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  • Will Gov. Cuomo Kill the Economic Opportunity James Franco Extols?

    May 8, 2015 1:40 PM

    Kudos to actor, writer, and director James Franco for his Washington Post piece yesterday explaining an important benefit of McDonald’s and the fast-food and franchise industries writ large—they are there for you when you need them.

    James Franco explains that in his case the McDonald’s job was essentially a starting job after being fired from two others. Franco explains that that job sustained him when other avenues were not available. Furthermore, Franco tells how he used that time to develop skills that launched his current career.

    Franco demonstrates the value of a good work ethic and shows how he made the job fun and kept a good attitude.

    Franco’s story points out that in many cases the jobs are starting jobs as skills are developed. The story doesn’t end there though, because it makes the point that such jobs are there for you when nobody else is and at whatever stage of life you may find yourself.

    Women hold 73 percent of these fast-food jobs, writes New York Gov. Andrew Cuomo in an opinion editorial in the New York Times yesterday. Unfortunately, raising the minimum wage is going to do is keep a notable percentage of these women at home, making McDonald’s and other franchise jobs unavailable for them when they need them.

    There are jobs that are going to be lost, and disproportionately it’s the women who will be losing them. If someone has to be let go due to rising labor costs for employers, then there is a 73 percent chance it will be a woman fired from these fast-food jobs.

    About 80 percent of economists surveyed recognize the job-killing reality of minimum wage hikes and 85 percent of econometric studies demonstrate this job-killing phenomenon. 

  • Congress Gives Up Fight against NLRB Ambush Election Rule

    May 8, 2015 10:55 AM

    The Competitive Enterprise Institute planned on scoring the Senate’s veto override vote on S.J. Res. 8, a Congressional Review Act Resolution of Disapproval to void the National Labor Relations Board’s “ambush election” rule. Unfortunately, the Senate voted 96-3 to table the measure in order to focus on other business.

    While it was unlikely that Senate Republicans could have mustered the 67 votes needed to override President Obama’s veto, GOP members should have demanded a vote to put senators on the record on whether they support the special interests of labor unions or worker rights.

    The NLRB’s ambush election rule threatens workers’ freedom of association and privacy, while hampering employers’ abilities to educate employees on the impact of unionization in the workplace.

    Further, the ambush election rule is a regulatory solution in search of a problem that doesn’t exist. Labor unions already win 65.2 percent (FY 2013) of all union elections held. Labor unions win an even higher percentage of elections when employees have less time to educate themselves on unionization, and the main component of the rule is to drastically shorten the time period for union organizing elections, possibly to as little as 11 days after a union files a petition.

  • On Bee Enslavement and Other Nonsense

    May 7, 2015 5:07 PM

    I’ve seen many crazy headlines about the challenges facing honeybees, but this one takes the cake:

    “Bee collapse is the result of their enslavement in industrial monocultures.”

    So now, not only are humans “killing off” bees, we are “enslaving” them! According to this article, “industrial agriculture” is the problem and technological approaches won’t help things. However, the authors don’t offer much of any solution other than: Until local agriculture replaces global agriculture, there will always be another parasite, another virus, another mysterious collapse.”

    Although they don’t define “local agriculture,” their criticism on the use of pesticides and other methods for high-yield farming suggests they would like to go organic. Unfortunately, that approach is not only unlikely to help feed the world growing populations or create affordable food domestically, it would also be bad news for wildlife. 

    As research scholar Indur Goklany and others have pointed out, producing more food per acre—thanks to agro-technologies such as pesticides and genetic modification—means we have more land for wildlife. For example, Goklany’s research shows that if we did not have high-yield agriculture and we still farmed the way we did back in 1910, we’d have to plant more than three times the amount of land that we plant now to generate the same amount of food.

    In that case, there would be less space left for wildlife. A better approach involves the strategic use of technology along with private stewardship to provide habitat for species. We can leverage the tools we have and ensure minimal environmental impact along with taking concerted actions to protect nature’s creatures at the same time.

    But the authors of this article don’t offer any such balance and instead provide misleading information by suggesting that farming practices in remote areas of china prove that modern farming elsewhere is bad for the environment. Superficially they say:

    In fact, there are now parts of China where bees have already gone extinct, requiring apple orchards to employ between 20 and 25 people to pollinate a hundred trees - something wild pollinators or a couple of hives worth of bees would normally do.

    Despite impressions created in this article, hand pollination is not widespread, is often done for economic rather than environmental reasons, and bees there are not “extinct.” Entomologist Gwen Pearson, Ph.D., offers a balanced article on this topic in this in Wired. She explains that honeybees are not extinct in these areas of China (some people keep them for honey production and some are used for farming) and there are economic reasons that the people there chose to hand pollinate.

