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Parliament’s lone Pirate wants copyright restrictions to walk the plank

April 07, 2015, 10:02 AM

Geo-blocking is more than just an annoyance. Which is why Julia Reda, the sole member of the Pirate Party serving as a member in the European Parliament, is working to get rid of it.

Although receiving a notice that a website has been blocked because it is not available in your country is really annoying, it also limits freedom online, enforces copyright protectionism, restricts artists to local audiences, stops businesses from expanding globally and hinders media diversity.

The problem is less noticeable in the United States, due to the high volume of available online content. But in Europe, where 28 different countries in close geographic proximity have 28 different sets of copyright regulations, the damaging effects of geo-blocking are more significant.

The above video is characteristic of Reda’s style. Take a bold stance against geo-blocking, use new media to expose the problem playfully and work for substantive reform. Not every member of the European Parliament would send a tweet asking the Twitterverse where she can buy Finnish bread in Germany. Reda’s Finnish bread serves a very serious purpose: as one of the MPs on the copyright reform bill, she is looking to eliminate geo-blocking and copyright protectionism as part of major EU copyright reform.

European Commission Vice President Anders Ansip has also come out publicly, calling for the abolishment of geo-blocking. It is a piece of a major reform agenda to create a single digital market in Europe.

In person, Reda is not exactly the antagonistic computer geek cyberpunk that one might imagine populates the Pirate Party ranks. Young, earnest and self-assured, Reda is happy to discourse fluently about her positions on a wide range of issues, most of which center on technology-driven legal quagmires that inspired the birth of the Pirate Party, such as copyright and data protection.

As a newcomer from a fringe political party elected last May among a wave of candidates that were seen as anti-establishment, Reda describes the other MEPs as being relatively approachable and interested in hearing her opinion. Some have even expressed interest in adopting her lobbyist transparency visualizations.

As one Pirate out of 750 Members of Parliament, Reda recognizes the necessity of compromise, focusing most of her time working on common-sense solutions that work from both a social and a market angle. For example, she is working to reform copyright to make it possible for libraries to lend e-books, citing studies that show that far from threatening the publishing market, borrowing e-books actually encourages people to buy books.

The Pirate Party is a political party born of the digital age. Its core issues relate to the elimination of copyright restrictions, freedom of expression on the Internet, open access to information and increased government and corporate transparency. Many in the United States see the Pirates as a fringe party whose members advocate or engage in activities that skirt the limits of legality. Former Pirate Bay spokesman Peter Sunde recently wrote a post for TorrentFreak that was deeply critical of the possibility of translating “pirate movement” causes into a working political party with a full ideological platform, citing the effort as a failure.

But despite criticism from either side, members such as Reda continue to take their reformist zeal and digital know-how to the established law-making bodies of power and provide a new perspective.

One week after Reda ruefully explained that “pretty good privacy” encryption does not work on the European Parliament’s email server, leaving MP communications unencrypted and insecure, a hacker claiming to be acting in the name of Anonymous hacked the personal website of the European Parliament President. It may be time for people who have the technical understanding to guard against digital threats without limiting freedom of expression to play a larger role in lawmaking.



This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

#LegalHack #CopyNight at R Street

April 07, 2015, 10:01 AM
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Tuesday, Apr 21, 2015, 6:30 PM

R Street Institute
1050 17th St NW, Suite 1150 Washington, DC

21 Legal Hackers Attending

DC Legal Hackers is the DC Chapter of a growing movement of more than twenty legal hacking, technology, or innovation groups around the country. A legal hacker is someone who cares about the intersection of law and technology and seeks to improve legal practice through technology while simultaneously using legal skills to promote technological inno…

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April 07, 2015, 10:01 AM
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  • The Conservative Case for Surveillance Reform

    April 07, 2015, 9:55 AM
    This event has passed 04/08/2015 @ 12:00 pm - 1:00 pm

    RSVP: http://reformnsa.splashthat.com/

    Two years ago, major revelations about the NSA’s massive intrusion into the lives of all Americans jumpstarted a national debate about the right to privacy and questions of government intrusion into our personal lives. With key sections of the Patriot Act set to expire on May 31st, Congress must address the constitutionality and effectiveness of the NSA’s mass surveillance programs.

    Rayburn House Office Building

    Room B354

    Lunch will be served.

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    April 07, 2015, 9:55 AM
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  • Do we still need the Post Office?

    April 07, 2015, 6:45 AM

    Do you like trees? I do. Who doesn’t? So why does our government encourage private companies to chop down millions of them each year and grind them into paper? And why does the government drive 18-wheel, pollution-belching trucks millions of miles all over America carrying this paper? Here is the answer: So that businesses can send mail to people who usually throw it away unread. Does this make sense in the Internet Age? Not really.

    These costly, out-dated, environmentally harmful practices will not stop until the government says goodbye to the U.S. Postal Service as we now know it.

    More than 90 percent of all mail is junk mail — catalogues and flyers sent by people trying to sell stuff to people. Most of us communicate with one another by calling, e-mailing or texting. We don’t write letters. Many businesses also are moving away from paper mail. This is why mail volume has dropped 25 percent since 2008. And does anyone even like going to a post office and standing in line? Nobody I know.

    The Postal Service has run more than $25 billion in deficits in the past five years. It’s time for a change.

    Fifteen years ago, the head of the Postal Service shocked many people by saying it should be privatized. That’s a great idea. Other nations, such as the United Kingdom, Germany and Sweden, have successfully privatized their postal services. If we privatized the U.S. Postal Service, its new owners could figure out how to reinvent it for the 21st century. We might start to see investment in new technologies, like using drones to make deliveries.

