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All articles with the "Regulation" tag.

Published: Fri, 26 May 2017 00:00:00 -0400

Last Build Date: Fri, 26 May 2017 10:55:30 -0400


Zoning Laws in New York, San Francisco, and San Jose Cut Americans' Wages by $8,775

Thu, 25 May 2017 15:30:00 -0400

(image) Why is housing in the coastal enclaves so damned expensive? The median rent for a two-bedroom apartment in New York City is now running at $4,260 a month; in San Francisco, the figure is $4,600. The national average, by contrast, is about $1,300. What gives?

Blame zoning. The Wharton Residential Land Use Regulatory Index reports that land use restrictions in New York, San Francisco, and San Jose are among the tightest in the country.

You don't have to live in New York, San Francisco, or San Jose to feel the effects. A new study by economists Chang-Tai Hsieh of the University of Chicago and Enrico Moretti of Stanford measured increases in the total factor productivity—that is, the efficiency with which inputs like labor and technology are combined to yield outputs—in 220 cities from 1964 to 2009. They concluded that onerous land use restrictions in high-productivity cities have huge spillover effects on the rest of the U.S. economy.

In a nutshell, artifically high housing costs keep workers from moving from low-productivity areas to high-productivity cities, thus depressing wages and economic growth. Those workers don't just get stuck in low-wage regions: Because they're stuck, job competition drives down the local wages even more. Meanwhile, most of the extra output produced in New York, the San Francisco Bay Area, and other overregulated regions are poured into housing costs rather than invested in more productive assets. In that way, highly restrictive zoning depresses economic growth and GDP.

"In the 1960s, developers found it easy to do business in much of the country," the Harvard economist Edward Glaeser noted in 2014. "In the past 25 years, construction has come to face enormous challenges from any local opposition. In some areas it feels as if every neighbor has veto rights over every project."

If land use regulations in New York and the Bay Area were set equal to the median U.S. city, those area's average wages would be 25 percent lower, but reduced housing costs would have more than made up for that. Furthermore, the researchers calculate, GDP would be 8.9 percent higher (as of 2009), translating into an addtional $8,775 in average wages for all American workers.

Still, it could have been worse. In the period studied by Hsieh and Moretti, Southern cities tended to eschew highly restrictive land use regulations. As a result, they have much lower housing costs and were responsible for about 33 percent U.S. aggregate GDP growth. If the big Southern cities had adopted the median U.S. level of residential zoning, the economists calculate, the change would have reduced GDP growth by 25 percent.

Drone Registry Repeal a Victory for Permissionless Innovation

Wed, 24 May 2017 08:30:00 -0400

Model aircraft enthusiasts and small-scale drone hobbyists enjoyed a major victory last week when a federal court struck down the Federal Aviation Administration's (FAA) controversial non-commercial small drone registration mandate. On May 19, the D.C. Circuit Court of Appeals invalidated the FAA's requirement that recreational operators of "small Unmanned Aircraft Systems," or UASs, weighing between 0.55 and 55 lbs. must register their crafts with the agency or risk fines and even jail time. The registry is nullified—at least for now—and sUAS buffs are once again free to zip around the troposphere without getting a go-ahead from the FAA first. Incredibly, this big win for permissionless innovation and tinkerers across America comes to us thanks to a single dedicated model aircraft enthusiast named John A. Taylor who just happened to be a lawyer who knew that the FAA was breaking the law. The FAA rules, first promulgated in December of 2015, came as a major surprise to the many hopeful small drone sellers for that year's Christmas season. Suddenly, tiny toys not much different from the remote-control helicopters that were a gift staple in holidays past would be considered UASs under the express oversight of the nation's aviation authority. In fact, in the eyes of former Transportation Secretary Anthony Foxx, little Timmy with his new drone would be considered an "aviator" and "with that title comes a great deal of responsibility." Small drone buyers would need to first pay to register the gadget with an FAA website and mark it with the assigned identification number before allowing their child to enjoy their coveted new toy. But another group took particular umbrage with the new rules: model aircraft enthusiasts, who had previously been exempt from this kind of regulation. It's not hard to sympathize with their plight. These small and responsible of DIYers had been safely flying their crafts with no issue long before "drones" were a household name. For decades, model aircraft activity had a de facto deregulatory assurance because the recreational community adequately policed its own. Specifically, the Academy of Model Aeronautics (AMA) maintained its own voluntary registration system and enforced community-based safety standards that obviated the need for (and likely exceeded the potential outcomes of) government-driven regulations. Indeed, since 1981, the FAA itself encouraged this kind of voluntary arrangement by merely offering guidelines that the model aircraft community could follow. In a nod to the effectiveness of this self-policing arrangement, Congress passed the FAA Modernization and Reform Act of 2012, which explicitly carved out a space for the model aircraft community to continue to tinker without the FAA breathing down their necks. Section 336 of the Act clearly states that the FAA may not "promulgate any rule or regulation regarding a model aircraft." It's hard to get more clear-cut than that. But the FAA nevertheless ignored Congress and proceeded with its half-baked drone registration program despite the major logistical and legal issues involved. This is where Taylor and his one-man crusade against FAA wrongdoing comes in. Taylor is a model plane hobbyist and insurance lawyer who lives in the Washington, D.C., area. Like others in his community, he was distressed by the FAA's sudden about-turn on model aircraft. Says Taylor: "I wanted to be able to fly my drone and I didn't want to have to register. It pissed me off on a very sort of visceral level." But unlike many of his comrades-in-flight, he had a law background that helped him prepare a solid legal case against FAA malfeasance. In his petition to the D.C. Circuit Court of Appeals, Taylor challenged both the legality of the registration requirement broadly as well as new flight restrictions that the FAA imposed on the area in its Advisory Circular 91-57A. Taylor argued that the FAA's new rule that model aircraft operators pay to register their crafts with the agency or face fines or jail time was, indeed, a rule. The [...]

