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The Swedish snus experience isn’t Finnished

September 25, 2014, 10:33 AM

Despite the wealth of evidence demonstrating that snus has helped thousands of Swedish men and women avoid the ravages of smoking, the European Union continues to enforce an irrational ban on snus beyond Sweden’s borders.

I have documented that smoking deaths in Sweden are significantly lower than in all other EU countries. A new study clearly demonstrates the differences in smoking rates when snus is available and when it is banned.

Snus has been popular in Sweden for 200 years, but it was also used in neighboring Norway and Finland. In 1995, Sweden and Finland joined the EU. Sweden applied for and received a waiver on the EU’s existing snus prohibition, thereby allowing Swedes to continue producing and selling within the country. In contrast, Finland accepted the ban, denying its snus consumers a legal source. Norway never joined the EU, so snus remained available.

Jennifer Maki, an economist with the Center for Healthcare Economics and Policy, compared the smoking rates in these three countries before and after 1995. Maki’s figure above shows the rates among men in Sweden and Finland. Clearly, a decline in smoking levels off in Finland after 1995, while the decline in Sweden continues, despite the fact that it was far lower over the entire period. As Maki writes:

In the post-ban period, smoking increased in Finland by 3.47 percentage points relative to Sweden…this estimate can be interpreted as an increase in the smoking rate [in Finland], relative to what it would have been, in the absence of the ban.

The comparison of Finland and Norway, seen in Maki’s chart belo, also shows the effects of snus use on smoking. According to Maki:

The smoking rate [decline] in Norway is similar to that in Finland prior to 1995, after which point the rates diverge. Using Norway in place of Sweden as a control produces a result similar to, but not as drastic as, [the Swedish comparison].

Maki’s conclusions illustrate the impact of snus in Sweden, the impact of the snus ban in Finland and the utter failure of EU policy:

The smoking rate among Swedish males is remarkable [sic] low, and continues to decline; given Sweden’s low smoking rate pre-1995, the ability to achieve further reductions post-1995 is notable…The findings presented in this paper provide support for the viability of a harm reduction approach to smoking cessation and suggest that the Swedish Experience could be replicated elsewhere… It may have been underway in Finland prior to the implementation of the ban. These results are not only meaningful within Finland, but may be applicable to the entire EU.

Note: I am especially proud of Jennifer’s contribution. She contacted me when she was a doctoral student at North Carolina State University; I provided materials on tobacco harm reduction, reviewed and critiqued early versions of her thesis and helped her search for Swedish and Finnish datasets. Her mentor, Barry Goodwin, sponsored my guest lecture at N.C. State, and I hosted a visit by Jennifer to the University of Louisville so that she could present her work.

The unfortunate rise of data protectionism

September 25, 2014, 8:00 AM

The age of Internet exceptionalism is at risk of coming to a close. Thus far, the Internet has served as a platform for data transfer and information sharing that easily transcends national borders. But increasingly, complex pockets of data protectionism, localization laws and “privacy” regulations across the globe threaten to complicate, if not eliminate, this data-transfer process.

A host of global developments, following on the heals of the 2014 Internet Governance Forum, reveal tensions between the contending forces that threaten cyberspace. The European Commission’s (EC) Article 29 Data Working Group recently announced a coordinated approach to enforce the de-listing of links on search engines under the “right to be forgotten” portion of the Data Protection Regulation. Despite the EC’s recent release of a myth-busting fact sheet to counter misrepresentations of the ruling in the media, the working group continues to support the troubling suggestion that individuals or groups will not be informed when their content has been de-linked, making the appeals process a far less powerful mechanism.

“Right to be forgotten” clarifications were released as one of a flurry of statements about the future of Europe’s stricter data-protection and privacy standards. In the second of a new series of “Digital Minds for New Europe” articles, Google’s Eric Schmidt emphasized the benefits of forming a digital single market in Europe that reduces regulatory red tape. In the article, he quotes new European Commission President Jean-Claude Juncker, who stated that in order to form a digital single market:

We have to end the regulatory silos in telecoms and copyright regulation, in data protection and in the application of European competition rules.

There is a growing consensus among European heads of state that data-protection reform is a priority, with the goal to develop a data protection framework by 2015. In a recent statement, EU Commissioner for Justice, Fundamental Rights and Citizenship Martine Reicherts said strict European data-protection standards are not “fit for the Internet age” and are stifling economic growth, though maintaining strict standards for personal data protection remains a priority.

While the EC recently issued an updated version of the de minimis safe-harbor notice that includes a clarification and compilation of exceptions to the safe harbor and thus continues to facilitate US-European transnational data transfer and trade, influential European governing bodies continue to lobby for increased Internet “sovereignty,” especially in light of Edward Snowden’s surveillance revelations. The French Senate is advocating a more “stringent and realistic data-protection system” and threatening to suspend safe harbor renegotiations if European demands are not met. The German government cancelled a contract with Verizon following disclosures that the United States was conducing mass surveillance in Germany.

Elsewhere in the world, governments are flagrantly splintering and taking control over regionalized pieces of the Web. Russia’s well-documented crackdown continues as the government gets ready for “possible cut-offs” from the Internet, according to Kremlin Press Secretary Dmitry Peskov’s statements to Bloomberg news. Despite assurances that Russian President Vladimir Putin did not, at his Sept. 22 meeting with the Security Council, discuss the possibility of disconnecting Russia from the “global Internet” in times of crisis, the Russian government has made plans to take control over Russia’s top-level Domain Name System (DNS) and discussed the possibility of instituting an Internet “kill-switch” by shutting off the country’s limited international exchange points. Peskov said Russia is planning to ensure that the Russian Internet could function as a sovereign network in case the West removes Russia from the global Internet.

