Background Checks Help Black Workers, and the Left Shouldn’t Curb Them | National Review

Background Checks Help Black Workers, and the Left Shouldn’t Curb Them | National Review

Data show that liberal policies have harmed African-American employment prospects.

The greatest moral claim of the political Left is that they are for the masses in general and the poor in particular. That is also their greatest fraud. It even fools many leftists themselves.

One of the most recent efforts of the Left is the spread of laws and policies that forbid employers from asking job applicants whether they have been arrested or imprisoned. This is said to be to help ex-cons get a job after they have served their time, and ex-cons are often either poor or black, or both.

First of all, many of the Left’s policies to help blacks are disproportionately aimed at helping those blacks who have done the wrong thing — and whose victims are disproportionately those blacks who have been trying to do the right thing. In the case of this ban on asking job applicants whether they have criminal backgrounds, the only criterion seems to be whether it sounds good or makes the Left feel good about themselves.

Hard evidence as to what actual consequences to expect beforehand, or hard evidence as to its actual consequences afterwards, seems to have had very little role in this political crusade.

An empirical study some years ago examined the hiring practices of companies that did background checks on all the employees they hired. It found that such companies hired more blacks than companies which did not follow that unusual practice.

Why? This goes back to decision-making by human beings in general, with many kinds of decisions in general. Since we seldom have all the facts, we are often forced to rely on generalizing when making our decisions.

Many employers, aware of higher rates of imprisonment among blacks, are less likely to hire blacks whose individual backgrounds are unknown to them. But those particular employers who investigate everyone’s background before hiring them do not have to rely on such generalizations.

The fact that these latter kinds of employers hired more blacks suggests that racial animosity is not the key factor, since blacks are still blacks, whether they have a criminal past or not. But the political Left is so heavily invested in blaming racism that mere facts are unlikely to change their minds.

Just as those on the left were not moved by hard evidence before they promoted laws and policies that forbad employers to ask about job applicants’ criminal records, so they have remained unmoved by more recent studies showing that the hiring of blacks has been reduced in the wake of such laws and policies.

Moreover, the Left is so invested in the idea that they are helping the disadvantaged that they seldom bother to check the actual consequences of what they are doing, whether that is something as specific as banning questions about criminal behavior or something as general as promoting the welfare state.

In the vision of the Left, the welfare state is supposed to be a step forward, in the direction of “social justice.” Tons of painful evidence, from both sides of the Atlantic Ocean, that the welfare state has in fact been a step backward toward barbarism — among low-income whites in England and ghetto blacks in the United States — does not make a dent in the beliefs of the Left.

The Left’s infatuation with minimum-wage laws has likewise been impervious to factual evidence that the spread and escalation of minimum wages have been followed by far higher rates of unemployment among young blacks, to levels some multiple of what they were before — and to a racial gap in unemployment among the young that is likewise some multiple of what it was before.

Those who doubt this need only turn to the data on page 42 of Race and Economics by Walter Williams, or to the diagram on page 98 of The Unheavenly City, written by Edward Banfield back in 1968. The facts have been available for a long time.

Surely the intelligentsia of the Left have access to empirical evidence and the wit to understand such evidence. But the real question is whether they have the stomach to face the prospect that their crusades have hurt the very people they claim to be helping.

Examining hard evidence would mean gambling a whole vision of the world — and of their own role in that world — on a single throw of the dice, which is what looking at hard evidence amounts to. The path of least resistance is to continue going through life feeling good about themselves, while leaving havoc in their wake.

Patterico's Pontifications » My Hopefully Final Response to Dan Gillmor on Net Neutrality: Why I Trust the Market Over Government, Every Time

Patterico's Pontifications » My Hopefully Final Response to Dan Gillmor on Net Neutrality: Why I Trust the Market Over Government, Every Time

The argument comes down to this: in a free market system, consumers’ ability to fight Big Business by choosing to spend money elsewhere isvastly superior than voters’ ability to fight Big Government by voting for someone else. Let’s look to public choice theory for some of the reasons, which (as you will see) are largely interrelated.

First, there is the issue of whether the actor is informed. Now, obviously consumers are not always as informed as they could be. However, when you compare an important purchase to an important election, a consumer’s incentive to research his purchasing options is much greater than a voter’s incentive to research politicians or political issues. Consumers mulling over a new computer or car or iPad are much more likely to spend time looking over resources containing detailed reviews and specifications about competing products, as compared to the time the typical voter spends researching a candidate. Part of the reason is that a purchase costs money. A vote costs nothing but the time it takes to cast.

Second, and related, is the issue of whether your action will have an effect. This can be expressed in terms of the existence and immediacy of incentives to make a good choice, and disincentives to make a bad choice. It is related to the first issue, because the lower your incentive to research, the less informed you are likely to be.

When you choose to spend your dollar on Product A vs. Product B, this has an immediate and undeniable effect on your well-being. You personally enjoy the benefits of your selected product, or feel the ill effects of its shortcomings. If your computer runs like a dream, or if your car is a lemon, these experiences provide immediate and concrete feedback to your dollar-spending decision. True, your one dollar or purchase will not make or break a company, but the incentive to reward good products and punish bad ones is clearly strong, and those strong incentives add up collectively.

For a voter, by contrast, your feedback is weak and sometimes nonexistent. If your preferred candidate (the one for whom your voted) loses, you will never feel the consequences of your choice, good or bad. If your preferred candidate wins, he has no obligation to live up to his promises. And in any event, even if he does, some of the promises he carries out may offend you, unless you happened to agree with him on every single issue.

This is not a situation that incentivizes being an informed voter.

Let’s compare apples to apples to show how stark the difference in incentives truly is. Imagine the following scenario:

You go to a store to buy a product for your company. Your company does not know you are the one making the purchase, so you will never be held accountable if the purchase turns out to be bad. Your purchase will cost you nothing, personally. Any effect the product’s quality has on your life will be so indirect that you will rarely think about it. The store policy is that you may not get the item you choose. If you do happen to get the item you choose, there is no guarantee it will work.

How much research are you going to do for that purchase, compared to the research you will do on a product you are buying for yourself?

Voters are also aware that, unless the election is tied and their vote breaks the tie — which never, ever, ever happens — their vote is utterly and completely meaningless. So voters rationally conclude it’s pointless to vote — and if they do, they rationally conclude that it is pointless to become informed.

All this leads to a pretty dismal reality. No company can consistently provide bad products and survive for long. But politicians can offer the same bad service, year in and year out, and people will routinely show up and vote for the least bad option. There is no real choice and your act has no effect.

So the free market wins out as regards your ability to effect change and your ability to be informed. But meanwhile, what about the supposed benefits of the First Amendment? Gillmor tells us that companies are not bound by the First Amendment (which is true) while the government is.

Me, I don’t trust the courts to protect my rights to free speech. Call me cynical, but that’s where I am. We live in a country where free speech rights have been violated by government since the very founding of the nation, with regularity and impunity. Yes, the First Amendment has protected us at times. Other times, it has not — just ask Eugene Debs.

I’ll take the market, thanks very much.

Legislative and Oversight Accomplishments of the House Committee on Oversight and Government Reform | Committee on Oversight & Government Reform

Legislative and Oversight Accomplishments of the House Committee on Oversight and Government Reform | Committee on Oversight & Government Reform

For instance, in the IRS targeting scandal, the Committee reviewed millions of pages of documents from the IRS, Treasury Department, and other agencies and conducted 52 transcribed interviews that amounted to 309 hours of testimony (p. 69). The Committee’s investigation found that 80 percent of the delayed requests for tax-exempt status were for conservative non-profit groups, and that not a single “Tea Party” group was approved by the IRS between February 2010 and May 2013.

