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All articles with the "Regulation" tag.

Published: Fri, 20 Jan 2017 00:00:00 -0500

Last Build Date: Fri, 20 Jan 2017 21:45:51 -0500


White House Site Relaunches with Trump’s Populist Policy Proposals

Fri, 20 Jan 2017 13:55:00 -0500

The website for the White House has been updated and relaunched to fit the new President Donald Trump administration. It is obviously pretty bare bones for now (you can read his inauguration speech here), but the issues section puts his agenda on open display. For those less interested in speeches and more interested in actual upcoming policy hints, it's worth looking over to see where things are going. He has six sections—energy, foreign policy, jobs, military, law enforcement, and trade. Here's a few interesting things worth noting, both good and bad: The administration will embrace fracking. Sound energy policy begins with the recognition that we have vast untapped domestic energy reserves right here in America. The Trump Administration will embrace the shale oil and gas revolution to bring jobs and prosperity to millions of Americans. We must take advantage of the estimated $50 trillion in untapped shale, oil, and natural gas reserves, especially those on federal lands that the American people own. We will use the revenues from energy production to rebuild our roads, schools, bridges and public infrastructure. Less expensive energy will be a big boost to American agriculture, as well. Unfortunately, but not unsurprisingly, Trump is also "committed" to the white whale of "energy independence." Just as with trade, America benefits when we get energy cheaply no matter where it comes from. It's great that he recognizes that cheaper energy creates jobs (by reducing costs). It's a shame he doesn't realize it's another good that can free Americans up to do other things if we can get it more cheaply elsewhere. The administration will use military action to fight the Islamic State (and increase the size of the military) Defeating ISIS and other radical Islamic terror groups will be our highest priority. To defeat and destroy these groups, we will pursue aggressive joint and coalition military operations when necessary. In addition, the Trump Administration will work with international partners to cut off funding for terrorist groups, to expand intelligence sharing, and to engage in cyberwarfare to disrupt and disable propaganda and recruiting. The Trump administration is also calling to "rebuild" the military even though America still overwhelms every other country's forces, saying "our military dominance must be unquestioned." But he does also call for embracing diplomacy and his saber-rattling here is focused entirely on terrorist groups and has no suggestion of interference in other countries' governance. The administration is calling for a moratorium on new federal regulations. As a lifelong job-creator and businessman, the President also knows how important it is to get Washington out of the way of America's small businesses, entrepreneurs, and workers. In 2015 alone, federal regulations cost the American economy more than $2 trillion. That is why the President has proposed a moratorium on new federal regulations and is ordering the heads of federal agencies and departments to identify job-killing regulations that should be repealed. Tim Carney at the Washington Examiner noticed last night that right as Barack Obama's administration was packing up, the Department of Energy released a new rule that will likely kill off cheap incandescent three-way light bulbs. Libertarians and conservatives who love trade should be doing the best they can to push Trump into focusing on these kinds of issues. This is what is hurting both manufacturers and consumers. Foreign trade makes goods cheaper for Americans and should be supported. All these regulations make both the production and the consumption of goods more expensive. That's where the focus should be. Speaking of which. The administration is really committed to screwing up trade: This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers. President Trump is committed to renegotiating NAFTA. If our partners refuse a renegotiation that gives American workers a fair deal, then t[...]

Regulations from the Executive in Need of Scrutiny (REINS) Act Is Not Necessarily Anti-Science

Fri, 20 Jan 2017 11:20:00 -0500

(image) Lots of activists are gnashing teeth and rending garments over the passage in the House of Representatives of the Regulations from the Executive in Need of Scrutiny (REINS) Act which would require both houses of Congress to vote on any new regulations issued by federal agencies that have an economic impact exceeding $100 million. The Union of Concerned Scientists asserts the REINS Act exists "to 'rein in' public health, safety, and environmental protections, and nothing more. They have been written and drafted by corporate lobbyists not to improve the federal regulatory process, but to stymy it, and add yet another roadblock for implementing sensible safeguards."

Over at The New Scientist, physical sciences editor Lisa Grossman dismisses the REINS Act supporters' claim that its purpose is "increase accountability for and transparency in the Federal regulatory process." Instead she sees a darker motive: "In practice, [passage of the REINS Act] could mean that years of painstaking research that go into writing regulations can simply be ditched, replaced with simple political whims....the fact that Congress seems eager to strip science out of the rule-making process is part of a larger trend: replacing scientific expertise with the vagaries of politics."

As necessary and valuable as scientific expertise is, scientists and federal bureaucrats are not experts at evaluating and making benefit-risk tradeoffs. If members of Congress get those tradeoffs wrong, voters can fire those whom they believe are not acting in ways that adequately protect their health, safety, and livelihoods.