  • The "Draw Muhammad" Contest and the Futility of Trying to Correct Journalistic Mistakes about the Law

    May 6, 2015 2:03 PM

    ​Journalists often not only get the law wrong, but then have the audacity to smugly talk down to people who attempt to correct them (usually in a way that manifests a pro-regulatory slant). A classic example was CNN anchor Chris Cuomo’s statement, in the context of a “Draw Muhammad” contest in Garland, Texas, that “hate speech is excluded from protection. dont just say you love the constitution...read it.”

    Cuomo has seemingly never read the Constitution himself, despite having once attended law school. The Constitution doesn’t even contain the word “hate,” much less mention “hate speech” in the First Amendment. The Supreme Court has made clear over and over again that hate speech in public settings is protected by the First Amendment. As Twitchy observed, “in 2011, the Supreme Court ruled 8-1 in Snyder v. Phelps stating the always awful Westboro Baptist Church” – which vociferously hates gay people – “had the right to protest at the funerals of slain military members. In other words, hate speech is protected speech.” This is not a new legal principle. The Supreme Court invalidated a hate-speech ordinance in R.A.V. v. St. Paul (1992). Moreover, it has also ruled that a racist group couldn’t be charged more fees based on its racist message (Forsyth County v. Nationalist Movement), and that a racist Klan speech was protected speech (Brandenburg v. Ohio (1969).

    When this was pointed out to Cuomo, he justified his erroneous statement by citing the legally irrelevant “Chaplinsky case,” a case that said nothing about hate speech, but rather involved the judicially created “fighting words” exception to the Constitution. The “fighting words” exception seldom applies to hate speech, and requires face-to-face insults, not depictions of the prophet Mohammed, however inflammatory such depictions might be. As the Supreme Court explained in its Texas v. Johnson decision, which struck down attempts to ban flag burning, the fighting words exception doesn’t reach apply to even extremely inflammatory speech unless it involves a “direct personal insult or an invitation to exchange fisticuffs.” In response to a Jewish reader who attempted to correct his error, he argued that it wouldn’t cover speech in which someone would “call you something ugly for being Jewish.” But calling somebody something ugly, even in-person, is typically protected speech under the Supreme Court’s decisions in Gooding v. Wilson and Lewis v. City of New Orleans, which limited the reach of the fighting words doctrine to cover almost no speech.

    Running out of patience with Cuomo, the First Amendment and criminal-defense lawyer Ken White, also known as Popehat, called Cuomo “a disgrace to Fordham Law School, which only admitted you because of your famous father.” Popehat’s acerbic remark may reflect his frustration over widespread media myths about the scope of the First Amendment, such as a recent McClatchy news story that quoted a political science professor erroneously suggesting that the Mohammed cartoons in Texas might have be unprotected incitement of violence. In reality, the Supreme Court’s ruling in Hess v. Indiana made clear that such speech cannot be banned as “incitement,” since even inciteful speech retains its protection under the First Amendment unless it is intended to incite imminent lawless action.

  • Why Is the Federal Government Threatening Times Square's Billboards?

    May 6, 2015 1:24 PM

    Colleagues tipped me off to an absurd news story about how the federal government is threatening to punish New York City for its famously gaudy Times Square electronic billboards:

    It is known as the “Crossroads of the World,” the “Center of the Universe” and “the Great White Way,” but Times Square could become like the “Black Hole of Calcutta” if the federal government has its way, CBS2’s Marcia Kramer reported Tuesday.

    The feds say many of Times Square’s huge and neon-lit billboards must come down or the city will lose about $90 million in federal highway money.

    The edict comes from a 2012 law that makes Times Square an arterial route to the national highway system. And that puts it under the 1965 Highway Beautification Act, which limits signs to 1,200 square feet. It took the feds until now to realize that Times Square was included, Kramer reported.

    City Transportation Commissioner Polly Trottenberg agrees.

    “The signs in Times Square are wonderful. They’re iconic. They’re not only a global tourist attraction, they’re important to the economy,” Trottenberg said.

    She said she’s not going to let it happen.

    “We’re not going to be taking down the billboards in Times Square. We’re going to work with the federal government and the state and find a solution,” Trottenberg said.

    Some have suggested that this is an example of regulators run amok. It isn’t. This is a classic example of Congress passing stupid laws, ordering regulators to implement them stupidly, and then forgetting about them until unintended consequences spring up down the line. Allow me to explain what’s going on here, as virtually all the news articles and commentary out there provide next to zero context.

    As the article noted, in the last surface transportation reauthorization (MAP-21 Act of 2012), Section 1104 created what is now known as the “enhanced National Highway System.” The enhanced National Highway System refers to MAP-21’s amendment to 23 U.S.C. § 103(b)(2)(B) to include, “Other urban and rural principal arterial routes ... that were not included on the National Highway System before the date of enactment of the MAP-21.”