    When Ben Franklin ran the post office in the 18th century, mail was often delivered to inns and general stores. Wouldn’t it be great if in the 21st century you could go to a coffee shop to drop off a package? That’s exactly the kind of innovation we could expect, if we privatized the Postal Service.

    Don’t let local control undermine the Texas model

    April 06, 2015, 9:35 AM

    Texas has always been fiercely protective of its prerogatives as a state. From challenging federal regulatory overreach in court to maintaining our own electric grid, we are willing to go to great lengths to ensure we can chart our own political destiny.

    Historically, most of the threats to state prerogatives have come from above, from the federal government. Recently, Texas has faced a new set of challenges to its authority, this time coming from below, from cities and municipalities, often driven by activist groups or entrenched special interests.

    Last November, Denton became the first city in Texas to ban fracking, and other cities are now looking to follow suit. The Denton ban, which was initiated not by the City Council but as the result of initiative petition, has created costly uncertainty for both the energy industry and the city itself. Numerous lawsuits challenging the legality of the new ordinance currently are pending. Oil and gas production is the lifeblood of the Texas economy, yet action on the local level is threatening to undermine the industry.

    The last few years also have seen the rapid rise of transportation network companies, which use smartphone apps to connect drivers and riders in real time. This emerging market provides a service that can be cheaper and more convenient than traditional taxis. TNCs such as Uber, Lyft and Sidecar quickly have become a staple of life in urban areas.

    This new transportation model frequently buts up against existing vehicle-for-hire regulations, which were built around traditional taxi and limo services. But the past year has seen a remarkable turnaround in how some of America’s biggest cities deal with alternative transportation. Cities from Washington to San Francisco have implemented sensible regulatory frameworks that allow TNCs to provide an alternative to traditional taxis while still addressing legitimate safety concerns.

    However, Texas cities have lagged in dealing with TNC regulation. In a recent ranking by the R Street Institute of vehicle-for-hire regulations in America’s top 50 cities, most Texas cities rank toward the bottom. Recent burdensome regulations in Houston and San Antonio have forced the major TNC companies to suspend operations in both those cities.

    When cities begin to enact regulations that threaten Texas’ continued success, the state has both the right and the duty to step in. The Legislature currently is looking at a number of options that would address municipal overreach on energy, transportation and other issues.

    Opponents of these measures rely chiefly on a misplaced appeal to local control. Just as we don’t like the federal government meddling in state affairs, the argument goes, so the state Legislature shouldn’t interfere with cities that want to pass their own regulations.

    This argument misunderstands the purpose of local control. Unlike states, which are protected by the 10th Amendment from federal overreach, local entities are creations of the state and have only those powers the state has chosen to grant them.

    In many cases, local control makes perfect sense. But local control is valuable only to the extent that it helps protect individual liberty and good government. It should never be used as a justification to add another layer of regulation on top of what the state already provides.

    Could ridesharing shift to an ad-supported business model?

    April 06, 2015, 8:00 AM

    (This post was co-authored by R Street Western Region Director Ian Adams.)

    In a recent blog post, tech entrepreneur Andrew Chen discussed what a free, ad-supported service tier for Uber might look like. He argues that “free, ad-supported Uber rides are inevitable,” adding that, if Uber doesn’t do it, one of its competitors will.

    It’s easy to see how Chen’s observations might be evidence that the Silicon Valley set is prone to overzealously apply the Internet company business model to everything. Namely, to offer a service for free that gathers commercially valuable data, and then make money from serving targeted advertising to a massive user base.

    Unlike taxis, which currently have lots of ads and yet persist in their outsized expense, Uber’s ads would be not be delivered in a scatter-shot manner. Instead, they would be tailored to the passenger and based on their history, preferences and location. This makes them much more valuable to advertisers.

    With more than a million rides per day, Uber has the requisite massive user base. In San Francisco, one of Uber’s most mature markets, its revenues are three times larger than the city’s taxi market ever was. And that’s not counting the city’s other ridesharing services, like Lyft and Sidecar.

    Uber also collects massive amounts of information about its users. It’s not far-fetched to think that tech investors see the real value of Uber in the data that it collects, and see moving people as an ancillary function. What’s more, Uber characterizes itself as a “technology company” and not a transportation service. Certainly, its $41 billion valuation doesn’t seem to be supported by the raw numbers of the vehicle-for-hire market, even if one expect those markets to grow significantly.

    While a totally ad-supported business model may work out great for Gmail, Facebook, Twitter and YouTube, these businesses are all highly scalable with relatively low labor costs and capital expenditures.

    It’s not immediately clear that a similar model would work well for Uber, which has significant costs associated with scaling its service. Drivers have to earn enough to pay for gas and vehicle maintenance, while also earning a decent return on top of those expenses.

    Let’s do some off-the-cuff math. Here’s a receipt from Uber for a ride in DC. It was a little under 18 minutes, and cost $9.90.

    If Uber used a simple model showing 30 second video ads, it could deliver about 36 ads during an 18 minute trip like mine. This is about $0.28 per view, which is a pretty high number.

    The average CPM (cost per 1,000 views) for video ads on the Internet can vary widely based on a number of factors. Analysis from Credit Suisse puts the average at $24.60. No doubt, that cost can go higher for a quality, targeted audience with a high conversion rate (percentage of users that complete a desired action). But even if we put this at $50 CPM for 30 second ads, about the top of the current market, this is just $0.05 per view. Assuming a driver has zero down time (which is highly unlikely), this only adds up to about $6 per hour before expenses.

    Chen suggests that Uber could demand CPMs as high as $100 (although he doesn’t get into the details of such a scenario, like how long each ad would be), based on the high cost of Snapchat’s advertising debut. There’s a good case to be made for why an Uber passenger would be a particularly valuable ad target, especially with all of the information Uber has about them — including their location, credit card and destination.

