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All articles with the "Regulation" tag.

Published: Fri, 23 Mar 2018 00:00:00 -0400

Last Build Date: Fri, 23 Mar 2018 04:18:24 -0400


Mark Zuckerberg Is Calling for Regulation of Social Media To Lock in Facebook's Position

Thu, 22 Mar 2018 11:20:00 -0400

So now Mark Zuckerberg, the founder and head honcho at Facebook, is going all in on government regulation. "The question," he told Wired's Nicholas Thompson, "isn't 'Should there be regulation or shouldn't there be?' It's 'How do you do it?'" On CNN, he said, "I actually am not sure we shouldn't be regulated. I think in general technology is an increasingly important trend in the world. I think the question is more what is the right regulation rather than 'yes or no should we be regulated?'" What gives? I'd like to suggest that Zuckerberg's response has little or nothing to do with civic-mindedness in the wake of ridiculously overblown panics over Russian trolls buying campaign ads showing Jesus wrestling Satan, or still-cresting fears that Cambridge Analytica used Facebook data to deny Hillary Clinton her rightful role as first woman president. Rather, Zuckerberg is using these incidents as a way to cement Facebook's centrality in a radically volatile social-media landscape. It was only a few weeks ago, after all, that we were treated to a spate of stories about how Facebook was losing younger users by the millions. From a representative account at Inc.: Last year alone, the social network lost more than 1.4 million users in the 12 to 17-year old demographic, according to new report from research firm eMarketer. That represents a decline of nearly 10 percent, or roughly three times what analysts had predicted. Notably, 2017 was the first time that analysts expected the company to see a drop in usage for any age group. Overall, Facebook lost 2.8 million U.S. users under the age of 25, the data found.... 2018 isn't shaping up to look any better. EMarketer predicts another 5.6 percent decline in users between 12 and 17 years old, and a 5.8 percent decline for those between 18 and 24. That likely has executives worried about the long-term dominance of the social media platform. Only the paranoid survive in Silicon Valley, right? Zuckerberg may be young (he's just 33) but he's old enough to remember MySpace and Friendster. And he's certainly aware that Facebook's "pivot to video," brief emphasis on live events, and push for "insta-articles" didn't work out well for his company, publishers, or individual users. He hangs around with people who don't just remember AOL and Netscape but also invested in them. The history of business is a cemetery of whales, of "too big to fail" juggernauts who are barely remembered these days. The supermarket chain A&P once had bigger market share in its sector than Walmart does today. It revolutionized the buying and selling of groceries and has passed away, little-remembered and little-missed. Only 60 companies that appeared in the 1955 version of the Fortune 500 were still there in last year's list, economist Mark Perry reminds us. More important for the current conversation (emphasis in original): At the current churn rate, about half of today's S&P 500 firms will be replaced over the next 10 years as "we enter a period of heightened volatility for leading companies across a range of industries, with the next ten years shaping up to be the most potentially turbulent in modern history" according to Innosight. Go ask your kids if they're still playing Minecraft and get back to me. Zuckerberg surely understands all this better than most of us. And he's surrounded by folks who, despite libertarian bona fides, recognize a corollary too: Regulation often isn't forced upon leading firms in an industry but welcomed and even demanded by them, as a means to fix the market when they're in a particularly good position. This is part of the insight that guides the public-choice school of political economy, but it's not just libertarians such as Nobel laureate James Buchanan who think this way. Forty years ago, the socialist historian Gabriel Kolko rewrote the received interpretation of the Progressive Era along the same lines. By looking at how regulation unfolded during the Gilded Age, Kolko concluded that railroad tycoons and other robber barons actively sought out regulatory regimes that would keep [...]

Mississippi Bans Abortions After 15 Weeks, Faces First Legal Challenge Today

Tue, 20 Mar 2018 10:23:00 -0400

"We are saving more of the unborn than any state in America, and what better thing can we do?" That's what Mississippi Gov. Phil Bryant said as he signed the nation's strictest law regarding abortion. The only exemptions in House Bill 1510, reports the Clarion Ledger, are if a fetus has health problems making it "incompatible with life" outside of the womb at full term, or if a pregnant woman's life or a "major bodily function" is threatened by pregnancy. Pregnancies resulting from rape and incest aren't exempted. Currently, federal law prohibits banning abortions before 20 weeks, which is considered the moment at which a fetus is viable. The law is being challenged by Mississippi's only abortion clinic, the Jackson Women's Health Organization: Dr. Sacheen Carr-Ellis, in a sworn statement, said she'll have to stop providing abortions to women past the 15 week ban, or else lose her Mississippi medical license, as House Bill 1510 requires. Carr-Ellis said women shouldn't be forced to carry their pregnancies to term against their wills or leave the state to obtain abortions. "A woman who is pregnant should have the ability to make the decision that is best for her about the course of her pregnancy, based on her own values and goals for her life," Carr-Ellis said in the statement. I realize and respect that some libertarians are opposed to abortion except when a pregnant woman's life is endangered by bringing the pregnancy to term. But Carr-Ellis's perspective seems right to me, especially before viability. Personhood is a legal concept, not a scientific fact, and will always be subject to definition and redefinition as our knowledge and morality change. But despite some ambiguity, viability has a strong claim as being the moment at which personhood should be granted and the state can rightly begin to take some interest, with interventions becoming more likely as the pregnancy continues. This is roughly the thinking behind Roe v. Wade (1973), which has been revised and amended in subsequent rulings by the Supreme Court, and it also accords well with public opinion on abortion. By a two-to-one margin (61 percent to 31 percent), Americans support unfettered rights to an abortion in the first trimester of a pregnancy but that position reverses in the second trimester (27 percent to 64 percent) and drops further in the final trimester (14 percent to 80 percent). That pattern is reflected in when women have abortions, too, with 95 percent of abortions taking place by week 15. In Mississippi, "78 abortions in 2017 when the fetus was identified as being 15 weeks or older. That's out of about 2,500 abortions performed statewide, mostly at the clinic." Granting pre-viability fetuses full legal rights from the "moment of conception," the stated goal of many if not most abortion opponents, is imprecise and opens up our private lives to all sorts of invasive state interventions. For instance, prior to the new law, Mississippi counted a pregnancy as beginning with the first day of a woman's last menstrual cycle, or about two weeks before most other states started counting. So even though Mississippi's previous ban on abortions started after 20 weeks, it effectively meant it started at 18 weeks by the methods used in other places. Beyond that, there is a serious question of how to account for naturally occurring abortions. "Embryologists estimate that the rate of natural loss for embryos that have developed for seven days or more is 60 percent," notes Reason's Science Correspondent Ronald Bailey. "The total rate of natural loss of human embryos increases to at least 80 percent if one counts from the moment of conception." If "moment of conception" becomes the legal definition, then what is to be done about the millions of "deaths" that occur every year? In any case, the rate of abortions per 1,000 women aged 15 years to 44 years has declined below what it was when Roe v. Wade was decided in 1973. Better contraceptives and more access to them is the leading cause of the reduction, as the incidence of unwante[...]

