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R Street disappointed in Senate’s failure to advance NSA reform

November 18, 2014, 8:18 PM

WASHINGTON (Nov. 18, 2014) — The R Street Institute expressed deep disappointment at a failed procedural vote to advance balanced legislation that would rein in NSA surveillance while maintaining essential operational capabilities of the intelligence community.

R Street joined alongside a broad coalition of civil libertarians, technology companies and public interest groups in support of the USA FREEDOM Act, but an attainable solution slipped through Congress’ fingertips.

“It is extremely disappointing to see the Senate fail to advance this vital reform to our surveillance state,” said R Street policy analyst Nathan Leamer. “This was an opportunity for the world’s greatest deliberative body to restore American citizens’ privacy rights and renew global confidence in our technology sector.”

“While some have criticized the bill for not going far enough, we believe this action was a positive step toward a much larger conversation about restoring the proper balance of privacy and security in America,” Leamer added. “While Congress continues to balk at progress, it will inevitably retread this very conversation next year.”

Louisiana’s PSC race is a must-watch for solar energy

November 18, 2014, 3:05 PM

The race for a seat on the Public Service Commission in Louisiana rarely generates headlines, even though the PSC in Louisiana, unlike in most states, actually has some legislative authority.

Considering the fact that Louisiana has among the nation’s lowest electricity rates, you would imagine the incumbent would have an easy re-election. However, the race to fill the seat in District 1, which consists of most of metro New Orleans and extends to some suburbs of Baton Rouge, is generating national headlines, with The Huffington Post calling it “The Most Important Race You’ve Never Heard Of.”

The reason this race has drawn so much attention is because solar power has become a major point of contention between incumbent Commissioner Eric Skrmetta and his challenger, Forest Bradley-Wright. Both candidates are Republicans in this very conservative district, but Forest Bradley-Wright is a very recent convert to the GOP. The main policy differences between the two center on promoting solar energy and other renewables, while limiting costs to non-solar users and utilities.

In 2007, Louisiana passed a tax credit for renewable energy that was seen as one of the most generous in the nation. The tax credit amounted for 50 percent of the first $25,000 of the cost of a system installed at a home or apartment complex. This is in addition to a 30 percent federal tax credit. In 2013, the Legislature passed a law that would phase out the program by 2017, after investigative reporting by The Times-Picayune of New Orleans found the program was costing the state tens of millions in lost tax revenue. In the meantime, residential solar installations have become very popular across Louisiana, with most solar contractors having more business than they can fulfill. Solar-leasing options have also become very popular in Louisiana and have resulted in the proliferation of the technology to the middle class.

With the pending loss of the very generous state solar tax credits — and the future of the federal credit in doubt — the solar industry has been pushing to maintain Louisiana’s generous “net metering” laws, which requires utilities to purchase solar power generated by homeowners at near-retail rates. Meanwhile, the current Public Service Commission has been trying to limit them by imposing a 0.5 percent cap, which means that a utility can stop offering net metering once 0.5 percent of its customers utilize it. They see non-solar users subsidizing solar users unfairly. Most solar users have to stay hooked to the grid because the sun doesn’t shine all the time.

Commissioner Eric Skrmetta has been a supporter of the cap, but he got behind a compromise offered by his fellow commissioner, Clyde Holloway, that would’ve lifted the cap, but allowed utilities to buy solar power at wholesale rates. His opponent, Forest Bradley-Wright, said this about the Holloway compromise:

Bradley-Wright spoke against Holloway’s plan, even though the rule in place now cuts off all net-metering benefits for future solar customers in a few jurisdictions. Better that than a rule that treats all solar customers, including those already getting net-metering, as wholesale power suppliers, he said.

‘The people who install solar systems under the state of Louisiana’s tax credits, which have been a real inspiration for many people to go solar, or under the context of the net-metering rules, are installing at a size that matches their own energy use needs, so they are not power sellers,’ he said.

Imagine a law that forced Starbucks to buy from any local coffee roasters who came to them, and do so at retail prices. Starbucks would have to raise prices on other items to offset the increased cost. Allowing utilities to buy home-generated solar power at wholesale cost is a fair deal for utilities, solar customers and non-solar customers.