As my colleague Eric Boehm has reported the federal regulatory state is out of control with new rules proliferating under President Obama at near light speed. As Case Western University law professor Jonathan Adler points out the Constitution vests the power to make laws in Congress, not in federal executive agencies. Adler concludes:

Federal regulation reaches nearly all aspects of modern life and is pervasive in the modern economy. Much of this regulation may be necessary or advisable, and nothing in the REINS Act would hinder a sympathetic Congress from approving new federal regulations. In all likelihood, however, the REINS Act's congressional approval process would prevent the implementation of particularly unpopular or controversial regulatory initiatives. The primary effect of the legislation would be to make Congress more responsible for federal regulatory activity by forcing legislators to voice their opinion on the desirability of significant regulatory changes.

It is past time for Congress to take responsibility to reassert its authority to make the rules that affect the health and livelihoods of millions of Americans.

Politicians Make Bootlegging Great Again

Tue, 17 Jan 2017 00:01:00 -0500

When Prohibition ended in 1933, my great-grandfather, Giuseppe Marano, thought his money-making glory days were over. Having made a good living selling alcoholic beverages to willing buyers at a time when that business was illegal across the country, he and his cohorts certainly viewed the passage of the 21st Amendment as the end of a very profitable era. Except that it really wasn't. Politicians may have formally dumped the national ban on booze, but in many places they've imposed enough foolish restrictions to keep bootlegging a going concern. On the first day of this year, it became a class 4 felony in Illinois—up from a business offense carrying a fine—to import 45 liters or more of liquor into the state without a license. The same minimum one-year prison sentence applies to bringing in more than 108 liters of wine or 118 liters of beer without government paperwork. The law passed as a nudge-and-wink scheme between politicians who resent the loss of tax revenue when beverages are brought in across the state line, and local liquor distributors who bristle when out of state competitors elbow in on their action. "Many out-of-state businesses are not compliant with Illinois tax laws, which undercuts Illinois businesses, depriving our state of money that could be going toward improving our schools, roads and social services," Karin Lijana Matura, executive director of Wine and Spirits Distributors of Illinois, an industry trade group, told WQAD. The legislation came in response to a thriving illegal cross-border trade as Illinois residents place orders with businesses—many in Indiana—for liquor, wine, and beer unavailable or just extremely pricey through their state's tightly regulated and protected cartel. "Alcohol is much more expensive in Illinois than it is in Indiana," reported a Chicago ABC affiliate in 2015. "And it is even pricier in Cook County, where the tax rate on liquor is more than five times higher than it is in the Hoosier state." The result is that "a six-bottle case of vodka that costs $167 in Indiana costs $226 in Illinois and is $18 more than that in Cook County." Indeed, Illinois taxed distilled spirits at $8.55 per gallon, compared to the $2.68 imposed by Indiana, according to the Tax Foundation. Taxes are also lower in neighboring Missouri and Wisconsin. The Illinois Policy Institute notes that Cook County adds another $2.50 per gallon to the price of a bottle of cheer, and Chicago tags on an extra $2.68 per gallon. Wine is taxed at $1.39 per gallon, a tad higher than the $0.25 rate in Wisconsin. Beer isn't leaned on quite so heavily by the tax man, but Illinois still imposes a higher rate than most of its neighbors at $0.23 per gallon, compared to $0.12 in Indiana, and $0.06 in Missouri and Wisconsin. And that's assuming you can even find the beverage of your choice to have an opportunity to balk at the price. Chicago "is one of the last contested territories for the nation's two beer giants…which wage a proxy war through licensed distributors" and squeeze out small competitors, Crain's Chicago Business pointed out a few years ago. Federal and state law makes it difficult for small players to bypass established distributors. So opposition to the new Illinois law found fertile ground among consumers with tastes that couldn't be satisfied locally, "particularly from residents who purchased hard-to-find wine from out-of-state retailers," according to the Chicago Tribune. "Other states allow out-of-state retailers to obtain a direct shipping license, providing both oversight and valuable tax revenue. We think this is the right approach for Illinois—creating competition, consumer choice, and revenue to help balance our state's budget," their petition said. All they wanted was a chance to legally place orders online with businesses that carry their drinks of choice and have the goods shipped to their homes. But they lost, and the tax man and distribution cartel got their pet bill signed into law. It's not as if Illinois officials are alon[...]

