January 2012

Conservatives and libertarians have long joked that these first words of the Constitution might well have ended with a period! But, laws are made and judgments about their wisdom are appropriate. Thus, when Senator Harry Reid laid down an interesting bench-mark in the recent financial crisis debate by calling the Republican “Cut, Cap, & Balance” bill “perhaps some of the worst legislation in the history of this country,” we thought a response was needed. Thus, we created a contest asking you whether you thought over our long history, we just might have set an even lower mark. We received many thoughtful answers, ranging from the “nanny regulator” laws to egregious trade protectionist laws to oppressive restrictions on speech to offensive and unjust racial exclusion laws. The result? Reid either didn’t know his legislative history or has a rather different set of values that the rest of us.

Consider some of the suggestions:

  • Nanny regulator laws include seemingly the myriad of small but irritating erosions of our freedoms, the unfortunate result of a misplaced residual Puritanical desire to punish “sin.” (Recall that Puritans were those opposed to oppressive treatment of caged bears, not because of the pain to the animal, but because of the enjoyment of the spectators.) Examples abound — one offered in this contest was the law granting the Consumer Product Safety Commission the power to ban all lead in toys, a law which did nothing to reduce harm to children but did benefit the big toy-makers at the expense of the local craftsman.
  • Trade Protectionist Legislation is unfortunately as American as Apple Pie and we received several suggestions. The most serious example was the Smoot-Hawley Tariff of 1930, a bill that closed America to world markets, exacerbating our own Depression and bringing that horror to the world.
  • Suppression of Political Speech laws have proliferated in recent decades as Americans began to question the growth of the regulatory welfare state and, not surprisingly, statist proponents saw this as unfair. They, after all, were the only legitimate voice of the people [the proletariat?] and, thus, these misleading narratives must be oppressed. Free speech means correct speech, after all. We at CEI have long seen these campaigns as attempts to drive market-friendly voices from the political marketplace. Openmarket.org readers pointed to a number of laws seeking to squelch political speech, such as McCain Feingold (the “Bipartisan Campaign Reform Act of 2002”), the Alien and Sedition Acts of 1798, and the Sedition Act of 1918.
  • The Recent Bush/Obama Tsunami of Regulations including Sarbanes-Oxley, the Medicare Prescription Drug, Improvement, and Modernization Act (or “Medicare Plan D”) pushed by Tom Delay, Dodd-Frank and ObamaCare which represent the most massive expansion of regulatory restrictions on the market ever. And finally…
  • Racial Exclusion Laws which suppress both civil and economic liberties. These laws include the various racist immigration and wartime rules of America — the Chinese Exclusion Act of 1882 and the Japanese Internment Act but also the Jim Crow laws seeking to buttress racist policies against the assimilative integrative market forces. They also include the Indian Removal Act of 1830 which seized the lands of the Civilized Five Tribes and the Fugitive Slave Act of 1850, which demanded that all Americans help enforce slavery. All these laws demonstrate the dark side of democracy — the atavism residuals of mankind’s tribal exclusionist past.

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Tech:

German official scolds Facebook on privacy:
“A leading German privacy official on Wednesday accused Facebook of using face recognition software in a manner that violates German and European law.”

Global Warming / Environment / Energy:

69% Say It’s Likely Scientists Have Falsified Global Warming Research:
“Mitt Romney, arguably the leading Republican candidate for president of the United States in the 2012 election, recently significantly diminished his prospects for obtaining the support he needs from the right wing of his party. How did he do this? He simply declared that he believes the Earth is warming, and that human activities are responsible. To most scientists, such a statement would be considered fairly innocuous, and an accurate assessment of current understanding. But to a large fraction of the US Republican party, this is a completely unacceptable position – ranking alongside gay marriage, gun control and abortion rights. Anthropogenic climate change has become a litmus test for Republicans in the United States.”