As it stands now, the current net-metering schemes require Louisiana’s non-solar customers to subsidize solar customers, and that’s neither fair nor “free market.” Commissioner Holloway’s compromise would’ve leveled the playing field and lifted the arbitrary cap, which was put in place because of the additional costs that Louisiana’s numerous electrical cooperatives were paying.

A win by Bradley-Wright would give pro-solar advocates a majority on the PSC, whereas a Skrmetta win maintains the status quo. The race thus marks two starkly different visions for the future of electricity and power in Louisiana.

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Las Vegas rated worst city in U.S. for transportation friendliness

November 18, 2014, 12:00 PM

From Watchdog Wire:

The free-market R Street Institute performed the study (Ridescore 2014; Hired Driver Rules in U.S. Cities) as new innovations in ride-sharing services around the world are running headlong into state and local regulations designed for, and sometimes for the benefit of, the existing taxi and limo industry…

A report on the R Street study in the Heritage Foundation’s Daily Signal hints at the difficulties…

…The R Street Institute provides an interactive map accompanying the report that allows user to view the rating in each of the cities included in the survey as well as the data behind it.

10 things Washington, DC is better at than the rest of the U.S.

November 18, 2014, 11:56 AM

From In the Capital:

Apparently D.C. isn’t just a great city for ridesharing when it comes to boats. The R Street Institute recently ranked the District’s regulatory environment above those in other major cities where Uber and Lyft operate. That’s not to say the past year hasn’t been without its fights, protests and other drama – but for now, UberX drivers can cruise D.C.’s streets knowing that they’ll face fewer hassles than their colleagues in other markets.

Fix surveillance reform

November 18, 2014, 10:51 AM

If nothing else, the results of the midterm elections made clear that Americans are concerned about the role of government in their lives. And perhaps no issue better exemplifies government overreach than the National Security Agency’s collection of data from millions of Americans.

Less than a year and half after Edward Snowden’s revelations about the NSA’s invasive snooping, congressional leaders have worked to craft comprehensive reform legislation both to restore Americans’ privacy and to ensure their security. In a political landscape mired in gridlock, this bipartisan effort has been a true bright spot. Dubbed the USA FREEDOM Act, the bill already has passed the House and now is sitting at the finish line in the Senate, where Senate Majority Leader Harry Reid, D-Nev. has filed a cloture motion to bring the measure to a floor vote.

Cooperating with Reid isn’t usually their priority, but Republicans would do well to pass this legislation now. Next year, Section 215 of the Patriot Act is set to expire. If Congress doesn’t address the issue now, they will be forced to repeat this same conversation next year, almost certainly prompting an ugly fight among Republicans over privacy and security. Incoming Senate Majority Leader Mitch McConnell, R-Ky. and House Speaker John Boehner, R-Ohio, should want to avoid both redundant work and the need to place a roiling intra-party conflict on the agenda.

There also are signs that our political leaders are beginning to recognize the economic impact of NSA overreach. House Judiciary Chairman Bob Goodlatte, R-Va. recently explained that “American tech companies have experienced a backlash from both American and foreign consumers and they’ve lost their competitive edge in the global marketplace.” A recent R Street Institute report explores how the mistrust and concerns prompted by the NSA revelations “could cost U.S. technology industry between $35 billion and $180 billion over the next three years.” As our nation continues to struggle out of the economic doldrums, Congress should avoid further damage to U.S. companies.

H.R. 3361 originally was introduced last fall by Rep. Jim Sensenbrenner, R-Wis. to rein in the NSA’s dragnet data collection, authorized under Section 215 of the Patriot Act. Unfortunately, due to the influence of national security hawks, the bill’s language was neutered by expanding the definition of “specific selection term.” This change kept the door open for the NSA to continue mass spying and surveillance of Americans. In May, over the objections of civil libertarians, the tech community and many of the bill’s original cosponsors, the House passed a watered-down version of the bill.

Instead of settling for this weakened approach, the improved version before the Senate is one Senate Judiciary Chairman Sen. Patrick Leahy, D-Vt. reintroduced with compromise language crafted to satisfy both White House concerns and the trepidations of many civil libertarians and tech companies. The new Leahy bill tightened the “specific selection term” and created “safeguards limiting large-scale surveillance of Americans.” This compromise has even prompted outgoing Attorney General Eric Holder and Director of National Intelligence, James Clapper to pen a letter saying their agencies support the bill and “believe that it is a reasonable compromise that enhances privacy and civil liberties and increases transparency.”

