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Updated: 3 weeks 4 days ago

Climate change and the intellectual decline of the right

August 18, 2014, 7:50 AM

From Inside Story:

The billboard fiasco led to the departure from Heartland of Eli Lehrer’s insurance policy group, one of the few areas in which Heartland research had any credibility. Unsurprisingly, insurance industry cannot afford to let tribal affiliation get in the way of a realistic assessment of the risks of climate change. Lehrer has founded a new group, the R Street Institute, which explicitly endorses mainstream science.

The billboard fiasco led to the departure from Heartland of Eli Lehrer’s insurance policy group, one of the few areas in which Heartland research had any credibility. Unsurprisingly, insurance industry cannot afford to let tribal affiliation get in the way of a realistic assessment of the risks of climate change. Lehrer has founded a new group, the R Street Institute, which explicitly endorses mainstream science. – See more at: http://inside.org.au/climate-change-and-the-intellectual-decline-of-the-right/#sthash.Tr6ylrv5.dpuf The billboard fiasco led to the departure from Heartland of Eli Lehrer’s insurance policy group, one of the few areas in which Heartland research had any credibility. Unsurprisingly, insurance industry cannot afford to let tribal affiliation get in the way of a realistic assessment of the risks of climate change. Lehrer has founded a new group, the R Street Institute, which explicitly endorses mainstream science. – See more at: http://inside.org.au/climate-change-and-the-intellectual-decline-of-the-right/#sthash.Tr6ylrv5.dpuf The billboard fiasco led to the departure from Heartland of Eli Lehrer’s insurance policy group, one of the few areas in which Heartland research had any credibility. Unsurprisingly, insurance industry cannot afford to let tribal affiliation get in the way of a realistic assessment of the risks of climate change. Lehrer has founded a new group, the R Street Institute, which explicitly endorses mainstream science. – See more at: http://inside.org.au/climate-change-and-the-intellectual-decline-of-the-right/#sthash.Tr6ylrv5.dpuf

Sanders on Paul Ryan’s poverty plan

August 15, 2014, 12:42 PM

R Street Senior Fellow Lori Sanders joined Lowman Henry of American Radio Journal to discuss the anti-poverty agenda put forth recently by House Budget Committee Chairman Paul Ryan, R-Wis. You can hear the full clip below.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.http://www.rstreet.org/wp-content/uploads/2014/08/ARJ_HENRY.mp3

North Carolina physicians endorse e-cigarettes

August 14, 2014, 10:46 AM

A survey of North Carolina physicians documents that many understand the benefit of e-cigarettes and some actively recommend that their smoking patients switch. The results were published in PLoS One by Kelly Kandra of Benedictine University and colleagues from Family Medicine at the University of North Carolina.

From the published paper:

Over two-thirds (67.2%) of the physicians indicated that e-cigarettes are a helpful aid for smoking cessation, and 35.2% recommended them to their patients. A majority (64.8%) believed that e-cigarettes lower the risk of cancer for patients who use them instead of smoking cigarettes.

It is exceptionally good news that, despite a tsunami of misinformation about e-cigarettes from federal and state health officials and major medical societies, a majority of the state’s practicing physicians know that the devices are helping smokers quit and reducing risk exposure.

Kandra and colleagues attempt to blunt the impact of their data, writing that “physicians should remain cautious until more data is available about recommending e-cigarettes as tobacco cessation tools in clinical practice in favor of more effective modalities.” What are those “more effective modalities”? Nicotine replacement therapy (with a success rate of 5 percent, only slightly higher than placebo), varenicline (Chantix, percent success rate), and bupropion (5 percent success) (reference here).

One of the study’s authors, Dr. Adam Goldstein, declared in a press release:

Physicians may choose to use FDA-approved medications rather than devices and products not approved by FDA.

In reality, physicians may also choose e-cigarettes after “approved medications” fail. Doctors are well equipped to weigh the risks and the benefits of consuming nicotine in smoke-free forms, and counseling their patients accordingly.

Poll finds bipartisan opposition in Tennessee to online sales taxes

August 14, 2014, 10:04 AM

From Nashville Business Journal:

Those are the findings from the survey conducted by National Taxpayers Union, a conservative tax advocacy organization, and R Street Institute, a nonprofit, free-market think tank.

Poll finds Georgians against online sales tax bill

August 13, 2014, 10:55 AM

From the Atlanta Business Chronicle:

The R Street Institute, a free-market think tank, worked with the National Taxpayers Union on the poll.

Christian Camara, the institute’s state affairs director, said he sympathizes with small brick-and-mortar business owners worried about losing out to online retailers who don’t have to collect sales taxes on the merchandise they sell to out-of-state customers.

But Camara said the proposed legislation would create a bookkeeping burden that would severely hamper all but the largest businesses that rely on online sales.

“If you’re a small- to medium [company] that transacts most of its business online, you’re going to have to change the system you have to comply with the law,” he said. “It could be quite a drain on resources, even a disincentive to get into business.”

Legal fiction and fictional legality

August 12, 2014, 2:07 PM

The Case of the Speluncean Explorers,” a 1949 Harvard Law Review essay by Lon L. Fuller, may prove instructive to the ever-growing number of Americans who follow with keen interest the machinations of the U.S. Supreme Court. Explorers illustrates how jurists go about reaching their conclusions.

