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Published: Sun, 26 Mar 2017 00:00:00 -0400

Last Build Date: Sun, 26 Mar 2017 01:12:33 -0400


Maryland Has a Bad Beer Bill on Tap

Wed, 22 Mar 2017 13:45:00 -0400

(image) First the good news: The Maryland House of Delegates just passed a bill that would quadruple the amount of beer that breweries are permitted to sell in their taproom. Now the bad news: Those brewers will have to try to squeeze those sales into less time, because the bill would also require them to stop serving by 9 on weeknights and by 10 on Fridays and Saturdays. (Depending on where they're located, they're currently allowed to stay open til either midnight or 2 a.m.) The bill also bans the brewers' taprooms from selling other companies' products.

In other words, the law takes away a lot more than it allows. The aim of all this, apparently, is to protect traditional bars and liquor stores from competition.

This had been one of three rival beer bills in the legislature. The best one would have loosened the restrictions on how much beer the brewers could serve without adding those new controls. The other measure was a cronyist proposal that essentially would have carved out a special privilege for a Guinness brewery coming soon to Baltimore County, upping the amount it could serve in its taproom without offering a comparable increase elsewhere. (Speaking as a local: I'm all for bringing more Guinness to the area, but I'd like the rest of the state's beermakers to have the same rights.) Guinness had actually endorsed the more sensible legislation, but it had this one ready too, just in case. Beer writer Liz Murphy called it the "cover your ass bill."

The legislation will now go to the Maryland Senate, where hopefully it will die. If these new rules do become law, Guinness will be able to handle them, but they'll kneecap a lot of smaller businesses. It'd be a double tragedy: a bill so bad that it drives you to drink, but which also takes drinks off the table.

Relax: Gutting the EPA Won't Make Your Air Dirtier and Water More Polluted

Tue, 21 Mar 2017 14:35:00 -0400

President Donald Trump's proposed cuts in the Environmental Protection Agency's budget "will not 'Make America Great Again', " asserted Conrad Schneider, the advocacy director at Clean Air Task Force activist group. "It will 'Make America Gag Again.'" Schneider and other alarmed activists are conjuring the bad old days of the mid-20th century when America's cities were blanketed with smog and its streams clotted with filth. In his new budget blueprint, Trump wants to cut back Environmental Protection Agency funding by 31 percent and fire 3,200 of agency's bureaucrats. But would such steep EPA budget cuts really unleash polluters to pump out more smoke and sewage? To get a handle on this question, let's take an amble down memory lane to assess the evolution of pollution trends in the United States since President Richard Nixon cobbled together the Environmental Protection Agency in 1970. First, with regard to air pollution, air pollution in most American cities had been declining over the course of the 20th century. Why? Many American cities had recognized the problem of air pollution in the late 19th century. Consequently they passed ordinances that aimed to abate and control the clouds of smoke emitted from burning coal in industry, heating, and cooking. For example, Chicago and Cincinnati adopted smoke abatement ordinances in 1881. American Enterprise Institute scholars Joel Schwartz and Steven Hayward document in their 2007 book, Air Quality in America, that emissions of smoke, soot, ozone and sulfur dioxide had been falling for decades before the creation the EPA and the adoption of the Clean Air Act. For example, ambient sulfur dioxide had fallen by 58 percent in New York City during the seven years preceding the adoption of the Clean Air Act. "Air quality has indeed improved since the 1970 passage of the" Clean Air Act, they claim. "But it was improving at about the same pace for decades before the act was passed, and without the unnecessary collateral damage caused by our modern regulatory system." They attribute a lot of the pre-EPA improvement in air quality to market-driven technological progress and increases in wealth that enabled households to switch from coal to cleaner natural gas for heating and cooking; railroads to replace coal-fired locomotives with diesels; more efficient industrial combustion that reduced the emissions of particulates; and improvements in the electrical grid that allowed power plants to be situated closer to coal mines and further from cities. Even if the Clean Air Act did not noticeably speed up the rate of air pollution abatement, the air is nevertheless much cleaner than it used to be. How clean? Since 1980 the index for six major pollutants, carbon monoxide, ozone, particulates, sulfur dioxide, nitrogen dioxide and lead has dropped by 65 percent since 1980. In the meantime, the economy grew more than 150 percent, vehicle miles increased by more 100 percent, population grew by more than 40 percent and energy consumption rose by 25 percent. And yet, a 2016 Gallup poll found that 43 percent of Americans say that they worry about air pollution a great deal. Schwartz and Hayward persuasively argue, "The public's interest lies in sufficiently clean air, achieved at the lowest possible cost. But federal air quality regulation suffers from incentives to create requirements that are unnecessarily stringent, intrusive, bureaucratic, and costly." Basically, the costs of ever tightening federal air pollution controls are now exceeding their benefits. Since most remaining air pollution (except for greenhouse gases which we will set aside for a discussion at another time) is now concentrated in discrete regions rather than crossing jurisdictional lines, cities, counties and states can be reasonably expected to monitor and regulate those pollutants without much federal oversight. The EPA also regulates water pollution under the Clean Water Act of 1972. That act prohibits anybody from discharging "pollutants" through a "point source" into a "water of the United State[...]

