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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.

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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?

Up in smoke

September 19, 2014, 10:28 AM

Undoubtedly much to the chagrin of the former mayor, more New Yorkers are smoking these days. According to the latest data from the city’s Department of Health and Mental Hygiene, adult smoking rates in New York City have risen to 16 percent, from an all-time low of 14 percent in 2010.

That this is happening in a city where nanny-statist extraordinaire Michael Bloomberg spent a dozen years doing everything he could to limit cigarettes should serve as a wakeup call for those still committed to doubling down on the current antismoking campaign.

New York banned smoking in nearly all indoor public places more than a decade ago. The city spends lavishly on advertising to encourage quitting and imposes so many taxes that a pack of name-brand cigarettes can cost $15. More recently, the city banned most e-cigarette use in public and raised the age to purchase tobacco from 18 to 21. And yet, all of these efforts correlate with increases in an activity that poses dozens of serious health risks.

It is becoming clear that the kinds of tactics that once were hugely successful in reducing smoking rates—which are half the levels seen when the first stern health warnings were issued in the 1960s—have reached the point of diminishing, if not negative, returns. Smoking rates nationally have been stuck at around 20 percent for roughly a decade, even as overbearing Bloomberg-style tactics have spread.

Rather than resort to ever-more coercive measures, public health -officials should consider the news out of New York as an impetus to explore new approaches. For people who just can’t quit—likely a sizable portion of those who persist in smoking—it’s time to consider a more tolerant and even welcoming approach to encourage switching to lower-risk products like chewing tobacco, nicotine lozenges, snus, and e-cigarettes. It’s important to note that none of these things are perfectly safe and all are quite addictive. But an impressive amount of data strongly suggests they are as much as 98 percent less dangerous than tobacco cigarettes. Allowing and, in some settings, even encouraging their use could do a tremendous amount of good.

Islamic State responds to Obama’s measured approach with Flames of War video

September 19, 2014, 10:05 AM

On Sept. 10, 2014, President Barack Obama stated that the United States will “degrade and ultimately destroy” the Islamic State.

He outlined a four-part strategic plan to accomplish that goal. First, the president promised “a systemic campaign of airstrikes” against the Islamic State. Then, he detailed plans to support forces fighting against the Islamic State in Iraq and Syria. Next, President Obama stated that the United States will “continue to draw on our substantial counter-terrorism capabilities” to prevent attacks. He concluded his plan by pledging “humanitarian assistance to innocent civilians.”

Most importantly, President Obama unequivocally stated the United States’ fight against the Islamic State “will not involve American combat troops fighting on foreign soil.”

The move seems to have emboldened the Islamic State, which released a brief video that feels more like a video game trailer than terrorist propaganda. The video, about a minute long, shows Islamic State soldiers fighting and creates the perception that they are killing and maiming American troops. A shaky video image of the White House is included, effectively marking it as a target for the Islamic State.

The video itself highlights the difference between the Islamic State and its terrorist predecessors. The high-quality images and impressive editing techniques look modern, hip and targeted to the Islamic State’s audience. While it may seem like a juvenile trailer to a violent video game, it likely resonates with the young male audience that the Islamic State needs to expand and continue to fight.

The new propaganda video is shockingly brash. If the public execution clips were not enough of a provocation to the United States and its allies, the newest video demonstrates that the Islamic State has little fear of America or its allies.

President Obama has maintained a calm, measured voice through the entirety of his remarks on the Islamic State. His almost-clinical demeanor may demonstrate a tactical unwillingness to be baited into a more aggressive military response than necessary. At the same time, perception matters heavily in international relations. If executions, direct threats and the depiction of American soldiers coming to harm result in nothing more than a stepped-up version of the airstrikes and opposition forces the Islamic State is already experiencing, what incentive do they have to stop their brutal quest for power?

Already, American military leaders have suggested that if the president’s initial approach fails, they may indeed recommend that he reverse his position regarding American troops on the ground in Iraq and Syria.

Only time will tell whether the president’s attitude towards the Islamic State is prudent. If his four-part plan is effective and the Islamic State is destroyed, he may be seen as a wise leader who saved American lives by refusing to be baited into an emotional response. On the other hand, if destroying the Islamic State ultimately requires sending American troops into battle, he may be remembered as an academic president who enabled the Islamic State to gain strength when it could have been stamped out with an earlier overwhelming show of force.

Benton woman dropped from insurance because of old, vacant home

September 19, 2014, 9:17 AM

From ArkansasMatters:

According to  Lars Powell, UALR Professor of Insurance, this isn’t common, but it can happen depending on the insurance company’s policy. Powell said living next to an abandoned home can increase your chances of break-ins and fires, but he said there are hundreds of other home insurance companies to chose from. “Anytime I’ve seen an issue like this where someone can’t get coverage for what seems like ordinary exposure, they’re with the wrong company and if they look around they’ll find a better deal than what they had in the first place,” said Powell.

