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Are you surprised? Study finds “that politically connected firms on average are less likely to be involved in SEC enforcement actions and face lower penalties if they are prosecuted by the SEC.” [Maria Correia, SSRN via Jeffrey Miron, Cato]


There’s a lot of amusement about the pair of vultures (real ones) who’ve taken up residence on Washington, D.C.’s K Street. In a new Cato post, I explain what attracts them.

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Some consider the Renaissance Italian cleric (whose feast day is today) to be patron of p.r. practitioners and lobbyists, and at least one comic tale, prefiguring the later Public Choice theme of “Bootleggers and Baptists,” tends to back them up. I explain at Cato at Liberty.

An old story, alas

by Walter Olson on July 17, 2013

Groups that hold themselves out as representing the interests of consumers don’t tend to represent actual consumers’ interest in free trade [Sallie James]

A manufacturer of Greek yogurt “paid $80,000 to Cornerstone Government Affairs to lobby Congress on its behalf, according to federal records.” And now Sen. Chuck Schumer of New York — upstate being a leading center of production for the premium product — has made sure it will be included in federally prescribed school lunches, even in places where local budgets and tastes might not have generated much demand for it. [The Hill; Ira Stoll]

P.S. And plenty of bad GOP behavior on the farm bill too, notes my colleague Mike Tanner.


And more litigation besides: “[Steven] Phillips sued a lawyer who billed him more than $1 million for lobbying lawmakers to increase the compensation for exonerees. And another ex-wife is seeking to recover child support that went unpaid during his years in prison. He said that he has spent at least $300,000 on lawyers since he was freed and that despite the compensation [package valued at $6 million], he has struggled to keep his business afloat.” [Texas Tribune] The “last thing a guy freed from 24 years of wrongful imprisonment needs is more time in court.” [Scott Greenfield]

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Compounding pharmacies, which mix medications to order, are a corner of the drug business that has been much less heavily regulated than mass-manufacturing drug companies. As a result, the compounders began expanding their market presence as against the mass manufacturers, and even get into mass manufacturing methods themselves. The process accelerated in the past few years after tightened FDA control of conventional makers’ production practices (under GMP, or Good Manufacturing Practice, regulation) began to result in widespread production-line suspensions; for hospitals and other users, the availability of compounded alternatives is often the only fallback in the face of shortages.

Unfortunately, poor quality control at some compounders resulted in a series of fiascos culminating in a meningitis outbreak. Now the Washington Post reports that major drug companies are seizing the chance to hobble their competition by pressing for maximally burdensome regulation of compounders, including the addition of regulations unrelated to safety, such as rules aimed at restricting the compounding of formulas that imitate the action of patented products. Hospitals, which sometimes engage in compounding themselves to obtain medication for their patients, say overregulation could worsen the problem of drug shortages. [Kimberly Kindy and Lena Sun, Washington Post] Earlier on drug shortages here, here, etc.

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By a vote of 61 to 38 with two-thirds needed, the U.S. Senate today failed to ratify the far-reaching Convention on the Rights of Persons with Disabilities, criticized in this space before. This morning I published an article in the Daily Caller laying out some of the many bad provisions of this treaty, which the United States is very fortunate to be clear of (at least for the moment; proponents may come back next year and try to ratify it again in a slightly more favorable Senate). After the Senate vote, I added a followup at Cato at Liberty correcting persistent misinformation about the treaty that’s appeared everywhere from a New York Times editorial to a Media Matters blog post (assuming that’s really such a wide range any more).

A footnote: the U.S. Chamber of Commerce, which really should know better, backed the treaty, which it erroneously asserted “would not require any changes to existing law in order for the U.S. to comply with its provisions.” The Chamber’s most remarkable argument?

…ratification will help to level the playing field for U.S. businesses, which currently compete with foreign counterparts who do not have to adhere to our high standards when it comes to accommodation and accessibility for individuals with disabilities.

So it’s a misery-loves-company argument: if America is going to burden business with costly mandates, we’d better make sure competitors’ countries do so too. Not the Chamber’s finest hour. And as I explain in my Daily Caller piece, the Convention does indeed prescribe mandates that go beyond anything in the current ADA, including employment coverage for the smallest employers (now exempted from the ADA’s equivalent), requirements for “guides, readers and professional sign language interpreters, to facilitate accessibility to buildings and other facilities open to the public,” a new right of disabled persons not to be discriminated against in the provision of life insurance, and much, much more. If U.S. companies find those sorts of new mandates unwelcome, I hope they’ll let the Chamber know.