    But even if you get $12 per hour with a $100 CPM, you still have to pay costs out of that amount, like Uber’s cut, and the drivers’ gas and vehicle maintenance. When Vox’s Tim Lee recently drove for Lyft, he came out with about $14 per hour, after accounting for gas and Lyft’s cut, and a significant amount of downtime. This is more or less consistent with Uber’s hourly wages in D.C., which it says are about $17 for UberX before expenses.

    So, in spite of Chen’s optimistic assertion of the inevitability of free rides for all, it seems like the numbers fall just short of working, even with pretty optimistic assumptions, which do not even consider issues like mobile data costs and putting screens in every car. This is, of course, just looking at the United States. It may be viable in countries where labor, gas, and capital costs are lower.

    Chen also suggests a few other variations on how ad-supported ridesharing could work, including app installs and business-to-business lead generation. Neither of those is particularly compelling as the sole basis for a broad, free service tier, but either certainly could help supplement revenue from targeted video ads.

    Even if ads can’t fully support a free ridesharing service, they do have the potential to take a buck or two off each ride. That buck or two could be crucial, as transportation network companies grow more competitive and face new questions about the employment relationships with drivers, as well as new, more substantial, insurance requirements.

    Indeed, one of the primary challenges Uber faces is finding ways to expand its market, which would both allow it to pass on positive network effects to users through lower prices and simultaneously increase its advantage over smaller competitors. Having a totally free or deeply discounted “loss-leading” service could potentially attract a huge number of new active users to its service. Uber has shown in the past it isn’t afraid of taking a loss to do this, and has plenty of cash with its latest funding round.

    One thing that could make entirely free ridesharing work, however, is Google’s rumored plan to enter the market with autonomous vehicles. An autonomous vehicle without a driver, NHTSA Level Four, would seem to make the math work by removing the labor cost. Another major expense, the cost of insurance, also could decline in view of the meaningful increase in safety associated with the elimination of human error (so long as outdated insurance rate-making rules, like California’s Prop 103, can be overhauled).

    Offering a free service at launch would also be a great way for Google to introduce this new technology and to overcome Uber’s dominant market position. For their part, Uber may already be anticipating this threat, having recently announced a partnership with Carnegie Mellon University to develop advanced technologies for ridesharing, including autonomous vehicles.

    You may be asking yourself: ”This all sounds great! When can I expect the future of free driverless cars?” Well, unfortunately, government doesn’t move at the speed of innovation. Before autonomous vehicles can be embraced, they will have to clear regulatory hurdles at both the state and federal levels.

    Where the government isn’t behind the curve of innovation, it is actively seeking to stymie its advance. In Sacramento, a bill has been introduced that would prevent ridesharing companies from sharing their data with third parties in the name of protecting consumer privacy.

    While it’s well-intentioned, and there are some good ideas in the bill, overly broad privacy laws can also pose an existential threat to data-driven innovation. For instance, sharing some of this data would be essential for TNCs to work with the insurance industry or advertising companies to lower costs in the manner described above.

    Whether free or otherwise reduced in price, ridesharing services and consumers stand to gain ground if they are willing to embrace the use of targeted advertising. Government regulators should get out of the way and embrace the future.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

    Moylan testimony on the Restoration of America’s Wire Act

    April 06, 2015, 7:30 AM

    The video below features R Street Executive Director Andrew Moylan in his testimony before the House Judiciary Subcommittee on Crime, Terrorism, Homeland Security and Investigations during their March 25 hearing on H.R. 707, also known as the Restoration of America’s Wire Act.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

    Kansas City could make terrible ridesharing market even worse

    April 06, 2015, 7:00 AM

    I was in Dallas last week and used my Uber account to hire rides from Love Field to the hotel, and then back again when I was finished with my business. I am a frequent traveler, with a long history of trying to find the right balance between inexpensive ground transportation and getting to my destination in a timely fashion. I also use shuttles, light rail, city buses, subways and Uber’s competitor ride-sharing service Lyft where available. As I travel frequently on my own nickel, I consider transportation options very carefully most of the time.

    It has been interesting to watch the politics of transportation options. Traditional livery and transportation services – threatened by the emergence of digitally summoned, paid, receipted and rated operations like Uber and Lyft – have moved to protect their turf by seeking to have the popular new services regulated out of existence.

    It’s reminded me very much of the grocery store clerks’ union trying to stop the automated checkout scanning in supermarkets, which rarely makes mistakes, in comparison to humans trying to key in thousands of prices every day at the registers. We had major league fights in the legislatures some years ago about this, but technology finally won out, and we are mostly better off for it in the 21st century.

    There is another wave of legislation accompanying this relatively new transportation option. Much of it has to do with rationalizing the insurance that covers accidents involving vehicles used for ride-sharing. Because they are privately owned, yet at times engaged for hire, ride-sharing drivers’ cars need coverage that allows for commercial activity, which requires insurance appropriate to the higher-risk profile of a driver-for-hire.

    This is an undertaking that requires a sorting out of risks from casual and part-time engagement as a livery service to virtually full-time work as a driver. As one can imagine, the public policy question of mandating the proper level of liability coverage for accidents turns on when the driver is operating his or her vehicle privately and when it is for hire. The period of time when a driver makes him or herself available, but has not yet acquired a passenger has received the most attention.

    For the most part, state legislation has provided the best solutions, although many municipal ordinances have produced good public policy and happy customers. My colleagues at R Street have produced a white paper rating the transportation friendliness of the top 50 cities in America, which you can access here.