Meanwhile, China is heightening Internet censorship and surveillance, focusing especially on multinational companies. Virtually all Google websites have been blocked since June. The Turkish government is deepening existing Internet censorship, violating freedom of speech and increasing surveillance over its citizens.

Global movements in Internet governance will have major repercussions for the United States. Karen Kornbluh, previously U.S. ambassador to the OECD, explains in an article for Democracy (that I highly recommend):

Preserving the ability of information to flow through the pipes of the Internet should be a major U.S. foreign and international economic policy priority. According to the National Foreign Trade Council, a business organization, ‘goods, services, and content flowing through the Internet’ were responsible for 15 percent of U.S. GDP growth from 2007 to 2012. Products and services that rely on cross-border data flows were expected to add an estimated $1 trillion in value to the U.S. economy annually over the next ten years.

Kornbluh warns that the push to place Internet regulations entirely under the purview of the United Nations would clog the network with conflicting regulations and fundamentally alter how it functions.

All of which goes to show that, in the end, we are a few government decisions, be they misguided or purposefully isolating, away from a “splinternet.” It is no wonder that Milton Mueller, a professor at the Syracuse University School of Information Studies and one of founders of the Internet Governance Project, envisioned in his closing speech of IGF an “Internet nation,” autonomous and immune to harmful government interference.

Here's diagram just discussed by @Joe_Nye charting the many bodies attempting to manage the cyber realm. #techborders pic.twitter.com/EPRA76cfGw

— Kevin Bankston (@KevinBankston) September 19, 2014

The Internet has, up to this point, been revolutionary in its function and governance. It is an incredibly effective platform for information exchange. The hope is that Internet governance will maintain this functionality through equally revolutionary processes. By cutting horizontally across national borders and vertically across traditional power structures, IGF is supposed to be the realization of a revolutionary form of governance in which ordinary members of civil society make decisions about how to run the Internet, alongside government rather than being represented by government. And this governance structure is supposed to keep the Internet a borderless, open platform. But unless we can cut through unnecessary regulations and restrictive laws, all these good intentions and revolutionary dreams will be for naught.
Further readings on Internet localization:

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

Tax-free internet purchases could be coming to an end in Florida

September 24, 2014, 1:49 PM

From ABC Action News:

“A majority of those surveyed here in Florida are against an internet sales tax,” said Christian Camara of the Washington D.C. based think tank R Street Institute. The group commissioned the poll that he claims highlights the unfairness of the Marketplace Fairness Act.

“When you’re in New York City and you go to a souvenir shop, the owner doesn’t ask ‘where are you from? Oh you’re from Florida. Let me charge you the Florida State sales tax.’ No, you pay the New York State sales tax,” Camara said.

D.C. cabs companies blame ride-sharing for loss of revenue

September 24, 2014, 10:22 AM

From HotAir:

Eli Lehrer and Andrew Moylan have more in a policy paper for National Affairs. It’s called “Embracing the Peer Production Economy” and calls such shifts a “godsend to the political right” because “[r]epealing archaic laws and regulatory standards, reducing professional-licensing requirements, relying more heavily on price signals than command-and-control regulation, and restricting costly tort claims” are among the goals of the center-right. But the paper also sheds some light on the limits of the peer-to-peer economy while offering policy ideas for optimizing it:

Presentation to Ecig USA Industry Conference

September 24, 2014, 10:04 AM


The attached presentation was delivered by R Street Senior Fellow Joel Nitzkin at the IQPC Ecig USA Industry Conference, held in Las Vegas, Nev. from Sept. 23-25, 2014.

State-run lottery grows government at the expense of the poor and uneducated

September 24, 2014, 8:30 AM

With budgetary challenges again facing the State of Alabama, politicians are mulling the idea of a state-run lottery to provide an infusion of cash. Democratic gubernatorial candidate Parker Griffith has actively campaigned for a lottery to fund education. Gov. Robert Bentley has responded by discussing how the proceeds of a lottery should be spent in the event that the Alabama Legislature and the people of Alabama decide to permit a state lottery.

The appeal of a lottery is clear. Consenting adults play a game of chance, and a portion of the proceeds fund government programs, education or otherwise.

Unfortunately, the reality of a state-run lottery is far less convenient.

The first problem is that state-run lotteries only return 20 percent to 40 percent of their sales for state programs. Consider the Missouri Lottery. In a state similar to Alabama in terms of population, the lottery generated slightly more than $1.1 billion in sales for 2013. Of that amount, about 25 percent actually went to funding public education. The remainder went to prizes, commissions, advertising and administration.

It might feel good to say that the lottery is helping fund government priorities without a tax increase, but it functions like a tax in that it takes money out of a state’s economy and the government redistributes the proceeds. Unlike a tax, a lottery consolidates the revenue among relatively few individuals rather than spending it on public priorities. In 2013, Missouri saw more than $750 million pulled out of its economy and reallocated to a small subset of prizewinners.

The next issue is that people with less money and lower educational attainment are the ones spending the greatest portion of their income on lottery tickets.

