Deregulate to Stimulate

Utah Doubles Down on Gambling Prohibition

by Michelle Minton on February 6, 2012 · 0 comments

in Deregulate to Stimulate, Features, Nanny State, Personal Liberty

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It’s not news that regulators in Utah are often uncomfortable allowing residents to make their own decisions about how, when, or if they engage in morally questionable behavior. The Beehive State has a well-known bee in its bonnet when it comes to alcohol, but what many non-Utahans may not know is that it is just as strict, if not more so, when it comes to preventing residents from gambling — even if they are in their own home. As federal lawmakers and many states edge toward legalizing, regulating, and taxing online wagering, some Utah legislators want to clarify the letter of their state law to make it absolutely clear that their residents don’t have a choice: gambling in Utah is illegal, whether it’s at a business, in your home, or on your smart phone.

As Eric Bianchi over at CalvinAyre.com reported last week, Utah state Rep. Stephen Sandstrom introduced legislation (HB 108) that would make it illegal for residents of the state to gambling over the Internet and on handheld devices. This is the second measure meant to address the increasing ease with which Utah residents are skirting the state’s strict gambling laws. Last month, the Utah House passed a bill (HB 40) that eliminated “vague working in the state law” that Internet cafes had reportedly been exploiting to allow online gaming — or as the bill’s sponsor Rep. Don Ipson charmingly put it, made them “havens for criminal activity.”

Utah is only one of two states in the nation that doesn’t have any form of legalized gambling, such as a casino or lottery (Hawaii is the other). But that doesn’t mean that residents aren’t doing plenty of gambling anyway.

Of course, that’s always the problem with prohibition, isn’t it? Bans never actually stop people from engaging in a behavior, it simply makes them a criminal if they do. If Utah’s Internet gambling ban is approved, especially as other states move toward legalizing the activity, Utahans will continue to gambling on and offline. Utah will lose tax revenue to neighboring states and residents will not have the protections of their government if their rights are violated while engaging in online gambling. Apparently, Utah regulators would rather try to protect the purity of the souls of their constituents rather than doing the job they are charged with which is to protect their right to life, liberty, and the pursuit of happiness.

Facebook Filing Blasts Obama-Bush Overregulation of Sarbanes-Oxley and Dodd-Frank

by John Berlau on February 2, 2012 · 9 comments

in Deregulate to Stimulate, Economy, Features

Post image for Facebook Filing Blasts Obama-Bush Overregulation of Sarbanes-Oxley and Dodd-Frank
In his letter to prospective shareholders in the middle of the 201-page “Form S-1” that Facebook  filed yesterday afternoon to launch its much-anticipated initial public offering, company founder and CEO Mark Zuckerberg stated that one mission of Facebook is to “bring a more honest and transparent dialogue around government.”

In one important way, another section of the IPO already does so in communicating the incredible burdens on companies attempting to go public — burdens that create difficulties even for companies as big as Facebook and almost insurmountable for smaller firms. On page 30 of the S-1 (page 37  if counting the total number of pages), Facebook specifically singles out the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010 as “risk factors” that will impose substantial costs to the company and its shareholders and divert resources from the firm’s core mission of innovation.

In bold lettering, Facebook announces, “The requirements of being a public company may strain our resources  and divert management’s attention.” The prospectus goes on to explain:

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), the Sarbanes-Oxley Act, the Dodd-Frank Act, … and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources.

Regarding Sarbox, Facebook registers a complaint similar to that of many entrepreneurs, investors, and scholars of the economy about the law’s burden. The filing notes that the company is “in the process of designing, implementing, and testing the internal control over financial reporting required to comply with” Sarbox’s infamous Section 404,”which process is time consuming, costly, and complicated.”

Facebook is far from the only firm — big or small — that has found Sarbox to be “time consuming, costly, and complicated.” According to John Battelle’s book The Search, considered a definitive history of Google, Sarbox was “hell for a company like Google, which made its money literally pennies at a time, from millions upon millions of micro-transactions.”

Battelle reports that Sarbox compliance significantly delayed Google’s 2004 IPO. “According to engineers involved in the work, Google had to significantly restructure its advertising report system from the ground up.”

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Court Ruling Broadening Americans with Disabilities Act Will Harm Taxicab Safety and Cost Hundreds of Millions

by Hans Bader on January 19, 2012 · 0 comments

in Deregulate to Stimulate, Economy, Employment, Features, Legal

Post image for Court Ruling Broadening Americans with Disabilities Act Will Harm Taxicab Safety and Cost Hundreds of Millions

A federal judge last month barred New York City’s “Taxi and Limousine Commission from issuing permits for taxicabs unless they’re accessible to people who use wheelchairs,” citing the Americans with Disabilities Act (ADA).  The judge effectively rewrote the ADA to cover taxi cabs, even though “the ADA specifically exempts automobile-type vehicles, including most taxicabs, from the requirement to be wheelchair accessible.”