New York's Dumb War on Uber

Wed, 11 Jan 2017 10:30:00 -0500

"Uber is one of these great inventions, startups, of this new economy and it's taking off like fire to dry grass and it's giving people jobs. I don't think the government should be in the business of trying to restrict job growth." This quote came from New York Gov. Andrew Cuomo back in July 2015. Today, a year and a half later, New York's state government still does not allow ridesharing services to operate in upstate New York. This inability to adapt to new business models leaves millions of New Yorkers with fewer transportation options and work opportunities. In November 2015, Uber estimated that expanding ridesharing across the state would create 13,000 jobs. If anything, this estimate is too low. Uber has 30,000 active drivers in Pennsylvania, a state with a similar population to New York's when excluding New York City. Admittedly, most of these jobs would be part-time, as half of Uber drivers work on the platform for under 10 hours a week. Some critics of ridesharing's business model worry about part-time work--but flexible work is a feature, not a bug. Because drivers set their own schedules and use their own cars, a wide array of people benefit. Everyone from single caregivers and full-time drivers to college students and retirees can earn additional income by partnering with ridesharing companies. New Yorkers realize these diverse benefits even if some of their elected representatives do not. Earlier this year, a Siena College poll found that "at least two-thirds of voters from every [New York] region and every [political] party support legislation to allow ridesharing companies such as Uber to operate in their areas." Overall, support for legalized ridesharing was 80 percent. Additionally, elected officials from cities across upstate New York recently sent a letter urging state policymakers in Albany to allow these services to expand. Even with support from the governor, the public, and influential mayors, attempts to expand access to ridesharing continually fail. The ridesharing fight will continue in Albany during the 2017 legislative session. This upcoming legislative debate will center around background checks for ridesharing drivers. Uber and Lyft currently use name-based background checks to screen potential drivers. While ridesharing's safety record has shown that this approach works, some insist on mandating fingerprint background checks for drivers as a condition for state-wide expansion. Ridesharing companies have been through this fight before. Uber and Lyft both famously left Austin, Texas, after the city required fingerprinting. Alternatively, after a long debate, Maryland recently declined to mandate fingerprinting when the state's Public Service Commission ruled that the name-based background checks were just as effective. If New York insists on fingerprint background checks, then it would become the first state to require them. This would be a mistake because, even though fingerprint background checks sound secure, they are unnecessary, ineffective, and discriminatory when used for job screening purposes instead of for law enforcement purposes. Fingerprinting leads to otherwise qualified and safe drivers being denied work opportunities. If someone is arrested but then found not guilty or never charged with a crime, that information would need to be updated by law enforcement for fingerprint background checks to be effective. Yet this follow-up step is often overlooked, which leads to discriminatory results. The Urban League, NAACP, and National Black Caucus of State Legislators all oppose fingerprinting requirements for this reason. Fingerprint background checks are only as effective as the databases of fingerprints that they pull from. In Maryland, certain traffic violations—including DUIs and reckless driving incidents—would not show up through fingerprint background checks. Name-based background checks avoid this failure by querying thousands of courthouse and law enforcement databases to find relevant recor[...]

Feds Nix NJ Municipalities’ Practice of Painting Blue Lines in Road to Show of Support to Police

Tue, 10 Jan 2017 12:52:00 -0500

A number of towns in New Jersey decided to paint blue lines in the middle of their roads as a show of support for local law enforcement ("the thin blue line"), but after the chief engineer of Somerset County sought clarification from the federal government about the practice before committing to a blue line there, they've found that the practice violates federal regulations on road markings. Some towns are already having the lines removed. Road markings in the U.S. are governed by the federal Manual on Uniform Traffic Control Devices for Streets and Highways (MUTCD), because apparently without federal standards the roads would fall into a state of anarchy. Mark R. Kehrli, the director of the Office of Transportation Operations at the Federal Highway Administration, wrote to the Somerset County chief engineer to tell him that the blue lines violated federal regulations. "Section 3A.06 of the MUTCD states that the pattern of a longitudinal double line shall be two parallel lines separated by a discernible space," Kehrli wrote. "For this space between the two lines to be discernible it must represent a lack of other markings. Accordingly, the pavement surface must be visible in the space between the lines in the same way that it is visible outside the lines. On this basis alone, filling in the gap in a double line, either partially or fully, does not comply with the provisions of the MUTCD." The use of the color blue was also problematic. Kehrli cited a 2013 official ruling on "Application of Colored Pavement," which stated: Blue is not a colored pavement and is not to be used as such in accordance with Paragraph 3 of Section 3G.01. Blue as it applies to a pavement marking is exclusively reserved for the background color in the international symbol of accessibility parking symbol (see Figure 3B-22) and for the supplemental pavement marking lines that define legal parking spaces reserved for use only by persons with disabilities as provided in Paragraph 5 of Section 3A.05. "There are many appropriate and fitting ways to recognize service to the public that do not involve the modification of a traffic control device, which can put the road user at risk due to misinterpretation of its meaning," Kehrli wrote. The idea that a blue line in the middle of a road might be misinterpreted by anyone as signaling a disabled parking spot is preposterous, and a great illustration of the inanity of so many federal regulations. An effort's already underway to get a state law that would permit municipalities to paint blue lines in the middle of the road, with Somerset County Sheriff Frank Provenzano lobbying state lawmakers about it. The president of the state PBA, meanwhile, criticized the FHA's priorities. "I hope the FHA has more important things on their to-do list," Patrick Colligan told Nevertheless, he said he supported Provenzano's efforts although he questioned the need to "legislate a blue line." Colligan's questioning of the FHA's priorities work just as well, however, for the entire exercise. Don't municipalities, also, have more important things on their to-do lists than spending money to paint blue lines in the road? "Although absurd, we would paint over the approximately 200-foot line if required," the Howell police chief Andrew Kudrick told "I'll just paint the entire parking lot blue at the police department." Semi-related: Last year, a state mandate requiring local jurisdictions to purchase body cameras was ruled unconstitutional because the state didn't cover the costs of the cameras. Although body cameras may be more expensive than painting blue lines (though that's far from certain given the inflated costs of government labor), avoiding symbolic expenditures leaves more of the money municipalities extract from their residents on the kinds of things, like body cameras, from which they might actually benefit.[...]

