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The gap in conservative climate policy

July 07, 2014, 2:31 PM

From Bloomberg View:

There’s a lot to like about Eli Lehrer’s argument for National Review that conservatives should stop downplaying global warming and instead try to take advantage of it.

Prop 45: An internecine fight on the regulatory left

July 07, 2014, 9:43 AM

Ominously, Proposition 45, the “Insurance Rate Public Justification and Accountability Act,” is heading for California’s November ballot. If voters approve the Consumer Watchdog-sponsored initiative, health insurers would be bound to submit their rates to the California Department of Insurance for “prior approval.” Such a system already exists in the property and casualty market as a result of the infamous and lamentable Proposition 103.

Currently, health insurers in California are subject to a “file-and-use” system, under which they file proposed rate changes with one of two regulators (the CDI or the Department of Managed Health Care) 60 days before they plan to put them into effect. These regulators review the proposed rates to determine whether or not they are excessive, after an independent actuary has evaluated the rate information submitted to determine whether it is reasonable and sound.

Consumer Watchdog growls that nearly 1 million Californians have been subject to rates deemed “unreasonable” by a regulator. This is not a particularly compelling argument, since what’s reasonable to an insurer trying to cover claims may not be reasonable to a regulator not unwisely considering what’s in the regulator’s political interest. The regulatory review process at best represents a second opinion about reasonability. Operationally, though regulators cannot currently prevent the use of rates deemed unreasonable, the CDI is not shy about exerting pressure on insurers. Bad publicity and a sour regulatory relationship are a high price to pay for a momentary rating victory.

The value of a file-and-use system is that insurers are able to respond to market conditions in a timely manner. The significance of such flexibility is thrown into relief by even a cursory inspection of Prop 103′s prior approval process. There is little question that Prop 103 has had a stultifying impact on market flexibility and innovation. Remarkably, non-traditional allies of the free market have come to that very conclusion.

For example, at a July 2 hearing, a joint legislative committee listened to testimony from advocates and opponents of the measure. Covered California, the organ responsible for administering the state’s healthcare exchange, expressed strong concerns about the impact of introducing another layer of rate review. Their representative opined that insurers would be unlikely to present their best and final rates to Covered California were they aware that they would be compelled to take further rate-reductions when subsequently presenting to the CDI.

Covered California does not go far enough. Like Prop 103, Prop 45 includes a provision by which private intervenors may challenge rate changes of 7 percent or more. The involvement of an intervenor dramatically increases the amount of time necessary for a rate to gain approval and is a serious obstacle to sound business judgment. The good news, for intervenors, is that they can get rich through their efforts.

The greatest failure of Prop 103 is that merely changing insurers’ pricing behavior does not address the foundational drivers of insurance costs. Thus, while realizing no meaningful benefit, Prop 45 could force market stagnation and, in the worst case, force some carriers out of the exchange due to rate inadequacy. Given that only 13 providers participate on the Covered California exchange, of which only four providers service the majority of the market, any departure from the exchange would be a significant competitive loss to the state-run system.

It is ironic that market concerns are being trumpeted by a state agency fearing that its bailiwick may shrink by the interference of a left-leaning “public interest” group. Ironic, but not funny.

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The European right to be forgotten might be a Pandora’s box

July 04, 2014, 2:11 PM

From Intellectual Property Watch:

“While the Canadian case [deals] with the sale of counterfeit products, rather than privacy, it embraces on the same logic to make its sweeping censorship demands,” Zachary Graves, director of digital marketing and a policy analyst at the R Street Institute, a non-profit public policy research organisation based in Washington D.C., said in a recent post.

It’s time for a conservative global-warming agenda

July 03, 2014, 3:06 PM

Conservatives should adopt a new strategy in the battle over global warming. Rather than falling back on the claim that global warming isn’t a problem, conservatives should take a page from liberals’ playbook and use the issue to pursue policies they already favor. What we need is a conservative climate-change agenda that shrinks the size of government and uses a small portion of those savings to help do a few things better.

While many on the environmental left tend to overstate their case, there’s little doubt that the climate is changing and that human activity plays a major role in this shift. In fact, not even those conservatives whom the left unfairly tars as “deniers” dispute that the Earth has gotten warmer or that a buildup of greenhouse gases traps heat energy.

It’s not inconceivable that climate change could have some positive impacts, like fewer deaths from cold. But negative consequences likely will outweigh positive ones by a large margin.

However, many current government programs are downright counterproductive in dealing with climate change. The National Flood Insurance Program encourages development in areas likely to be impacted by sea-level rise, while many Army Corps of Engineers projects exacerbate the problem by starving river deltas of the silt they need to remain in place.

