Tag: Regulation

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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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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.

I immediately thought of it when reading about “A Silicon Valley for Drones, in North Dakota” from New York Times reporter Quentin Hardy. A fortuitous combination of things is going on there, including: a) the state has a low population density (47th out of 50 states), so if a drone falls from the sky it will probably just hit dirt; b) Grand Forks Air Force Base “flies nothing but robot aircraft for the United States military and Customs and Border Protection”; c) the state spent $34 million on a civilian industrial park for drones near the air base; d) the University of North Dakota, which already trains commercial pilots and air traffic controllers, has a drone controller program; e) there’s a surprising amount of tech talent thanks to business investments from Amazon and Microsoft; f) it’s a rural state. and “rural states with farming, oil and rail lines see many practical reasons to put robots in the sky.”

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.

Murray believes that the administrative state is very incestuous (with a single agency often playing the role of police, prosecutor, and judge) but thinly-spread. He thinks that with the help of an organization like the Madison Fund — or collection of them — businesses can challenge regulatory rules without risking their very existence. Currently, businesses tend to just ignore many regulations that cost a lot but don’t serve any sensible purpose, though this opens them to the risk of enormous penalties and legal fees should they come under scrutiny.

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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. Preview Open

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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.

To Be an Informed Healthcare Consumer


shutterstock_93062659I cannot imagine how it is even remotely possible to be an informed healthcare consumer under the current system. With some effort and a helpful provider, one can accumulate useful knowledge about diet and exercise, the effectiveness of various treatments, etc., all of which is well and good. But when it comes to being a consumer in a supposedly capitalist system, one cannot operate as an informed consumer. Throw in government regulation, and all bets are off.

My recent travails with obstructive sleep apnea provide a perfect example of this. I’ve had the study done because I must in order to remain employed but — were this merely a matter of personal health — I would be lost in a raging sea of costs on a night darkened by ignorance. Though I have tried to determine the out-of-pocket costs for this simple procedure, the data is simply not available. In short, I could not (and cannot) use cost as a determining factor. Allow me to explain.

As with pretty much any medical procedure these days, I needed a specialist — in this case, a pulmonologist — to conduct the test and interpret the results. I met with him a few weeks ago for about half an hour. He asked all the same questions I’d already answered in a questionnaire and took a peak in my throat to see exactly what two other doctors had already seen and documented. This short chat was billed for $558. Of course, this is not what the interaction costs or what the doctor expects to be paid for services rendered. No, the actual price of this consultation is $255.51; at least this is the price negotiated between the insurance network and the provider. The baffling part is that I can only discover this actual cost when I receive the explanation of benefits from my insurance carrier.

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We’ve all been told why government safety regulations are necessary. Why, without an active government inspecting and approving products and manufacturing methods, consumers will be helpless against the rapacious greed of capitalists. Without government oversight, capitalism results in a “race to the bottom” with manufacturers cutting corners and skimping on quality to protect their profits. […]

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It’s too bad the James Pethokoukis’s post, “Should Republicans Be Focusing Way More on Deregulation Than Tax Cuts?” didn’t get more than the 17 comments it has at the time I’m writing this. Even though I answered “Neither,” it is an important question that exposes the role of the GOPe in our politics. I was […]

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Indigo Labor Day


shutterstock_87947731The front-page headline caught my attention: “Tide may be turning for working-class Americans.” Really? We just learned on Friday that a record 94 million Americans are not participating in the labor force. How can this be good news seven years after the Great Recession? Bloomberg columnist Al Hunt explains why we are in fact on the verge of Morning in America, Obama-style:

On the surface, this Labor Day holiday caps another dark year for U.S. unions and many working-class Americans.

Union membership in the private sector is 6.6 percent; it was 16.8 percent 30 years ago. Union members account for 35.7 percent of public sector workers, down slightly from a decade earlier.

Silicon Valley, New York City are Holding Us Back


NYCHA_Logo_480x480Big cities, we’re told, are engines of productivity. And that’s mostly true. Regions with capital and a high concentration of technological innovation — places like California’s Silicon Valley — employ people, drive economic growth, do all sorts of good stuff, right?

