Out of the Storm News
Testimony on House Bill 5108
Alan Smith, R Street Institute Midwest Director
Tuesday, June 10, 2014
Michigan Senate Government Operations Committee
Good afternoon Chairman Richardville and members of Senate leadership constituting the Government Operations Committee. Thank you for the opportunity to be heard today. I am Alan Smith, and I am a senior fellow and Midwest Director for the R Street Institute, a national think tank based in Washington, D.C., that supports free markets and limited, effective government. We’ve been engaged on several issues in Michigan during this session having to do with public policy solutions to challenges for Michigan residents.
As a think tank, we advocate for principles, not particular commercial interests. The first principle is that we have way too many crimes. The states of this nation have devoted much energy lately into refocusing public approbation and punishment on behavior that threatens lives as opposed to preferences. We may have a citizenry that is more prone to violence and more dishonest than we have had in the past, and we have to deal with this; but neither of these underlies Michigan’s 80-plus-year-old law that criminalizes certain transfers of property having to do with entertainment venues. As former U. S. Senator and Ambassador Daniel Patrick Moynihan famously observed, we started with a few laws and now we have “catalogs of offenses.” Actually, I counted them last night. There are currently 87 chapters of offenses in the Michigan crime catalog spanning Abduction to Weights and Measures.
The Heritage Foundation, the Texas Public Policy Foundation, the Washington Times, the Providence Journal, the Economist, many law review articles and attorney associations, including the American Bar Association have all come to the conclusion that this country is massively oversubscribed to criminal laws. An excellent 2009 book called One Nation Under Arrest is available from bookstores and the academics in this field are reading a law review articleby Douglas Husak, a Rutgers lawyer and philosophy professor, entitled “Overcriminalization: The Limits of the Criminal Law, published in 2008. Husak contends the first principle of criminalization is that criminal liability should not be imposed unless statutes are designed to prohibit a “nontrivial harm or evil.”
The second principle is that good public policy is understandable by the public. When people dole out a portion of their budget for the privilege to attend events they enjoy, it is counterintuitive to imagine that offering up that property, lease, or whatever you call it for resale at whatever price you establish in the marketplace is a crime against the state. Of course, in the overwhelming majority of states, it isn’t. To be specific, of the 27 states that have enacted laws regarding ticket resale, only 11 states generally ban selling tickets for more than face value, and all but three allow resellers to charge a service fee. By generally, I mean overall regulation, because several states have laws pertaining to tickets for specific events at universities, NFL games, NASCAR and the like.
A third principle is that good public policy is supported by the general public. What the public supports is the idea that, even when an event is sold out, somebody for the right price will let you go in his or her place. First come, first served is a traditional way to allocate resources, but it is not the only way, or we wouldn’t have handicapped parking spaces. How does the government distinguish between the serious Brazilian fans who stood in line all night to buy the extra World Cup soccer tickets last week, and the serious fans around the world who bought out all the major matches online in a couple of hours? One way of developing sound public policy is to allow the person who will ultimately place the most value for sitting in that seat to fund that experience. Moreover, who among us has not purchased something with the idea that it might become more valuable at some point, and that we might convert that value by selling it?
Even though we are a free-market-oriented public policy organization, we are not suggesting that, for instance, universities shouldn’t be allowed to organize their events in a way to assure that their students and alumni get preferences for attendance. We support, and you should, anybody’s right to draw up agreements that harness the well-traveled law of contracts or property to determine the placement of tickets. We support, and the public clearly understands, that licensees at entertainment venues may be ejected for inappropriate behavior. None of this however, needs to be backed up by Michigan criminal laws describing an offense against the state.
For those of you with backgrounds in economics, you well understand that the markets are much more adept at working out values than are any particular group of government officials. I’m sure many of you read that the average secondary market price for Stanley Cup finals tickets is twice as high as the rematch games between the San Antonio Spurs and Miami Heat for the professional basketball title. This is a product of a functioning market. Should the government be deciding if this is right or wrong? Or too expensive?
We do not suggest that the market can forego protection against automated online scams and misallocations. Limited, efficient government may also mean that laws targeting fraud may have to be occasionally updated to reflect all the improvisations of electronic age thieves. But the state should be cautious about lawmaking in an area that is essentially a software war.
In summary, we cheer Michigan in its desire to join most other states by opening up secondary markets for both individuals who have decided for whatever reason to resell their tickets, and the businesses who have sprung up to organize these marketplaces.
I will be delighted to discuss any of this in more detail, or to answer any questions you may have for me.