Rand Paul's REINS Act Finally Makes It to Senate Floor

Wed, 17 May 2017 17:32:00 -0400

A Senate committee vote on Wednesday is a new high water mark for a long-sought-after regulatory reform proposal. Further progress, though, might be unlikely. The U.S. Senate Homeland Security and Governmental Affairs Committee approved the REINS Act (the acronym stands for "Regulations from the Executive in Need of Scrutiny"), sending the bill to the Senate floor for the first time. While the REINS Act has cleared the House several times in recent years—most recently in January—this is the first time the proposal has been approved by a vote of any kind in the Senate. Sponsored by Sen. Ran Paul (R-Kentucky), the REINS Act would require every new regulation that costs more than $100 million to be approved by Congress. As it is now, executive branch agencies can pass those rules unilaterally, and even though those major rules account for only 3 percent of annual regulations, they are the ones that cause the most headaches for individuals and businesses. Passage of the REINS Act would also require Congress to review all existing regulations that surpass the $100 million threshold. Since there's no clear accounting of how many such rules exist, assessing the landscape would be a necessary step before reforms could be enacted. "For too long, an ever-growing federal bureaucracy has piled regulations and red tape on the backs of the American people without any approval by Americans' elected representatives," Paul said in a statement Wednesday. "The REINS Act reasserts Congress' legislative authority and would continue the historic progress we have made this year to curb the damaging effects of overreaching regulations." While the committee vote is a win for the legislation, another bill also approved by the same committee on Wednesday is a more likely vehicle for regulatory reforms this year. Clyde Wayne Crews, the vice president for policy at the Competitive Enterprise Institute, a free market think tank that favors regulatory reform, tells Reason that he doesn't expect a floor vote on Paul's bill this year—though he admits it's difficult to predict anything in Washington. Still, regulatory reformers have hope in the form of the Regulatory Accountability Act, which would codify several executive branch mandates requiring cost/benefit analyses on new rules. It would also require executive agencies to do more after-the-fact reviews of the consequences of their regulations and would apply the same cost/benefit measures to things that aren't technically regulations but do much of the same thing, like when the FAA issues "guidance" on drone rules, for example. The Regulatory Accountability Act does not go as far as the REINS Act, but "it helps pave the way for more substantial reforms in the future," says Crews. What of President Donald Trump's promise to reshape the federal regulatory state—to bring about the "deconstruction of the regulatory state," as White House adviser Steve Bannon promised in March? "It's not that," says Crews. "The administrative state will be just fine. It won't solve every problem, but it might allow our descendants to do so." With Congress likely to spend the next several months on hearings concerned with the firing of James Comey and other hearings seeking to find his replacement as director of the FBI, the entire legislative agenda for 2017 has been disrupted. Health care and tax reform will likely be pushed off until the fall, and the federal budget still has to be passed too. In that environment, getting the REINS Act to the floor of the Senate might be a bigger accomplishment than it initially seems, even if it moves no farther.[...]

Washington Post Ed. Board Says Life Insurance Regulations Would Cut Down on Child Homicides