TNC battle ends with Gov. Brown’s signature

September 18, 2014, 3:23 PM

Gov. Jerry Brown has lent his signature to compromise legislation that clarifies how and when transportation network companies are commercially insured.

Sponsored by Assemblywoman Susan Bonilla, D-Concord, A.B. 2293, was one of the session’s highest-profile pieces of legislation. In its final incarnation, the bill does three things:

  • It places in statute the definition of TNC promulgated by the industry’s primary regulator, the California Public Utilities Commission;
  • It introduces a requirement that TNCs notify their drivers about the scope of their insurance coverage; and,
  • It codifies the distinction between the points at which personal and commercial insurance coverages are in-force during the course of a ride.

The controversy surrounding AB 2293 morphed from a closely kept inter-industry contest into a public confrontation over the way in which the state and well-established interests interact with new and powerful market participants. Both sides energetically lobbied legislative offices and, as a result, many amendments later, a compromise was reached.

As is often the case in Sacramento, industries that could otherwise be natural allies in the effort to reduce overall regulatory burdens were pitted against one another as a result of a maladapted regulatory framework.

Unfortunately, this will not prove the last time that such a conflict transpires. Other industries should look to the A.B. 2293 episode as a roadmap for future action — for instance, in the coming debate on regulation of space-sharing services like Airbnb. That way, aware of the pitfalls of late engagement and sometimes tone-deaf tactics, the parties will be able to forgo open confrontation.

The first step to avoiding controversy is to simply talk.

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Fraud costs Michigan drivers $220M a year

September 18, 2014, 1:11 PM

Auto insurance fraud costs Michigan drivers more than $220 million a year, Secretary of State Ruth Johnson announced while unveiling a set of 17 legislative and regulatory anti-fraud recommendations offered by the Fighting Auto Insurance Rip-offs (FAIR) Task.

Johnson convened the task force a year ago, following a one-day sting operation that found more than 16 percent of paper proof-of-insurance certificates submitted statewide on July 31, 2013 were fraudulent, including more than 45 percent in Van Buren, Chippewa and Sanilac counties. (See chart below.) As reporter Emily Lawler of MLive.com put it:

It came about after instances of people using white out to change the years on their auto insurance certificates, selling replica insurance documents and, in one case, a fake insurance document that included a QR code linking to a website stating that “llamas are soo cool.”

Topping the task force’s recommendations is a proposal to create a state auto insurance fraud agency, similar to an idea proposed by R Street President Eli Lehrer in a November 2011 report published by the Heartland Institute. Though the task force didn’t any specific details on how the anti-fraud agency should be structured, the Insurance Institute of Michigan has proposed a five-year pilot project to expand the existing Automobile Theft Prevention Authority, currently funded by a $1 fee on auto insurance policies, with an additional $2-per-vehicle fee to fund anti-fraud efforts. The new agency would collect data on fraud trends, consolidate insurance fraud investigations and offer training to police and prosecutors.

IIM Director Pete Kuhnmuench cited the high-cost of auto insurance in Michigan as a primary driver of the fraud, as drivers who can’t afford coverage obtain fake certificates to comply with registration requirements. The latest report from Bankrate Insurance showed Detroit with the most expensive auto insurance of any metropolitan area in the country, with rates 165 percent higher than the national average. The Michigan Assigned Claims Facility, which offers covers for the uninsured and underinsured, grew by 47 percent between 2007 and 2012, according to Johnson’s office.

Members of the task force included representatives from the Secretary of State’s office, the Michigan State Police, the Prosecuting Attorneys Association of Michigan, the Insurance Institute of Michigan, the Michigan Insurance Coalition, Property Casualty Insurers Association of America and the Michigan Association of Insurance Agents.

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If Hillary does not run, Martin O’Malley will be the next Democratic nominee

September 18, 2014, 10:25 AM

Despite some wishful thinking (“she’s sick/she doesn’t want to run”) from my fellow conservatives, every credible source indicates that Hillary Clinton will run for the presidency and, in all likelihood, win the Democratic nomination. It’s also, at this point, more likely than not that she will become the 45th president.

But in the off-chance that she does decide not to run or stumbles badly in the Democratic primaries, it’s not outlandish to think Maryland Gov. Martin O’Malley could be the next Democratic nominee. Hillary may overshadow the governor right now, but he has a very good chance of emerging as a frontrunner if she isn’t in the race. Here are four reasons why:

Executives have a distinct advantage in presidential elections: Experience running a big operation—being an incumbent president, running a state government or commanding an army—serves candidates well on the campaign trail. Since the Civil War, only one candidate without executive experience has beaten a rival who had it. That was in 1920, when then-Sen. Warren Harding beat then-Gov. James Cox. Right now, O’Malley is one of only two governors considered among the likely Democratic candidates.

