Posts tagged as:

regulation and its reform

A theme we’ve touched on before in this space. [The Economist]

{ 0 comments }

Bureaucracy and taxes in Greece strangle a woman’s dream of a baking business before she even gets it properly launched [Despina Antypa, New York Times via Dan Mitchell]:

…as happens so often in Greece, the bureaucrats had other plans. In a country where you are viewed favorably when you spend money but are considered a criminal when you make it, starting a business is a nightmare. The demands are outrageous, and include a requirement that the business pay taxes in advance equal to 50 percent of estimated profit in the first two years. And the taxes are collected even if the business suffers a loss. I needed only 20 square meters for my baking business, but inspectors told me they could not give me permission for less than 150 square meters. I was obliged to have a separate toilet for customers even though I would not have any customers visit. The fire department wanted a security exit in the same place where the municipality demanded a wall be built. … I, like thousands of others trying to start businesses, learned that I would be at the mercy of public employees who interpreted the laws so they could profit themselves.

More: Hans Bader.

{ 3 comments }

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]

{ 2 comments }

“We are in a situation now where most Americans are criminals, but they either don’t know it, or they think they will not be prosecuted” says Tim Lynch in his introduction to this Cato panel last month. Perhaps even worse, “federal regulators and prosecutors have so much power that they can pressure people who are totally innocent into pleading guilty and paying fines.”

Discussing their experiences with agency and prosecutorial power at the panel are: Kevin Gates, Vice President, Powhatan Energy Fund, subject of a FERC investigation for vaguely defined “market manipulation”; William Yeatman, Senior Fellow at the Competitive Enterprise Institute, who studies FERC as well as other energy and environmental agencies; Lawrence Lewis, who as a building manager at a military retirement home got a criminal record after diverting a backed-up sewage system into a drain he believed fed into the sewage treatment system; and William Hurwitz, M.D., specialist in pain treatment and target of a controversial prosecution of which John Tierney wrote: “Lapses in medical judgment – or even just differences in medical judgment – have been criminalized…. All it takes is a second opinion from a jury”.

{ 1 comment }

Wow, more of this please [St. Paul Pioneer Press]:

It’s no longer a crime in Minnesota to carry fruit in an illegally sized container. The state’s telegraph regulations are gone. And it’s now legal to drive a car in neutral — if you can figure out how to do it.

Those were among the 1,175 obsolete, unnecessary and incomprehensible laws that Gov. Mark Dayton and the Legislature repealed this year as part of the governor’s “unsession” initiative. His goal was to make state government work better, faster and smarter….

In addition to getting rid of outdated laws, the project made taxes simpler, cut bureaucratic red tape, speeded up business permits and required state agencies to communicate in plain language.

If lawmakers in Minnesota could identify 1,175 worthless or outdated laws that could be rooted out with little real political resistance, imagine how many other worthless or outdated laws there are that are not so easy to uproot because they work to the benefit of one group or other (cross-posted from Cato at Liberty).

More: list of laws.

{ 6 comments }

Peter Schuck, professor emeritus at Yale Law School, came to Cato in March to discuss his new book Why Government Fails So Often: And How It Can Do Better. Caleb Brown of Cato interviewed him for this Cato podcast.

“…Most companies roll over.” [Tim Lynch, Cato; WSJ; related on Federal Energy Regulatory Commission enforcement]

On this coming Monday, May 19, the Cato Institute is hosting a lunch on the subject of “Mugged by the State: When Regulators and Prosecutors Bully Citizens,” featuring Kevin Gates, Vice President, Powhatan Energy Fund; William Hurwitz, M.D., Pain Treatment Specialist; Lawrence Lewis, Engineer and Building Manager; and William Yeatman, Senior Fellow, Competitive Enterprise Institute; moderated by Tim Lynch, Director, Project on Criminal Justice, Cato Institute. You can watch live online at http://www.cato.org/live.

More: Cato podcast, brothers’ website, Philly.com (with an additional story of a man resisting the Delaware insurance commission after it took over his nightclub insurer).

May 15 roundup

by Walter Olson on May 15, 2014

  • “Sign Installer Cited for Violating Rule on the Sign He Was Installing” [Lowering the Bar, Santa Barbara]
  • YouTube yanks exhibit from public court case as terms-of-service violation. How’d that happen? [Scott Greenfield on controversy arising from doctor's lawsuit against legal blogger Eric Turkewitz]
  • Philadelphia narcotics police scandal (earlier) has an alleged-sex-grab angle; also, given the presence of compelling video clips, shouldn’t the story be breaking out to national cable news by now? [Will Bunch, Philadelphia Daily News; Barbara Laker and Wendy Ruderman, PDN 2009 Pulitzer series, on Dagma Rodriguez, Lady Gonzalez and "Naomi" cases]
  • The most dynamic part of the economy? Its endangered “permissionless” sector [Cochrane] Call it subregulatory guidance, or call it sneaky regulation by agencies, but either way it can evade White House regulatory review, notice and comment, etc. [Wayne Crews, CEI "Open Market"]
  • What’s Chinese for “Kafkaesque”? Dispute resolution in Sino-American contracts [Dan Harris, Above the Law]
  • In another win for Ted Frank’s Center for Class Action Fairness, Ninth Circuit reverses trial court approval of Apple MagSafe settlement [CCAF]
  • Mississippi’s major tort reform, viewed in retrospect after ten years [Geoff Pender, Jackson Clarion Ledger]

{ 3 comments }

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.

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