Brickbat: All Wet

Thu, 05 Jan 2017 04:00:00 -0500

(image) Jon Carey says the pond on his 10-acre home near Butte Falls, Oregon, is the best part of the property. Carey and his wife bought the property two and a half years ago. The pond has been there for 40 years. But now the Jackson County watermaster says the pond is illegal. State law gives the county rights to all rainfall, and the Careys have no right to collect it. They have appealed to the local water commissioner, and they have the support of the Oregon Forestry Commission as well as local firefighters, who use the pond as a water source for fighting wildfires. But the watermaster says that would set a dangerous precedent for the owners of all the other illegal ponds in the area.

Small Businesses Win Some Regulatory Relief

Tue, 03 Jan 2017 00:01:00 -0500

Christmas has come and gone, but anybody struggling to keep a small business afloat or pondering an entrepreneurial venture might be digging under the desiccated blue spruce (take it out, already) for a missed present or two. The good news is that, as tough as politicians make it to launch your own firm, they've recently gifted us with a bit of relief from their depredations—and more may be on the way. At the moment, starting a business isn't exactly a growth industry. "[T]otal entrepreneurial activity (TEA) in the United States declined by two percentage points to 12 percent in 2015," according to the latest Global Entrepreneurship Monitor, sponsored by Babson College and Baruch College. And yeah, it's all in startups—"fewer people were entering entrepreneurship in 2015." The report adds. The Census Bureau agrees, putting new business creation at nearly a 40-year low. "The number of jobs created by establishments less than 1 year old has decreased from 4.1 million in 1994, when this series began, to 3 million in 2015," the Bureau of Labor Statistics chimes in on a less-than-cheerful note. True the decline comes after several years of decent startup activity, but as the Kauffman Foundation, which monitors entrepreneurial activity, put it, "Despite the large short-term increases, entrepreneurship remains in long-term decline." There's probably no single reason for the fall-off in startups. Economists and other analysts mention difficulties in gaining financing, increasingly nimble larger companies nabbing opportunities, and the seeming risk-aversion of younger Americans as hurdles for entrepreneurial activity. But when you ask small business owners themselves, they cite the heavy hand of officialdom as a major concern. "[M]any small-business owners are apparently wary of the current impact of the government on their businesses," Gallup noted in 2014. Specifically, they pointed to "the president's signature healthcare legislation and his push for a federally mandated minimum wage increase as potentially deleterious to business." The two most important problems they faced, small business owners told the National Federation of Independent Business's 2016 annual survey, are taxes and government regulations—a consistent response in recent years. Keep in mind that, when the economy takes a beating from political meddling, entrepreneurs get the worst of the stomping. As the federal government's own Small Business Administration notes, "small businesses bear a larger burden from regulations than large businesses." Specifically, regulatory compliance costs firms with fewer than 20 staffers 36 percent more per employee than it costs companies cutting paychecks to more than 500 people. Which sucks. So it's encouraging when government officials concede that they should, perhaps, step more gently on the throats of the people over whom they rule. "So-called cottage food laws allow home chefs and bakers to run businesses out of their homes or apartments without needing special licenses or having to comply with food safety regulations," the Washington Post's Erin Bylander noted last month. D.C.'s law, passed in 2013, spares food-related businesses making no more than $25,000 from many regulations. Maryland and Virginia have similar laws in place, though the Old Dominion State mostly dispenses with the revenue cap. Such laws make it easier for culinary entrepreneurs to get a foothold in the market without taking on the huge hassle and expense of dealing with red tape. Food-policy expert Baylen Linnekin has long championed such regulatory reforms—and more—in the pages of Reason. Last year, he touted victories for "Food Freedom" bills in Colorado and Wyoming that cleared away many of the restrictions on producing, buying, and selling food at the retail level. Advocates of the Wyoming measure summarize it as saying that, with some exceptions, "any food may be sold as lon[...]