The facts of the hypothetical case are straightforward. Five explorers venture into a cave to explore its hidden contents. Once inside, they become trapped. With no means of escape, the explorers learn via radio contact they are likely to be rescued, but only long after their supply of food was depleted.

Faced with this fate, the explorers decided among themselves that one of their number should be sacrificed to function as repast, so that the others might live. Once the unlucky explorer was dispatched, the others were able to sustain themselves until rescue arrived – at which time the four remaining speluncean explorers were charged with murder.

In lower court, the explorers were found guilty of murder. Upon appeal, the case was brought before the Supreme Court of the fictional nation of Newgarth. Since fanciful Newgarth’s Supreme Court is not dissimilar in composition to that which currently our highest U.S. bench, examining its activities may prove prescient.

Newgarth’s statute relevant to the speluncean explorers reads: “Whoever shall willfully take the life of another shall be punished by death.” While legislation can create powerful and life-changing rules, this particular statute is blunt and devoid of nuance or exception.

Unlike cases heard in a judicial context, commands promulgated by the legislative branch seek to shape the behavior of the masses to conform with universalizable principles. The creation of legislatively adopted rules of general applicability hinges on a process in which the odds of success are small. Legislation that does finally emerge from the process’ many opportunities for failure tends to reflect the varied input of hundreds of active interests.

Here’s the question: Should the residue of the efforts of those varied interests to create the law be considered in subsequent efforts to interpret and apply the law? When tasked with divining the purpose of legislation in the course of rendering a legal judgment, courts have changed their approach to such residue over time.

It was once the case that courts held to an economical practice of consulting a defined corpus of authority – namely, the text of the statute and limited contextual clues. In part, courts did so in the name of predictability and with a sense of institutional restraint. Still, there were costs associated with such a penchant for reservation.

By refusing to investigate in a less-inhibited manner the purpose of legislation, courts sometimes were compelled to offer opinions resting upon words devoid of their generalized context and, thus, appearing as simulacra. Decisions borne of this approach have been subsequently painted as synthetic results designed to advance a staid – right-wing – normative vision.

In Fuller’s tale, such are the decisions of Chief Justice Truepenny and Justice Keen. The chief justice affirms the explorers’ conviction because he interprets the statute to be unambiguous in what it requires. Still, the chief justice is mindful of a non-legal imperative to articulate a request for clemency to the chief executive of Newgarth. Justice Keen gives no such quarter. Keen on circumscribing the role of the judiciary, Justice Keen both affirms the conviction AND remonstrates the chief justice on separation of power grounds for using his official position to influence the application of the law.

There are two votes for death.

In response to this mostly unforgiving approach, the 20th Century legal academy presented a new method of accounting for, if not satisfactorily marshaling, the assortment of discrete “truths” which underpin the creation story of any statute. The new method sought to accomplish its goal by eschewing literal readings when a literal reading was believed to confound the statute’s actual “purpose,” as discovered by a court.

In the story, fictional Justices Foster and Handy wrote decisions embodying this approach, though on comically divergent grounds. Justice Foster found a result in which the explorers survived, only to be killed later, absurd. So, he created his own legal rule from the spirit of the statute and it provided an exception narrowly tailored to the explorers’ scenario. Seeming to ignore the law totally, Justice Handy reasoned that public opinion and common sense demanded that the explorers be exonerated.

There are two votes for life.

Today, the legacy of the interpretive approach exemplified by Foster and Handy has been a corpus of statutory construction dizzying in the constructive gymnastics that it is willing to tolerate. At its worst, courts have rendered the process of opinion writing a matter of blithe and perfunctory convention, by seemingly doing away with the need for legal analysis. Instead, they favor divination of goals at a “higher level of generality.”

Though the results are sometimes politically or philosophically satisfying, the consequences of naive and extra-legal constructionism are costly.

The ranks of adherents to such an approach have swelled. As a result, the legitimacy of the judiciary as an impartial, or at least something less than overtly political, decision-making body has suffered. The problem is no longer harsh legal formalism, but rather, the harsh subjective positivism of legal informality.

Subjective positivism brings any inquiry regarding meaning no closer to capturing the “purpose” of legislators in crafting and compromising their way through the various “vetogates” than does dogmatic formalism. Because both attempt to do too much, both fail.

When a court creates law, it simultaneously distorts law. Nonetheless, critics must maintain a certain sympathy for the difficulty of the project courts are asked to complete. To the extent that the “original intent” of a statute’s language is hopelessly lost, courts are left with few satisfactory alternatives. They are seemingly trapped in a binary.

Jurists must choose whether it is preferable to aver to a fiction of text, standing on its own, or to shoulder the burden of omniscience and seek to account for the practically unknowable completeness of a statute’s history. Both approaches, to the extent that they purport to channel the “purpose” of the legislature, can be confounded by a horrendous and even more basic obstacle – that though a legislature speaks, and means what it says, it sometimes does so not knowing what it means!

A hilarious, awful and mind-blowing example of this is the recent passage of major national legislation of which a prominent leader said that it must pass without close inspection since only afterwards could legislators and others find out what it means. No wonder life can be hard for courts, independent of their own self-generated and self-defeating proclivities.

