Archive for the ‘Regulation’ Category

Obama Labor Department: Regulating Us Into Suppressed Wages

May 24, 2016

Last week, President Obama’s Labor Department announced changes into overtime rules for salaried employees. Consider this another case of Obama regulations falling on those progressives proclaim their policies help:

As colleague Jeffrey Miron observed in this space on Wednesday, the notional paycheck benefits to employees reassigned to hourly status are likely to prove temporary, since employers have many ways over the medium term of dodging a permanent upward jump in payroll costs: they can forbid employees to clock more than 40 hours a week, lay off those who regularly do so, cut back on non-cash perks for the salaried, and so forth, not to mention suppressing the level of base pay itself.

That’s right, suppressed wages:

Moreover, most studies find that employers offset all or almost all of the cost of overtime premiums with lower base wages. One recent study found that employees paid for 80 percent of the cost of overtime coverage through lower regular wages.

Keep that in mind when you hear left-wing candidates talk about their supposed “support” for the middle class.


Criminal Enterprise Cookies In Wisconsin

January 26, 2016

Another reason to loathe the political class.

Regulating Fantasy Sports

October 27, 2015 has a good article about the call to regulate daily fantasy sports websites. From the article:

Additionally, states are likely leery of losing revenue from their government-backed gambling monopolies: state lotteries. In a recent Boston Globe editorial, one argument cited for regulation is that unregulated DFS “may drain revenue from the coffers of the Lottery.” Governments seem to disapprove of gambling—unless they are the pit bosses.

It’s crony capitalism all the way down. Along with the incentives for governments, there are three levels of private sector economic rent seekers in the gambling and daily fantasy marketplace, starting from largest to smallest in order of political influence and capital: 1. Physical casinos which would love nothing more than to see online DFS classified as gambling and prohibited; 2. DraftKings and FanDuel, which would likely welcome some regulation of the DFS industry to hamper competition; and 3. Smaller and not-yet-created DFS operators.

I live in Iowa, where at the moment playing fantasy sports for cash is illegal. Opponents in the state cite the so-called “dehumanizing” aspect of fantasy sports (huh?) and that money heads out-of-state without any local benefit.

Sorry, casinos and lotteries doing business in Iowa, but you have absolutely no moral claim on how I choose to spend my money. I’d much rather spend money on fantasy boxing (a sport I know a little about), where I have won free games in the past couple years, than ever spend it on a sucker bet like a lottery ticket or a less-sucker bet like a slot machine. It doesn’t matter if the money I spend has a local “benefit” or not. By that logic, we should ban out-of-state vacations or online shopping, since that money also heads out of the local economy.

Of course, by legalizing fantasy sports for money, the state WOULD get some benefit by taxing the winnings of fantasy players. Odd that lawmakers are choosing to NOT collect taxes for a change. I guess they’d rather drive fantasy players, and fantasy players’ winnings, underground. Their loss.

Net Neutrality 101

November 14, 2014

A smart rule of thumb: be skeptical of politicians and good-government types advocating to fix problems, especially if those problems don’t exist.

A License To Kill The Competition

June 19, 2014

Domestic protectionism at its finest:

In 2012, Trisha Eck had a successful business selling over-the-counter whitening product and providing a clean, comfortable place for customers to apply the product to their own teeth. That is, until March 2014, when the Georgia Dental Board told her to shut down her business or face up to five years in jail and up to $500 in fines per customer. Unwilling to suffer those punishments, Trisha closed her business.

And why does the Georgia Dental Board, which includes 8 dentists, feel the need to shut down this business? Was Ms. Eck’s business a danger to her community? More like a danger to a dental cartel:

Dentists routinely charge up to five times more for teeth-whitening services similar to those Trisha offered. Rather than try to compete by lowering prices or improving their services, the Dental Board is using government power to put their competition out of business.

More proof how business licensure is designed to protect entrenched business interests at the expense of everyone else. And more reason to be anti-dentite.

How The Government-Business Marriage Threatens Lives

September 19, 2013

The late Milton Friedman wrote the following on licensure:

In the arguments that seek to persuade legislatures to enact such licensure provisions, the justification is always said to be the necessity of protecting the public interest. However, the pressure on the legislature to license an occupation rarely comes from the members of the public who have been mulcted or in other ways abused by members of the occupation. On the contrary, the pressure invariably comes from members of the occupation itself.

