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The Nanny State & A Regulated Society Archive

Tuesday

25

January 2011

0

COMMENTS

More Government is not the Answer for Too Much Government

Written by , Posted in Big Government, Free Markets, The Nanny State & A Regulated Society

Once again confirming that this administration believes that more government is the first, best and only solution to any problem, Obama is proposing billions of dollars in new spending on an activity that ought to be left to the private sphere:

The Obama administration has become so concerned about the slowing pace of new drugs coming out of the pharmaceutical industry that officials have decided to start a billion-dollar government drug development center to help create medicines.

The new effort comes as many large drug makers, unable to find enough new drugs, are paring back research. Promising discoveries in illnesses like depression and Parkinson’s that once would have led to clinical trials are instead going unexplored because companies have neither the will nor the resources to undertake the effort.

The initial financing of the government’s new drug center is relatively small compared with the $45.8 billion that the industry estimates it invested in research in 2009. The cost of bringing a single drug to market can exceed $1 billion, according to some estimates, and drug companies have typically spent twice as much on marketing as on research, a business model that is increasingly suspect.

This is typically unquestioning coverage by the New York Times, as the article never once addresses alternatives to the government’s assumption that private drug makers just aren’t investing enough. Take this sentence, for instance: “The new effort comes as many large drug makers, unable to find enough new drugs, are paring back research.” Now read it with this additional clause I’ve added: “The new effort comes as many large drug makers, unable to find enough new drugs to pay for the costs of investing in research, are paring back research.”

This addition is both accurate and clarifying, and it makes apparent a question both the administration and the New York Times fails utterly to address. Just why is it so expensive to develop drugs that many companies are concluding that it’s not worth as much effort as we might like? The reason neither wants to ask the question is because they know the answer: it’s because of too much government.

(more…)

Thursday

20

January 2011

0

COMMENTS

States War on Business

Written by , Posted in Big Government, Economics & the Economy, Free Markets, Taxes, The Nanny State & A Regulated Society

Why any entrepreneur would try to make a living for themselves in a state like New York or Illinois is beyond me. Maybe it’s just because I’ve never really gotten the allure of big cities, but why would anyone subject themselves to the rule of such petty bureaucratic tyrants?  The big government regulatory states have no respect for those seeking to earn a living, so not find somewhere that does?  Take this story:

…”They told us we had to move or we’d be towed,” Loera explained as the cops rigged the food truck to the tow truck.

They gave Paty’s truck a $55 summons saying it was not allowed to sell merchandise from a metered spot, Loera said. His mother, Patricia Monroy, who does not speak English, made the ultimate decision to stay put once her family translated what the cops were saying.

“My mother felt like she was not breaking the law,” Loera said. “We still had 45 minutes on the meter.”

…Loera had reached out to the Street Vendor Project after his Nov. 30 arrest, and members of the organization joined Paty’s for Tuesday’s return to raise awareness on issues vendors face: harassment from law enforcement and city offices, a harsh ticketing system and excessive punishment and regulations confusing to vendors and cops alike.

But no one anticipated the towing.

“Even if they were breaking parking rules — and I don’t think they were because I don’t think food is merchandise — that’s why they get a ticket. But that’s not a worth a tow,” Basinski said.

…The food truck was careful to follow parking rules, Loera said. It arrived on the Upper East Side about 10:15 a.m., changing spots about 11 a.m. and again an hour later.

Loera and his mother, who was tearing as the truck was being towed, hopped in a cab to follow it. They did not want a repeat of the last towing, when all of their perishables and other items — including its generator — had been removed from the truck, Loera said.

After they paid the $370 to get their truck back in November, they had to take out a $5,000 loan so they could restart the business that provides the livelihood for six families, Loera said.

And what was the basis of the complaints against the truck?

Paty’s had faced the ire of several residents on Community Board 8, who complain about food trucks in the area. They worry the trucks are illegally hogging metered parking spots and that they are unfairly competing with struggling brick-and-mortar stores.

Hogging metered spots? I’m sorry, but weren’t they paying for them just like anyone else? If the prices aren’t reflecting market value, then raise them. But there’s no basis to complain about people who are paying those prices. Unfair competition? Unfair that they made products that people wanted more than other products? How dare they!