Returning to the Fuller scenario, this is the choice that confronted and confounded the final and dispositive Newgarth Supreme Court vote, belonging to Justice Tatting. The justice authors an opinion sharply critical of the purposive approach taken by Justice Foster. Yet, faced with competing legal rationales and personally mixed emotions, Tatting opts to cast no vote at all and to withdraw from the case.

Two votes for death, two votes for life and one vote for the impossibility of the situation.

Since a tie is not sufficient to overturn the lower court’s conviction, Justice Tatting’s decision dooms the explorers.

Left with the sad death of the imaginary explorers, one is stuck with a few prospective thoughts. First, that absurd results in the name of consistency can, and do, lead to unjust consequences. Second, that the flexibility necessary to overcome formalistic textualism requires such violence to reason that it requires intellectual laxity, or worse, intellectual dishonesty. And third, that not acting at all, as Justice Tatting did, provides no escape from the dire consequences of reality.

Fundamentally, what is necessary to avoid these problems is a reevaluation of the sort of clarity the judiciary is able to provide when tasked with interpreting statute. We must face the fact, if the best we can hope for is the limited application of isolated and descriptive facts, then it is there that the basis of the new interpretive goal should lie. Nothing less than the foundation of jurisprudence is at stake.

Unfortunately, today, a humble and well-circumscribed judiciary which tailors the scope of its rulings to the limits of its understanding may be beyond the scope of wild imagination.

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Vote for R Street at SXSW 2015

August 11, 2014, 2:19 PM

We’ve put together four awesome panels for SXSW Interactive. Your vote can help us bring free market ideas to Austin’s annual gathering of 30,000 technologists, activists, and entrepreneurs. Please take a moment and give each panel a thumbs up in SXSW’s PanelPicker system before voting closes on September 6th.

Your Laws, Your Data: Making Government More Open http://panelpicker.sxsw.com/vote/35484

When Should Privacy Trump Free Speech? http://panelpicker.sxsw.com/vote/35595

How Big Data Can Transform Poverty Policy http://panelpicker.sxsw.com/vote/36257

Has Copyright Gone Too Far? http://panelpicker.sxsw.com/vote/33432

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Lehmann talks Uber and Lyft in Virginia

August 11, 2014, 1:50 PM

R Street Senior Fellow R.J. Lehmann, co-author of our recent white paper on principles for regulating the peer production economy, discusses a recent deal struck by the Commonwealth of Virginia temporarily lifting its ban on transportation network companies like Uber, Lyft and Sidecar. You can hear the clip below.

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Fla Citizens’ business travel saves Florida money

August 08, 2014, 3:53 PM

A recent article by the Palm Beach Post blasting Citizens Property Insurance Corp. executives for traveling overseas casts a negative image onto the state-owned and operated insurer. However, what the article fails to establish is that such travels are a necessary function of any insurance company similar in size and scope to Citizens.

As a condition to sell an insurance product, insurance companies are required to prove that they have secured enough surplus (cash in the bank) and risk transfer (reinsurance) to be able to pay their claims. Otherwise, an insurer selling coverage that it can’t realistically make good on would be engaging in criminal fraud, from which the government rightfully should protect its residents.

Reinsurance is one of the ways insurers pay their claims. It is essentially insurance for insurance companies. If a tornado damages or destroys a handful of homes, those claims are usually paid for by insurance companies directly; if a hurricane causes billions of dollars of damage to an entire region, reinsurance kicks in.  As such, insurers are required to carry reinsurance in order to sell the coverage they offer consumers, especially in risky places like Florida.

Despite the potential of billions of dollars in claims, reinsurance companies make their money by spreading risk around the globe, which is something a typical primary insurance company simply cannot do on its own. So while they may be paying out money for claims stemming from a hurricane in Florida, they are also collecting premiums for separate, unrelated risks elsewhere, such as earthquakes in New Zealand.

But reinsurance is a complex and expensive product that is not easy to price or negotiate. Several factors are taken into account, including an insurer’s finances, exposure (how at risk the properties they cover are), claims-paying patterns, litigation history and so forth. Investors backing up the reinsurance transactions usually ask questions of the insurance executives.  As such, these negotiations, even in today’s digital world, are done mostly in person wherever the reinsurer is based, which is usually places like London, Zurich and Bermuda. This is how virtually every insurer around the world has to do it, and Citizens is no different.

It must be noted that Citizens is not legally required to carry reinsurance, because it has the unilateral authority to levy assessments (read: hurricane taxes) on virtually every policy issued in the state (property, auto, renters, commercial, boaters, etc.) if it ever encounters a deficit in its surplus due to a sufficiently bad hurricane season.  However, Citizens made the responsible decision a few years ago to begin purchasing reinsurance coverage to reduce the likelihood or severity of post-hurricane assessments, which could increase the overall cost of insurance on Floridians by up to 40 percent for multiple years in a worst-case scenario–during which time another hurricane could strike and compound the situation.