Full report compressed (document p 69)

Since IRS’s first admission of wrongdoing, the Committee has conducted an exhaustive investigation of the IRS’s targeting. The Committee reviewed over a million pages of documents from the IRS, the Treasury Department, the Justice Department, the Federal Election Commission, the IRS Oversight Board, the Treasury Inspector General for Tax Administration, and other custodians. The Committee conducted 52 transcribed interviews, totaling 309 hours of testimony. Despite noncooperation from the Administration and the destruction of a sizeable number of emails from Lois Lerner, the investigation presented clear findings. A review of public information showed that while more than 80 percent of delayed applications were associated with conservative groups, less than seven percent were associated with progressive or liberal agendas.316 Between February 2010 and May 2013, not a single group identifying itself as “Tea Party” was approved by the IRS.³¹⁷

POLITICAL PRESSURE ON THE IRS TO “FIX THE PROBLEM” During his State of the Union Address in January 2010, President Obama delivered a stunning rebuke of the Supreme Court’s Citizens United decision. “With all due deference to separation of powers,” the President intoned, “last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests – including foreign corporations – to spend without limit in our elections.”330

Over the next ten months, in the lead-up to the 2010 midterm election, the President, members of his Administration, and allies in Congress carried out an orchestrated effort to discourage political speech by conservative nonprofit groups in an effort to fix the Citizens United decision. On the campaign trail, the President called conservative groups “shadowy” entities with “innocuous” and “benign-sounding” names that in reality “are running millions of dollars of attack ads against Democratic candidates.”331 Calling them “phony” and “front groups,” the President urged a “fix” to the Citizens United decision, which he believed allowed these allegedly nefarious groups to “pose” as nonprofits.332 The President’s allies in Congress and elsewhere echoed this call, working aggressively to delegitimize the Court’s decision and the Constitutional protections for nonprofit political speech.333 Senator Jeff Merkley urged action “so that no longer do you have a shadowy front group,”334 and Senator Charles Schumer similarly complained that “the public is under siege by advertising from shadowy special interest groups.”335

This rhetorical assault on the legitimacy of tax-exempt groups engaged in political speech was felt by the IRS’s Exempt Organizations Division. As the President’s public statements generated media attention, the IRS identified a Tea Party group applying for tax-exempt status as a “potentially politically embarrassing case.”336 Due to media attention, the IRS’s Washington office ordered the application to be elevated to Washington.337 The attention on media continued through the fall. In response to a tax-law journal article in September 2010,338 Lerner initiated a “c4 project” to assess the political activity of certain nonprofits in wake of Citizens United.339 She told her subordinates: “We need to have a plan. We need to be cautious so it isn’t a per se political project. More a c4 project that will look at levels of lobbying and pol. activity along with exempt activity.”340

5 Things Every Young American Should Know About Politics - John Hawkins - Page full

5 Things Every Young American Should Know About Politics - John Hawkins - Page full

1) There is no free lunch: There is no such thing as “free” birth control, “free” community college, “free” health care or “free” anything else. Someone ALWAYS has to pay and if you’re not sure who that “someone” is, the person paying may be YOU. Even if you’re sure it’s not you this time, it may be you the next time, which is why people who work hard, play by the rules and take care of themselves run from “free” offers like a deer who catches sight of Ted Nugent off in the distance.

2) Politicians are interested in getting elected, not making your life better: There are well-meaning politicians who put the country first, but they’re about as common as professional athletes who eat dinner at McDonald’s every day. Politicians generally aren’t brave, they aren’t virtuous, they can be bought off, they often won’t do the right thing unless they’re being watched and they are not looking out for people like you. You wouldn’t leave your dog with people who think like that, but we’re trusting the fate of our nation to them.

3) Rarely does government ever "fix" problems: There’s always some politician promising to “solve” a problem, but as the great Thomas Sowell says, “There are no solutions; there are only trade-offs." As a practical matter, what that means is that when politicians move to “solve” a problem, they often create new problems that are just as bad as the ones they were trying to solve. Then they move to “solve” those problems and create more problems. After you rinse and repeat enough, you end up with the government micromanaging which bathrooms people use to make sure they’re “gender inclusive” enough.

4) People respond to incentives: Ever heard someone say, “Be careful what you wish for?” Well, you REALLY better be careful what you incentivize. In a nation of 316 million, there are people, sometimes millions of them, who will do just about every sort of crazy, self-destructive thing you can imagine if they get rewarded for doing it somehow. Changes in government policy can kill industries, change the culture for the worse and lead millions of formerly independent people to become slothful and dependent. Ah, but you’re probably thinking, “If incentives can create all of those bad outcomes, then think of all the GOOD we can do with them!” Well, that might be true except that…

5) Government isn’t a good; it’s a necessary evil: Government is inherently slow, stupid, inefficient, wasteful and dangerous. Moreover, it is, was, and will always be that way, no matter who’s in charge because that is the nature of the beast. Now combine that with power-hungry politicians and dead-eyed bureaucrats who feel entitled to force you to do things at gunpoint and you should be very wary of anyone telling you about all the wonderful things government can do. Whether the government is offering Americans something “free” or pointing a gun at our heads, we’re all better off with as little of it as possible in our lives.

Net Neutrality or Government Brutality? : The Freeman : Foundation for Economic Education

Net Neutrality or Government Brutality? : The Freeman : Foundation for Economic Education

