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OpenMarket: August 2012

  • Union contracts driving pension crisis

    August 14, 2012 10:00 AM

    The Washington Examiner

    Maryland's $37 billion public pension system earned a pitiful 0.36 percent return on its investments last fiscal year.

    How embarrassing is that? Even the fiscal basket case that is California was able to eke out a 1 percent return. Indeed, the news for Maryland looks "like a minor disaster for fiscal 2011," in the prosaic words of Jeff Hooke, chairman of the Maryland Tax Education Foundation. That's a lot like saying the Trojan War was a minor disagreement over a girl.

    Sadly there's no brave and clever Odysseus waiting in the wings to save Maryland. Instead, state officials continue to wrap themselves in delusion. State Treasurer Nancy Kopp, for example, who chairs the pension system's trustees, explained, "The board continues to focus on long-term performance. Taking the long view, the system has on average exceeded the assumed rate of return over the last 25 years, which is a more appropriate measure of performance."

  • Alcohol Regulation Roundup: Dog Days Edition

    August 13, 2012 3:59 PM

    These days in D.C., the mercury regularly rises above the 90-degree mark right along with most of the U.S. As unpleasant as it might be to live on the surface of the sun, there’s nothing quite like enjoying a cold one with friends to celebrate as that damnable orb descends below the horizon each evening. Take a look below at the regulatory changes around our sticky nation that could affect the ease and cost of obtaining your preferred poison.

    Alabama: is expecting an influx of new beers in coming weeks thanks to a change in the law that now allows beer to be packaged in bottles as large as 25.4 ounces where previously they were limited to 16 ounces in most of the state.

    Arizona: The new growler laws go into effect this month allowing restaurants to fill the take-home jugs where before only microbreweries and brewpubs were allowed to do this.

    California: Apparently California lawmakers don’t have a whole lot of pressing issues to deal with so they have to get into the business of regulating celebrities signing wine bottles. The State Assembly passed bill 2184 at the end of July which stipulates that 1) Consumers must not be required to buy anything to get an autograph, 2) They don’t have to pay a fee for the autograph, and 3) The store is required to pay for the services needed to carry out the autograph promotions. Where it gets really crazy is that the bill also stipulates that the retailer may advertise the event, but the brand owner may not (i.e., Jacob’s Creek couldn’t put an ad on its website or Facebook page). Also, it states the signing may happen in retailer shops, but not restaurants and that the brand owner may only visit a retail shop twice per year to do autograph sessions. As Tom Wark over at Fermentation: The Daily Wine Blog noted,

    These and so many other alcohol regulations not only serve fears that originated 100 years ago and no longer matter, but now only serve to protect the financial interests who have used 100 year old fears to game the system to their own economic interests.

    Also in California: beers aged in used wine barrels are officially still legally considered beer. Last month Gov. Jerry Brown signed a bipartisan bill ensuring that microbreweries don’t have to worry about aging beer in wine/liquor barrels. Some in the industry feared that because the beer derived some of its flavor from the barrels which previously held wine or liquor, that the beer might be considered a distilled spirit by the state, which would require much higher taxes.

  • Supposed "Bipartisan" Consensus Can't Waive Laws Such As Welfare Reform And Its Work Requirements

    August 13, 2012 12:49 PM

    As I've noted before, the Obama administration violated the text, structure, and purpose of the 1996 welfare reform law, in claiming the authority to waive its work requirements, which were specifically designed not to be waivable, in its July 12 HHS memorandum. (Contrary to the administration's claims, that memo did indeed strike at the very heart of welfare reform.)

    One thing that really annoys me as a lawyer is the false suggestion by people like Ron Haskins of the Brookings Institution that the Obama administration’s action would have been okay if the administration had merely conferred with congressional Republicans first; and the bizarre claim by the Huffington Post that the administration’s expansion of waivers must be okay because it was supported by people such as Nevada’s Republican governor, giving it a bipartisan basis. (Haskins' statement, and the alleged support of Republican governors, was then cited by The Washington Post's Glenn Kessler to call the administration’s action nothing more than a “process foul and poor coordination with Congress.” Never mind that the administration’s action was greeted with outrage by Republican lawmakers like House Speaker John Boehner, who took issue with the substance of its action, not just the Obama administration’s failure to consult with them.)