Al Gore: We need an American ‘Arab spring’:
“Ever since CNBC’s Rick Santelli inspired the Tea Party movement’s creation in early 2009, the left has been looking for a similar spark on their own side. The earliest liberal alternative, the so-called Coffee Party, was a flop. But former Vice President Al Gore insists such a movement still needs to be invented.”

Insurance / Gambling:

MLB investigates A-Rod gambling:
“Major League Baseball is taking “very seriously” the allegations that Alex Rodriguez took part in some illegal, underground poker games, one of which reportedly turned violent, and he could face suspension if his participation in the games is confirmed.”

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Post image for Bloomberg on Energy

Mayor Bloomberg, America’s chief nanny regulator, is moving on to bigger things — energy! During the recent heat spell he urged New Yorkers to turn down their air conditioners.  The last thing he wants is another blackout!

But, while asking Americans to forego air conditioning (one of the most significant public health technologies extant), he also proudly announced a $50 million grant to the Sierra Club’s “Beyond Coal” campaign. The goal of this program announced Mike Brune, the program’s director, is to shut down about one-third of the nation’s coal plants and replace them with clean energy as quickly as possible. They admit this will raise electricity prices (modestly, they claim!) and result in reduced availability of affordable energy — and, thus, availability of air conditioning.

Bloomberg also has championed energy conservation but has been a bit more cautious in endorsing “renewable” energy (windmills, biofuels) and has come out against premature closing of the Indian Point twin nuclear power plants. Closing these plants he noted would reduce energy availability by about 25 percent — and there is no alternative for that loss. A news account of this issue noted: “While Bloomberg is a Republican and Cuomo is a Democrat, this is not a partisan fight. What it is about is a mayor who looks at the reality of the situation and a governor who’s near obsessive focus on closing the reactors defies rational explanation.” The reporter quoted Bloomberg: “If you close Indian Point today, we’d have enormous blackouts.”

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In a few weeks, the U.S. District Court for the Southern District of California will hear arguments in a consumer lawsuit against Ferrero, the maker of popular hazelnut-chocolate spread Nutella. So what’s the dispute? Slate‘s Nadia Arumugam lays it out:

Athena Hohenberg used to serve her kid Nutella first thing in the morning. She says Ferrero’s labeling and television marketing convinced her that the chocolate-and-hazelnut spread could form part of a wholesome, balanced breakfast for her 4-year-old daughter. Then a friend told Hohenberg that, nutritionally, Nutella resembles a candy bar, and Hohenberg—shocked and angry—filed a lawsuit against Ferrero in California.

To be clear: Ms. Hohenberg isn’t claiming that Nutella’s Nutrition Facts (on the back of every jar of the spread) is inaccurate; nor is she questioning the veracity of Nutella’s ingredient list (in which sugar is listed first and palm oil second.)

Instead, Ms. Hohenberg’s primary complaint is that Ferrero misleads mothers by marketing Nutella as “part of a balanced breakfast.” In Nutella commercials, sun-kissed children wolf down Nutella-on-wheat-toast with their orange juice while their healthy, upper-middle-class mother sings Nutella’s praises. Do the commercials mention that one tablespoon of Nutella is 100 calories and 5 grams of fat? No. But do they lie to consumers? Absolutely not—as Slate‘s Arumugam proves in unnecessarily exhaustive detail.

Personally, I’m anxious to see how Athena Hohenberg’s lawsuit turns out. If Ferrero ends up shelling out cash to Hohenberg—very doubtful, but stranger things have happened—I look forward to filing a similar lawsuit against General Mills. After all, I was shocked and angry to discover that there wasn’t really “magic in every bite” of mini-charm Lucky Charms . . .

Today, August 3, 2011, marks the one year anniversary of Treasure Secretary Tim Geithner’s op-ed in The New York Times, ostentatiously titled “Welcome to the Recovery.” Read the whole article here.

He might as well have printed that on a banner and hung it over a battle ship for how much he has likely grown to regret those words. “We are on a path back to growth” Geithner declared, as he went to great lengths to justify and praise the stimulus package.