Over the past six years or so, network neutrality, or “net neutrality,” has risen from an obscure techie buzz phrase to a bona fide political issue and rallying cry for some strange political bedfellows. The current debate comprises competing views on economics, regulation, free speech, property rights, and even the supposed rights of individuals and businesses to a certain Internet experience. Would a net-neutrality mandate protect the rights of some or merely trample the fundamental rights of others and stifle competition and innovation?
Much of the perplexity surrounding net neutrality stems from ambiguity and confusion over the very definition of the term. The concept concerns how information is transmitted over the Internet. Data are moved in “packets” through networks of computers and routers. Currently, these data are processed with little regard to what kind of information they are—be they important medical data, streaming video, or spam.
Generally speaking, net neutrality is the notion that all content, applications, and services should be treated the same by Internet service providers (ISPs). Net-neutrality proponents fear that network operators might someday discriminate against certain types of information by charging fees to particular content providers in exchange for guarantees of higher-quality service or by blocking some content completely.
Such a proposal may sound innocuous enough, but the problem is that the proliferation of things like streaming video and online gaming are taking up increasingly large amounts of bandwidth and are sensitive to delay. This Internet congestion can lead to the degradation of service for all Internet users. Slight delays may hardly be noticeable in e-mail or web-browser applications, but can be more serious for video-content providers or Voice over Internet Protocol (VoIP), which allows people to make phone calls over the Internet.
Then there is the question whether the government has any right to tell ISPs how to manage their own networks and pricing structures, which will be discussed in some detail below.
Adding to the confusion is the fact that net-neutrality advocates disagree over just how much control network operators should be allowed to maintain. Some believe that neutrality means data packets must be handled on a first-come-first-served basis without exception, while others would permit the existence of differing quality-of-service levels as long as there are no special fees (no price discrimination) for higher service levels. Still others would allow prioritization of data and differing quality levels (along with tiered pricing), provided that there were no exclusivity in service contracts. Or, in the words of Sir Tim Berners-Lee, developer of the World Wide Web, “We pay for connection to the Net as though it were a cloud which magically delivers our packets. We may pay for a higher or a lower quality of service. We may pay for a service which has the characteristics of being good for video, or quality audio. But we each pay to connect to the Net, but no one can pay for exclusive access to me.”
Since the most restrictive definition is the one that is typically embodied in legislation and that raises the most serious issues, it is the one on which this article will focus.
The Birth of “Net Neutrality”
The idea of network neutrality originated during the late 1990s as some feared potential threats to the “end-to-end” nature of the Internet, although some trace the concept back to the age of the telegram, when Congress passed the Pacific Telegraph Act of 1860. The act subsidized a transcontinental telegraph line and stated that “messages received from any individual, company, or corporation, or from any telegraph lines connecting with this line at either of its termini, shall be impartially transmitted in the order of their reception, excepting that the dispatches of the government shall have priority.” The term “network neutrality” was coined by Columbia Law School professor Tim Wu in his 2002 paper, “Network Neutrality, Broadband Discrimination,” in which he promotes a “network anti-discrimination regime.”
There have been several efforts to pass net-neutrality laws at the federal and state levels, but they have thus far been rebuffed. That may change, however, particularly if Senator Barack Obama wins the presidential election in November. He has expressed support for net neutrality, dating back to a 2006 bill (S 2817). The prospect of imposing government regulation on what is essentially a free market might lead one to believe that Democrats are more likely to support net-neutrality mandates than Republicans (notwithstanding the fact that the GOP frequently acts in contradiction to its pro-market rhetoric), and, indeed, there is some truth to this.
Generally speaking, most members of the political left have tended to favor net-neutrality legislation and most on the right have tended to oppose it, but there are notable exceptions. Organizations like MoveOn.org, the American Civil Liberties Union, and a number of liberal bloggers have come out in favor of such legislation, for example, but former Clinton White House press secretary Mike McCurry is co-chairman of the Hands Off the Internet Coalition, which opposes it. On the other hand, most Republicans oppose net neutrality, but conservative groups such as the Christian Coalition and Gun Owners of America support it.
Even the most important innovators of the Internet are divided on the issue. Vinton Cerf, a co-inventor of the Internet Protocol (IP) and vice president and “Chief Internet Evangelist” for Google, is for it. Bob Kahn, inventor of the Transmission Control Protocol (TCP), which provides reliable delivery of a stream of bytes over the Internet, and David Farber, a computer science and public-policy professor at Carnegie Mellon University who is known as the “grandfather of the Internet,” are against it.
And then there are the corporate interests. Large web-content providers such as Google, Yahoo!, eBay, and YouTube support net-neutrality mandates because they fear the prospect of having to pay higher prices to ensure the quality of their content, while cable and telecommunications companies such as AT&T, Verizon, Comcast, and Cox Cable oppose it because they feel they should have the freedom to operate their own networks and set their own prices without interference from the government.
In 2004 then-Federal Communications Commission (FCC) Chairman Michael Powell outlined a set of nondiscrimination principles. Powell argued that the broadband industry should offer consumers freedom to access content, run applications, attach devices, and obtain service-plan information.
When AT&T and BellSouth merged in 2006, the FCC attached a net-neutrality provision as condition of its approval. Under the measure the company agreed “not to provide or to sell to Internet content, application, or service providers, including those affiliated with AT&T/BellSouth, any service that privileges, degrades or prioritizes any packet transmitted over AT&T/BellSouth’s wireline broadband Internet access service based on its source, ownership or destination.” AT&T agreed to the concession in order to break a 2–2 deadlock among the commissioners that had held up the merger for several months. The provision was narrowly tailored to AT&T, however, and included a 30-month expiration date. Moreover, current FCC chairman Kevin Martin and fellow Republican commissioner Deborah Taylor Tate warned that the measure “does not mean that the commission has adopted an additional Net neutrality principle. We continue to believe such a requirement is not necessary and may impede infrastructure deployment,” they wrote in a statement. Martin and Tate added, “Thus, although AT&T may make a voluntary business decision, it cannot dictate or bind government policy.”
Proposed Legislative “Solutions”
S 2817 was just one of many attempts to codify net-neutrality regulations in recent years. An attempt to attach a neutrality provision to the purportedly landmark 2006 telecommunications bill (S 2686) failed on an 11–11 committee vote, and S 2686 ended up failing in the Senate anyway. The Communications Opportunity, Promotion and Enhancement (COPE) Act of 2006 (HR 5252) contained neutrality provisions, which were stripped out before the bill ultimately died, as did the Internet Non-Discrimination Act of 2006 (S 2360) and the Internet Freedom and Nondiscrimination Act of 2006 (HR 5417). The Network Neutrality Act of 2006 (HR 5273) was defeated in committee. The Internet Freedom Preservation Act of 2008 (HR 5353), which would enforce the principles of the FCC’s AT&T–BellSouth merger deal on all broadband providers, is now pending, as are some older bills that have been reintroduced.
As with the neutrality debate in general, there are divisions over policy within the federal government. While Congress and perhaps the FCC seem to be moving toward increased government regulation, the Federal Trade Commission (FTC) has opposed new regulation. As far back as 2002 the FTC noted the rapidly evolving nature of the high-speed Internet service market and argued that “broadband services should exist in a minimal regulatory environment that promotes investment and innovation in a competitive market.” More recently, a 2007 FTC report reiterated its position and asserted that since no “significant market failure or demonstrated consumer harm from conduct by broadband providers” could be found, net-neutrality regulations “may well have adverse effects on consumer welfare, despite the good intentions of their proponents.”
The FTC’s conclusion is critical because one of the main justifications of net-neutrality laws is to prevent harm to consumers. That no harm has been found has led neutrality critics to dub the notion a “solution in search of a problem.”
To date, only a couple of cases of what could be called net-neutrality incidents have occurred. Madison River Communications blocked a web-based application when it prevented customers from using Vonage’s VoIP service. The FCC stepped in and ordered Madison River to stop the blocking and make a $15,000 payment to the federal government. In another case, America Online was accused of blocking e-mail to the website dearAOL.com, which was established to protest an AOL plan to charge users a higher price for a feature to block e-mail from unauthorized senders. AOL maintained that the blocking was unintentional and assured that access was restored after customers complained. No government involvement was necessary. Finally, there was an allegation that Comcast was blocking Internet traffic to certain peer-to-peer (file-sharing) websites that were consuming large amounts of bandwidth, but it was later revealed that Comcast was merely slowing down certain peer-to-peer uploads by reducing the number of simultaneous connections that users could have to the site.
Net-neutrality proponents contend that they want to use regulation to increase competition and innovation, but their remedies would have the opposite effect. The growth in demand for bandwidth-intensive applications, such as streaming video, multi-player online gaming, and telemedicine, will require vast capital investments. Broadband providers will not invest in such projects, however, if there is not a good chance they will be able to recoup their costs and turn a profit. This is not unlike how cable companies currently rely on richer customers paying for premium services so that they can invest in less-profitable ventures, such as providing infrastructure for services to rural areas. As Randolf J. May, president of the Free State Foundation, explained in testimony before the New York City Committee on Technology in Government on a proposed net-neutrality resolution,
If broadband providers are not allowed to differentiate their services because of regulatory straightjackets, their ability to compete in the marketplace will be compromised. Lacking the flexibility to find innovative new ways to respond to customer demand, they will lack incentives to invest in new network facilities and improve applications. This lack of new investment, in turn, will have the perverse effect of dampening competition among existing and potential broadband operators.
Net-neutrality advocates also tend to underestimate the amount of competition that already exists in the market for high-speed Internet services. There are multiple companies providing these services using multiple technologies, including wireline, cable, terrestrial wireless, and satellite. Wireless broadband services, in particular, have come to provide a strong source of competition. Recent FCC data show that wireless has gone from having no subscribers in the beginning of 2005 to 35 million subscribers and a 35 percent share of the market for high-speed lines by June 2007. Moreover, as of June 2006 there were two or more broadband providers in 92 percent of the nation’s zip codes, and four or more providers in 87 percent of the nation’s zip codes. With all of this competition, it simply would not be in the companies’ interests to degrade services to consumers because doing so would cause them to lose business to their more innovative rivals.
The costs of stifling competition and innovation through net-neutrality regulations would be significant. A May 2007 American Consumer Institute study estimated that regulation would cost consumers $69 billion over ten years. According to study author Stephen Pociask, “Despite proponents’ best intentions, net neutrality proposals would be a twofold problem for consumers. Innovations that require a guaranteed level of service won’t come to market, and consumers would have to pay more for the services they receive.”
The Usefulness of Price Discrimination
Price discrimination is another concern of neutrality advocates. Despite the negative connotation associated with the word “discrimination,” price discrimination is a common and efficient way of allocating scarce resources and satisfying consumer demand. Children and seniors get discounted ticket prices at movie theaters; people pay different prices for different seats at concerts and sporting events; and some toll roads charge different prices depending on the time of day and the resulting levels of traffic congestion. In response to an FCC Notice of Inquiry regarding broadband practices, the Department of Justice’s Antitrust Division (of all things!) heralded the value of price discrimination in a September 2007 statement, noting the example of the U.S. Postal Service: “The U.S. Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery. These differentiated services respond to market demand and expand consumer choice.” The Department concluded, “Whether or not the same type of differentiated products and services will develop on the Internet should be determined by market forces, not regulatory intervention.”
In other words, the government should simply get out of the way and allow the market to work. Government should not try to pick winners and losers.
When neutrality proponents say that people have a right to “neutral” provision of information over the Internet, they are really saying that the public has some sort of right over the private property of the companies that provide the access to that information. Some have tried to justify this argument by claiming that the Internet was designed to be neutral, but it is the freedom from government restrictions that has encouraged innovation and allowed the Internet to flourish. Or as my Reason Foundation colleague Steven Titch has put it,
The legislated mandate for neutrality . . . is based on the supposition that neutrality was a founding doctrine of the Internet. That couldn’t be more wrong. The Internet and its commercial component, the World Wide Web, are what they are today due to the simple principle of free exchange through voluntary agreement. Engineering concepts such as “network neutrality” or meaningless slogans like “information should be free” had nothing to do with it.
Broadband providers have invested large sums of money in their networks and should be free to manage them as they see fit. Customers who feel their needs are not being met are free to switch to other providers. This freedom of contract and voluntary exchange are the cornerstones of a free-market economy. Supporters of net neutrality fear that without regulation, a relatively small number of companies will become the “gatekeepers” of the Internet, but the alternative is far worse: a monopolistic government gatekeeper whose incentives are to cater to political power, not consumer desires.
In addition to violating free-market ideals, net neutrality might also violate constitutional rights, specifically, the Takings Clause of the Fifth Amendment. As the Free State Foundation’s May explains,
[T]he de facto imposition of common carrier regulation through net neutrality mandates raises serious Fifth Amendment property rights issues under the Takings Clause. This is because the mandate to carry traffic that ISPs might otherwise choose not to carry, or to carry traffic at faster speeds than the service providers otherwise might prefer, or to refrain from charging more to those who impose greater capacity demands, is not costless. . . . Government mandates that impose such costs, but which, at the same time, restrict ISPs’ freedom to recover such costs, implicate the ISP’s property rights.
Net neutrality also brings up First Amendment concerns on both sides of the debate. Some grassroots groups, such as the Christian Coalition and Gun Owners of America, fear that broadband providers might someday decide to block access to their web content for ideological reasons. This, they argue, would constitute a violation of their free-speech rights.
This analysis is erroneous for a couple of reasons. First, the Constitution prohibits the government from restricting one’s speech, not other private parties. As Brian Costin of the Heartland Institute writes, “[F]ree speech rights for an individual or group end where another’s property rights begin.” Second, a government regulation such as net neutrality that forced a private party to provide access to forms of speech with which it disagrees would violate the free-speech rights of the broadband provider. As noted previously, ISPs have an economic incentive not to block access to content, but they would be within their rights to do so if they saw fit.
The Right Tool for the Job
While network-neutrality advocates claim to want to ensure fairness and competition, the government regulation they propose will result in anything but those things. In the free market, competition ensures that customers receive the services they demand. Government control, by contrast, ensures that they receive whatever services the politicians and bureaucrats in power at the time deem appropriate (not to mention the inevitable and endless litigation about who could offer what services when and for how much).
The concept of the “tiered” Internet is not something to be feared. On the contrary, it could be a means of enhancing services to broadband customers, providing revenue for ISPs to invest in accommodating increasing demand for bandwidth-intensive and delay-sensitive applications and making further improvements to data delivery, and of increasing fairness by ensuring that content providers responsible for the most Internet congestion pay the higher costs of assuring a high quality of service for Internet users. Choking off this potential revenue stream through net-neutrality mandates will only ensure that instead of an Internet with regular lanes and “fast lanes,” all consumers will be stuck in the slow lane.