So this year, Citizens negotiated with reinsurance companies to provide the same kind of coverage every other private insurer must buy as a matter of law. Thanks to the deals reached by Citizens executives during the business trips that the Post and others have demonized, Citizens was able to purchase $3.1 billion in reinsurance coverage for $300 million. This is nearly twice as much coverage as it purchased last year for almost the same price.  This reduces the assessment risk on Floridians from $11.6 billion to $2.3 billion. The state’s other government-run insurance entity, the Florida Hurricane Catastrophe Fund, might well want to consider purchasing its own reinsurance coverage to further protect Florida taxpayers.

Nevertheless, the Post unfairly attempts to link consumer horror stories of denied coverage and unpaid claims to “lavish” travels by some employees, as if Citizens made a practice of denying claims to use that money to pay for expensive junkets. Never mind that these are totally unrelated to one another, that they are paid for by different pots of money or that these trips were necessary to seal multi-million dollar deals that may potentially save Floridians billions of dollars. It is the kind of comparison a slick politician would use to demagogue an adversary.

Citizens is Florida’s largest property insurer, due in part to government policies supported by many politicians who today attack Citizens. If they find it unacceptable for Citizens to operate like a regular company and make decisions that rely less on a taxpayer bailout, they should join those of us who support actions to reduce its size and restore it to its original role as an insurer of last resort.

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How many Americans use smokeless tobacco?

August 08, 2014, 3:52 PM

I recently described how the federal government is all thumbs when it tries to count how many Americans smoke. Further evidence of the government’s ineptitude is seen in the fact that the National Health Interview Survey, the CDC’s official source for smoking statistics, only measures smokeless tobacco use every five years or so. That leaves the National Survey on Drug Use and Health as the government’s only annual source of data on smokeless use.

I analyzed NSDUH data from 2012 and found that 7.1 percent of adult men (roughly eight million) use smokeless tobacco, and the prevalence of smokeless use among women is minuscule (about one-half of one percent). For obvious reasons, I’ll limit this discussion to men.

NSDUH asks participants if they use “chewing tobacco” or “snuff.” Over two-thirds of smokeless users in the survey, about 5.5 million, said they used only snuff, 1.2 million used only chewing tobacco and 1.4 million used both. However, participants’ responses to questions about smokeless brands used most often suggest that NSDUH misclassified some users. The problem stems from the fact that consumers of smokeless products often use the terms “chew” or “dip snuff” interchangeably.

The most common brands among “snuff” users were Copenhagen (29 percent), Skoal (26 percent) and Grizzly (25 percent). Other than Red Seal (4 percent) and Kodiak (4 percent), no other brand registered above 2 percent. It is interesting to note that Camel Snus, the first pouched product that introduced the Swedish experience to American smokers, was the preferred brand for 1.7 percent of snuff users.

The misclassification problem is evident because 16 percent of “chewing tobacco” users favored Skoal, 11 percent picked Grizzly and 7 percent listed other moist snuff brands. Red Man (25 percent), Levi Garrett (10 percent) and Beech-Nut (5 percent) were the top chewing tobacco brands.

Although 35 percent of smokeless users in this survey never smoked and 27 percent are former smokers, it is a tragedy that 38 percent are current smokers (a figure that is consistent with my previous research). That percentage means that 2.8 million smokeless tobacco users don’t recognize or are ignoring the significantly greater hazards of smoking.

Any ignorance on their part may be traced to the deliberate campaign by the CDC, FDA NIH and other tobacco prohibitionists to deny Americans vital facts about the relative risks of smoking and smokeless use. This misinformation campaign conflates risk data to damn equally all forms of tobacco. The FDA declares:

Tobacco products are harmful yet widely used consumer products that are responsible for severe health problems…[including] cancer, lung disease, and heart disease, which often lead to death.

The CDC asserts:

Tobacco use is the leading preventable cause of death in the United States.

A decade after Charley, Florida’s still paying the bill

August 08, 2014, 1:58 PM

Tomorrow, Aug. 9, marks the ten-year anniversary of the formation of Hurricane Charley. The third named storm of the 2004 hurricane season, Charley did $13 billion of damage, nearly all of it in Florida.

But the bad news for the Sunshine State didn’t end there. Charley was followed three weeks later by Frances, a $12 billion storm that wrought havoc across Central Florida. Then September brought both Ivan, an $18 billion storm that struck Pennsacola, and Jeanne, a $6.8 billion storm that, like Frances, made landfall near Port St. Lucie.

The following year, Pennsacola was hit again, this time by Hurricanes Dennis, which caused $4 billion in damage. Then, the capper to this 15 months of misery in the Sunshine State came in the form of October 2005′s Hurricane Wilma, the strongest Atlantic hurricane ever recorded, which did $29.1 billion of damage.

Here we are, a decade later, and just last month, Florida’s Office of Insurance Regulation announced that the Florida Hurricane Catastrophe Fund would finally end a 1.3 percent assessment that has been imposed on nearly every property insurance policy to pay for borrowing the Cat Fund incurred in the wake of the 2004 and 2005 storm seasons. OIR noted the charge will be ended 18 months earlier than originally expected, and there was much rejoicing.








And justifiably so. The assessments had been a burden on Floridians since 2007, when they were first initiated at a level of 1 percent. Through May 31, the fund had raised a total of $2.9 billion through these post-storm “hurricane taxes” just to cover shortfalls from those two record storm years.

