Posts tagged as:

regulation and its reform

Time mag asked arch-leftwinger Barbara Ehrenreich about the best single way to reduce income inequality. I’d never have dreamed that David Henderson would agree with the answer she gave — or that I would too. More here on Ehrenreich’s views on the “criminalization of poverty” (which, not surprisingly, head off in directions very different from mine once you’re past the initial area of agreement).

One reader points out that laws against behaviors like driving with broken headlights or lapsed insurance are of universal benefit and improve road safety. But I don’t think Ehrenreich’s point (or Henderson’s or mine) amounts to “let’s legalize driving with broken headlights.” Not so long ago, many petty offenses of traffic and street life were illegal but the consequences of violation were much less harsh. The other day I got a transponder toll in the mail amounting to maybe $10, which would jump to $150+ if I didn’t get in a payment within 20 days; being your basic organized middle-class person, I dashed off a check that same day. Add one complicating factor — say I was a person whose mail was forwarded to me from another address — and it would have been a closer thing.

Why has government chosen to escalate once-petty fines over the past couple of generations? 1) It wants revenue and likes the idea of making agencies self-financing or better; 2) it listens more closely to its own agencies than to the populace; 3) when middle class policymakers (as they nearly always are) consider the issue, they think of what level of fine it would take to deter someone like themselves and worry less about whether fines at that level might capsize the little guy or small business (I hear often about how this framework of punitive small fines is a key deterrent to trying to run a small business with a couple of delivery trucks and maybe an urban commercial building or two to run up inspection and property fines.)

The reformist consumer finance literature, to which Elizabeth Warren was a big contributor as an academic, and with which Ehrenreich is no doubt well acquainted, decries $30 late fees and 20 percent interest rates as a business plan by which credit card companies can turn small debts into big ones at the expense of persons without middle-class money habits and skills. Which raises the question: why spend so much time belaboring the banks if government’s own policy on late fees, bounced checks, etc. is going to be so much less merciful? (& welcome Radley Balko readers)

P.S. An example? South Carolina man says he didn’t realize you needed to pay for a soda refill at VA hospital canteen. Contemplated consequences: $525 fine, federal criminal conviction, unable to return to workplace. (Update: following national publicity, let off with warning).

{ 6 comments }

Nick Gillespie reviews the new book by the author of The Death of Common Sense:

The Rule of Nobody updates and expands Howard’s original brief, and it helps to explain why government at all levels not only is on autopilot but on a flight path that can only end in disaster.

Every Philip Howard book is notable for its horror stories of regulation and systemic dysfunction, and reviewer Kyle Smith in the New York Post relates one I hadn’t heard, about the mammoth Deepwater Horizon spill:

When the oil rig started leaking mud and gas, the crew should have simply directed the flow over the side. Dumped it in the gulf. That would have been a small oil spill, of course, and no oil spill is a good thing. But in trying to avoid that, the crew caused a gigantic oil spill. Eleven lives were lost.

Safety protocol called for the men to aim the flow into a safety gizmo called an oil and gas separator, but that became backed up and made matters worse. Explosive gas filled the air around the rig, which finally exploded.

Then some workers who escaped in a raft almost died. Why? They were tied to the burning rig, and regulations forbade them to carry knives so they couldn’t cut themselves free.

More on the book here. Another review: Jesse Singal, Boston Globe.

{ 2 comments }

Yesterday Yale Law professor emeritus Peter Schuck visited Cato to discuss his new book, and Arnold Kling commented, with me moderating. More about the book and its arguments is here, and a further note from Kling.

{ 0 comments }

why-government-fails-so-oftenI’m particularly pleased to have played a role in bringing so many terrific authors to speak at Cato this year, including Virginia Postrel and Lenore Skenazy (I helped a bit with Megan McArdle too). Next up, on Mar. 27: Peter Schuck of Yale Law School, “militant moderate” whose magnum opus on how government fails is forthcoming from Princeton. Commenting will be Arnold Kling. Register now! (or make plans to watch live online). Event description:

Featuring the author Peter Schuck, Professor of Law Emeritus, Yale Law School; with comments by Arnold Kling, Economist and Adjunct Scholar, Cato Institute; moderated by Walter Olson, Senior Fellow, Center for Constitutional Studies, Cato Institute.