    This makes no sense. The Obama administration’s flouting of the 1996 welfare reform law would not have been cured by consulting with Republicans before doing so. Laws cannot be ignored even on a bipartisan basis. A president and his aides can’t ignore a law by consulting with politicians of the opposing party and getting their individual approval to nullify or rewrite the law. Instead, the president has to get both Houses of Congress to formally vote to change the law. In INS v. Chadha (1983), the Supreme Court ruled that a law’s application could not be waived by a single House of Congress, much less individual lawmakers, since that violated the constitutional separation of powers and the constitutional requirements of bicameralism and presentment.

  • Today's Links: August 13, 2012

    August 13, 2012 10:11 AM


    ADAM COHEN: "Is Your Car Being Tracked by a License Plate Scanner?"
    "If you drive through Maryland, the state may be using an automated reader to photograph your license plate — and storing your movements away for future use. Maryland is not alone. ACLU offices in 38 states are looking into how the government is using license plate readers across the country — and what it is doing with the data. The ACLU is already calling the license plate readers 'the next big thing in government tracking.'"

    US NEWS & WORLD REPORT: "Debate Club: Should States Be Able to Collect Sales Tax on Goods Sold Online?"
    "Congress is debating legislation which would require online retailers to collect sales tax. Currently, online sellers are not required to charge their customers a sales tax on items purchased online. Proponents of the Marketplace Fairness Act say online tax rules are outdated, and the spread of Internet sales requires a leveling of the playing field between online retailers and brick-and-mortar businesses. [...] Others argue that it unfairly requires online retailers to become tax collectors, and takes away the power of states to regulate their own sales taxes. States like New Hampshire, which don't collect a sales tax, say forcing retailers to collect sales tax would disrupt their state economy."

    DAVID KRAVETS: "DOJ Won’t Ask Supreme Court to Review Hacking Case"
    "The Justice Department has decided not to ask the Supreme Court to review a controversial federal appeals court decision that said employees may not be prosecuted under a federal anti-hacking statute for simply violating their employer’s computer use policy."

  • CEI's Battered Business Bureau: The Week In Regulation

    August 13, 2012 8:32 AM

    68 new rules, from health care to Glasflugel gliders.

  • Yes, Obama Did Gut Welfare Reform

    August 10, 2012 4:54 PM

    Earlier, I wrote about how the Obama administration gutted welfare reform. Now, the New York Times is claiming that the Obama administration did not gut welfare reform or open the door to waiver of its work requirements for welfare recipients. But as journalist Mickey Kaus notes, a passage in the Times' own editorial helps confirm that the Obama administration has indeed opened the door to the evisceration of welfare reform's work requirements. Welfare reform's work requirements, unlike other provisions in the 1996 law, were specifically designed not to be waivable, but the Obama administration has now instead declared that they can be waived, thus violating the 1996 welfare-reform law. As the Times itself noted, the Obama administration's expansion of waivers came in response to a request for waivers by the State of Nevada. Nevada expressly advocated a waiver of the requirement that welfare recipients work. For example, as the Times observed, Nevada suggested that "those families hardest to employ . . . be exempted from the work requirements for six months while officials worked with them to stabilize their households."

    As Kaus notes,

    ***–Here are the exact words in Nevada’s letter:

                  TANF Performance Measures and Possible Waiver Opportunities

                   Exempt the hardest-to-employ population for a period of time (i.e. six months) to allow time for their barriers to be addressed and their household circumstances stabilized; …

    Note that “six months” isn’t an upper limit on the “exempt” period. Could be sixteen months. Note also that the NYT makes it sound as if Nevada might actually be requiring welfare recipients do something during this period–”while officials worked with them.” But the actual Nevada letter doesn’t say anything except that they need “time for their barriers to be addressed.”

    More generally, Nevada proposes a broad, excuse-laden “progression” system in which all recipients with “employment barriers” are given “more time and assistance”–translation, more welfare with fewer obligations to work or train for work or look for work. What are “employment barriers”? They include lack of child care, transportation, drug addiction, “special needs such as clothing and tools,” and lack of “job seeking/retention skills.” Obesity can also be a “barrier.”

  • Bureaucratic Green Chemistry

    August 10, 2012 2:16 PM

    California bureaucrats recently released their proposed regulations implementing the state’s 2009-passed "green chemistry" law. The law supposedly will make life safer for California residents by ensuring that all products are designed to be "green."

    But it is destined to fail -- costing consumers without delivering benefits -- because policymakers foolishly assume that bureaucrats are better situated than business to decide what makes a product safe. It's the same fatal conceit on which the Soviets once based their failed economic policies.