A 1999 report to the National Gambling Impact Study Commission conducted by professors at Duke University found that “the education category with the highest per capita spending [on lotteries] is those who did not complete high school, and the college graduates have the lowest.” The study also noted “high-school dropouts and people in the lowest-income category are heavily over-represented among those who are in the top 20 percent of lottery players.”

While lottery participation is voluntary, there are plenty of evidence to believe it will have a negative fiscal impact on lower-income families and those with less educational attainment.

If pulling money out of the economy and generating revenues from the poor and uneducated were not enough to give Alabama’s legislators second thoughts, how can politicians who campaigned on limiting the size of government create another bureaucracy with the sole purpose of running state gaming operations? Such a move seems to say, “We needed more money, so we decided to create more government.”

Religious opposition to a lottery has often been cited as the reason for its failure to gain traction in Alabama, but some of the strongest reasons for questioning a lottery’s merit have precious little to do with morality. Most Alabamians will not lose sleep about whether the state has a lottery or not, but the implications of such a policy shift are significant and worth a more developed conversation than Alabamians are hearing from current political sound bytes.

America’s F-35: Coming in for a ‘crash landing’?

September 24, 2014, 8:00 AM

The F-35 Lightning II Joint Strike Fighter is slated to enter service for the U.S. military next year, with the Marine Corps shooting to achieve initial operational capability (IOC) for its first F-35B squadron by August 2015. This would be the first time the F-35 has achieved IOC status with any branch of the armed forces and comes three years after it was supposed to enter service. The purpose of the F-35 was to provide a fifth-generation airplane that could outfit the Air Force, Marine Corps and Navy to deal with any potential adversary.

In the meantime, the F-35 has been plagued with numerous cost overruns and delays. The development cost initially was expected to be $306 billion, but has jumped to $390 billion thus far. Software development and even overall build quality have been poor. An investigation into engine problems that grounded the F-35 fleet this summer is near completion. It also likely does not have the performance characteristics to be suitable for service as a fighter.

The continued delays and problems are costing taxpayers billions and are even harming military readiness, as the F-35 consumes a significant portion of the Pentagon’s procurement budget. Some international partners the United States had counted on to buy the fighter are reconsidering their participation in the project, citing high costs.

It’s time to cancel, or at the very least drastically scale down, the F-35 project and shift the funds to deal with the strategic realities America faces.

The F-35 was designed with a peer competitor in mind, such as Russia or China. However, since the end of World War II, U.S. defense needs have mostly been countries or irregular groups whose air capabilities are far inferior. In fact, we have not lost a plane in air combat since the Vietnam War. All subsequent aviation losses have been at the hands of air-defense systems or on the ground.

Proponents of the F-35 believe the project is too far advanced to be scrapped and replaced. However, that’s not so. Air Force Col. Michael Pietrucha wrote in the May-June issue of Air & Space Power Journal, that funds would be better spent upgrading existing F-15s, F-16s, F-22s and A-10s with the technologies and lessons learned from the F-35 program, while also taking into service those F-35s already built. Pietrucha also urged development of an exportable light-fighter project (the South Korean FA-50 is an example of the concept) to arm American allies and redevelopment of the Air Force’s electronic warfare capabilities, which rely on Navy EA-18G Growlers.

Similar reforms would be appropriate for the Navy and Marine Corps. The Navy could procure upgraded F/A-18 Super Hornets, along with taking into service the relatively few F-35Cs already produced. Boeing is developing an Advanced Super Hornet version that reduces radar visibility and introduces new weapon options.

The Marine Corps, on the other hand, is extremely determined to get the F-35B into service, even though it has been the most technically plagued version. One solution for the corps’ air-support capabilities could be to procure more AH-1Z Super Cobra attack helicopters, along with continuing with the planned AV-8B Harrier II upgrades to launch off of amphibious assault ships. This, combined with the F-35Bs already produced and ordered, would fulfill the Marines’ need for organic air assets to support Marine operations. Or the government could continue with the F-35B portion of the program alone (most of the redesigns of the F-35 were done to accommodate the Marines) and redevelop the Marines’ capabilities to form a more efficient strike force that can substitute for a full Navy carrier battle group at less cost to the taxpayer.

The most important lesson of the F-35 project is not to repeat its mistakes. From the outset, the F-35 was designed as a fighter that would be all things to all branches. It was doomed to failure because the expectations were too high and the capabilities were underwhelming. The only successful joint fixed-wing jet fighter—the F-4 Phantom of the Vietnam era—succeeded because it was originally a Navy design that the Air Force later altered for its own purposes.

It’s not too late to end this wasteful project and reinvest the money in projects that better reflect the current geopolitical reality, rather than the reality arms manufacturers, military brass and congressional members from aerospace-heavy districts wish to foist on the country. We can develop forces that can keep America safe, while protecting taxpayers. Hopefully our leaders will have the courage to make this decision.

Rob Schneider: Makin’ enemies

September 23, 2014, 1:05 PM

In a decision that had to be as awkward as it was necessary, State Farm has cut ties with pitchman Rob Schneider, following a social media campaign to make the home and auto insurance giant aware of the comedian’s unfortunate recent history of promoting bogus claims about the alleged dangers of vaccination.

State Farm spokesman Phil Supple told PRWeek of the decision:

“[Schneider’s] ad has unintentionally been used as a platform for discussion unrelated to the products and services we provide,” he said. “With that, we are working to remove the ad from our rotation at this time.”