    Where the state or its major cities can go wrong, in our judgment, is currently exemplified by the Kansas City market. Kansas City was given an “F“ grade in transportation friendliness by our ratings, including the highest score in the chart for “hostile regulation.”

    The city appears bent on maintaining a poor score for apparently trying to regulate the new services as taxicabs, but reportedly requiring higher fees and more insurance than taxis are required to carry. The City Council has been debating an ordinance for “months,” according to the Kansas City Star, and it goes to the full council this week. Lyft suspended operations in Kansas City last October, and Uber has said publicly that its drivers will be priced out of the market, as well.

    At the same time, both houses of the Kansas Legislature have passed and sent to Gov. Sam Brownback a bill which increases the insurance requirements and requires background checks of drivers. The latter is sound public policy, but requiring insurance for physical damage to the vehicles, which even taxis are not required to carry, seems like harassment.

    Meanwhile, the Missouri Legislature, which governs most of the Kansas City metro area, is considering a bill to prohibit local regulation of transportation network companies. These divergent approaches could produce real schizophrenia in the metro area.

    We have to come down on the side of the customer in all this. We think that safety regulation and insurance liability coverage are important, but that places like Kansas City, which aren’t yet finding the right balance of public interests, ought to reconsider in light of what many other jurisdictions are able to fashion as workable rules for both the insurers, the TNCs and those of us who travel a lot.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

    NTU urges Washington legislators to oppose House Bill 2211

    April 04, 2015, 12:12 PM

    From National Taxpayers Union:

    Before implementing this 60 percent tax, lawmakers should consider the make-up of an e-cigarette. The main ingredients that produce the water vapor—propylene glycol and glycerin—are considered harmless by the FDA and can be found in everything from toothpaste and fog machines to foods and cosmetics. Such products contain no tobacco, and a study by Dr. Joel Nitzkin of the R Street Institute found that e-cigarettes can actually reduce the risk of tobacco-related deaths or illnesses by 98 percent or more. By implementing a tax rate of 60 percent, HB 2211 would discourage the use of an option that can save lives.

    Cutting defense in a time of war

    April 03, 2015, 8:29 AM

    Defense spending is a hot topic in Washington, with growing pressure to bust the budget caps agreed to in the Budget Control Act in 2011.

    With uncertainty over Russian intervention in Ukraine, the advance of the Islamic State in Iraq and Syria, civil war in Libya and Yemen and continuing tensions with Iran, most budget proposals considered this year, regardless of party, are to increase defense spending, although by varying amounts.

    With the geopolitical and domestic political winds blowing in that direction, is there a way for those of who support defense reform to remain relevant? There are, in fact, ample opportunities to cut defense spending, even when the United States is at war.

    • Require the Pentagon to pass an audit to receive funding. The Audit the Pentagon coalition has been working on legislation to force the Pentagon to comply with the Chief Financial Officers Act of 1990. That law requires all federal agencies to pass an annual financial audit and the Pentagon has never been in compliance. Congress should attach financial penalties to defense spending any year the Pentagon cannot pass an audit. This will identify whether or not tax dollars are being spend appropriately by the Department of Defense.
    • Time to cancel the F-35 fighter. The F-35 Joint Strike Fighter is touted as possibly the last-manned fighter the U.S. Air Force, Navy and Marine Corps would ever order. It’s also touted as the plane that would ensure American air superiority for years to come. The plane has been plagued with cost overruns and technical issues. The two most recent technical issues could impact the F-35’s intended role in close air support. The new Small Diameter Bomb II cannot fit inside the bomb bay of the Marine Corps’ F-35B. If an F-35 pilot wanted to engage targets using a cannon, they would be out of luck, as well. The software required to fire the cannon won’t be ready until 2019. It’s time to begin exploring alternatives to the F-35 and pull the plug on the program.
    • Cut the civilian staff of the Department of Defense. New Defense Secretary Ashton Carter has opened the door to cutting more civilian staff. Republican lawmakers proposed a bill to cut more than 115,000 jobs from the Pentagon’s work force. Surely both parties can reach a deal to cut the size of the civilian workforce. This will free funds to take care of the combat needs of the military.
    • Reduce the number of generals and admirals and restructure the force. The U.S. military has too many generals and admirals. The force is also too top-heavy with the large number of support personnel attached to each flag officer. Former Defense Secretary Robert Gates once bemoaned that there were 30 layers of bureaucracy between him and an action officer. These generals and admirals have access to numerous taxpayer-funded perks, including stately quarters, personal chefs and drivers and private jets. As of 2012, the GAO estimated the cost to taxpayers of these combatant commands is $1.1 billion. This personnel structure not only bleeds taxpayer money, but places the lives of troops in danger, as it slows down reaction time in a crisis.
    • The Pentagon must better account for money spent overseas. While the entire Pentagon must be audited, so long as the United States is engaged in overseas combat operations, safeguards are needed to ensure the money is best spent wisely. Recent reports show that the government cannot account for $45 billion spent in Afghanistan. It will be much more difficult to ask for money for overseas operations without accounting for how current money is spent.

    There is widespread agreement that men and women in uniform need the equipment and support to accomplish their missions. The Pentagon and Congress also have obligations to taxpayers to ensure that money is well spent.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

    Lawsuit over cable and satellite sports packages may be a bad play for fans

    April 03, 2015, 8:14 AM

    As major league baseball teams ready for the start of the new season this weekend, a federal court in New York is considering whether to grant class-action status to a lawsuit over the way sports leagues package out-of-town games for cable and satellite companies.