Good News! A Court Has Ruled This Skim Milk Can Be Called Skim Milk!

Tue, 21 Mar 2017 13:35:00 -0400

(image) Hooray for common sense over really stupid regulatory behavior that is clearly designed to protect entrenched government interests! Skim milk is skim milk!

This calls for a more detailed explanation, obviously. A creamery in Florida, Ocheesee Creamery, has been fighting with state regulators over its skim milk. One might assume that skim milk is simply milk with the cream removed. That's what thinking for yourself gets you. According to the Florida Department of Agriculture, in order to actually call your skim milk "skim milk" in the marketplace you are required to add vitamin A to replace what has been removed from the process.

Ocheesee doesn't want to add vitamin A (or anything else) to its skim milk and has been fighting state regulators. The state wanted Ocheesee to label its milk "imitation skim milk," which is absurdly not true. It is actual skim milk but without added vitamin A. It even offered to label the lack of vitamin A, but it wasn't enough for regulators.

Baylen Linnekin, who writes about food law and food policy issues weekly for Reason, had been covering the case and was even retained as an expert to explain in a report that consumers would not be misled by the fact that Ocheesee's pasteurized skim milk was still pasteurized skim milk regardless of whether vitamin A had been added.

Linnekin also noted that the larger dairy industry was more than happy to side with regulators given the opportunity to keep potential competitors with different kinds of choices out of the marketplace. Note how dairy interests are trying to also convince the feds to prohibit products like soy milk or almond milk from calling themselves "milk," though there's no real consumer confusion here that necessitates government intervention.

A federal judge initially sided with the Florida regulators against Ocheesee, but this week a panel of federal judges reversed the decision on appeal, ruling "The State was unable to show that forbidding the Creamery from using the term 'skim milk' was reasonable" and that Ocheesee was not misleading consumers.

It's also yet another win for the freedom-protecting lawyers of the Institute for Justice, who were representing the creamery in court. Read more about the case here.

Another Blow Against the Petty Tyranny of Blue Laws

Wed, 15 Mar 2017 00:01:00 -0400

I am in Austin this week for the South by Southwest conferences, and I had planned to pick up some whiskey this Sunday before flying back home to Jerusalem, where brown spirits cost much more. Then a friend pointed out that my plan was not feasible in Texas, which is one of 11 states that still prohibit liquor sales on Sunday. Until recently there were 12 such states, but last week Minnesota Gov. Mark Dayton signed a bill allowing liquor stores to operate on Sundays. He thereby eliminated an arbitrary inconvenience that over the years has been justified in the name of piety, paternalism, and protectionism, none of which is a morally acceptable reason to use force against peaceful people. Minnesota's new law, which follows similar moves by 16 other states since 2002, takes effect on July 1. But Jim Surdyk, proprietor of Surdyk's Liquor & Cheese Shop in Minneapolis, did not wait to exercise his new freedom. He was open for business last Sunday, prompting a $3,500 fine and threats against his license. It is not hard to understand Surdyk's impatience. In the 159 years since Minnesota became the 32nd state, it has never deigned to let people buy packaged beer, wine, or liquor on Sunday. Minnesotans who wanted to have drinks at home on the Christian Sabbath had to plan ahead or make a run to neighboring Wisconsin, which has allowed Sunday sales since 1874. You might wonder whether it is constitutional to foist a religious day of rest on people who choose not to observe it. According to the Supreme Court, it is. The Court's reasoning highlights the petty tyranny of blue laws. In the 1961 case McGowan v. Maryland, seven department store employees challenged their criminal convictions for daring to sell people "a loose-leaf binder, a can of floor wax, a stapler, staples and a toy" on a Sunday. The Court rejected their argument that Maryland's blue law violated the First Amendment's ban on "an establishment of religion." "There is no dispute that the original laws which dealt with Sunday labor were motivated by religious forces," Chief Justice Earl Warren wrote in the majority opinion. But he added that "as presently written and administered, most of them, at least, are of a secular rather than of a religious character." Warren's secularization of Maryland's blue law was a bit of a stretch, given that the statute explicitly addressed "Sabbath Breaking" and repeatedly referred to the "Lord's day," demanding that people not "profane" it through inappropriate activities. But the chief justice argued that the state had a legitimate interest in promoting "the health, safety, recreation and general well-being" of its residents by mandating not only "a periodic respite from work" but "a general cessation of activity, a special atmosphere of tranquility, a day which all members of the family or friends and relatives might spend together." More recently this pious paternalism has given way to a nakedly protectionist argument. The main opponents of Sunday sales nowadays are independent liquor stores whose owners worry that competition will force them to work harder without guaranteeing a commensurate increase in revenue. "Small-business owners argued that allowing Sunday sales would stretch six days of purchases over seven days and increase their operating costs," the St. Paul Pioneer Press reports. "They also worried it would bring more chain and big-box stores," which "can undercut smaller stores on pricing." The point of banning Sunday sales, in other words, is not to protect consumers from themselves but to protect merchants from their competitors. High-handed promotion of "the general well-being" has been replaced by an open conspiracy against consumers. Jim Surdyk, the Minneapolis liquor retailer who dismayed city and state officials by selling on Sunday before he was legally permitted to do so, has a more customer-friendly attitude. "You have to be on top of the game or get out of the game," he says. "I'm just trying to do what everybody wants." © Copy[...]