Other government programs subsidize the use of coal and the opening of new oil wells. Ending all subsidies should be a high priority for conservatives. Broad efforts could include creation of “subsidy-free zones” in areas likely to be impacted by climate change. One version of this idea was signed into law by Ronald Reagan with 1984′s Coastal Barrier Resources Act, which bars federal subsidies to new development over thousands of miles of coastal barrier islands. Such policies promote adaptation to a changing climate, and they save taxpayer money.

Conservatives also should press the federal government, the largest employer in the United States, to do a better job preparing its own facilities for the potential consequences of severe weather. Rep. Matt Cartwright, D-Pa., has proposed doing exactly that. His pending legislation, the ponderously named Preparedness and Risk Management for Extreme Weather Patterns Assuring Resilience (PREPARE) Act, makes sense and should draw conservative co-sponsors.

What’s more, conservatives need to more consistently condemn corporate-welfare programs for energy industries, whether it’s solar, wind, oil, gas, or any other. Any subsidies such industries receive should be limited to research efforts the private sector can’t carry out on its own. A stronger, better research establishment could help us better understand climate change and develop breakthrough technologies. This would cost taxpayers far less than the current stew of corporate welfare programs that produced Solyndra and other costly failures.

There are other, broader changes — including outright repeal of the EPA’s burdensome, ill-advised greenhouse-gas-control regulations — that conservatives ought to consider as well.

For decades, progressives have used the battle over climate change as a proxy for a broader war about culture and ideology. Whether they’re demanding cap-and-trade schemes, plotting ways to plan the entire energy economy, or trying to order entire classes of power plants out of existence by government fiat, progressives consistently forward schemes designed to enlarge the size of government and squelch the freedoms of private enterprise. It’s time to respond.

Conservatives should address climate change. And they can do it without giving up a single conservative principle.

Public voices opposition to Internet sales taxes

July 03, 2014, 12:53 PM

From Somewhat Reasonable:

This week, the National Taxpayers Union (NTU) and the R Street Institute launched a 20-state tour to announce new poll results that demonstrate the publics near complete lack of support for the MFA and the detrimental the tax plan would be. The first stop was in South Carolina, where R Street Executive Director Andrew Moylan and NTU Executive Vice President Pete Sepp hosted a press conference annoying the results. Voters in South Carolina rejected Internet sales taxes by a significant margin of 51-36….

…”New Internet sales tax laws are bad policy, but this polling proves that they’re terrible politics as well,” said R Street’s Andrew Moylan in a press statement. “It shows that strong majorities across the country seek an Internet that enriches their lives, not out-of-state revenue agents.”

News from the front desk: Issue No 198

July 03, 2014, 12:13 PM

From The Fifth Estate:

The thinking echoed what the conservative think tank the R Street Institute said last year after it broke away from the Heartland Institute that has dominated – and some say controlled and funded – anti climate action around the world.

See one of our articles last year reporting the R Street Institute arguing for a carbon tax and saying it would be possible to get one in the US by 2015.

See this most recent post from the R Street folk, R Street disappointed by EPA greenhouse gas rules

Why is it disappointed?

Because the new carbon emissions regulations are likely to “prove expensive and damaging to a still-fragile economic recovery”.

Instead, it said, the Obama administration should move to a carbon tax and “kill two birds with one stone” – slow climate change and free up the tax burden for the economy.

“R Street has instead urged officials to embrace the power of the free market by utilising revenue-neutral carbon pricing as a complete substitute for command-and-control regulation.

“Carbon pricing could allow states to kill two birds with one stone.

“They could achieve mandated emissions reductions through a price signal instead of complicated regulation, while utilising all resulting revenue to eliminate or reduce taxes that are damaging to the economy. This could get EPA off their backs while securing real pro-growth tax reform.”

Conservatives debate IP: A right or a privilege?

July 02, 2014, 5:14 PM

Can copyrights and other intellectual property be treated the same as physical property rights, and just how far should that analogy be taken?

Those were among the key issues during a lively 90-minute roundtable hosted by the American Enterprise Institute yesterday, featuring references that ranged from the Copyright Act of 1790, to the Berne Convention, to Milton Friedman and Emmanuel Kant

Moderator Jeff Eisenach, director of AEI’s Center for Internet, Communications and Technology, opened the discussion by referencing a 2010 report from Chicago-based intellectual property merchant bank Ocean Tomo, which found that intangible assets like patents and copyrights now represent more than 80 percent of the value of firms listed in the S&P 500 index.

Mark Schultz, cofounder and co-director of academic programs at the Center for the Protection of Intellectual Property at George Mason University School of Law, further distinguished copyrights as a “narrow property right.”

“Property rights,” Schultz said, “support self governance as an engine of free expression.”

Other panelists pointed to the protection of property rights as one of the main stabilizing effects government can provide, giving examples of poor and unstable societies abroad where the rule of law with respect to property is not respected.

“A lot of the difficulty in the copyrights debate is because we fundamentally see it as a property right,” concluded Stan Liebowitz, head of the University of Texas at Dallas’ Center for the Analysis of Property Rights and Innovation.