Schneider’s tenure as a spokescharacter was mercifully brief. In late August, the company began airing a spot in which Schneider revived his “Richmeister” character – perhaps better known as “the copy guy” — that was made popular on Saturday Night Live in the early 1990s:

The spot is part of a broader campaign to use properties owned by SNL creator Lorne Michaels’ Broadway Video Entertainment, which has also already featured spots in which Dana Carvey and Kevin Nealon revive their “Hans and Franz” characters:

Schneider was an active and vocal opponent of A.B. 2109, a California law signed in September 2012 by Gov. Jerry Brown that requires parents seeking a “personal belief exemption” from mandatory vaccinations first consult with a physician. While there’s room for reasonable disagreement on the degree to which public health concerns trump First Amendment rights or other civil liberties, Schneider’s comments on the subject (like those of former Playmate of the Year Jenny McCarthy, the most prominent anti-vaccine activist) clearly cross over the line into spreading dangerous falsehoods:

On the topic of vaccine safety, Schneider said, “The doctors are not gonna tell you both sides of the issue… they’re told by the pharmaceutical industry, which makes billions of dollars, that it’s completely safe.”

“The efficacy of these shots have not been proven,” he later continued. “And the toxicity of these things — we’re having more and more side effects. We’re having more and more autism.”

California law requires children be vaccinated against measles, pertussis (whooping cough), polio, mumps, rubella, hepatitis B, chicken pox, diphtheria and tetanus in order to attend kindergarten. But the shocking spread of the belief that vaccines cause autism – a theory first presented in a 1998 paper in The Lancet, which was later retracted, and that has been thoroughly debunked, including by the National Academies Institute of Medicine — has led to a situation in which many schools, particularly those serving wealthy parents, are seeing vaccination rates fall below the 92 percent threshold that public health experts believe is crucial to ensure “herd immunity.”

The Centers for Disease Control & Protection found that measles outbreaks in 2013 were the worst in 17 years, with roughly 80 percent of the unvaccinated citing “philosophical differences” as motivating their decision.

Recent reporting by the Los Angeles Times found that, statewide in California, the rate of children whose parents cited personal belief exemptions for not vaccinating their children jumped from 1.5 percent in 2007 to 3.1 percent in 2013. Over that same period, the number of public school kindergartens where more than 8 percent of children were unvaccinated more than doubled from 5 percent to 11 percent, while at private schools it jumped from 1 in 10 to 1 in 4.

Bucking immunization trends throughout history, the rates of vaccination actually correlate negatively with income. The Times found 150 schools in Los Angeles County with exemption rates of greater than 8 percent, and the average incomes in those districts was $94,500, 60 percent more than the county median. Separate analysis by The Hollywood Reporter looked at personal belief exemptions filed on behalf children in wealthy West Los Angeles schools, “particularly those attending exclusive, entertainment-industry-favored child care centers, preschools and kindergartens,” finding that:

The number of PBEs being filed is scary. The region stretching from Malibu south to Marina del Rey and inland as far as La Cienega Boulevard (and including Santa Monica, Pacific Palisades, Brentwood, West Hollywood and Beverly Hills) averaged a 9.1 percent PBE level among preschoolers for the 2013-14 school year — a 26 percent jump from two years earlier. By comparison, L.A. County at large measured 2.2 percent in that period. Many preschools in this area spiked far higher, including Kabbalah Children’s Academy in Beverly Hills (57 percent) and the Waldorf Early Childhood Center in Santa Monica (68 percent). According to World Health Organization data, such numbers are in line with immunization rates in developing countries like Chad and South Sudan. These two schools aren’t outliers; dozens more — including Seven Arrows, Turning Point and Calvary Christian — report PBE levels that are five times the county average.

All of which is to say that, while Mr. Schneider’s beliefs on the subject of childhood vaccination might be typical among parents in his neighborhood, that doesn’t make him a “good neighbor.” Insurance companies are in the business of managing and mitigating risk. That should render associating with a high-profile disseminator of false information that could do catastrophic harm to public health off the table.

We commend and congratulate State Farm on their decision to let him go.

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

YODA takes on the dark side of copyright enforcement

September 23, 2014, 10:32 AM

Imagine the following scenario: You buy a computer secondhand off eBay at a bargain price that would put most computer stores out of business. You then boot up the machine, only to learn that, in order to make any of its features work, you need to enter a host of product keys to prove that you do, in fact, own the operating system. You email the original owner, who replies:

“Sorry, but it’s illegal for me to give you the product key. They only licensed me to use it. You’ll have to buy your own copy of the software before you can use the computer.”

Absurd, right? Depressingly enough, what I’ve just described is the status quo when it comes to the secondhand sale of software. A byzantine web of user license agreements, product keys (supposedly designed to protect against piracy) and other tools allow companies to essentially revoke basic property rights, such as the right to resell your own possessions or even to have them repaired.

As Techdirt notes:

Earlier this year, there was a big lawsuit in which Avaya had sued a company for copyright infringement for merely servicing Avaya equipment. Many other equipment manufacturers have terms of service or “transfer” policies that either effectively block such sales, or (more commonly) include a bunch of hoops that everyone has to jump through just to sell the products you thought you owned. All because of the software that comes with the hardware.

In other words, if you own an Xbox 360 and the dreaded “three red rings” light up (indicating a problem with the hardware or power supply) don’t even think about sending it to a cheap repair service not authorized by Microsoft. You could be on the hook for copyright violations, which could cost you anywhere from $750 to $150,000 if the matter goes to court. That’s a lot of copies of Destiny!