When Government Spreads Disease: The 1906 Meat Inspection Act : The Freeman : Foundation for Economic Education

When Government Spreads Disease: The 1906 Meat Inspection Act : The Freeman : Foundation for Economic Education

You know the old myth about the meat-packing industry. In 1906, Upton Sinclair came out with his bookThe Jungle, and it shocked the nation by documenting the horror of the meat-packing industry. People were being boiled in vats and sent to larders. Rat waste was mixed with meat. And so on.
As a result, the Federal Meat Inspection Act passed Congress, and consumers were saved from ghastly diseases. The lesson is that government is essential to stop private enterprise from poisoning us with its food.
To some extent, this mythology accounts for the wide support for government’s involvement in stopping Ebola today. Not only that, but the story is also the basis for the US Department of Agriculture’s food inspection efforts, the Food and Drug Administration’s regulation of medical drugs, the central plan that governs food production, the Centers for Disease Control and Prevention, and the legions of bureaucrats who inspect and badger enterprise every step of the way. It is the founding template for why government is involved in our food and health at all.
It’s all premised on the implausible idea that people who make and sell us food have no concern as to whether it makes us sick. It only takes a quick second, though, to realize that this idea just isn’t true. So long as there is a functioning, consumer-driven marketplace, customer focus, which presumably includes not killing you, is the best regulator. Producer reputation has been a huge feature of profitability, too. And hygiene was a huge feature of reputation — long before Yelp.
Lawrence Reed deals ably with other myths of the meat-packing industry. Sinclair’s book was not intended as a factual account. It was a fantasy rendered as a socialist screed. It did drum up support for regulation, but the real reason for the act’s passage was that the large Chicago meat packers realized that regulation would hurt their smaller competitors more than themselves. Meat inspections imposed costs that cartelized the industry. That’s why the largest players were the law’s biggest promoters. Such laws almost have more to do with benefiting elites than protecting the public.
Still, there is more to this little-known history that speaks to the entire basis for government management of health. The legislation required federal inspectors to be on site at all hours in every meat-packing plant. At the time, regulators came up with a shabby method for detecting bad meat, namely poking a rod into the meat and smelling the rod. If it came out smelling clean, they would poke the same rod into the next piece of meat and smell it again. They would do this throughout the entire plant.
But as Baylen J. Linnekin points out in “The Food-Safety Fallacy: More Regulation Doesn’t Necessarily Make Food Safer” (Northeastern University Law Journal, vol. 4, no. 1), this method was fundamentally flawed. You can’t necessarily detect pathogens in meat by smell. It takes a long time for bacteria to begin to stink. In the meantime, bacteria can spread disease through touch. The rod could pick up bacteria and transmit it from one piece of meat to another, and there was no way for inspectors to know about it. This method of testing meat most certainly spread any pathogens from bad meat to good meat, assuring that an entire plant became a house of pathogens rather than having them restricted to just one carcass.

#29 – "Upton Sinclair's ‘The Jungle' Proved Regulation Was Required" : The Freeman : Foundation for Economic Education

#29 – "Upton Sinclair's ‘The Jungle' Proved Regulation Was Required" : The Freeman : Foundation for Economic Education

A little over a century ago, a great and enduring myth was born. Muckraking novelist Upton Sinclair wrote a novel entitled The Jungle—a tale of greed and abuse that still reverberates as a case against a free economy. Sinclair’s “jungle” was unregulated enterprise; his example was the meat-packing industry; his purpose was government regulation. The culmination of his work was the passage in 1906 of the Meat Inspection Act, enshrined in history, or at least in history books, as a sacred cow (excuse the pun) of the interventionist state.

A century later, American schoolchildren are still being taught a simplistic and romanticized version of this history. For many young people, The Jungle is required reading in high-school classes, where they are led to believe that unscrupulous capitalists were routinely tainting our meat, and that moral crusader Upton Sinclair rallied the public and forced government to shift from pusillanimous bystander to heroic do-gooder, valiantly disciplining the marketplace to protect its millions of victims. 

But this is a triumph of myth over reality, of ulterior motives over good intentions. Reading The Jungle and assuming it’s a credible news source is like watching The Blair Witch Project because you think it’s a documentary. 

....

Most Americans would be surprised to know that government meat inspection did not begin in 1906. The inspectors Holbrook cites as being mentioned in Sinclair’s book were among hundreds employed by federal, state, and local governments for more than a decade. Indeed, Congressman E. D. Crumpacker of Indiana noted in testimony before the House Agriculture Committee in June 1906 that not even one of those officials “ever registered any complaint or [gave] any public information with respect to the manner of the slaughtering or preparation of meat or food products.” 

To Crumpacker and other contemporary skeptics, “Either the Government officials in Chicago [were] woefully derelict in their duty, or the situation over there [had been] outrageously overstated to the country.” If the packing plants were as bad as alleged in The Jungle, surely the government inspectors who never said so must be judged as guilty of neglect as the packers were of abuse.

Some 2 million visitors came to tour the stockyards and packinghouses of Chicago every year. Thousands of people worked in both. Why did it take a novel, written by an anticapitalist ideologue who spent but a few weeks in the city, to unveil the real conditions to the American public? 

All the big Chicago packers combined accounted for less than 50% of the meat products produced in the United States, but few if any charges were ever made against the sanitary conditions of the packinghouses of other cities. If the Chicago packers were guilty of anything like the terribly unsanitary conditions suggested by Sinclair, wouldn’t they be foolishly exposing themselves to devastating losses of market share?

In this connection, historians with an ideological axe to grind against the market usually ignore an authoritative 1906 report of the Department of Agriculture’s Bureau of Animal Husbandry. Its investigators provided a point-by-point refutation of the worst of Sinclair’s allegations, some of which they labeled as “willful and deliberate misrepresentations of fact,” “atrocious exaggeration,” and “not at all characteristic.” 

Instead, some of these same historians dwell on the Neill-Reynolds Report of the same year because it at least tentatively supported Sinclair. It turns out that neither Neill nor Reynolds had any experience in the meat-packing business and spent a grand total of two and a half weeks in the spring of 1906 investigating and preparing what turned out to be a carelessly written report with predetermined conclusions. Gabriel Kolko, a socialist but nonetheless a historian with a respect for facts, dismisses Sinclair as a propagandist and assails Neill and Reynolds as “two inexperienced Washington bureaucrats who freely admitted they knew nothing” of the meat-packing process. Their own subsequent testimony revealed that they had gone to Chicago with the intention of finding fault with industry practices so as to get a new inspection law passed. 

According to the popular myth, there were no government inspectors before Congress acted in response toThe Jungle, and the greedy meat packers fought federal inspection all the way. The truth is that not only did government inspection exist, but meat packers themselves supported it and were in the forefront of the effort to extend it so as to ensnare their smaller, unregulated competitors.

When the sensational accusations of The Jungle became worldwide news, foreign purchases of American meat were cut in half and the meat packers looked for new regulations to give their markets a calming sense of security. The only congressional hearings on what ultimately became the Meat Inspection Act of 1906 were held by Congressman James Wadsworth’s Agriculture Committee between June 6 and 11. A careful reading of the deliberations of the Wadsworth committee and the subsequent floor debate leads inexorably to one conclusion: knowing that a new law would allay public fears fanned by The Jungle, bring smaller rivals under controls, and put a newly laundered government seal of approval on their products, the major meat packers strongly endorsed the proposed act and only quibbled over who should pay for it.