    The lawsuit, brought against Major League Baseball and the National Hockey League by cable consumers who are sports fans, contends that MLB and the NHL’s Extra Innings and Center Ice packages, respectively, gouge viewers because they offer no option other than to receive all out-of-town games. There also is no option to let consumers pay less to watch games featuring only one particular team. The NFL, which makes its popular Sunday Ticket package available exclusively through DirecTV, was not named in the suit, although that package could be affected by a final court decision.

    The fans’ complaint is a variation on the long-standing demand for a la carte cable channels, made in the belief that it would be a much cheaper alternative if the cable companies allowed consumers to choose the few individual channels they want, rather force them to pay for groups of hundreds that they don’t watch.

    In the case of sports-programming packages, the plaintiffs’ assumption is that, if it costs $200 for a season of MLB Extra Innings, which delivers about 40 out-of-town games a week, it would be proportionately less to deliver four or five.

    The error in this assumption is that TV signals are not physical commodities that each have their own associated production and delivery costs. It costs DirecTV or Comcast the same amount to transmit one ballgame as it does all 15 that might be played on a given night. In fact, the signals from every game are reaching the satellite or cable receiver. It’s more accurate to say that viewers pay to have the signal descrambled.

    Right now, it’s likely that viewers are getting a good deal. The service providers get games in bulk and pass them along to consumers. One thing is for certain, the choice to see the games only featuring your favorite team won’t be one-fifteenth the cost of the current Extra Innings package. Fans may be unpleasantly surprised, should they win this case, when there is no drop in the cost to select one team, but a substantial increase in the price to receive all games. That would be the logical way for things to go.

    Overall, programming packages keep prices low by providing broad viewership. When a la carte was being debated in 2013, one analyst projected ESPN by itself would cost $30 a month, to make up for loss of general subscription fees and ad revenue.

    Over the top (OTT) delivery, using the broadband connection, changes this equation substantially and may indeed become a new spin on the a la carte idea. It remains to be seen how this plays out.

    As a final aside, I’m skeptical when people claim they only watch a handful of cable channels. If a Yankees fan living in Dallas is committed enough to purchase Extra Innings, as the pennant race heats up, that fan’s likely also checking out how the rival Red Sox are faring.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

    End life tenure for federal employees

    April 03, 2015, 8:06 AM

    J. David Cox traveled to Selma, Ala. at the invitation of. President Barack Obama to commemorate the hallowed civil rights march. It was an honor for the president of the American Federation of Government Employees. No other union heads were invited. George and Laura Bush were there, as was House Majority Leader Kevin McCarthy, R-Calif. Rep. John Lewis, D-Ga., who braved the police billy clubs on the Edmund Pettus Bridge 50 years earlier, also was in attendance.

    Cox treated the august moment for remembrance as an opportunity. After shaking the president’s hand, Cox told him, “boss man, it’s time for a raise.” Being asked for more money at a civil rights event must have been an awkward moment for the president.

    The timing of Cox’s ask was doubly tacky because it came shortly after the Government Accountability Office dropped a bombshell: only 0.18 percent of the federal workforce was fired for poor performance and bad conduct last year. Can anyone name another employer who so little weeds out bad workers?

    Federal union heads blame management. Matthew Biggs of the International Federation of Professional and Technical Engineers said federal managers have plenty of tools to dump bad employees. William Dougan, head of the National Federation of Federal Employees, said “a lack of proper training and preparation of the first-line supervisors” is the reason bum feds stay in their jobs.

    Strictly speaking, federal workers can be fired for poor performance. The Civil Service Reform Act of 1978 lays out the process in law, which is further spelled out in reams of Office of Personnel and agency-specific regulations. An employee must have regular performance assessments and must be encouraged to help set performance standards. Those who do not perform well must be given notice, meetings must be held to discuss performance and under-performers must be given help and opportunities to improve. Before an employee can be fired or even demoted, he is entitled to be represented by an attorney. It takes six months to a year, according to GAO, to get rid of a bad fed, and this usually occurs with new hires.

    Managers who take issue with an employee’s performance may face reprisal in the form of accusations of discrimination or creating a hostile work environment. This partly explains why so few feds are removed from their jobs; he process is paper-work heavy and grueling.

    Unions exist to protect their members. But a “due process” system that produces guaranteed lifetime employment benefits nobody.

    For one, it is inherently inequitable. Most of America’s 105 million full-time workers do not have jobs for life. Having to work hard and keep the boss happy is the norm. To the average working stiff, a government job for life looks like an entitlement. Perhaps this is part of the reason a mere 11 percent of the public has great confidence in government agencies.

    GAO also observes the failure to show bad workers the door is toxic for morale. Most federal employees are good workers. They suffer when the bad eggs among them misbehave and fail to pull their load.

    The feeling of guaranteed lifetime employment has insidious effects. Workers grow comfortable and see little reason to push themselves or keep their skills and resumes market competitive. At some point, they realize they are stuck: bored in their current jobs but uncompetitive in the job market. They become clock-watchers, waiting for the opportunity to retire.

    Congress should make Cox an offer he cannot refuse: give federal employees a raise but end life tenure. Current employees could retain the protections of the Civil Service Reform Act, but all newly hired feds would be put on 10-year renewable contracts. Those workers who are good at their jobs will indubitably be retained, because it is a costly hassle to replace a good employee.

    Over time, renewable 10-year contracts would produce a happier and better federal workforce, and one without bad employees enjoying taxpayer-subsidized jobs for life. What’s not to like?

    The West not yet fully won for ridesharing

    April 03, 2015, 7:46 AM

    On the heels of last week’s cross-industry compromise on insurance requirements for ride-sharing drivers, and with some legislative sessions drawing to a close, it’s a good time to take a look at where ridesharing insurance regulation stands in the West.