But other panelists argued copyrights should be seen more as a privilege than a right.

“The contours of the rights we create matter,” said Jerry Brito, senior research fellow at the Mercatus Center at George Mason University. “There is a schizophrenia in the current conservative debate over copyrights … copyrights are a privilege. It’s a government-created statutory property and it is a privilege.”

Shultz argued the relevant concern is the degree to which copyrights infringe on the liberty of others, noting “if you install a fence, that infringes on my right to roam freely.”

“If our only understanding of liberty is if I get to do whatever I darn well please, it is a five-year-old’s understanding,” he continued. “A grown-up understanding of liberty is ordered liberty, competing claims that need to be reconciled through a system.”

Tom Palmer, senior fellow at the Cato Institute, countered that “property rights allow us to live together in peace.”

“That is what liberty is very much about, but it doesn’t carry over into some guy singing my song,” Palmer said.

Panelists disagreed fundamentally on the role of government in maintaining “ordered liberty,” with some arguing copyright enforcement isn’t stringent enough and while others feel it is too stringent, in a way that had inhibited free markets.

“When the founding fathers created the first copyrights act in 1790, they were thinking about creating professional authors and professional artists,” said Jay Rosenthal, senior vice president and general counsel for the National Music Publishers of America. However, citing the economic disparity licensing fees have created, Rosenthal pointed out “the reason we don’t know how everything works out is because we’ve never had a free market.”

Palmer expressed skepticism about just how much copyright’s actually functioned to promote innovation. Palmer repeated several times, “the burden of proof is on those who would claim it spurs innovation.”


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Got Obamacare tax questions? You might be out of luck — FATCA’s here — Koskinen gets the Times treatment

July 02, 2014, 12:08 PM

From Politico:

NORTH CAROLINA VOTERS NOT FANS OF MFA. WRAL reports, “Most North Carolina voters oppose a federal bill that would allow online retailers to collect out-of-state sales tax, according to a poll released Tuesday by the National Taxpayers Union and the R Street Institute. The poll, based on a telephone survey of 400 North Carolinians likely to vote in the 2014 general election, showed that 70 percent of respondents oppose” the Marketplace Fairness Act. http://bit.ly/V9zJRN

Arthur could strike around the Fourth in Morehead City

July 02, 2014, 11:47 AM

Ahead of the Independence Day holiday weekend, the U.S. East Coast is preparing for Tropical Storm Arthur, the first named storm of the 2014 season.

Formed yesterday off the east coast of Florida, Arthur has strengthened to a strong tropical storm, with sustained winds of more than 60 miles per hour, and is expected to strengthen to a Category 1 hurricane at some point Thursday. Storm watchers say it is showing signs of forming a defined eye wall and could strike the Outer Banks of North Carolina – an area typically thronged with tourists this time of year – the morning of July 4.

While it is unusual to see a storm reach this degree of intensity so early in the season, risk modeler AIR Worldwide does not expect significant wind-related claims, anticipating storm surge to be a more significant factor:

According to AIR, if the storm makes landfall in or bypasses North Carolina as a Category 1 hurricane, wind damage to most homes and businesses is not expected to be significant. There may be isolated instances of nonstructural damage to roof coverings and wall cladding, and windows if debris becomes airborne, as well as damage to trees, utility poles, and signage

Should the storm hit North Carolina particularly hard, it will be interesting to see how the two state-backed insurance pools – the North Carolina Joint Underwriting Association (or “FAIR Plan”) and the North Carolina Insurance Underwriting Association (or “Beach Plan”) – cope with the losses.

Under their current financial structure, the pools have about $4.09 billion of claims-paying ability, which comprises $700 million of retained earnings; $1 billion of assessments on member companies; $945 million of traditional reinsurance and an additional $544.6 million of reinstatement layers; $701.8 million of catastrophe bond coverage; and $270 million of post-event bonding coverage.

The first layer of cat bonds (the Tar Heel Re bonds) if losses exceed $2.025 billion. To date, no cat bonds issued by a public insurance authority in the United States have ever been triggered.

According to the most recent wind-speed probabilities advisory from the National Hurricane Center, most directly in Arthur’s path are North Carolina’s Cape Hatteras and Morehead City, which face odds of a tropical storm strike of 82 percent and 75 percent, respectively, and odds of a hurricane strike of 21 percent and 15 percent, respectively.

Other cities facing tropical storm risk include Wilmington, N.C. (55 percent); Nova Scotia’s Halifax (51 percent), Yarmouth (50 percent) and Eddy Point (43 percent); Nantucket, Mass. (44 percent); and Myrtle Beach, S.C. (40 percent).

There’s little risk of a hurricane strike outside of North Carolina’s Outer Banks, with the highest risks seen in Yarmouth, N.S. (7 percent); Nantucket (6 percent); and Wilmington, N.C. (5 percent).