Larry Kudlow Is a Big Upgrade for Trump's White House

Fri, 16 Mar 2018 00:30:00 -0400

President Donald Trump will reportedly name Larry Kudlow head of the White House National Economic Council. For fans of pro-growth policies—deregulation, low taxation, and open trade—it's great news for obvious reasons. Kudlow has been a decades-long champion of these ideas, and those with coherent philosophies tend to offer some stability and continuity. This administration could use more of those things, not less.

Kudlow is also a noticeable upgrade over the outgoing Gary Cohn, not only because he has been a far more consistent voice for free markets—Cohn's support of carbon tax and a value added tax, and rumored moderating disposition on tax reform were all worrisome clues—but also because the syndicated columnist and former TV host is better equipped to sell those ideas to the public and lawmakers.

Kudlow, it's been reported, also played a role in persuading senators to support tax reform despite the intense political opposition, and hysterical warnings about the bill's homicidal intent and supposed enduring unpopularity. His problem with the Trump tax bill was that it wasn't cut enough on the individual side.

Of course, the hardest sell might be the president himself. "We don't agree on everything, but in this case I think that's good," Trump said of Kudlow this week. "I want to have a divergent opinion. We agree on most. He now has come around to believing in tariffs as a negotiating point." Trump hired Kudlow even though he co-wrote a piece for National Review only two weeks ago arguing that imposing tariffs on steel and aluminum imports is tantamount to imposing sanctions on your own country—"a crisis of logic." Kudlow, a former White House budget aide for President Ronald Reagan, has long held positions on NAFTA and trade in general that are diametrically opposed to the president's, which undermines the idea that Trump is rigidly opposed to any dissent within the administration.

And if tariffs are indeed merely a "negotiating point," that's good news.

While Kudlow immediately restores some balance in a White House that has picked up the protectionist rhetoric lately, it's highly unlikely that the propelling idea of Trump's electoral success will be shelved simply because he tapped a new adviser, no matter how convincing or compelling his arguments might be. It's worth considering, however, that Kudlow might mitigate some of the worst inclinations of the protectionist wing. Certainly, his presence doesn't hurt.

It's worth noting that tariffs, though important, aren't everything. And on most issues, Trump has displayed a surprisingly traditional fiscal conservatism. Cohn, it seems, would have been much more liable to push Trump toward acquiescing on economic issues in pursuit of deals.

So, the hardest hits by the news have been liberal pundits who are, despite all the talk of the Trumpocalypse, far more predisposed to being fans of the president's big-government inclinations than that of old-school fiscal conservatism. Many liberal columnists have already lined up to point out that Kudlow has made some bad predictions in the past. It's worth remembering that this puts him on par with just about every other economist who's ever appeared on TV or written a column or worked for government. Kudlow's rosy predictions seem predicated on an optimistic view that fails to consider the unpredictability of markets and world events. Economists—all of them—should stop trying to be seers.

The idea that anyone who's failed to forecast a recession but been right about the big ideas should be disqualified from a job in Washington seems to be reserved exclusively for fiscal conservatives. And watching the agitated reaction from proponents of high taxes and highly regulated top-down economics should imbue conservatives with optimism that Trump has made the right choice.

Why Is Silicon Valley’s Cool New Self-Flying Taxi Taking Off in New Zealand Instead of California?