Scott Gottlieb: Trump's Nominee for Food and Drug Administration Commissioner

Mon, 13 Mar 2017 14:32:00 -0400

Products regulated by the Food and Drug Administration (FDA) account for about 20 cents of every dollar of annual spending by U.S. consumers, amounting to more than $2.4 trillion in annual consumption that includes medical products, food and tobacco. The agency regulates medicines, diagnostic tests, medical devices, food safety including those made from modern biotech crops and livestock, food labeling, and tobacco and nicotine products. What the agency's bureaucrats decide has signifcant impact on U.S. economic growth and the livelihoods of Americans. President Donald Trump has nominated physician and American Enterprise Institute scholar Scott Gottlieb to become commissioner of the agency. Gottlieb earlier served as deputy commissioner during the Bush administration. Gottlieb has long been a critic of FDA's increasingly risk-averse culture that is slowing down the approval of new medicines. Defenders of the agency often cite data suggesting that the agency approves new medicines faster than other drug approval agencies abroad. That is true if only the period of time after a drug maker has submitted its New Drug Application (NDA) for approval is taken into account. More consequentially, increasing FDA requirements for longer and more extensive clinical trials before the NDA is submitted has substantially lengthened the periods and raised the costs of getting new treatments from petri dishes to patients' bedsides. Consider that researchers at the Tufts University Center for the Study of Drug Development have estimated that in 1991 it cost $412 million (2013 dollars) to develop and obtain approval for a new pharmaceutical. Last year, they calculated that it now takes more than $2.5 billion, a six-fold increase. Gottlieb, who has been associated with venture capital side of medical innovation, will seek to change the agency's culture from the current highly precautionary approach to one that more readily recognizes that benefits always come with risks. Under his direction, the agency would likely exercise a lighter regulatory hand over the development of new medical apps and diagnostics while seeking to work out the best way to speed up the approval of novel therapeutics based on stem cells and gene-edting technologies like CRISPR. Gottlieb is keen to get generic drugs approved quickly in order to bring down prices for consumers. In an August 2016 op-ed in the Wall Street Journal, he noted it now takes more than 2 years for the agency to approve a generic drug application and that the costs had risen from $1 million in 2003 to over $15 million now. He added, "This means that a drug may not face brisk generic competition until it exceeds $25 million in annual revenue. Thanks to these changes, infrequently used generics—such as clomipramine for major depression—may now have only one competitor and cost as much as branded drugs." Gottlieb also cited research that estimated the FDA's proposed generic labeling rule would expose generic drug manufacturers, who supply 84 percent of all prescriptions, to failure-to-warn product liability lawsuits, costing more than $5 billion in 2017. That rule is supposed to be finalized in April. As commissioner, Gottlieb might be able to halt it. While not a radical reformer, Gottlieb clearly has a good understanding of how over-regulation has been slowing down innovation in medicines and foods.[...]

At SXSW, Mark Cuban Calls Himself a Libertarian 'at Heart,' Wants to Be Convinced to Run for President

Sun, 12 Mar 2017 20:45:00 -0400

(image) "At heart I'm a libertarian," famous entrepreneur Mark Cuban said at a South by Southwest panel focused on disruption and government regulation.

But moments later, he said that while he believed many government regulations are bad, he had "evolved" on some healthcare issues and believed that America had taken on a liability and should guarantee that citizens have access for emergency or chronic medical problems.

"If a toilet falls out of a space lab and hits you on the head," Cuban joked, you should be guaranteed healthcare. But he also made it clear that healthcare shouldn't be guaranteed for every medical problem, and he thought the terms should be provided by a constitutional amendment.

Many libertarians may look askance at such a position, and perhaps also wonder why guaranteed government healthcare was even a topic of discussion for a panel titled "Is Government Disrupting Disruption?" In reality, talks about disruptive innovation and government regulation probably took up only a quarter of the conversation of the panel.