Friedman was most critical of medical licensure. A legal fight by the Institute For Justice makes Friedman’s words prophetic. IJ is representing medical providers such as Dr. Mark Baumel:

To improve Virginia’s dismal screening rate, Baumel wanted to offer patients “virtual colonoscopy” — a procedure that President Obama chose over traditional colonoscopy as part of his first comprehensive exam as commander in chief. In virtual colonoscopy, a CT scanner takes multiple cross-sectional X-rays, which are combined by a computer to form a three-dimensional image of the patient’s colon and surrounding abdominal cavity. A radiologist then checks the image for suspicious precancerous growths, or polyps. For 80 percent to 85 percent of patients, where no polyps are found, that is it: With no sedation or invasive procedure, patients are free to resume their normal activities.

Sounds innovative, and potentially life-saving, as more patients are likely get screened. But not so fast:

But Virginians are prevented from obtaining this innovative service. Unlike Delaware, the Old Dominion prohibits purchasing a CT scanner without first obtaining a certificate of need. And in 2009, Virginia’s Department of Health denied Baumel a certificate of need after existing health care facilities intervened and opposed his application. Consequently, at this time, no one in Virginia can obtain a virtual colonoscopy with the opportunity for same-day polyp removal.

Thanks to an unholy alliance between business and government, lives are at risk. So much for the “public interest.”

Deregulation Or Government Meddling: What Triggered The Great Recession?

August 31, 2013

The Huffington Post reported the emergence of the website, which looks to counter claims made by the George W. Bush Presidential Library about President Bush’s legacy. Fair enough; I presume most presidential libraries put a less-than-truthful spin on their namesakes’ legacies. Unfortunately, the website’s take on the financial crisis of 2008 is flawed:

The library’s presentation of the financial crisis is similarly rosy, as it denies the failure of Bush’s anti-regulation, “free-market” philosophy and gives the impression that Bush solved the problem before leaving office.

Scholars from rival libertarian think tanks agree on one thing: Bush was no free-market adherent. Even President Bush himself admitted this, in a way only Bush could. As for “anti-regulation” policy during the Bush years, the number of economically significant regulations increased 70%.

So this begs the question: was the financial crisis triggered by deregulation, or government meddling? Consider the following:

-Adherence to the Community Reinvestment Act led to riskier lending by banks. Per a study from the National Bureau of Economic Research, banks under CRA scrutiny increased their lending by 5%, which was coupled with a 15% increase in defaults. Also, from 2001-07, nearly half of CRA loans were purchased by Fannie Mae and Freddie Mac. Per the link, these loans contained “subprime features.”

Per David Hogberg, mortgage-backed securities became “loaded” with subprime loans thanks to a Department of Housing and Urban Development mandate that 40% of the loans financed by Fannie and Freddie had to be for borrowers with below-median incomes (another source says the quota was 42%), and eventually 50% of the loans by 2000. This mandate helped trigger the GSE issuance of MBS products by 116% from 1997 to 1998 alone. The mandate played a large role in banks lowering their lending standards, since the GSEs would purchase those loans and bundle them as MBS products.

Just how “loaded” were mortgage-backed securities with subprime loans? Per Lawrence White, nonprime mortgages were less than 10% of all mortgages in 2001; by 2006 they accounted for 23% of all mortgages, and 34% of new mortgages. One study states that by 2006, 75% of subprime mortgages were securitized. During the critical years of the housing bubble, most MBSs were issued by the GSEs.

In an era of rampant government manipulation, the argument that “deregulation” caused the financial crisis rings hollow. But if the “deregulation caused the crisis” argument wins the day, history is sure to repeat itself.

Obamacare and the Cost Curve: What To Expect

June 30, 2013

Families everyday are forced to make difficult financial decisions because of the costs of health care (mine included). As we get closer to full-blown implementation of the “Affordable” Care Act, here’s why I think these decisions will become more difficult over time:

-For those who attain health insurance through work, you’re looking at a probable premium increase that wouldn’t have otherwise occurred thanks to a health insurance tax imposed on providers. One study estimates that increase could range from 13-23%.

-The real hammer will be imposed upon the individual market, as many of those plans do not meet the “essential benefits” mandate of the law. Per Avik Roy of, benefits mandates add 4% to the cost of a health plan, benefits you’ll have to pay for regardless of how “essential” they are for you.

-Also, the individual insurance market will now be subject to Obamacare’s community rating and guaranteed issue regulations. The community rating alone is estimated to sock healthy, younger individuals with a premium increase of over 40%. It’s been estimated these type of regulations in New York make health insurance premiums 42% higher. Avik Roy also demonstrates the unintended consequence of adverse selection would even raise premiums on elderly patients, the ones allegedly protected by these regulations.