Thu, 15 Mar 2018 11:40:00 -0400

The air taxi vehicle developed by the startup called Kitty Hawk is now public, and it is impressive. The aircraft will be able to take off vertically and fly up to 60 miles, intelligently piloting itself during the entire flight. Kitty Hawk is funded by Alphabet CEO Larry Page, and boasts a lineup of accomplished executives from the San Francisco Bay area, including alumni from Google, Twitter, and Virgin America. But instead of launching an air taxi service close to their homes and families in Silicon Valley, Kitty Hawk chose New Zealand—a not-very-convenient commute that's something like 15 hours each way. Kitty Hawk did preliminary testing at an airstrip in Hollister, an agricultural town about 50 miles south of San Jose, and the company's headquarters has not shifted from Mountain View. But when its executives conducted a global search for a location to start a service that would eventually carry passengers, California failed to make the cut. A report from New Zealand's news site explains why. It quotes Fred Reid, Kitty Hawk's chief operating officer, as saying they were looking for a country that was open to new ideas, such as approving a single aircraft design that could be used from testing through commercialization. New Zealand Prime Minister Jacinda Ardern said she wanted to send "the message to the world that our doors are open." Another excerpt: "[CEO Sebastian] Thrun said when meeting people from the government for the first time, the first question everyone asked was how they could make the process faster for Kitty Hawk." It turns out that startups designing autonomous vehicles are as mobile as the aircraft they dream up. If the United States is perceived as too slow to recognize the benefits of these technologies, companies will look elsewhere. The sheer weight of the regulatory structure for autonomous planes will "strangle further innovation—at least in the U.S.," Joe Blair, a vice president at Vancouver, B.C.-based Chrysalix Venture Capital, wrote in an essay last year. "Other countries have welcomed autonomous drones with open arms." France and Switzerland allow drones more flexibility than the U.S. when operating beyond visual line of sight. New Zealand was the location that Domino's chose for the world's first commercial drone delivery service (the pizza's flight time was less than 5 minutes). A cluster of drone companies is forming around Delft in the Netherlands. Dubai will host Uber's air taxi service, a Kitty Hawk competitor that's scheduled to launch in 2020. "It's really a problem," Janina Frankel-Yoeli, vice president of Israel's Urban Aeronautics, told the BBC. Current aircraft are already "virtually capable of taking off, flying and landing on their own," but the Federal Aviation Administration (FAA) will not allow them to fly without a pilot. Greg McNeal, co-founder of drone software company AirMap, told Recode: "We asked why autonomous cars weighing 3,500 pounds can drive next to hundreds of pedestrians, but a three-pound drone can't fly over people." Nobody wants to wake up to an autonomous vehicle crashing through their roof, but it's possible to prevent that without driving companies overseas. Requiring passenger services to secure a hefty amount of insurance is one approach—strict regulations would exist, but would be drafted by insurers. A model can be found closer to the ground: the insurance industry's car safety ratings tend to be tougher and more comprehensive than the federal government's. (The FAA already recognizes "equivalent levels of safety.") For its part, the FAA has shown some signs of trying to break out of a 1950s-era regulatory mentality. In 2016, it released what it calls Part 107 rules for drone operations. These permit lightweight line-of-sight drones operated by a human; waivers are available to permit night flying or operating beyond line of sight. But Part 107 waivers do not extend to carrying passengers or autonomous operations. Not helping matters is the dizzying [...]

Drunk History: When the Government Banned Female Bartenders

Tue, 13 Mar 2018 11:45:00 -0400

(image) "Why did it take America so long to have female bartenders?" So asks David Wondrich, author of the superb cocktail history, Imbibe!, in his latest column at The Daily Beast.

As Wondrich notes, "it wasn't about mixing drinks," since women are obviously capable of doing that. And "it wasn't about protecting the precious flower of American womanhood from the foul atmosphere of the bar," since American women have been drunkenly inhaling that atmosphere since at least the days of King George III. So "what was the taboo against barmaids about?" After a long, interesting overview of American drunk history, Wondrich settles on this thesis:

Any answer, I think, would have to be sketched out along these lines. During Colonial times, men fell into the job of tending bar, particularly in parts of the country where women were in short supply. With the diminished class system that prevailed over here, it wasn't seen as a somehow degrading or unmanly service job. It was seen for what it was, a moneymaking job with a fair amount of independence and just enough craft to earn its expert practitioners the respect of a nice-sized chunk of the populace. The more men mystified that craft part of the job by mixing up outlandish concoctions, tossing drinks between cups in long liquid arcs, dashing this and that into the glass with knowing winks, setting things on fire, so on and so forth, the more they could justify their high pay—and their exclusive possession of the job.

Surprisingly, Wondrich makes scant mention of one of the most obvious contributing factors to this sexist state of affairs. Namely, government regulators frequently banned women from working in this particular occupation. What's worse, those regulators received the blessing of the U.S. Supreme Court.

The state of Michigan, for instance, once had a law on the books forbidding women from working as bartenders unless they were "the wife or daughter of the male owner." Valentine Goesaert, who owned a bar in Dearborn, challenged the law for violating her right to tend bar at her own establishment. But the Supreme Court sided with the state. In an opinion written by progressive legal hero Justice Felix Frankfurter, the Court upheld the ban on the grounds that the judiciary owed vast deference to government regulation of economic activity.

"We cannot cross-examine either actually or argumentatively the mind of Michigan legislators nor question their motives," Justice Frankfurter wrote in Goesaert v. Cleary (1948). "We cannot give ear to the suggestion that the real impulse behind this legislation was an unchivalrous desire of male bartenders to try to monopolize the calling." Indeed, Frankfurter declared, "Michigan could, beyond question, forbid all women from working behind the bar."