    In a nutshell, this provision added roads that meet the definition of “principal arterial” to the National Highway System that were not previously designated as components of the National Highway System. Why might someone want to do this? Because arterials not designated as part of the National Highway System are not eligible for Federal-aid Highway Program funding. Based on the current statutes and regulations governing National Highway System designations, roads evaluated to be principal arterials by the Federal Highway Administration’s Highway Performance Monitoring System were automatically added to the National Highway System under Congress’s 2012 law. This included some roadways in New York City.

  • Trade Promotion Authority: Addressing Some Criticisms

    May 6, 2015 10:00 AM

    Some members of Congress are concerned about Trade Promotion Authority (TPA), which would fast track trade negotiating authority, but in fact it would be a positive move toward ensuring the United States remains a competitive economy. Senator Jeff Sessions (R-Ala.) released a statement this week citing concerns with TPA over increased trade deficits, currency manipulation—claiming it would take power away from Congress and give it to the executive branch—and more.

    AEI’s Derek Scissors published a rebuttal to Sessions’ misdirected attack on TPA that deals with many of the issues raised by Sessions. Scissors noted correctly that some of Sessions’ concerns have little to do with TPA but are hot-button issues for opponents of trade agreements, for example, immigration.

    Several points raised in Sessions’ attack deserve more elaboration. First, contrary to Sessions’ assertion, Trade Promotion Authority does not usurp Congress’ authority in relation to trade agreements. Rather, it is an accommodation between the executive branch and the legislative branch of government to allow trade negotiations to be conducted with credibility with other countries; that is, that agreements reached during negotiations will not be overturned in the voting process. TPA cedes negotiating authority to the president for trade agreements only if certain congressionally determined criteria are met: that very specific objectives outlined in TPA are accomplished in a trade agreement, that Congress is consulted throughout the negotiating process. TPA puts Congress in charge.

  • Labor Department "Fiduciary Rule" Threatens to Eviscerate JOBS Act Gains for Investors, Entrepreneurs

    May 6, 2015 9:53 AM

    Three years ago, President Barack Obama signed into law the Jumpstart Our Business Startups (JOBS) Act, modestly but significantly liberalizing securities markets for investors and entrepreneurs. In signing that bill into law on April 5, 2012, Obama paid heed to the wisdom of ordinary American investors and made the case for easing barriers to their investing in startups.

    “Because of this bill, start-ups and small business will now have access to a big, new pool of potential investors—namely, the American people,” Obama proclaimed. “For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

    But the authors of the Department of Labor’s new proposed “fiduciary rule” don’t seem to share the view President Obama professed on investor choice in signing the JOBS Act. Rather, those who wrote the DOL’s sweeping new seven-part group of regulations that would sharply curtail choices of assets and investment strategies in 401(k)s, IRAs, and other savings plans, appear to share the mindset of Obamacare architect and MIT economist Jonathan Gruber. Gruber has been shunned by former allies since he was caught on camera boasting about how the health care overhaul passed due to the “stupidity of the American voter.”

    By curtailing investment in IRAs, the rule could eviscerate the gains entrepreneurs and savers have made from the JOBS Act in the freedom to raise capital and invest. And the authors of the rule seem to want it that way, for paternalistic Gruberesque reasons. Again and again in the rule, DOL expresses the view that American investors must be protected from their own stupidity. According to page 4 of the rule:

    [I]ndividual retirement investors have much greater responsibility for directing their own investments, but they seldom have the training or specialized expertise necessary to prudently manage retirement assets on their own.

    Therefore, they “need guidance on how to manage their savings to achieve a secure retirement.”

    Can’t savers who feel they need this guidance seek it out from a variety of investment professionals under a system with strong disclosure and anti-fraud rules? Absolutely not, says the Obama administration.

    “Disclosure alone has proven ineffective,” states the rule. “Most consumers generally cannot distinguish good advice, or even good investment results, from bad” (page 36). In fact, proclaims the DOL, “recent research suggests that even if disclosure about conflicts could be made simple and clear, it would be ineffective — or even harmful.”

    So, in the DOL’s view, the only solution is to tax these dim-witted investors—for their own good, of course—and expose financial professionals to a flurry of lawsuits and penalties if administration officials deem their advice not to be in savers’ “best interests.”

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

    May 4, 2015 11:48 AM

    The 1,000th new regulation of 2015 was published in Friday’s Federal Register, which itself hit the 25,000-page mark on the year. Even so, agencies are still well behind their usual rulemaking pace, on pace for slightly less than 3,000 regulations, compared to the usual pace of more than 3,500 rules.