    Unsurprisingly, some states have all but settled on a framework for regulating the insurance coverage for TNCs, while others are just beginning to work on legislation. While late-coming states will have the benefit of the wisdom won through extended negotiations by the parties elsewhere, they must act quickly if they hope to provide the legal certainty necessary for the speedy introduction of new insurance products.

    Missed opportunity

    The Legislature in Santa Fe adjourned without passing any TNC legislation. On the penultimate day of the legislative session, after passing the first chamber by a large margin, a New Mexico Senate committee scuttled the taxi-opposed measure without a vote. Now, for the first time in 60 years, there is talk of the need for a special legislative session.

    Wyoming, in spite of having TNCs in state, also took no action before adjourning this session.

    Active, but quiet, legislation

    In Alaska and Oregon, ridesharing legislation has been introduced, but has been slow to move. In the far north, that is likely to change in the coming weeks. Session ends in Juneau in late April. Lawmakers in Salem have until July.

    The Alaska bill is notable because, in its current form, it defines TNC activity exclusive of “Period 1” – when the app is on, but no connection is yet made. Both S.B. 58 and H.B. 120 read: “A person is performing TNC services…when the person accepts a request for transportation…” Alaska will be an interesting near-term test of how TNCs and insurers work together in the wake of their public agreement.

    Oregon cities have been busy waging war on TNCs. Portland has banned ridesharing outright and Eugene recently sued Uber in an effort to achieve a similar outcome. Meanwhile, other more scandalous matters have preoccupied Oregon’s state government.

    Two legislative vehicles, one supported by insurers and another supported by cabs, are vying for attention in the same committee. At the moment, only the insurer-backed bill, H.B. 2237, has been scheduled for a hearing.

    Active and moving legislation

    Arizona, Hawaii, Nevada and Washington are in the midst of pitched battles in various committees.

    After Arizona Gov. Jan Brewer vetoed a TNC-backed bill last year, legislators in Phoenix have taken the unusual (and R Street-preferred) step of crafting insurance requirements for TNCs while simultaneously revising insurance requirements for cabs. Changes that were made in the Senate will require concurrence (another vote) in the House. But with all stakeholders more-or-less satisfied, H.B. 2135 has a good chance of becoming law.

    In Hawaii, SB 1280 is scheduled for hearing this week. The bill would designate the Hawaii Public Utilities Commission as the industry’s regulator, a development that would do away the state’s hitherto confusing system of patchwork regulation. Though TNCs currently oppose the bill, there is reason to believe that further amendments will be forthcoming that will reflect the national compromise.

    Montana’s TNC legislation, S.B. 396, is based on the national model and is now awaiting hearing in the second house. Time is of the essence, because the legislative session comes to a close at the end of the month.

    Nevada – home to Las Vegas, one of the least friendly ridesharing environments in the nation – is working on legislation that could significantly improve its score on our RideScore evaluation of transportation-for-hire environments. S.B. 440 and its non-insurance concomitant seek to create a framework for TNC operation. Cab operators, who have outsized influence in Nevada, are flocking to Carson City to voice their opposition.

    Legislation in Olympia that requires insurance coverage from “app on” has moved to the House floor after encountering opposition from its own author. S.B. 5550, which at one point embraced heightened local regulations, has been narrowed to address only insurance issues. At the moment, TNCs continue to oppose the bill because they believe that it goes beyond the national compromise.

    Awaiting signature

    Idaho’s Legislature has passed a bill (H.B. 262) that is now sitting on its governor’s desk. The bill comes just in time to resolve an ongoing conflict between TNCs and the city of Boise, which suspended its effort to regulate ridesharing, pending passage of the state law.

    Laws in place

    On the final day of March, Utah Gov. Gary Herbert signed S.B. 294 and made Utah the latest state to adopt a sensible model for ridesharing regulation.

    Last year, in California and Colorado, legislation that defines TNC activity and makes determinations about the appropriate amounts of insurance coverage during the various so-called “periods of activity” became law. Colorado’s legislation went into effect Jan. 1, while California’s will come into effect on July 1.

    Though insurers and TNCs have differing opinions about the quality of the two laws – insurers prefer the California approach and TNCs prefer the Colorado approach – the introduction of a regulatory framework in each state has created the certainty necessary for the filing and introduction of TNC-specific insurance products.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

    It’s time for open data in insurance

    April 02, 2015, 12:43 PM

    The National Association of Police Organizations is a non-profit group that represents and serves police officers, police unions and local police associations. The National Association of Insurance Commissioners is a non-profit group that represents and serves insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Both are private organizations, although their memberships consist of public employees.

    Most Americans have never heard of NAPO, although they are likely more familiar with the Patrolmen’s Benevolent Association and Fraternal Order of Police locals that are among its constituent supporters. Imagine one day that NAPO were to assert that it — and not the FBI or any other public agency — is uniquely entitled to collect, process and sell to the highest bidder all of the arrest reports and other criminal records collected by its members.

    There would understandably be significant public backlash. Crime statistics are public records. They are collected by public officials, whose salaries are paid by the public, in the course of upholding the public trust. They should be free and open to everyone, due to the valuable role they play in research and in shaping public policy. But if anyone should profit from their sale, it is the taxpayers themselves, not a private organization.

    And yet, that is precisely the status quo when it comes to the NAIC. Like other financial regulators, state insurance commissioners regularly collect data from the companies they regulate: quarterly and annual financial statements, investment schedules, reinsurance exhibits. But states also require regulated insurers to file those statements with the NAIC, which charges steep filings fees for the privilege.