The judge’s ruling will harm public safety and the environment, and cost hundreds of millions of dollars in New York City alone: “the relief demanded ‘would require, over the next five years, that all 13,000 New York City medallion cabs be replaced by cabs that cost about $15,000 more – basically to have their frames cut and then stretched to accommodate a ramp and room inside for a person in a wheelchair. …The larger taxis are generally about 800 pounds heavier and use about 20% more fuel – raising costs and polluting the air. Stretched taxis have harsher suspensions, and are therefore less comfortable for most users, as well as more dangerous (because they are less maneuverable and harder to stop).’”

The court’s unduly expansive interpretation of the Americans with Disabilities Act (ADA) is backed by the Obama Justice Department, which filed a brief supporting the lawsuit. The Obama administration is busy reinterpreting federal labor, employment, disabilities-rights, and discrimination laws in ways that impose costly new burdens on businesses and consumers. The Obama EEOC recently sued Pepsi for doing criminal background checks on job applicants, forcing it to pay $3.1 million to settle the lawsuit. The EEOC is also threatening employers who require high-school diplomas with lawsuits under the ADA.

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Judge Criticizes American Law Schools

by Hans Bader on January 17, 2012 · 2 comments

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

A prominent federal judge has added to the growing chorus of criticism for American law schools and their failure to provide practical training for their students despite charging exorbitant tuition:

Judge José Cabranes of the U.S. Court of Appeals for the 2d Circuit . . .noted that law schools are in “something of a crisis,” given the skyrocketing cost of tuition, ever-higher graduate debts and a growing feeling that legal scholarship is of little use to the bench or practitioners. …

To get back on track, law schools should shift their curricula back to core courses and away from the interdisciplinary classes that have grown in popularity, he said; they should introduce a two-year core law program followed by a yearlong apprenticeship, and increase transparency regarding costs, job prospects and financial aid information. …

Cabranes lamented the move by law schools toward specialized, often interdisciplinary courses that can displace “black-letter” law courses — criminal and civil procedure, evidence and federal courts. He related a story about a friend’s child who enrolled in a law school clinic focusing on housing court — but who had never taken a property law course. Core law courses should come before clinics and interdisciplinary work, even if the latter are more popular with students and faculty, he said. …

Cabranas also offered a harsh assessment of the scholarship that legal educators are producing. He recalled recent criticism from several Supreme Court justices that the scholarship has left “terra firma” in favor of outer space. “Legal scholarship is a conversation among members of the academy with the rest of us reading — maybe,” he said.

Cabranes also “condemned a growing ‘cult of globalization,” in which law schools focus on trendy international concerns, rather than give their students a “solid foundation in the law.” An earlier news story in The New York Times described what a costly white elephant  law schools have become. Law school is expensive because of government-enforced accreditation standards that prevent law schools from containing costs even if they wanted to: “the lack of affordable law school options, scholars say, helps explain why so many Americans don’t hire lawyers” when they genuinely need legal assistance or advice. Lawyers need to bring or work on big-ticket lawsuits — even socially destructive lawsuits — to pay off their student loans, instead of providing badly needed legal advice and assistance to people of modest means, who can pay less. (Certain types of lawsuits are favored by one-way fee-shifting statutes that encourage trial lawyers to bring those particular types of lawsuits, even when the entity being sued is probably innocent.)

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New York Times Documents the Case for Freedom

by David Bier on January 13, 2012

in Bailout Watch, Deregulate to Stimulate, Economy, Regulation

It’s not every day that the front page of The New York Times has two articles that highlight the importance of limited government, but today’s edition does exactly that. The first article describes how the Citizens United Supreme Court decision to allow corporations and unions to spend unlimited amounts on political causes has actually benefited free-speech and the political process.

Under the old political rules, Mitt Romney arrived in South Carolina this week the prohibitive Republican front-runner: flush with cash, awash in endorsements from a party establishment starting to coalesce behind him and buoyed by victories in Iowa and New Hampshire.

But as Mr. Romney is quickly learning, those rules no longer apply. Mr. Romney’s carefully tended network of Republican donors has been rendered functionally less important by “super PACs,” through which a handful of wealthy individuals are financing a multimillion-dollar advertising barrage to assail his record and prop up his opponents….