In the end, Americans got a new federal meat inspection law, the big packers got the taxpayers to pick up the entire $3 million price tag for its implementation, as well as new regulations on the competition, and another myth entered the annals of anti-market dogma.

To his credit, Sinclair actually opposed the law because he saw it for what it really was—a boon for the big meat packers. He had been a fool and a sucker who ended up being used by the very industry he hated. But then, there may not have been an industry that he didn’t hate.

Does Regulation = Unemployment?

Does Regulation = Unemployment?

Contrary to what public administration profs tell you, everybody pays the cost of regulation and the unemployed may pay most heavily in lost jobs in exchange for rather murky benefits.

The National Association of Manufacturers (NAM) released a report, “The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business,” slamming the Obama administration for burdensome regulations imposed by the Environment Protection Agency (EPA) and other federal regulatory agencies.

In his foreword, NAM President and CEO Jay Timmons said that the average American company pays $9,991 per employee to comply with federal rules and regulations and the average manufacturer pays almost double that amount – “$19,564 per employee per year.” He noted how small manufacturers, or companies with less than 50 employees, have regulatory costs of $34,671, or more than three times the cost of an average U.S. company.

Timmons added, “The United States needs government policies more attuned to the realities of global competition” because it is the “backbone of our nation’s economy and employs more than 12 million men and women who make things in America.” Thus, the regulatory costs per employee can translate into actual unemployment as factories struggle to make payroll despite the regulatory expense.

The Most Unconscionable Drug Price Hike I Have Yet Seen. In the Pipeline:

The Most Unconscionable Drug Price Hike I Have Yet Seen. In the Pipeline:

As has been pointed out, a price hike like this would be very hard to maintain without a government-protected monopoly.

There's a drug called Thiola (tiopronin) that most people have never heard of....Retrophin bought the marketing rights earlier this year (a move complicated by the company's CEO, investor Martin Shkreli, who may have let the news of the deal leak on his Twitter account).
That link mentions part of Shkreli's business plan as "acquiring the rights to obsolete remedies Shkreli says can be put to new and lucrative purposes", and by gosh, that's certainly accurate. Retrophin is increasing the price of Thiola from $1.50 per pill to over $30 per pill. Because they can - they stated when they bought the drug that their first move would be to raise the price. New dosages are formulations are also mentioned, but the first thing is to jack the price up as high as it can be jacked. Note that patients take several pills per day. Shkreli is probably chortling at those Mission Pharmacal hicks who didn't realize what a gold mine they were sitting on.
Now, there have been somewhat similar cases in recent years. Colchicine's price went straight up, and (infamously) so did the progesterone formulation marketed as Makena. But in both those cases, the small companies involved took the compound back through the FDA, under an agency-approved program to get marketing exclusivity. I've argued here (see those last two links) that this idea has backfired several times, and that the benefit from the clinical re-evaluation and re-approval of these drugs has not been worth their vastly increased cost. I think that drug companies should be able to set the price of their drugs, because they have a lot of failures to make up for, but this FDA loophole gives people a chance to do minimal development at minimal risk and be handed a license to print money in return.
But this isn't even one of those cases. It's worse. Retrophin hasn't done any new trials, and they haven't had to. They've just bought someone else's old drug that they believed could be sold for twenty times its price, and have put that plan right into action. No development costs, no risks whatsoever - just slap a new sticker on it and put your hands over your ears. This is exactly the sort of thing that makes people go into fist-clenching rages about the drug industry, and with damn good reason. This one enrages me, and I do drug research for a living.
So thank you, Martin Shkreli. You've accelerated the progress of the giant hammer that's coming down on on all of us over drug pricing, and helped drag the reputation of the pharmaceutical industry even further into the swamp. But what the hell do you care, right? You're going to be raking in the cash. The only thing I can say about Shkreli and Retrophin is that they make the rest of the industry look good in comparison. Some comparison.

Antibiotic surprise | Somewhat Reasonable

Link: http://blog.heartland.org/2014/01/antibiotic-surprise/

The thing about antibiotic resistance is that it takes resources for a bacterium to maintain it.  If you change antibiotics and attack from a different direction, not only does the bacterium have to re-tool, it's already weakened from spending the resources to build the first adaptation. Given enough time, it would lose the genes for the first adaptation to save resources, and then suddenly, the original antibiotic works again.

The trick is to have enough alternatives in stock to force bacteria to give up at least one of their adaptations.

Almost everyone these days uncritically accepts that the solution to antibiotic-resistant disease is to use fewer antibiotics. What about using more antibiotics? More varieties that is.
When doctors found penicillin was losing its efficacy as our first line of defense against bacterial infections, the medical community didn’t throw up its hands and use less. New antibiotics were developed! And thankfully so.
No… not stronger antibiotics. New varieties were developed that kept us ahead of the bacteria that ail us, humans and animals alike, to the point where doctors and veterinarians now have well in excess of 100 antibiotics to rely upon in fighting infection.
But now, thanks to overregulation resulting from tax-funded lobbying by anti-antibiotic, naturopathic, homeopathic, sustainability and organic activists, pharmaceutical companies have largely abandoned the development of new antibiotics. It simply does not pay to bring new antibiotic strains to market in the current regulatory environment. Pharmaceutical companies find it much simpler and more profitable to focus instead on treating phony ailments like attention-deficit disorder, obesity and erectile dysfunction.

The Sacred Cow Slaughterhouse � WE NEED TO REGULATE CARS THE WAY WE REGULATE GUNS

Link: http://www.michaelzwilliamson.com/blog/item/we-need-to-regulate-cars-the-way-we-regulate-guns

Eugene Volokh wrote a post describing what it would look like if we actually regulated guns the way we regulate cars. 

Here's the flip side.

To buy or operate a standard car, one will have to be 18 years old.  Under that age, adult supervision will be mandatory.  This means the adult must be in the vehicle with the underage driver.
To buy a sports car, you will have to be 21.  A "Sports car" will be defined as any combination of any two of the following: 2 doors instead of 4, spoked rims not requiring hubcaps, aerodynamic effects such as spoilers or air dams, a wheelbase under 100 inches, a manual transmission, a curb weight under 3000 lbs, fiberglass or other non-metal construction, or painted logos.
For every purchase, you will have to fill out a questionnaire confirming you're a US citizen, do not use drugs or abuse alcohol, have never had a conviction for alcohol related incidents or reckless driving.  Lying on this form will be punishable by 10 years in prison and/or a $10,000 fine.
New cars will only be purchased from Federal Automobile Licensees who must provide fingerprints, proof of character, secure storage for all vehicles, and who must call the Federal Bureau of Motor Vehicles to verify your information before purchase.  They may approve or decline or delay the sale.  If they decline, you may appeal the decision in writing to a review board.  If they delay, it becomes an approval automatically after 10 days. However, the dealer may decline to complete such a sale in case of later problems. 
....

Letter to a Very Bright 11th Grader

Sent to you by Karl via Google Reader:

via Cafe Hayek by Don Boudreaux on 9/24/12

24 September 2012
Ms. Annie M__________
11th Grade
Southwest High School
Minneapolis, MN
Dear Ms. M____________:
Thanks so much for your e-mail and kind words about Cafe Hayek.  Russ Roberts and I are delighted that you and your family enjoy it.
Your teacher asks you to challenge me to give "one good reason why the law should not require that women be paid the same as men for the same work."  I'm happy to oblige.  There are many good reasons, but I'll here stick to one.
That one reason is that it's practically impossible for government officials to determine when two jobs involve "the same work."  What might look like the same work to outside observers – to government officials, lawyers, or even the workers themselves – might well be very different work.
Is the worker Mr. Smith more experienced than the worker Ms. Jones?  Is Mr. Smith less likely than is Ms. Jones to take time off of work to care for children or sick parents?  Is Mr. Smith less likely than is Ms. Jones to quit in order to move with a spouse to another city?  Is Mr. Smith a bit more helpful than is Ms. Jones with customers?  Is Mr. Smith slightly more willing than is Ms. Jones to stay on the job a few extra minutes after the workday officially ends in order to help with important unfinished business?
These questions – and many others like them – are important.  Yet in the real world no outside observer is in as good a position to answer them as is each individual employer.  Not that every employer always gets it right, but every employer does have strong incentives to get it right.  If an employer underpays a woman, some other firm can increase its profits by hiring her away at higher pay.
Suppose that the law your teacher endorses were applied to the market for women's dresses.  Would that be good?  Your teacher – to be consistent – must answer "yes."  After all, why should one dress that keeps its wearer clothed sell for a different price as another dress that does the "same work" – namely, keeps its wearer clothed?
Ask your teacher if she supports equal prices for equal-sized dresses.
If she replies that not all dresses of the same size are equal in value to one another, ask her – politely, of course – how she knows this fact to be true.  Ask her why market prices for dresses should be trusted as signals of the different qualities or 'values' of dresses, while market wages for human labor should not be trusted as signals of the different qualities or 'values' of workers.
Ask your teacher also if she would trust government officials to judge whether or not, say, a size 2 knee-length dress from Liz Claiborne provides services to its buyers that are "equal" to those supplied by a size 2 knee-length dress from Versace.  If, as I suspect, she feels uneasy about bureaucrats making such a determination about the relative value of dresses, ask her why she trusts bureaucrats to make the same sort of determination about the relative value of human labor.
(If she likes the idea of bureaucrats sitting in judgment on the appropriate prices of dresses, write to me again.  The conversation will then have to be much different.)
Good luck, Annie.  Let me know what happens.
Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA  22030

   

Last-hope prostate drug not funded | London | News | London Free Press

Link: http://www.lfpress.com/news/london/2012/08/22/20130276.html (via shareaholic.com)

Zytiga (Abiraterone Acetate)

• Pills taken daily with few side effects.
• Health Canada OK'd July 2011. Every province but Ontario funds it.
• Extends life an average four months and reduces pain.