Tue, 16 May 2017 10:35:00 -0400

Lax life insurance regulations are encouraging way too many Americans to kill their children. This, according to the Washington Post, whose breathless Sunday editorial ran with the headline, "Too many children are killed for insurance money. Here's how states can stop it." Rather than condemn the actual murderers, the Post blames the life insurance industry, whose "spotty" regulatory compliance and commission-hungry salesmen have created a "system that has turned children into prey." "The apparent ease with which these killers were able to obtain policies," the Editorial Board says "shows sufficient safeguards are not in place." What is needed, they say, are more procedural safeguards or dollar caps on child life insurance. This call for tougher regulation is undercut, however, by the very circumstances of the murder cases outlined in the Washington Post's article. The Post's piece rattles off several murder cases—many not actually involving children—where the killers are motivated by collecting on life insurance policies: "Shane Paris Sisskoko was three months old when he was murdered in Montgomery County in 2001. Lemuel Wallace, 37, blind and developmentally disabled, was shot to death in 2009 in a Baltimore park. Latiqua Cherry, a Prince George's mother, was stabbed nine times before her body was set on fire in May 2015. Prince McLeod Rams was 15 months old when he was drowned or suffocated in Virginia in October 2012. "Common to all of these deaths is that the killer had secretly insured the victims' lives and made themselves sole beneficiaries." The Post fails to mention that each of the crimes they describe involves the fraudulent bypassing of regulations already on the books. Murderers, in the business of fraud and deception, are more than likely to be undeterred by additional regulation. Laquita Cherry's ex-boyfriend reportedly had to fake her signature in order to take out an insurance policy on her life. Lemuel Wallace's killer—a former pastor named Kevin Pushia—fraudulently altered documents to be listed as a beneficiary. Similarly, Shane Paris Sisskoko's father had to repeatedly lie to the child's mother about the reasons for medical examinations and calls from insurance companies to obscure the fact that he had taken a $750,000 policy on his son's life. The Post editorial board simply ignores the laws in 42 states known as "slayer statues", which bar a beneficiary from collecting on a death they knowingly caused. Often a conviction for causing the death of the insured is not required for these slayer statutes to be invoked. Moreover, the kinds of cases the Washington Post seems most concerned about—huge life insurance claims for the death of very young children—are also the kinds that will get the most scrutiny from life insurance companies, which often leads to police investigations. An insurance company tipped off police to the huge life insurance policy on Wallace. And the death of a ten-year-old boy in Washington state whose murder the Post uses to encourage tighter regulation was was ruled an accidental death by police until an insurance investigator informed them of the $650,000 policy that the boy's father had taken out on him. It should also have been made clear the type of murders referred to appear to be incredibly rare. The Coalition to Prevent Insurance Fraud—a pro-regulation group cited in the Post's editorial—has logged 160 cases of murder motivated by life insurance in "recent years," according to a 2017 report. The group offers no citation for statistic or what is meant by "recent years" so the accuracy of that number is hard to verify. Should "recent years" stretch over the last decade however, that would make them more scarce than children killed by babysitters, or fatal romantic triangles. Most insurance-related homicides, the Coalition report admits, involve the killing of a spouse, not a child. Calls for broad industry regulation to deal with a handful of admittedly tragic deaths are rarely [...]

Left Rebrands Environmental Regulations As Environmental Protections: New at Reason

Fri, 12 May 2017 13:30:00 -0400

(image) "Trump signs order at the EPA to dismantle environmental protections," declares a March 28 headline in The Washington Post. An April 27 article in the Post described an "effort to remove environmental protections." Two days later, another Post article stated that Trump's term in office has "already seen multiple rollbacks of environmental protections." And the Post isn't the only publication pushing such language.

Whatever happened to environmental regulations? Many mainstream and activist publications appear to be following the advice of University of California, Berkeley linguist and fierce political progressive George Lakoff to reframe issues. Protections sound so much nicer than regulations, don't you think?

Elizabeth Warren's Over-the-Counter Hearing Aid Bill Tries to Sell More Regulation As Less Regulation

Thu, 11 May 2017 12:25:00 -0400

Sen. Elizabeth Warren (D–Mass) a deregulator? It almost sounds too good to be true. The progressive Democrat, historically hostile to free markets, teams up with Republican Sen. Charles Grassley (R–Iowa) to propose that stores be allowed to sell hearing aids over-the-counter. And, of course, it's not true. Far from stripping away regulation to make it simpler and cheaper for people to care for their hearing needs, the Over-the-Counter Hearing Aid Act of 2017 loads on regulation that would, if passed, likely drive low-cost alternatives to hearing aids out of the market. To make matters worse, this regulatory and crony sleight of hand is bipartisan. To understand how this could be requires understanding a little bit about hearing aid regulation. All devices sold as hearing aids in the U.S. are regulated through the Food and Drug Administration (FDA). They require a prescription from a doctor. They are sold by only a handful of companies, and can cost thousands of dollars. Because of this there exists a thriving market in Personal Sound Amplification Products (PSAPs), which perform the same basic function as prescription hearing aids—amplifying sound for the user—but are available for as little as $20 at Wal-Mart or less on the Internet. PSAP makers, however, are not permitted to market their products as solutions or even an aid to diagnosed symptoms of hearing loss. The FDA list of specific marketing no-nos includes helping a customer hear conversations in a crowded room, or follow movie dialogue. To get around this, companies often brand their products as hunting or bird watching aids, helping to pick up natural sounds. Website reviews for the low-cost aids substitute for the ads. "I purchased these for myself as I cannot afford expensive hearing aids," a Wal-Mart website review reads. "They are good for the money you pay. They amplify and I do not have to ask my friends to repeat everything." The Warren and Grassley bill, introduced in March of this year, would create a whole new regulatory class of devices called Over the Counter (OTC) hearing aids. These OCT hearing aids could be marketed as a means of assisting with mild to moderate hearing loss, provided they meet yet-to-be determined FDA standards on safety, labeling, and audio output. Crucially, Warren's legislation instructs the Department of Health and Human Services secretary to redefine what a PSAP is, with the goal of shifting more PSAPs into this new, more regulated OCT hearing aid category. At minimum, regulation would drive up the cost of PSAPs. And depending on how onerous those new regulations are, many devices would fail to meet the new standards. To no one's surprise, makers of high-end PSAPs have been lobbying hard for the bill. TechCrunch reports that Doppler Labs—a tech start up that produces a $300 PSAP known as Here One—has been working closely with Warren. Doppler also hired KR Liu—a member of the Consumer Technology Association's standards committee on PSAPs—to be its director of advocacy and accessibility in 2015. The Consumer Technology Association has since endorsed and promoted passage of Warren's bill. Bose—maker of the PSAP the $499 "Hearphones"—has spent roughly $50,000 on lobbying for the OTC Hearing Aid Act this year, according to lobbying disclosures. Records from 2016 also show Bose spending $100,000 lobbying on "issues related to the FDA," though no specific legislation is listed. On Monday, a coalition of some 20 conservative and business groups—including the Campaign for Liberty, the Black Chamber of Commerce, and Tea Party Nation—penned a letter to Sen. Lamar Alexander, who chairs the Senate Committee that is currently considering Warren's bill, warning him of its potential impact. "Sen. Warren's bill will do nothing to give consumers greater access, or lower prices," the letter warns, going on to call the OTC Hearing Aid Act "another big government ploy to create more regu[...]

