Today, the Department of Justice sued to stop the proposed AT&T-T-Mobile merger. They claim to know in advance how the merger will affect the mobile market for years to come. It’s an example of F.A. Hayek’s fatal conceit. Of course, most people haven’t read Hayek. So over in the Daily Caller, I use a better known thinker to make the same point:
The philosopher Yogi Berra once said that “It’s tough to make predictions, especially about the future.” Let’s apply his lesson to the proposed $39 billion AT&T-T-Mobile merger…
Competitors are also surprisingly confident in their ability to predict the future. A Sprint spokeswoman said that “Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision … Today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.”
This translates roughly to “We think the merger would make the market more competitive. We were scared that we’d have to work harder to innovate and cut costs to keep our customers happy. Whew.”
Most mergers fail. Nobody knows if a merged AT&T and T-Mobile would offer a better, cheaper product line. The only way to find out is trial and, often, error. The Justice Department’s astounding claim that it knows the merger’s effects in advance is either proof of its superior enlightenment, or else the height of hubris. I’m guessing the latter.
Read the whole thing here.
More news from the frontlines in the battle over school choice, as thousands of Indianans have taken advantage of the Hoosier state’s Choice Scholarship Program. Public school teachers and administrators are naturally panicked over this development, going so far as to contact parents and persuade them to keep their children enrolled.
The program is welcome news for many parents concerned about the education their children are currently receiving in public schools.
Yet opposition to the program is strong, and the Indiana teachers’ unions are working to thwart the program. They claim it violates the Indiana constitution by using taxpayer dollars to subsidize religious education, and runs afoul of the state’s obligation to provide “tuition-free system of common schools.”
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The Wall Street Journal today writes about how the Obama administration is repeating the “mistakes of the past by intimidating banks into lending to minority borrowers at below-market rates in the name of combating discrimination.” Assistant Attorney General for Civil Rights Thomas Perez has argued that bankers who don’t make as many loans to blacks as whites (because they make lending decisions based on traditional lending criteria like credit scores, which tend to be higher among white applicants than black applicants) are engaged in a “form of discrimination and bigotry” as serious as “cross-burning.” Perez has compared bankers to “Klansmen,” and extracted settlements from banks “setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit,” treating welfare “as valid income in mortgage applications” and providing “favorable interest rates and down-payment assistance for minority borrowers with weak credit,” notes Investors Business Daily.
Under Perez’s “disparate impact” theory, banks are guilty of racial discrimination even if they harbor no discriminatory intent, and use facially-neutral lending criteria, as long as these criteria weed out more black than white applicants. The Supreme Court has blessed a more limited version of this theory in the workplace, but has rejected this “disparate impact” theory in most other contexts, such as discrimination claims brought under the Constitution’s equal protection clause; discrimination claims alleging racial discrimination in the making of contracts; and discrimination claims brought under Title VI, the civil-rights statute governing racial discrimination in education and federally-funded programs. Despite court rulings casting doubt on this “disparate impact” theory outside the workplace, the Obama administration has paid liberal trial lawyers countless millions of dollars to settle baseless “disparate impact” lawsuits brought against government agencies by minority plaintiffs, even after federal judges have expressed skepticism about those very lawsuits, suggesting that they were meritless.
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NEWS
ALCOHOL – How Does a Wine Monopoly Lose Money?
“In a report issued today, Pennsylvania Auditor General Jack Wagner says the state liquor control board’s wine vending machines, a wonderful illustration of what happens when a government monopoly tries to act more like a business, are operating at a loss, costing taxpayers more than $1 million since they were introduced a year ago. ‘We think the wine kiosk program has failed,’ Wagner said at a press conference, ‘and it needs dramatic, radical changes if the program is going to continue to exist.’
PRIVACY – Couple Can Sue Laptop-Tracking Company for Spying on Sex Chats
“An Ohio woman and her boyfriend can sue a laptop-tracking company that recorded their sexually explicit communications in an effort to identify thieves who stole the computer the woman was using. [. . . ] ‘It is one thing to cause a stolen computer to report its IP address or its geographical location in an effort to track it down,’ [Judge] Rice wrote in his decision (.pdf). ‘It is something entirely different to violate federal wiretapping laws by intercepting the electronic communications of the person using the stolen laptop.”