    On to the data:

    • Last week, 65 new final regulations were published in the Federal Register, after 79 new regulations the previous week.
    • That’s the equivalent of a new regulation every two hours and 35 minutes.
    • So far in 2015, precisely 1,000 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,976 new regulations this year, which would be several hundred fewer rules than the usual total.
    • Last week, 1,975 new pages were added to the Federal Register, after 1,589 pages the previous week.
    • Currently at 25,097 pages, the 2015 Federal Register is on pace for 74,694 pages.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Seven such rules have been published so far this year, one in the past week.
    • The total estimated compliance cost of 2015’s economically significant regulations ranges from $793 million to $846 million for the current year.
    • 81 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2015, 183 new rules affect small businesses; 28 of them are classified as significant. 
  • ERAM Deployed Five Years Late, NRC Blasts FAA on NextGen Delays

    May 4, 2015 10:32 AM

    We saw two announcements on air traffic control modernization last week. The first was that the Federal Aviation Administration (FAA) had finally completed its En Route Automation Modernization (ERAM) deployment, a critical component of the Next Generation Air Transportation System (NextGen) update of National Airspace System (NAS) management.

    ERAM greatly improves flight tracking, communications, and controller displays by harnessing new technologies that have been developed in the last several decades. This is all well and good, but ERAM rollout was supposed to have been completed by 2010. Five years late and several hundred million dollars over budget, it is a bit rich for the FAA to be declaring victory. But perhaps this is to be expected from a broken agency culture. Recall that the automated flight tracking computer system ERAM is replacing, the Host, suffered from serious delays when it was implemented… in the 1980s.

    The second big air traffic control announcement was the comprehensive review of NextGen published by the National Research Council. Appropriately described by The Washington Post’s Ashley Halsey as “scathing,” the NRC report, which was ordered by Congress in the FAA Modernization and Reform Act of 2012, calls out FAA’s failings in implementing NextGen. Halsey highlights some quotes:

    • “The original vision for NextGen is not what is being implemented today.”
    • “This shift in focus has not been clear to all stakeholders.”
    • “Airlines are not motivated to spend money on equipment and training for NextGen.”
    • “Not all parts of the original vision will be achieved in the foreseeable future.”
    • “NextGen, as currently executed, is not broadly transformational.”
    • “‘NextGen’ has become a misnomer.”
  • Deceptive Discrimination Laws

    April 29, 2015 9:14 AM

    Discrimination may be bad for business, but that doesn’t mean laws banning discrimination are good for business. Often, these laws are like the proverbial Trojan Horse, applied by the courts in unexpected ways that are harmful to businesses, including employers who harbor no prejudice of any kind. For example, the Supreme Court interpreted a federal race and sex discrimination law (Title VII of the Civil Rights Act) as banning unintentional “disparate impact” (which is when a neutrally applied selection criterion weeds out more black than white applicants) even though that statute explicitly limited relief to cases where there was a showing that the employer had “intentionally engaged in or is intentionally engaging in an unlawful employment practice.” [See Griggs v. Duke Power Co. (1971); 42 U.S.C. 2000e-5(g).] The result of that case was to outlaw a wide array of useful, colorblind standardized tests.

    The Supreme Court also interpreted a statutory attorneys fees provision that was neutral on its face as instead mandating one-way fee-shifting, effectively entitling only prevailing plaintiffs to such fees (except in really extreme cases), not prevailing defendants, and entitling such plaintiffs to fees even if the employer had a reasonable, good-faith belief for taking the position it did. [See Christiansburg Garment Co. v. EEOC (1978).]

    Civil rights agencies and courts also impose emotional distress damages in discrimination cases that seem to be either grossly exaggerated, or insufficiently corroborated by objective evidence. For an example of the former, see the recent ruling by an administrative law judge in the Oregon Bureau of Labor and Industries, recommending “$135,000 in damages against Melissa and Aaron Klein, owners of Sweet Cakes by Melissa in Gresham, Ore., who had declined to cater a gay wedding on grounds of religious scruples [Oregonianearlier].” As is typical in administrative discrimination cases, the same agency is effectively serving as prosecutor, judge, and jury, which the Founding Fathers would have viewed as a violation of the constitutional separation of powers, as law professor Philip Hamburger has explained.

    $135,000 (or even a tenth that amount) is a grossly excessive emotional-distress damage award for a simple refusal to contract with a customer. Being rebuffed by a merchant is much less painful than losing your job, or even losing out on a promotion, and people wrongly fired from their jobs typically get less than $135,000 in emotional distress damages. The award is so ridiculously large that it seems to designed not to compensate, but to punish people for harboring archaic beliefs, with the lion’s share of the award being to punish the small business owners for their thought-crime, rather than make anyone whole.

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