Ford Gets It Right on Self-Driving Cars

Thu, 29 Dec 2016 11:05:00 -0500

(image) Ford Motors has just unveiled the latest iteration of its self-driving automobile, a modified Ford Fusion that processes a terabyte of information per hour from lidar, radar, optical sensors, high resolution 3D maps, GPS and more to navigate itself. The new vehicles still require someone to sit in the driver's seat to monitor the car and take over if it gets confused. However, Ford is on the right path; the company wants to build a fully autonomous car available for ride-hailing and ride-sharing services by 2021. That car will dispense with fripperies like steering wheels and pedals.

The key is that Ford is aiming for full autonomy, not half-assed autonomy that requires a driver to take over whenever an alarm bell sounds. Chris Brewer, Chief Program Engineer, Ford Autonomous Vehicle Development explains:

Building a car that will not be controlled by a human driver is completely different from designing a conventional vehicle, and this raises a whole new set of questions for our autonomous vehicle engineering team: How do you replicate everything a human driver does behind the wheel in a vehicle that drives itself? ...

Just as we have confidence in ourselves and other drivers, we need to develop a robust virtual driver system with the same level of dependability to make decisions, and then carry them out appropriately on the go. We're doing that at Ford by taking a unique approach to help make our autonomous cars see, sense, think and perform like a human — in fact, better, in some cases.

With regard to performing better than human drivers, automated vehicles will have access to lots more information. For example, the Ford Fusion cars' lidars have a 360 degree sensing range the length of two football fields. Virtual drivers could use this superior information and their finer control over the car's steering, brakes, throttle, etc. to pull off evasive manuevers in dangerous situations that a normal human could not achieve.

For more skeptical view of when fully autonomous vehicles will become available, see Reason Foundation Director of Transporation Policy Bob Poole's Reason TV interview below. Among other things, Poole says that his skepticism about the speedy deployment of self-driving cars "is coming from researchers, serious researchers, not reporters writing in the popular press, at UC Berkeley, at Carnegie-Mellon, and at MIT...." Ouch.

src="" allowfullscreen="allowfullscreen" width="560" height="340" frameborder="0">

For a reporter's view, see my article, "Will Politicians Block Our Driverless Future?" Bob, want to place a friendly bet?

Weaponized Drones and the Second Amendment

Wed, 28 Dec 2016 15:10:00 -0500

A spectacular (and loud) YouTube video showing a drone rigged with a handgun actually firing bullets freaked out a lot of folks last year. In response, several states have passed legislation outlawing such weaponized drones. In 2008, the Supreme Court affirmed in its decision in District of Columbia v. Heller that "the Second Amendment protects a personal right to keep and bear arms for lawful purposes, most notably for self-defense within the home." So does the Second Amendment protect the right of Americans to have and use armed drones for self-defense? In 2012 on Fox News, Justice Antonin Scalia observed: "Obviously the [2nd] amendment does not apply to arms that cannot be hand-carried—it's to keep and "bear", so it doesn't apply to cannons—but I suppose there are hand-held rocket launchers that can bring down airplanes, that will have to be decided." Scalia's comment provoked attorney Lawrence Rafferty to snark, "Do we draw the limit at briefcase nukes that can be carried in one's hand?" In the alternative, what about allowing police to use armed drones? Last year, North Dakota passed legislation prohibiting police drones from carrying lethal weapons, but perhaps allowing them to be armed with tasers or pepper spray. In October, The Wall Street Journal reported that representatives from Taser International had met with some police officials to discuss the idea of installing stun guns on police drones. In 2014, the South African company Desert Wolf unveiled its Skunk Riot Control Drone that could shoot pepper spray, paintballs, or plastic bullets. In 2015, The Times of India reported that the police in Lucknow had bought five drones to use for crowd control (a quick Google search finds no instances of them being used yet). One tiny bit of good news is that many states have adopted laws that require the police to obtain a warrant to use drones for surveillance. Interestingly, several states, including Michigan, Oregon, and West Virginia, forbid the use of drones to spot, harass or hunt wildlife. Oregon explains that it adopted the drone hunting ban because "it is the intent of the Legislative Assembly that the wildlife laws embody the sporting ethic of fair chase hunting...." None of the drone hunting ban laws I examined made an exception for drone hunting on private land. The states likely claim to have the authority to enact such bans because wildlife is legally "owned" by the states, not by private individuals. In any case, if a privately owned armed drone is operated on the owner's private property (or with the permission of the property owner), are states constitutionally constrained from outlawing it? As noted, several states don't think so. Legislative push will come to constitutional shove when a drone equipped with a firearm or a bomb, either as an act murder or an instance of stupidity, does kill someone. See armed drone in action. (Caution: It's loud.) src="" allowfullscreen="allowfullscreen" width="560" height="340" frameborder="0">[...]

