Regulation

CEI’s Battered Business Bureau: The Week in Regulation

by Ryan Young on May 13, 2013 · 0 comments

in Features, Regulation

Post image for CEI’s Battered Business Bureau: The Week in Regulation

This week in the world of regulation:

  • Last week, 64 new final regulations were published in the Federal Register. This is up from 62 new final rules the previous week.
  • That’s the equivalent of a new regulation every two hours and 38 minutes — 24 hours a day, seven days a week.
  • All in all, 1,227 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2013 will be 3,445 new final rules.
  • Last week, 1,621 new pages were added to the 2013 Federal Register, for a total of 27,811 pages.
  • At its current pace, the 2013 Federal Register will run 76,404 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. For the third week in a row, no such rules were published last week, for a total of 12 so far in 2013.
  • The total estimated compliance costs of this year’s economically significant regulations ranges from $5.58 billion to $10.19 billion.
  • So far, 88 final rules that meet the broader definition of “significant” have been published in 2013.
  • So far this year, 228 final rules affect small business; 21 of them are significant rules.

Highlights from final rules published last week:

For more data, go to TenThousandCommandments.com.

Correcting Misconceptions about Autonomous Vehicles: Reason Magazine Edition

by Marc Scribner on May 10, 2013 · 4 comments

in Features, Mobility, Personal Liberty, Precaution & Risk, Privacy, Regulation

Post image for Correcting Misconceptions about Autonomous Vehicles: Reason Magazine Edition

In the June issue of Reason, one of my favorite publications, Greg Beato has an article discussing the public policy implications of autonomous vehicles, such as Google’s Self-Driving Car. While I appreciate libertarians (being one myself) taking this technology seriously, Beato makes a number of questionable assumptions and outright factual errors in the piece. Here’s my quick attempt to address some of them.

Beato begins with obligatory Google-bashing common among techies, who seem to either love Google or despise it. (This is probably too simplistic, but this is how it looks like to a Silicon Valley outsider.) The legal issues with respect to Google’s collection of unprotected Wi-Fi data are complicated from a libertarian perspective, those related to Google’s settlement with the FTC “for bypassing privacy settings in Apple’s Safari browser,” as Beato puts it, are not. No one’s privacy was ever violated. All Google was guilty of, as technology policy and privacy analysts here at CEI noted at the time, was

failing to realize a software tweak by Apple rendered one of Google’s help pages inaccurate. There is no evidence that any users were “taken in” or harmed by this inaccurate help page, nor does the FTC allege that Google knew or should’ve known that its help page was wrong. A four-commissioner FTC majority even admitted that Google’s alleged wrongdoing didn’t last very long or earn the company much money.

This is hardly the privacy-invading sin Beato implies it was, but he is obviously setting the stage for his arguments for additional public skepticism of autonomous vehicle technology.

But much of the beginning of the article focuses on the huge potential benefits of vehicle automation, which are large and which we at CEI have highlighted in the past. But at the halfway point, Beato drops this:

But is everyone really so eager to see the automobile, which stands as one of history’s great amplifiers of personal autonomy and liberty, evolve into a giant tracking device controlled by a $250 billion corporation that makes its money through an increasingly intimate and obtrusive knowledge of its customers?

Beato is correct that the automobile is one of the great technological liberators of mankind from the time-consuming drudgery that was previously associated with personal mobility. But the implication that Google is intent on destroying privacy protections by deploying a mobility-enhancing technology is over the top. Autonomous vehicle users in the future, just like users of any digital technology that transmits telemetric data, will be opting in. Google and other potential providers, in turn, will likely be responsive to privacy concerns. The real concern is the ability of law enforcement and other government bodies to access this private information.

But Beato instead makes questionable assumptions regarding technology that is not yet available to consumers, always a dangerous tack to take. For instance, Beato claims, “Even if it were possible to operate the car in some kind of ‘manual’ mode, you would likely still be sending information back to headquarters.” “Even if”? “Likely”? As far as the ability to operate a fully autonomous vehicle manually (i.e., not in autonomous mode), this will be standard. In fact, more than one of the four (not three, as Beato incorrectly states later in the article; they are Nevada, Florida, California, and Washington, D.C.) jurisdictions that recognize the legality of these vehicles (not where they are legalized – more on this in a moment) explicitly requires this feature.