The panel's apparent actual function was to float the trial balloon of "Mark Cuban: 2020 Presidential Contender."

Interestingly, while Cuban is critical of Trump's mental acuity (diplomatically speaking), he made it clear that he is indeed in favor of much of Trump's deregulation hopes, though Cuban believes there are regulations that should be preserved (including federal water management) if they achieve a public safety goal. It was not pointed out to him that nearly every single regulation is claimed to preserve public health and safety even when they do not, but he's at least aware that there are other regulations that are designed to "protect moneyed interests" or to serve as a "source of revenue" for government agencies. (Also of interest, he told the SXSW crowd that net neutrality was "bad, scary" and the Federal Communications Commission "worse, worse, worse.")

Cuban was critical of Trump's economic growth strategy while accepting the reality of the tough lives of people in parts of the country. He, like many trade and economic analysts, doesn't believe the president can roll back the clock to give people their old jobs back. "Our current administration is not going to solve this problem by thinking they're bringing back factories," he said.

When moderator Michele Skelding, an entrepreneurial advisor with the University of Texas at Austin, suggested his comments were "a great platform to run on." Cuban wouldn't commit one way or the other as to whether he would consider a presidential run in 2020, but it seemed clear it was something he was thinking about.

"There's somebody who has to run that looks forward and not like it's 1975," he said. But while the former Trump-praiser-turned-critic ("I got to know him," he explained) could oppose Trump, he made it very clear there are parts of Trump's agenda (deregulation) that he actually supports.

"But I like presidents who read," he said, to the crowd's cheers.

What Do You Call a Tool to Help Uber Avoid Gov't Stings? A Good Start.

Fri, 03 Mar 2017 16:45:00 -0500

As Uber faces some public relations problems right now connected to complaints of sexual harrassment and mistreatment of its drivers, The New York Times has what it apparently thinks is an expose of sorts. It doesn't. Or at least it doesn't from the perspective of the lives of ordinary people. The way journalist Mike Isaac has approached this story betrays a type of media bias that seems to naturally assume that government regulators are in charge of us all, and those who are trying to find ways to work around them are up to no good. To wit, Uber uses a tool called "Greyball" to circumvent officials. It's a tool that Uber says is designed to help it deny ride requests to people who violate their terms of service, disrupt the system, or threaten their drivers. They also have been using it to operate in places where government officials have been trying to shut them down. The story of the technology itself is genuinely fascinating, but it's caught up in this concept that Uber's behavior is villainous, possibly even illegal, though the expert Isaac consulted, a fellow Times contributor, could only make vague claims. This tool essentially creates a fake ghost version of Uber. People who are "greyballed" could order cars via Uber's map and could watch them travel around. But the Uber drivers always canceled when the customer ordered a pickup. The cars were not actually real. They were fabricated by the app to trick the user into wasting time, without the user realizing they had been secretly been banned and maybe starting a new account. Uber used this tool to operate in Portland, Oregon, as regulators attempted to use sting operations to catch them and shut them down. As the story explains, this all bothered authorities because Uber was employing people and putting them to work outside of their purview: UberX essentially lets people who have passed a cursory background check and vehicle inspection to become an Uber driver quickly. In the past, many cities banned the service and declared it illegal. That's because the ability to summon a noncommercial driver — which is how UberX drivers who use their private vehicles are typically categorized — often had no regulations around it. When Uber barreled into new markets, it capitalized on the lack of rules to quickly enlist UberX drivers, who were not commercially licensed, and put them to work before local regulators could prohibit them from doing so. After authorities caught up, the company and officials generally clashed — Uber has run into legal hurdles with UberX in cities including Austin, Tex., Philadelphia and Tampa, Fla., as well as internationally. Eventually, the two sides came to an agreement, and regulators developed a legal framework for the low-cost service. What's fascinating about the story is how it fails to identify a single person victimized by the Greyball tool other than the authorities who are unable to operate their stings. Meanwhile, as the story does note, it's the Uber drivers who faced harassment and had their cars impounded or ticketed by authorities, which Uber then had to reimburse. And in other countries, Uber drivers (and passengers) had to worry about actual physical attacks from workers in the entrenched taxi cartels. As usual when we see stories like this, the defense always seems to be "Uber needs to follow the same rules as everybody else," and never "Everybody else should have the same freedom as Uber." The story is written with an unquestioned assumption that extensive government regulation of private transit is normal and expected. When I mentioned this sort of bias on Twitter, I got this response from a stranger: "That's not media or institutional bias, that's a reality bias. Very few people are ok with inmates running the asylum" My response there, as it is here, is that "inmates running the asylum" is "an interesting way to describe ostensibly free human beings." Read[...]

