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Barney Frank

[reposted from Cato at Liberty]

Economic sanctions, when they have an effect at all, tend to inflict misery on a targeted region’s civilian populace and often drive it further into dependence on violent overlords. That truism will surprise few libertarians, but apparently it still comes as news to many in Washington, to judge from the reaction to this morning’s front-page Washington Post account of the humanitarian fiasco brought about by the 2010 Dodd-Frank law’s “conflict minerals” provisions. According to reporter Sudarsan Raghavan, these provisions “set off a chain of events that has propelled millions of [African] miners and their families deeper into poverty.” As they have lost access to their regular incomes, some of these miners have even enlisted with the warlord militias that were the law’s targets.

Congress added the provisions to Dodd-Frank in a fit of moral self-congratulation over making sure Americans had the chance to be ethical and thoughtful consumers of such products as jewelry and cellphones (as well as thousands of other products, as it turned out, from auto parts to the foil in food packaging). Publicly held companies would be required to report on their supply connections to “conflict minerals” such as tin, tungsten, and gold mined in war-torn areas of the Democratic Republic of the Congo. Lawmakers assigned enforcement of the law to the Securities and Exchange Commission – a body with scant discernible expertise in either African geopolitics or metallurgy – and barbed it with stringent penalties for disclosure violations, to which are added possible liability in class-action shareholder lawsuits.

Reactions to this morning’s Post account frequently employ words like “unintended” or “tragic” to describe the effect on miners of the law, which people in the Congo soon came to call “Loi Obama” – “Obama’s law”.  Unintended and tragic? Maybe. But not unforeseen, because the signs that the law would backfire this way have been in plain sight for years now – as in this 2011 account by Prof. Laura Seay (via) of how “electronics companies now have a strong incentive to source minerals elsewhere, leaving Congolese miners unemployed.” Or this 2011 account by David Aronson in the New York Times of the “unintended and devastating consequences” that he “saw firsthand on a trip to eastern Congo.” Or this more recent paper by law professor Marcia Narine.

But although the evidence has been there for years, the will to believe in the law was too strong – a will fueled by anti-corporate campaigners who take it on faith that when brutalities in the underdeveloped world occur within two or three degrees of separation of the activities of multinational businesses, the right answer must be to blame and shame the businesses.

You might call it an expensive lesson for Americans too, if you assume that anything has been learned. A recent Tulane calculation found that the costs in business compliance have already topped $700 million, with billions more ahead should nothing change. Just this September, the U.S. government conceded that it “does not have the ability to distinguish” which refiners and smelters around the globe are tainted by a connection to militia groups. That is to say, the government has demanded of business a degree of certainty that it cannot achieve itself.  Courtesy of UCLA corporate law professor Stephen Bainbridge, here’s a flowchart of what complying might involve for a given business.

If the new Republican Congress wants to be taken seriously about fixing counterproductive regulation, it should make the repeal of this law an early priority. (& Bader)

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…such as harass our political enemies [Michael Cannon, Cato, more; Washington Post on revelations that the Internal Revenue Service applied extra tax scrutiny to groups that "criticize how the country is being run".]

Update: that “just a rogue field office in Cincinnati” story didn’t last long. AP is reporting that the agency’s acting head knew nearly a year ago that tea party groups were being targeted, a fact that might have been of interest to lawmakers pursuing constituent reports of overly onerous document demands from the IRS (see our earlier coverage of that here and here). Meanwhile, ProPublica, the generally liberal-leaning journalistic outfit, has disclosed that the IRS shared with it confidential data from nine conservative-leaning nonprofits.

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David Aronson, New York Times:

The “Loi Obama” or Obama Law — as the Dodd-Frank Wall Street reform act of 2010 has become known in the [central African] region — includes an obscure provision that requires public companies to indicate what measures they are taking to ensure that minerals in their supply chain don’t benefit warlords in conflict-ravaged Congo. The provision came about in no small part because of the work of high-profile advocacy groups like the Enough Project and Global Witness, which have been working for an end to what they call “conflict minerals.”