This is a system that should raise major alarms for property rights advocates, as it transforms owners into the equivalent of digital serfs, at the mercy of software manufacturers.

Responding to such concerns, U.S. Rep. Blake Farenthold, R-Texas, has just introduced the aptly named You Own Devices Act (YODA). Like the lovable, but extremely powerful fictional Jedi master whose name it bears, YODA is intended to cut through red tape with the same speed and dexterity that its namesake uses to push aside lightsaber-wielding Sith.

Here’s the relevant piece of the bill:

…If a computer program enables any part of a machine or other product to operate, the owner of the machine or other product is entitled to transfer an authorized copy of the computer program, or the right to obtain such copy, when the owner sells, leases or otherwise transfers the machine or other product to another person. The right to transfer provided under this subsection may not be waived by any agreement.

The bill also explicitly allows the new owner to receive security update patches, just as the original owner would. In other words, when you resell a computer to someone they get that computer with exactly the same software they would expect if they bought it new. No more, no less.

Let’s not mince words: This bill shouldn’t need to exist. Imagine selling a car, but being prohibited from selling the engine that makes it drive. Yet because software property rights exist in a nebulous netherworld where companies can mandate adherence to often abusively self-favoring contracts with no room to negotiate, a legislative fix has become necessary.

If companies want to treat the purchase of their software as if it’s merely a glorified rental, then there needs to be more transparency in terms of service agreements, which consumers don’t read and wouldn’t be able to decipher even if they did. Either companies should disclose that you are merely leasing their products, or they should acknowledge the common and reasonable expectation that buying a computer or a game console or any other piece of electronic hardware means you do, in fact, own it in full, including the right to resell it.

Or, to paraphrase Yoda, if once you buy software from a company, forever should it not dominate your destiny.

Study shows Florida voters rejecting federal internet sales tax push

September 23, 2014, 9:23 AM

From SaintPetersblog:

A study released Monday by the National Taxpayers Union and the R-Street Institute shows that Florida voters polled oppose a federal bill that would force online retailers to collect sales tax on online purchase…

Sounds complicated right? Well, that’s one of the reasons the Washington D.C.-based R-Street Institute is opposing the MFA.

“In order for businesses to set up a framework, the amount of capital to comply with this law might discourage people from entering the marketplace,” R-Street state director Christian Camara said.

While he admits his group hasn’t crunched specific numbers, Camara argues complying with the MFA would be a costly endeavor, especially for small businesses that turn to online retail instead of forking over the capital for a brick and mortar store. Those costs, he says, would increase bookkeeping expenses and update websites…

Both Schalk and Camara agree on what they see as a reasonable compromise. Instead of requiring companies to have a complicated set of criteria for remitting sales tax to states where purchasers live, an R-Street proposal would require the companies to pay the sales tax to the states where the business is based. This, Schalk argues, would foster tax competition because companies would benefit from working out of states with low sales tax.

LEADS Act: another small step toward digital privacy

September 23, 2014, 9:00 AM

It may take incremental steps to ensure due process against government seizure of online data, but step-by-step protections are better than no protections at all.

The Law Enforcement Access to Data Stored Abroad (LEADS) Act, introduced last week by a bipartisan trio of U.S. senators, is the latest development stemming from the heightened concern about data privacy and due process raised by the 2013 disclosures about the National Security Agency’s sweeping set of activities geared toward data acquisition on millions of U.S. and foreign individuals.

The LEADS Act, sponsored by Sens. Chris Coons, D-Del., Orrin Hatch, R-Utah and Dean Heller, R-Nev., is intended as an amendment to the pending update of the Electronic Communications Privacy Act. The ECPA update would sharpen Fourth Amendment protections by extending them to data stored by third-party services, also known as “cloud storage.” In short, the bill would make documents and material stored in the cloud subject to the same search-warrant requirements as a user’s personal property.

LEADS would permit the execution of U.S. search warrants originating on data servers in foreign countries, as long as they comply with the laws of the country where the electronic data is stored.

The act has the support of a number of technology companies, including Microsoft and Verizon. In the wake of the NSA disclosures, a number of companies—both domestic and foreign–moved their data to storage facilities off-shore, in many cases cancelling contracts with U.S. companies.

The larger point, however, is that users have the right to be secure in their papers and effects, just as the Fourth Amendment states. The push for a renewed ECPA itself is the result of the NSA’s overreach. Sadly, it may be a casualty of the current gridlock in Congress. Still, the Supreme Court gave citizens some encouraging rulings this year, including a requirement for police to have a search warrant to access cell phone data.

It’s also encouraging to see, outside of Washington policy circles, U.S. businesses getting more active in protecting user data. On their new smartphones, Apple and Google have made it impossible for the government to unlock encrypted data. Yahoo has released thousands of pages of documentation on its ultimately unsuccessful suit to stop the government from seizing its customers’ data. Clearly, U.S. enterprises see no upside in cooperating with overzealous investigators. While it is true that agencies, from the NSA on down to your local police department, have legal means at their disposal to acquire the evidence they need, it is not up to the citizenry to grease the wheels for them.

Quite to the contrary, the central point of the Bill of Rights is to place explicit limits and obstacles on the government’s powerful monopoly on force. While no one can know what the founders may have thought of today’s tech policy debates, they knew well the overwhelming advantage power of the purse, power of military and power of policing affords the state–even one conceived as democratic and just. They did their best to make sure that abuse of that advantage did not come too easily.