The Social Cost of Carbon Calculation Debate*

Fri, 03 Mar 2017 14:15:00 -0500

"The social cost of carbon is the most important number that you've never heard of," according to University of Chicago economist Michael Greenstone. Greenstone led the interagency working group that devised this metric during the Obama administration. Since it was first calculated in 2010, the social cost of carbon has been used to justify 80 different federal regulations that purportedly provide Americans with over a trillion dollars' worth of benefits. "The social cost of carbon is nothing but a political tool lacking scientific integrity and transparency conceived and utilized by an administration pushing a green agenda to the detriment of the American taxpayers," insisted Rep. Darin LaHood (R-Il.), chair of the Oversight Subcommittee of the House Committee on Science, Space and Technology. LaHood's remarks were made as he opened a hearing called "At What Cost? Examining the Social Cost of Carbon" earlier this week. "This metric did not simply materialize out of thin, and dirty, air," countered Rep. Don Beyer (D-Va). Beyer argued that the social cost of carbon (SCC) metric was devised by the Obama administration through a process that "was transparent, has been open to public comment, has been validated over the years and, much like our climate, is not static and changes over time in response to updated inputs." So what are these politicians fighting about? The social cost of carbon is a measure, in dollars, of the long-term damage done by a ton of carbon dioxide emissions in a given year. Most of the carbon dioxide that people add to the atmosphere comes from burning coal, oil, and natural gas. The Obama administration's interagency working group calculated that the SCC was about $36 per ton (in 2007 dollars). This figure was determined by cranking damage estimates through three different integrated assessment models that try to link long-term climate change with econometric projections. Notionally speaking, imposing a tax equal to the SCC would encourage people to reduce their carbon dioxide emissions while yielding revenues that could be used to offset the estimated damage, e.g., by building higher sea walls or developing heat-resistant crops. Can citizens take that $36-a-ton estimate to the bank? Not really. First, consider that integrated assessment models are trying to forecast how extra carbon dioxide will impact climate and economic growth over the course of this century and beyond. One of the critical variables is climate sensitivity, conventionally defined as how much warming can be expected from doubling the amount of carbon dioxide in the atmosphere. The working group calculating the SCC also used various discount rates. (One way to think of discount rates is to consider how much interest you'd require to put off getting a dollar for 10 years.) Finally, instead of focusing on domestic harms, the working group included the global damages in calculating the SCC. Republicans, who convened the subcommittee hearing, argue that the SCC is bogus and therefore many of the regulations aimed at cutting the emissions of carbon dioxide by restricting burning of fossil fuels are too. In his 2013 analysis of the IAMs relied upon by the Obama administration's interagency working group, Massachusetts Institute of Technology economist Robert Pindyck concluded that all three models "have crucial flaws that make them close to useless as tools for policy analysis." He pointedly added, "These models can be used to obtain almost any result one desires." In other words: Garbage In, Garbage Out. Having tossed the models aside, Pindyck earnestly sought another method for establishing a plausible SCC. In November, he published a new study in which he asked selected economists and climate scientists to provide their best guess of what the SCC should be, assuming the possibility of a climate-induced reduction in global economic output 50 years [...]

The Social Cost of Carbon and Congress: New at Reason

Fri, 03 Mar 2017 14:15:00 -0500

(image) "The social cost of carbon is nothing but a political tool lacking scientific integrity and transparency conceived and utilized by an administration pushing a green agenda to the detriment of the American taxpayers," insisted Rep. Darin LaHood (R-Il.), chair of the Oversight Subcommittee of the House Committee on Science, Space and Technology. LaHood's remarks were made as he opened a hearing called "At What Cost? Examining the Social Cost of Carbon" earlier this week.

"This metric did not simply materialize out of thin, and dirty, air," countered Rep. Don Beyer (D-Va). Beyer argued that the social cost of carbon (SCC) metric was devised by the Obama administration through a process that "was transparent, has been open to public comment, has been validated over the years and, much like our climate, is not static and changes over time in response to updated inputs."

So what are these politicians fighting about? Read the column and find out about "the most important number that you've never heard of."

Brickbat: Pokemon Go Away

Fri, 03 Mar 2017 04:00:00 -0500

(image) A new Milwaukee County, Wisconsin, ordinance will require the developers of Pokemon Go and other games to get a permit to host an event if they create games that will bring people into county parks. Officials say the law is a response to the large numbers of people who came to county parks while playing Pokemon Go, which they said led to traffic congestion, large amounts of trash and other problems.