    What the NAIC does with the data it collects can mostly be filed under the category of “wholesaler.” It has natural clients in the major rating agencies and in financial data firms like Bloomberg, Thomson Reuters and SNL Financial. But the group also produces its own reports for sale and markets its ability to sell customized data to order, bragging that:

    We can search our financial statement data for any schedule/exhibit or we can customize an order right down to any page, column or line. Our database spans 10-years and has 6,000 companies if you need to track any trends in the insurance industry. E-mail idp@naic.org for a quote today!

    As the size of that database would suggest, insurance data is big business for the NAIC. The group’s just-released annual report details how the organization took in $26.9 million in database fees in 2014 and $15.2 million in revenues from the sale of its publications and data products. Together, that represents 44.5 percent of the association’s $94.7 million in 2014 revenues. By comparison, member assessments from the 56 jurisdictions that comprise the NAIC generated only $2.3 million in revenues, or just 2.5 percent.

    Apologists for the status quo are apt to note that those revenues are necessary to fund the NAIC’s operations, which include many valuable services to state insurance departments. It is undoubtedly true that the NAIC does, indeed, serve a crucial role in the state-based system of insurance regulation, from its Securities Valuation Office to the National Insurance Producer Registry. But the notion that granting a monopoly to a private organization on the collection and sale of what properly should be public records is the only way to deliver those services just simply has no basis in reality.

    As detailed in R Street’s 2014 Insurance Regulation Report Card, U.S. states and territories collected $2.74 billion in regulatory fees and assessments from the insurance industry in 2013, but spent less than half that amount, $1.32 billion, on regulating the industry. If you throw in the $168 million in fines and penalties collected by insurance regulators, $1.15 billion in miscellaneous revenues received by insurance departments and, of course, the whopping $16.39 billion in premium taxes collected by the states, only about 6.4 percent of the more than $20 billion states collected from the insurance industry was actually spent on insurance regulation.

    Surely, somewhere in that $20 billion, states could find at least the $15 million that would make up for the loss of data product sales and allow the NAIC to give this stuff away for free.

    I’ve long advocated that the data currently controlled by the NAIC could and should be made available by the Treasury Department’s Federal Insurance Office, much as the Securities and Exchange Commission makes public company filings available through their EDGAR service and the Federal Reserve does the same for bank holding company reports through its National Information Center.

    FIO was created, according to the statutory language of the Dodd-Frank Act, to “receive and collect data and information on and from the insurance industry and insurers; enter into information-sharing agreements; analyze and disseminate data and information; and issue reports regarding all lines of insurance except health insurance.” The text of Dodd-Frank also specifies that Title 5 Section 552 of the U.S. Code (better known as the Freedom of Information Act) “shall apply to any data or information submitted to the Office by an insurer or an affiliate of an insurer.”

    FIO Director Michael McRaith demurely declined to answer when I asked him in a public forum last month whether his office should make this data available to the public for free, but he did agree that members of the public should be able to access information about insurance companies. I would not hold my breath waiting for the office to take a more forceful stance on the issue any time in the near future.

    But perhaps not all hope is lost that the NAIC itself might finally see the light. There is precedent. Twenty years ago, the SEC was likewise intransigent about the costs and logistical difficulties involved in making public filings available for free on the Internet. That is, until the Internet Multicasting Service, with a donated computer and a National Science Foundation grant, created the software and user interface that would serve as the basis of Edgar. Within two years, the commission had taken over the project.

    Given a sufficient groundswell of interest, let’s hope history can repeat itself.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

    What do conservative policy intellectuals think about climate change?

    April 02, 2015, 10:03 AM

    From the Grist:

    Eli Lehrer, president and cofounder of the R Street Institute

    Lehrer previously worked at the Heritage Foundation and the Heartland Institute, then cofounded R Street as a reality-based free-market think tank in part because of Heartland’s refusal to accept climate science. (Lehrer raised money for his programs at Heartland from the insurance industry, which cannot afford to deny the reality of climate change.) Lehrer tries to convince conservatives to support a carbon tax on the grounds that the revenue can be used to reduce other taxes. His substantive policy positions are quite reasonable. The problem is that until he builds enough support among Republicans to pass a carbon tax, he thinks Democrats should “be willing to wait” instead of doing what can be done under existing law.

    Quote: “President Obama’s various proposals to deal with climate change have deep flaws. But that doesn’t mean the problem they seek to address isn’t genuine. Conservatives should care about global warming. And, just as liberals have done for almost 20 years, they should use the issue as a way to promote policies they already favor.”

    British Medical Association misleads on e-cigarettes

    April 02, 2015, 8:50 AM

    Dr. George Rae, chairman of British Medical Association Northeast, made reckless comments about e-cigarettes in a March 31 BBC radio interview, available here. I highlight Rae’s most egregious claims in the transcript provided by Clive Bates.

    Interviewer: Give us the science bit: How dangerous could they be?

    Rae: …You’ve got to realize that there are chemicals within e-cigarettes, particularly a group of chemicals called nitrosamines, and nitrosamines can cause cancer, and they [e-cigarettes] can be even more cancer-forming than what you’re getting within cigarettes themselves.

    Obviously, as a doctor, that is causing me concern, because there is the perception by obviously many people that, ‘well, I’m not smoking cigarettes, which have got tar and have got nicotine, and therefore, that this is a safe substitute.’ Well what I think what has got to be coming across loud and clear, and I’ve been on the airwaves in the previous months and other doctors [are] saying ‘look hang on, this isn’t the case, there are chemicals within those e-cigarettes and these are serious chemicals’ and I’ve given you one example, the nitrosamines.

    So there are lots and lots of concerns about e-cigarettes. I don’t think you’ll get many, if indeed any, doctors coming on the radio and saying ‘Look, it’s ok. They’re an acceptable substitute and let’s just go with it.’ I think nothing could be further from the truth.