Silly immigrants, they thought they were coming to America because it was free, but there’s no place in America for earning an honest living by providing services that people want. If you aren’t working for the government, your work isn’t legitimate.

Other states, like Illinois, are content to just tax their business into leaving. Some states understand the incentives created by tax and spend policies run amok. Take this statement by Wisconsin Governor Scott Walker:

Wisconsin is open for business. In these challenging economic times while Illinois is raising taxes, we are lowering them. On my first day in office I called a special session of the legislature, not in order to raise taxes, but to open Wisconsin for business. Already the legislature is taking up bills to provide tax relief to small businesses, to create a job-friendly legal environment, to lessen the regulations that stifle growth and to expand tax credits for companies that relocate here and grow here. Years ago Wisconsin had a tourism advertising campaign targeted to Illinois with the motto, ‘Escape to Wisconsin.’ Today we renew that call to Illinois businesses, ‘Escape to Wisconsin.’ You are welcome here. Our talented workforce stands ready to help you grow and prosper.

The Associated Press, on the other hand, sneers at the idea that high taxes will drive anyone out of Illinois (Hat-tip: Tax Foundation):

But economic experts scoffed at images of highways packed with moving vans as businesses leave Illinois. Income taxes are just one piece of the puzzle when businesses decide where to locate or expand, they said, and states should be cooperating instead trying to poach jobs from one another.

It’s true that taxes are just one piece of the puzzle, but it’s not like Illinois has paired its high tax policies with a business-friendly regulatory regime. Nor is this a small change, as Illinois has moved from the 21st to the 46th highest corporate tax rates among states. I’ll ignore for now the assertion that states should not be competing to produce good policy, and point out instead this story (Hat-tip: Reason):

The founder of Jimmy John’s said he has applied for Florida residency and may recommend that his corporate headquarters move out-of-state as a result of the Illinois tax increases enacted last week.

Jimmy John Liautaud told The News-Gazette on Tuesday that he is angry about the moves, which boosted the individual income tax from 3 percent to 5 percent and the corporate income tax from 7.3 percent to 9.5 percent.

“All they do is stick it to us,” he said, adding that the Legislature and governor showed “a clear lack of understanding.”

A lack of understanding apparently shared by the alleged economists unearthed by AP.

Is it any wonder why these states are economic and fiscal basket cases?

Sunday

16

January 2011

0

COMMENTS

Government Puts Halt to Rogue Couple Who Feeds Poor

Written by , Posted in Liberty & Limited Government, The Nanny State & A Regulated Society

Big government inevitably crowds out private charity, and because government, which spends the other people’s money, is less competent than private actors allocating their own resources, that means a worse social safety net than if government just got out of the way. This outrageous story is the latest example:

Bobby and Amanda Herring spent more than a year providing food to homeless people in downtown Houston every day. They fed them, left behind no trash and doled out warm meals peacefully without a single crime being committed, Bobby Herring said.

That ended two weeks ago when the city shut down their “Feed a Friend” effort for lack of a permit. And city officials say the couple most likely will not be able to obtain one.

Anyone serving food for public consumption, whether for the homeless or for sale, must have a permit, said Kathy Barton, a spokeswoman for the Health and Human Services Department. To get that permit, the food must be prepared in a certified kitchen with a certified food manager.

The regulations are all the more essential in the case of the homeless, Barton said, because “poor people are the most vulnerable to foodborne illness and also are the least likely to have access to health care.”

You want to know something else interesting about poor and homeless people? They’re the least likely to have access to food.

Thursday

23

December 2010

0

COMMENTS

Abolish the FCC

Written by , Posted in Liberty & Limited Government, The Nanny State & A Regulated Society

Fox reports on Republican efforts to FCC plans to snare the internet in the regulatory web of big government:

Under the Congressional Review Act, Congress can strike down a regulation by passing a joint resolution. If President Obama vetoes the resolution, Congress could overturn it by a two-thirds majority.

While blocking the FCC’s Internet rules appear to be a longshot, Republicans aren’t backing down.