Scott Gottlieb Confirmed as New FDA Commissioner

Tue, 09 May 2017 18:05:00 -0400

(image) Physician, venture investor, and drug industry consultant Scott Gottlieb has been confirmed by the Senate as the new Commissioner of the Food and Drug Administration. Gottlieb takes the helm of the agency that regulates products accounting for about 20 cents of every dollar of annual spending by U.S. consumers, that is, about $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.

Gottlieb has long been a critic of the FDA's slow and protracted drug and medical device approval processes. 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.

In an email, Union of Concerned Scientists spokesperson Seth Michaels warned that Gottlieb's confirmation is "yet another example of an appointee whose record raises questions about whether they'll respect science and the public interest." On the other hand, Paul Howard, Senior Fellow and Director, Health Policy at the market-friendly Manhattan Institute issued a statement applauding the appointment. "At a time of both unprecedented scientific opportunity and rapidly evolving public health challenges, Dr. Gottlieb provides the FDA with principled and pragmatic leadership," declared Howard. "His experience as a regulator, practicing physician, cancer survivor, and innovator will help the agency navigate the scientific challenges surrounding drug and medical device development and approval without losing sight of the real-world implications of the agency's decisions for patients struggling with potentially life threatening conditions."

I earlier noted, "While not a radical reformer, Gottlieb clearly has a good understanding of how over-regulation has been slowing down innovation in medicines and foods." Good luck to him as he tries to reform the agency's excessively cautious regulatory culture.

Could Trump’s Deregulation Be a Lifeline for Struggling Entrepreneurs?

Tue, 09 May 2017 00:01:00 -0400

For every new regulation federal agencies propose, they have to "identify at least two existing regulations to be repealed," President Trump ordered just 10 days after taking office. In April, he doubled down, boasting that "we are absolutely destroying these horrible regulations that have been placed on your heads over not eight years, over the last 20 and 25 years," with an emphasis on clearing red tape that discourages banks from lending to businesses and drags out large construction projects. Tax rule complexity that has "effectively increased tax burdens, impeded economic growth, and saddled American businesses with onerous fines, complicated forms, and frustration" was targeted in another executive order weeks later. The president's "deregulation scheme is yuge for big banks" Salon dutifully sniffed, while a Business Insider columnist snarked that the administration's response to everything is "regulation bad, deregulation good." Maybe our vocabulary-challenged chief executive has boiled it down that simply, but if so, he's not far from the truth. And if big banks and large businesses benefit, it'll be almost incidental to the relief felt by small businesses and entrepreneurs just trying to get launched and make a buck in an environment that kneecaps their efforts. "The nation's underground sector has grown to as much as $2 trillion of the nearly $19 trillion economy," a Sage BusinessResearcher report estimated last month. That doesn't include drugs or other criminal activity—it's all off-the-books work that would be legal if licensed and taxed. Many economists believe "working off the books may be the only way many cash-strapped entrepreneurs and home-based businesses get their ideas off the ground." Why would people feel compelled to work off the books and risk legal penalties? Because taxes and regulations, no matter how prettily they're framed or how "necessary" their advocates consider them, create difficult and expensive hurdles to starting businesses. And the situation is getting worse, crippling the employers of the future—or, often, driving them to operate out of sight of tax collectors and regulators. Complying with regulations cost businesses an average of $8,086 per employee, the Small Business Administration reported in 2008. But businesses with fewer than 20 employees took the biggest hit at $10,585, vs. $7,454 for firms with 20-499 employees, and $7,755 for large businesses. In the manufacturing sector, which so many people, Trump included, want to cultivate within the nation's borders, the disparity was much worse: $28,316 per employee for small businesses, $13,504 for medium, and $12,586 for large outfits. In 2012, the National Association of Manufacturers brought in the original SBA report's authors to revisit the topic. They found that regulations now cost each business an average of $9,991 per employee, with $11,724 the average for small businesses, $10,664 for medium businesses, and $9,083 for large ones. The situation further soured in the manufacturing sector, at $34,671 for small outfits, $18,243 for medium ones, and, $13,750 for large companies. Even allowing for inflation, that's a big jump in costs. Trump threatens "consequences" for companies that move operations outside the United States, but they really would have to be "yuge" to offset the price of staying. "The impact of regulatory burden cannot be overstated: more than one-third have held off on business investment due to uncertainty on a pending regulation," the National Small Business Association reported in this year's Small Business Regulations Survey, "and more than half have held off on hiring a new employee due to regulatory burdens." The worst offenders, by the way, are said by small business owners to be the federal tax code and the Affordable Care Act, although there's plenty of pain to go around. "These worries coupled with signi[...]