As a result, Mr. Romney’s remaining opponents have little incentive to drop out, knowing that their support from super PACs and Internet contributions from grass-roots supporters can keep them in the race long after they would have remained viable in earlier eras…

In other words, Republicans are actually getting more time to make a decision, more information about the candidates, and more debate about the issues as a result of the Citizens United decision. As John Samples shows in his book The Fallacy of Campaign Finance Reform, the motto “more money = more speech” does, in reality, hold true.

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Re-organizing the Federal Government to Crush Opposition

by Iain Murray on January 13, 2012 · 2 comments

in Deregulate to Stimulate, Economy, Politics as Usual, Stimulus to Nowhere

One of the few virtues of the federal government has been its inefficiency. With functions spread out across different agencies and duplicated powers and responsibilities, it has often proved unable to harm the economy as much as it could owing to power games and competition among agencies. Now the president wants to change all that. He wants a ruthlessly efficient government to intrude in all aspects of our lives without internal checks and balances. An efficient government might have been a good thing 30 years ago, when the government was spending much less per person. Now that it’s spending over $30,000 per household, the prospect is terrifying.

Take, for example, the proposal to transfer the National Oceanic and Atmospheric Administration from the Department of Commerce to the Interior Department. It’s clear that President Obama wants to create a European-style Department of the Environment. The merger gives the environmental lobby a one-stop shop for everything outside the EPA. It also creates a powerful behemoth that will be all-too-ready to trample property rights in the name of the environment. The Interior secretary and the EPA administrator will form a powerful alliance in the president’s cabinet, and the chances of protecting the environment through responsible stewardship and free market methods will be significantly diminished as this new bureaucracy expands its power.

Meanwhile, the proposed merger of the subsidies arm of the Commerce Department with such entities as the U.S. Trade Representative, the Small Business Administration, the Export-Import Bank, and other market-complicating agencies creates what one commentator called “a corporate welfare Voltron.” The whole purpose of this department will be to interfere with the free enterprise system to the benefit of the political flavors of the month. Rent-seekers across the country will delight that the process of diverting taxpayer money into their pockets will become simpler and easier. That may be efficient, but is is not responsible government.

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Alcohol Regulation Roundup: January 13, 2012

by Michelle Minton on January 13, 2012 · 1 comment

in Deregulate to Stimulate, Economy, Features, Nanny State, Personal Liberty

http://www.openmarket.org/wp-content/uploads/2012/01/jester-beer-from-thrillist.jpg

Out with the old year and out with the old alcohol laws! 2012 is off to a great start with several states reducing the regulatory burdens on the producers and consumers of alcoholic beverages. Here’s to a new year!

Colorado: The movement to get full strength beer grocery stores seems to be losing steam. After four years of concerted but failed efforts and a governor expressly against the idea, the legislature apparently has no plans to push for sales of beer with more than 3.2 alcohol by weight in outlets other than liquor stores.

Connecticut: Apparently, I was not the only person curious about where one wouldn’t be able to buy liquor on or around Christmas/New Year’s Eve. Consumer Protection Commissioner William M. Rubenstein was kind enough to clarify Connecticut’s law: unless you’re in a bar or restaurant, the state’s anachronistic blue laws do prohibit the sale of alcohol on Christmas and New Years, and if those happen to fall on Sundays, it prohibits off-premise sales on the following Monday as well.

Idaho: The push is on to collect enough signatures to get the question of privatizing the state-run liquor business before voters. Optimistic after the success of a similar privatization ballot initiative in Washington State, Idaho grocers need to collect 47,432 signatures by April 30. Even if the measure is successful, they will have to face-off with the current governor, a Republican who has stated his belief that it’s the government’s duty to promote “temperance.”

Indiana: Lawmakers are reportedly drafting a bill that would allow carry-out sales of alcohol on Sundays as well as cold beer sales in convenient, grocery, and drug stores. Opponents of the plan, as usual, claim it would hurt mom-and-pop liquor stores. Oddly enough, Indianapolis does have one exception to the Sunday sales ban – a recent change in the law allows retailers to sell alcohol on Super Bowl Sunday and the previous Sunday, but only in the “downtown Super Bowl zone.”

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U.S. Economic Freedom Declines as Regulations Increase

by Ivan Osorio on January 12, 2012

in Deregulate to Stimulate, Economy

Economic Freedom in the United States declined over the past year, according to the newly released 2012 edition of the Heritage Foundation/Wall Street Journal global Index of Economic Freedom. It’s not hard to find the culprit.

As Nick Schulz points out at the Enterprise Blog, “regulation is a growing problem for small companies.” He cites the Dismal Scientist (at Moody’s), which point out, “The most small firms since the late 1990s have begun citing regulation as their biggest problem. Regulation is poised to surpass taxes in the survey, which is rare.”