Sens. John Ensign and Kay Bailey Hutchison plan to introduce a resolution of disapproval to stop the ruling from going into effect.

“This vote is an unprecedented power-grab by the unelected members of the Federal Communications Commission, spearheaded by Chairman Genachowski,” Hutchison said in a statement, referring to FCC Chairman Julius Genachowksi. “The FCC is attempting to push excessive government regulation of the Internet through without congressional authority and these actions threaten the very future of the technology.”

…Rep. Fred Upton, who will oversee the powerful House Energy and Commerce in the next Congress, has pledged to summon all members of the FCC to Capitol Hill to explain their move while working to block the plan “by any legislative means necessary.”

While withholding judgment on just how much backbone we’re likely to see from Republicans, it’s good that there’s at least the rhetoric of serious opposition to this move. And while I think the Congressional Review Act is an under-utilized tool for reigning in bureaucratic power grabs, more can be done here. The ultimate goal should simply be to abolish the FCC.

The FCC is an outmoded bureaucracy designed to regulate a state of technology that is no longer exists.  It’s simply not relevant to the modern world. Cable, satellite TV, and even internet radio have negated any need to regulate the “public airwaves.” What limited useful functionality they might still be able to serve, such as selling broadcast licenses, can be done by some other department, while the rest of the FCC’s docket (censorship and bureaucratic control) needs to go the way of the dodo.

It’s great that Republicans are opposing this ruling, but they might as well go big or go home. Abolish the FCC.

Tuesday

30

November 2010

0

COMMENTS

A Sign of the Times

Written by , Posted in Big Government, The Nanny State & A Regulated Society

Management of roads used to be the business of local governments – that is, until the federal government dangled its grant money over the states as leverage.  Now, thanks to this usurpation of authority, we have stories like this:

…[T]he Federal Highway Administration is ordering all local governments — from the tiniest towns to the largest cities — to go out and buy new street signs that federal bureaucrats say are easier to read.

The rules are part of a tangle of regulations included in the Manual of Uniform Traffic Control Devices.

The 800-plus page book tells local governments they:

– Should increase the size of the letters on street signs from the current 4 inches to 6 inches on all roads with speed limits over 25 miles per hour. The target date for this to be completed is January 2012.

– Install signs with new reflective letters more visible at night by January 2018.

– And whenever street name signs are changed for any reason, they can no longer be in ALL CAPS.

Why is the federal government ordering local governments, already strapped for cash, to waste millions on unnecessary sign changes? This might have something to do with it:

Whether or not requiring cities and towns to replace all their street signs improves safety, it would undoubtedly be a windfall for the multi-billion-dollar-a-year sign industry.

The American Traffic Safety Services Association — which represents companies that make signs and the reflective material used on them — lobbied hard for the new rules.  And at least one key study used to justify the changes was funded by the 3M Corporation, one of the few companies that make the reflective material now required on street signs.

Contrary to the claims of statists, it is big government and not the free markets which favors big business. Without a centralized authority capable of making such dictates, rent seeking sign makers would have had to successfully lobby every local government in the nation to achieve this same payout, a feat they would not have been able to accomplish.

Wednesday

24

November 2010

2

COMMENTS

Insider Trading Should Be Legal

Written by , Posted in Economics & the Economy, The Nanny State & A Regulated Society

Fox News reports on an aggressive insider trading crackdown:

…Monday’s raids targeted three hedge funds: Level Global Investors in New York, Diamondback Capital Management in Stamford, Conn., and an address that matched Loch Capital Management in Boston. Federal law enforcement agencies would not comment other than to confirm an investigation.

Investors can use the expert networks to glean details of what’s occurring within certain industries or particular companies. Someone interested in learning more about fast-food dining in China, for example, might connect with local store managers, suppliers or experts on dining in the region.

The expert networks connect the investor and the source, getting a fee from the investor and then paying the source, who could make $400 to $500 an hour, says Sanford Bragg, CEO of the consulting firm Integrity Research Associates, which connects investors with these research firms.

Hedge funds have been paying people to dig for hard-to-find numbers on companies for years.