Many will remember the 113th Congress for gridlock, a government shutdown and poor approval ratings. While there should be no illusion that passage of meaningful NSA reform will fix Washington, it could be a catalyst for Congress and the administration to actually work together and respond to Americans’ real concerns. Instead of procrastinating on an already large agenda, Congress should take action now to curb government overreach and protect Americans’ privacy.

Ending the Uber wars

November 18, 2014, 10:28 AM

From the Philadelphia Inquirer:

Philadelphia isn’t alone in grappling with this issue, which has confronted cities across and beyond the country. But it is among the most hostile to transportation alternatives of any kind. The R Street Institute, a free-market think tank, ranked the 50 largest U.S. cities for friendliness to cab competitors and found Philadelphia to be among the five most hostile.

R Street encourages Senate to advance NSA reform

November 18, 2014, 8:31 AM

WASHINGTON (Nov. 18, 2014) – The R Street Institute encourages the Senate to quickly pass S.2685, the USA FREEDOM Act. This legislation offers a balanced approach to rein in the National Security Agency’s mass surveillance program.

As a recent Pew study showed, revelations surrounding NSA surveillance have led to a massive erosion of global trust in the U.S. government’s protection for personal freedoms and privacy.

This has had financial consequences for the U.S. technology sector, which has had to deal with questions about its perceived vulnerability and insecurity. House Judiciary Chairman Bob Goodlatte, R-Va., noted these concerns threaten “their competitive edge in the global marketplace.” A recent R Street Institute report showed how this could cost the U.S. economy dearly, with projected direct costs “between $35 billion and $180 billion over the next three years.”

Passing the USA FREEDOM Act would go a long way toward alleviating many of the concerns surrounding the future success of American industry, domestically and abroad.

“While there are aspects of surveillance reform not immediately addressed in this legislation, passage of the USA FREEDOM Act is a requisite first step to advance the conversation for more extensive reform,” R Street Policy Analyst Nathan Leamer said.

bipartisan coalition of legislators, tech companies, and privacy supporters have worked in collaboration on this reform, with input from the administration and the intelligence community, culminating in a letter of support from Director of National Intelligence James Clapper and outgoing Attorney General Eric Holder.

“We hope legislators will put aside partisan posturing and take the lead in good governing,” Leamer added. “By taking this first step to restore trust in American innovation, we can maintain essential national security capabilities while restoring faith in personal freedom.”


Panel: Conservative Thought and Sustainability

November 13, 2014, 9:30 AM
R Street's Lori Sanders will be speaking at the ASBC Annual Business Summit on November 13, 2014.

The California Model: What We Can Learn from the Golden State’s Approach to Ridesharing

November 10, 2014, 1:00 PM
Join the R Street Institute and Engine for a candid discussion about new ridesharing legislation.

Election post-mortem in California

November 07, 2014, 12:06 PM

If the key to success is maintaining low expectations, California Republicans had a great election night.

Over the past several years, every objective measure of the party’s success has pointed toward failure. Heading into the midterm, California Republicans held no statewide offices and were subject to Democratic super-majorities in the Assembly and the Senate (though, in the Senate, the Democrat advantage was rarely realized because of members’ ethical failures, leading to three suspensions).

Though some votes are still being counted, close races for statewide office have all been resolved in favor of Democrats. In the legislative branch, it looks as though California Republicans have crawled back to simple minority status in each chamber. This is enough for California Republicans to go wild in celebration.

The significance of the Republican legislative gains are largely symbolic. The budget, formerly the best tool for leveraging their agenda, no longer requires a two-thirds vote. Still, tax increases do require the two-thirds number, thus, there likely will not be an attack on Prop 13 (property tax restrictions) in the coming session.

Democrats had a rough night nationally, but their California candidates came away largely unscathed. Arguably, the party spent time and money on unwinnable races (AD 36 and AD 65) at the expense of other close contests (AD 66).

