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  • Misguided Regulations Threaten Automated Vehicle Innovation

    October 16, 2014 5:55 PM

    Earlier this week, I appeared on a Cato Institute panel titled, "The End of Transit and the Beginning of the New Mobility: Policy Implications of Self-Driving Cars." Spurred by the release of Cato Senior Fellow Randal O'Toole's latest paper, "Policy Implications of Autonomous Vehicles," I joined Randal and Adam Thierer (see Adam’s new paper here) of the Mercatus Center to discuss various vehicle automation public policy issues, including the impact on transit and urban growth, state licensing and operations regulation, federal vehicle safety regulation, and data security and privacy policy. We all share the goal of minimizing government intervention in order to promote innovation and consumer availability of automated vehicles.

    My presentation focused on state and federal regulatory issues, specifically those related to licensing, operations, and safety. I told the audience that we should all be very concerned by the prospect of overregulation and the precautionary principle, highlighting the fact that any unnecessary cost increase or production delay translates to increased property damage, injury, and fatalities, as consumers then use older, less safe vehicles when they would have otherwise purchased automated vehicles.

    To date, four states and the District of Columbia have enacted statutes that explicitly recognize the legality of automated vehicles. As for implementation, most are closely following the ongoing regulatory developments in California as a bellwether for future state legislation and regulation. This is in part because California is among these early first-moving states to legislate on automated vehicles and in part because California is the largest single economy in the U.S. Actions California takes, if they aren’t preempted by federal legislation, can have major implications for national markets, such as the one for automobiles.

    California’s manufacturer testing regulations came into force in September. While not entirely problematic, California’s rules mandate that a licensed driver be in the driver seat at all times during autonomous operation. In effect, this outlaws testing of more advanced fully automated vehicles. Google, which has designed a prototype that would remove the steering wheel and accelerator and brake pedals, has been forced to install these manual driver controls back into their vehicles. As I noted during my presentation, this represents the first clear example of onerous regulations forcing automated vehicle innovators to take a step back. Unfortunately, the District of Columbia and Michigan have also adopted driver-seat requirements.

  • The Tesla File: Government Favors Cut Both Ways

    October 16, 2014 4:57 PM

    Electric vehicle manufacturer Tesla Motors has become a fascinating case study in economic freedom in recent years, although the narrative is a complicated one. The most recent development for Tesla has come out of Michigan, where the state legislature has banned car manufacturers from selling vehicles directly to the public or from owning dealerships themselves, new restrictions that effectively outlaw Tesla’s entire sales strategy, at least in the Great Lakes State. Michigan is not alone, however, in erecting restrictions on marketing and sales of cars that seem to target or effect only Tesla. Arizona, Maryland, Texas, and Virginia also ban the company from selling its cars in their states, although they can operate showrooms and residents can make purchases online. Colorado, Georgia, New Jersey, Ohio, and Pennsylvania also have restrictions or are in legal disputes with Tesla over what they can and can’t do in those states.

    Having to fight for the right to sell an otherwise legal product to willing customers – legislature by legislature – has created what Tesla’s James Chen has referred to as “a game of whack-a-mole in every state.” Just as the company has made its case before one state’s officials, another state comes along and threatens to erect barriers that suspiciously seem to harm only Telsa while protecting market incumbents from increased competition. This can only happen so many times before it begins to seem like more than a coincidence. In this scenario, CEO Elon Musk is cast in the role of the victim of opportunistic legislation lobbied for by bigger, more entrenched rivals – the underdog fighting cronyism between big carmakers and state politicians.

  • Update: Where in the World is Jonathan Gruber?

    October 14, 2014 6:20 PM

    Today the plaintiffs in King v. Burwell filed the last brief regarding the cert petition now before the Supreme Court. It effectively rebuts each of the government’s arguments against Supreme Court review. 

    For starters, there’s some interesting history about the government’s switch in its tactics on timing. When Obamacare was first being litigated several years ago and the government lost in the Eleventh Circuit, it quickly sought Supreme Court review even though there were no imminent deadlines facing it regarding Obamacare taking effect.  Now, on the other hand, we have, in the words of the reply brief, “billions of taxpayer dollars … pouring out of the Treasury without congressional authorization and millions of Americans … ordering their lives around an impugned regulation.” And instead of  supporting a quick Supreme Court review of King, the government instead asks the Supreme Court to hold off until the D.C. Circuit completes its en banc reconsideration of Halbig—a reconsideration that the government itself requested.