Trump and How to Speed Up FDA Regulatory Approvals

Wed, 01 Mar 2017 15:15:00 -0500

President Donald Trump described the Food and Drug Administration's drug approval process as "slow and burdensome" in his speech to a joint session of Congress on Tuesday. He observed that the FDA process "keeps too many advances... from reaching those in need." His solution is to "slash the restraints" at the FDA to speed new drugs to the bedsides of patients. To illustrate his criticisms Trump pointed to Megan Crowley in the gallery, a young woman who has survived Pompe disease which is caused by a genetic glitch that prevents her cells from properly processing glycogen. After she and her younger brother was diagnosed with the disease in 1998, her father John Crowley co-founded the biotech company Novazyme to develoop a treatment. Megan and her brother began taking the recombinate enzyme replacement therapy in 2003. The enzyme treatment was tested on several dozen patients and submitted to the FDA in 2005. The agency took only 9 months to approve the drug in 2006. That may not seem particularly slow and burdensome, but a new Tufts University study reports more typically that getting a new drug from development through the FDA process takes more than a decade and costs about $2.6 billion. As it happens, Crowley is head of Amicus Therapeutics which has developed an enzyme replacement treatment for Fabry Disease. In November, the FDA rejected its initial submission for approval and ordered the company to conduct further clinical trials. Interestingly, the Amicus' new drug was approved by European Union drug regulators in May, 2016. Another way to think about the development of the Pompe treatment is that it took three years for the drug to get FDA approval after Crowley had begun dosing his children with it. If they had had to wait an extra three years for FDA approval, Megan and her brother might well have succumbed to their illness. As I have argued, the FDA should be modernized so that new treatments become available to patients once they have made it through the Phase II safety testing. Patients who choose the new treatments would essentially be enrolled in Phase III efficacy trials. This would drastically cut the time and the expense it takes to get new medicines to people. I am not alone in urging this reform of the drug approval process. In a February 14, 2012 Wall Street Journal op-ed, former FDA Commissioner Andrew von Eschenbach argued that "after proof of concept and safety testing, the [new therapeutic] product could be approved for marketing with every eligible patient entered in a registry so the company and the FDA can establish efficacy through post-market studies." Elsewhere von Eschenbach pointed out this FDA reform would mean that new drugs could ... ...come to market after promising early-stage research in targeted patients, with appropriate post-marketing studies required. Payers and patients would be the ultimate judge about the quality of the product, and companies could learn from the experience to develop superior products if needed. Companies would still be liable for unforeseen side effects, but patients and doctors would be warned -- through the drug's labeling -- that the product had been approved based on promising but provisional research. Gradually replacing or reducing dependence on Phase 3 trials with smaller, faster adaptive trials and post-market surveillance would have a positive impact on medical innovation and the U.S. economy.... To head the FDA, Trump is reportedly thinking of nominating venture capitalist Jim O'Neill who argued in 2014: "We should reform [the] FDA so there is approving drugs after their sponsors have demonstrated safety—and let people start using them, at their own risk. Let's prove efficacy after they've been legalized." Sounds good to me.[...]

Trump's Economic Illiteracy on Display in Address to Congress

Wed, 01 Mar 2017 13:45:00 -0500

Many agree that Donald Trump came across as presidential during last night's speech to a joint session of Congress. He even came across as somewhat coherent. But if being presidential and coherent means raking up more debt, being a nationalist protectionist who believes in destructive "Made in America" and import-bashing policies, and railing against immigrants as if they were responsible for all of the crimes and welfare spending in the country, then it's hard to see any value whatsoever in being presidential and coherent. I appreciate that the new president didn't spend a significant amount of time blaming his predecessor. Yes, Trump did mention our debt doubling as a share of GDP in the last eight years and he also said that this was the slowest recovery ever, but his complaints do not compare to those of Barack Obama, who was still blaming George W. Bush eight years into the job. Trump also continued to be solid in his calls for regulatory overhaul. He wants to cut regulations and lift the horrible burden on our lives and companies imposed by an out-of-control regulatory state. That's great. He also made some noise about cutting taxes, and in particular about the dangerously high corporate income tax rates. I will also give him credit for not endorsing the misguided House Republican plan to adopt a border adjustment tax that would tax imports while exempting exports. That plan would give, yet again, a leg up for companies like Boeing and General Electric while hammering consumers. However, last night we also had to sit through the president's misleading rants about other countries' tax codes creating a disadvantage for our exporting companies while Trump never once acknowledged that if there is a disadvantage it actually comes from our own government taxing U.S. companies on a worldwide basis—which is something most of our competitors do not do. I am going to let others address the anti-immigration stance of the president. However, I would be remiss if I didn't mention that it is heartbreaking to see how misguided today's Republicans are about the alleged harms caused by immigration. I realize that in today's America my own chances of getting into the country and working in this great nation as an H-1B holder would be very slim. However, my true heartache comes for those who entered this country illegally but have stayed to make better lives for themselves and their families. There are millions of upstanding citizens who are undocumented due to a lack of process to make low-skilled workers legal, thereby preventing them from being able to fully contribute to making America great and productive. To the nannies who watch our children, the cleaning ladies who keep our houses neat, the gardeners who mow our lawns, or the farmhands who pick our vegetables and fruits, I say, some of us know and appreciate your value. It is hard to accept that you now live in fear of being sent away from the country you have called home for many years. As for the federal budget, on the campaign trail Trump promised that he would not touch the most expansive and insolvent entitlement programs, which just happen to be the biggest drivers of our future debt. Yet Trump also promised that he would address the unsustainable level of our debt. Ultimately, Trump will only be able to keep one of those two promises, and it won't be the one about reducing the debt. That is unfortunate because the gross U.S. debt is almost $20 trillion. The public portion of that debt, the money that the government owes to foreign and domestic investors, has reached $14.4 trillion and is growing fast due to the explosion of entitlement programs—the same programs that Trump has irresponsibly promised not to touch. Last year, spending on Medicare, Social Security, Medicai[...]

