Tag: Regulation

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Approximately 88% of US inflation is driven by four sectors: Health Care Education Real Estate Pharmaceuticals How’s all that regulation working out for y’all? More

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Promoted from the Ricochet Member Feed by Editors Created with Sketch. The Pitfalls of Management by Measurement

 

shutterstock_144543284The news is full of Wells Fargo’s follies since they got hit with fines totaling $185 million last week. What happened was a case of management by measurement. Wells Fargo employees were heavily pressured – including threats of job loss – to rack up customer “solutions,” which translate into selling additional services to the bank’s customers that included additional bank accounts and bank credit cards. In order to meet the strict quotas that management had imposed, employees opened accounts for customers without first receiving customers’ permission or informing them.

Though this practice was widespread (some 5,300 Wells Fargo employees have been fired since 2011 for opening fake accounts), it does not appear to have been the result of a conspiracy. Rather, it was an example of spontaneous order that emerged from employees acting in their own best interests — in this case, reducing the pain of management pressure — given the incentives and constraints imposed by the system. In an article appearing on Bloomberg, Matt Levine explains how this sort of thing happens:

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Contributor Post Created with Sketch. Beet the System

 
Studies have shown that these sugar beets also contain significant amounts of hydrogen hydroxide.

Consumers and producers are capable of incredible folly. Consider, for example, the latest instance of anti-GMO hysteria: Under pressure from consumers, several major food companies — including Hershey’s Chocolate — have decided to only use “non-GMO” sugar. This is stupid for several reasons. To begin with, crystalline sugar does not contain any genetic material, in much the same way that a cat is not made up of several dogs. Indeed, attempts to correctly identify the source of table sugar have found that it’s refined to the point that it’s impossible to tell whether it came from sugar cane or sugar beets, let alone GMO whether or not they were GMO or not; it doesn’t just look identical, but actually is identical, down to the molecular level. Moreover, GMO sugar beets come in a single, well-understood variety that actually reduces pesticide use and increases yield.

This isn’t a market failure so much as a consumer one: People want to pay a premium for magic, and the market obliges them. That many of these same consumers will then cry murder about pesticide and land use is a sad but separate problem. On the other hand, the very same market can succeed when consumers aren’t actively misled, the government operates within a small scope, and producers are allowed to innovate. Via Ron Bailey, it appears that at least some uses of the CRISPR gene-editing technology don’t fall under the current rules that apply to GMOs (especially if there’s no genetic transfer from one organism to another). Upshot? Innovation from relatively small producers who don’t have to overcome nine-figure regulatory burdens:

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Contributor Post Created with Sketch. Google Is a Monster, But We’re Dr. Frankenstein

 

shutterstock_14906359In 2013, the United States Department of Justice started a program called Operation Choke Point. Unable to ban industries they deem undesirable, they decided to make it hard or impossible for those industries to work with banks and credit card payment processors. Every single one of the now-undesirable industries, like adult entertainment, is legal.

Operation Choke Point categorized certain industries as “high-risk,” which had the effect of making fearful banks shut down accounts. The program is a way for the Administration to stifle or severely damage industries it simply doesn’t like. Unsurprisingly, the Administration’s biggest targets was the firearms industry. Operation Choke Point led to many banks shutting down the accounts of gun stores:

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Contributor Post Created with Sketch. This Week in Federal Regulatory Takeover

 

“As the presidential primaries dominate the news, under the radar the Obama administration continues its unilateral assault on the economy and civil society. Consider the news from just this week.” So I wrote last month. Is it poor form to start a new post with exactly the same opening?

1. Yesterday, the Food and Drug Administration announced that they will extend tobacco regulations to e-cigarettes:

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Contributor Post Created with Sketch. Why Does Silicon Valley Like Democrats So Much?

 

shutterstock_176341079Over at TechCrunch, Greg Ferenstein — after pointing out how little interest Silicon Valley has had in the 2016 GOP presidential candidates — offers his theory as to why American tech leans left:

I think the more likely explanation is that the nation’s new industrial titans are pro-government. Google, Facebook, and most Internet titans are fueled by government projects: the Internet began in a defense department lab, public universities educate a skilled workforce and environmental policies benefit high tech green industries. The CEO of Uber, Travis Kalanick, is a fan of Obamacare, which helps his entrepreneurial drivers keep their health insurance as they transition between jobs.