    And while the reply brief’s starting point is what the government did, its conclusion succinctly describes what the government did not do. It did not mention Jonathan Gruber at all. Gruber, “the ACA architect whose work it cited in every brief below … is nowhere mentioned now.”

    That fittingly leads us back to the title of our earlier post: Where in the World is Jonathan Gruber? (Or, for you more plain-spoken Waldo fans, Find Gruber!) 

  • Farewell to Our Friend, Leonard Liggio

    October 14, 2014 1:14 PM

    We are saddened to hear our friend Leonard Liggio passed away this morning. Today, the liberty movement has lost an intellectual champion. The Competitive Enterprise Institute has lost a colleague and ally. And on a personal note, I have lost a reliable, ever-present partner since I first started working in this movement several decades ago. 

    Leonard was long the Don of the free market community. Realizing that CEI needed to move out of its infancy stage and expand its board of directors in the early 1990s, Fred Smith approached Leonard, who quickly agreed to serve on our team. He continued with that board role for nearly two decades, moving to emeritus status only last year. Leonard was whimsical in his conversation, grounded in his idealistic commitment, and often bemused by CEI’s temerity in translating classical ideas into actual reform. And, he was always supportive. 

     I asked Fred to recount a few of his own memories of Leonard. Here is his reply:  

  • CEI’s Battered Business Bureau: The Week in Regulation

    October 14, 2014 6:44 AM

    Even with a mid-term election coming up next month, agencies are cranking out a dozen or so new regulations every workday. The federal government also announced that, having solved all other problems, it will be holding a Tall Wood Building Prize Competition.

    On to the data:

    • Last week, 62 new final regulations were published in the Federal Register. There were 79 new final rules the previous week.
    • That’s the equivalent of a new regulation every two hours and 43 minutes.
    • So far in 2014, 2,818 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,576 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
    • Last week, 1,503 new pages were added to the Federal Register.
    • Currently at 61,538 pages, the 2014 Federal Register is on pace for 78,094 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 34 such rules have been published so far this year, one in the past week.
    • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.62 billion to $10.87 billion. They also affect several billion dollars of government spending.
    • 231 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2014, 538 new rules affect small businesses; 79 of them are classified as significant. 
  • BPA Research Funding Linked to Researcher Bias?

    October 9, 2014 5:18 PM

    The number of studies that have appeared in the news during recent years on the chemical bisphenol A (BPA) is staggering. Few substances undergo such scrutiny. So why BPA? Mattie Duppler of American’s for Tax Reform’s Cost of Government project answers that question in an article for The Hill’s Congress Blog: Congress has poured millions of dollars ($170 million since 2000) into BPA research for what amounts to little more than a witch hunt.

    Follow the money and you may find a strong statistical association between government funding and the increased number of research studies that link BPA to various health ailments.

    Money goes out to researchers motivated to produce studies that report positive associations that easily get published and that gain more funding. And the more money politicians spend for research studies, the more likely some portion of studies will come up with positive associations between BPA and various health aliments, which is likely to happen by mere accident. In addition, many positive findings appear to be attributable to activist agendas among some researchers who make creative interpretations of largely meaningless data. And the studies that come up negative usually don’t get published or end up in the news either because negative findings as simply not interesting.

    Thus far, the allegedly most damning studies on BPA are extremely weak. Most don’t really find what the researchers claim they do, and they are often poorly designed. Consider the latest BPA study in the news. Published in the Journal of the American Medical Association Pediatrics (JAMA Pediatrics), it claims that BPA is associated with wheezing and reduced lung function in children.

  • A Pen and Phone Strategy to Shrink Government

    October 9, 2014 12:36 PM

    President Obama is right that Congress doesn’t do much. That’s not necessarily a bad thing, of course. But the pen and phone strategy Obama proposed can be used for a lot of things. The president seems inclined to use it mostly to expand government. But the pen and phone can also shrink government and make it more accountable, as Wayne Crews and I explain over at RealClearMarkets:

    Congress passed 72 laws in 2013, while agencies issued 3,659 rules and regulations—a 51 to one ratio. This disparity suggests two areas where a pen-and-phone strategy might do some good. First, increased government transparency about the nature of all these rules. Second, establishing something akin to a federal "Department of No" to reduce the bureaucracy's output relative to Congress.

    In short, we propose the Executive require already-required transparency documents such as the Unified Agenda to at least come out on time. And we propose at least an informal check on agency rulemaking that asks agencies to look before they leap. Read the whole thing here.