From the doctor’s office to the workplace, the federal government is taking on ever more responsibility for managing our lives. At the same time, Americans have never been more disaffected with Washington, seeing it as an intrusive, incompetent, wasteful giant. In this book, lawyer and political scientist Peter Schuck lays out a wide range of examples and an enormous body of evidence to explain why so many domestic policies go awry. Economist David Henderson, research fellow at the Hoover Institution and coeditor of EconLog, lauds the book as full of “gems” and “juicy” insights: “Schuck does a beautiful job of laying out all the problems with government intervention.” But can the state get better results by pursuing more thoughtfully conceived policies designed to compensate for its structural flaws? Schuck believes it can. Many libertarians will disagree — and that debate will enliven our discussion.

A sampling of the book’s argument is here.

{ 1 comment }

By cutting off their access to the banking system.

“According to CNN investigative reporter Drew Griffin, the White House is pressuring trade associations and insurance providers to keep quiet about the changes the Affordable Care Act is creating for some people’s health coverage plans. One industry official told CNN on the record that the White House is applying ‘massive pressure’ to combat the impression that the ACA is resulting in the cancellation of some plans.” [Mediaite]

This is not the first time, or the tenth, I’ve heard about regulated entities feeling pressure to shut up about things that might embarrass the regulators they answer to. These stories did not begin with the Obama administration and I don’t think they’ll end with it. Quite aside from whatever we think of ObamaCare itself, shouldn’t they disturb us? And can anything be done about it? Following media attention to the plight of “whistleblowers” in the workplace, lawmakers have created fairly elaborate procedures intended to identify and remedy cases of retaliation against federal employees who speak up about problems they notice, procedures that in some instances have also been extended to some private-sector employees. Should there be procedures aimed at unearthing and rectifying retaliation against regulated entities, too, when they blow the whistle? Or would that be too easily manipulated by regulated entities in search of profit, revenge, or point-making?

{ 1 comment }

Businesses in New York that permits from City Hall — which at one time or another is likely to be most of them — commonly pay thousands of dollars for “expediters” to navigate municipal departments for them. That this system continues even after years of putatively pro-business, modernizing administration by Mayor Michael Bloomberg, says Ira Stoll, is “outrageous.” [Future of Capitalism]

My new Cato post tells how on-site feds increasingly direct big business decisions.

P.S. Related thoughts on deferred prosecution agreements from Brandon Garrett and David Zaring at NYT “DealBook.”

The California disease

by Walter Olson on September 19, 2013

“We once had to get something like 7 permits just to remove a dangerous and dilapidated deck. …Approximately the same expansion that cost us just under a million dollars in Alabama several years ago was going to cost over $5 million [in] Ventura County, and the County was still piling on requirements when we gave up. … Even as a service business we do a bit of this [manufacturing avoidance], no longer stick-building anything but having all our buildings, cabins, stores, etc built in Arizona as modular buildings and then shipped to California.” [Coyote]

{ 18 comments }

August 29 roundup

by Walter Olson on August 29, 2013

…try opening a wood-fired pizza restaurant just off the gritty Brooklyn-Queens Expressway in Brooklyn [Ira Stoll]

{ 2 comments }

Fred DeLuca, founder and president of the Subway sandwich chain, doubts he would have made it in today’s business environment [Washington Free Beacon]:

It’s continuously gotten worse, because there’s more and more regulations. It’s tougher for people to get into business. Especially a small business. I tell you, if I started Subway today, Subway would not exist, because I had an easy time of it in the ’60s when I started. I just see a continuous increase in regulation.

{ 1 comment }

What Paul Krugman likes about the unprecedented structure of the Consumer Finance Protection Bureau is what fans of constitutional government should dislike about it, writes Ira Stoll [SmarterTimes].

Disposing of obsolete law

by Walter Olson on December 18, 2012

Who if anyone should be entrusted with the job? [NewTalk symposium with Stuart Taylor, Jr., James Maxeiner, Ron Faucheux. E. Donald Elliott, Mary Kiffmeyer]

P.S. Or how about a Regulatory Reduction Commission? [Wayne Crews and Ryan Young, Washington Times]

August 23 roundup

by Walter Olson on August 23, 2012

  • Cross-examination could be awkward: “Top Nevada Court Says Attorney Son Can Represent Dad in Divorce From Mom” [ABA Journal]
  • “Phoenix Woman Ordered to Not Give Out Water in 112 Degree Heat Because She Lacked a Permit” [Doherty, Reason]
  • Admitting no guilt, Yale capitulates to feds’ Title IX probe, promises crackdown on sexual “climate” [YAM, earlier here, here, etc.]
  • Citing “egregious” ethics lapse, judge denies McGuireWoods fees in BarBri antitrust case [NLJ]
  • Foreign Corrupt Practices Act probe of retailers? [Reuters, FCPA Professor] FCPA piggyback shareholder suits falter [D&O Diary]
  • Obama has postponed a slew of new regulations until after November, and they’re a costly lot [Rob Portman, WSJ]
  • Fifth Circuit rejects challenge to sentencing in Paul Minor case [YallPolitics, background]

