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OpenMarket: Regulatory Reform

  • Jack Dreyfus, FDA Reform Pioneer

    April 10, 2009
    My colleague John Berlau wrote a nice obituary of mutual fund pioneer Jack Dreyfus that was published in Investor's Business Daily earlier this week. One thing John points out that few readers are likely to have known about Dreyfus is his long-time advocacy of more liberal FDA regulation of off-label drug promotion. FDA has the statutory authority to regulate promotional materials distributed by pharmaceutical companies about their products, and the agency imposes a near-total ban on distributing information about unapproved, or so-called off-label, uses. Once FDA approves a drug for any indication, doctors are free to prescribe it for any other use. The practice is so widespread that an estimated 60 percent of all...
  • Trojan Horse "Food Safety" Law

    April 9, 2009
    A misguided bill, the Food Safety Modernization Act of 2009, may shut down farmer's markets and "drive out of business local farmers and artisanal, small-scale producers of berries, herbs, cheese, and countless other wares, even when there is in fact nothing unsafe in their methods of production," warns Walter Olson at Overlawyered. Ignorance about the law's broad reach (and how it will be construed by the courts) has thwarted opposition to the bill, which will likely pass Congress. For example, a newspaper claims the bill "doesn't regulate home gardens." The newspaper probably assumed that was true...
  • Baptist-Bootlegger Alliance on Tobacco

    April 8, 2009
    In today's Washington Examiner, Tim Carney has an excellent column on how the bill to place tobacco under FDA regulation would reduce competition in the tobacco industry and enrich the biggest company -- Philip Morris -- at the expense of consumers and competitors alike. Although the bill is supported by leading anti-smoking groups (which indirectly receive money from Big Tobacco through the $246 billion Master Settlement Agreement), the bill's...
  • Rise of the Luddites

    April 7, 2009
    When it comes to things such as environmental policy, the Progressives have been rather successful at promoting their world view.  They realized that it would be futile to argue that property rights and human ingenuity could not solve anything - so they did not try (immediately) to socialize oil or other sub-surface minerals but they did succeed in derailing the evolutionary process by which institutions emerged to resolve emerging problems.  The economist Ronald Coase  noted this in an essay pointing out that the EMS (Emergency Medical Services) was well on its way to being homesteaded with rules for allowing multiple uses - and then the Feds created the Federal Communication Commission and the spectrum is still terribly managed to this day.   The environment is...
  • A Bounty on Your 401(K)

    April 6, 2009
    The Obama Administration's mortgage bailout for irresponsible borrowers (including wealthy borrowers with modest mortgage payments) provides a bounty for reckless sub-prime mortgage lenders like Countrywide to rip off your retirement plan. Countrywide sold its junky mortgages on Wall Street, where they ended up being owned by mutual funds that probably are in your 401(K). But it continued to service the mortgages and make money doing so.
  • That G20 Communique

    April 3, 2009
    Yesterday’s communiqué from the leaders of the G20 – a motley collection of democracies and dictatorships – has some good points, but in general it represents a new version of what economist Friedrich Hayek called “the fatal conceit.” It believes that government has all the answers, and demonstrates that the world's leading governments recognize few boundaries. As such, not only does the communiqué promise far more than it can deliver – something the voters in G20 democracies should remember – but it may also impede global economic recovery. The communiqué holds that, “We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared” and to “do whatever is necessary.” In clause after clause, this pro-government rather than pro-prosperity declaration...
  • The mark-to-market relief rally

    April 2, 2009
    The events leading to the Dow's climbing over 8000 today can be properly called the Mark-to-Market Relief Rally. More than any expected action of the bureaucrats and politicians at the G20, the decision today of the Financial Accounting Standards Board (FASB) to relax strict application of mark-to-market accounting mandates, urged on by members of Congress of both parties, it what's giving investors something to cheer for. In this era that supposedly signifies the return of big government, it is heartening that on this issue, Republicans and Democrats worked together to push for this common-sense free-market reform that will do much to get our economy going and could save taxpayers billions in avoiding the need for bailouts. In CEI’s recently released “...
  • Markets Rally on Hopes of Regulatory Relief

    April 2, 2009
    The stock market has gone up by 280 points so far today, fueled by FASB's vote to relax rigid mark-to-market accounting rules, which require financial institutions to value assets at their current fire-sale prices, and magnify boom-bust economic cycles. The market may also be getting a boost from the Senate's earlier vote undercutting the Obama Administration's proposed $...
  • Obama Follows in Hoover's Footsteps

    April 1, 2009
    During the Great Depression, Herbert Hoover damaged the economy, and impoverished the American people, with costly, artificial attempts to stimulate the economy through increased government spending, financed by heavy taxes like the Revenue Act of 1932. Obama is now doing the same thing through his proposed $2 trillion cap-and-trade carbon tax. That tax fulfills his ...
  • Virginia Postrel on Her Own Brush with Cost-Effective Drug Research

    April 1, 2009
    One letter writer argues that Herceptin was a poor example because "Multiple cost-effectiveness analyses have shown that, despite its high cost, Herceptin is both effective and cost-effective." That, of course, was Postrel's point. She replies, "its very cost-effectiveness makes it such a striking example. New Zealand chose to ration the drug (and not to cover it at all for early-stage cancer until July 2007) despite its significant benefits."

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