Colorado's Absurd War on Online Dog Walking Services

Wed, 03 May 2017 14:30:00 -0400

In over 10,000 cities in all 50 states, the online platform Rover offers pet owners the ability to connect with walkers and sitters with the ease that characterizes the growing sharing economy. There are over 100,000 people who earn money by working with the platform and Rover is just one of many "pet sharing" sites. But according to the Colorado government, people who watch pets for money are breaking the law unless if they can get licensed as a commercial kennel—a requirement that is costly and unrealistic for people working out of their homes, often as a side job. This is not simply a case of an outdated law failing to accommodate modern technology. There are more nefarious motives—those of special interests who want to protect their profits by keeping out new competition. As Americans For Tax Reform's John Kartch argues, it is time to add "Big Kennel" to the list of special interests that support ridiculous occupational licensing schemes. Lisa Jacobson experienced the wrath of the kennel industry and its defenders in government firsthand. She started working with Rover a little over a year ago when she was in between careers. Even though Jacobson is a single mother of two, she could earn money to pay her mortgage through the work she found with Rover. Because of her five-star rating and unique skills, Jacobson was soon at the top of search results and her client list grew. Unfortunately, her success attracted the attention of a large commercial kennel in Colorado Springs, which filed a complaint against her. Then an inspector from the Colorado Department of Agriculture came to her home and told Jacobson that she was advertising pet sitting without a kennel license. The inspector said that Jacobson had to get a state license or take down her Rover profile. When Jacobson found out that the license came with a $400 nonrefundable application fee, she was torn. There was no way her home would be approved, since both carpet and hardwood floors are not allowed at commercial kennels, but she needed the income to support herself and her children. She decided to avoid legal trouble and took down her profile. In a single day, she lost all her income from Rover simply because state regulators refuse to recognize that watching someone's pet at home does not automatically turn a person into a large-scale kennel business. After the initial shock of being shaken down by a government bureaucrat subsided, Jacobson decided to fight back. She joined others in testifying in favor of House Bill 1228, an effort by Colorado state legislators to restore some sanity to pet sharing regulations that is sponsored by Rep. Lois Landgraf (R), Rep. Dan Pabon (D), and Sen. Kevin Priola (R). This legislation would create a less costly and restrictive licensing structure for platforms such as Rover, as well as allowing people to watch up to three pets without needing a license. Even though hearings on the bill were dominated by opponents from the commercial kennel industry, it passed the Colorado Senate on April 27 by a vote of 33 to 1 and is now on the way to Gov. John Hickenlooper's desk. Rover functions like other online platforms that characterize the sharing economy. Because of increased levels of information and connectivity provided by the internet, people with pets can easily connect with and vet potential dog walkers, sitters, and trainers. Now, instead of having to rely on a family member or friend to watch a dog when someone travels, the network of potential pet-care providers extends much further. One clear advantage of online pet sitting platforms is that owners generally pay less than they would pay for their dog to stay at a kennel; Rover's average rate in 2015 was $25.00. But it is not just lower prices that has made dog sharing so attractive to pet owners. Owners can choose to have the sitter stay at their house with[...]