Related: Government Almost Killed the Cocktail

Trump Is 'Destroying' Regulations

Mon, 12 Mar 2018 15:40:00 -0400

With his tariffs on aluminum and steel, his family-separating crackdowns on nonviolent illegal immigrants, and his authoritarian musings about executing drug dealers, President Donald Trump is a libertarian's nightmare. Except when it comes to regulatory reform. The Competitive Enterprise Institute (CEI), a D.C.-based free-market think tank that focuses on the administrative state, tallied up the number of regulations in Trump's first year in office and found "the lowest count since records began being kept in the mid-1970s." CEI's Clyde Wayne Crews told Reason, "I haven't seen personally anything like the regulatory reductions that have taken place." What's producing these results? Part is the president's early executive orders mandating that for every new regulation two old ones get killed, and that the net imposed regulatory cost of each agency and department be zero. Trump has also appointed some genuine reformers: Scott Gottlieb at the Food and Drug Administration (FDA), Ajit Pai at the Federal Communications Commission, and Betsy DeVos at the Department of Education. Chief among the anti-bureaucratic bureaucrats is Neomi Rao, administrator of the obscure but important Office for Regulatory Affairs, which applies cost-benefit analyses to proposed regulations while making sure they still align with legislative intent. Rao, who came to the administration after founding the Center for the Study of the Administrative State at George Mason University, tells Reason, "We have done more in our first year than any president since we've been keeping records, which is back to Reagan." President Trump appears genuinely enthusiastic about this push, talking up FDA reforms in both of his State of the Union addresses and crowing at a December red-tape-cutting ceremony that the "never-ending growth of red tape in America has come to a sudden screeching and beautiful halt." But Crews warns that a midterm will be much harder for Trump to navigate than the comparative honeymoon of 2017. "I think in 2018, he's going to have a much tougher time meeting the goal," Crews said. "When you're acting alone as president and you can't make law on your own, the barrier that you run into is you run out of low-hanging fruit." Produced by Matt Welch and Alexis Garcia. Camera by Todd Krainin, Ian Keyser, Mark McDaniel, and Jim Epstein. "Headway, Machinery, Run, Scenery, and Soli" by Kai Engel is licensed under a Creative Commons Attribution license ( Source: Artist: Photo Credits: Kevin Lamarque/REUTERS/Newscom - Pool/ABACA/Newscom - Olivier Douliery/Pool via CNP/Newscom - Richard Ellis/ZUMA Press/Newscom - Everett Collection/Newscom - Erik McGregor/Sipa USA/Newscom - Michael Reynolds/UPI/Newscom - Aaron P. Bernstein/REUTERS/Newscom - Ron Sachs/CNP/MEGA/Newscom - Homeland Security Governmental Affairs Committee - John Angelillo/UPI/Newscom - Britta Pederson/picture-alliance/Newscom - Carlos Barria/REUTERS/Newscom - Mike Segar/REUTERS/Newscom - Olivier Douliery/CNP/AdMedia/Newscom Subscribe at YouTube. Like us on Facebook. Follow us on Twitter. Subscribe to our podcast at iTunes.[...]

Food Trucks Still Under Attack from Regulators

Sat, 03 Mar 2018 08:00:00 -0500

Chicago's food truck operators, hopelessly besieged by oppressive and inane city regulations that I've characterized as "some of the worst, if not the worst, in the entire country," are now hoping the state's highest court will take up their case. A lawsuit, filed in 2012 by the Institute for Justice on behalf of client Laura Pekarik, owner of a cupcake truck, seeks the repeal of Chicago's idiotic proximity restrictions (which bar food trucks from selling food within 200 feet of brick-and-mortar restaurants and, hence, prohibit them from operating throughout the city's downtown area), and requiring trucks to be fitted with city-monitored GPS equipment. An Illinois appellate court upheld the rules last year. "The Illinois Supreme Court should accept review of Laura's challenge to Chicago's anti-competitive 200-foot rule," says Robert Frommer, the IJ attorney representing Pekarik, in an email to me this week. "Competition is the American Way, which is why for decades Illinois courts have struck down laws meant to enrich deep-pocketed incumbents by throttling upstart newcomers. We hope that the Court will honor that long history by striking down the rule and making it clear that a business's success should turn on how good its food is, not on who it knows at City Hall." I first wrote about battles over food truck regulations for Reason back in 2011. At the time, the key issue—repeated in cities across the country—was a combination of local brick-and-mortar restaurant owners wrongfully seeking local-government protection against competition from food trucks and local regulators obliging. Much has changed for the better in the years since. For example, Washington, D.C., regulations, a key focus of my article, have improved dramatically. Unfortunately, it's also true that much hasn't changed, and that regulations around the country are still a mixed bag. While Chicago dropped its unconscionable ban on allowing food trucks to cook their food onboard—which meant food trucks had to store, cook, slice, and dice all their food off the truck, sometimes hours in advance of serving the food—a similar ban is somehow still in effect throughout Washington State. (Momentum was building just this week in Olympia to repeal that state ban.) Elsewhere, the struggle continues. Tupelo, Mississippi, for example, is dragging its heels before it will even establish food truck regulations. While Tupelo lawmakers are taking their sweet time, the city also appears willing to allow brick-and-mortar restaurant owners to dictate terms. At least that's how the latest city council meeting on the issue makes it seem. "The main thing that I'm interested in, and I think the food trucks want it, too, is to have some regulations about where they can be, things like that," said Leslie Nabors of Buffalo Wild Wings, in remarks reported by Tupelo's Daily Journal. "We don't want just any trucks coming into town and setting up shop." Some of Nabors' brick-and-mortar neighbors agree. "Whether it's a minimum distance food trucks can be from a restaurant, noise regulations over generators or if food trucks can park on city property—I don't know if this is what we want to do, but I've looked into several cities' food truck ordinances," said John Robbins, owner of Mugshots. "I just hope the city looks into that. I'm not against food trucks, but I don't want them to park on the same piece of property without any property tax or ordinances in place. We just want to make sure they jump through the same hoops we do." They may as well say they're going to build a wall around downtown Tupelo and force food truck owners to pay for it. Back in my 2011 piece, I urged exactly the opposite of this rent seeking chicanery. Wishing food trucks the pain of jumping through the same idiotic hoops restaurant owners must navigate is a needlessly crappy and adversarial argument. A better one? "Instead of cracking down o[...]

Home Pot Delivery Is Cool, but California's Taxes and Regulations Are Still Onerous