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Government’s Chinatown Bus Shutdowns Based on “Statistical Malpractice”

by Marc Scribner on May 9, 2013 · 0 comments

in Mobility, Precaution & Risk, Regulation

Reason’s Jim Epstein has an article up that does a nice job debunking a National Transportation Safety Board study, prompted by a 2011 bus crash in the Bronx that killed 15 people, that led the Federal Motor Carrier Safety Administration to shut down a number of supposedly unsafe small bus companies:

In 1997, Chinese-born entrepreneurs began regularly scheduled long-distance bus services that picked up passengers on the street. Tickets were priced so low that it was hard to figure how the operators could be breaking even, much less making a profit. Faced with declining market share, Greyhound and Peter Pan imitated the Chinatown model by teaming up to create a new venture called BoltBus. Then Coach USA got into the game with Megabus. Today, “curbside” buses—lines that begin and end their routes at the sidewalk as opposed to a traditional station—make up the fastest growing form of intercity travel in the U.S.

But over the past two years, the government has forced 27 bus companies based in Chinatown to close. The regulatory clampdown was fueled by a government study that found curbside carriers were disproportionately killing their passengers. Released by the National Transportation Safety Board, a federal agency, the study concluded that curbside bus companies were “seven times” more likely to be involved in an accident with at least one fatality than conventional bus operators. That finding was reported by The New York Times, the Los Angeles Times, Businessweek, USA Today, the New York Daily News, WNYC, and Reuters, among others. Although the study did not single out Chinatown bus companies the headline in Businessweek read, “Chinatown Buses Death Rate Said Seven Times That of Others.”

The study is bogus. Not only is the “seven times” finding incorrect, the entire report is a mangle of inaccurate charts and numbers that tell us virtually nothing meaningful about bus safety. There’s no evidence that curbside or Chinatown buses are any less safe than any other kind of bus.

How did the study authors figure curbside bus companies are “seven times” more prone to fatal accidents? For starters, they counted 37 accidents during the study period involving curbside buses in which there was at least one fatality. When I rebuilt the study data and contacted the companies involved, I found that, in 30 of those 37 accidents, curbside buses were not involved. In fact, 24 of those 30 misclassified cases involved Greyhound’s conventional bus fleet. (Greyhound’s curbside subsidiary BoltBus had no fatal accidents during the study period.)

The National Transportation Safety Board denied my requests for the study data, even though it was a taxpayer-funded report with an impact on policy. After my Freedom of Information Act request also failed to return the information following a six-month wait, I began reconstructing the study data from other sources.

Proceeding on the time-honored hunch that people who are hiding something have reason to do so, I generated a list of the 37 fatal crashes using a database obtained from a federal contractor that collects nationwide accident data. I analyzed that data with help of Aaron Brown, a quantitative analyst with the hedge fund AQR Capital Management. Brown was the first to point out major flaws in the NTSB’s methodology in an article published by Minyanville.com, accusing the study authors of “statistical malpractice.” I also consulted with Ed George, a professor of statistics and department chair at the University of Pennsylvania’s Wharton business school, who examined the study for the purposes of this article.

“When I first read the NTSB report, I thought this is just terrible statistics,” says Brown. “But it goes way beyond that. It’s almost as if someone took some random data and shook it together.”

Read the whole thing over at Reason for an overview of the NTSB’s incredibly sloppy study methodology. Cato’s Randal “The Antiplanner” O’Toole has more.

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The Economist on “the muddle-headed world of American public pension accounting”

by Ivan Osorio on May 9, 2013 · 0 comments

in Bailout Watch, Economy, Labor

As state governments across the nation struggle to address a public pension underfunding crisis they can no longer deny, The Economist is the latest major news outlet to turn its gaze on the ongoing debacle. In the current issue, the magazine’s “Buttonwood” column draws a sketch of U.S. public pension accounting that is not only dysfunctional, but that runs against plain common sense.

American public-sector schemes discount their liabilities by the expected return on their assets. The riskier the asset mix, the higher the assumed return—and the lower the bill appears to be.

This is an odd way of thinking. Suppose a car company borrowed $10 billion in the form of a 20-year bond to build a manufacturing plant and planned to pay off the debt with the profits from running the plant. The car company will assume a higher return on capital than its financing cost (otherwise it should not build the plant). But it still has to recognise the $10 billion bond liability on its balance-sheet. It cannot say it owes only $2 billion because it expects a very high return.

The reason is clear. If the plant fails to earn a high return, the firm will still be liable to repay the bond. Similarly, if pension schemes fail to earn a high return on their assets, they still have to pay benefits. Final-salary pensions are a debt-like liability.