Alas, Florida still isn’t quite done paying the bill. While the Cat Fund’s charges will go away entirely for new policies taken out with the state-run reinsurer, multi-year policies issued or renewed between Jan. 1, 2011 and Dec. 31, 2014 will still see a 1.3 percent assessment, and those issued or renewed between Jan. 1, 2007 and Dec. 31, 2010 will still pay a 1 percent assessment.

Even more crucially, the state-run primary insurer, Citizens Property Insurance Corp., also continues to levy its own hurricane taxes tied to the 2004 and 2005 seasons, and is projected to continue the assessments until 2017. Citizens thus far has collected $1.5 billion in assessments to finance its post-2004/2005 borrowing. It continues to collect $162 million a year, 84 percent of it from non-Citizens policyholders.

Citizens has made great strides in reforming its operations, both in shrinking its book of business and in investing in risk transfers that now include $3.1 billion of private reinsurance. But the state-run entity remains the largest residential property insurer in Florida, with 14.5 percent of the overall homeowners/farmowners market in 2013, according to SNL Financial. And with $292.6 billion in total exposure, it is a matter of when, not if, Citizens will have to dig itself out of another fiscal hole, the moment Florida’s now nine-year-long streak of good fortune ends.

It’s good news that both Citizens and the Cat Fund are in better fiscal shape than they’ve been in years, but much more work needs to be done. In the short term, Florida needs to take advantage of the remarkably good terms that can be had in the current soft market to shift as much risk to the private global reinsurance market as possible. In the longer term, we need market reforms that will encourage primary insurers to return to the Sunshine State by giving them the freedom to charge appropriate rates.

Don’t let the lessons of 2004 and 2005 be forgotten. Florida can’t afford another decade of hurricane taxes.

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Gingrich advises state lawmakers not to kill innovation

August 07, 2014, 5:54 PM

Former Speaker of the House of Representatives Newt Gingrich is known as a font of ideas, even by detractors who don’t necessarily approve the product of all his ratiocination. Many of his ideas have to do with transforming the way we look at certain kinds of processes, institutions or approaches to public policy, and every form of extant public policy has its defenders.

At last week’s annual meeting of the American Legislative Exchange Council, a national organization whose members are (mostly) conservative lawmakers and nongovernment public policy specialists, attendees from around the country were treated to a breakfast and a workshop at which Gingrich sketched out a theme that addresses many of the hottest issues in the nation. “Breakout,” his 2013 book detailing “the epic political battle of our age,” describes a critical contest between the “pioneers of the future” and the “prison guards of the past.”

Gingrich, John Stossel and many others have cautioned that unlike when, with little resistance, mankind was allowed major leaps forward due to the invention of alternating current, light bulbs, steamships, internal combustion engines, refrigeration, antibiotics and computers, we face delays or might actually lose the chance to take advantage of today’s advances in medicine, transportation, education and energy production. The ever-more powerful and omnipresent government at nearly every level is gaited to preserve privileges and to fit everybody with one size, rather than to facilitate the future. This process goes by a lot of different names – “fairness,” “leveling the playing field,” and “protecting the public.”

Under this line of thinking, the public is protected by laws that favor government-run schools; keep experimental but promising drugs out of reach for Americans who are dying of diseases but willing to try anything; and that prohibit innovative services by everyday folks in the fast-growing “shared economy.” “If it moves, tax it,” was Ronald Reagan’s explanation of the government’s view of the economy. “If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Of course there is a new wrinkle since Reagan, and that is to subsidize something to get it moving, at least long enough to let the politically connected insiders sell out at a nice profit.

Just to pick one example of the challenge faced by innovators today, marvel at the updated status of the college rideshare board. Worldwide, dramatically expanded networks of late-model cars and carefully selected drivers at Lyft, Über and Sidecar have been essentially banned in whole states, and are being arrested and fined this week in Madison, Wisc. The taxicab industry has organized to eliminate this competition in many of the nation’s cities. A taxi medallion in nearby Chicago is currently valued at about $350,000. The value has doubled since 2009. According to the Washington Post, where medallions exist, they have outperformed even the S&P 500-stock index, and there are roughly 6,900 of them in Chicago. In New York, where most vehicles on view at any particular time on the avenues are taxis, the medallions have sold for more than $1 million.

In Dallas last week, the hotel doorman told me that the taxi flat rate to the airport was $50. Summoning ride-sharing on my smart phone got me a ride in about two minutes and the surge (higher when demand spikes) pricing I agreed to pay still saved me $20. This is really disruptive technology, and citizen demand has prompted at least one state, Colorado, to regulate, rather than ban it. While arresting network company drivers in the meantime, Madison is working on an ordinance. Houston and my hometown, Columbus, Ohio, enacted ordinances in the last two weeks, and numerous other cities — including Minneapolis, Milwaukee, Oklahoma City and St Louis — are trying to “level the playing field” by regulating insurance coverage, street hailing, vehicle safety and a multitude of other issues.

Does it make sense that a government obsessed with alternative energy would try to crush alternative transportation? If you lived on Long Island in New York and were reading that Long Island Railroad workers were considering a strike to secure a 17 percent benefits increase, would you be interested in another way to get to work? LyftLine and UberPool, the carpool versions of the popular peer-to-peer services, are being tested now. Sidecar announced this week that it has already serviced 13,000 customers with discounted shared rides.