He has big-city street cred: As the only former big-city mayor among the serious potential candidates on either side, O’Malley has urban-center clout that nobody—not even Hillary—can match. Democrats’ ability to win swing states like Pennsylvania and Ohio largely depends on their ability to turn out voters in urban centers. O’Malley can do that. Such voters are also important in primaries. Other Democratic candidates, including Hillary, are largely untested in this regard.

He’s friendly with the Democratic Party’s kingmakers: To a large extent, success in the Democratic Party’s primary process is determined by one’s relationship with the major groups that make up the party’s base: organized labor, women’s groups, big-city political bosses, environmental activists, government contractors, public employees, Hollywood liberals and trial lawyers. O’Malley has been friendly with all of these groups while governor of Maryland. Many of the other potential candidates have said and done things that could ruffle the feathers of various liberal groups. Former Sen. James Webb, for example, is still haunted by comments he made in 1979 about women in the military, while among Massachusetts Gov. Deval Patrick’s accomplishments in office are deregulating auto insurance rates and professional licensing, hardly popular notions on the left. While O’Malley hasn’t thrilled all of these groups all the time, he hasn’t seriously offended any of them either.

He won’t scare anyone: While O’Malley holds a variety of standard-issue liberal positions that put him a bit to the port side of the median voter, he’s not cut from the same cloth as potential candidates Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., whose broad-based attacks on free markets will alienate many. O’Malley could even draw fundraising support from hedge-fund billionaires, corporate executives and gay conservatives turned off by GOP homophobia. His efforts to restore the Chesapeake Bay and reforms the state’s commercial fishing industry might also appeal to environmentalists.

O’Malley certainly has some disadvantages going into the race. He’s not proven as a national fundraiser, has faced less scrutiny than some other candidates and lacks national name recognition. Nonetheless, in Hillary’s absence, Martin O’Malley could be considered a favorite for the nomination in 2016.

Oral cancer scaremongering by public health officials

September 18, 2014, 9:34 AM

A range of public health leaders, who should know better, have rushed to repeat (and, with their stature, endorse) the apparently unfounded claim by baseball great Curt Schilling that his mouth cancer was caused by smokeless tobacco.

Claims about cancer causation can significantly influence national health policy; when made by recognized authorities, they should be based on scientific and medical facts.

While I fully sympathize with Mr. Shilling, his claim of causation has no on-the-record support from his medical team. That has not stopped the anti-tobacco establishment from rushing to the media.

In remarks trashing smokeless tobacco, Schilling’s oncologist, Dr. Robert Haddad of the Dana-Farber Cancer Institute, made no comments specifically connecting his patient’s cancer to use of smokeless products.

Regardless, in short order, the FDA Center for Tobacco Products repeated Schilling’s causation claim on Twitter, and the presidents of the Massachusetts Medical and Dental Societies and the director of the Arizona Department of Health Services gave it further credence.

I don’t question Schilling’s belief that smokeless tobacco caused his cancer. However, before endorsing his statements, public health officials should address several points:

  1.  Where, specifically, was the “mouth cancer”? According to this National Cancer Institute monograph, almost all cases of mouth cancer attributable to smokeless tobacco occur in the location where it is used. That is also my experience in 30 years as an oral pathologist. In addition, the cases of mouth cancer that I have seen are almost always in users of dry powdered snuff, and they occur in the gum-cheek area. Schilling hasn’t disclosed the location of his cancer, which he blames on moist snuff. Users of that product are not protected from mouth cancer, but epidemiologic studies show that they are not at higher risk than nonusers.
  2. Other risk behaviors. It can be uncomfortable, but doctors need to know about all risk factors for oral cancer. Those at higher risk are individuals who smoke and drink, a combination that tends to be associated with cancers in the throat as well as the mouth. Human papillomavirus infection is an emerging risk factor, especially for throat cancer. Schilling disclosed that his cancer was discovered as a “lump” in his neck; this presentation is more common with a throat cancer than a mouth cancer. Schilling hasn’t disclosed information on his other risk factors.

It is inappropriate for the FDA, presidents of medical societies and other public-health authorities to blindly endorse unvalidated medical claims. Hundreds of thousands of former smokers in the U.S. use smokeless tobacco. Dreading the prospect of getting mouth cancer, they might be motivated by these authorities’ pronouncements to start smoking again, not knowing that the latter significantly increases their mouth, throat and lung cancer risks. Public health advocates should stick to the facts, not engage in scaremongering.