  • The Economist: Interchange Fee Caps Benefit Large Retailers at Consumer Expense

    October 9, 2014 11:52 AM

    Surprise! Price controls lead to unintended consequences—including transfers of wealth to parties who lobbied for those controls.

    That’s the actual – and unsurprising – result of the an amendment to the 2010 Dodd-Frank financial reform bill, sponsored by Sen. Richard Durbin (D-Ill.) that caps fees charged by banks for payment cards, mainly debit and credit cards. As The Economist reports:

    [T]he limits on “interchange fees”, as the financial jargon has it, have not worked out as planned. They have resulted, by one calculation, in the transfer of between $1 billion and $3 billion annually from poor households to big retailers and their shareholders. These were not the beneficiaries Mr Durbin had in mind when the amendment came into effect three years ago this week.

    Or are they? This result is exactly what I said would happen. And as I noted at the time, Sen. Durbin was quite open about whose interests he had in mind.

  • The 2014 Federal Paperwork and Red Tape Roundup, Part 2: Billions of Dollars and 13,000 Lifetimes Annually

    October 9, 2014 9:38 AM

    Whoever makes two ears of corn, or two blades of grass to grow where only one grew before, deserves better of mankind, and does more essential service to his country than the whole race of politicians put together. —Jonathan Swift

    The Office of Management and Budget, in its 2014 Information Collection Budget of the U.S. Government (encompassing fiscal year 2013 data), estimates that it takes citizens 9.453 billion hours to complete the paperwork requirements from 22 executive departments and six independent agencies subject to the survey.

    Tax compliance (Treasury Department) represents the bulk, some 75 percent at 7 billion hours.

    The grand total is said to be a decrease from the 9.467 billion hours of fiscal year 2012. However, it is up from 8.783 billion in the 2011 report, and considerably up from 7.4 billion in 2000.

    Note that many compliance hours attributable to the Dodd-Frank law and its agency spawn are not included in the official tally here, but are rather exiled to an appendix on the last page of the Information Collection Budget. We’re early in the life-cycle of that red tape machine, but at least hours are disclosed. Expect growth in these categories and their playing a greater role in future editions.

    How does one visualize 9.5 billion hours? I don’t know, but an 80-year human lifespan is 29,200 days. In hours, that’s 700,800 hours.

    That means 2013’s 9.5 billion hours of paperwork took up the equivalent of 13,488 full human lifetimes. I’m being generous in saying everyone lives 80 years. And this is paperwork only, not other compliance costs, tasks, duties, restrictions, directives and mandates. Is red tape a time waster? You can decide, you don’t want to hear it from me about how you spend your finite 700,000 hours.  

  • Where in the World is Jonathan Gruber?

    October 9, 2014 8:18 AM

    The Obamacare insurance exchange rule is being challenged in four cases, and each one of them has been active over the last two weeks. The IRS rule puts the Obamacare insurance subsidies, and their attendant penalties, into effect nationwide. CEI is involved in two of these casesKing v. Burwell, which we lost in the Fourth Circuit, and Halbig v. Burwell, which we won in a 2-1 D.C. Circuit panel ruling. We argue that this is contrary to the underlying statute, which provides for such subsidies only in states that have chosen to set up their own exchanges—a choice that 34 states have declined.

    The King plaintiffs have petitioned the Supreme Court to review the Fourth Circuit’s ruling, which upheld the IRS rule. Last Friday the federal government filed its opposition to that request. Its arguments were relatively predictable, with one exception that we’ll get to later. 

    In the D.C. Circuit, Halbig is now on en banc review, with argument before the full 13-judge court scheduled for December 17. Our opening en banc brief, together with six supporting amici, was also filed last Friday.

    Last Tuesday, September 30, there was a third court ruling—Oklahoma won its own challenge to the IRS rule in the Eastern District of Oklahoma. That court did an excellent critique of the dissent in Halbig, and it was also noteworthy for issuing the first “post-Gruber” ruling—that is, the first court decision to consider the recently-unearthed 2012 video that showed MIT Professor Jonathan Gruber, one of Obamacare’s chief architects, directly contradicting his current attack on our position. The video shows him flatly stating that nonparticipating states would not receive subsidies, in stunning contrast to the more recent claims, by Gruber and others, that our legal position is “crazy.” (CEI, by the way, is proud to have helped launch that video into Internet stardom just two days after the Halbig and King decisions.)


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