Sean P. Carr, one of the best reporters covering the insurance industry here in the nation’s capital, died suddenly last night from complications during emergency surgery, just a few weeks shy of what would have been his 44th birthday.
Sean and I go back almost exactly 20 years. In my first job in journalism, I was (briefly) a staff writer reporting to Sean as editor of the weekly Elizabeth Gazette in Elizabeth, N.J. After a couple weeks, I was promoted to head my own paper, The Springfield Leader, and together Sean and I were recognized that year by the New Jersey Press Association with awards for editorial commentary. Our publisher swept the category.
In 1996, I replaced Sean as beat writer covering the communities of Lakewood and Point Pleasant, N.J. for the (sadly, now defunct) daily, The Ocean County Observer. Given our similarities in stature, complexion and hair and eye color, some local politicians weren’t even aware the paper had changed reporters, a problem that would recur throughout our careers.
Our paths diverged for a few years, as I went west to California and then south to Florida, and Sean for a time left journalism for politics, working on campaigns in New Jersey, Pennsylvania, Michigan and Arizona. They converged once again a decade ago in Washington, D.C., where I had moved to become bureau chief for the insurance news service A.M. Best and Sean was doing communications for the SEIU. After a failed attempt to recruit him to Best’s in 2004, I finally managed to lure him into the wacky world of insurance in 2007, hiring him to cover the NAIC.
I left A.M. Best for SNL Financial in 2009, and Sean subsequently replaced me as bureau chief. And when I left SNL in late 2011 to join Eli Lehrer at the Heartland Institute, he took my old gig at SNL. I continued to act as a source for his stories, though this required us to negotiate some loose and informal rules, particularly in our daily Gchat conversations, about which tidbits were to be considered on or off the record. My foul mouth, more than anything else, pushed most of these dialogues into the latter category.
For two guys whose lives and careers were as intertwined as ours, Sean and I did not share the same politics. I am a committed advocate of free markets and deregulation. Sean was a dyed-in-the-wool leftist with a background in the labor movement. In our younger, more hot-headed days, this clash sometimes led to loud newsroom shouting matches.
But on much else, we shared a lot of common ground, including our mutual love of Guinness, dogs and Star Trek. And our common ground helped our politics grow closer, the older we got.
We both shared a love of science, and it was Sean (who had graduated with a degree in human ecology from Rutgers University’s Cook College) more than anyone else who eventually was able to convince me that climate change and other environmental ills were serious problems that merited a public policy response, even if we likely wouldn’t agree entirely on what the contours of that response should be.
And as two guys who both grew up in blue collar communities in New Jersey, I like to think I was able to bring him around to the realization that many government programs and regulations, pitched as in the “public interest,” are in fact merely tools that big corporations and other established interests use to crush small business and innovative new competitors.
I will miss those talks. I will miss Sean’s joy for life, his distaste for bullshit and even his goofy puns. The worlds of insurance and journalism both are a bit dimmer today, as they each lost one of their guiding lights. I lost one of my best friends, and my brother-in-arms.
UPDATE: I just received this very thoughtful note from former Sen. Ben Nelson, D-Neb., who is now serving as president of the NAIC:
I’m sorry you lost such a close friend. Makes Sean’s loss even more difficult. I enjoyed my brief experience with him and considered him professional. Thanks for sharing your common journeys. Memories will prevail.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
R Street State Affairs Director Christian Camara will take part this Thursday in a forum sponsored by Florida International University’s Metropolitan Center on “The Hurricane Threat: Issues in Coastal Vulnerability.”
Joining a panel with state Rep. Joe Gibbons, D-Hallandale Beach, and experts from the Broward County Emergency Management Division, the FIU International Hurricane Research Center and the Metropolitan Center itself, Camara will discuss how Florida’s government-subsidized system of property insurance harms the environment and makes the state more vulnerable to hurricanes, both physically and economically. He will focus in particular on the incentives to build in high-risk, environmentally sensitive coastal areas, which place more life and property in harm’s way, as well as the enormous liabilities the state’s taxpayers carry.
To sign up to attend the event, scheduled to start at 8:30 a.m., June 12 at the FIU Broward Pines Center in Pembroke Pines, Fla., follow this link to the RSVP page.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
R Street’s Andrew Moylan joined Afternoon Constitutional host Joe Thomas of WCHV-FM, 107.5 in Charlottesville, Va., to discuss Virginia’s recent cease and desist letter to transportation network companies like Uber and Lyft. Click the embedded link below to listen to the audio.