    Interviewer: We often hear about tar, you know in the advertisements from years ago, it’s all about the tar causing the problems. But with e-cigarettes, if there’s different types of chemicals, by the sounds of it, they can cause the same types of problems.

    Rae: Absolutely! No, there’s absolutely no doubt about that at all. That is the whole point. They are being marketed as something which is safe and a safe substitute, and that’s not the reality. I don’t think there have been any clinical trials done on e-cigarettes. And anyway, doctors wouldn’t get involved in anything which wasn’t regulated. [BR note: The BMA spokesman ought to be aware of the growing body of scientific evidence here].

    Interviewer: But surely it’s better than the alternative [smoking]?

    Rae: No, it’s not better. Because what I’m actually trying to get across and I’ll say it again, there are potentially more cancer-forming chemicals within e-cigarettes than you’ve actually got in cigarettes, per se, themselves. Now nobody’s going to go on the air and say, you know, that is better for you – it’s not! It’s actually a bit of a time bomb that people are actually unaware of. I think you are not going to find the medical profession relenting on the message we are trying to get across on e-cigarettes.

    The British Medical Association ought to assure that its spokespeople are properly educated and sticks to the facts on such an important public health matter.

    What if Congress won’t do its job?

    April 02, 2015, 8:41 AM

    The U.S. Constitution is abundantly clear about which branch of the federal government creates our laws: “All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” But what the Constitution makes simple, Congress and the president have turned into a hot mess.

    Lately, Congress has assailed the president for essentially writing law on his own. Congress is right. From immigration to environmental regulation and even health care, Barack Obama has used a combination of regulation and executive action to achieve his policy objectives. He even has gone so far as to take military action under the suspect legal authority of a congressional authorization of force from 2001.

    Recent presidents have argued, however, that what appears to the public as unilaterally writing law is simply presidents’ using the fullest extent of their delegated power to respond to the issues of the day. And they’re right in a way, too. Over the course of several decades, Congress has shifted an immense amount of its constitutional law-writing authority to the president and federal agencies. The House and Senate seem perfectly content to complain about the president exceeding his constitutional authority while doing precious little to exercise their own.

    The shift has been subtle but significant. Add one agency here. Delegate rulemaking authority there. Bring in some creative legal reasoning. Pretty soon, you have our current regulatory state, where bureaucrats use decades-old congressional authority to draft what amounts to new law.

    Delegated congressional authority is substantively different than the executive branch’s responsibility to ensure that laws are faithfully executed. Purely administrative action is well within the president’s power. Developing new substantive provisions of law, crafting arbitrary exemptions to laws, and ignoring deadlines and details clearly laid out in properly enacted laws are not.

    As my colleague Kevin R. Kosar writes in a new paper, the REINS Act, introduced in the current Congress by Rep. Todd Young, R-Ind., and Sen. Rand Paul, R-Ky., is just one way that Congress could take back its constitutional responsibility. The legislation would require Congress and the president to affirm major federal rules — those with an economic impact of $100 million or more — before such rules could be enforced. Congress would not be forced to write the rules itself; it would simply become accountable for the exercise of its authority.

    Unfortunately, Congress is not clamoring to pass the REINS Act. At this point, Americans need to ask themselves — do senators and congressmen really have any interest in the arduous task of writing law, or would they rather talk about it? We hear so much about executive overreach, but what about legislative underreach? What if the biggest problem is not the president, but rather a complete unwillingness of Congress to develop or be accountable for positive ideas to address the challenges our nation faces?

    The issue is not simply with Republicans. When Democrats most recently controlled Congress, they drafted the Affordable Care Act to look like a Mad Libs game, with the Health and Human Services secretary directed to fill in the blanks as she saw fit. Then-Speaker Nancy Pelosi’s preference — to pass the bill to find out what was in it — was a complete abdication of law-writing responsibility.

    The REINS Act should have been one of the first bills the Republican Congress put on the president’s desk. The measure is not about attacking the president; it is about Congress being serious about its constitutional charge. Instead, we have watched Congress try to undo the president’s actions under authority Congress gave away long ago. Congress is not trying to take its authority back from the president. Instead, our senators and congressmen are saying: “We have no plans to use our authority, but we really do not want the president doing anything with it, either.”

    The Constitution rejects a president that both writes the laws and executes them, but it also expects a Congress willing to do its job. Until Congress demonstrates a willingness, through legislation like the REINS Act, to be accountable for the laws that affect the American people, talk of separation of powers and overreach by the president is little more than empty political rhetoric.


    Lehrer talks flood insurance on Morning Edition

    April 02, 2015, 7:53 AM

    R Street President Eli Lehrer joined reporter Charles Lane recently to discuss pending flood insurance rate increases on National Public Radio’s Morning Edition program. The full audio of the segment can be found here, while the transcript of his remarks are below.

    LANE: Most homeowners, however, will see no rate increases and only a $250 annual surcharge. But for those who live in the most flood-prone areas, the idea is to align the cost of insurance with the actual flood risk. Eli Lehrer is a conservative policy analyst who helped Congress draft the rate increase.

    ELI LEHRER: We encourage enormous numbers of people to live in areas where they really shouldn’t be living because we provide them with subsidized flood insurance.

    LANE: After Superstorm Sandy, the flood program’s debt got so big that premiums barely covered the interest payments, so Congress raised rates. But Lehrer, who advocates for taking the government out of the insurance business, says it wasn’t enough.

    LEHRER: The program still has enough built-in subsidies that it will be another decade at least before we can even have a hope of bringing all or almost all rates to actuarial soundness.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.