The Buttonwood columnist (currently Philip Coggan) notes recent changes to the nation’s largest public pension plan, the California Public Employee Retirement System (CalPERS), that would require greater employer contributions. But such changes will be ineffective in the long run unless they were to be accompanied by major reforms that address some of the structural factors that have made public pension shortfalls severe and chronic: payouts based on final-year pay, negotiation of benefits through collective bargaining, benefit increases through binding arbitration, politicized pension fund boards, and flawed accounting standards.

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First Amendment Menace: Obama Administration to Expand Americans with Disabilities Act over Websites?

by Hans Bader on May 8, 2013 · 4 comments

in Legal, Nanny State, Personal Liberty, Regulation, Tech & Telecom

Can websites be forced to change to accommodate the disabled — by using “simpler language” to appeal to the “intellectually disabled,” or by making them accessible to the blind and deaf at considerable expense?

Generally, the First Amendment gives you the right to choose who to talk to and how, without government interference. There is no obligation to make your message accessible to the whole world, and the government can’t force you to make your speech accessible to everyone, much less appealing to them. The government couldn’t require you to give speeches in English rather than Spanish to reach a larger number of listeners. And the Supreme Court once noted that the poem Jabberwocky is protected by the First Amendment, even though it makes no sense to most people.

But now, the Obama administration appears to be planning to use the Americans with Disabilities Act (ADA) to force many web sites to either accommodate the disabled, or shut down. Given the enormous cost of complying, many small web sites might well just go dark and shut down. The administration wants to treat web sites as “places of public accommodation“ subject to the ADA, even though they are not physical places. Courts used to reject this argument when it was made just by disabled plaintiffs, but now that the Justice Department is making it, too, some judges are beginning to buy it, opening the door to trial lawyers surfing the web and sending out extortionate demand letters to every small business whose web site is not accessible to the blind (or perhaps too hard to understand for the mentally-challenged).

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How Online “Marketplace Fairness Act” Could Tax Your 401(k)

by John Berlau on May 6, 2013 · 9 comments

in Economy, Legal, Nanny State, Personal Liberty, Regulation, Trade

Today, the Senate likely will pass the Marketplace Fairness Act, which would force online retailers to collect sales taxes for states in which purchasers reside. Most have heard how this will hit us when we purchase goods over the Internet. But a lesser-known problem is the legislation also would enable states to levy new taxes on 401(k) and other savings vehicles.

How? The bill authorizes states to “require all sellers not qualifying for the small seller exception [$1 million in sales or less] to collect and remit sales and use taxes with respect to remote sales sourced to that Member State.” Yet “sellers” and “sales” are never specifically defined, and there are no specific exemptions for certain types of products or services.

Financial experts say this means states tax “sales” such as stock trades in a mutual fund or brokerage account, or even contributions to pension plans such as 401(k)s that were designed to be tax-free until retirement.

The American Society of Pension Professionals and Actuaries, a group of more than 11,000 retirement plan and benefits professionals, warns the bill “would allow states to impose a financial transaction tax that would apply to American workers’ 401(k) contributions and other transactions within worker’s accounts.” The group notes that “over 70 million workers could be affected” by such taxes, which “could significantly reduce workers savings over time, threatening their retirement security.” The group calls for “a clear exception” for transactions within a 401(k) account.

Yet this is not the only financial service the bill could enable states to tax, experts say. Grover Norquist of Americans for Tax Reform asks in a letter to Sen. Mike Enzi, R-Wyo., a chief GOP proponent of the legislation, “Will financial products that are sold over the Internet, such as portfolio management services, credit reporting service apps, or insurance service, fall under MFA taxation authority?”

The Securities Industry and Financial Markets Association (SIFMA), representing securities firms and asset managers,  issued a statement urging hearings  on the MFA’s impact on financial services. As written, “the bill could lead to unexpected costs being passed on to consumers of financial services, including sales taxes on services or state-level stock transaction taxes,” the group said.

Similarly, the Financial Services Roundtable, which represents banks, insurance companies and brokerage firms, states these concerns: “A transaction tax on financial services products will hurt retail investors, retired Americans, and small businesses, effectively making it more expensive for them to invest and plan for the long-term. Without hearings, these implications and others will not be properly addressed.”

These potential scenarios, taken seriously by financial policy experts, illustrate the inherent problem of the bill. Forcing a business without any physical presence in a state to tax that state’s consumers is taxation without representation. As my colleague Jessica Melugin, an adjunct fellow at the Competitive Enterprise Institute, has written, “This bill would undermine that federalist principle by allowing one state to reach into the borders of another and tax businesses that have no political voice in the taxing state.”