Trump, Navigable Waters, and the EPA's WOTUS Regulations

Tue, 28 Feb 2017 15:30:00 -0500

In 2015, the Environmental Protection Agency issued a new Clean Water Rule, a.k.a. Waters of the U.S. (WOTUS) rules defining the jurisdiction of the agency over rivers, lakes, creeks, estuaries, ponds, swamps, prairie potholes, irrigation ditches, and intermittent rivulets. The new rules were based on the EPA's interpretation of the provisions of the 1972 Clean Water Act that mandated that the agency devise "comprehensive progams for water pollution control" aimed at "preventing, reducing, or eliminating the pollution of the navigable waters and ground waters and improving the sanitary condition of surface and underground waters." The agency reasoned that it had authority to regulate non-navigable upstream water sources like farm ponds and intermittent streams since they could carry pollution down to navigable waters like lakes and rivers. These new rules brought nearly half of Alaska and a total area in the lower 48 states equivalent to the size of California under the Clean Water Act's jurisdiction. The upshot is that under the new more extensive regulations, ranchers, farmers, and property developers had to seek permission from the U.S. Army of Corps of Engineers to make changes that might affect minor sources of water on their land. Obtaining permits could take years and cost thousands of dollars. At least 32 states have sued to prevent the new regulations from taking effect, and the Sixth Federal Appeals Circuit Court stayed the new rules in October, 2016. At the Conservative Political Action Conference meeting last week, new EPA Administrator Scott Pruitt declared that the Obama administration's WOTUS regulation had "made puddles and dry creek beds across this country subject to the jurisdiction of Washington DC. That's going to change." The new executive order that President Trump is expected to sign today directs that EPA to reopen the rulemaking process to repeal and revise the WOTUS rules. The agency is explicitly told to use the standards set out in former Supreme Court Justice Antonin Scalia's plurality opinion in the 2006 Rapanos vs. United States case. In his opinion, Scalia declared: In sum, on its only plausible interpretation, the phrase "the waters of the United States" includes only those relatively permanent, standing or continuously flowing bodies of water "forming geographic features" that are described in ordinary parlance as "streams[,] … oceans, rivers, [and] lakes." See Webster's Second 2882. The phrase does not include channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall. The Corps' expansive interpretation of the "the waters of the United States" is thus not "based on a permissible construction of the statute." Of course, various activist groups are alarmed at the potential rollback of EPA authority. For example, Trout Unlimited issued a statement: Gravity works cheap, and it never takes a day off. The Administration cannot stop water flowing downhill—and we all live downstream. To be effective, the Clean Water Act must be able to control pollution at its source, upstream in the headwaters and wetlands that flow downstream through communities to our major lakes, rivers, and bays. ... If Justice Scalia's direction is followed, 60 percent of U.S. streams and 20 million acres of wetlands would lose protection of the Clean Water Act; an unmitigated disaster for fish and wildlife, hunting and fishing, and clean water. In favor of Trump's new executive order American Farm Bureau Federation President Zippy Duvall declared: President Trump's executive order to ditch the Waters of the U.S. rule is a welcome relief to farmers and ranchers across the country today. The flawed WOTUS rule has proven to b[...]

