January 2012

Morning Media Summary

by Lee Doren on May 26, 2011

in Odds & Ends

Tech:

Gagging orders: Twitter prepared to hand over user data:
“A senior executive from Twitter yesterday admitted for the first time that the website would turn over information to authorities if it was “legally required” to do so.”

Apple’s iOS 4 hardware encryption has been cracked:
“Russian company ElcomSoft is claiming to have cracked the 256-bit hardware encryption Apple uses to protect the data on iOS 4 devices, and is offering software that allows anyone to do it.”

Global Warming / Environment / Energy:

Greenpeace warns of radioactive sea life off Japan:
“Environmental activist group Greenpeace warned Thursday that marine life it tested more than 20 kilometres (12 miles) off Japan’s stricken Fukushima nuclear plant showed radiation above legal limits.”

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Regulation of the Day 177: Single-Wide Trailers

by Ryan Young on May 25, 2011 · 2 comments

in Nanny State, Personal Liberty, Regulation

In 1957, the town of Cordova, Alabama banned single-wide trailer homes. It was a cynical attempt to lower the local poverty rate by keeping poor people out of town. Mayor Jack Scott explains, “We’re trying to better Cordova[.] We’re trying to clean up Cordova and keep it clean. We’re trying to keep the property values up. We’re trying to get it to where people will want to build homes on these vacant lots.”

The recent spate of tornadoes in Alabama has left a number of Cordova residents homeless. Some people are interested in buying trailers to live in temporarily while they rebuild their houses. FEMA also has trailers available for people. But they’re single-wides, so they aren’t allowed in Cordova. The weird part is that the ordinance was mostly unenforced until the tornadoes came. Now the city is cracking down at precisely the time when people need trailers the most.

The citizenry is understandably upset about this regulation. But when over 200 people, many of them displaced, showed up at a townhall meeting, they ran into another regulation. Fire marshals only allowed 100 people to enter the National Guard Armory, where the meeting was held. After much complaining, they relented and allowed everyone in.

Hopefully they will also convince Mayor Scott to rescind the trailer ban. Cordova’s people need roofs over their head more than they need their mayor’s aesthetic vision.

The Auto Bailouts: Still A Huge Loss for Taxpayers, and a Failure in Stemming Unemployment

by Hans Bader on May 25, 2011

in Bailout Watch, Economy, Employment, Stimulus to Nowhere

Columnist Shikha Dalmia explains how the auto bailouts are a huge money loser for taxpayers and the economy as a whole, despite recent earnings by General Motors. She pegs the cost for the “total bailout at up to $105 billion” for General Motors alone, factoring in less publicized costs commonly overlooked in calculating the cost of the federal government’s bailout, such as billions in special tax preferences GM received due to its quasi-governmental status. The Washington Examiner‘s Conn Carroll explains how Chrysler’s recent alleged “payback” of its bailout is phony and how taxpayers still have lost billions on its bailout. Chrysler is effectively using one taxpayer loan to pay off another.

If this massive amount of money had been left in the private sector, and thus spent elsewhere in the economy (rather than used for an auto bailout), it would have preserved far more jobs. There are far fewer jobs now relative to the beginning of the recession than in past “recoveries” — even compared with the massive recession that ended in 1975, which was a bigger worldwide recession in percentage terms.

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NLRB Targets Boeing, Ignores Congress

by Ivan Osorio on May 25, 2011

in Deregulate to Stimulate, Economy, Employment, Labor, Regulation

It is now well known that the Obama administration is trying to use the National Labor Relations Board (NLRB) as a battering ram to push through policy changes favorable to organized labor. Union leaders probably don’t welcome that public attention, as the NLRB’s suit against Boeing for building a plant in South Carolina, a right-to-work state, has generated a backlash.

As I note in The American Spectator today, several lawmakers have asked the NLRB for documents pertaining to its actions against Boeing (as well as the Board’s plans to sue four states that have enacted constitutional amendments guaranteeing  secret ballots in union organizing elections).

On May 3, Sen. Mike Enzi (R-Wyo.), minority ranking member of the Senate Health, Education, Labor and Pensions Committee, joined nine other senators in sending a letter to NLRB Acting General Counsel Lafe Solomon requesting documents pertaining to the Board’s actions against Boeing.

Then on May 12, House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.), along with Reps. Trey Gowdy (R-S.C.) and Dennis Ross (R-Fla.), also wrote to Solomon, requesting documents pertaining to its threatened lawsuit against Boeing and the four states with secret ballot amendments — including any communications with union officials.

On May 13, Rep. Tim Walberg (R-Mich.), chairman of the Workforce Protections Subcommittee of the House Education and Workforce Committee, and 10 other senators (including Reps. Gowdy and Ross) also sent Solomon a letter, in which they strongly criticize “what we perceive to be an activist, job-destroying agenda.”