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Swedish study: After a heart attack, quitting tobacco better than no tobacco

July 02, 2014, 10:10 AM

A recent study by Gabriel Arefalk and colleagues at the University of Uppsala in Sweden, published in the American Heart Association flagship journal Circulation, was purported by the authors, the AHA  and the media to show that continuing snus use or smoking after a heart attack (myocardial infarction, MI) is twice as harmful as quitting.

These conclusions are questionable.  Using the Arefalk numbers, Carl Phillips and I found that snus users, and perhaps even some smokers, are better off than non-users.

We have submitted a letter to the editor of Circulation, and Carl has the full text of our letter in his CASAA blog post.

The bottom line is that the authors tried to spin the results as suggesting that continuing snus use is dangerous after an MI.  In fact, continuing snus users actually had a lower death rate than people who used neither snus nor cigarettes.

Whatever is happening in this population, it clearly does not support the simplistic “snus is bad” mantra.  There is a glaringly obvious explanation for why people who quit snus (or smoking) after an MI fare better than those who do not:  Those who are healthy (except for the recent MI, of course) and hope to recover are more likely to take steps to minimize their risks.  After being advised to give up snus, many also get physical therapy, exercise and maintain a healthier diet.  Meanwhile, those who are less healthy may not make changes in an attempt to regain long-term health.  The Arefalk analysis may not have adequately controlled for these confounding factors.

Of course, this would only partially explain the better outcomes of quitters compared to continuing users; it does nothing to explain why all of them (except those who continued to smoke) apparently fared better than non-users.  There are possible explanations for this in the form of statistical artifacts or real effects.  The key observation is that these unreported results do not support the authors’ main interpretation that snus use is dangerous after an MI.

With the publication of this article, peer review appears to have been woefully inadequate.   The prime statistical error we discovered is the key number reported in the first paragraph of the article’s results section.  Reviewers of this study failed to detect the glaring error.

Even without correcting that error or calculating the mortality rate for non-users, the (incorrect) number for the population as a whole the authors reported can still be compared to rates for people who used snus or cigarettes at the time of their MI.  This is enough to raise red flags about the analysis and conclusions, since it is still higher than the rate for those who kept using snus, and far higher than the rates for those who stopped using either product.

In 2011, Arefalk was lead author on a study making dubious claims about snus use and heart failure.  I described that effort as “neither legitimate nor persuasive until the authors resolve the fundamental questions about the analysis.”

The current article in Circulation is a classic example of anti-tobacco propaganda.  Credible epidemiologic studies do not report risks in exposed groups without reporting the comparable baseline risk among the unexposed.  The authors, and the journal editors and reviewers who enabled them, omitted this critical information.  Our letter to the editor gives them a chance to correct these deficiencies.

Poll: Few like sales tax on online purchases

July 01, 2014, 4:26 PM

From WRAL-5:

Most North Carolina voters oppose a federal bill that would allow online retailers to collect out-of-state sales tax, according to a poll released Tuesday by the National Taxpayers Union and the R Street Institute… …”Across the board, there is surprisingly large opposition to changing the law to impose a sort of Internet sales tax collection burden,” said Andrew Moylan, executive director and senior fellow at the R Street Institute.

Poll: South Carolinians reject Internet taxes

July 01, 2014, 4:18 PM

From FitsNews:

The data – released this week by the National Taxpayers Union and R Street Institute – underscores the extent to which the state wants the federal government to adopt a “hands off” approach when it comes to taxing the internet…

…Andrew Moylan, executive director and senior fellow at the R Street Institute, said the data painted an unambiguous picture.

“The voters of South Carolina clearly believe that the Internet should exist to enrich the lives of its citizens, not line the pockets of out-of-state revenue agencies,” Moylan said. “While conservatives strongly oppose such a law, it’s striking that independents and Democrats join them in clearly rejecting new state tax enforcement powers over the Internet.”

Michigan scalping law is ‘consumer protection’ gone wrong

July 01, 2014, 4:02 PM

So-called “consumer protection” has evolved into a major legislative preoccupation, which would be fine if it was mostly related to protecting citizens from injury – physical or fiscal.

Alas, despite the emotional rhetoric politicians deploy in their floor speeches, much of the legislative output is more targeted at protecting special interests than at keeping the market honest and efficient.

Licensing bills, in particular, are simply impediments to potential competitors.  Many of them are ridiculous – like the 1,200 hours of study and three year’s apprenticeship required by one state to practice hair braiding; mandatory licenses for florists and interior designers; and the laws being passed to protect existing transportation monopolies from the new share economy.

Michigan has a law on the books that prohibits reselling tickets to events for more than face value. What that means is that people who incur charges from services like Ticketmaster charges can’t even recoup their out-of-pocket expenses by reselling the ticket should they be unable to attend the game, concert or other event.