-For those states that will expand their Medicaid coverage via Obamacare (which is not required per the Supreme Court decision last June), this will create more cost-shifting since Medicaid historically underpays providers. Medicaid already adds approximately $1800.00 to a family’s private health insurance premiums due to cost-shifting.

As I stated in a previous health care post, these costs relating to Obamacare are estimates, but estimates born out of acknowledgment of the laws of supply-and-demand, and the reality that regulations add to expenses. For whatever reason, the left does not want to acknowledge these realities.

So how do you bend the cost curve down? Repealing Obamacare would be a start, but not an end-point. As Milton Friedman showed, by 1997 the impact of our tax laws encouraging the purchase of third-party payer health insurance amounted to a 57% increase in the cost of health care, and Medicare/Medicaid accounted for an additional 43%. These two provisions increased costs 100%. Getting a handle on 3rd-party payer health care is required to get health care inflation under control. With the regulations and distortions that provide favorable treatment to employer-purchased 3rd-party insurance still in place, the expansion of Medicaid, the disincentives to purchase low-cost catastrophic coverage (the true model for insurance), and no Medicare reform in sight, expect the health care cost curve over time to get costlier.

**UPDATE 7/9/13: Implementation of the employer mandate is getting pushed back a year, as are implementation of anti-fraud measures.

Big Government Orthodoxy

November 12, 2011

Funny how liberals criticize critics of President Obama for clinging to ideology while continuing to cling to discredited big-government Keynesian policies.

Such is the case with this commentary. While attacking the Republicans for clinging to “small government orthodoxy,” the writer claims Obama’s jobs bill will create 2 million jobs. And regulations are a good thing, no questions asked.

Here’s the recent success of “grown-up” big-government orthodoxy:

*President Obama’s “stimulus” set the private sector back. Do we really need to go down this road again, spending billions we can’t afford for results that won’t materialize?

*Despite continued assertions by the left, the George W. Bush era was defined by INCREASED regulatory activity. (Calling Senate Republicans proponents of small government is like erroneously labeling FDR the savior of the American economy) It was the stringent enforcement of regulations that played a key role in the housing bust that triggered our current economic malaise.

So, yeah, lets double-down on THESE programs.

Protection Against “Black Market” Lemonade

August 23, 2011

The new disturbing trend in nanny state politics is the war on lemonade stands.  Our brave men in blue are cracking down on kids who have the audacity to sell lemonade from roadside stands, since these kids haven’t gone through the permit process or submitted their lemonade pitchers to health inspections.

One example is from my home state.  During Iowa’s famous RAGBRAI bicycle ride across the state, the police in Coralville shut these youngsters down.

There are many other examples (here, here, and here).  Astonishingly, the anti-lemonade stand stance has its defenders.

What is so immoral about kids showing a little entrepreneurial spirit, showing a little initiative, engaging in some productive work, providing consumers with something they may want?  Is society really in danger when customers pluck down some pocket change for a quick cool refreshment?  Are commercial establishments and competing vendors really in danger of losing their livelihoods from some kid selling a cup of Minute Maid?  Because if you can justify the actions these officials are taking, then you believe that yes, society IS in danger from lemonade stands, and yes, it IS immoral for kids to learn about hard work, entrepreneurship, and the value of money.  That YES, commercial enterprises and competing food vendors should be protected from the predatory pricing of lemonade stands.

If that’s your belief, quite frankly you’re an asshole.

Ms. Cepeda blames the pro-lemonade stand crowd for turning this into a political issue.  It’s definitely a political issue, hence the Lemonade Freedom Day event held a couple days ago (which the folks in Washington DC bravely shut down).  But the blame belongs to local officials making asinine rules, and the goons they send out to enforce those asinine rules, for making this a political issue.  Is there any part of neighborhood interaction that these statists WOULDN’T regulate?  What’s next, shutting down bake salesBabysittersGarage sales?

Has there been an outbreak of lemonade-stand illnesses amongst lemonade stand connoisseurs that makes these regulations necessary?  Are there bunch of unregulated little Jim Joneses running around spiking lemonade with cyanide?

Of course not.  This has NOTHING to do with public health, and everything to do with local governments wanting get their greedy little hands on every single penny they can, even if it means shaking down elementary school kids.

Watch out, Girl Scouts, YOU’RE NEXT!!