In addition, on May 5, House Education and the Workforce Committee Chairman John Kline (R-Minn.) and Health, Employment, Labor and Pensions Subcommittee Chairman Phil Roe (R-Tenn.) wrote to Solomon requesting documents pertaining to the NLRB’s case against Boeing.

The NLRB responded with a letter that simply restates the Board’s position; the only documents attached to it are two news releases from the NLRB’s own website and a copy of the NLRB’s complaint and notice of hearing. In the letter, NLRB Acting Deputy General Counsel Celeste J. Mattina directs the Congressmen to other publicly available information.

This prompted a duly strong reaction from Reps. Kline and Roe. In a release, Kline states that, “The NLRB is not immune from congressional oversight or public scrutiny.” Indeed, the NLRB is not a lawmaking body, and Congress has not delegated to it the authority to change labor laws beyond what is in any statute.

For that reason, the NLRB’s arrogance should worry anyone concerned about the rule of law and the nation’s economic well being — as an unpredictable legal environment is just about the biggest obstacle a government can throw in the way of investment and growth.

The documents to the House Oversight Committee are due this week. It may be in for a similar non-response. Members of Congress should not relent in their efforts to rein in the NLRB’s pro-union activism.

For more on labor policy, see here and here.

New York Times on “Paternalistic” Government

by Greg Conko on May 25, 2011

in Agriculture, Culture, Health and Illness, Nanny State, Personal Liberty, Precaution & Risk, Regulation

The Dining section of today’s New York Times has a short piece reporting that the U.S. Department of Agriculture has lowered its recommended safe cooking temperature for pork from 160 degrees Fahrenheit to 145. Gourmands are rejoicing, as they’ve noted that the higher temperature would often render a lean cut of pork, such as a loin, “tough and dry.”

It’s been reasonably well known for some time that cooking whole cuts of meat — including beef, lamb, and even pork — to a lower internal temperature could kill a sufficient portion of harmful bacteria to make the food safe to eat (though ground meats should still be cooked to the higher temperatures because the grinding and mixing process could move substantially more bacteria from the heated outside part of the cut to the inside). And USDA cooking recommendations for beef and lamb have reflected that reality for some time now. But the higher cooking temperature for pork remained, primarily as an artifact of largely bygone concerns about trichinosis — a disease caused by parasitic worms once common in pork and wild game. But due to changing pork industry practices, trichinosis from pork is now fairly rare.

What’s most remarkable about the article is a quote from chef and culinary author Nathan Myhrvold (Yes, techies! That Nathan Myhrvold.) describing USDA’s attitude toward pork cooking temperatures as “very paternalistic, father knows best, we can’t let those dumb customers know the real thing.”

Who’d have thunk it? Government being paternalistic? I’ll grant that it’s just the Dining section, but I never thought I’d read those words quoted so approvingly in the New York Times.

Mark Haines RIP

by Ivan Osorio on May 25, 2011

in Culture, Video, Zeitgeist

Like other regular viewers of CNBC’s “Squawk on the Street,” I was saddened to learn that Mark Haines, the show’s longtime co-host, passed away unexpectedly last night. I’ll miss watching him on weekday mornings. I always enjoyed his direct, no-nonsense approach to interviews. Indeed, this morning, Haines’s CNBC colleague Joe Kernen said that one of the most valuable things he learned from him was not to relent when an interviewee tried to evade a question. That doggedness provided some memorable on-air moments, including this one. It gets really interesting at 4:50.

My full blog post on the above interview is here.

Education Department’s Gainful Employment Rule Was Based on Falsehoods

by Hans Bader on May 25, 2011

in Economy, Employment, Legal

Earlier, CEI issued a study on an Education Department rule that is likely to backfire on students: the so-called “gainful employment rule” that is being used to crack down on for-profit colleges. Now we learn that a General Accounting Office (GAO) report that was used to justify the rule was not “accurate,” as an internal GAO memo concedes. For example, the GAO repeatedly included erroneous claims that “15 out of 15 schools” investigated by the GAO engaged in various deceptive practices, when in fact far fewer of the 15 schools had been found to have done so.  “According to the GAO memo, ‘because a summary of X of 15 schools was requested, we then went back and stretched whatever we could find to come up with a number for the testimony.’”

Other inaccuracies in the GAO report resulted because “congressional staffers” hostile to for-profit schools “demanded the inclusion of numerous details as it was being finalized.” “The [GAO] team’s unwillingness to say no to the additional insertion of details at the end of a job created some of our most obvious inaccuracies.”

As the Daily Caller notes, “The report was crucial because it helped the push for strict new regulations at the Department of Education on the for-profit colleges. The most controversial part of the regulations, called gainful employment, is pending at the White House Office of Management and Budget.”