Of more interest than the losses in vulnerable legislative districts were the results of Democratic intraparty races. Two big lessons appeared from those:

  1. Candidates that reached out to non-Democrats did better than those who did not. In Sacramento, one candidate sent/had sent 18 mailers directly to registered Republicans – his new title is “senator-elect.”
  2. No incumbent is safe. The chairman of the Revenue and Taxation Committee, and rumored speaker-to-be, walked to a large win in the primary only to lose to another Democrat in the general election. His opponent, a self-styled “humble-housewife,” had no campaign committee and no contributions or expenditures worthy of reporting to the secretary of state.

For their part, California voters had a say on a handful of initiatives. Propositions 1 and 2, a water bond and a rainy day fund, enjoyed broad bipartisan support. Gov. Jerry Brown campaigned for reelection by way of stumping for each of them (which had some Democrats grumbling about a hole at the top of the ticket). Both passed. Further down the ballot, Props 45 and 46, prior-approval of health care rates and an increase in the state’s cap on non-economic damages, tested well-funded defensive political machines. Both failed by double digits.

Here are some final thoughts on California’s election cycle and what it means for the next legislative session and California’s political future generally:

  • The California Republican Party is not dead, but it took a major national wave to trigger a revival. Freshman state legislators from swing seats will need to occasionally frustrate caucus recommendations to vote their districts if they hope to survive next cycle.
  • The Senate will be a confusing place to count votes, because a number of members that won reelection also won congressional seats. That will trigger special elections. What’s more, a former speaker of the Assembly was just elected to the Senate. Should further ethics problems surface, it will test the new pro tempore’s hold on his office.
  • The California Teachers Association went all out in its successful effort to retain Superintendent Tom Torlakson. The challenger, Marshall Tuck, had the backing of Silicon Valley. This will not be the last time that tech and unions collide.
  • The two top contenders for an open U.S. Senate seat from California are Attorney General Kamala Harris and Lt. Gov. Gavin Newsom. Neither had significant opposition, though Harris did receive 2,000 more votes than Newsom.
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Will TDI hold the line on TWIA liability expansion?

November 07, 2014, 9:00 AM

The Texas Department of Insurance met Wednesday to consider whether to expand liability for the Texas Windstorm Insurance Association (TWIA). State law caps the amount that TWIA can cover in an individual policy, but allows it to request increases in the cap each year to account for increased construction costs.

This year, TWIA is asking to increase the maximum allowable coverage amount from $1.77 million to $1.85 million for individual townhouses; from $370,000 to $390,000 for the contents of apartments, condos or townhouses; and from $4.4 million to $4.6 million for commercial structures and their contents.

It was a brief and somewhat sleepy affair. There was testimony from TWIA’s actuary, as well as from a coastal area interest group. The hearing was adjourned with a decision left pending.

On the surface, the whole thing might seem routine. And yet, for the past two years, TDI has denied TWIA’s request for increase, and there is a decent chance it will do so again this year. As TDI noted in its previous denials, TWIA’s liability increases over the last decade have far exceeded the cost increases in the BOECKH Index (upon which TWIA is statutorily supposed to base its increase requests).

For example, from 2005 to 2013, the BOECKH Index factors relating to individually owned townhouses have increased by about 30 percent. By contrast, TWIA’s maximum allowed liability for individually owned townhouses has increased by 305 percent over the same time period (no, that’s not a typo). If prior liability expansions have been excessive, it only makes sense to hold off on further expansions until the long-term trends aren’t quite so out of whack.

From a big picture perspective, there is something more than a little odd about approving any liability expansion, given TWIA’s overall precarious financial position. TWIA currently has $77 billion in liability. Were Texas to be hit by a major storm, it likely would not be able to meet its financial obligations. Indeed, in 2013 TWIA briefly considered going into receivership to deal with claims made after 2008′s Hurricane Ike.

It’s true that, compared to TWIA’s current liabilities, the proposed increase in exposure from its current request would be minimal. But to paraphrase Everett Dirksen, even if TWIA only expands its liability by a little each year, pretty soon it will add up to real money. When TWIA’s financial viability is in doubt, insuring houses worth more than $1.8 million should not be high on the organization’s priority list. Texas needs to be looking at ways to lower TWIA’s liability exposure, not expand it.

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Heartland Institute experts react to the 2014 midterm elections

November 06, 2014, 1:26 PM

From the Heartland Institute:

“The shift in Senate leadership could lead to significant progress in technology policy. For one, we could at last see movement on patent reform, an issue that has bipartisan consensus but was tabled this year by Democratic Majority Leader Harry Reid in response to pressure from the trial lawyers lobby.