Fri, 02 Mar 2018 15:15:00 -0500

U.S. News recently ranked California's "quality of life" the worst in the nation, much to the delight of Fox News. (That metric was just one of eight used by the magazine, and California actually came in 32nd overall.) U.S. News assessed quality of life based on measures of the "natural environment" and the "social environment." One factor that was conspicuously excluded: Can you order marijuana online and have it delivered to your home or office that day? Stoney, based in Santa Ana, delivers cannabis products throughout the state, generally overnight. Delivery is free for orders over $50; otherwise it costs $8. In Orange County and Los Angeles, the company offers same-day service for $15. All you need is a credit card and an ID proving you are 21 or older. The website has a decent flower selection of about two dozen strains, plus concentrates, shatter, prerolled joints, edibles, and vape pens. It is not exactly an Amazon for pot, but it's the closest thing I've seen. California is one of just three states that currently allow home delivery of recreational marijuana. The other two are Oregon, which legalized recreational marijuana in 2014 and began allowing deliveries to consumers a year ago, and Nevada, which legalized recreational marijuana in 2016 and allowed home delivery under temporary regulations that lapsed at the end of last year but were renewed as of yesterday. Delivery to consumers is still banned in Colorado and Washington, the two states where voters approved legalization in 2012, although that may change in Colorado as soon as this fall. Alaska, which legalized recreational marijuana in 2014, does not allow home delivery either. In Massachusetts, where legal sales of recreational marijuana are expected to begin this summer, home delivery will be delayed at least until the fall and possibly later. In Maine legislators have yet to establish a system for licensing and regulating recreational sales. In Vermont and the District of Columbia, recreational use is legal, but sales are not. The home delivery option is one of the most consumer-friendly aspects of California's marijuana regulations, along with the allowance for on-site consumption at marijuana stores (subject to local approval). The taxes, by contrast, are decidedly unfriendly. They include $9.25 per ounce sold by growers, a 15 percent excise tax collected by retailers, local marijuana taxes, a 6 percent state sales tax, and local sales taxes. Taxes totaled 31 percent on my Stoney order, not including the levy on growers. At LAX CC, a marijuana shop in Los Angeles that has a big selection (77 strains and 40 concentrates on the day I visited), taxes add 35 percent to the retail price. If you include the wholesale tax, the effective rate on an eighth of an ounce, which was priced at $45 for most strains, is roughly 39 percent. According to new report from the California Growers Association (CGA), which represents small cannabis cultivators, "taxes were identified as the single greatest barrier to entry" in a survey of the group's members. The report argues that "current cannabis tax policy is propping up the illicit market, preventing compliance from good-faith operations, and contributing to price increases for patients and consumers." A legal eighth in California may cost two or three times as much as a black-market eighth. Taxes are not the only reason street dealers undersell state-licensed marijuana suppliers, who also bear regulatory costs that their illegal competitors escape. The CGA, which complains that "barriers to entry are impracticably high," says one problem is the sheer volume and complexity of state and local regulations. Seven state agencies, local building and fire codes, and local regulatory and tax ordinances "all have at least some rules which apply to any given business." All together, "there are hundreds of pages of relevant regulations." In[...]

Searching for Gun Violence Solutions That Don't Collectivize Punishment

Wed, 21 Feb 2018 12:00:00 -0500

Former Virginia Gov. Terry McAuliffe, a Democrat, and David French, a senior editor at the conservative National Review, probably differ on most domestic-policy issues. But on one particular gun-control measure, they clearly agree. French wrote about the measure last week, in the wake of the heinous school massacre in Parkland, Florida. McAuliffe pitched the idea with regard to domestic abusers two and a half years ago in a news conference. They're both right. It's called a gun violence restraining order (GVRO), or sometimes a gun violence protective order. It's based on a familiar model: the domestic restraining order. As the Giffords Law Center to Prevent Gun Violence explains, GVROs "allow families and household members, as well as law enforcement officers, to petition a court to remove a person's access to guns if he or she poses an imminent danger to self or others." The Parkland massacre makes the utility of GVROs excruciatingly obvious. The FBI now concedes that it failed to act on a tip about the shooter from someone who found the shooter's behavior, gun ownership, and social media posts disturbing. But even if the FBI had acted, it might not have been able to prevent the shooting: You can't throw somebody in jail simply for behaving erratically. Sadly, this is not a new story: Seung-Hui Cho exhibited numerous warning signs before committing the massacre at Virginia Tech. The man who killed more than two dozen people in Sutherland Springs, Texas, had escaped from a mental facility and tried to carry out death threats, among other red flags. The perpetrator of the massacre at the Pulse nightclub in Orlando had a long history of troubling behavior and acted so bizarrely in a gun store that the owner said he called the FBI. Friends of the man who killed nine people in a black church in Charleston say he had threatened to shoot up a school the week before. Acquaintances of the man who killed 13 people at Fort Hood said he was a "ticking time bomb" and complained that their superior officers ignored clear warning signs. A Connecticut investigation found that the perpetrator of the massacre at Sandy Hook Elementary School exhibit clear "warning signs" that the school district and others "missed opportunities" to address. Not every mass killer gives off an air of impending menace. The perpetrators of the shootings in San Bernardino and Las Vegas did not telegraph their intentions. But most mass killers often display a clear set of similar warning signs: social isolation, depression, narcissism, resentment, a sudden fascination with firearms, and so on. When an individual raises fears that he might do something horrible, a GVRO gives friends, neighbors, family, and authorities a means of preventing a nightmare. The other advantage of GVROs, as French notes, is that they do not constitute "collective punishment." The vast majority of gun owners in the U.S. will never hurt anyone, so they naturally bristle at the idea that they should be forced to give up their rights because a minuscule percentage of others abuse those rights. (And the percentage truly is minuscule: 73 million Americans own a firearm; 5 million Americans own an AR-15. As the Richmond-based Fourth Circuit Court has noted, "in 2012, the number of AR- and AK-style weapons manufactured and imported into the United States was more than double the number of Ford F-150 trucks sold, the most commonly sold vehicle in the United States." Yet in 2014 rifles of all types, not just assault-style rifles, accounted for fewer than 250 homicides.) Collective punishment should offend not just gun owners, but any American who believes in individual responsibility and due process. And, in fact, liberals generally abhor the collective-punishment model when it is imposed in other circumstances or on other populations—e.g., on Middle Easterners and Muslims by[...]