Air Travel Getting Safer, Cheaper

Tue, 27 Dec 2016 07:00:00 -0500

Last time I wrote about airline safety was in November 2015, when a Russian airliner crashed in the Sinai Peninsula. Roughly a year later, another Russian plane has gone down—this time into the Black Sea. All 92 people on board, including many members of a famed Red Army Choir, were killed. The safety record of Russian-made and Russian-operated planes such as the TU-154, which was involved in this latest accident, is relatively poor. That said, things were much worse under communism, when the state-run Aeroflot was notoriously cavalier with the lives of its crew and passengers. According to the Aircraft Crashes Record Office, "8,231 passengers have died in Aeroflot crashes. Air France is next on its list, with 1,783, followed by Pan Am (1,645), American (1,442), United (1,211) and TWA (1,077)."

Mercifully, air travel overall is getting safer. Between a high point in 1972 and a low point in 2015, the total number of airline fatalities declined from 2,373 to 186—a reduction of 92 percent. Roughly over the same time period (1970-2014), the number of passengers carried globally increased from 310 million to 3.2 billion. Put differently, the chances of dying in an air crash declined from 1 in 210,000 in 1970 to 1 in 4.63 million in 2014. Today, flying is not only safer, but also cheaper. In the United States for example, average domestic round trip airfare fell from $607 in 1979 (the year of deregulation) to $377 in 2014 (both figures are in 2014 U.S. dollars). Between 1990 and 2013, the average international round-trip airfare fell from $1,248 to $1,175 (2013 U.S. dollars). In both cases, the average number of miles flown per trip has increased.


Things are getting better, in other words, but chose your airline carefully.


The FDA Keeps Us Guessing About the Scope of Its E-Cigarette Regulations

Fri, 16 Dec 2016 09:15:00 -0500

Next Generation Labs, which makes synthetic nicotine for e-cigar­ettes, argues that a recent statement by the Food and Drug Administration shows the agency does not plan to regulate e-liquids as tobacco products unless they contain ingredients derived from tobacco. I don't think the statement shows anything of the kind, but I can't be sure. Like the FDA's other pronouncements on the subject of what is covered by its potentially ruinous e-cigarette regulations, the statement cheered by Next Generation Labs is hard to decipher. Here is what the FDA said last month in response to Nicopure v. FDA, a lawsuit by a company that sells e-liquids and vaporizers: Not all nicotine-free e-liquids (NFLs) are subject to the deeming rule. Assuming an NFL is not made or derived from tobacco, it is subject to the rule only if it meets the definition of a "component or part"—that is, if it is "intended or reasonably expected" either "(1) To alter or affect [a] tobacco product's performance, composition, constituents, or characteristics; or (2) To be used with or for the human consumption of a tobacco product; and is not an accessory."...An NFL that is intended or reasonably expected to be mixed with liquid nicotine would qualify as a "component or part." The FDA is quoting from its own interpretation of the Family Smoking Prevention and Tobacco Control Act, the 2009 law that gave it authority over tobacco products. Since that law says a tobacco product must be "made or derived from tobacco," you might think it's obvious that an e-liquid is not a tobacco product if none of its ingredients is derived from tobacco. But the FDA says that e-liquid still might be a tobacco product because someone—a distributor, a retailer, or a consumer—could add nicotine to it later. Even if the e-liquid never contains nicotine, it would seem to qualify as a "component or part" of a tobacco product if it is consumed in a vaporizer that also can be used to inhale nicotine. By the FDA's reasoning, that vaporizer is a component of a tobacco product, meaning it is itself a tobacco product. Hence any e-liquid used with that vaporizer, whether or not it contains nicotine or any other tobacco derivative, is also component of a tobacco product. As far as I know, the FDA has neither endorsed nor rejected this understanding of the law, despite many opportunities to do so. But the interpretation is consistent with the agency's broad view of its authority under the Tobacco Control Act. Assuming the FDA reads the law this way, an e-liquid could escape regulation as a tobacco product only if it was part of a closed system that was incompatible with e-liquids containing nicotine. If a company specializing in nicotine-free liquids packaged them in cartridges that could be used only in that company's e-cigarette, the liquids presumably could not be considered components of a tobacco product. That approach would also avoid the possibility that nicotine added to the e-liquids by someone other than the manufacturer would retroactively transform them into tobacco products, as suggested by the FDA in its Nicopure brief. What does all this mean for e-liquids that contain synthetic nicotine? The possibility that someone would add tobacco-derived nicotine to them seems remote, so Next Generation Labs needn't worry about that (I think). But e-liquids containing its TFN-brand nicotine could still be deemed tobacco products if they work with multipurpose vaporizers. The company is therefore collaborating with Vapeix to develop a "cloud-connected smart vaporizer platform" that works only with e-liquids containing TFN nicotine. Next Generation cofounder Ron Tully says the alliance aims to "create a vape market which is unequivocally disassociated from traditional vaping devices that are intended to be used with t[...]