High technology gives the state yet another powerful advantage over the individual. While it does create certain efficiencies, it also promotes procedural laziness, lulling lawmakers into the belief that massive surveillance, analytics and online data crunching will replace solid police work. A bunch of pranksters who made it to the top of one of the Brooklyn Bridge towers—and who were never caught—serve as a warning against this mentality.

That’s why we need LEADS, a new ECPA and many other constitutionally derived hoops for law enforcement to jump through when it comes to online investigation and datagathering. In the long run, it will ensure thoroughness and meaningful outcomes without compromising privacy, liberty and due process.

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

If we valued government like the iPhone, we would be lining up to pay taxes

September 23, 2014, 8:30 AM

Last Friday, the line to purchase the iPhone 6 and iPhone 6 Plus at the Apple Store on Fifth Avenue in New York extended more than 10 blocks. As has been the case with virtually every iPhone released, customers across the nation waited in line for hours and some even camped overnight. These early adopters are just the first of millions who will undoubtedly exchange hundreds of dollars for what amounts to a gadget of convenience.

The mania around Apple might seem extreme, but we make choices with our dollars all the time. Whether it is the house where we live, the food we eat, the clothes we wear or even the phones we buy, we financially reward those who respond to what we actually want.

Why? We value the goods or services they provide more than the dollars in our pocket.

Yet when it comes to our federal tax bill, one of our largest single expenditures every year, most of us are not sure that we are getting our money’s worth. Civil and criminal penalties ensure that the tax revenues keep flowing, but many Americans hold our federal government in especially low regard.

According to a recent Gallup poll, “Americans’ trust in each of the three branches of the federal government is at or near the lows in Gallup’s trends, dating back to the early 1970s.”

Apply the same standard to the federal government that we do to our personal discretionary spending. Who among us would line up to voluntarily pay our current taxes because of how much we value the services our government provides?

The federal government has a vital role in regulating interstate commerce, it provides for the common defense, it administers patents and copyrights, it provides for a common currency and those are just a few important responsibilities. Most Americans see the need for those functions and would probably be willing to financially support them.

The problem is that our current federal government operates well outside of its designed role. Do the majority of Americans really value the likes of the Administration on Aging, Radio Free Asia, or even the Japan-United States Friendship Commission enough to fund them without compulsion?

The federal government’s structure is not designed to be accountable for results except on the highest of levels. We might hold politicians responsible for our perception of their handling of major issues that make headlines, but how many of us hold anyone answerable for the performance of the Inter-American Foundation? How many of us even know that it exists and our tax dollars pay for it?

If the federal government’s current command of our resources is the best way to spend our money, we should get in line ready to hand more of it over.

On the other hand, if we find the cost to be excessive for the returned value, we need to change the way our federal government operates rather than simply accepting what we no longer trust. Our politicians are public servants rather than our masters. The have the power to collect our taxes, but we have every right to expect a return on that investment for our families, our communities and our country.

Sanders on EPA carbon rules

September 23, 2014, 8:00 AM

R Street’s Lori Sanders joined the American Action Forum’s Douglas Holtz-Eakin and the Brookings Institution’s Adele Morris in a panel discussion examined flaws in the structure of forthcoming EPA regulations for existing power plants and the varying reactions among states to the EPA’s requirements. The Sept. 17 event, co-hosted by R Street and the AAF, also featured a keynote address by Jason Furman, chairman of the President’s Council of Economic Advisors.

Overall, the panel agreed that EPA regulations are a poor substitute for a national plan to combat climate change, preferring a nationally applied market mechanism such as a carbon tax to the proliferation of 50 state plans with varying strategies to produce different levels of emissions reduction. The panelists argued the rule’s formula places unfair burdens on some states, particularly those which already have achieved significant emissions reductions. However, given the lack of congressional will for a legislative solution to climate change, the panelists suggested the EPA give states more flexibility as they craft their plans to ensure as little disruption as possible for consumers and industry.

Video from the event is available below:

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R Street

September 22, 2014, 1:45 PM

What the peanut salmonella case teaches us about overcriminalization

September 22, 2014, 12:10 PM

Brothers Stewart and Michael Parnell — the company owner and buyer at the center of the salmonella-tainted peanut scandal that killed nine people in 2008 and 2009 — will both face long prison sentences following their convictions on federal charges last week. But the specific way that the brothers will face justice ought to raise some questions for anyone concerned about laws that have granted too much arbitrary power to courts and prosecutors. Quite simply, the Parnells are being prosecuted and sentenced for technical wrongs when their actual crime was much worse.

Food Safety News, a trade publication that provided the most knowledgeable and in-depth coverage of the trail, puts it simply: “At no point did the government charge the defendants with being responsible for the deaths or injuries that resulted from the outbreak.” The only issues heard in the Georgia courtroom involved lying on paperwork and shipping unsafe products.

Such things should obviously be illegal. That said, civil sanctions, administrative penalties and fines can do far more to discourage firms from doing them than criminal charges. It’s easier to levy such penalties than it is to get a criminal conviction, and the tools available to civil authorities, such as the ability to close plants and seize goods, do more to protect the public than a criminal trial could. The existence of laws allowing for stiff jail sentences for what are essentially paperwork violations likely give prosecutors the power to lock up almost anyone in the food business. That’s more power than the government should have.

In particularly egregious cases of food-safety breaches — and the Parnells’ behavior was egregious — criminal charges are appropriate. But, in these cases, it’s much better and fairer to try malefactors for the harm they do rather than technical wrongs: In this case, with nine people dead and hundreds more made ill, state prosecutors could have easily charged both brothers with manslaughter and assault. The charges might have been a little harder to prove and the trial would have take place in a state court rather than a federal one. But such a process would do far more to serve the interests of justice.