More: Supercilious Washington Post columnist Dana Milbank doesn’t bother to engage Sen. Mike Lee’s arguments; Washington Post editorial is less supercilious but no more substantive.


For now, at least [Ira Stoll, earlier].

Related: “Soda Noir,” Owen Smith’s funny cover illustration for the June 18 New Yorker. And George Will reveals in his column that as part of its stimulus program the federal government spent millions of dollars on campaigns at the local and state level to crack down on sweetened drinks, a policy of dubious legality given that existing law “prohibits the use of federal funds ‘to influence in any manner … an official of any government, to favor, adopt, or oppose, by vote or otherwise, any legislation, law, ratification, policy, or appropriation.'” [earlier here, here]


Christopher Snowdon for the U.K.’s Institute for Economic Affairs, in an analysis [PDF] of the government’s penchant for funding private advocacy:

This paper argues that there is a deeper problem if government funds and/or creates pressure groups with the intention of creating a ‘sock puppet’ version of civil society which creates the illusion of grassroots support for new legislation. These state-funded activists engage in direct lobbying (of politicians) and indirect lobbying (of the public) using taxpayers’ money, thereby blurring the distinction between public and private action.

• State-funded charities and NGOs usually campaign for causes which do not enjoy widespread support amongst the general public (e.g. foreign aid, temperance, identity politics). They typically lobby for bigger government, higher taxes, greater regulation and the creation of new agencies to oversee and enforce new laws. In many cases, they call for increased funding for themselves and their associated departments. In public choice terms, they are ‘concentrated interests’ compelling the taxpayer to meet the costs that come from their policies being implemented, as well as the costs of the lobbying itself.

Snowdon’s analysis could be carried over to the equivalent institutional arrangements in the U.S. with relatively little change.

Meanwhile, hmm: Amtrak will give you a fare discount if you join a group that supports Amtrak subsidies [Jonathan Adler]


If you’re annoyed at federal bossiness, don’t just blame environmentalist groups. A group called the National Electrical Manufacturers Association is keen on restricting your choice, and it’s located right in Rosslyn, Va. where it can do something about it. [Future of Capitalism]


…and so Washington, D.C. watches with some satisfaction as government agencies and congressional panels begin to take bites at the super-successful company on antitrust, tax and other grounds. [David Boaz, Cato-at-Liberty and New York Daily News]. More on the affluent culture of Washington D.C. from Andrew Ferguson [via MR]


The other day the Chicago Tribune documented a longstanding campaign (see Friday link) to get government bodies to adopt standards requiring flameproofing of furniture upholstery, carpets and other household materials. Turns out key actors in that campaign were companies that make the chemicals used in flameproofing, which thereby guaranteed themselves a giant market for their products, as well as cigarette companies that worried that they would face regulatory and legal pressure over fires caused by careless smoking and decided to pursue a strategy of turning the issue into someone else’s problem.

Unfortunately, according to the Tribune series, the supposedly flameproof furnishings 1) aren’t necessarily very good at reducing fire risk and 2) are doused with chemicals that one might not want rubbing off on one’s family and pets. That’s aside from the regulations’ obvious cost in making furnishings more expensive and narrowing consumer choice by excluding producers unable or unwilling to use the chemical treatments. Whether or not you accept the series’ interpretation in all respects — the authors tend to taken an alarmist line, for example, on the chemicals’ environmental dangers — it’s useful as reminder #83,951 that government regulation often is driven by motives quite different from those advertised, and in particular by business lobbies whose interest is frequently squarely opposed to laissez-faire.

On Sunday, Times columnist Nicholas Kristof, criticized lately in this space for his views on supposed Big Beer responsibility for Indian reservation alcoholism, addressed the flameproofing story in his column. After reciting the controversy — laying a particular emphasis on chemical alarmism, long a specialty of his — Kristof concludes as follows:

This campaign season, you’ll hear fervent denunciations of “burdensome government regulation.” When you do, think of the other side of the story: your home is filled with toxic flame retardants that serve no higher purpose than enriching three companies. The lesson is that we need not only safer couches but also a political system less distorted by toxic money.