It’s a criminal law, and theoretically one could be imprisoned for three months for a violation.  At a legislative hearing to modernize and decriminalize this behavior at which I testified, a pastor of a suburban Michigan church told how he had been un-theoretically arrested, fined and forced to pay court costs for trying to sell some of the unused tickets his church had bought for a congregation outing outside the event.

Most of the attention on ticket sales reflects consumer interest in sports and popular music concerts.  It is enormously entertaining to watch another run for the Triple Crown, or to see the world’s second highest-paid athlete make an exquisite crossing pass which allows Portugal to tie the United States in last few seconds of a World Cup match. I wasn’t personally affected when the Electric Forest concert this weekend in western Michigan sold out, but I did have friends there and can’t wait to hear about their experiences. A lot of people will pay plenty to have that kind of memory.

About half the states have some kind of prohibition on ticket resales, either a special law to protect NASCAR races, NFL games, events at universities and the like, or, in 11 of those states, a general prohibition.  Of those, all but three states allow commercial resellers to charge a service fee.  (Interestingly, two states – California and Arizona – specifically allow ticket scalping by statute.)

Respected media organizations, public policy institutes and the American Bar Association have all concluded that we have way too many criminal laws.  One recent book relates the story of a 12-year-old girl arrested on the Washington, D.C. subway for eating a single french fry.  As former Sen. Daniel Patrick Moynihan observed, “We started with a few laws, and now we have catalogs of offenses.”

The antiquated Michigan law is a pretty good example of why there is such a strong libertarian streak emerging in the country.  The legal landscape is so littered with criminal laws that nearly every citizen is a violator at least once a day.

Michigan is way out of line with her sister states by slapping criminal sanctions on mostly unsuspecting residents who have tickets to unload; want at least their money back; and may hope to match up with somebody who wants to be there so badly they will happily pay more.

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Reinsurers starting to drop their terrorism exclusions

July 01, 2014, 3:19 PM

As property insurers lock up their July 1 reinsurance renewals, many are finding a bonus surprise above and beyond the soft pricing environment – the terrorism exclusions that have been standard in reinsurance contracts for the past decade are, in many cases, being completely done away with.

Writing in the Financial Times, Alistair Gray notes:

Reinsurers, which backstop conventional insurers, are agreeing to withdraw the terrorism exclusion clauses that they insisted on after the insurance industry lost about $40bn from the al-Qaeda hijackings of 2001.

Gray also quotes Moody’s Senior Credit Officer Kevin Lee noting that, while the “technology for modelling terrorism risk has improved greatly” since 9/11, the current trend “is largely driven by greater bargaining power among reinsurance buyers.”

A flood of institutional capital into the reinsurance sector – particularly to insurance-linked securities and other forms of collateralized reinsurance – has made it increasingly difficult for traditional reinsurers to find attractive prices in the market that long has been their bread and butter, the North American property catastrophe market. June 1 renewals, which are dominated by contracts covering property risks in Florida, saw rates on line fall by between 12.5 percent and 20 percent, and similar declines of up to 20 percent are expected for the July 1 renewals.

While there remain skeptical observers who feel the tide of institutional money could reverse itself, either in the wake of a significant catastrophe or once the market for fixed-income securities once again begins offering more normal returns, general sentiment is moving toward the conviction that the new money is here to stay. As Lara Mowery, global property specialty leader at reinsurance broker Guy Carpenter, put it in a recent Q&A:

There are things out there that will shape the space going forward, but I think the dynamics in terms of this capital coming in and the way that reinsurers and insurers are reacting is a longer-term proposition now. People are becoming more comfortable that this isn’t fleeting capital.

All of which should be taken as support for the approach taken in the U.S. House toward extension of the Terrorism Risk Insurance Program, including raising the trigger level for conventional terrorism to $500 million. Guy Carpenter recently issued a report finding that multiline terrorism reinsurance capacity is about $2.5 billion per program for conventional terrorism and about $1 billion per program for coverages that include nuclear, biological, chemical and radiological risks.

Those trends already supported raising the program’s trigger level from the current $100 million. With a growing number of reinsurers offering to include terror cover as part of an overall reinsurance program, that further strengthens the argument that the private market is ready and willing to take on more risk than it has in the past, and that the government should ensure that it does not crowd out the capacity that is coming on line.

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New poll shows N.C. residents oppose federal bill targeting sales tax for online purchases

July 01, 2014, 12:06 PM

From the Locker Room:

Sen. Thom Goolsby, R-New Hanover, joined R Street executive director Andrew Moylan and NTU executive vice president Pete Sepp today in presenting the poll results during a news conference at the state Legislative Building. Click play below to watch the 44:25 news conference.