“We may also see a long-overdue rewrite of the Telecom Act, which would serve the dual purpose of updating regulation to reflect the 21st century Internet era as well as reign in recent FCC regulatory overreach, such as its ongoing attempt to unilaterally reclassify Internet service providers as heavily regulated telephone companies and extend broadcast regulations into online programming and content.”

Steven Titch
Policy Advisor
The Heartland Institute
Fellow R Street Institute

The new tobacco war

November 06, 2014, 12:23 PM

From The Bulletin:

“We now have established a pretty good body of literature showing that e-cigarettes do not attract non-smokers. They simply don’t. Virtually every e-cigarette user is a smoker who switched,” said Dr. Joel Nitzkin, a public health physician who now consults for R Street, a conservative think tank in Washingon, D.C. “There are lots of non-smokers, especially kids, who are tempted to try e-cigarettes, to sample them. But it’s hard to find even a single kid who is started off as a non-smoker, sampled them and continued its use.”

He points to two studies conducted by public health groups as proof. A U.S. survey of 3,240 adults found only six nonsmokers who had ever used an e-cigarette, and a 2013 UK survey of more than 12,000 adults and 2,000 children was not able to identify a single nonsmoker who used e-cigarettes regularly.

CDC data, he said, could be interpreted in the same way, showing a rapid increase in teens trying e-cigarette use, but a continued decline in teen smoking rates.

“The best path from where we are to a tobacco-free society is to adopt tobacco harm reduction elements in the public health programs and have people switch to products that are a whole lot easier to quit,” Nitzkin said. “Not only are they easier to quit, they cut the risk of potentially fatal tobacco related illness by 99 percent or more. I think we have good solid scientific evidence to point that out.”


Colorado smoking ban: no impact on heart attacks

November 06, 2014, 12:08 PM

As early as 2004, various medical journals published articles claiming that small-community smoking bans resulted in nearly immediate reductions in heart disease. For example, the high-profile BMJ reported that hospital admissions for acute myocardial infarction (AMI) declined 40 percent, from 40 to 24, in Helena, Mont., after implementation of a smoke-free ordinance. Circulation, the journal of the American Heart Association, reported that AMI admissions dropped 27 percent “within months” in Pueblo, Colo. Similar reports came from Bowling Green, Ohio; Monroe County, Ind.; and beyond.

The striking implication was: eliminating second-hand smoke saves lives by reducing heart disease.

There were two problems with these claims. First, the declines, based on small numbers of observations, were actually consistent with random variation. Second, none of the reports accounted for the long-term downward trend in heart disease in the United States. They credited no-smoking intervention with the lower number of AMIs at a time when rates were declining nationwide.

In 2011, I documented that state-wide smoking bans in California, Utah, Delaware, South Dakota, New York and Florida had little or no immediate measurable effect on AMI deaths. The study, published in the Journal of Community Health, eliminated the “tiny-number” problem and factored in the national downward trend in AMI deaths.

I discussed these findings on my blog, but the work was largely ignored, until now.

Recently, researchers from three Colorado institutions reported AMI rates before and after a statewide smoking ban there; their work appears in the American Journal of Medicine. (Thanks to Chris Snowdon, who also blogged about it here).

Paul Basel and colleagues found that “No significant reduction in [AMI] rates was observed” after the Colorado ban was implemented. They also referred to our study:

[The Rodu et al.] study compared the decline in [AMI] mortality in 6 states with smoke-free ordinances, with the average decline among 44 states unaffected by smoke-free policy. No state with a smoke-free ordinance had a significantly lower observed [AMI] mortality compared with that expected by the nationwide secular decrease in states without the ordinance. This emerging evidence highlights the importance of accounting for secular trends in [AMI] incidence before definitive attribution to smoke-free ordinances can be made.

It is comforting to see unfounded second-hand smoke claims corrected, particularly in the pages of a prestigious journal.

Hey, taxi!

November 06, 2014, 10:48 AM

Sometimes, people and businesses start out by trying to avoid regulation, and then discover that some basic ground rules aren’t such a bad thing after all. At an extreme, you have those who went long Bitcoin because they didn’t trust banks or the government, only to find that the Magic: The Gathering online exchange didn’t have federal deposit insurance.

