Archive for August, 2006

Paternalism and Your Money — Part One

President Bush has signed H.R. 4, the Pension Protection Act of 2006, into law.

The bill is mostly sound and fury, signifying nothing. The Pension Benefit Guaranty Corporation will be “saved,” even though we were repeatedly assured until now that there was in fact nothing to “save” it from. Private employers will be required, over time, to go from 90% funding to 100% funding of their pension plans — which is nothing more than hollow accounting gimmickry. And the real volcanoes under the city — public employee pensions — are not addressed at all. Neither of course is the Social Security crisis.

But one afterthought of the bill is worth looking at:

Employers can encourage their workers to save by automatically enrolling them 401(k) retirement accounts.

This proposal has been bouncing around for years. A good primer on the subject is available from the Congressional Research Service.

Read On…

Big news day

Bureaucracy vs. Katrina recovery

Jonathan Rauch has a must-read dispatch from devastated St. Bernard Parish, Louisiana:

Cleanup and repair cost the school system tens of millions of dollars, but federal payment has been slow. Reimbursement for small projects goes through five to 10 weeks of federal and state review, according to David Fernandez, the school system’s financial manager. Any expenditure over $1 million is subject to another four to 12 weeks of review in Washington, he said.

This is the so-called “million-dollar queue.” “Anything over a million dollars has to be reported to Congress,” says Brown, the former FEMA director. “Why do you think that is? Congress wants to make an announcement.” In other words, members of Congress want to be the first to boast of a federal project in their district.

“This is all political,” Brown says. “It has nothing to do with good public policy.” …

On private property, even debris — including, for example, 1,600 tree stumps — had to be reviewed for archaeological value before FEMA would pay for removal.

(“Struggling to Survive”, National Journal, Aug. 11; “Stretchier Red Tape”, Aug. 11).

Federal tobacco suit ruling

As Ted notes at Point of Law, Judge Gladys Kessler has ruled in partial favor of the federal government in its longstanding racketeering case against the tobacco industry (Jun. 21, 2005 and links from there), begun under the Clinton Administration (after much backstage string-pulling and blandishment by private plaintiff’s lawyers) and continued by the Bush Administration. In particular, Judge Kessler is ordering the tobacco companies to make admissions of fraud and racketeering that may prove damaging to them in future private litigation (you can see why those private lawyers were smart to lobby). She did, however, at various stages throw out or disallow large portions of the government’s case, including most of its sweeping demands for money.

A few preliminary comments, based on a reading of the shorter remedial section but not the 1,653-page ruling (PDF) itself:

1) It is now familiar, if still a scandal, that business decisions which would have been near-universally regarded as perfectly lawful at the time can retroactively be defined not only as giving rise to liability, but even as “racketeering”. By this point, with the “racketeering” label having been flung around (and sometimes with success) in so many garden-variety commercial disputes, it may be on the verge of losing its sting.

2) This case, however, was not of the garden variety. From the start, it sought to stigmatize as racketeering tobacco companies’ public advocacy efforts — their efforts to defend their product in public debate and marshal every good and bad argument on its behalf the same way a lawyer might, their P.R. efforts to plant favorable articles in the press, their support of groups like the Tobacco Institute, and so forth. The Justice Department’s complaint charges them, revealingly, with responsibility for taking “false and misleading positions on issues” (emphasis added) (see Sept. 23, 1999). It should be obvious (but apparently still isn’t) that lots and lots of other defendants, who are not for the moment as politically unpopular as tobacco companies, might also someday be in peril of legal charges for advancing false and misleading “positions on issues”.

3) Although Judge Kessler may have thrown out substantial portions of the feds’ case, the remedies she approved nonetheless impinge on values of free advocacy. Tobacco companies are to be ordered to admit in communications to consumers various supposed facts which they do not believe to be true, and which in fact may not be true (for example, that no particular formula for a cigarette’s ingredients is safer or more natural than any other) but which fit the desired anti-tobacco message. They are to be forbidden to utter a great many other statements which they believe to be true on the grounds that — well, basically on the grounds that the government disapproves of those statements and doesn’t want them aired as part of public debate.

4) It goes without saying that the advancement of erroneous or misleading arguments, the promotion of dubious science, etc. as part of an effort to sell one’s product line is not going to be deemed “racketeering” when certain other groups of professionals do it — say, politicians and lawyers.

Foie gras foolery

Chicago’s silly anti-foie gras law is taking effect next week (see Jun. 8 and links therein), but a planned commerce-clause lawsuit against the ban (via Wallace, whose post has a lot of good links on similar bad laws and proposals) is even more silly. In 1995, the Seventh Circuit Court of Appeals upheld an even sillier nanny-state ordinance against spray paint sales that was also challenged on commerce clause grounds: “Just as the Constitution does not enact Mr. Herbert Spencer’s Social Statics, so it does not enact prescriptions from the pages of The Journal of Law & Economics—where, we may assume, an article will appear in due course adding this ordinance to the long list of laws whose costs exceed their benefits.” (Full disclosure: I was a clerk for the author of that opinion at that time.)

Warrantless Wiretapping Program Struck Down

I have perused the decision by a federal district judge in Michigan declaring the NSA warrantless wiretapping program to be in violation of both FISA and the Fourth Amendment and have some thoughts.

While the decision contains a wealth of flowery language reminiscent of, say, a post by a libertarian blawger, it is rather weak on actual analysis. On the other hand, what little analysis it contains is spot-on accurate.

Read On…

Jack Thompson, meta-Bully

Take-Two Interactive/Rockstar, a controversy magnet for its Grand Theft Auto game, has unveiled a new game called Bully, set at a boarding school. Despite the predictions of some anti-game activists that the new production would glorify bullying, a reviewer for the New York Times says it does nothing of the sort: “the entire point of the game is that bullies (noticeable at a distance by their distinctive white shirts) are everyone’s enemies”. (Seth Schiesel, “With Bully, Rockstar Looks to Beat the Grand Theft Auto Rap”, New York Times, Aug. 10). None of which stopped Overlawyered favorite Jack Thompson (Jul. 24, Jun. 25 and many others) from firing off a letter to Take Two and Wal-Mart vowing to file suit to stop the game’s Oct. 1 release unless they provide him with an advance copy to criticize. Bit-Tech has the gory details (Brett Thomas, “Jack is back to beat up on Bully”, Aug. 15). And now it’s reported that Thompson having gotten no satisfactory answer to his demand letter, he’s proceeded to sue under Florida nuisance law to demand such an advance copy (Eric Bangeman, “Jack Thompson sues over upcoming “Bully” title”, Ars Technica, Aug. 16). Update Oct. 14: judge demands to inspect the game.

More: Steve Chapman, as usual, has a relevant observation: “Like adults, who can enjoy murder mysteries without ever feeling the need to commit murder, adolescents apparently can separate the fantasies of mass entertainment from the realities of how they want to live their own lives.” (“Teens’ lives don’t always imitate art”, syndicated/Chicago Tribune, Aug. 10).

“Have You Tried Rebooting?”

A few quick thoughts about the massive Dell battery recall:

The relatively new Restatement (Third) of Torts: Product Liability proposes some modifications of the common law duty to warn after a sale (as opposed to a duty to warn — i.e., on the packaging — before a sale).

Of course, a manufacturer remains strictly liable for any damages proximately caused by a manufacturing defect before a post-sale warning or recall is announced. Under the Restatement (Third), Section 11, there is still never a “duty to recall,” unless imposed by the government.

Previously, the determination of whether there was a “duty to warn after the sale” was no different than any other test for duty: Did the benefits of a post-sale warning outweigh the costs?

Read On…