Well, not so much. And the reasons they’re lagging are interesting. Thanks to Greg Ferenstein, I found this study, from the University of Chicago, that says that it all comes down to… regulation. Land use regulation, at that. From the study:

We study how growth of cities determines the growth of nations. Using a spatial equilibrium model and data on 220 US metropolitan areas from 1964 to 2009, we first estimate the contribution of each U.S. city to national GDP growth. We show that the contribution of a city to aggregate growth can differ significantly from what one might naively infer from the growth of the city’s GDP. Despite some of the strongest rate of local growth, New York, San Francisco and San Jose were only responsible for a small fraction of U.S. growth in this period.

As the GOP Plays with Trumpism, Hillary and the Democrats Work to Shape the New American Economy


U.S. Republican presidential candidate Donald Trump hugs a U.S. flag as he takes the stage for a campaign town hall meeting in Derry, New Hampshire August 19, 2015. REUTERS/Brian Snyder

Donald Trump’s policy views have a high degree of plasticity, even for a politician. But the retrograde version he currently espouses — mass deportation, protectionism, maybe even the gold standard — and the harsh way he espouses them have a foothold in the GOP. Columnist George Will may be correct that each “sulfurous belch from the molten interior of the volcanic Trump phenomenon injures the chances of a Republican presidency.”

Safety Uber Alles


shutterstock_246422644On a the Friday episode of Radio Boston — WBUR’s local news show that is, like NPR itself, equally informative and insufferable — a guest comment perfectly encapsulated the wrong-headed way that the Left addresses problems. While discussing recent controversies regarding ride-sharing programs like Lyft and Uber, guest Shira Springer said (starts around 9’12” into the file for the whole show):

I feel sorry for the taxi drivers in that respect, but I am for regulation. I do think Lyft and Uber need to somehow be regulated. And I’m speaking here as a single woman who is fearful of contacting an Uber driver and having them come and pick me up. Let’s be honest: there have been cases locally and globally where sexual assault [has] taken place with Uber pick ups. And so you have to kind of be conscious and aware of the consequences, perhaps, of calling a driver to your home or having a driver drop you off at your home and not having them have… a background check.

Of course, Uber and Lyft do require background checks, though they’re (apparently) not as rigorous as those for bus, taxi, and livery drivers in Massachusetts. Asked if requiring them to meet those standards would change her mind, Springer responded:

Economic Debate: Kasich, Rubio, Bush Up — But Trump’s Protectionism is the Real Downer


DebateWith a record 24 million people watching the GOP debate, you’d think there would have been a lot more time spent on the most important issue of the day: the economy. Look at any poll. Jobs and the economy are always at the top of the list. But there was barely a mention of this on Thursday night.

The Republican party is not going to win this election unless it persuades the electorate that its primary principles of low marginal tax rates, lighter regulation, free trade, and a sound dollar are the best path to growth. Call it free-market capitalism. Call it supply-side. Call it entrepreneurship. Call it take-home pay. But the endgame is growth and prosperity.

So let’s make this very simple. Like almost every election in American history, 2016 is going to be about growth versus redistribution, private-sector markets and competition versus government planning, and a hard reliable dollar versus a protectionist collapse of the greenback.

The SEC’s New CEO Pay Rule Is Useless and Dishonest


To match Special Report SEC/INVESTIGATIONSA party line, three Democrats vs. two Republicans vote of SEC commissioners has finalized a rule that will require companies to disclose the ratio of the compensation of their CEOs to the median compensation of their employees. This rule is required under the 2010 Dodd-Frank financial regulation law.

Like most progressive policies, this sounds good on its face to most people. “No more fat cats! No more too big to fail!” chants the collective liberal media and political establishment. But, again like most progressive policies, it’s not quite so simple.

People naturally grumble at the idea of some CEO making millions and millions of dollars each year while some employees at their given company are making minimum wage. This makes the idea behind the SEC’s new ratio rule politically popular and an easy sell. The problem is that proper perspective isn’t applied to the issue of CEO compensation. Let’s address a few key points that explain why CEOs are compensated so handsomely in many cases.