--- --- ---
WHAT THE PROVINCE SAYS
Letter from Ontario Health Ministry to patient denying coverage:
"Although there is a well-conducted randomized controlled trial demonstrating a statistically and clinically significant increase in overall survival without substantial side effects in this group of patients . . . the cost effectiveness of this agent is not favourable. As a result, the (Committee to Evaluate Drugs) recommended that Zytiga not be funded."

The cost?  $5000/month.  (Don't know if that's $US or $Can.)

Health - Brian Wansink & David Just - How Bloomberg's Soft Drink Ban Will Backfire on NYC Public Health - The Atlantic

Link: http://www.theatlantic.com/health/archive/2012/06/how-bloombergs-soft-drink-ban-will-backfire-on-nyc-public-health/258501/ (via shareaholic.com)

Complex Societies Need Simple Laws - Reason Magazine

Link: Complex Societies Need Simple Laws)

"If you have 10,000 regulations," Winston Churchill said, "you destroy all respect for law."
He was right. But Churchill never imagined a government that would add 10,000 year after year. That's what we have in America. We have 160,000 pages of rules from the feds alone. States and localities have probably doubled that. We have so many rules that legal specialists can't keep up. Criminal lawyers call the rules "incomprehensible." They are. They are also "uncountable." Congress has created so many criminal offenses that the American Bar Association says it would be futile to even attempt to estimate the total. 
 So what do the politicians and bureaucrats of the permanent government do? They pass more rules.
That's not good. It paralyzes life.
Politicians sometimes say they understand the problem. They promise to "simplify." But they rarely do. Mostly, they come up with new rules. It's just natural. It's how the public measures politicians. Schoolchildren on Washington tours ask, "What laws did you pass?" If they don't pass new laws, the media whine about the "do-nothing Congress."
This is also not good.
When so much is illegal, common sense dies. Out of fear of breaking rules, people stop innovating, trying, helping.
Think I exaggerate? Consider what happened in Britain, a country even more rule-bound than America. A man had an epileptic seizure and fell into a shallow pond. Rescue workers might have saved him, but they wouldn't enter the 3-foot-deep pond. Why? Because "safety" rules passed after rescuers drowned in a river now prohibited "emergency workers" from entering water above their ankles. Only 30 minutes later, when rescue workers with "stage 2 training" arrived, did they enter the water, discover that the man was dead and carry him to the approved inflatable medical tent. Twenty other cops, firemen and "rescuers" stood next to the pond and watched.
The ancient Chinese philosopher Lao Tzu, sometimes called the first libertarian thinker, said, "The more artificial taboos and restrictions there are in the world, the more the people are impoverished....The more that laws and regulations are given prominence, the more thieves and robbers there will be." He complained that there were "laws and regulations more numerous than the hairs of an ox." What would he have thought of our world?
Big-government advocates will say that as society grows more complex, laws must multiply to keep up. The opposite is true. It is precisely because society is unfathomably complex that laws must be kept simple. No legislature can possibly prescribe rules for the complex network of uncountable transactions and acts of cooperation that take place every day. Not only is the knowledge that would be required to make such a regulatory regime work unavailable to the planners, it doesn't actually exist, because people don't know what they will want or do until they confront alternatives in the real world. Any attempt to manage a modern society is more like a bull in a darkened china shop than a finely tuned machine. No wonder the schemes of politicians go awry.
F.A. Hayek wisely said, "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." Another Nobel laureate, James M. Buchanan, put it this way: "Economics is the art of putting parameters on our utopias."
Barack Obama and his ilk in both parties don't want parameters on their utopias. They think the world is subject to their manipulation. That idea was debunked years ago.
"With good men and strong governments everything was considered feasible," the great Austrian economist Ludwig von Mises wrote. But with the advent of economics, "it was learned that ... there is something operative which power and force are unable to alter and to which they must adjust themselves if they hope to achieve success, in precisely the same way as they must taken into account the laws of nature."
I wish our politicians knew that. I wish they'd stop their presumptuous schemes.
We need to end the orgy of rule-making at once and embrace the simple rules that true liberals like America's founders envisioned.

Why Capitalism Isn't Going Anywhere - Reason Magazine

Link: http://reason.com/archives/2012/02/20/why-capitalism-isnt-going-anywhere

It's the only system known to humanity that increases both growth and freedom.

At the height of the financial crisis in late 2008 and early 2009, a wave of articles declared the end of capitalism. A half-dozen reporters writing about the issue called Allan Meltzer, who since 1957 has been teaching about capitalism at Carnegie Mellon University in Pittsburgh.
Five of the calls he answered. The sixth was from a reporter of Die Zeit, the German weekly, who, as Professor Meltzer recalls it, asked, “Professor, what do you think about the end of capitalism?”
Professor Meltzer replied that that was the stupidest question he’d been asked in 50 years.
The reporter hung up the phone before Mr. Meltzer got to explain why, but the fuller answer is in Mr. Meltzer’s new book, Why Capitalism?, which Oxford University Press published this week.
The book is short — just 160 pages — but its simple, clear, and direct language makes a big point: that capitalism “is the only system known to humanity that increases both growth and freedom.” As a result, far from ending, capitalism has spread to formerly socialist or communist enclaves such as Eastern Europe, India, and even China.
The book is not simply a paean to capitalism, though. It’s also a look at some of the problems the country is facing, including the decline in the value of the dollar, the financial crisis and its aftermath, and the federal debt and deficit.
Mr. Meltzer’s three laws of regulation help in part to explain the crisis. The first is that “lawyers and bureaucrats regulate,” but “markets circumvent regulation.” Second, and related, is that “regulations are static. Markets are dynamic.” Third, “regulation is most effective when it changes the incentives of the regulated.”

Why Pilot Projects Fail

Why Pilot Projects Fail

via Megan McArdle : The Atlantic by Megan McArdle on 12/21/11

It seems that the LA Unified School District recently revamped its lunch menus to eliminate fattening standbys like chicken nuggets, nachos, and flavored milk.  The resulting meals are much healthier, but apparently also much less appetizing.  As a result, participation in the program is down, and the LA Times found students replacing the Beef Jambalaya and lentil cutlets with things like Cheetos.

This happened despite the fact that the menu was tested extensively before they put it into operation:

Andre Jahchan, a 16-year-old sophomore at Esteban Torres High School, said the food was "super good" at the summer tasting at L.A. Unified's central kitchen. But on campus, he said, the chicken pozole was watery, the vegetable tamale was burned and hard, and noodles were soggy.

"It's nasty, nasty," said Andre, a member of InnerCity Struggle, an East L.A. nonprofit working to improve school lunch access and quality. "No matter how healthy it is, if it's not appetizing, people won't eat it."

At Van Nuys High School, complaints about the food were so widespread that Principal Judith Vanderbok wrote to Barrett with the plea: "Please help! Bring back better food!"

Among other complaints, Vanderbok said salads dated Oct. 7 were served Oct. 17. (Binkle said the dates indicate when the food is at its highest quality, not when it goes bad. They have been removed to avoid misinterpretation.) On campus, even adults -- including a Junior ROTC officer and an art teacher -- have been found selling black market candy, chips and instant noodles to hungry students, she said.

"I compare it to Prohibition," Vanderbok said.

This is one more installment in a continuing series, brought to you by the universe, entitled "promising pilot projects often don't scale".  They don't scale for corporations, and they don't scale for government agencies.  They don't scale even when you put super smart people with expert credentials in charge of them.  They don't scale even when you make sure to provide ample budget resources.  Rolling something out across an existing system is substantially different from even a well run test, and often, it simply doesn't translate.