GENETICALLY-MODIFIED FOOD – Monsanto Seeks Approval for Low-Fat GMO Soybean
“Joe Cornelius, a Monsanto project manager who has worked on the Vistive soybeans for 15 years, said Vistive Gold could make a real difference in efforts to produce healthier foods. As an example, he said it could produce French fries with more than 60 percent less saturated fat. [. . .] But Bill Freese, a science policy analyst with the Center for Food Safety, said Vistive Gold and other engineered crops don’t face rigorous enough testing. No animal feeding trials were conducted on the new soybean to see what would happen when it was consumed, he said.”
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California legislators are set to pass a bill that would reduce the number of babysitters. Not on purpose, of course. But when you make babysitters more expensive, parents won’t hire as many of them. California Sen. Doug LaMalfa lists some of the bill’s requirements:
Under AB 889, household “employers” (aka “parents”) who hire a babysitter on a Friday night will be legally obligated to pay at least minimum wage to any sitter over the age of 18 (unless it is a family member), provide a substitute caregiver every two hours to cover rest and meal breaks, in addition to workers’ compensation coverage, overtime pay, and a meticulously calculated timecard/paycheck.
The intentions behind this bill are noble, one assumes. But when it comes to regulations, good intentions don’t matter. Results do. And it’s pretty easy to see that if it passes, this bill will result in a lot of unhappy nights at home for frustrated parents — and a lot less income for sitters who have been priced out of a job.
You can read the full text of the bill here [PDF]. It would also raise unemployment for maids, nannies, and anyone else who makes a living helping others around the house.
Earlier this year, President Obama proudly touted his executive order calling for federal agencies to review regulations on their books and identify obsolete rules for repeal.
That was a welcome gesture, but unfortunately it seems to have remained just that. In the case of labor policy, the administration is taking the opposite approach.
The Obama administration seems to be throwing every pro-union measure at the wall to see what sticks, in order to give union bosses something — anything — to keep them on board for the 2012 elections.
Having failed to get legislation favorable to organized labor through Congress — including the so-called Employee Free Choice Act, which would have effectively eliminated secret ballots in union organizing elections — the administration is now trying its hardest to enact policy changes favorable to organized labor through the regulatory process.
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It is perhaps a little ironic that the most vocal opponents of online poker will soon be the only people in the USA who can legally play online poker. The District of Columbia is moving forward with its plans to run the pilot program, which will allow 20 to 30 places around D.C. to offer online poker within the next week or so, despite the claims of corruption during the initial phases when the plans were pushed through the legislative process. If all goes well, the virtual poker rooms will open their doors to anyone (of age) in the District by the end of the year.
The planned system in D.C. has a lot of problems from a free market standpoint. For one, a monopoly system of government run poker room eliminates competition and the benefits that come from that. In the pre-UIGEA, pre-Black Friday era of online poker, players would quickly realize if a poker website had unfair odds, shady practices, or something as simple as bad customer service and they could and did move on to other poker rooms on the Internet. There would not be such an option for D.C. online gamblers.
Even with its problems, the D.C. online poker system would set the District on a path toward legalized online gambling. Unfortunately for poker players in the rest of the United States, they are left with a choice of either driving to the brick-and-mortar casino or moving to another country.
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Andrew Stiles describes “Ten Job-Destroying Regulations” from the Obama administration that will wipe out hundreds of thousands of jobs. Another job-killing regulation is the Obama administration’s recent demand that trucking companies employ alcoholics as truckers rather than assigning them to less safety-sensitive positions — a demand that will lead to costly lawsuits against trucking companies by accident victims, and thus discourage anyone from setting up new trucking companies.