The economic rescue package that President Obama put in place was essential to turning the economy around. The combined effect of government actions taken over the past two years — the stimulus package, the stress tests and recapitalization of the banks, the restructuring of the American car industry and the many steps taken by the Federal Reserve — were extremely effective in stopping the freefall and restarting the economy.

Unfortunately, the headline yesterday was “Sliding Towards Recession.”

Jerry Jasinoski, former President of the Association of Manufacturers, writes in the Huffington Post about the distinct lack of good indicators.

Housing is depressed, 15 million people are unemployed, and there are signs of slowing in manufacturing. The ISM Manufacturing Index fell 4.4 percentage points to 50.9 in July from 55.3 in June, the lowest in a year.

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Post image for Robert Reich Doesn’t Understand Surface Transportation Funding

Over at Salon, former Labor Secretary Robert Reich has a predictably empty article on the debt ceiling deal in which he denounces Republicans for holding America “hostage” (at least he didn’t equate them with mass-murdering terrorists, as that would be totally inappropriate in the post-Loughner Era of New Civility).

How the supposed fiscal hawks in the Republican party were holding anyone hostage to gain anything is unclear, at least to me. They had repeatedly offered President Obama cushy deals, and the Boehner deal they ended up passing doesn’t do a damn thing to change the country’s fiscal and economic trajectory into the Sun. (It’s the entitlements, stupid!) There was certainly very little for libertarians or true fiscal conservatives to be happy about.

That’s fine. Reich is not the first, nor will he be the last, partisan hack to use some really silly rhetoric when “discussing” the debt deal. But then he goes on to talk about something he knows even less about: surface transportation infrastructure. You see, he criticizes President Obama for ceding too much ground, and claims that the debt deal puts at risk the president’s proposed National Infrastructure Bank (and unified Transportation Trust Fund):

He says he wants an “infrastructure bank” that would borrow money from private capital markets to pay private contractors to rebuild our nations roads, bridges, airports, and everything else that’s falling apart.

Fine, but the new deal he just signed may not let him do this either — if the infrastructure bank relies on federal funds or even federal loan guarantees to attract private money. The only way he could create an infrastructure bank without sweetening the pot would be by privatizing all the new infrastructure. That means toll roads and toll bridges, user-fee airports, and entry fees everywhere else.

Apart from its potential unfairness to lower-income people, such a privatized infrastructure would have the same effect as a tax increase. After paying more for roads and bridges and all other infrastructure, Americans would have less cash for to spend on goods and services. That means no boost to the economy.

First, there is no need to create an i-bank, which will do little to bolster responsible transportation infrastructure investments and will do a lot to further distort investment decisions and create more opportunities for waste, fraud, and abuse.

Second, the “privatization” aspect is also not as radical as he makes it sound. In the United States, there is very little interest in true privatization, i.e., government divestitures and design-build-operate-own projects. Rather, most so-called “privatization” comes in the form of concessions, where government-owned infrastructure is leased to and then maintained by private companies.

In my recent paper, “The Limitations of Public-Private Partnerships,” I highlight the advantages of allowing more private-sector participation in this important market — one that is generally dominated by inefficient government monopolies, ones that Reich seems to a priori support.

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Post image for August 20 Is Lemonade Freedom Day

Kids have been setting up lemonade stands for as long as there has been lemonade. But in recent years, regulators have started shutting them down. Robert Fernandes, a father of two, has had enough. That’s why he has declared August 20, 2011 to be Lemonade Freedom Day.

Fernandes is encouraging kids and parents to set up lemonade stands that day without going through the permits, inspections, and fees that many towns require. For more information, visit LemonadeFreedom.org. There is also a Lemonade Freedom Day Facebook event page here.

Fernandes also links to a list of news stories about lemonade stand shutdowns. The list is disturbingly long.

That’s why on August 20, I’m going to take a stroll through my neighborhood to see if any young entrepreneurs are selling unlicensed lemonade. I encourage everyone to do the same.