Sometims the "success" of the earlier project was simply a result of random chance, or what researchers call the Hawthorne Effect.  The effect is named after a factory outside of Chicago which ran tests to see whether workers were more productive at higher or lower levels of light.  When researchers raised the lights, productivity went up.  When researchers lowered the lights, productivity also went up.  Obviously, it wasn't the light that boosted productivity, but something else--the change from the ordinary, or the mere act of being studied.

Sometimes the success was due to what you might call a "hidden parameter", something that researchers don't realize is affecting their test.   Remember the New Coke debacle?  That was not a hasty, ill-thought out decision by managers who didn't care about their brand.  They did the largest market research study in history, and repeated it several times, before they made the switch.  People invariably told researchers they loved the stuff.  And they did, in the taste test.  But they didn't love the stuff when it cost them the option of drinking old Coke.  More importantly, they were being offered a three-ounce cup of the stuff in a shopping mall lobby or supermarket parking lot, often after they'd spent an hour or so shopping.  New Coke was sweeter, so (like Pepsi before it) it won the taste test.  But that didn't mean that people wanted to drink a whole can of the stuff with a meal.

Sometimes the success was due to the high quality, fully committed staff.  Early childhood interventions show very solid success rates at doing things like reducing high school dropout and incarceration rates, and boosting employment in later life.  Head Start does not show those same results--not unless you squint hard and kind of cock your head to the side so you can't see the whole study.  Those pilot programs were staffed with highly trained specialists in early childhood education who had been recruited specially to do research.  But when they went to roll out Head Start, it turned out the nation didn't have all these highly trained experts in early childhood education that you could recruit specially--and definitely not at the wages they were paying.  Head Start ended up requiring a two-year associates degree, and recruiting from a pool that included folks who were just looking for a job, not a life's mission to rescue poor children while adding to the sum of human knowledge.

Sometimes the program becomes unmanageable as it gets larger. You can think about all sorts of technical issues, where architectures that work for a few nodes completely break down when too many connections or users are added.  Or you can think about a pilot mortgage modification program.  In the pilot, you're dealing with a concrete group of people who are already in default, and in every case, both the bank and the individual are better off if you modify the mortgage.  But if you roll the program out nationwide, people will find out that they can get their mortgages modified if they default . . . and then suddenly the bank isn't better off any more.

Sometimes the results are survivor bias.  This is an especially big problem with studying health care, and the poor. Health care, because compliance rates are quite low (by one estimate I heard, something like 3/4 of the blood pressure medication prescribed is not being taken 9 months in) and the poor, because their lives are chaotic and they tend to move around a lot, so they may have to drop out, or may not be easy to find and re-enroll if they stop coming.  In the end, you've got a study of unusually compliant and stable people (who may be different in all sorts of ways) and oops! that's not what the general population looks like.

So consider the LAUSD test.  In the testing phase, when the program was small, they were probably  working with a small group of schools which had been specially chosen to participate.  They did not have a sprawling supply chain to manage.  The kids and the workers knew they were being studied.  And they were asking the kids which food they liked--a question which, social science researchers will tell you, is highly likely to elicit the answer that they liked something.

That is very different from choosing to eat it in a cafeteria when no one's looking.  And producing the food is also very different.  Cooking palatable food in large amounts is hard, particularly when you don't have an enormous budget--and the things that make us fat are, by and large, also the things that are palatable when mass-produced.  Bleached grains and processed fats have a much longer shelf life than fresh produce, and can take a hell of a lot more handling.  Salt and sugar are delicious, but they are also preservatives that, among other things, disguise the flavor of stale food.

I think one anecdote in the article is particularly telling.  People complained that salads dated October 7th were served on the 17th--and the district responded by first, pointing out that that was the "best served by" date, not the date when the food actually went bad; and second, removing the labels because they were "confusing".  Now, as anyone who has forgotten to eat a bag of lettuce knows, while it may not actually be rotten after 10 days, it probably doesn't look much like something you'd eat voluntarily.  This is not something that you can change by stamping a different "sell by" date on the container.  If that were my choice, I too would come to school with a backup bag of Cheetos.

So why would he say something so obviously weird?  There are two reasons I can think of:  1) in a large and complicated distribution system, and with their limited funds, he knows that there is no way to actually solve this problem, so they mounted the only defense they could.  Or 2) the school district still has the mentality of the old system, which is mostly focused on not poisoning anyone.  In fact, there isn't much difference between Chicken nuggets that won't poison you, and Chicken nuggets at their absolute peak of freshness.  And the employees just sort of assumed that the same set of rules would work for lettuce.

That's what real world applications are up against.  They're not an awesome pilot project with everyone pulling together and a lot of political push behind them; they're being rolled out into a system that already has a very well established mindset, and a comprehensive body of rules.  The new program implemented by the old rules often turns out to be worse than the old program.  You don't move kids from pizza to salad; you move them from pizza to cheetos.

This is not, obviously, an argument against ever changing anything.  It is, however, an argument against assuming that your changes will work.  No, not even if you had a great pilot.

How Congress Occupied Wall Street

Link:
<http://online.wsj.com/article/SB10001424052970204323904577040373463191222.html?mod=djemITP_h>

The legislature comprises less than 1% of the people, and are uniquely advantaged.  They spend large sums of money to get and keep their offices, because they reap much more in profit from having been elected.  Maybe the Occupy Random Places crowd is targeting the wrong 1%?

Mark Twain famously wrote, "There is no distinctly native American criminal class except Congress." Peter Schweizer's new book, "Throw Them All Out," reveals this permanent political class in all its arrogant glory. (Full disclosure: Mr. Schweizer is employed by my political action committee as a foreign-policy adviser.)

Mr. Schweizer answers the questions so many of us have asked. I addressed this in a speech in Iowa last Labor Day weekend. How do politicians who arrive in Washington, D.C. as men and women of modest means leave as millionaires? How do they miraculously accumulate wealth at a rate faster than the rest of us? How do politicians' stock portfolios outperform even the best hedge-fund managers'? I answered the question in that speech: Politicians derive power from the authority of their office and their access to our tax dollars, and they use that power to enrich and shield themselves.

The money-making opportunities for politicians are myriad, and Mr. Schweizer details the most lucrative methods: accepting sweetheart gifts of IPO stock from companies seeking to influence legislation, practicing insider trading with nonpublic government information, earmarking projects that benefit personal real estate holdings, and even subtly extorting campaign donations through the threat of legislation unfavorable to an industry. The list goes on and on, and it's sickening.

Astonishingly, none of this is technically illegal, at least not for Congress. Members of Congress exempt themselves from the laws they apply to the rest of us. That includes laws that protect whistleblowers (nothing prevents members of Congress from retaliating against staffers who shine light on corruption) and Freedom of Information Act requests (it's easier to get classified documents from the CIA than from a congressional office).

The corruption isn't confined to one political party or just a few bad apples. It's an endemic problem encompassing leadership on both sides of the aisle. It's an entire system of public servants feathering their own nests.

None of this surprises me. I've been fighting this type of corruption and cronyism my entire political career. For years Alaskans suspected that our lawmakers and state administrators were in the pockets of the big oil companies to the detriment of ordinary Alaskans. We knew we were being taken for a ride, but it took FBI wiretaps to finally capture lawmakers in the act of selling their votes. In the wake of politicos being carted off to prison, my administration enacted reforms based on transparency and accountability to prevent this from happening again.

We were successful because we had the righteous indignation of Alaskan citizens on our side. Our good ol' boy political class in Juneau was definitely not with us. Business was good for them, so why would they want to end "business as usual"?

The moment you threaten to strip politicians of their legal graft, they'll moan that they can't govern effectively without it. Perhaps they'll gravitate toward reform, but often their idea of reform is to limit the right of "We the people" to exercise our freedom of speech in the political process.

I've learned from local, state and national political experience that the only solution to entrenched corruption is sudden and relentless reform. Sudden because our permanent political class is adept at changing the subject to divert the public's attention—and we can no longer afford to be indifferent to this system of graft when our country is going bankrupt. Reform must be relentless because fighting corruption is like a game of whack-a-mole. You knock it down in one area only to see it pop up in another.

What are the solutions? We need reform that provides real transparency. Congress should be subject to the Freedom of Information Act like everyone else. We need more detailed financial disclosure reports, and members should submit reports much more often than once a year. All stock transactions above $5,000 should be disclosed within five days.

We need equality under the law. From now on, laws that apply to the private sector must apply to Congress, including whistleblower, conflict-of-interest and insider-trading laws. Trading on nonpublic government information should be illegal both for those who pass on the information and those who trade on it. (This should close the loophole of the blind trusts that aren't really blind because they're managed by family members or friends.)

No more sweetheart land deals with campaign contributors. No gifts of IPO shares. No trading of stocks related to committee assignments. No earmarks where the congressman receives a direct benefit. No accepting campaign contributions while Congress is in session. No lobbyists as family members, and no transitioning into a lobbying career after leaving office. No more revolving door, ever.