I happen to think that a huge benefit of network transportation services is in the rural areas of the state and smaller towns where there are no taxicabs. There, many people are seriously challenged, particularly on weekends, in getting to hospitals and doctor appointments, work or any number of places they would drive if they had serviceable transportation of their own.

Many people my age remember the classic case of the firemen who were kept on the railroad even when there were nothing but electric and diesel trains to ride. People with commercial experience know that sometimes a business must pay for 365-day-a-year air conditioning under lease agreements, even though it is only available from May or June until September or October.

Even worse, it is possible that the breakthroughs on customized medicine particular to the DNA and biochemistry of individual patients will be foreclosed to Americans because no company can afford to do whatever tests the U.S. Food and Drug Administration directs based on protocols that apply to medicines for entire populations. The threat of taxing access to the Internet seems to always be “on the table.”

In the end, the public should demand policy that works for customers, as well as licensed providers. Alas, entrenched interests, with all of the manipulative tools, legal causes of action and government authority that now exists, may stifle many of the innovations that could transform the economy before most people get a chance to try them out.

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Pending gas price hikes make California lawmakers skittish

August 07, 2014, 4:21 PM

As the California Legislature wraps up its last few weeks of this year’s session, some lawmakers are anxious to head off a scheduled gas price increase set to take effect next January under the state’s cap-and-trade program.

Responding to pleas from consumer groups and the oil industry, Assemblyman Henry Perea, D-Fresno, has put forth A.B. 69, which would postpone for three years the requirement to purchase permits for transportation fuels. Perea says he supports the cap-and-trade emissions-reduction program overall, but noted in a statement that a report he commissioned from the Legislative Analyst’s Office found that significant hikes in gas prices would hurt average Californians.

“There is widespread agreement that including transportation fuels in the cap-and-trade program will increase the retail price of gasoline,” Perea said.

The rules stem back, ultimately, to A.B. 32, passed by the Legislature in 2006, which called on the California Air Resources Board to reduce the state’s greenhouse gas emissions. Under an executive order originally signed by former Gov. Arnold Schwarzenegger, fuel producers will be required to decrease carbon intensity across the board by 10 percent by 2020. Part of that order calls for a low-carbon fuel standard, which is estimated to increase gas prices by 15 cents per gallon.

Polling released last month by the Public Policy Institute of California found that Californians still broadly support A.B. 32, particularly regulations to limit or ban off-shore drilling, the building of nuclear power plants or hydraulic fracturing. The poll even finds that 76 percent of Californians favor the law’s requirement that the state’s oil companies either produce lower emissions transportation fuels or buy offsets. But that support drops to 39 percent if the result is higher fuel prices.

Californians already pay some of the highest gas prices in the nation. Further restrictions to the energy industry would naturally result in those regulations hitting the average Californian’s wallet. Naturally, lawmakers fret that the impending price hikes will further cripple the state’s poor, putting yet another burden on their economic recovery.

But is it fair to exclude one segment of the energy industry from cap-and-trade when others have been complying since 2012? The utilities industry, among others, argue it is time oil companies be held to the same standards. Recently, a group of 32 members of the state Senate and Assembly wrote to Gov. Jerry Brown warning that:

A fundamental redesign of A.B. 32 that allows oil companies to play by different rules than other industries would not only unacceptably delay action to reduce climate pollution, but could also disadvantage those industries that have already made investments to comply with the law.

California has always struggled to find the balance of environmental protection and economic prosperity. If the cap-and-trade rules are implemented and gas prices shoot up significantly, it will be incumbent on the Legislature to explore alternatives to cut the cost of living in California for all residents.

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Virginia reaches deal with Uber and Lyft

August 07, 2014, 12:27 PM

From Matthew Feeney at the Cato Institute’s blog:

It is welcome news that Virginia Gov. Terry McAuliffe and Attorney General Herring have worked out an agreement with Uber and Lyft. However, the agreement is temporary and lawmakers in Virginia and elsewhere in the U.S. need to implement permanent legislation that allows for innovative companies such as Uber and Lyft to fairly compete against taxis, as R Street Institute policy analyst Zach Graves stated in a news release:

R Street Institute applauds Houston city council vote on Uber, Lyft

August 07, 2014, 9:12 AM

Houston, Texas (August 6, 2014) – By a 10-5 vote, the Houston City Council today paved the way for transportation network companies like Uber and Lyft to operate legally in the city, provided they comply with consumer safety and insurance regulations.

“By legalizing ride-share services like Uber and Lyft, the Houston City Council took an important step in recognizing the innovation that can emerge from new technology platforms,” said Steven Titch, a Sugar Land resident and associate fellow of the R Street Institute. “The resulting increase in transportation choices will be good for Houston consumers.”

While the measure, on balance, marks a step forward, Titch noted that some of the amendments added to the bill, such as a requirement that a minimum percentage of each TNC’s fleet be handicapped accessible, could prove onerous and difficult to enforce.

The news comes on the heels of Virginia’s announcement earlier today that the state government has reached an agreement with Uber and Lyft to grant them transportation broker’s licenses as long as they comply with similar consumer safety and insurance regulations.