Trump May Dabble in Deregulation, But He Doesn't Believe in Free Markets

Wed, 03 May 2017 00:15:00 -0400

My head spins. Before President Trump was elected, FCC Commissioner Ajit Pai came on my TV show, upset because President Obama ordered his agency to regulate the internet. For the first time, "decisions about how the internet works are going to be made by bureaucrats and politicians instead of engineers and innovators," he complained. Pai was outvoted by Democrats who supported Obama's "net neutrality" rule. "Neutrality" sounds good, but the rule actually meant the end of the permissionless innovation that allowed American companies to lead the world in cyberinnovation. Now they would have to get government permission before trying anything new. They would not be allowed to charge big users like Netflix more, or create "fast lanes" for customers who pay extra. Such experiments do discriminate, but they also bring innovation like free-data plans. They create incentives for building better fiber-optic networks, meaning faster speeds and lower prices for most everyone. Under Obama's rules, said Pai, we would have "slower speeds, fewer competitive choices. This is a massive shift in favor of government control." That was then. Now Pai chairs the FCC, and he's dismantling the burdensome rules. Victory! President Trump appointed other sensible deregulators: Betsy DeVos, Elaine Chao, Tom Price, Scott Pruitt, Shirley Ybarra. Many of them criticized the same agencies they will now run. They are in a position to say, "Stop! This endless red tape kills opportunity. Let the free market work!" Bob Poole's fine research on reducing flight delays by replacing the bureaucratic FAA with private air traffic control might actually come to fruition. His ideas on reducing traffic jams by allowing congestion pricing are getting a hearing. Victory! Wiser people are in charge. But deregulation still won't be easy. That becomes clear reading Matt Welch's article "The Deregulator?" in the new issue of Reason. Welch points out that not only did the president appoint deregulators, "Trump put taxpayer money where his mouth is, unveiling a budget blueprint that cut spending at every non-military/security-related agency...31.4 percent from the EPA, 28.7 percent from the State Department, and 20.7 percent each from the departments of Agriculture and Labor." The bad news is that proposing cuts doesn't mean they will happen. It's Congress that writes budgets. "The president is asking the most politically sensitive branch of government to approve the deepest funding and staffing cuts the EPA has ever seen," writes Welch, "all while surviving an onslaught of headlines such as the San Francisco Chronicle's 'Trump budget would make America dirty and sick again.'" Trump's EPA cuts won't make America "dirty and sick," but try un-scaring voters who read headlines like that, along with New York Times diatribes like "Leashes Come Off Wall Street, Gun Sellers, Polluters and More." Will Congress ignore that hysteria and still vote for deregulation? I fear they will not. Welch also mocks my beloved "Stossel Rule," although it's the one idea of mine that President Trump wholeheartedly embraced: Before regulators pass a new rule, they must repeal at least two existing ones. Welch points out that serious reformers call that "a toothless publicity stunt" because bureaucrats would game the system—repeal tiny rules but still pass gigantic new ones. Another obstacle to reform is that President Trump is not consistent. Yes, he reversed the Obama administration's shortsighted ban on finishing the Keystone Pipeline, but then he told his secretary of commerce to "Buy American, Hire American." Infrastructure can't be built efficiently using just U.S.-made steel. Trump eventually granted an exemption to the Canadians building Keystone, but every project should be built with the best materials available for the lowest cost. Since there [...]

Wacky Wavy Inflatable Tube Men Can't Sell Weed, Say Washington State Lawmakers

Mon, 01 May 2017 17:45:00 -0400

(image) The Washington state legislature voted to ban the use of "inflatable tube displays, persons in costume, or wearing, holding, or spinning a sign with a marijuana-related commercial message" by retail businesses selling cannabis products. On April 20, of all days.

The omnibus marijuana bill, SB 5131, has some good provisions as well: Washington residents would be allowed to share marijuana with other legal adults for the first time, and cannabis retailers would be able to operate five dispensaries (right now they are limited to three). But those liberalizations come at a cost to commercial speech.

The stated purpose behind this prohibition of pot-promoting blow-up ads is to protect children. Washington's legalization initiative—passed by voters in 2012—set the legal age for cannabis consumption at 21. And current regulations already prohibit marijuana advertisements from using cartoon characters, toys or other depictions deemed "especially appealing to children or other persons under legal age to consume marijuana."

But this apparently did not go far enough for Washington state legislators, who felt that a number of outdoor advertisements from recreational dispensaries were flouting the spirit, if not the letter of the law.

Particularly scandalous was a billboard put up by Tacoma dispensary Clear Choice Cannabis featuring a cat wearing a "thug life" collar along with text saying "I'm so high right meow." Images of that billboard—which has since been voluntarily taken down by business owner—circulated around the Washington legislature as proof of cannabusinesses potentially targeting children.

Said state Rep. Christine Kilduff (D–University Place): "When you have those big billboards out there for our youth to see, it just telegraphs legitimacy."

An amendment banning billboards was initially proposed, but this was later dialed back over First Amendment concerns. Instead signs will be limited to displaying only the name, location, logo, and type of business being advertised. Which should still raise First Amendment concerns, but apparently doesn't.

Unusual restrictions on cannabusinesses' advertising for the purpose of keeping the stuff out of the hands of children are not limited to Washington state. Colorado bans marijuana ads in radio, TV, and print unless the advertiser can produce reliable evidence that no more than 30 percent of the audience is under 21. And in Oregon the strain name "girl scout cookie" can't be displayed on packaging because it is named after a product sold both to and by children.

SB 5131 is currently waiting on the governor's signature before it becomes law.

Access to Obama White House Brought Companies Better Stock Performance, Study Shows