As Melugin concludes in a Washington Times op-ed, state sovereignty does not just mean protection from the interference of the federal government. It also means freedom from encroachment of other states. “The legislation does away with the crucial notion that one state’s sovereignty stops where another state’s begins,” she writes. ”Under this cartel, state tax laws extend everywhere commerce happens on the Internet.”

And as we are just now finding out, that “everywhere” could include your 401(k) account, individual retirement account, and mutual fund. So to borrow a phrase from investing, the House needs to undertake some much-needed due diligence on this bill, rather than rusbhing it through as the s0-called upper chamber likely will do.

CEI’s Battered Business Bureau: The Week in Regulation

by Ryan Young on May 6, 2013 · 0 comments

in Features, Regulation

Post image for CEI’s Battered Business Bureau: The Week in Regulation

This week in the world of regulation:

  • Last week, 62 new final regulations were published in the Federal Register. This is down from 66 new final rules the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 43 minutes — 24 hours a day, seven days a week.
  • All in all, 1,163 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2013 will be 3,451 new final rules.
  • Last week, 1,250 new pages were added to the 2013 Federal Register, for a total of 26,190pages.
  • At its current pace, the 2013 Federal Register will run 76,134 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. No such rules were published last week, for a total of 12 so far in 2013.
  • The total estimated compliance costs of this year’s economically significant regulations ranges from $5.58 billion to $10.19 billion.
  • So far, 85 final rules that meet the broader definition of “significant” have been published in 2013.
  • So far this year, 216 final rules affect small business; 20 of them are significant rules.

Highlights from final rules published last week:

For more data, go to TenThousandCommandments.com.

Anti-Immigration Group: “They’re Taking Your Jobs!”

by David Bier on May 3, 2013 · 1 comment

in Labor

The Center for Immigration Studies (CIS), the close-America’s-doors lobby group, has a facile new study that purports to show “there really are no jobs that Americans won’t do.” The fact that this study was produced shows how utterly out of touch with economics CIS is. America’s workforce is 85.3% native-born—it is no surprise that the vast majority of all economic activity is performed by U.S. citizens.

This “news flash” is supposed to demonstrate that because “there are very few occupations that are majority im­migrant… the often-made argument that immigrants only take jobs Americans don’t want is mistaken.” But even this misrepresents the point: the fact that some Americans will do these jobs does not at all imply that Americans in general would do all these jobs. Many Americans do work as agricultural workers—37% of the total, in fact—but that doesn’t mean Americans will beat down farmers’ doors looking for jobs if the immigrants left (just that farmers will produce less).

The reality is that as has been shown in restrictionist European countries, some services simply don’t happen at all without inexpensive labor, whereas in America we just pay higher prices for them. That this needs to be pointed out is scarcely believable. If you banish individuals currently providing services, you get fewer services, making us poorer. In New York City in 2012, immigrants owned 70 to 90 percent of all laundry, taxi and limousine, grocery, beauty salon, and day care small businesses. Americans will suffer dramatically from the loss of all these services, particularly poorer Americans who will pay higher prices for these services.

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CEI Podcast For May 2, 2013: Small Business Owners Sue Over IRS Obamacare Power Grab

by Ryan Young on May 2, 2013 · 0 comments

in Healthcare, Legal, Podcast, Regulation

Have a listen here.

Small business owners and individuals in six states, with help from CEI, are suing the IRS over what General Counsel Sam Kazman calls a flagrantly illegal expansion of the Affordable Care Act.

The Costs Of Union Shareholder Activism

by Ivan Osorio on May 2, 2013 · 0 comments

in Economy, Employment, Labor, Regulation

Is shareholder activism a good or a bad thing? That depends on what any given resolution seeks to improve the company’s performance, and thereby increase shareholder value. That seems like a simple enough and easily understood measure to determine which shareholder resolutions merit consideration. But resolutions that do not meet that criterion are often introduced at public companies’ shareholder meetings, often by labor union pension funds.

A new study from Navigant Economics, commissioned by the U.S. Chamber of Commerce, analyzes resolutions scored by the AFL-CIO in its “Key Votes Survey” between 2009 and 2012, and finds “no conclusive or pervasive evidence that the shareholder proposals assessed in this study improve firm value or result in an economic benefit to pension plans and plan participants.”

Today, at a Chamber event to announce the study’s release, former Securities and Exchange Commission (SEC) Chairman Harvey Pitt. He noted that shareholder activism can be useful, but not when it seeks to advance social agendas. Moreover, successful shareholder activism should advance the interest of all shareholders.

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