San Francisco Man Has Spent 4 Years and $1 Million Trying to Get Approval to Turn His Own Laundromat Into an Apartment Building

Wed, 21 Feb 2018 10:37:00 -0500

To understand how difficult and expensive it is to build housing in San Francisco, observe the case of Robert Tillman. Tillman owns a single-story laundromat in the city's Mission District. Since 2014, he has been attempting to develop his property into a 75-unit apartment building. The city is in the midst of a housing affordability crisis, with an average one-bedroom apartment going for $3,400 a month. So you might think Tillman's project would sail through the permitting process. Instead, the city's labyrinthine process of reviews, regulations, and appeals has dragged on for four years. The project has cost the self-described "accidental developer" nearly $1 million so far, and he hasn't even broken ground yet. "It's taken me longer to get to this point than it took for the United States to win World War II," says Tillman, "and my site is the easiest site in the city to build." In a sane world, it would be easy. No housing is located at the site, so there's no fear that redevelopment will displace any tenants. There are three other coin-operated laundromats within 100 yards of Tillman's property, so there is no real concern about lost neighborhood services. Half of the property is a parking lot, so the city won't be losing an aesthetically pleasing landmark. On top of all that, Tillman's lot is a three-minute walk from the 24th Mission Street BART light rail station, a major plus for a city obsessed with "transit-oriented" development. In March 2014, when Tillman first submitted his plans to the San Francisco Planning Department, the initial reaction was positive. Officials were "very much in favor of developing site," Tillman says. The real opposition came from some of the neighbors. A community meeting in January 2016 served as something of a flashpoint. At the meeting, one woman fretted that the tall building would violate the privacy of a nearby public school. Another argued that the project needed to be 100 percent affordable housing. Two representatives from local Latino Cultural District Calle 24 said that even a 100 percent affordable housing project was out of the question, given the proposed height of the development. When Tillman said he saw his project as necessary so people like his daughter could afford to come back and live in the city, one particularly motivated activist said she wished his daughter was killed in a terrorist attack. Nevertheless, Tillman persisted, working with the Planning Department to change the design of his development where necessary and spending tens of thousands more on various impact studies. That includes $6,500 on a wind study, $5,000 on a shadow study, and $189,000 in city fees by the end of 2017. Meanwhile, the San Francisco Planning Commission—which oversees the Planning Department and is responsible for approving new developments—continued to push for changes. Parroting many of the Mission activists' concerns, Commissioner Rich Hillis complained that the design was "bulky, and a bit out of character" with the neighborhood, while Commissioner Kathrin Moore said that erecting an 84-foot tall building would be like "plopping a foreign object into this area and not thinking about the consequences." Commissioner Dennis Richards said, "I think a project absolutely belongs here. The question is what kind of project." Thanks to California's state density bonus law, which restricts localities' ability to reject housing developments that reserve a certain percentage of their units for below-market tenants, the Commission was largely prevented from imposing new conditions. After another three-month delay, the Commission voted on November 30, 2017, to approve the project. So that meant Tillman could move forward with construction, right? Of course not. It just set off another round of delays. California's Environmental Quality Act allows[...]

City Orders Businesses to Join Its Police Surveillance System

Tue, 20 Feb 2018 12:25:00 -0500

City leaders in Saginaw, Michigan, are drafting local shops into the crime-fighting business. The city has ordered local businesses to install video cameras and to turn over footage to the police on demand. Saginaw City Council voted unanimously yesterday to pass an ordinance requiring certain types of businesses (with "characteristics which may tend to increase the risk of criminal activity on their premises") to install a minimum of three surveillance recording cameras. These must be in operation whenever the business is open, and one camera must be positioned to record the face of each person entering or leaving. Not all businesses are covered by the new rules, but if you spend time in Saginaw, you're likely to walk into one of these places. Besides some obvious choices—banks, gun shops, check-cashing businesses—the ordinance covers all hotels, gas stations, pharmacies, cell phone dealers, and places that sell liquor (or allow liquor to be consumed on the premises, like a banquet hall). All these businesses will have a year to install their surveillance systems, subject to approval and inspection by the Saginaw Police Department. Then, if "a crime occurs" involving the business (the ordinance is written very vaguely), the establishment will provide the recording of the incident to the police. If the business resists, police will attempt to get a search warrant. Businesses are required to retain all recordings for at least 30 days; if the police contact them about a crime, they have to retain their recordings of the incident for at least 60 days. Businesses will be subject to inspections of their surveillance systems whenever the chief of police damn well pleases. The new law states the chief or a designee can inspect the system at any "reasonable" time to make sure it's in compliance with the city ordinance, which also seems like a nice way of getting around any demand by a business that police get a warrant to review footage. Police could also use such a demand to access surveillance for purposes other than investigating a crime. You would think that the city of Saginaw, population around 50,000, must be in the midst of a massive crime wave. The opposite is true. While Saginaw's violent crimes historically are far above average, overall crime in the city has dropped significantly over the past decade. As in many other American cities, Saginaw's crime is on the decline and has been for a while. But that's not enough for city leaders who want to force businesses to install (and pay for) equipment that lets the police snoop on folks. A recent beating and robbery of a 65-year-old woman captured on surveillance footage in Saginaw is being used to make the case that video recording devices should be mandatory. Saginaw Police Chief Bob Ruth claims businesses can get compliant surveillance systems for $300–$350. This quote from Ruth, in Michigan Live, has a confounding use of "we," which seems to indicate that Ruth doesn't even recognize that private businesses are not there to do the city's bidding: "I think the extra work that we're doing is far outweighed by the quality of work we're going to get in the end, on the way we'll be able to solve cases. It's really going to help us." [emphasis added] Those who attempt to defy the city's ordinance will face fines for each day they are out of compliance. And eventually they could lose their business licenses. It's not unusual for a city or a police department to attempt to force a business to shell out for surveillance equipment and other costly security demands when violent crime or drug dealing frequently takes place on or near the premises. Officials use "nuisance abatement" procedures and zoning rules to essentially force them to help the police or get shut down. It's less common for a city to make[...]

