

by Hans Bader on December 9, 2010 · 6 comments

in Economy, Employment, Politics as Usual, Zeitgeist

In America today, 317,000 waiters and waitresses have college degrees.  Over 18,000 parking lot attendants have college degrees.  So do thousands of janitors.

As Richard Vedder notes in the Chronicle of Higher Education, “some 17,000,000 Americans with college degrees are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree.”  This fact is “incompatible” with “the relentless claims of the Obama administration and others that having more college graduates is necessary for continued economic leadership . . . . Putting issues of student abilities aside, the growing disconnect between labor market realities and the propaganda of higher-education apologists is causing more and more people to graduate and take menial jobs or no job at all. This is even true at the doctoral and professional level—there are 5,057 janitors in the U.S. with Ph.D.’s, other doctorates, or professional degrees.”  These depressing statistics are also discussed at The Economic Collapse Blog.

We wrote earlier about the college debt bubble, and how greedy, government-subsidized college administrators are charging obscene amounts of money for largely useless and ideologically-slanted “educations.”  (100 colleges now charge $50,000 or more in tuition, compared to just 5 colleges in 2008-09, and federal financial-aid subsidies effectively reward colleges for increasing tuition to levels that would evoke outrage in other civilized countries.)

Image credit: Honeywell-Nobel Initiative’s flickr photostream.

Lame Ducks Need Some Backbone to Let Ethanol Subsidy and Tariff Expire

by Fran Smith on December 9, 2010

in Economy, Energy, Ethanol

What’s one of the easiest things to do in the lame duck session?  Why, nothing — in relation to the 45-cents a gallon tax credit for ethanol and the 54-cents a gallon tariff on imported ethanol.  Both are due to expire at year-end.  It seems, though, that Congress is working its way to doing something, reauthorizing these programs that cost taxpayers $25-$30 billion over five years and hit consumers with higher prices at the gas tanks.

Right now there’s talk that the ethanol industry “would accept” a slightly lower subsidy. And the protectionism tariff on imported ethanol looks like it’s sacrosanct, even though President Obama has been preaching the benefits of trade in the wake of the finally agreed upon Korea-U.S. Free Trade Agreement.

Support for continuing the ethanol subsidy and tariff seems to be the “business as usual” state of affairs just a month after game-changing elections that will bring some avowed government cost-cutters to Congress in the next session.  Even saving that $25-$30 billion in new deficit spending over five years doesn’t seem to affect this Congress. Right now,  it still looks like special interests may trump the public interest, unless the lame ducks grow some backbone.

Anti-Earmarker Jeff Flake Gets the Nod for Appropriations; “Prince of Pork” Abdicates for Chairmanship

by Fran Smith on December 8, 2010

in Bailout Watch, Economy

It looks like the anti-spending brigade will get some support on the powerful House Appropriations Committee — incoming Speaker of the House John Boehner has said he backs fifth-term Arizona Congressman Jeff Flake’s bid to be named to Appropriations.

Flake, a major spark in the anti-earmark efforts and a strong proponent of free trade, was a thorn in the side of the free-spending Republicans and had been relegated to some less influential committees.  In fact, Flake was “purged” from his position on the House Judiciary Committee (as reported in 2007 by Robert Novak) for his “bad behavior” — his outspokenness and actions against earmarks and Republican leaders. 

His principled positions were duly noted by free market policy groups. He was rated the most fiscally conservative House member by the National Taxpayers Union, a Taxpayer “Super Hero” by Citizens Against Government Waste, and the top free trader by Cato Institute. Undeterred by his slapdown, in 2008 Flake asked for an Appropriations seat but was turned down.  Here’s what he said in his 2008 letter:

One of the major factors in our loss of the Congressional majority in 2006 and subsequent losses this month is that House Republicans have made ourselves indistinguishable from Democrats on federal spending.  Voters simply no longer associate us with limited government.

Earmarks make up a small fraction of the federal budget, but they receive an inordinate amount of public attention.  It is difficult for Republicans to convince voters that we have turned a corner on spending if we continue to use the House Appropriations Committee as little more than a vehicle for securing earmarks.

But how things have changed.  With a cadre of newly elected anti-spending representatives in Congress, Flake, with his own 66.3 percent of the vote in his district, finally got the nod from the Republican leadership. Here’s what Boehner said in his statement endorsing Flake for Appropriations:

“I support Congressman Jeff Flake [R-AZ] in his effort to be appointed to serve on the Appropriations Committee, and I join with incoming Majority Leader Cantor in expressing hope that other reform-minded Members of Congress will follow Jeff’s example in seeking appointment to the committee.”

Flake’s not letting any grass grow under his feet.  He’s already asking for a new Investigations Subcommittee to be established under the aegis of Appropriations.  Its task?  Here’s what appears on Flake’s website:

Taxpayers deserve an Appropriations subcommittee dedicated to investigations. Such a subcommittee will:

–Send a clear message to taxpayers that the Committee is serious about spending oversight;

–Shoulder the burden of the Committee?s oversight duties, freeing individual subcommittees to focus on crafting responsible spending bills;

–Implement a thorough and responsive oversight agenda focused on cutting waste, reducing duplication, and increasing transparency. Selected potential topics in what would be a long and full spending oversight agenda are below.

Here’s hoping he’ll get that subcommittee — and some more anti-spending colleagues on Appropriations. That may not be easy, since Kentuckian Harold Rogers was named to be chairman of the Appropriations Committee.  He had in the past been called the  “Prince of Pork” — but vows that as chairman he’ll rein in government spending and hold to the Republican moratorium on earmarks.

Image credit: Right Winger’s flickr photostream.

CEI Podcast — December 8, 2010: What’s Driving Ethanol Subsidies

by Ryan Young on December 8, 2010

in Agriculture, Energy, Environment, Ethanol, Global Warming

Have a listen here.

CEI Research Associate Brian McGraw talks about the federal government’s multi-billion dollar subsidies for ethanol, which is now dismissed even by environmental groups as an inferior alternative to gasoline. He also explains what lies in ethanol’s near future. Brian was also recently interviewed on RTV’s Thom Hartmann Show, which you can watch here.

Image credit: Rascaille Rabbit’s flickr photostream.

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