Mon, 01 May 2017 16:00:00 -0400

Companies whose executives visited the White House during the Obama administration had their stock prices rise more than normal after the meetings, but underperformed after Donald Trump won the election, a new paper by researchers at the University of Illinois finds. The finance professors, Jeffrey Brown and Jiekun Huang, published their findings in a working paper issued by the National Bureau of Economic Research and titled "All the President's Friends: Political Access and Firm Value." "Following meetings with federal government officials, firms receive more government contracts and are more likely to receive regulatory relief," the professors write. "Firms with access to the Obama administration experience significantly lower stock returns following the release of the [2016] election results than otherwise similar firms. Overall, our results provide evidence suggesting that political access is of significant value to corporations." The professors outlined three ways that government meetings may be valuable to companies. "Government officials may influence the allocation of lucrative government contracts towards firms whose executives have interacted with them," Brown and Huang write. Officials or politicians may also "provide more regulatory relief to companies that have access to the politicians." Finally, "access to politicians may enable companies to gain an informational advantage about government policies and actions and help resolve political uncertainty." The scholars used White House visitor logs to identify 2,286 meetings between White House officials and corporate executives between January 2009 and December 2015. "Consistent with the notion that campaign contributions 'buy' access, we find that firms that contributed more to Obama's presidential election campaigns are more likely to have access to the White House. We also find that firms that spend more on lobbying, firms that receive more government contracts, larger firms, and firms with a greater market share are more likely to have access to influential federal officials," they write. The professors even compared companies that went ahead with the meetings and companies that scheduled meetings that got canceled. The canceled meetings had no significant effect on the stock price, but the meetings that actually took place produced what the authors call "significant positive cumulative abnormal returns." They found that "the stocks of firms with access to the Obama administration underperform the stocks of otherwise similar firms by about 80 basis points in the three days immediately following the election." The economists write that there are two different ways to view these outcomes. At worst, "gaining access to politicians may enable firms to gain undue influence over elected officials and extract political favors… Under such a view, political access facilitates quid-pro-quo exchanges between firms and elected officials in which policy favors are exchanged for private gains to the politicians." Senators Bernie Sanders and Elizabeth Warren suggest this when they talk about how the system is "rigged"; Donald Trump was getting at it when he accused Hillary Clinton of being "totally owned by Wall Street." A more benign explanation is that, as the authors put it, "political access may enable firms to provide policy-relevant information, which in turn helps elected officials to make more informed decisions on policies that affect the firms." The authors warn that more research is needed to figure out which of these two dynamics best explains the correlation between stock-market results and political access. Perhaps it is some combination of the two. One common response to the "undue influence" problem is to propose restricting political contributions, instead u[...]

Is the World Finally Ready for a Female-Orgasm Machine? [Reason Podcast]

Thu, 27 Apr 2017 12:30:00 -0400

When Brent Reider, a 58-year-old medical-device inventor from Oxford, Ohio, set out to develop a fix for the suprisingly widespread problem of female urinary incontinence, one of the last things on his mind was building a better orgasm. He was just trying to use a neuromuscular electrical stimulator (NMES) device to strenghten women's pelvic floor muscles so that they could better control their bodies in the face of changes wrought by aging, childbirth, and other life experiences. Yet by the time he brought his newest contraption, the Yarlap, to market last year, he'd discovered something that only a very few (and almost always female) researchers had ever seriously thought about: A woman's pelvic floor is almost unfathomably complicated, designed by evolution to control and influence all sorts of bodily functions from bladder control to posture to sexual functioning. The pelvic floor's health and strength affects not just obvious parts of a woman's anatomy but also her lower back, hips, and knees. As important, Reider found that his device, which uses low-level electrtical stimulation to strengthen the pelvic floor muscles, not only helps cure incontinence but often heightens a woman's ability for sexual satisfaction in a way that the most-dedicated Kegel practitioner could only dream about. Reider's findings, which draw on work by academic researchers such as Beverly Whipple and Elisabeth Lloyd, has been published in The Journal of Women's Health, Issues and Care, and crosses boundaries between sex and medicine that are rarely acknowledged, let alone traversed. Unsurprinsingly, then, when it came time to start certifying the device through the Food and Drug Administration (which has been tasked with "clearing" medical devices for safety and efficacy since the 1970s) and marketing it through sites such as Amazon and Facebook, Reider and his business partner, his 24-year-old daughter MaryEllen, ran into a different but equally knotty set of issues. It turns out that neither the government nor social media are quite ready for a medical device that transcends the traditionally separate categories of sex and medicine. In the latest Reason podcast, I talk with the entrepreneurs about the difficulties in launching a device that not only promises to help the one-in-three women (including many high-performance female athletes) who experience incontinence but also reconfigures the way we think about personal health and well-being. The Yarlap, says MaryEllen Reider, can be bought without a prescription and is an example of a medical technology that's "about improving your lives and taking your health into your own hands." As such, it joins a growing roster of "electroceuticals" and other devices, drugs, and techniques that empower individuals to improve their lives in very specific and personalized ways. Subscribe, rate, and review the Reason Podcast at iTunes. Listen at SoundCloud below: src="" width="100%" height="450" frameborder="0"> Don't miss a single Reason podcast! (Archive here.) Subscribe at iTunes. Follow us at SoundCloud. Subscribe at YouTube. Like us on Facebook. Follow us on Twitter. This is a rush transcript—check all quotes against the audio for accuracy. Nick Gillespie: Brent, what is the problem that the Yarlap was designed to address originally? Brent Reider: The Yarlap is designed to treat female urinary incontinence, both stress and urge incontinence, and of course incontinence. Nick Gillespie: Now we are talking, we're all in Oxford, Ohio, where Brent and Mary Ellen or Brent live[...]

Premature Babies Are Struggling to Breathe. Why Are Regulators Dragging Their Feet?