This is a minor battle, as these things go. But the same obstacles to lemonade freedom apply throughout the economy. Federal regulations alone cost nearly an eighth of GDP to comply with. That sizable burden is a major reason why the economy is still struggling. Lemonade Freedom Day is one way to tell overzealous regulators to back off.

Post image for Police Shut Down Another Rogue Lemonade Stand

Abigail Krutsinger is 4 years old. She lives in Coralville, Iowa. A local tradition there is the RAGBRAI bike ride, where cyclists ride across Iowa from the western border to the eastern border. Abigail, seeing how exhausted the cyclists were when they reached Coralville, opened up a lemonade stand. It was a way to help out thirsty bikers, make a little bit of money, and learn a little something about running a business. Classic Americana.

In another display of classic Americana, police quickly shut her down. Abigail never applied for a permit and a health inspection.

This is not an isolated incident. Similar crackdowns have happened in Wisconsin, Georgia, Oregon, and Maryland, and New York. Will there be more?

The Seattle Times recently featured a special report about a psychological “expert witness” who destroyed countless lives in the court cases in which he was hired to serve as an expert witness. He made up bogus psychological diagnoses for many people, like labeling a conscientious, mentally-healthy mother as a “quasi-psychotic” and “grave danger to her son” who was “‘probably’ sexually abusing him.” He also falsely claimed that a child-molesting priest had reformed, enabling him to molest several additional children.

For a quarter century Stuart Greenberg testified as an expert in forensic psychology, an inscrutable field with immense power. Purporting to offer insight into the human condition, he evaluated more than 2,000 children, teenagers and adults. His word could determine which parent received custody of a child, or whether a jury believed a claim of sexual assault, or what damages might be awarded for emotional distress.His peers elected him their national president. . .

But his formidable career was built upon a foundation of hypocrisy and lies.

All this wrong-doing made him a star in family courts in King County, Washington, where judges in divorce cases rubber-stamped his recommendations about which parent should receive custody of a child. “At conferences and in classrooms, in Washington and beyond, he taught others to do what he did. He became his profession’s gatekeeper, quizzing aspirants, judging others’ work, writing the national certification exam.” Later, state courts sealed his disciplinary records, permitting him to continue his wrongdoing even after it was well-known to state regulators, who did nothing about it. He was finally apprehended after he was caught videotaping his own employees using the restroom for his own sexual gratification.

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Tech:

Randi Zuckerberg Runs in the Wrong Direction on Pseudonymity Online:
“The Nymwars rage on. Over the past several weeks Google has been engaged in a very public struggle with its users over its “real names” policy on Google+, prompting blog posts and editorials debating the pros and cons of allowing pseudonymous accounts on social networking sites. But there is one person for whom insisting on the use of real names on social networking sites is not enough. Unsurprisingly, that person is Facebook’s Marketing Director, Randi Zuckerberg. Speaking last week on a panel discussion about social media hosted by Marie Claire magazine, Zuckerberg said,”

Hamburg rejects Facebook facial recognition:
“The Hamburg data protection authority on Tuesday ruled that Facebook’s facial recognition feature, which attempts to identify people in photos uploaded to the site, violates German privacy laws.”

Global Warming / Environment / Energy:

Global warming is a litmus test for US Republicans:
“Mitt Romney, arguably the leading Republican candidate for president of the United States in the 2012 election, recently significantly diminished his prospects for obtaining the support he needs from the right wing of his party. How did he do this? He simply declared that he believes the Earth is warming, and that human activities are responsible. To most scientists, such a statement would be considered fairly innocuous, and an accurate assessment of current understanding. But to a large fraction of the US Republican party, this is a completely unacceptable position – ranking alongside gay marriage, gun control and abortion rights. Anthropogenic climate change has become a litmus test for Republicans in the United States.”

Insurance / Gambling:

Poker is a game of Skill, Rules French Court:
“A report appearing on French website Madeinpoker.com announced the decision, with the Toulouse court ruling that Texas Hold’em should be considered a skill game rather than one of chance.”

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