Congress Has Failed (Yet Again) to Close the Martin Shkreli Loophole

Thu, 15 Feb 2018 15:20:00 -0500

Prescription drug companies sometimes use a legal loophole called "restricted distribution" to undermine their generic competitors. The CREATES Act, sponsored by a transpartisan group of senators, would have curtailed the practice, but last week Majority Leader Mitch McConnell (R-Ky.) excluded the bill from the budget agreement. As a result, Americans will continue to pay more than they should for certain prescription drugs. Many Americans are at least vaguely familiar with restricted distribution, thanks to the most infamous pharmaceutical executive to take advantage of it, Martin Shkreli. Shkreli, you may remember, jacked up the price of a drug called Daraprim, which was approved by the Food and Drug Administration in the 1950s and has been used for decades as a treatment for parasites that infect people with compromised immune systems. The patent for Daraprim expired more than 40 years ago, but it's still the only FDA-approved version of pyrimethamine currently on the market in the U.S., which means it has no generic competitor. (The FDA approved a slightly different formulation of pyrimethamine as a malaria treatment in 1981, but it has since been discontinued.) For a long time, American patients didn't really need a generic version of Daraprim, because it cost around $13.50 per 25 milligram pill and is taken for a short period of time. For immunocompromised adult patients who have the toxoplasmosis parasite, the FDA recommends taking 50 to 75 milligrams of Daraprim a day for up to three weeks, followed by half that dosage for an additional four to five weeks. So at the high end, an adult course of Daraprim therapy for a U.S. patient used to cost around $1,350 total. While that might not seem cheap, it was a drop in the bucket compared to the cost after Turing Pharmaceuticals, Shkreli's company, bought the rights to Daraprim and jacked the price up to $750 per pill in 2015. That move increased the cost of one course of treatment to around $75,000. At that point you might have expected another company to jump in and start offering a generic version of the drug. But Shkreli used a regulatory loophole to keep that from happening. You see, when a generic manufacturer wants to create a cheap version of a branded drug, it has to buy thousands of doses from the manufacturer in order to run comparison tests. Generic manufacturers use the results of these tests to prove to the FDA that their version is identical to the branded drug that the agency has already approved. More often than not, the company that holds the marketing and distribution rights to a branded drug will sell those comparison doses to the generic manufacturer without being obstructionist, because that's the trade-off for receiving a 20-year monopoly by way of a drug patent: The branded manufacturer gets to charge whatever they want for years and years without facing competition, and in exchange for that government-backed monopoly, it's supposed to sell equivalency samples to generic companies. But what if the company is run by an unscrupulous asshole like Martin Shkreli? Then it might opt to put the drug into what's called "restricted distribution," which means no distributor anywhere can sell comparison samples to a generic manufacturer. The FDA originally created the concept of restricted distribution to limit the availability of drugs that might be dangerous. Methadone, for instance, was first approved in the 1940s as a painkiller. In the 1970s, the FDA restricted its availability because regulators didn't want the opioid used for anything other than the treatment of opioid dependence. Even today, methadone can be dispensed only in highly regulated settings and only for one approved reason. In 2007, Congress empowered the FDA to create an entire system of safe[...]

Maybe the Government Won’t Screw Up Bitcoin After All

Tue, 13 Feb 2018 08:30:00 -0500

Libertarians generally don't expect much of government regulators. Hearings on the hill about how to approach some new, unregulated activity often boil down to little more than nebulous demands to "do something" and boss people like us around. This is especially pronounced with a revolutionary new technology like bitcoin. For these reasons, a recent testimony by the chairmen of the Commodity Futures Trading Commission (CFTC) and Securities Exchange Commission (SEC) before the Senate Banking Committee provided a welcome breath of fresh air to the cryptocurrency community. Rather than rushing to regulate, these policymakers urged restraint and humility towards financial innovation. Last week, the cryptocurrency community breathed a collective sigh of relief as two of the most relevant financial regulatory bodies in the United States signaled an unusual understanding of blockchain technologies and explicitly committed to a "do no harm" approach towards cryptocurrencies. In his remarks before the committee, CFTC Chairman J. Christopher Giancarlo told the body that "we owe it to this generation to respect their enthusiasm about virtual currencies with a thoughtful and balanced response, not a dismissive one." SEC Chairman Jay Clayton, while more skeptical about certain cryptocurrency applications and fundraising vehicles, nonetheless praised the technology's promise to "facilitate capital formation [and provide] promising investment opportunities." Both men outlined a regulatory path forward that, while still imperfect (as most things are), would be much preferable to many alternatives. Contrary to some people's preconceived notions, bitcoin and cryptocurrencies are hardly "unregulated." By virtue of the flexible nature of these technologies—vicariously or simultaneously serving as alternative currencies, payment systems, registries, or even next-generation legal devices—cryptocurrencies touch upon the domain of several regulatory bodies. Thus, a panoply of separate policy guidance documents have emanated from bodies as diverse as the Department of Treasury, Internal Revenue Service, Federal Election Commission, and each of the separate states. This isn't necessarily a bad thing. If properly constrained, the limited regulatory functions of these dispersed offices could be vastly preferable to the more expansive authorities granted to a hypothetical "Department of Cryptocurrency." The challenge, then, is to ensure that our policies indeed remain properly constrained. The according downside, of course, is that entrepreneurs and cryptocurrency users face regulatory uncertainty as they wait to see how different policymaking bodies will respond. There have been two large sources of regulatory uncertainty in terms of U.S. financial regulations. One of them concerned how the SEC would approach the burgeoning world of "initial coin offerings" (ICOs). An ICO is a kind of cryptocurrency crowdfunding mechanism. In theory, ICOs would provide promising technology projects with seed funding and reward backers with the project's returns—a kind of democratic, distributed venture capital fund. In practice, ICOs have unfortunately boiled down to little more than a wild west of unaccountable projects and outright scams that seemed to flagrantly skirt established SEC securities regulations. Even diehard cypherpunks have recognized the problems that fly-by-night ICO scams generate for novice investors and the community as a whole. Yet many have feared that such shady schemes could generate the pretext for onerous regulations that impose innovation-stifling costs on legitimate cryptocurrency projects as well. No one wants to see fraudulent scams proliferate. But we must ensure that the policies put in place to mitigate [...]