Internet Sales Tax Polls

July 01, 2014, 9:50 AM

The R Street Institute has teamed up with the National Taxpayers Union to launch a 20-state tour to announce new poll results showing just how toxic the so-called Marketplace Fairness Act’s Internet sales tax plan is among voters across the country.

Throughout the next several weeks, representative from R Street and NTU will appear in each state to present the polling data to local representatives, press and business interests. You can view each of those presentations here after the event.

Check back here often for updates from new states, and keep up with the latest on the issue at http://www.donttaxtheinter.net

Results are available for the following states:

Slender Man or slender minds?

July 01, 2014, 8:00 AM

Much of the media have been consumed in recent weeks by a lurid story with all the hallmarks of a psychological horror film by the likes of Guillermo del Toro.

The facts of the case, referred to as the “Slender Man Stabbing” for reasons that will become obvious, are as follows: A 12-year-old girl was discovered, barely alive and apparently having crawled to civilization, lying on a sidewalk after having been stabbed 19, allegedly by classmates Morgan Geyser and Anissa Weier. According to Geyser and Weier, they were trying to impress the fictional “Slender Man,” a creature created by internet horror writers in a genre known as “Creepypasta.”

What is Creepypasta? An excellent December 2013 article from Aeon Magazine explains:

The word ‘creepypasta’ derives from ‘copypasta,’ a generic term for any short piece of writing, image or video clip that is widely copy-and-pasted across forums and message boards. In its sinister variant, it flourishes on sites such as 4chan.org and Reddit, and specialised venues such as creepypasta.com and the Creepypasta Wiki (creepypasta.wikia.com), which at the time of writing has nearly 15,000 entries (these sites are all to be avoided at work). Creepypasta resembles rumour: generally it is repeated without acknowledgement of the original creator, and is cumulatively modified by many hands, existing in many versions. Even its creators might claim they heard it from someone else or found it on another site, obscuring their authorship to aid the suspension of disbelief. In the Internet’s labyrinth of dead links, unattributed reproduction and misattribution lends itself well to horror: creepypasta has an eerie air of having arisen from nowhere.

Slender Man — a faceless albino humanoid creature between eight and twelve feet tall with multiple sets of arms, constantly depicted as wearing a suit (the tailoring is not explained) and preying on children — is one of the oldest, most infamous and widely acknowledged characters from this genre. Having originated with several photoshopped images purporting to show the creature in the background of old black and white photographs on the Something Awful forums, Slender Man (or “Slendy” as some fans call him) has since spawned his own exhaustive online mythos, as well as countless pieces of fanart, including stories, drawings, documentaries, web series purporting to be found footage of the creature (Marble Hornets being the most popular), and even a well-regarded video game in which players try to collect eight pages of a previous victim’s writing while being stalked through a dark wood by the creature. A full primer on the Slender Man mythos can be found here.

Naturally, since the stabbing, the creators of Slender Man and the administrators of the Creepypasta Wiki — the largest Creepypasta archive on the internet — have gone to great lengths to make it clear that the Slender Man mythology does not sanction or encourage violence. The Creepypasta Wiki has also, as of this writing, instituted an age check before allowing users to peruse its archives. These responses are understandable and admirable, but ultimately should have been unnecessary, for a very simple reason: While the girls in this instance may claim to have been inspired by Slender Man, who they appear to have believed is a real figure who would be impressed by their crime, their brutal act self-evidently bears no relation to the actual substance of the Slender Man mythos. For that reason, any attempt to lay blame at the feet of the creators of Slender Man is as unpersuasive as it would be to blame animal husbandry for the famous “Son of Sam” serial killer, who believed his neighbor’s dog was commanding him to kill.

Perhaps the most notable inconsistency between these disturbed children’s fantasy and the real Slender Man mythology is that it appears the girls believed Slender Man was someone to be sought out. According to one account, they believed he had a mansion in the Wisconsin woods where they would go to live with him after the attack. Not only is such a mansion not mentioned anywhere in the written material on Slender Man (the creature’s living conditions are entirely unexplained), but even if it were, no one who had read or seen anything of the Slender Man literature would want to set foot in it for any amount of money. The central element of Slender Man’s characterization is that he kidnaps unwilling victims, and that the attentions of the creature can be presumed to result in death or worse. To hope to meet him would be similar to hoping that there really is a monster in one’s closet and that it weren’t so shy, or that one might be spirited off to hell after reading Dante’s Inferno. Only a lunatic would wish for such a thing.

What does need to be acknowledged in this case is the degree to which mental illness remains one of the most difficult policy questions to resolve. Unlike previous cases — such as the shooting in Newtown, Conn., where warning signs of Adam Lanza’s mental illness could have been identified for the abnormalities that they were – there really is no easy answer here. It appears the only warning signs the culprits evidenced were vivid imaginations. In the wake of the stabbing, one published fantasy author shared reflections on a similarly morbid (though entirely nonviolent) creative relationship she shared with another girl at a similar age.  It would surely be impractical, inhumane and silly to involuntarily commit anyone who displays signs of creativity or imagination that inclines toward the macabre. So what to do?