Unfortunately, the Dodd-Frank law has had unintended and devastating consequences, as I saw firsthand on a trip to eastern Congo this summer. …

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May 2 roundup

by Walter Olson on May 2, 2011

  • In suit over weird, elaborate online hoax, court allows fraudulent-misrepresentation claim despite lack of motive of tangible gain [Chi Trib]
  • Service animal rodeo: “A trained rat probably would have had a good case in California” [AP/Statesman-Journal] Broward County, Fla. backs lonely widow’s right to keep “prescription Chihuahua” against rules of condo board [AOL, Sun-Sentinel] Oklahoma: “Depressed Woman Fights to Keep Therapy Kangaroo” [Newser] Earlier on recent change in federal rules;
  • DahliaCrateLabel

  • Should lawmakers screen bills for constitutionality? Ms. Lithwick has trouble sticking to a position [AEternitatis]
  • Human-relations complaint leads to arrest of U.K. man for singing “Kung Fu Fighting” [MSNBC]
  • Barney Frank: Yes, let’s talk about med-mal reform [The Hill] Ringing the bell: Roundups of more big med-mal verdicts [White Coat, more]
  • “Expert Witnesses Stripped Of Immunity From Negligence Suits In The UK” [Erik Magraken]
  • “Sustainability”: an empty idea? Or perhaps actively wrongheaded? [David Friedman via David Henderson]

October 14 roundup

by Walter Olson on October 14, 2010

  • Gulf spill fund flooded with dubious claims [Fred Smith, CEI]
  • If these cases go forward, it will make it economically unfeasible for anyone to make vaccines in this country” [NYT quoting Beck on Bruesewitz v. Wyeth preemption case now before SCOTUS]
  • Barney Frank’s evolving views on Fannie/Freddie oversight [Mankiw, Globe]
  • $5.2 million legal bills to Michael Jackson estate [TMZ]
  • Frederick, Maryland pizzeria owner asked to pay $200K for unsolicited faxes [Gazette; my WSJ take four years ago]
  • UK: “Migration Watch” may sue critic [David Allen Green via Richard Wilson, more]
  • Parody of cheesy law firm promotes TV series “Breaking Bad” ["Better Call Saul", autoplays video/audio]
  • N.J.: “Drowns while fleeing cops, family sues for $50M” [five years ago on Overlawyered]

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January 20 roundup

by Walter Olson on January 20, 2010

  • Renewed attention to Amirault case contributed to Coakley’s political nosedive [e.g., Jacob Weisberg of Slate via Kaus, earlier] First time a Massachusetts prosecutor has paid a political price over that episode?
  • Many, many Democratic elected officials call for rethinking/renegotiating Obamacare rather than trying to force it through [e.g. Barney Frank] Blue Mass blogger: talk radio fueled ire at Coakley, let’s have FCC shut it down [Graham]
  • “Big Brother and the Salt Shaker” [NY Times "Room for Debate", Food Liability Law, earlier on NYC initiative and more] NYU’s Marion Nestle “loves” being called a nanny statist, so we’ll just go right on calling her that [Crispy on the Outside]
  • Terror suspects win right to seek compensation from UK government over restrictions on their activities [Canadian Press]
  • “Men Without Hats. Meaning no hard hats. Meaning The Safety Dance never met OSHA requirements. No wonder it was shut down.” [Tim Siedell a/k/a Bad Banana]
  • Italian judge orders father to go on paying $550/month living allowance to his student daughter, who is 32 [Guardian/SMH, earlier on laws mandating support of adult children]
  • Two informants vie for potential bonanza of whistleblower status against Johnson & Johnson [Frankel, AmLaw Litigation Daily]
  • “Polling Firm Says John Edwards Is Its Most Unpopular Person Ever” [Lowering the Bar]

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Lawyers know how to do it, but then, so do members of Congress.

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As Thom Lambert (via Larry Ribstein) makes clear, the Massachusetts Democrat either doesn’t understand the nature of the bank program, or does understand it and has chosen to demagogue the issue anyway (cross-posted from Point of Law).

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