Tammer Kamel, president of Iluka Consulting Group Ltd. in Toronto, recalls visiting a Hong Kong fund 10 years ago that wanted to better gauge future sales by a company with factories in China. Its solution: Pay Chinese farmers near a company warehouse to count trucks leaving the site.

For a possible investment in a casino, another fund paid people to stand outside the casino and count visitors walking in, Kamel says. Then the fund multiplied that number by average losses per visitor to get a better sense of the casino’s daily take.

“The managers were openly discussing technique,” Kamel said. “They clearly thought it was just smart data gathering.”

Of course it is smart data gathering! Moreover, it’s good for markets and the economy when someone does this research. How would it be better to allow businesses to prohibit people from determining if a business is cooking its books? It is madness to say that markets should have less information because some squish thinks it is “unfair.” Attempting to regulate the distribution of information is silliness in the extreme.

I’ll allow Don Bordreaux to explain better than I can the benefits of insider trading:

Time to stop telling horror stories. Federal agents are wasting their time slapping handcuffs on hedge fund traders like Raj Rajaratnam, the financier charged last week with trading on nonpublic information involving IBM, Google and other big companies. The reassuring truth: Insider trading is impossible to police and helpful to markets and investors. Parsing the difference between legal and illegal insider trading is futile—and a disservice to all investors. Far from being so injurious to the economy that its practice must be criminalized, insiders buying and selling stocks based on their knowledge play a critical role in keeping asset prices honest—in keeping prices from lying to the public about corporate realities.

Prohibitions on insider trading prevent the market from adjusting as quickly as possible to changes in the demand for, and supply of, corporate assets. The result is prices that lie.

And when prices lie, market participants are misled into behaving in ways that harm not only themselves but also the economy writ large.

…Suppose that unscrupulous management drives Acme Inc. to the verge of bankruptcy. Being unscrupulous, Acme’s managers succeed for a time in hiding its perilous financial condition from the public. During this lying time, Acme’s share price will be too high. Investors will buy Acme shares at prices that conceal the company’s imminent doom. Creditors will extend financing to Acme on terms that do not compensate those creditors for the true risks that they are unknowingly undertaking. Perhaps some of Acme’s employees will turn down good job offers at other firms in order to remain at what they are misled to believe is a financially solid Acme Inc.

Eventually, of course, those misled investors, creditors and workers will suffer financial losses. But the economy as a whole loses, too. Capital that would otherwise have been invested in firms more productive than Acme Inc. never gets to those firms. So compared with what would have happened had people not been misled by Acme’s deceitfully high share price, those better-run firms don’t enhance their efficiencies as much. They don’t expand their operations as much. They don’t create as many good jobs. Consumers don’t enjoy the increased outputs, improved product qualities and lower prices that would otherwise have resulted.

In short, overall economic efficiency is reduced.

It’s in the public interest, therefore, that prices adjust as quickly and as completely as possible to underlying economic realities—that prices adjust to convey to market participants as clearly as possible the true state of those realities.

Sunday

7

November 2010

1

COMMENTS

Taxpayer Money Used To Promote Food, Then Tell You Not To Eat It

Written by , Posted in Government Meddling, The Nanny State & A Regulated Society

From the NYT:

Domino’s Pizza was hurting early last year. Domestic sales had fallen, and a survey of big pizza chain customers left the company tied for the worst tasting pies.

Then help arrived from an organization called Dairy Management. It teamed up with Domino’s to develop a new line of pizzas with 40 percent more cheese, and proceeded to devise and pay for a $12 million marketing campaign.

Consumers devoured the cheesier pizza, and sales soared by double digits. “This partnership is clearly working,” Brandon Solano, the Domino’s vice president for brand innovation, said in a statement to The New York Times.

But as healthy as this pizza has been for Domino’s, one slice contains as much as two-thirds of a day’s maximum recommended amount of saturated fat, which has been linked to heart disease and is high in calories.

And Dairy Management, which has made cheese its cause, is not a private business consultant. It is a marketing creation of the United States Department of Agriculture — the same agency at the center of a federal anti-obesity drive that discourages over-consumption of some of the very foods Dairy Management is vigorously promoting.