Fri, 21 Apr 2017 13:00:00 -0400

As a neonatologist, I worry about patients with pulmonary hypertension. This unforgiving disease, sometimes seen after premature birth, can end with sudden death from constricting blood vessels in the lungs. One minute a baby in the neonatal ICU may be sleeping comfortably; moments later, doctors and nurses are giving chest compressions and rescue medications. A pulmonary hypertension crisis, as these frightening episodes are called, starts with a drop in the blood oxygen level. That drop triggers a monitor to beep. It's up to the nurse to hear the sound, come to the bedside and take action. The first and most effective step in stopping a pulmonary hypertension crisis is simple: Give oxygen. But a nurse caring for another patient might be delayed for 30 seconds, and the loss of that time can lead to brain injury or death. In an age of self-driving cars and 400-ton airplanes that can land themselves in blinding fog, it makes no sense that hospitalized patients are surrounded by lifesaving machinery that can be activated only by a person pressing a button or turning a knob. Modern transportation augments human judgment and reaction times with a computer's superior ability to continuously respond to dozens of fluctuating variables. Yet in medicine, safety remains stubbornly reliant on human intervention. FDA regulation impedes innovation My patients with pulmonary hypertension are often attached to a respirator with adjustable oxygen settings. The respirator sits inches below the monitor that indicates how much oxygen is in the blood. But the two machines can't communicate with each other. If they could, it would be possible to increase the flow of oxygen automatically the moment a crisis is detected. In 2009, engineers developed just this kind of closed-loop respirator and introduced it in several hospitals as part of a feasibility study. It increased the time premature babies spent at a safe oxygen level by more than two hours per day. But no biotechnology company has marketed the idea. There are other examples of automated systems with unrealized potential to save lives, and not just in the neonatal ICU. Software that scans an ECG for subtle heartbeat variability can identify patterns—undetectable to the human eye—that indicate an elevated risk of heart attack. Hospital beds that play audible feedback during an emergency promote more effective CPR. Yet patients are not benefiting because neither of these tools has been commercialized. Why haven't these innovations attracted the industry backing necessary to make them widely available? One reason is that the process of getting FDA approval for new devices—particularly those deemed "life-sustaining"—is often even more complicated and expensive than getting approval for drugs. In the Journal of Public Economics, Harvard Business School professor Ariel Dora Stern recently described how FDA hurdles discourage companies from investing in innovation. Often, the more profitable strategy is to wait for someone else to spend the time and money required to get approval for a new device, and then enter the market later with something similar that will face less scrutiny. Dr. Stern estimates that regulatory obstacles add an average of US$6.7 million to the cost of introducing a new medical device. For a company developing an ICU monitor, for instance, that will ultimately sell for less than $35,000 per unit, this up-front commitment can be prohibitive. A consequence is that small biotechnology firms (with annual revenue less than $500 million) rarely gamble on getting new inventions approved. Dr. Stern's paper notes that less than 17 percent of novel device applications to the FDA come from small companies. This is different fr[...]

Federal Judge Says Judicial Deference to Executive Branch Agencies Is 'Judicial Abdication'

Thu, 20 Apr 2017 10:52:00 -0400

Newly appointed Supreme Court Justice Neil Gorsuch is an outspoken foe of Chevron deference, the legal doctrine that tells federal judges to tip the scales in favor of executive branch agencies when those agencies have offered a "reasonable" interpretation of an "ambiguous" federal statute. "Under any conception of our separation of powers," Gorsuch has written, "I would have thought powerful and centralized authorities like today's administrative agencies would have warranted less deference from other branches, not more." An important case decided last week by the U.S. Court of Appeals for the District of Columbia Circuit reveals that Gorsuch has a key anti-Chevron ally on that court. At issue in Waterkeeper Alliance v. Environmental Protection Agency was whether the EPA exceeded its authority under federal law while attempting to regulate animal waste produced by farms. According to the unanimous D.C. Circuit opinion written by Senior Judge Stephen Williams, "the EPA's action here can't be justified." Among the judges who joined that unanimous opinion was Janice Rogers Brown, a Republican-appointee who has previously exhibited certain libertarian tendencies in cases dealing with such issues as economic liberty, police misconduct, and Amtrak. Those tendencies were on display once again last week. "I join in the Panel Opinion because '[the EPA's approach] ran afoul of the underlying statutes (and was therefore outside the EPA's delegated authority),'" Judge Brown declared. But she also wrote a separate concurrence, in which she went further, rejecting efforts by the EPA and others to shoehorn lawless executive branch behavior in via the already too lenient standard set forth by the Chevron doctrine. "If a court could purport fealty to Chevron while subjugating statutory clarity to agency 'reasonableness,'" she wrote, "textualism will be trivialized." Brown concluded her concurrence by observing that "an Article III renaissance is emerging against the judicial abdication performed in Chevron's name." Article III is that part of the U.S. Constitution that grants "the judicial power" to the courts. In other words, what Brown is saying is that certain federal judges are starting to get fed up with judicial deference to the executive branch and starting to wonder whether the time has come to perform their judicial duty to "say what the law is," as Chief Justice John Marshall once put it. As evidence of this Article III renaissance, Brown pointed to none other than Neil Gorsuch, quoting from then-Judge Gorsuch's 10th Circuit opinion in Guiterrez-Brizuela v. Lynch, in which Gorsuch wrote, "whatever the agency may be doing under Chevron, the problem remains that courts are not fulfilling their duty to interpret the law." To be sure, Chevron is at no immediate risk of being overturned. But if Judge Brown and Justice Gorsuch ultimately have their way, the doctrine's days will be numbered.[...]