“The news out of Houston and Virginia represents progress. Policymakers in other cities and states should follow suit and continue to support these emerging industries,” said Titch.

Half a trillion unaccounted for on federal spending transparency website

August 06, 2014, 3:43 PM

The federal government can’t find $619 billion dollars on the website it built six years ago to give a transparent account of its spending activities. USA Today‘s Gregory Korte has the full story:

A government website intended to make federal spending more transparent is missing at least $619 billion from 302 federal programs, a government audit has found. And the data that does exist is wildly inaccurate, according to the Government Accountability Office, which looked at 2012 spending data. Only 2% to 7% of spending data on USASpending.gov is “fully consistent with agencies’ records,” according to the report….OMB spokesman Jamal Brown said the administration is already working to improve the data.

The website is currently maintained by the Office of Management and Budget, and had an initial budget of $15 million.

Hat tip to AEI’s Arthur Brooks for the tweeting the story.


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Political hacks stand to gain from Florida gerrymander fix

August 06, 2014, 12:14 PM

Looks like Florida lawmakers will have to put their summer campaign activities and fundraising on hold. Last week, Leon County Circuit Court Judge Terry Lewis ordered the Legislature to redraw and ratify by Aug. 15 two congressional district maps that in July he ruled were in violation of the state’s anti-gerrymandering law.

The two districts in question are currently held by U.S. Reps. Dan Webster, a Republican from Winter Garden, and Corrine Brown, a Democrat from Jacksonville. Lawmakers are set to convene in Tallahassee tomorrow, where a committee will be appointed to redraw the maps over the weekend. The rest of the Legislature will reconvene sometime next week to vote on their final passage.

Although state legislative leaders have acquiesced  to redraw the maps per the judge’s order, they intend for the newly drawn districts to take effect in 2016, as it is logistically too late for them to apply before this year’s November election.

Candidates would have to re-qualify, supervisors of election would have to redraw precinct maps and update their databases and voters would need to receive their new cards, all of which would cost state and local agencies—and candidates—a substantial amount of money and resources. Absentee ballots have already been mailed for the primary election in August, and any changes to the maps would undoubtedly affect adjacent districts as well.

In light of the logistical impossibility of applying the new maps in time for the Nov. 4 election, Judge Lewis has indicated that he may order a special election sometime after November for the newly drawn districts. Legislators have vowed to challenge such a ruling.

With her district as one of the two targeted by Judge Lewis, Rep. Brown has emerged as a strange bedfellow ally for the Republican leadership in Tallahassee. She slammed the judge’s ruling as “certainly not in the best interests of Florida voters,” and said it “ignores one of the central principles of redistricting: maintaining communities of interest or minority-access districts.”  Many expect her to challenge the ruling regardless of how the Legislature acts.

Her district stretches from Jacksonville down into Orlando and is made up of predominantly African-American and Democratic voters.

This entire ordeal was a result of a lawsuit filed by a coalition headed by the League of Women Voters and other left-leaning groups that alleged the Republican-controlled Legislature drew maps based on favoring incumbents and other such political considerations in violation of the “Fair Districts” amendment approved by voters in 2010. Brown unsuccessfully sued to invalidate it after its passage.

During the course of the trial, it was revealed through e-mails and other evidence that legislative staff were secretly sharing drafts of maps and other information with Republican political consultants.  At least one of the maps shared by political operatives was submitted under someone else’s name. According to Lewis’ ruling, these “seemed to be in the Central Florida area, which coincidentally, were the areas in the enacted map [he] found to be problematic.”

The judge zeroed-in on this issue of operatives trading information behind the scenes, stating that “it make[s] a mockery of the Legislature’s proclaimed open and transparent process.”

The special session is estimated to cost Florida taxpayers more than $68,000 per day, in addition to the time, resources and expenses that local election supervisors will have to incur to update their databases and voter rolls after new congressional maps are adopted–especially if the courts order a special election.

Will the millionaire political operatives whose shenanigans instigated this ruling be forced to cover any of these costs? Nope. Will they make more money off these changes?  You bet.

Such is politics in the Sunshine State.

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R Street applauds Virginia agreement on ridesharing services

August 06, 2014, 11:59 AM

WASHINGTON (August 6, 2014) - The R Street Institute welcomed today’s news of an agreement between the Commonwealth of Virginia and transportation networking companies Uber and Lyft. This arrangement will help ensure the safety of passengers, provide transparency into company operations and promote a level playing field for transportation providers.

Under the agreement, Uber and Lyft will be granted transportation broker’s licenses and temporary operating authority, so long as they meet a set of regulations to promote passenger safety, have appropriate insurance and comply with Virginia law.

“Gov. Terry McAuliffe and State Attorney General Mark Herring should be commended for their work to legalize the operations of Uber and Lyft,” said Zach Graves, policy analyst for the R Street Institute. “Through this operating agreement, Virginia residents will reap the benefits of more consumer choice, and increased competition for transportation services.”

However, Graves warned that this is only a first step in government working with businesses in this emerging sector.

“Public interest advocates should be wary that this is only a temporary measure, and the battle over transportation services regulation in Virginia is certain to come up again in the 2015 legislative session. Ultimately, policymakers in Virginia and other states need to advance legislation that offers permanent legalization for all transportation network companies, without imposing additional anti-competitive regulations at the behest of the taxi industry,” he said.