Uber and the Costs of Employment Regulation


shutterstock_251175352Uber and its customers are rightly concerned over a recent ruling out of California that calls into question whether the company’s drivers can continue to be classified as independent contractors. As I note in my new column for Defining Ideas, however, the problem runs much deeper than just the application of California law. The entire legal framework is ill-equipped to deal with the complexities of modern labor markets:

The clear lesson to learn from this fiasco is that it is a hopeless task to apply traditional regulatory structures to modern arrangements, especially when they block the implementation of new business models. Indeed, it is necessary to go one step further: it makes no sense to apply these regulatory statutes to older businesses, too. Time after time, these statutes are drafted with some “typical” arrangement in mind, only for the drafters to discover that they must also try to apply the statutes to nonstandard transactions that do not fit within the mold. Rigidity is not just a problem today. It was a problem with the [Fair Labor Standards Act] and other New Deal labor statutes even when they were first passed.

This point is unfortunately lost on a lot of modern commentators who think that their real challenge is only to update the employment laws for the sharing economy, rather than scrap them altogether. For example, James Surowiecki, writing in the New Yorker, comes out in favor of “Gigs with Benefits,” a great title for a bad idea. He rightly notes the scads of critics who claim that Uber is disguising its employees as independent contractors are wrong, and he recognizes that calling Uber drivers employees could be the death knell for many of these gigs.

The “Short-termism” Myth


A number of pundits, including Ricochet’s own James Pethokoukis, have picked up Hillary Clinton’s “short-termism” meme and run with it. Clinton is claiming that U.S. CEOs are looking no further than the next quarter or two and — instead of making long-term investments in research and capital equipment — are repurchasing company shares, buying up other companies, or paying higher dividends to shareholders.

The hidden assumption is that there are lots of long-term investment opportunities out there to which the nation’s CEOs are blind. Individual companies often make mistakes, and those that make them too often usually don’t stay in business for long.  If there truly are profit opportunities just waiting to be snapped up by entrepreneurs, then you’d expect lots of people to be taking advantage of them. Yet the country’s economy remains moribund. When most companies are retrenching rather than expanding, the explanation may be “animal spirits,” mass delusion, or shared stupidity as Clinton and Pethokoukis seem to be implying. However, before reaching for such vague reasons for large-scale trends, I tend to look for systemic causes — and “systemic” all too often translates into “government.”

The Libertarian Podcast, with Richard Epstein: Uber and Innovation


New York City Mayor Bill de Blasio — brace yourself for this one — is trying to make it harder for Uber to do business in the Big Apple. This comes on the heels, of course, of California trying to upend the company’s classification of its drivers as independent contractors and protests from French cabbies who are upset about the competition.

Can innovative companies like Uber overcome the political power of the incumbent companies they’re disrupting? Is it inevitable that even the most dynamic startups will have to eventually assimilate to the culture of lobbyists and rent-seeking? Those are some of the topics I take up with Professor Epstein in this week’s installment of The Libertarian. Listen in below or subscribe to the show via iTunes or your favorite podcast app.

HUD Makes a Further Mess Out of Housing


shutterstock_170154509Last week, the Department of Housing and Urban Development released its final rule on “affirmatively furthering fair housing,” a regulation intended in part to advance HUD’s goal of making sure that government agencies that receive public funds take “meaningful actions” to eliminate “historic patterns of segregation, achieve truly balanced and integrated living patterns, promote fair housing choice, and foster inclusive communities that are free from discrimination.” As I note in my new column for Defining Ideas, the result is a mess:

The tedious Final Rule, which has been hailed as “historic and overdue,” is an intellectual shipwreck. Its empty and vacuous commands are incapable of rational implementation. Yet notwithstanding HUD’s pious denials, the department is sure to continue its history of contentious litigation brought to chastise and correct local governments whose actions have not met its standard. One inherent difficulty in both the previous and current versions of the Final Rule is that its objectives are often in deep conflict with one anther.

HUD gives backhanded recognition to this point when it notes: “The Fair Housing Act does not prohibit individuals from choosing where they wish to live, but it does prohibit policies and actions by covered entities and individuals that deny choice or access to housing or opportunity through the segregation of persons protected by the Fair Housing Act.” But it does not grasp the magnitude of this concession. It turns out, of course, that most individuals do not wish to live in communities that meet HUD’s sterile definitions of “truly balanced and integrated communities.” They often prefer to live with individuals with whom they share common values in neighborhoods that offer the social support and companionship that they so clearly want.