The Good and the Bad in Canada's Proposed Marijuana Regulations

Wed, 14 Dec 2016 10:45:00 -0500

Yesterday the task force charged with advising the Canadian government on how to legalize marijuana unveiled its recommendations, which are not quite as consumer-friendly as anticipated. Here are some of the good elements: Age limits. The task force recommends a minimum purchase age of 18, although it says jurisdictions with a drinking age of 19 (British Columbia, Newfoundland and Labrador, Nova Scotia, and New Brunswick, plus three territories) might want to "harmonize" the two rules. The minimum purchase and consumption age in every U.S. jurisdiction with legal marijuana is 21, which means most college-age cannabis consumers are still breaking the law. Possession and sharing. The report says adults should be allowed to possess up to 30 grams (an ounce) in public, which is the limit in seven of the nine U.S. jurisdictions that have legalized marijuana so far. It also says "social sharing" should be legal. Home cultivation. All but one of the U.S. jurisdictions with legal marijuana allow consumers to grow their own, a policy the task force endorses, recommending a limit of four plants per household. Sales. The report says marijuana products should be available through direct-to-consumer deliveries, which only some of the U.S. jurisdictions allow, as well as storefronts, although it recommends separating cannabis sales from tobacco and alcohol sales. Edibles. The task force says foods and beverages containing THC should be allowed, as long as they do not also contain caffeine or alcohol, do not exceed legal limits on dose per serving, and do not appeal to children too much. Consumption outside the home. The task force recommends that provinces be allowed to "permit dedicated places to consume cannabis such as cannabis lounges and tasting rooms, if they wish to do so." That might open the door to cannabis cafés where people can consume marijuana purchased on the premises, or at least establishments that let customers consume marijuana they bring with them. Here are some of the worrisome recommendations: Advertising and promotion. The task force thinks advertising and promotion should be banned with very narrow exceptions, similar to the Canadian policy for tobacco. It also wants the government to mandate plain packaging, limited to "company name, strain name, price, amounts of delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD) and warnings and other labelling requirements." At the same time, the task force wants to "encourage a diverse, competitive market that also includes small producers"—a tall order when businesses can barely communicate with consumers. Taxes. The report says taxes should be based on potency, which is not necessarily a terrible idea, assuming that there must be special taxes on cannabis at all. But it also says taxes should be aimed at discouraging consumption: "Taxes should be high enough to limit the growth of consumption, but low enough to compete effectively with the illicit market." Since you can be sure that black-market dealers won't be jacking up their prices in the hope of minimizing sales, that will be a tough balancing act. The task force itself notes "the experience in Washington, where a high tax at the start of legalization, combined with a shortage of legal product, strengthened the existing illicit market." Driving under the influence. The task force recommends research aimed at establishing a scientific basis for a "per se" drugged driving standard based on THC blood levels. Although the report concedes there is no such basis so far, it may nevertheless encourage legislators to impose a limit that is unscientific and unfair. There is no guarantee that legislators will take the task force's advice. Prime Minister Justin Trudeau has said he plans to introduce marijuana legislation th[...]

Straitjackets for New Ideas

Tue, 13 Dec 2016 11:15:00 -0500

One of the toughest economic challenges "is discovering what consumers want that doesn't already exist and making it happen," Virginia Postrel writes in her latest Bloomberg column. "Regulatory power, by contrast, requires a finite number of rigid categories into which every new idea must be crammed, no matter how it is deformed in the process."

(image) When Starbucks, for example,

wanted to open stores in San Francisco, it discovered that many neighborhoods had banned the conversion of retail spaces into restaurants, reflecting a surprisingly common city-planning prejudice against eating out. Starbucks could sell coffee to go, but it couldn't give customers anywhere to sit unless it located in busy shopping districts away from where people lived. Already a well-established company, Starbucks lobbied to get a new zoning category created, "beverage houses." Now you can find all sorts of coffeehouses in San Francisco neighborhoods where they were once forbidden.

Postrel notes that this "only happened because a wealthy company had the resources to survive in less desirable locations while it worked to change the rules." Most enterprises, and most people with new ideas for enterprises, aren't as big and rich as Starbucks.

And that's what it took to open some coffeeshops with chairs—not exactly a bold innovation, even if it felt like one in certain sectors of San Francisco. Postrel points to plenty of other products, from Airbnb to "tailored and dynamic cocktails of bacteria-attacking viruses," where the regulatory straightjacket has been even more confining. To read the whole thing, go here.