This call for real reform must transcend political parties. The grass-roots movements of the right and the left should embrace this. The tea party's mission has always been opposition to waste and crony capitalism, and the Occupy protesters must realize that Washington politicians have been "Occupying Wall Street" long before anyone pitched a tent in Zuccotti Park.

This, by the way, was written by a female former governor of Alaska.

Reducing Judge Silberman’s Interpretation of the Term “Regulate” to Absurdity

Reducing Judge Silberman’s Interpretation of the Term “Regulate” to Absurdity

via Patterico's Pontifications by Aaron Worthing on 11/18/11

[Guest post by Aaron Worthing.  Follow me by Twitter @AaronWorthing.]

As I said on John Smart's show the other day, I have not been paying as much attention to the different opinions coming down in the various Obamacare cases ever since we had a split in the circuits.  That is because at that point, I came to believe that Supreme Court review was all but guaranteed, and subsequent events have vindicated that belief.

But in the D.C. Circuit version of the case, one part did stick in my craw a bit, and I thought I would take a moment to address it.  One of the most basic arguments against the mandate goes something like this.  The Commerce Clause says that

[t]he Congress shall have Power… [t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

That is found in Article I, Section 8, Paragraph 3.  What opponents of  Obamacare's mandate have said (including myself) is that this grants only the power to regulate commerce that already exists and not to create it.  But, Judge Silberman writes for the majority in the D.C. Circuit Obamacare case that this is an incorrect reading of the language:

We look first to the text of the Constitution.  Article I, § 8, cl. 3, states: "The Congress shall have Power . . . To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."  (emphasis added).  At the time the Constitution was fashioned, to "regulate" meant, as it does now, "[t]o adjust by rule or method," as well as "[t]o direct."  To "direct," in turn, included "[t]o prescribe certain measure[s]; to mark out a certain course," and "[t]o order; to command."  In other words, to "regulate" can mean to require action, and nothing in the definition appears to limit that power only to those already active in relation to an interstate market.  Nor was the term "commerce" limited to only existing commerce.  There is therefore no textual support for appellants' argument.

First, I think that is a facile reading of those definitions.  Ordinarily to direct a thing is to control it but not to create.  For instance, when a police officer is told by his supervisor to "direct" traffic, we don't take that as a power to create traffic, only to channel the flow that is already there.

The other reason why this reading is shallow is that it fails to recognize how that interpretation applies to the other words of that provision of the Constitution.  And to a certain extent this is a product of how modern Commerce Clause doctrine has become divorced from the text.  Every lawyer will tell you that the phrase "commerce… among the several states" means that the Congress can only regulate interstate commerce—that is, commerce between states.  Commerce wholly within a state, intrastate commerce, cannot be touched.  The same lawyers will also tell you that the Supreme Court, however, has completely ignored this clear textual command since the 1930's.  I think the best explanation is that the Court was bullied into making bad precedents by Franklin Roosevelt's court-packing scheme.  The official explanation in the case law is that any commercial activity that affects interstate commerce can be reached under the Necessary and Proper Clause.  But that logic doesn't hold up to scrutiny, because the upshot of it is to erase a distinction written into the Constitution itself between intrastate commerce and interstate commerce.  What was the point of inserting that phrase "among the several states" if that distinction was going to be swept away by the Necessary and Proper Clause?

(Indeed, it is a principle of statutory interpretation that one should "[a]void interpreting a provision in a way that would render other provisions of the Act superfluous or unnecessary."*  That will be important again in a minute.)

Another less feeble explanation for excising the interstate requirement from the interstate commerce clause is to argue that by advances in technology the distinction was erased.  Now there is some truth to that.  When you walk into a Target store, only most a small percentage of the items on the shelves are made within the same state you are living in.  Indeed now and then it is pointed out that many items stamped with the "Made in the U.S.A." logo in fact are "made" to a significant extent in other countries with debates about how much a thing should have to actually have been made in America to earn that logo.  The reality is that our trade is far more interstate and indeed international than it ever has been before.  But that does not justify throwing out the distinction altogether.

Still, because of modern Supreme Court precedent, it is easy to forget that in the minds of the founders there is such a thing as intrastate commerce that cannot be touched by the Federal Government.  And if the word "regulate" can be read to include creation in relation to the "commerce" element of the interstate commerce clause, then why can't it also be read to allow the Federal Government to create the "interstate" aspect as well?  That is, if the word regulate means that the government can force you to buy health insurance (or broccoli), why can't it say to a person engaged in intrastate commerce that they must take their products across state lines?  That is the direct implication of Silberman's reading of the term "regulate."  And this interpretation is particularly galling if you buy the "technological" justification for the expansion of federal commerce power.  If you believe that in 1789 transportation was so difficult that most commerce was more intrastate than it is now, then Judge Silberman's reading would have allowed the federal government to force a person to take their goods across state lines at a time when the trip was much more difficult than it is today.

And to reduce his interpretation of the term "regulate" to even greater absurdity, certainly we would agree that if the purchase of Health Insurance is commerce, surely building a car and selling it is also commerce, right?  The precedents from the modern Supreme Court are especially clear on this point.  So by Judge Silberman's interpretation of the term "regulate" the Commerce clause grants Congress the power to take a person who is not working, or working in another industry, and force that person to work in the manufacture of automobiles.  Now anyone casually familiar with the Constitution would reasonably pipe up and say, "but wouldn't that be involuntary servitude in violation of the Thirteenth Amendment?"  And I would say it would be, but the Thirteenth Amendment was only ratified in 1865.  So is it Silberman's position that in 1864 a random free citizen could be conscripted into a job he didn't want under the Commerce Clause?

And all of this becomes even more absurd when we also remember that the term "regulate" applies equally to interstate and international commerce.  Again, this is where our reading of the text can be warped by modern precedent, for the Court has never read the international commerce clause half as broadly as the interstate commerce clause.  For instance, in Wickard v. Filburn a wheat farmer was told that he could be prevented from growing wheat for his own personal consumption on the theory that if he did not grow his own wheat he would be forced to buy it from others, and thus his growing of wheat affected interstate commerce.  But no court has held that we could therefore prevent a man living in the Ukraine from growing wheat for his own use because it will affect international commerce with America.  And does anyone believe that our government can command a man in China to buy a certain product?  (Indeed, if Obamacare is upheld, I have a delightfully simple way to solve the problem with our chronic trade deficit: just pass a law requiring everyone in the world to buy more American products.)  But so I suppose Silberman would be forced to claim that to "regulate" meant one thing internationally, and another domestically./

So in short, Judge Silberman's interpretation of the term "regulate" would lead to the absurd results of forcing a person to travel across state lines against their will, to work at a job not of their own choosing (prior to ratification of the Thirteenth Amendment) and would allow us to command citizens in other countries to buy American.  Although that last possibility definitely has its appeal, it is nonetheless an absurd definition of the term "regulate" and therefore, it is wrong.  And the travesty of it all is that our discussion of the Commerce Clause has become so divorced from the original text and what it plainly meant, that it is hard for modern minds to even recognize the absurdity of Silberman's interpretation.

And there is one more problem.  It is presumed in the construction of language in the Constitution (or any statute) that the same word has the same meaning in all contexts.  So let me call your attention to Article I, Section 8, Paragraph 14:

The Congress shall have Power… [t]o make Rules for the Government and Regulation of the land and naval Forces;

Now at first glance it seems reasonable to interpret the term "regulation" as allowing for creation.  Certainly Congress has the right to create a military, right?  But here's the thing; in the two paragraphs before it, the Constitution makes specific reference to that power:

The Congress shall have Power… [t]o raise and support Armies; … [t]o provide and maintain a Navy;

So if the word "regulate" meant to "create" then there would be no need to specify the right to raise an army or provide a navy.  It would be implicit in the term "regulation;" indicating that the founders did not believe that the word "regulate" included creation.  And as I said before, the courts avoid interpreting a provision of the constitution or a statute in a way that renders other parts superfluous or unnecessary.Besides, if regulate meant to create, then what exactly is a well-regulated militia?

No, Judge Silberman, far from there being "no textual support" for the claim that to regulate is not the same as creating, on balance, the opponents of Obamacare have the better textual argument—but particularly if we remember what the Constitution actually says, and not merely what the Supreme Court has said about it.

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* That phrase is from William Esckridge, Jr. & Phillip Frickey, The Supreme Court, 1993 Term—Forward: Law as Equilibrium, 108 Harv. L. Review. 26, 97-108 (1994).  I wrote out the full citation because that part of the article is a classic, listing many of the canons of textual interpretation followed by the Supreme Court along with cases applying them.  Bluntly I recommend that every working lawyer keep a copy of it on his desk.

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Also, you might have noticed I have deployed a similar argument on conscription in the past.  But in that case we were talking about the reach of the necessary and proper clause, so it is similar, but not completely repetitive.

[Posted and authored by Aaron Worthing.]