One major source of regulatory anxiety for businesses is the Affordable Care Act (ACA), better known as Obamacare. Implementation of Obamacare will entail a major regulatory enterprise, and it’s being done badly, according to new Mercatus Center study. The study’s authors, Christopher Conver Jerry Ellig, studied eight key Obamacare rules. They found “that the regulatory impact analyses (RIAs) for these regulations were seriously incomplete, often omitting significant benefits, costs, or regulatory alternatives. Analysis of equity was cursory at best.”

While distressing, that shouldn’t be surprising. As CEI’s Wayne Crews notes in his annual survey of the federal regulatory state, Ten Thousand Commandments: “[A] problem with cost-benefit analysis is that it largely amounts to agency self-policing. Agencies that perform ‘audits’ of their own rules would rarely admit that a rule’s benefits do not justify the costs involved.”

We are stuck in a regulatory recession. Getting out of it will require pushing up our economic freedom ranking. Unfortunately, the current administration shows no intention of doing that. As Wayne also likes to say, you don’t need to teach the grass to grow; you just need to take the rocks off of it. (Thanks to Iain Murray for the Heritage and Enterprise Blog links.)

Wisconsin: The Canary in the Coal Mine

by Matt Patterson on January 6, 2012 · 6 comments

in Deregulate to Stimulate, Economy, Features, Zeitgeist

Post image for Wisconsin: The Canary in the Coal Mine

Faced with a $9.2 billion budgetary shortfall next year, California Gov. Jerry Brown has not surprisingly reached for the only tool in the Democratic shed — more taxes. Via The New York Times:

Gov. Jerry Brown called on California voters Thursday to approve $6.9 billion in temporary new taxes, including a surcharge on big earners, as part of yet another bad-news budget proposal, this one for 2012. He warned that without those tax increases, California would be forced to impose severe cuts in public schools that could reduce the school year by three weeks.

There is another way to address budgetary woes, of course, the one taken by Wisconsin’s Scott Walker — structural reform.  On January 5, Gov. Walker explained the success of his collective bargaining reform law passed last year to a gathering of journalists and academics at the American Enterprise Institute in Washington, D.C. As a result of these reforms, claimed Walker, Wisconsin is in far healthier fiscal condition than it was last year.

And it’s not just Walker touting the reform’s success. Even the editors of the Milwaukee Journal-Sentinel, who had opposed the law, on December 31 were forced to admit:

The governor did balance the budget with fewer gimmicks than in the past; he did reduce the structural deficit significantly; he did put a lid on property tax increases; he did give schools and municipalities more control over their budgets than they’ve had in years. And his efforts at economic development through corporate tax breaks and a revamped Commerce Department (now the public-private Wisconsin Economic Development Corp.) look promising.

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Cordray Recess Appointment is Travesty for Government Accountability

by John Berlau on January 4, 2012 · 7 comments

in Deregulate to Stimulate, Economy, Features, Politics as Usual, Zeitgeist

Post image for Cordray Recess Appointment is Travesty for Government Accountability

News is just breaking that President Obama will today make a “recess” appointment of Richard Cordray to head the Consumer Financial Protection Bureau, a powerful and largely unaccountable regulatory bureaucracy created by the Dodd-Frank financial “reform” law rammed through Congress in 2010.

Such a move would be a horrific precedent on many levels for government accountability. It would be an appointment made by broadly defining “recess” to an entity over which Congress has no effective oversight of a nominee with a checkered history as Ohio AG’s of directing state money to confrontational “community organizers” as well as his trial lawyer supporters.

Let’s take these one at a time. The Senate is now in “pro forma” session, in which a handful of senators meet in the Senate every three days, as part of the agreement with the Republican-controlled House to adjourn Congress. The Democrat-controlled House and Senate did the same thing during the last year of the George W. Bush administration. During the 2007-08 pro forma session, as noted by the nonpartisan Congressional Research Service and reported by Politico, President Bush “made no recess appointments between [Democrats’] initial pro forma sessions in November 2007 and the end of his presidency.”

President Obama arguably had a window yesterday in the few seconds between the first and second session of Congress, but didn’t exercise this opportunity. If he appoints Cordray now, he sets a precedent that Democrats and critics of the “Imperial Presidency” will likely regret the next time  there is a Republican president and Democrats control one or both houses of Congress. If any adjournment or break the Senate takes can be defined as “recess,” can the president make appointments when the Senate is in formal session and gavels out for the evening? Our long-held tradition of checks and balances advises strongly against going down this road.

And, in this case, the CFPB itself shatters precedents, as well as specific Constitutional provisions, on checks and balances in regulatory agencies. Once a director is appointed, Congress has no effective oversight of the bureau through the appropriations process, as it does with other agencies.

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