Ironically, I can think of one counter-intuitive answer, and that is to stop treating mental illness as something to be repressed or hidden. By this, I do not mean that we should abandon efforts to treat mental illness, but rather that we should cease treating its existence as a character flaw to be hidden at all costs. No one thinks less of an asthma sufferer for having asthma attacks and seeking an inhaler. No more should we treat mental illness as the functional end of a person’s ability to function in polite society.

Had these girls felt allowed to express their morbid fantasies, how much sooner might their murderous character have been noticed? How much easier, with the right treatment, would it have been for that dark creativity to be channeled into something better, such as writing or art of the kind that inspired the creation of “Slender Man” in the first place? Illness of any kind cannot be treated without first being detected, and our culture’s treatment of mental illness as a defect in one’s character creates systematic incentives for its sufferers to remain in the shadows.

Slender Man may be fiction, but it is time we stopped allowing society to encourage some of its simultaneously most dangerous and most vulnerable members to simply let themselves be kidnapped by the darkness in their own minds.



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Tour featuring new polling on unpopular Internet sales tax scheme hits the road

June 30, 2014, 11:56 AM

WASHINGTON (June 30, 2014) – Today, National Taxpayers Union (NTU) and the R Street Institute begin a 20-state tour to announce new poll results showing just how toxic the so-called Marketplace Fairness Act’s (MFA’s) Internet sales tax plan is throughout the country.

The first stop on the tour is South Carolina, where R Street Executive Director Andrew Moylan and NTU Executive Vice President Pete Sepp will host a press conference at the state house in Columbia to review the results of the latest poll, which found Palmetto State voters reject an Internet sales tax mandate by a wide 51-36 percent margin.

“New Internet sales tax laws are bad policy, but this polling proves that they’re terrible politics as well,” said R Street’s Andrew Moylan. “It shows that strong majorities across the country seek an Internet that enriches their lives, not out-of-state revenue agents.”

NTU’s Pete Sepp said: “Special interests might convince some in Washington, but in the states, voters are not fooled by any attempts to unleash tax collectors from reckless states like New York and Illinois on their hometown businesses.”

Last year a national NTU and R Street Mercury poll found 57 percent of respondents were opposed to an Internet sales tax scheme like MFA.

Today’s press conference begins at 2 p.m. ET. On Tuesday, the tour continues to North Carolina, and then 18 more states.

To keep up with the latest, visit “DontTaxtheInter.net.”

Full presentations on the polling are available for the following states:


California Senate panel lowers insurance requirement for TNCs

June 27, 2014, 9:27 AM

California’s A.B. 2293 – sponsored by Assemblymember Susan Bonilla, D-Concord – crossed another hurdle Wednesday by earning approval of the state Senate Insurance Committee. Having earlier been amended by Senate Energy, Utilities and Commerce Committee, the bill was further modified by the Insurance Committee to clarify the definitions of transportation network company services and the minimum insurance requirements for each period of service.

Specifically, the amendments define TNC services as “app on,” meaning that a driver is acting in a commercial capacity whenever he or she is logged in to a TNC application and signals availability to take fares. The bill also sets the minimum liability coverage at $750,000; allows for limits to be met by a combination of policies obtained by the driver and/or the TNC; and requires TNCs to maintain coverage for uninsured motorist, underinsured motorist, comprehensive and collision, at amounts to be set by the CPUC..

During the Insurance Committee’s hearing, support for and opposition to the bill came generally from the same quarters as during the Energy, Utilities and Commerce Committee’s hearing. However, some Uber drivers come out in support of the bill, because they want the right to unionize. Moreover, the Department of Insurance now opposes the bill, because the amended version lowered the minimum coverage threshold from the original $1 million.

A few committee members questioned about the lack of data to determine what a minimum threshold should be, and warned that setting the level too high could stifle innovation and technology. However, Chairman Bill Monning, D-Carmel, noted the committee holds “the responsibility to make sure there is sufficient protection for passengers, pedestrians, drivers and to the companies.”

Ultimately, the bill passed the committee by a 9-1 vote. Its next stop is the Senate Appropriations Committee.

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No easy fix for California’s replacement parts regs

June 27, 2014, 8:30 AM

Henry Ford would be gratified to see how far mass production has come. Entire cars are constructed in a matter of hours. He would be somewhat less impressed by how difficult and costly it has become to replace parts.

Why is it that certain parts – bumpers, for instance – are such a headache to repair? The root of the problem is related to something simple: expectations.

Insurers that sell automobile insurance policies agree to return the covered vehicle to its pre-loss mechanical condition in the event of a claim. What, exactly, such an agreement entails is subject to debate.