I’ll take a little inflation risk and a slightly lower yield in exchange for deposit insurance and a numeraire currency, and I’m not just saying that because I was a Washington Mutual customer.

Uber is the latest entrepreneurial anarchist to embrace regulation. In late October, Uber’s blog touted the passage of the Vehicle-For-Hire Innovation Act in Washington, D.C., as “a watershed moment: 14 U.S, jurisdictions have now adopted permanent regulatory frameworks for ridesharing, a transportation alternative that didn’t even exist 4 years ago.”

Car-sharing companies like Uber, Lyft and Sidecar are being to recognize that basic safety regulations may help customers to trust them. These are new companies offering a new concept and entering an industry where there isn’t a great history of trust. Many people have had bad experiences with taxi drivers who can’t find an address, run up a fare, avoid certain neighborhoods or won’t pick them up. If that’s how customers are treated by regulated cabbies, some consumers might reasonably ask, what will a bunch of regular people driving better cars to do them?

I’m a regular Uber user in Chicago and I’ve been happy. So have enough people in enough places that the company has been able to expand to Sao Paulo and Milan, Akron and Wichita. Drivers use their own cars and the electronic infrastructure is easy to scale. Hence, start-up costs are low, and many of these cities do not have extensive taxi services in place. Uber has tended to raise more outrage in places where people rely on taxis to get around, not just getting to and from the airport.

Uber once resisted any regulation, insisting that it wasn’t in the same business as taxis and that, evenif they were, the taxi industry was regulated in order to protect the medallion owners from competition. The company entered new markets without waiting for regulatory blessing. As Uber and its counterparts have become more established, and as they have sought to reach a wider customer base, they have begun to accept some basic rules of the road. The new rules in D.C. give customers some assurance that there is recourse if their driver is careless or predatory.

Now that more major cities have accepted Uber and its counterparts, the ride-sharing industry has gained legitimacy. It will be interesting to see what happens next. Will competition play out so that the best provider wins? Will the streets become a free-for-all with every driver looking to pick up every pedestrian? Or as these upstarts become established, will they, like the taxis before them, turn to regulation in order to cement their positions?

The history of regulation shows that the latter is likely over the long run. In new and young markets, regulation can help grant legitimacy. At its root, regulation means to “make regular”; it is intended to help buyers and seller set expectations for fair trade. Competition is essential, but there can be costs associated with a free-for-all in which the terms and risks of trade are less than fully transparent. Think of all those poor Mt Gox account holders believing their Bitcoin wallets was safe.

Once regulation is established, however, the fun work of regulatory capture begins. Finding ways to exploit the regulatory process becomes more important than serving customers. It brings us right back to the situation that made Uber possible in the first place: taxi drivers who can’t find an address, run up a fare, avoid certain neighborhoods or won’t pick up potential customers. The regulation became a way to support the monopoly profits of the medallion owners rather than the livelihood of the drivers or the needs of the customers.

Until that happens, enjoy the ridesharing. Calling a car right to your house beats walking two blocks in the snow, and having a driver who knows how to use a GPS service to find an odd address is much better than driving in circles. The fact that ridesharing is often cheaper than a taxi makes it even better.

Although, in my humble opinion, regulators need to do one more thing to make ridesharing legitimate. They must outlaw those hideous pink mustaches, to make American cities even more beautiful.

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HomeAway goes to court over San Francisco’s ‘Airbnb law’

November 05, 2014, 12:10 PM

An old adage in the legal profession suggests: “When the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on your side, pound the table.”

This week, HomeAway, a vacation-home rental site, filed a complaint in federal court alleging the city and county of San Francisco are in violation of the Commerce Clause of the U.S. Constitution because of a recently passed ordinance, slated to go into effect in February, which regulates short-term rentals of residential property.

HomeAway is vigorously pounding the table.

By invoking the Commerce Clause, HomeAway clings to a theory that San Francisco is discriminating against out-of-state interests by limiting the ability to list properties for sharing purposes to local residents. Even a cursory review of relevant legal precedent reveals that local land use decisions, particularly about zoning, are left almost entirely to the judgment of local authorities. Since economic rights receive a low level of constitutional deference, and because the nature of the regulation here is so modest, were the U.S. District Court of Northern California to find for HomeAway, it would be ploughing fresh constitutional soil.