Publish the Constitution Annotated as data

September 18, 2014, 4:06 AM

Dear Library of Congress and Government Printing Office,

For decades, you have jointly published a handy compendium that explains the U.S. Constitution as it has been interpreted by the U.S. Supreme Court. It took a couple of letters from the Senate (and repeated nudging from the public interest community—20092010,201120122013) to move you to publish the Constitution Annotated online more than once a decade, but you still do not regularly publish it online in a structured-data format. Instead, the Constitution Annotated is published as a PDF, which has not been updated in 15 months.

The entire point of the document is to educate the public and Congress about the Constitution. As a technical matter, the Constitution Annotated is prepared as an XML file, published internally to congressional staff as a series of webpages and updated regularly. You could simply make those pages available to the public and we would all be happy. Instead, the public interest community must keep pestering you, year after year.

Why do we care? Publishing the Constitution Annotated in a structured-data format means that the public can easily reuse the information, so that more people can benefit from the knowledge it contains. Structured data makes it easier to embed the information in Wikipedia or create better websites on the Constitution, and so on. It also means we can do neat things with the contents, such as automatically classifying Supreme Court cases by topic simply by drawing upon the document’s structure.

Publishing the Constitution Annotated in structured-data format is also within your mission. As the respective repository and publisher of government-generated information, providing public access to an authoritative explanation of our nation’s founding document, as interpreted over the years, is the kind of thing you do.

So I ask you, on Constitution Day 2014, let’s get this fixed before next year. We’re happy to help.

Constitution Day message to members of Congress

September 17, 2014, 4:14 PM



Dear Congressional Leaders,

We write to urge you to bring to the floor S. 607 and H.R. 1852, the bipartisan Leahy-Lee and Yoder-Polis bills updating the Electronic Communications Privacy Act (ECPA).

Updating ECPA would respond to the deeply held concerns of Americans about their privacy. S. 607 and H.R. 1852 would make it clear that the warrant standard of the U.S. Constitution applies to private digital information just as it applies to physical property.

The bills would aid American companies seeking to innovate and compete globally. It would eliminate outdated discrepancies between the legal process for government access to data stored locally in one’s home or office and the process for the same data stored with third parties in the Internet “cloud.”

Consumers and businesses large and small are increasingly taking advantage of the efficiencies offered by web-based services. American companies have been leaders in this field. Yet ECPA, written in 1986, says that data stored in the cloud should be afforded less protection than data stored locally. Removing uncertainty about the standards for government access to data stored online will encourage consumers and companies, including those outside the U.S., to utilize these services.

The bills would not impede law enforcement. The U.S. Department of Justice already follows the warrant-for-content rule. The only resistance to reform comes from civil regulatory agencies that want an exception allowing them to obtain the content of customer documents and communications directly from third party service providers. That would expand government power; government regulators currently cannot compel service providers to disclose their customers’ communications. It would prejudice the innovative services that we want to support, creating one procedure for data stored locally and a different one for data stored in the cloud. For these reasons, we oppose a carve-out for regulatory agencies or other rules that would treat private data differently depending on the type of technology used to store it.

S. 607 was approved by the Judiciary Committee last year, and H.R. 1852 is co-sponsored by over 260 Members, including a majority of the majority. We urge you to bring them to the floor. We believe they would pass overwhelmingly, proving to Americans and the rest of the world that the U.S. legal system values privacy in the digital age.


ACT | The App Association • Adobe • American Civil Liberties Union • American Library Association • Americans for Tax Reform • AOL • Association of Research Libraries • Automattic • Autonet Mobile • Blacknight • Brennan Center for Justice at NYU Law School • BSA | The Software Alliance • Center for Democracy & Technology • Center for Financial Privacy and Human Rights • Chamber of Digital Commerce • Cheval Capital • CloudTech1 • CodeGuard • Competitive Enterprise Institute • Computer & Communications Industry Association (CCIA) • The Constitution Project • Coughlin Associates • Council for Citizens Against Government Waste • Data Foundry • Digital Liberty • Direct Marketing Association (DMA) • Distributed Computing Industry Association (DCIA) • Dropbox • Electronic Frontier Foundation • Endurance International Group • Engine Advocacy • Evernote • Facebook • Federation of Genealogical Societies • Foursquare • FreedomWorks • Future of Privacy Forum • Gandi.net • Giganews • Golden Frog • Google • Heritage Action for America • Hewlett-Packard • Information Technology Industry Council (ITI) • The Internet Association • Internet Infrastructure Coalition (i2Coalition) • Intuit • Kwaai Oak • Less Government • LinkedIn • Media Science International (MSI) • Microsoft • NetChoice • New America’s Open Technology Institute • Newspaper Association of America • Oracle • Peer 1 Hosting • Personal • reddit • R Street Institute • ScreenPlay • ServInt • A Small Orange • Software & Information Industry Association (SIIA) • SpiderOak • Taxpayers Protection Alliance • TechFreedom • TechNet • Tucows • Tumblr • Twitter • U.S. Chamber of Commerce • Yahoo! Inc.