Nashville regulators seek to bring Airbnb into the fold

September 22, 2014, 9:00 AM

On its face, Airbnb would seem to violate Nashville laws against short-term rentals of any sort, other than licensed hotels and historic bed-and-breakfast inns. And so, lawmakers are planning to regulate the young start-up’s activity in their city.

The incident is a striking example of the tension between the categorical method of organization, which regulators must rely on exclusively, and incremental responses to particulars. It is also at least as interesting what regulators are not seeking to do as much as the specific course they’re pursuing.

In Knowledge and Decisions, Thomas Sowell distinguishes between decisions that are categorical and those that are incremental. Categorical decisions are necessary for regulators and, to an extent, for any large bureaucracy, as they economize the knowledge required for decision-makers at the top of a large hierarchy. Thus, a corporation can have policies that apply across the board without needing an endless list of qualifiers because of the particular circumstances of particular employees. Legislators similarly deal with high-level categories, which judges must often radically recast in order to make them fit particular contingent circumstances.

Incremental decisions, on the other hand, are extremely responsive to particulars. Sowell’s example is Gerber’s decision to pursue offering insurance. From a categorical point of view, it makes no sense—Gerber is a baby food company, what does that have to do with insurance? But in a free market with basic property rights, businesses don’t have to fit into neat categories. If the people running the business see an unrelated area where there’s money on the table, or an area that relates to their business in ways that might not be intuitive from a categorical point of view, they can go for it. This is the great strength of the Knightian entrepreneur, navigating a sea of irreducible uncertainty to create value.

Whatever you may think of the merits of licensing or taxing short-term rentals, fitting them into the straightjacket of categories kills off potential innovation by entrepreneurial tinkering. What’s interesting, though, is that they could have done just that. Given the outright ban on unlicensed short-term rentals, Nashville could simply have opted to shut Airbnb down in their city. That they didn’t is evidence that Robin Hanson’s theory of the struggle between regulators and “sharing economy” services is correct—such startups currently enjoy a high status among voters, and so are harder to regulate. If that’s so, then perhaps the straightjacket of categorical regulation can be overcome, if we can continue to advocate for and dignify the virtues of the tinkerers.

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Conservatives should champion the free-market system of the peer-production economy, R Street study finds

September 22, 2014, 8:45 AM

WASHINGTON (September 22, 2014) – Regulation of the “peer production” or “sharing” economy can be a good political issue for both the left and the right, argue R Street President Eli Lehrer and R Street Executive Director Andrew Moylan in a new paper.

Published in the Fall 2014 edition of National Affairs, the authors discuss the emergence of the economy using examples from companies like Fiverr, eBay, Etsy, Lyft, Sidecar, Uber and Airbnb, arguing that barriers to future growth of these and similar companies stem primarily from archaic laws, professional licensure, torts and taxes.

“In the abstract, the best way forward in many of these markets would be comprehensive reform that makes it easier for small businesses to operate across the board, not just in the peer-production economy,” write the authors. “Where reasonable, lawmakers should try to model peer-production regulations on the existing rules for comparable services.”

The authors write that the legislative and regulatory issues raised by the peer-production economy could be a godsend to the political right, as eliminating the barriers to the market all figure highly on the agenda of many free-market advocates.

“To date, however, the peer-production sector has not engaged the political right, and many of its strongest proponents have come from the political left,” say the authors, while noting that the organizations themselves tend to lean left as well. This is primarily because peer-production companies cultivate a young, hip, urban vibe that clashes with much of the Republican Party’s older, overwhelmingly white, largely suburban and rural base.

The authors note that the cultural distance between some conservatives and the peer-production economy should not be seen as a huge problem. Almost none of it results from any fundamental difference with regard to public policy. More importantly, political liberals will not be keen to pursue anti-regulatory, free-market policies against which their core constituencies rail.

“While both sides face significant political challenges and both have much to lose, their free-market economics and hands-off approach to regulation make conservatives the natural champions of the new peer-production economy, and they should capitalize on the opportunity,” write the authors.

The study can be found in its entirety at: http://www.rstreet.org/wp-content/uploads/2014/09/20140918_Lehrer.Moylan.pdf


Tesla takes Massachusetts

September 22, 2014, 8:30 AM

High-end electric car consumers rejoice! If you want to buy one of the famous Tesla cars and you live in Massachusetts, you can now do exactly that. This past week, Massachusetts’ Supreme Judicial Court decided to lift the ban on Tesla sales within the state, following a lawsuit brought by some of the state’s auto dealers. As you may have guessed, the dealers lost

At first glance, it’s easy to see where the dealers got the idea for their lawsuit. Current Massachusetts law prohibits car manufacturers from also operating dealerships in the state. Given that Tesla never bothered with the whole “dealership” business model, it would seem that Tesla’s “direct sales” would be illegal.


Or at least, that’s how you might think about it if you’re a rent-seeking group of middlemen trying to protect your business model against innovation. Fortunately, the Supreme Judicial Court wasn’t persuaded, pointing out that the law as written was clearly designed to prevent auto companies that already partnered with dealerships from competing abusively with their own dealers. Because Tesla never employed dealers in the first place, the law never applied to them. Transport Evolved quotes the unanimous decision:

Chapter 93B is aimed primarily at protecting motor vehicle dealers from injury caused by the unfair business practices of manufacturers and distributors with which they are associated, generally in a franchise relationship…We therefore affirm the judgment of the Superior Court dismissing the plaintiffs’ action on the basis of lack of standing.