General Motors Wants to Outlaw Silicon Valley Self-Driving Car Competition

Fri, 24 Feb 2017 15:35:00 -0500

In December, the Michigan legislature adopted the SAVE Act pretending that its goal was to help get self-driving vehicles on Michigan's roads as soon as possible. Fortune magazine actually declared that the state had passed the "most permissive self-driving car laws in the country." In some respects, maybe yes, but the Act contains a telling bit of crony capitalism: "A motor vehicle manufacturer may participate in a SAVE project if it self-certifies to all of the following: (a) That it is a motor vehicle manufacturer. A person that is not a motor vehicle manufacturer may not participate in a SAVE project." In other words, it is a naked attempt to protect legacy vehicle manufacturers, like Ford, GM, Chrysler-Fiat, etc., from competition with software companies like Google and ride-hailing services like Uber. In the case of Michigan, Waymo, the self-driving division of Alphabet (Google), managed to get itself grandfathered after pointing out that its self-driving vehicles had vastly more actual road testing experience than any of the automakers. According to The Wall Street Journal, GM is now getting pet legislators to introduce the SAVE ACT in other states. The Journal reports that Illinois state Rep. Michael Zalewski has introduced a bill that, like Michigan's, would limit access for testing self-driving vehicles on that state's roads to companies that make their own vehicles. That means GM would be eligible, but not tech companies like Uber Technologies Inc. that are developing their own self-driving cars and don't make their own vehicles. "General Motors approached me about it and suggested that they had success last year in Michigan [with a similar bill], and they consider Chicago a big market for them," Mr. Zalewski, a Democrat, said in an interview. "We went from there." ... After falling behind in self-driving cars, GM has unleashed its powerful lobbying team to cultivate relationships with statehouses. The largest U.S. vehicle maker by sales has a long history of backing legislation to preserve its interests, including a bill in Indiana last year that would stop electric-vehicle maker Tesla Inc. from operating its own stores there. This is outrageous. In my July 2016 article, "Will Politicians Block Our Driverless Future?," I reported that when a U.S. Senate committee asked then-head of Google's self-driving vehicle program Chris Urmson what additional legislation was needed, he replied: "What we have found in most places is that the best action is to take no action. And that in general the technology can be safely tested today on roads in many states." In other words, stay away. The scurrilous motivations behind the SAVE Act might be best summarized as "I'm from the government and I'm here to help my cronies by hurting their competitors." For more background, see my March 2017 article, "Bad News: The Government Wants to 'Help' Driverless Car Companies."[...]

Herbert Hoover's Radio Malware Turns 90

Fri, 24 Feb 2017 12:10:00 -0500

On February 23, 1927, Babe Ruth had still to hit 60 home runs in a season. Yet President Calvin Coolidge would that day sign a bill that would establish how radio spectrum—the "economic oxygen" of the emerging information age—would still be governed 90 years later. Markets would be pre-empted, no ownership of the "ether" would be permitted. Public administrators would dole out privileges to deploy wireless networks according to the "public interest." Today, the Radio Act is gasping, choked by its contradictions. While the system continues to drip out dabs of bandwidth when far fatter dollops would spur great leaps forward, the members of the Federal Communications Commission are celebrating the close of a year-long auction of radio frequency rights, fetching $20 billion in winning bids. This is the sort of market-based process the Radio Act was designed to avoid. Over time, regulatory failure has thankfully given way to more open markets. The evolution of vibrant mobile data networks—nowhere prescribed or mandated in law—is an emphatic endorsement of the power of policy liberalization. Yet the ghost of Herbert Hoover, the driving force behind the Radio Act, still haunts progress, frequently placing needless obstacles in the path of competitive forces. Chaos Theory The fake news of 1927 was later summarized (and promulgated) by the Supreme Court. "Before 1927, the allocation of frequencies was left entirely to the private sector, and the result was chaos.... It quickly became apparent that broadcast frequencies constituted a scarce resource whose use could be regulated and rationalized only by the Government." In fact, a property system, with first-come rights enforced by the Department of Commerce under a 1912 statute, maintained order and allowed AM radio broadcasting to flourish from its introduction—by KDKA, a Westinghouse station—in 1920. Hoover, as Secretary of Commerce, 1921-1928, defined the rules using common law precedents. What troubled Hoover was that he had precious little discretion over who broadcast or what they said. For instance, when Los Angeles evangelist Rev. Aimee Semple McPherson (whose Foursquare Gospel Church owned a station reaching hundreds of thousands) strayed from her frequency slot, sanctions were swift. "Order your minions of Satan to… open my station at once," the minister telegrammed Hoover. "You cannot expect the almighty to abide by your wave length nonsense." Alas, He did. And so did Aimee, who returned to her spot on the dial. Anarchy did not reign. What troubled Hoover was that he had precious little discretion over who broadcast or what they said. Radio was scorching hot as a consumer product, with millions being sold and 1924 being declared "Radio Christmas" by Madison Avenue. It was universally seen as an explosive new social force, and its deep political importance—soon to play out in episodes as disparate as Franklin Roosevelt's "fireside chats" and Adolf Hitler's Third Reich mobilization—was instantly noted. Political Spectrum A coalition formed to seize the moment. Major commercial radio stations that had built-up impressive audiences and, by 1926, were forming networks such as NBC, saw a new "public interest" test for broadcasting to be money in the bank. Such barriers to entry could block upstarts and stifle extensions of the radio broadcasting band. At the same time, Hoover and other powerful policy makers, including the estimable Sen. Clarence C. Dill (D-Wash.), author of the 1927 Radio Act, sought to use licensing to gain leverage over broadcast content. In the asserted quest to control interference, regulators could impose an "equal time rule" and restrict various controversial[...]