Which affords James Taranto of the WSJ’s “Best of the Web” this response:

The guy is so blinded by ideology that he fails to notice he has just given an example of burdensome government regulation.

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I’ve got a new opinion piece up at the Daily Caller on some relevant angles of the unfolding Wal-Mart FCPA story, including the feds’ growing crackdown on low-level “facilitating payments” that had previously been considered lawful, the potentially confiscatory effects of something called the Alternative Fines Act, and the question of why FCPA fines and settlements should be going to the U.S. Treasury, “which was surely not the victim of the Mexican bribe-paying, if victims there were.” Earlier here, here and (at Cato) here; and link thanks to Scott Greenfield (a must-read), Point of Law, Chris Fountain, Steve Bainbridge, and Coyote.

Plus: Scoop! Must credit Washington Post! Wal-Mart (like much of the rest of American business) has backed FCPA reform! In above-the-fold coverage with no fewer than three reporters’ bylines — though it does little more than recycle a meme that bounced around left-wing websites all day Tuesday — the Washington Post darkly warns that the giant retailer has been a member of broad business coalitions pressing various FCPA reforms “that, some advocacy groups argue, would eviscerate the Watergate-era anti-corruption statute.”  “There is no evidence,” the paper is constrained to concede to the disappointment of Some Advocacy Groups, “that suggests Wal-Mart participated in the Chamber’s efforts because of its problems in Mexico.”

The Post notes that the campaign is led by what it bizarrely describes as the U.S. Chamber’s “little-known” Institute for Legal Reform. Yet the Post’s own index indicates that the “little-known” Institute has gotten seven mentions in the paper within the past 12 months, mostly for its advocacy on FCPA reform. Indeed, the Post itself has covered the FCPA debate in some depth over the past year, and its editorialists have ardently defended the law (perhaps “Watergate-era” should serve as some kind of tipoff phrasing.)

It would be one thing if Wal-Mart’s Washington reps had shown some sort of special dislike of FCPA not shared by other American firms that do business in developing countries. But the real story here is how broad and pervasive the discontent with the law is among American businesses with international operations. They consider it unrealistic, incapable of reliable compliance, punitive and constantly changing in its interpretations. Wouldn’t the Post do better to begin listening to them, rather than demonize their efforts to petition Washington for redress?


Secretary Kathleen Sebelius offers no apologies for what might seem a disturbing breach of the principle that taxpayer funds should not go to lobbying [Caroline May, Daily Caller] Earlier on the oughta-be-controversial federal food-policy grant program here, here, etc. More: Abby Schachter on CDC’s Thomas Frieden [NY Post].


March 6 roundup

by Walter Olson on March 6, 2012

  • D.C. Circuit’s Janice Rogers Brown: three-decade-long case over Iran dairy expropriation raises “harshest caricature of the American litigation system” [BLT]
  • Legal blogger Mark Bennett runs for Texas Court of Criminal Appeals as Libertarian [Defending People, Scott Greenfield] And Prof. Bill Childs, often linked in this space, is departing TortsProf (and legal academia) to join a private law practice in Texas;
  • Ambitious damage claims, more modest settlements abound in Louisiana oil-rig cleanup suits [ATLA's Judicial Hellholes, more, more, earlier]
  • Better no family at all: Lawprof Banzhaf jubilant over courts’ denial of adoption to smokers [his press release]
  • “The worst discovery request I’ve ever gotten” [Patrick at Popehat] And yours?
  • Concession to reality? Class action against theater over high cost of movie snacks seen as dud [Detroit Free Press]
  • FCPA is for pikers, K Street shows how real corruption gets done [Bill Frezza, Forbes] Dems threatening tax-bill retribution against clients whose lobbyists who back GOP candidates [Politico]

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In a new Cato post, I explain why I wish such an organization existed.

Notwithstanding the observation the other day that Apple didn’t make it by being a political concern, the Economist reports that according to an index produced by Strategas, an investment-research firm, the stocks of American firms that do a lot of lobbying substantially outperform the broader market.

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