Still another is the Obama EEOC’s current practice of suing some employers who consider applicants’ arrest records and criminal convictions in hiring — a practice it is now considering broadening, through agency guidance further restricting consideration of applicants’ criminal histories in hiring decisions. If you were thinking of starting a new business, wouldn’t you be less likely to do so if you thought you would have no freedom as to whom you could hire, and no freedom to consider someone’s dangerousness or the content of their character before hiring them? If you don’t hire a criminal, the EEOC may sue you for “disparate impact”; but if you do hire the criminal, you may later be sued under a state law for “negligent hiring” if the criminal harms someone on the job or while doing errands for your company.
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Libertarian urbanist — call him a “market urbanist” — Timothy B. Lee recently had an article at Forbes.com in which he criticized Matt Welch and Nick Gillespie’s The Declaration of Independents (it’s a great read: buy it here!) for its supposed lopsided attack on passenger rail. Welch then responded, and Lee responded to his response. Both make very good points regarding the intersection of mobility and individual liberty.
But in my opinion, the Reason editors didn’t go far enough in attacking passenger rail, which has become so obsolete that it is borderline inherently wasteful. In the United States, outside of a few dense urban cores, rail is good for one thing: freight. And when freight movement is considered with respect to highway use, costs, and benefits, highways demolish arguments in favor of passenger rail.
The United States has the best freight rail system in the world. While heavily regulated by the Federal Railroad Administration, Surface Transportation Board, and other obsolete government agencies, it is privately owned and is quite profitable at the moment. This was not always the case. From the 1870s — when the National Grange and other populist farmer organizations scored pro-regulatory victories — until the 1970s, the railroad industry was on a slow decline. Major shocks during this period included the first auto-driven suburban expansion following World War I, which was followed by the second and much larger auto-driven suburban expansion post-World War II.
The latter was supported by Eisenhower’s Interstate system, along with nasty urban renewal schemes that destroyed central cities and turned obscure architecture critic Jane Jacobs into an urbanist folk hero (despite her ignorance of many urban realities, see pp. 33-43). Private passenger rail, which through much of U.S. history was cross-subsidized by freight revenues, would now be DOA thanks to the cheaper air travel we enjoy following deregulation and increased auto ownership. Freight rail is on better footing today thanks to deregulation over the past 35 years, but it is no longer the king cargo mode it once was. And since the federal government took over the money-losing passenger rail operations from private railroads four decades ago, use in terms of passenger-miles has remained flat and its ridership share out of all passenger modes has significantly decreased.
But Lee insists that the individualizing, pro-dispersal automobile and auto infrastructure would not have enjoyed such large gains were it not for pro-auto government policy that built large road networks, forced lower-density development, and imposed parking minimums. There is certainly some truth to this. Cities would likely look somewhat different than they are today, although I’d bet not by that much. But it is important to recognize what cars and the roads they drive on are, what passenger trains are, and what passenger trains are not.
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NEWS
FEDERAL REGULATIONS – Obama: Seven Proposed Regs Would Exceed $1 billion
“President Barack Obama says his administration is considering seven regulations that would cost the U.S. economy more than $1 billion a year. In a letter to House Speaker John Boehner, Obama says his administration is also trying to reduce the burden of government rules.”
CALIFORNIA NANNY-STATE REGULATION – Styrofoam Ban: one side claims jobs; the other, the environment
“Styrofoam food take-out containers may become a thing of the past. California lawmakers are considering such a ban, the first-ever such ban in the country. Supporters say the containers create litter that’s not biodegradable. Opponents fear a ban could cost jobs. [. . .] Two California companies that make Styrofoam products say numerous jobs are on the line, including at restaurants that use the goods, if a ban is approved.”
DRUG MARKETING – Will the FDA Regulate Social Media?
“A blog post from the Public Relations Society of America last week complained that ‘it’s time for the FDA to act and to properly advise’ pharmaceutical manufacturers about what kind of advertising is and isn’t allowed, especially on social-networking sites. PhRMA, a trade association representing pharmaceutical makers, said this month that ‘we continue to wait for FDA’s guidance, and to hope that it comes soon.’”
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