The grist of HomeAway’s concern is actually totally unrelated to the Commerce Clause. Instead, it is that the new San Francisco law will have a deleterious impact on their business, while having a relatively minor impact on Airbnb’s business. Further, HomeAway maintains that the San Francisco legislation was crafted specifically with Airbnb in mind.

But even if it was, so long as political decision-making does not run afoul of the law – which, in this case, it clearly does not – it’s hard to see the basis for a legal complaint. If anything, HomeAway’s complaint ultimately is that the Board of Supervisors came to an ill-conceived policy conclusion.

This suit is a business decision wrapped in a legal delaying action. HomeAway was unable to exert the political influence necessary to shape public policy in such a way that its business model could be accommodated. Thus, instead of seeking to amend the legislation through the democratic process, HomeAway has opted to inflict pain through the litigation process.

Politically, the lawsuit’s optics may be favorable. HomeAway’s complaint details Airbnb’s political activity during the ordinance’s drafting process. While nothing that Airbnb did was illegal, the suit – which news outlets are seemingly compelled to take seriously – has created a wave of negative press. HomeAway, no doubt, hopes to create a critical mass of negative attention that it can focus and wield to attain its political objective.

Lost in the suit, and in the contest between HomeAway and Airbnb, is the ultimate policy goal that players in the sharing economy should keep in mind. Greater personal freedom, circumscribed where necessary by limited regulation, will encourage markets and foster the creation of wealth. Where opportunity is created and residents are left better off, policy makers will be more willing to listen.

Instead of banging the table in a jurisdiction interested in other priorities, HomeAway should build a case for its model that San Francisco will want to embrace.

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Come hear how Texas will benefit from a ‘conservative budget’

November 05, 2014, 11:01 AM

Next Monday, Nov. 10, I officially join R Street as its new Texas director. I’ll be working on a variety of issues of critical importance to the Lone Star State, such as introducing the discipline of competition into the state’s windstorm insurance system, using markets to solve environmental problems and eliminating the regulatory barriers that prevent new emerging technologies from disrupting protected industries.

But there’s one issue that’s so pressing I can’t wait till my formal start date to tell you about it: limiting the growth in Texas’ budget.

Tomorrow, Nov. 6, the Texas Public Policy Foundation is hosting a lunch primer on the budget, titled “Would Texans benefit from a conservative Texas budget?” (Spoiler alert: the answer is yes). In the last decade, public spending in Texas has increased by an estimated 63 percent. Even controlling for inflation and increases in population, the average family of four in Texas is now paying $1,200 more a year to account for this additional spending.

Unless checked, the natural tendency of government is to grow. That’s why it is important to have real structural limits on state spending growth. R Street is proud to be a part of the Conservative Texas Budget Coalition, calling for a budget that limits spending growth to no more than population plus inflation (an estimated 6.2 percent). TPPF, which happens to be my current employer, is also a member of the coalition, and their primer will feature speakers from coalition partners TPPF, Americans for Tax Reform and Americans for Prosperity, explaining how spending discipline will benefit all Texans.

The event will be from 11:30 a.m. to 1 pm in the Legislative Conference Center, Room E2.002 at the state Capitol. Lunch is provided. Y’all should come. And if you see me, be sure to say hello.

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Postal Service mail-tracking: three big questions

November 04, 2014, 11:11 AM

Last week, the New York Times reported there were nearly 50,000 incidents of mail surveillance in 2013. Under the “mail cover” program, which has been around for roughly a century, federal, state and even local law enforcement officials can trace a suspect’s mail using data collected from the outside of an envelope or a parcel, including sender and recipient, addresses and where the mail entered the postal system.

Law-enforcement officials obtain mail covers by placing a request with the Postal Inspection Service, who are in charge of vetting requests and asking the Postal Service turn over the data. (Opening the mail would require an additional step: obtaining a warrant.)

This is unsettling news for anyone who cares about privacy. The Inspection Service, which polices the mail for kiddie porn, illegal lotteries, and other perfidy, is not administering the program very well. An inspector general’s report found numerous screw-ups. About 21 percent of approved mail-cover requests were granted without written authorization and the Inspection Service failed to review the program annually for policy compliance. Plainly, heads need to roll and the program needs reform.