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Contributor Post Created with Sketch. Today in Misguided, Counterproductive, Onerous, Pernicious Federal Regulation

 

As the presidential primaries dominate the news, under the radar the Obama administration continues its unilateral assault on the economy and civil society. Consider the news from just this week.

1. We start with HUD, courtesy of the Wall Street Journal: “The U.S. Department of Housing and Urban Development on Monday released guidance that could give ammunition to tenant advocates, saying the practice of excluding tenants based on their criminal or arrest records could violate the Fair Housing Act where it has a disproportionate impact on blacks and Hispanics.” The argument is basically that use of criminal history in this way is discriminatory because African Americans and Latinos are disproportionately represented in the prison population.

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The source of much of the angst of this election season is the perceived waning work prospects of the average American. This may have reached a critical mass now, but it is the culmination of trends long in the making. The purpose of this post is to review them, and how they have created a […]

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Contributor Post Created with Sketch. #MakeAmericaCompetitiveAgain

 

shutterstock_208443250Donald Trump hit a nerve on tariffs, American manufacturing, and competition from China. A lot of people find the arguments for free trade unpersuasive and feel they’ve been on the receiving end of a bi-partisan policy that that imposes rules on costs on Americans that lets the rest of the world (literally) profit at our expense. I don’t quite buy that narrative but — as I’d wager some of you are thinking — of course you wouldn’t, Meyer. That doesn’t mean it’s totally wrong, though, and of course I want of my fellow countrymen to have every opportunity to find remunerative, useful employment.

My problem with Trump on this matter isn’t so much his calling attention to problems, but that his solutions are bunk. More specifically, I think the kinds of tariffs he’s suggesting are going to hurt people by raising prices, will spark retaliation against our own manufacturing, and will suffer from all the pitfalls that happen when one person thinks he’s smarter than the combined wisdom of hundreds of millions. Trump may have an economics degree, but his reading seems to have stopped before Adam Smith.

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Contributor Post Created with Sketch. From the Editors’ Desk: Senate Food (& Drug) Fight!

 

shutterstock_243773839Via the WSJ, the parties’ attitudes on the subject could hardly be in starker contrast:

For weeks, members and staffers of the Senate Health, Education, Labor and Pensions Committee have been trying to find common ground on the legislation. Republicans wanted to smooth the regulatory path for drug and medical device approvals, while Democrats strove to increase funding for medical research and find ways to keep drug prices in check. But in recent weeks, Democrats balked at several industry-sought measures they believed would lower the bar too much on the safety of products approved at the FDA, according to people familiar with the talks. These measures supported by Republicans would have, among other provisions, reduced FDA scrutiny of certain laboratory tests’ accuracy and of medical software.

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Contributor Post Created with Sketch. Cronyist Deregulation

 
640px-Charging_Tesla_Model_S_01
By Jeff Cooper (jecoopr), CC BY 2.0, via Wikimedia Commons.

As conservatives and free-marketeers, we’re familiar with the way large businesses and entrenched interests weaponize political power by passing new regulations. Given enough time, skill, and sleaze, they can use government to keep all would-be competitors at bay and achieve de facto monopolies. But there’s another model of regulatory abuse that often gets less attention and is actually more insidious: Getting tailor-made, exclusive exemptions from general laws for oneself while leaving everyone else stuck with the old system.

Tesla Motors’ continued efforts to gain exemption from laws banning direct vehicle sales are a good example. Until recently, most states prohibited car manufacturers from directly selling vehicles to consumers, forcing them to purchase vehicles through car dealerships. Tesla — a high-end electric car manufacturer — doesn’t like this model and has lobbied for exemptions from these rules, either for electric vehicles as a class or under conditions that all-but-explicitly restrict this perk to Tesla itself.