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Dismantling Sarbanes-Oxley

by Jacqueline Otto on May 25, 2011

in Economy, Regulation, Tech & Telecom

My colleague Ryan Radia and I recently wrote in an editorial for Investor’s Business Daily that the 2002 Sarbanes-Oxley Act should be dismantled for the sake of up-start businesses specifically in the technology sector. We argue that the burden of regulation imposed by the law is inequitable and puts businesses today at a disadvantage not experienced by businesses before the law’s passage. Read the full article here.

Companies like Microsoft, Apple and Google created immense wealth and opportunity in an era of less heavy-handed regulation. Firms such as Facebook and Skype may well represent tomorrow’s giants, but mandates such as Sarbanes-Oxley make these innovative firms much less likely to launch independent public companies.

Seeking an acquirer is often a sensible move for startups, but whether and when to go public should be based on market opportunities, not the costs of short-sighted legislation.

For the sake of today’s entrepreneurs and investors, Congress needs to take a close look at burdens that discourage companies from seeking public offerings. Revisiting the Sarbanes-Oxley Act would be an excellent first step. Section 404, which purports to prevent conflicts of interest, should be scrapped. The section establishes duplicative layers of oversight that are exorbitant to maintain. For instance, companies must assess for fraud, assess the measures to assess for fraud, then assess the assessors!

The murky waters on the tech IPO front should serve as a wake-up call to legislators. If America’s entrepreneurial spirit is to realize its full potential, many more capable high-tech firms may need to go public to raise the capital they’ll need to grow. The next generation of innovation depends on it.

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Mind-boggling Increase in Tuition Since 1960 Even as Students Learn Less and Less

by Hans Bader on May 25, 2011

in Deregulate to Stimulate, Economy, Employment, Legal

There has been a truly mind-boggling increase in college tuition since 1960. For example, law school tuition has risen nearly 1,000 percent after adjusting for inflation: around 1960, “median annual tuition and fees at private law schools was $475 … adjusted for inflation, that’s $3,419 in 2011 dollars. The median for public law schools was $204 … or $1,550 in 2011 dollars … in 2009 the private law school median was $36,000; the public (resident) median was $16,546.”

Due to market distortions like the proliferation of unnecessary state licensing requirements that require useless paper credentials, and financial aid that directly encourages colleges to raise tuition, colleges can raise tuition year after year, consuming a larger and larger fraction of the increased lifetime earnings students hope to obtain by going to college. As George Leef notes, “long-term average earnings for individuals with BA degrees have not risen much and in the last few years have dipped.”

Meanwhile, college students learn less and less with each passing year. “Thirty-six percent” of college students learned little in four years of college, and students now spend “50% less time studying compared with students a few decades ago, the research shows.” Thirty-two percent never take “a course in a typical semester where they read more than 40 pages per week.”

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Alcohol Producers in Texas Must Unite For their Right to Produce

by Michelle Minton on May 25, 2011

in Features, Nanny State, Personal Liberty

Post image for Alcohol Producers in Texas Must Unite For their Right to Produce

As discussed in my latest “Alcohol Regulation Roundup” post, a representative for brewing giant, Anheuser-Busch (AB-InBev) testified at a Lone Star State Senate committee hearing last week to express the company’s opposition to what’s known as the “Craft Beer Bill.” HB 602 would deregulate a sector of the Texas beer market by allowing small brewers to sell a limited amount of beer to customers who visit the brewery. The reason for AB-Inbev’s opposition is that the bill excludes brewers in the state who producer more than 75,000 barrels of beer annually; in 2008, Anheuser Busch produced more than 100 million barrels of beer throughout its 12 breweries in North America. When Anheuser-Busch’s Houston, Texas, location opened in 1966, it had the capacity to brew 900,000 barrels of beer a year. However, as consumption in the US rose, the Houston facility expanded production and by 1982 was producing 3.5 million barrels a year. In 1994, the Houston plant alone employed more than 1,000 people.

As noted here by Texas Watchdog writer Mark Lisheron, it might seem strange that Anheuser would take the time and energy to fight a bill that (even if it did apply to large brewers) would not affect their bottom line in any significant way. It seems strange, that is, until you learn that the wholesalers have once again been pulling strings behind the scenes.

“Small brewers were encouraged to add a brewery output stipulation to the bill by the Wholesale Beer Distributors of Texas. Ostensibly, as Keith Strama, an attorney for the suds lobby, told the committee, “The bill was designed to promote local breweries as they gain market share.”

InBev had supported the bill in its earlier form until they realized that a provision added to the bill would limit participation to small brewers only. This sort of discriminatory treatment is an issue that Anheuser-Busch has made a point to address in each state where it comes up (just this week, they lost their fight to keep Illinois craft brewers from being allowed to self-distribute).

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