Kerri Smith came up with a new design for a maternity support pillow and decided to sell it online. Then came the unpleasant surprise: 15 states require “law tags” on pillows and each charges its own fee, ranging from $5 to $720 a year. First year cost of complying with those state laws in order to start taking orders from anywhere in the country: $4,660. And that’s before more states join the 15 that currently exact fees. [Becket Adams, The Blaze/WTAM] As for a pillow intended for the actual baby, don’t even ask.

{ 2 comments }

July 30 roundup

by Walter Olson on July 30, 2012

  • Backing down, sort of: “Menino says he can’t actively block Chick-Fil-A” [Boston Herald; Michael Graham on the Boston mayor's curious standards] Glad for small favors: Maryland public officials have wisely stayed out of the fracas [my post at Maryland for All Families got an Instalanche, thanks Glenn Reynolds] Earlier here, here, here;
  • Trying to start a business in Greece? What to expect [Reuters on shrimp farm]
  • Proceeds of California’s Prop 63 “millionaire’s tax” were supposedly earmarked for mental health. Here’s where the dollars have actually been spent [AP]
  • George Will on prosecution of whale-watcher for “harassing” humpback [WaPo, our January coverage]
  • Tries to slide down banister four stories up, survivors now suing Chicago’s Palmer House hotel [Chicago Sun-Times]
  • Link bait: the ABA Journal picks the 12 greatest courtroom plays;
  • Prop 65 and carryout bags: “California, Land of the Free” [David Henderson]

{ 3 comments }

The uproar continues, and quite properly so (earlier here and here), over the threats of Boston Mayor Thomas Menino and Chicago alderman Proco (“Joe”) Moreno to exclude the Chick-Fil-A fast-food chain because they disagree (as do I) with some of the views of its owner. Among the latest commentary, the impeccably liberal Boston Globe has sided with the company in an editorial (“which part of the First Amendment does Menino not understand?…A city in which business owners must pass a political litmus test is the antithesis of what the Freedom Trail represents”), as has my libertarian colleague Tom Palmer at Cato (“Mayor Menino is no friend of human rights.”)

The spectacle of a national business being threatened with denial of local licenses because of its views on a national controversy is bad enough. But “don’t offend well-organized groups” is only Rule #2 for a business that regularly needs licenses, approvals and permissions. Rule #1 is “don’t criticize the officials in charge of granting the permissions.” Can you imagine if Mr. Dan Cathy had been quoted in an interview as saying “Boston has a mediocre if not incompetent Mayor, and the Chicago Board of Aldermen is an ethics scandal in continuous session.” How long do you think it would take for his construction permits to get approved then?

Thus it is that relatively few businesses are willing to criticize the agencies that regulate them in any outspoken way (see, e.g.: FDA and pharmaceutical industry, the), or to side with pro-business groups that seriously antagonize many wielders of political power (see, e.g., the recent exodus of corporate members from the American Legislative Exchange Council).

A few weeks ago I noted the case of Maryland’s South Mountain Creamery, which contends through an attorney (though the U.S. Attorney for Maryland denies it) that it was offered less favorable terms in a plea deal because it had talked to the press in statements that wound up garnering bad publicity for the prosecutors. After that item, reader Robert V. wrote in as follows:

Your recent article about the [U.S. Attorney for Maryland] going after the dairy farmers reminded me a case in New York state where the Health Department closed down a nursing home in Rochester. They claim is was because of poor care, the owner claims it was because he spoke out against the DOH.

The state just lost a lawsuit where the jury found the DOH targeted the nursing home operator because he spoke out against them.

According to Democrat and Chronicle reporters Gary Craig and Steve Orr, the jury found state health officials had engaged in a “vendetta” against the nursing home owner:

Beechwood attorneys maintained that an email and document trail showed that Department of Health officials singled out Chambery for retribution because he had sparred with them in the past over regulatory issues. The lawsuit hinged on a Constitutional argument — namely that the state violated Chambery’s First Amendment rights by targeting him for his challenges to their operation.

The Second Circuit panel opinion in 2006 permitting Chambery/ Beechwood’s retaliation claim to go forward is here. It took an extremely long time for the nursing home operators to get their case to a jury; the state closed them down in 1999 and the facility was sold at public auction in 2002.

{ 6 comments }