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“You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land of imagination. Next stop, the Twilight Zone!” More

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Member Post

 

Well, I can’t say that I ever expected to see a government agency agree in principle to reducing regulation of a major consumer product, but apparently that’s what might be happening: …”NHTSA will interpret ‘driver’ in the context of Google’s described motor vehicle design as referring to the (self-driving system), and not to any of the vehicle occupants. […]

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Promoted from the Ricochet Member Feed by Editors Created with Sketch. Does “Climate Change Hysteria” Provide Cover for Industrial Polluters?

 
640px-Fishing_boat_Lake_Poopo
By Lovisa Selander – Transferred from en.wikipedia.

From a story I read this morning:

UNTAVI, Bolivia – Overturned fishing skiffs lie abandoned on the shores of what was Bolivia’s second-largest lake. Beetles dine on bird carcasses and gulls fight for scraps under a glaring sun in what marshes remain. Lake Poopo was officially declared evaporated last month. Hundreds, if not thousands, of people have lost their livelihoods and gone. High on Bolivia’s semi-arid Andean plains at 3,700 meters [~12,000 ft.]and long subject to climatic whims, the shallow saline lake has essentially dried up before only to rebound to twice the area of Los Angeles. But recovery may no longer be possible, scientists say.”This is a picture of the future of climate change,” says Dirk Hoffman, a German glaciologist who studies how rising temperatures from the burning of fossil fuels has accelerated glacial melting in Bolivia.

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The print edition of the WSJ headlines it, “Democrats Diverge on Banks.” The internet version headlines it, “Sanders, Clinton Offer Contrasting Approaches to Wall Street Regulation : One puts forth a couple of major proposals to deliver a punishing blow; other offers a wider array of less drastic ideas.” I presume the article is firewalled, […]

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Contributor Post Created with Sketch. We’re Not Going to Regulate the Drone Industry Out of Business, Are We?

 

shutterstock_242529727_dronesI really loved this Politico piece by Marc Andreessen from 2014:

But policymakers shouldn’t be trying to copy Silicon Valley. Instead, they should be figuring out what domain is (or could be) specific to their region—and then removing the regulatory hurdles for that particular domain. Because we don’t want 50 Silicon Valleys; we want 50 different variations of Silicon Valley, all unique from each other and all focusing on different domains. Imagine a Bitcoin Valley, for instance, where some country fully legalizes cryptocurrencies for all financial functions. Or a Drone Valley, where a particular region removes all legal barriers to flying unmanned aerial vehicles locally. A Driverless Car Valley in a city that allows experimentation with different autonomous car designs, redesigned roadways and safety laws. A Stem Cell Valley. And so on.

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Promoted from the Ricochet Member Feed by Editors Created with Sketch. Dinner With Charles Murray

 

img-murray-charles-hr_101703740559My husband and I were seated next to Charles Murray at dinner recently and had an interesting conversation. I first asked him if his Madison Fund has gotten off the ground. It hasn’t, because Murray is a public intellectual, not an organizer of funds, but investors have expressed interest, and I think it looks like an opportunity for a business-savvy Ricochet member!

For those of you who haven’t read his latest book, By the People, the Madison Fund is intended to fight the crippling the excesses of the administrative state. The idea is that the fund will act like insurance against regulatory overreach, and that Madison Fund lawyers will take on cases that fight silly — as opposed to reasonable — regulation in order to make it unenforceable.

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Apparently, yes: Beginning in December of 2016, restaurants with more than 20 locations will be required to provide calorie information on their menus, despite evidence that this does not influence ordering decisions. This new mandate is part of the multi-stage Obamacare rule roll-out. More

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Contributor Post Created with Sketch. Regulation Inflation

 

There’s basically no real inflation in the cost of technology — computers and that sort of stuff are actually getting cheaper. From the Bureau of Labor Statistics:

Have you bought a TV or computer recently? If so, you may have noticed their prices have steeply decreased over the years, while their quality continues to improve. From December 1997 to August 2015, the Consumer Price Index for personal computers and peripheral equipment declined 96 percent. Most of the decline in this index occurred between 1998 and 2003. The price index for TVs decreased 94 percent from December 1997 to August 2015. This decline was more gradual than the decline in the price index for personal computers.

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