For certain, the mail-tracking controversy underscores the importance of independent inspectors general and the Freedom of Information Act. It was the USPS IG who conducted the audit and refused the Postal Service’s request to keep it hidden from the public. FOIA helped the Times pry loose additional information about the mail cover program.

But at least three big questions remain unanswered.

The first concerns the growth of this program. Why did mail cover approvals skyrocket from about 8,000 per year between 2002 and 2012 to 49,000 in 2013? Is the Inspection Service, to venture a charitable hypothesis, simply becoming more efficient at processing these requests? Are local law-enforcement agencies catching on to this program, much as they did with the federally authorized asset seizure program? Or are other factors at play?

This leads to a second question worth a public response: how many law-enforcement requests for mail covers were denied? Knowing this number would clarify whether the Inspection Service is rubber-stamping these requests. Which it may well be, seeing as it authorized a renegade sheriff and prosecutor to use mail tracking to investigate a politician who dared criticize them. A former FBI agent has said the mail cover program is “so easy to use…you don’t have to go through a judge….You just fill out a form.”

The IG report on this program was first released in June, and Politico immediately ran a story on it. The New York Times covered the topic in July, and further revealed that USPS is digitally recording the information of every piece of mail, sent by everyone, creating a vast data trove. This mass data collection goes way beyond the mail-cover program approved by federal courts in the 1978 decision U.S. v. Choates.

Months have passed, and not a single congressional hearing has been held on the subject. Nor has any legislation been introduced to rein in the practice. The president has done nothing. The First Amendment protects an individual’s freedom to communicate and associate with others. So why are our elected officials not doing anything about the mail-cover program?

Tea partiers: Don’t compare us to Gamergate

November 03, 2014, 3:58 PM

From Slate:

And Mytheos Holt, an associate policy analyst at the R Street Institute and video game reviewer for Gamesided who described himself as “a sympathetic bystander” to Gamergate, also said right-wingers could find a “new conservative constituency” within this movement.

“If the right can make the case that there will never be room for them in the left’s ideal world, this may be the start of a new coalition,” says Holt.

A big conservative city is about to strangle its sharing economy

November 03, 2014, 11:40 AM

Onerous new regulations in Houston, Texas, set to go into force this Tuesday, may end up shutting down some ride-sharing operations in the country’s fourth most populous city — a place that desperately needs them. The city’s sheer overreach in regulating companies like Uber and Lyft, indeed, should serve as a strong rejoinder to cities that might consider following a similar path.

Under Houston’s new regime, everyone who drives for pay, even on a very occasional basis, will have to go through a 40-step process that the city specifies in excruciating detail. Individually, the requirements the city imposes for things like safety inspections and criminal records checks aren’t unreasonable. But the way that Houston wants to do them is. In many cases, the city insists on doing and redoing things (such as background checks) that companies have already done. The result: Uber is complaining bitterly and will almost certainly see its driver ranks shrink, while Lyft is likely to suspend all operations on Nov. 4. Smaller companies like Wingz that might have targeted Houston’s large and lucrative market are, for now, staying away entirely.

In some cities, with lots of mass transit, this might not be that big a deal. Houston, which doesn’t have the population density to support street-hail taxis in most of its neighborhoods and possesses only one urban rail line, companies like Uber and Lyft are sometimes the only practicable way to get around for those who don’t have access to a car. Imposing regulations that make life nearly impossible for the companies’ drivers, as the city has done, sets an awful precedent, reduces options for consumers and seems likely to increase drunk driving.

And it’s particularly disturbing because Houston, of all cities, should know better. Although it’s hardly a tea-party hotbed, the city easily stands as America’s most conservative city with more than 1 million residents. In 2012, Barack Obama and Mitt Romney came within a few thousand votes of each other county-wide and it’s the only really big city in the country that regularly elects city council members who could do fine in the House GOP caucus. The governments of San Francisco and Washington, D.C. — the two most liberal cities in the country by many measures — have both been much more welcoming to Uber and Lyft, and even our nanny state on the Hudson, New York City, has done much better than Houston. The city needs to change. Quickly.

New peer production companies are a vibrant new economic sector. Houston is proving how the wrong regulations can crush them.