By way of example, contemplate a scenario in which your car’s bumper has had an unexpected rendezvous with a parking lot lamppost. The bumper is left misshapen and in need of replacement. Parts like your car’s bumper are considered “crash parts.” These are parts of the vehicle that are non-mechanical, non-structural and non-safety related. That means that crash parts tend to serve a cosmetic function and are made of sheet metal or plastic.

Secondary manufacturers around the world are able to reverse-engineer and manufacture your damaged car’s bumper. Replacement parts makers that have the blessing of the vehicle manufacturers are referred to as “original equipment manufacturers,” or OEM, for short. Other crash part manufacturers must be content with being referred to by the less poetic and negative term “non-OEM.”

Names aside, the bottom line is that non-OEM crash parts typically cost between 20 percent and 65 percent less than OEM crash parts. This cost difference makes non-OEM crash parts extremely attractive for cost-conscious repair. To combat their bottom-line disadvantage, OEM manufacturers maintain that the non-OEM parts are not of the same “like, kind and quality” as OEM crash parts.

The cost/quality debate forms the background to expectations and disputes regarding an insurer’s contractual obligation to return your car to its pre-loss condition. For years, meeting expectations concerning crash part replacement has been a flashpoint between insurers, automobile manufacturers and repair shops.

Since 2005, the Legislature in Sacramento has witnessed the introduction of 10 pieces of legislation designed to bend the cost curve away from one industry and toward another. The powerful interests aligned on each side have seen repeatedly that most of these attempts fail in the first step, with the first committee to hear the issue.

Thus, it was with alarm that insurers reacted to a regulatory decision by the California Department of Insurance (CDI) to create a new auto claims world, using its existing scope of devolved authority, by promulgating regulations that remove the incentivize to use non-OEM crash parts.

Regulatory usurpation of legislative matters works real political violence and undeniably is dictatorial in effect. Moreover, the nature of regulatory promulgation allows debate only on the details on a legal product created by government. Regulation can be a premeditated, non-market-based, government-originated effort to create winners and losers by fiat. In contrast, legislative debates are more likely to preserve fairness. For those apparently selected to be losers by the flex of regulatory muscle, the legislative process is understandably preferable.

Yet, before going further, consider again your car’s damaged bumper. When the car goes in for repair there are a variety of options available when it comes to replacing the damaged parts. By law, you have the right to determine where the car is taken for repairs and what specific repairs/parts are used on your vehicle. Thus, you can elect to order replacement parts directly from the factory of the vehicle’s manufacturer. This option tends to be expensive, but in theory, it could be a guarantor of quality.

Given that OEM crash parts are more expensive than non-OEM crash parts, an insurer’s estimate of the appropriate cost of repair may only cover a portion of the cost necessary to install OEM parts. This is because the insurer believes that it can discharge its obligation to return your car to pre-crash condition by using less expensive non-OEM parts.

The CDI characterizes instances in which an insurer’s estimate covers only the cost of less expensive non-OEM parts as “requiring” the use of such parts. The significance of this distinction is borne out by the regulations. The regulations oblige any insurer that “requires” non-OEM parts to guarantee the quality of those parts. The obligation is puzzling, because insurers do not certify, manufacture, replace or otherwise interact in a legally-significant way with parts themselves. Instead, insurers maintain a contractual relationship with their insured to return vehicles to pre-loss condition; a relationship which is only incidentally related to the repair shop/part manufacturer industry’s work on vehicles. Without a concrete nexus to the part itself, insurers are ill-suited to shoulder liability for defects.

By purposely conflating a warranty for repair and a warranty, the CDI has heavily burdened insurers, at the expense of their policyholders.

At the time they were promulgated, insurers speculated the regulations, in effect now for a little over a year, would cause a decline in the use of non-OEM crash parts and an increase in the cost of repairs. Though data bearing out those claims does not yet exist, the merit of those claims is apparent.

For instance, hindering the use of non-OEM parts would be expected to lead to an increase in the use of OEM parts, in turn, leading to an increase in the number of vehicles which reach the dollar threshold at which vehicles are declared a total loss. This is undesirable when one considers that, depending on the value of your car, faced with the prospect of repairing that bumper using an expensive OEM part, it could end up totaled.

To rectify the perceived problem with non-OEM crash part quality, insurers repeatedly have proposed systems by which such parts could be certified as equivalent to OEM quality. These proposals have consistently been opposed by automobile manufacturers and body shops alike. The great irony of their opposition is that it is commonly known that both non-OEM and OEM parts are manufactured overseas, often at the same plant!

Whether intentional or not, the CDI, having acceded to the agenda of the automobile manufacturers and the body shops, has set a course for higher costs and no discernable increase in consumer protection. It is time for the Legislature to step in and to create a uniform system by which crash parts of all kinds are rendered regulatory identical. Perhaps then a bumper repair would be an easy fix.

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