California Food Nannies Shutter Startup for Home Cooks

Sat, 10 Feb 2018 08:00:00 -0500

A dozen or so years ago, as my friend Dave was planning a move from Washington, D.C., to Philadelphia, he used the need to clean out his fridge before the move as an excuse to offer a half-empty jar of homemade kimchi for sale on Craigslist. While I don't think the kimchi sold, Dave's effort opened my eyes to the seemingly limitless possibilities of homemade online food sales. The truth is that while those possibilities are limited theoretically only by imagination, they very often bump up in the real world against—to paraphrase Waylon Jennings—the limits of what the law will allow. That truth was evident last week, when Bay Area food startup Josephine announced it will close its doors in March. As I described in a Sacramento Bee op-ed in support of Josephine last year, the company launched nearly four years ago with a mission to provide cooks who are typically underrepresented in restaurant leadership—including women and immigrants—with a platform by which to sell home-cooked meals with their neighbors. It's a cool idea. And it worked quite well for a time. That is, as I noted, until local health officials "sent cease-and-desist letters to several Josephine cooks." Josephine responded by trying to work with lawmakers and regulators, pushing a bill in the state legislature that would provide some legal avenue for its cooks. Despite the fact that the bill is now moving through the California legislature, the company decided its passage would be too late for Josephine and its funders. Josephine didn't have to die. The regulations that have made it impossible for the company to operate should have died instead. But its fate mimics that of other similar home-food startups. A similar New York-based startup, Umi Kitchen, flamed out last year after just four months of operations. I wrote an appreciation of Forage Underground Market, the inventive San Francisco food swap that was shuttered by California state and local health authorities, way back in 2012. And I predicted at the time the food underground movement was just beginning to blossom. "From underground supper clubs and street lobstah pushas to nonprofit incubator kitchens like San Francisco's La Cocina and for-profit companies like Washington, D.C.'s Feastly that feature accomplished cooks serving meals in their own homes," I wrote, "entrepreneurs and social entrepreneurs are helping to re-write societal norms around food provisioning in communities around the country on what would appear to be an unprecedented scale." Since that time, foods made by home cooks have indeed become normalized. For example, every state, save one, now has a cottage food law in place that allows home cooks to prepare and sell certain homemade foods. But cottage food laws typically only allow the sale of so-called "non-potentially hazardous" foods—or foods that are less likely to cause foodborne illnesses. That means foods such as jams, popcorn, fruit pies, spices, teas, and the like are generally allowed, while meat pies and Dave's kimchi, for example, are not. A couple states, led by Wyoming, have adopted food freedom laws, which are far more welcoming toward and permissive of home cooks than are any cottage food laws. Unfortunately, the proposed California law, AB 626, the Homemade Food Operations Act, is, though better than the status quo, still flawed. While the bill would allow sales by home cooks, such as those who've worked with Josephine, the law would still place meal and dollar caps on individual sellers, and require home inspections. Each of those requirements raises the specter of government intrusion into the home. It would also allow cities and counties, working together or separately, to continue to ban food sales under[...]

Legal Limits on Opioid Prescriptions May Increase the Number of Pills Dispensed

Wed, 07 Feb 2018 13:30:00 -0500

Last month Arizona became the 15th state since 2016 to impose a statutory limit on the length of initial opioid prescriptions for acute pain. The rationale for such laws is that shorter prescriptions will mean fewer pills in circulation and less potential for abuse and diversion. But recent research suggests the opposite may be true, because patients tend to get refills when the initial prescription is too short. According to guidelines published by the U.S. Centers for Disease Control and Prevention in March 2016, "three days or less will often be sufficient" when doctors prescribe opioids for acute pain, and "more than seven days will rarely be needed." State legislators seem to have taken that recommendation to heart. In 2016 and 2017, according to a tally by the National Conference of State Legislatures (NCSL), 14 states enacted limits on such prescriptions, ranging from three days (Kentucky) to two weeks (Nevada), with seven days the most common. Arizona picked five days. One obvious problem with such arbitrary limits is that some patients recovering from surgery or injuries will need more than three, five, or seven days of pain medication. That is a problem for those patients, but it is also a problem for politicians trying to prevent nonmedical use. A study published last month by JAMA Surgery found that prescription lengths similar to those mandated by most of these state laws were associated with a higher likelihood of refills for some types of surgery. "While government restrictions often limit the dispensing of opioid prescriptions to 7 days or less," MedPage Today noted, this study suggests that "longer initial opioid prescription lengths following certain surgical procedures may, in fact, limit the need for refills and decrease total opioid use." Harvard surgeon Rebecca Scully and her collaborators looked at prescription data for more than 200,000 patients who took pain medication after surgery, 19 percent of whom received at least one refill. The prescription length associated with the lowest probability of a refill was nine days for general surgery, 13 days for women's health procedures, and 15 days for musculoskeletal procedures. "In practice," Scully et al. conclude, "the optimal length of opioid prescriptions lies between the observed median prescription length and the early nadir," i.e., the point where a refill was least likely. That rule of thumb would make the optimal prescription length four to nine days for general surgery procedures, four to 13 days for women's health procedures, and six to 15 days for musculoskeletal procedures. "Although 7 days appears to be more than adequate for many patients undergoing common general surgery and gynecologic procedures," Scully et al. write, "prescription lengths likely should be extended to 10 days, particularly after common neurosurgical and musculoskeletal procedures, recognizing that as many as 40% of patients may still require 1 refill at a 7-day limit." Some states with prescription limits (including Arizona) make exceptions for postsurgical pain, but the NCSL summary indicates that most do not. A legal limit of seven or fewer days not only interferes with proper patient care; it may increase rather than reduce the number of pills ultimately dispensed.[...]