…[I]n a series of confidential agreements approved by agriculture secretaries in both the Bush and Obama administrations, Dairy Management has worked with restaurants to expand their menus with cheese-laden products.

…Dairy Management, whose annual budget approaches $140 million, is largely financed by a government-mandated fee on the dairy industry. But it also receives several million dollars a year from the Agriculture Department, which appoints some of its board members, approves its marketing campaigns and major contracts and periodically reports to Congress on its work.

The organization’s activities, revealed through interviews and records, provide a stark example of inherent conflicts in the Agriculture Department’s historical roles as both marketer of agriculture products and America’s nutrition police.

I know how to solve this conflict. It’s quite easy, in fact: abolish the Department of Agriculture. Government should neither be promoting a specific consumer good, nor nannying people to stop eating food that it deems as crossing some arbitrary health threshold.

Tuesday

26

October 2010

0

COMMENTS

Thursday

7

October 2010

1

COMMENTS

EPA's Newest Overreach: Regulating Dust

Written by , Posted in Energy and the Environment, The Nanny State & A Regulated Society

The EPA, which easily contends for the dubious distinction of being the most flagrantly unconstitutional of our government’s many unconstitutional activities, has found yet another vehicle through which to expand its near dictatorial powers: dust.

What horrible substance is the EPA trying to protect us from now? Dust.

…Kelsey Huber, writing for “The Foundry,” a blog of The Heritage Foundation, explains that “when EPA regulations were first applied to particulates in 1971, they were created to target soot,” which consists of carbon particles resulting from the incomplete combustion of coal, oil, wood and other fuels, and soot actually is harmful, in sufficient quantities. “Dust,” on the other hand, is merely soil that has gone airborne.

Apparently, soot is no longer a problem, or perhaps the agency just realized that it wasn’t creating enough turmoil for the country. We can’t be sure. In any case, the EPA now wants to regulate dust.

…Mr. Huber continues: “From this regulation, several problems arise. First, while human activity can create dust, it is also … a natural occurrence. How can it be effectively regulated?” A fair question.

Be careful ballplayers. The next time you slide into second, you might just be visited by the environmental gestapo.

Ok, that’s not actually likely, but the costs for this nonsensical proposed power grab are real:

…[A]nytime some government body imposes new requirements on businesses, one result is an increase in the cost of doing business, and in this case the cost of domestic food products will rise accordingly. When a farmer works his fields producing the food we eat, that may stir up some dust. Is the EPA going to fine farmers for planting or harvesting food if in the process of doing so they kick up some dust?

Does that mean that farmers will have to water fields before working them? How much is that going to cost in additional water use and time? Some crops, like corn, cannot be harvested that way.

Tamara Thies, chief environmental counsel for the National Cattlemen’s Beef Association, said the regulations under consideration would prove twice as stringent as the current standard.

“It would be virtually impossible for many critical U.S. industries to comply with this standard, even with use of best management practices to control dust,” she said.

Tuesday

28

September 2010

0

COMMENTS

Free Labor For Me, But Not For Thee

Written by , Posted in Government Meddling, The Nanny State & A Regulated Society

Government bureaucrats think it is their business to prevent individuals from entering voluntary contracts with companies or organizations if the level of compensation does not meet some arbitrary threshold. Congress has used minimum wage laws to prevent certain arrangements, while the Department of Justice has a set of rules detailing when unpaid internships are considered legal.  Naturally, these rules do not apply to government.

At CEI’s Open Market, Brian McGraw points to these rules from the DoJ that won’t apply for the currently advertised unpaid internships at the White House:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Yes, number 4 really does say that it’s legal only for a corporation to use unpaid interns if they are counter-productive. No such restriction will apply for the White House, though, as “Unpaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible.”

It is obviously hypocritical for government to restrict the use of unpaid interns for others, while at the same time everyone knows that Washington thrives on the practice. But there is no good reason for these restrictions on anyone. Individuals that enter into unpaid internships do so because they will receive something in return, usually training and experience to add to their resumes, that they value more than their labor. They would not take the position if this were not true. Like most government actions designed to protect people from themselves, prohibiting individuals from entering into voluntary unpaid internships actually harms them by limiting their opportunities.