    California's green chemistry initiative goes beyond basic safety regulations. Regulators will impact product formulations and designs by listing both chemicals and products on "concern" lists based on largely political, rather than scientific grounds. Such listings will send signals to consumers and manufacturers to avoid these chemicals and products. In addition, regulators will force some companies to study alternative formulations and redesign products -- even when there is no sound science demonstrating any serious health or safety risks.

    In that case, rather than maintain focus on product performance, affordability, safety, and consumer demand when designing products, manufacturers will be forced to serve the political preferences of the regulators. The final products will be inferior, and ironically, potentially less safe.

    Still, some people argue that we should at least seek substitutes to “be on the safe side.” They forget that every product on the market prevailed because it was the best to perform the job at an acceptable price at the time. Politically driven substitutes will always be inferior.

  • Regulation Of The Day 226: Hot Dog Carts

    August 10, 2012 2:14 PM

    Nathan Duszynski is 13 years old and lives in Holland, Michigan. His stepfather has multiple sclerosis. His mother has epilepsy. Neither is able to work.

    To help out with his family's expenses, Nathan started mowing lawns and soon saved up the $1,200 or so that he needed to buy a hot dog cart. That way he could make even more money.

    The owner of a local sporting goods store was even kind enough to allow Nathan to set up shop in his store's parking lot. But regulators shut Nathan down ten minutes after opening up shop for the first time. He had yet to sell his first hot dog. Turns out that food carts are illegal in Holland unless they're connected to a brick-and-mortar restaurant.

    Seeing as many cities across the country have unaffiliated food carts and no evidence of consumer harm, there can only be one explanation for Holland's hot dog cart ban: rent-seeking. Restaurants don't want to deal with the competition, so they convinced the government to do their dirty work for them.

    Because of this rent-seeking, Nathan and his family are now homeless.

    Our friends at the Mackinac Center have spoken with the family:

    "Nate and I are now in a shelter," Lynette Johnson said. "Doug can't stay with us because he takes prescription narcotics to deal with his pain and the shelter does not allow him with those kinds of drugs."

    She said the situation has been stressful on the family. Lynette is afraid to be away from her husband in case she has a seizure.

  • The Myth Of The Phoenix: Losses Resulting From Purity Tests Don't Plant The Seeds Of Future Success

    August 10, 2012 2:02 PM

    "Purifying" a political party by getting rid of moderates does not appeal to voters in the short run. Nor does it allow a party to become stronger in the long run, by allowing it to be reborn and rise from the ashes like a phoenix. But ardent liberals, conservatives, and libertarians often buy into such wishful thinking. In reality, such a strategy works neither in the short run, nor the long run.

    It fails in the long run. It's often said -- falsely -- by right-wingers and left-wingers that conservative Republican Barry Goldwater's 1964 presidential nomination planted the seeds of Republican Ronald Reagan's 1980 victory by giving the GOP a distinctive conservative stamp that eventually attracted white southern voters, even though in the short run, the Goldwater strategy clearly failed, since the conservative Goldwater was drubbed in the general election by incumbent Democratic President Lyndon Johnson, who beat Goldwater by a whopping 25-percent margin, far more than he would have beaten a moderate Republican by. Right-wingers say this to rationalize venerating the politically inept Goldwater (who was a very nice, honest man but not good at PR), and to justify nominating conservatives even when they alienate some moderate voters in the short run.

    Liberals falsely tie the GOP's later victories to Goldwater to make it look like the GOP is built on a supposed "southern strategy" that appeals to white racism. Goldwater carried the Deep South, and no state outside it except for Arizona, carrying the Deep South only because he opposed the 1964 Civil Rights Act (which he opposed on constitutional federalism grounds). White southerners at the time opposed the Civil Rights Act for totally different reasons than Goldwater, who had long criticized segregation, and had been described by Life magazine as "instrumental in pushing the Pentagon to support desegregation of the armed services." Many southerners opposed it out of pure racism, not out of legitimate federalist principles like Goldwater's.

  • Capitalism In Space

    August 10, 2012 1:48 PM

    Over at National Review Online today, I have a piece on the current state of play in U.S. human spaceflight. It's worth noting that, even as Congress continues to keep us dependent on Russian for access to the International Space Station by underfunding the commercial crew program, the Russians just had another launch failure (their fourth in the past couple years), and their program is in disarray. If we lose a crew in the next couple years on a dodgy Russian rocket, we'll know whom to blame, but people like Kay Bailey Hutchison will be retired.

    What a mess.


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