California’s incomplete prescription for reducing climate risk

August 06, 2014, 11:19 AM

The California Natural Resources Agency has just released its Final Safeguarding California Plan for Reducing Climate Risk. The roughly 350-page plan is designed to provide policymakers with recommendations about how best to craft an “integrated strategy” to address climate change. While it is not entirely clear what that means, it is clear the strategy would touch virtually every California industry in a meaningful way.

Are the recommendations worth anything? In at least one area, likely not.

Inevitable and historic instances of climate change and its various manifestations have impacted the world profoundly. Severe weather, sea-level rise and fall and changes in the frequency and severity of wildfires may all be tied to climate change. What is less clear is whether California’s lengthy plan is sufficiently precise in its particulars to be of any use.

For example, one industry to which the plan directs special attention is insurance. Why? Because, the CNRA believes that insurer solvency is directly threatened by climate change. With regard to its insurance recommendations, the plan leads readers into a maze of narratives replete with brief but equivocating solutions.

Not all of the plan without merit, however. There is an instance of clarity where it asserts that

Efforts to reduce climate risks through hazard mitigation activities, including but not limited to fire hazard reduction, minimizing new development in areas most vulnerable to hazards and improved flood management, will be important to managing risks and supporting sustainable insurance and disaster programs.

This translates to “mitigating risks is a good idea,” which it obviously is.

As for the selectively chosen solutions, the plan is under the thrall of a decision made by the California Department of Insurance to mandate that insurers complete a “climate risk disclosure survey.” It also refers approvingly to a 2008 National Association of Insurance Commissioners report in which the survey idea was presented. Boldly, the plan doubles down on the NAIC report and recommends that insurers should be required to provide even more specific, detailed and potentially proprietary information to the CDI for public display.

While the value of such surveys may be negligible, there is a more serious problem with the plan’s recommendation. For some reason, it ignores less ideological and more relevant tools that were presented alongside the NAIC recommendation to undertake surveys. Among the tools referenced in another NAIC report cited by the plan and by the same author, but omitted from the Plan’s recommendations, is risk-based pricing.

Risk-based pricing is not revelatory. It is the pricing of risk based on probabilities of loss. It is the foundation of insurance, but is endlessly inconvenient to ideology. While not revelatory, the practice of risk-based pricing is increasingly subverted by the policy goals of various regulators.

In California, as in many other states, it is necessary for property/casualty insurers to file for approval with the CDI the rates that they plan to charge. The commissioner has the authority to reject rate changes that he/she deems inappropriate. In some states, spurious rejection has led to rate deficiencies which have forced insurers to limit their exposure to under-priced risk.

By treating reporting as a panacea without mentioning the role of risk-based pricing, the plan cripples the credibility of what are meant to be a set of objective policy recommendations.

An interesting and ironic juxtaposition to the grave concern articulated by the CNRA is the perception of the risks posed by climate change by those within the international insurance industry. An annual study by the Centre for the Study of Financial Innovation found that professionals within the industry ranked climate change as the number 18 risk facing the industry. What was the number one risk the industry felt it faced? Regulation!!

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R Street testimony to Houston City Council on ride-sharing

August 05, 2014, 5:59 PM




Remarks by Steven Titch
Associate Fellow, R Street Institute
Re: Legalization of ride-sharing services
Houston City Council meeting

Aug. 5, 2014

Good Afternoon,

I would like to thank the City Council for the opportunity to speak on what may prove to be a defining issue for the city of Houston.

As a resident of Sugar Land, a community well within the Houston metropolitan area, the decision the City Council makes tomorrow will affect my transportation choices. Ride-share services like Uber and Lyft provide an economical, reliable alternative to the paucity of cab services in Houston and the surrounding suburbs. While some compromise may be necessary, I urge the City Council to approve the proposal and allow Uber and Lyft to legally operate without an undue regulatory burden that would undermine their ability to do business.

But this issue is about more than whether a ride-share service deserves legitimacy. I urge council members to consider this in the context of how Houston will treat new businesses that use technology to add greater value and convenience to the routine matters of everyday life.

The City Council, Mayor Annise Parker, the Harris County Independent School District and many other public agencies have voiced strong support for nurturing the environment and skills conducive to the growth of high-tech industry and jobs. We all want to see the creation and improvement of STEM programs in our schools. We do our best to showcase Houston as a city that welcomes 21st century entrepreneurs.

Uber and Lyft are where those policies pay off. They are at the vanguard of companies that use technology to meet market needs that were impossible or impractical to meet before. We tend to think of high tech as Google or Facebook, businesses that employ lots of engineers and software coders. But consider also the value created by those who take their technology skills and connect them to everyday needs, and create something that has immediate benefits for everyone. That’s Uber. That’s AirBnB. That’s Bitcoin. All the good intentions about promoting high tech will mean nothing if the city’s first reaction is to ban anything that threatens to disrupt comfortable enterprises that depend on the status quo.

Right now, there are students our local universities and colleges and our high schools, who are designing the next disruptive service or product. They are watching this vote. It will tell them if Houston is truly a city that will welcome their talents and ideas. What message do you wish to send?

Thank you.