What a Subway Breast-Implant Ad Can Teach Us About U.S. Health Care

Mon, 12 Dec 2016 16:00:00 -0500

For sheer accumulation of elite institutional prestige, it's hard to top Atul Gawande. He is a professor at both Harvard Medical School and the Harvard School of Public Health and a regular contributor to the New Yorker magazine, where I've enjoyed reading and learning from some of his brilliant and fair-minded past work. Gawande greeted the news of Donald Trump's election and its impact on heath-care policy with this gem: "eliminating Obamacare isn't going to stop the unnerving rise in families' health-care costs; it will worsen it. There are only two ways to assure people that if they get cancer or diabetes (or pregnant) they can afford the care they need: a single-payer system or a heavily regulated private one, with the kind of mandates, exchanges, and subsidies that Obama signed into law." A few days later I was in the New York subway and saw a poster advertising plastic surgery. "Breast augmentation," the poster blared: $3,900. "Free consultation, 100% financing available—includes all fees." On the health care financing question, I think the New York subway ad is closer to the truth of the matter than the New Yorker magazine. If there's anything American capitalism is really good at, after all—for better or worse—it's figuring out ways for consumers to pay for things that they otherwise couldn't afford, and may not even need. That new iPhone? Pay for it over two years in connection with your cellphone service contract. A new house? How about a 30-year mortgage, or even an interest-only adjustable rate mortgage? A new car? Lease it for three years. College tuition? Try a section 529 tax-deferred savings account, student loans, and financial aid. Leave cancer or diabetes aside for the moment. With all due respect to Professor Gawande, Harvard, and the New Yorker, it's just hard for me to believe that in the absence of Obamacare, the expense of pregnancy will suddenly become out of reach to ordinary Americans. Somehow, hundreds of millions of Americans managed to become pregnant in the more than two centuries that the republic existed before 2010, when the Patient Protection and Affordable Care Act was passed. If the law is repealed, we'll find a way to reproduce again afterward. If anything, pregnancy and childbirth are fine examples of the way that government involvement, regulations, and subsidies increase the cost of medical care rather than decreasing it. When someone else is paying, all of a sudden any personal financial incentive a patient might have had to see a cheaper nurse-midwife for routine prenatal care rather than a more highly paid obstetrician/gynecologist disappears. Likewise, if the government requires insurance companies to pay for a two-night hospital stay, why go home sooner? Much of the expense of modern pregnancy care—fetal echocardiograms, repeated sonograms, various other tests—relates to a policy agenda of preventing the birth of disabled individuals. That may or may not be a policy agenda worth furthering by making everyone's pregnancy more expensive, but if that is the tradeoff, let's at least be transparent about it, rather than pretending that it's the pregnancy, rather than the disability-birth-prevention, that is the expensive part. The most expensive part of health care is usually a doctor's time. The supply of trained physicians is artificially constrained by limits on how many medical students, residents, and fellows are accepted each year in American medical institutions. Even highly competent and experienced foreign-trained practitioners often are required to repeat their training if they want to immigrate here and practice in America. If Americans were paying directly for their own health care, you might see political pre[...]

Oregon's Recreational Marijuana Market Approaches Collapse

Fri, 02 Dec 2016 13:45:00 -0500

Oregon's recreational marijuana market is rapidly approaching collapse thanks to new state regulations, as supply shortages and price increases hit dispensaries across the state. Yesterday the Oregonian ran a long piece documenting the struggle of many of these businesses, who have been forced to lay off staff and watch their store shelves stripped bare for want of product. One such dispensary—Human Collective in Southeast Portland—has experienced a severe decline in the amount of marijuana flower buds it could get its hands on, while its inventory of marijuana concentrates is down to about 10 percent of normal. Owner Don Morse has responded by raising his prices and running with half the normal amount of staff. Another cannabusiness owner told the Oregonian that he expects 70 to 80 percent of the dispensaries operating today to be closed by next year. These problems are the natural consequence of the onerous and unworkable pesticide testing regulations that went into effect in October. As Reason has reported, these new regulations have massively increased the time and costs it takes to comply, while also severely restricting the number of labs that are permitted to carry out testing. The predictable result has been many marijuana growers and processors either increasing their prices dramatically or shutting down their operations altogether due to a lack of labs available to test their products. And now dispensaries are starting to feel this pain. A survey of cannabusinesses conducted by Beau Whitney at Whitney Economics has found that 22 percent of respondents report that they are going out of business or in danger of doing so. A further 80 percent say that the new testing requirements have "severely impacted" their bottom line. Almost all have said they either have raised or will raise their prices substantially just to stay afloat. Yet even with price hikes, about half of the businesses surveyed reported losing $20,000 or more a month thanks to new regulations. Despite this slow-rolling disaster, the Oregon Public Health Authority (OHA)—the agency responsible for crafting the pesticide regulations—is standing firm. Johnathan Modie, a spokesman for the OHA, told the Oregonian that the ruination of so many businesses is just "the price of public safety." Anthony Johnson, a longtime legalization advocate and blogger at, disagrees, instead calling overregulation "the new prohibition," with potential to push producers and consumers into black markets where there are no public safety checks. Indeed, there are already reports of this happening, as many smaller grow operations—unable to bear the costs of sitting on their hands while they wait—have returned to selling on the streets. This is all a far cry from the hopes of marijuana advocates and users, who expected to find a bit of normalcy in the post-prohibition environment. CORRECTION 12/20/16: An earlier version of this article erroneously said the survey of cannabusinesses was connected by Golden Leaf Holdings. It was conducted by Whitney Economics.[...]