This should be self-evident if you imagine pretty much any other good. Safeway could not sue to a child’s lemonade even if there were a hypothetical law that prevented juice manufacturers from selling their own products outside supermarkets. Just as the lemonade stand isn’t actually in competition with the supermarket, Tesla wasn’t in competition with the car dealers. So one has to wonder why the dealerships cared in the first place.

The most likely answer is that they cared because they feared that Tesla’s business model – one without dealerships – would actually work. And not just work, but make Tesla a higher profit margin than the very auto companies whose products these dealers bring to market. What this would mean in practice is that many other companies might decide to phase out dealerships altogether, cutting out the middlemen. When the value proposition you bring to the table is so weak that it requires laws to prevent cutting you out of the distribution chain, you have good reason to fear for your job.

However we might empathize with the dealers’ fear of their industry vanishing with time, it’s important to remember that vanishing industries do not represent harms for the government to correct. The French economist Frederic Bastiat outlined the absurdity of arguments like the dealers’ in a satirical letter from a candle-maker to the French government asking the government to blot out the sun because it was unfairly competing with his candles. Of course, the candle-maker’s misery notwithstanding, we all understand that candles are inferior to the sun and are presumably grateful that we don’t need artificial light 24 hours a day.

This is not to suggest that Tesla’s cars are as vastly superior to cars sold by traditional dealerships as the sun is to candles. So far, the jury’s out on Tesla, though the demand for them is apparently strong enough that they’re a viable product. What’s more, Tesla caters to a fairly upscale market, so it is unlikely to drive the Fords or Chevrolets out of business unless it starts producing dramatically cheaper cars.

But one thing is for certain: If Tesla’s cars do outclass their competitors in the same way that the sun outclasses candles, then the law should not be allowed to keep them from American buyers simply because of the persistent inefficiency of one particular special interest group. As Justice Louis Brandeis said, sunlight is the best disinfectant. If Tesla is the sun in Bastiat’s metaphor, it may be about to disinfect armies of inefficient candle-makers.

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Embracing the peer-production economy

September 22, 2014, 8:00 AM



(The attached paper, co-authored by R Street Executive Director Andrew Moylan, appear in the Fall 2014 edition of National Affairs.)

Enthusiasts of the growing “peer-production” or “sharing” economy are convinced that the new decentralized, technology-based approach to connecting consumers and providers of services is going to revolutionize commerce and transform modern life. The true promise of this emerging sector  —  which has taken the form of ride-sharing apps like Uber, space-sharing platforms like Airbnb, work-sharing businesses like TaskRabbit, and a host of other emerging digital services — remains to be seen. But it is already becoming apparent that the sharing economy could have some significant political implications.

The key political questions are to what extent peer-production services should be regulated and how. These are particularly challenging questions for the left. Taking an accommodating, hands-off approach to such regulation would appeal to the educated, young, urban consumers of such services who tend to be liberals, but it would run the risk of alienating core liberal constituencies like unions, trade guilds, and trial lawyers — not to mention undercutting the default progressive faith in the wisdom of the regulatory state. For the right, there is more opportunity than risk, but making the most of it would require finding a way to shape a free-market message that would appeal to the largely young, wealthy city-dwellers who use sharing services and for whom the broader conservative agenda is largely anathema.

Managing the peer-production economy in a prudent fashion and standing up for its interests has the potential to pay huge political dividends for the party that does it best, but it will not be easy. To see why will require a grasp of how the peer-production economy evolved, why it is important (and how it has been oversold), and the challenges that our legal and regulatory systems present to its future growth.

Do these videos show VP Biden making mistakes or are they signs of a bigger problem?

September 19, 2014, 10:46 AM

In modern American politics, each and every slip, gaffe and poor choice of words is judged and scrutinized hundreds of times over. In some instances, honest mistakes are blown out of context simply to push the media cycle. President George W. Bush was routinely targeted for his rhetorical miscues, but Vice President Joe Biden continues to commit interesting verbal stumbles.

Most recently, Biden referred to bankers who exploit soldiers as “Shylocks.”

His infamous remark that Republicans will put black Americans “back in chains” made headlines around the nation.

Biden claimed that one could not go to a convenience store in Delaware unless he or she had a “slight Indian accent.”

On the campaign trail in South Carolina, Biden argued that he could effectively debate southern politicians because Delaware “was a slave state.”

During his 1988 presidential bid, Biden aggressively defended his academic record and invited a reporter to an IQ comparison.

When asked about Obama in 2008, Biden referred to then-candidate Obama as a “sort of mainstream African-American who is articulate and bright and clean….”

Biden asked state Sen. Chuck Graham, who is confined to a wheelchair, to stand up.

Discussing economic plans, Biden highlighted the importance of the three letter word “J-O-B-S.”

In the stimulus debate, Biden asserted that spending money was necessary to avoid bankruptcy.

Biden noted that even if the president and vice president do everything right, there is still a 30 percent chance they get it wrong.

Vice President Biden also commented on self defense with a firearm.

Everyone makes mistakes, and politicians are no exception. The only difference is that they commit errors on a much larger stage. Should Biden be held harmless for his stumbles or are they evidence of troubling personal perspectives and abject carelessness?