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
From the Washington Examiner:
R.J. Lehmann, an insurance analyst and co-founder of the free-market R Street Institute, favors a slimmed-down TRIA program, rather than complete termination, acknowledging that “terrorism insurance is a little more complicated” than flood insurance. Private terrorism insurance may not be available if the program ends, he said.
He added that “with flood insurance, you’re subsidizing people to take risks they wouldn’t otherwise take. It’s not clear with terrorism insurance that that’s generally a problem.”
From the Huffington Post:
This became evident at a recent panel held at Columbia University by The Current, a journal of culture, politics and Jewish affairs. The event featured a former conservative, Columbia Professor of Humanities Mark Lilla, and conservative thinker Reihan Salam of The National Review. Both thinkers believe that anti-statist ideology is genuine and deep-rooted, and not the last whimper of white supremacy or a disingenuous political posture. Lilla yearns for the moderate conservatism of the past, while Salam embraces the reformist drive of movements like the Tea Party. It is the conservatism of Lilla that has died; populist libertarianism is on the rise…
…Conservative commentator Reihan Salam of The National Review also believes there is a broad base of anti-government sentiment, but he holds a far more positive view of populist, “grassroots” conservatism. A Bangladeshi American, Salam disputes that conservatism is a movement for bigoted whites. During the panel, he noted that most conservatives under 40 support gay marriage, and argued that polling demonstrates that views on race are actually very similar across the ideological spectrum. In his view, the emergence of movements like the Tea Party is a direct consequence of the failures of an inept and profligate Republican establishment. In a recent piece in Slate, Salam maintained that Tea Party populism can be “the most constructive and powerful political force of our time” if it attacks not only Washington, but also the “Washington-Wall Street axis,” and the crony capitalism that accompanies this relationship. While Lilla yearns for the conservatism of yesteryear, Salam embraces the grassroots libertarianism that is driving the movement today.
The hidebound arm of an administrative state once again has descended upon one of the nation’s most visible, exciting and novel industries. The Virginia Department of Motor Vehicles on Thursday furnished both Uber and Lyft — businesses that match people willing to pay for rides with people willing to provide them — with letters demanding they cease and desist operations within the commonwealth.
The DMV alleges these companies are operating in violation of Virginia law. While that may be true, attempting to kill a disruptive technology is a regrettable way to handle the problem.
The regulatory framework in Virginia was crafted to accommodate existing industries, and it doesn’t have a category that’s appropriate for a business like Uber or Lyft. The state doesn’t interfere with “ride-sharing arrangements” in which no money changes hands, but all “for-profit passenger carriers” must obtain operating authority from the state. To provide rides for pay, the commonwealth has determined, Uber’s and Lyft’s drivers must be licensed as taxicab operators, and the services must register either as common carriers or as contract carriers.
Virginia’s DMV is still studying the law, and the Legislature may well change it in the next session, but the state has asked Uber and Lyft to stop their “illegal operations” in the meantime.
By its very nature, innovation will force regulators to play catch-up. But why must innovation languish in the face of regulatory torpor? If instead we wanted to facilitate novel industries, what would our approach to regulation look like?
It certainly would not ask an administrative body to abdicate its duties. If anything, it would require full and robust communication between the novel industry and its potential regulator. Frank, timely and clear conversation about new practices, organizational principles, and early experiences can help regulators and policymakers alike assess how best to accommodate the new industry.
With less aggressive regulation, the civil-liability system, though fraught with excess and absurdity, could handle cases in which novel industries harm customers or others. And should a novel industry prove too disruptive, legislators, not regulators, could act. Regulators are bound by the scope of their devolved authority, while lawmakers are better equipped institutionally to address whatever fresh policy questions such industries pose.
The ongoing struggle of the transportation network companies (TNCs) — lodestars of the innovator-vs.-regulator conflict — has painted in stark terms the downsides of regulatory security blankets. Virginia’s present approach, one akin to forcing square pegs into round holes, is frustrating for both regulators and regulated firms.
When the administrative state lacks the ability to regulate a new business efficiently, it should grant the business some space, rather than trying to force it into existing regulatory categories. In exchange for granting innovators this space, society will more quickly experience the benefits of novel businesses and learn to avoid the shortcomings of innovation. Most importantly, society will again experience the transformative power of creative liberty.
The negativity of the Virginia DMV was predictable, but is not necessarily the Homeric victory of the TNCs. As evidenced by their inevitable difficulties in California, they too may not be playing their role in the “facilitative approach.” But at the end of the day, administrative institutions must adapt to disruptive technology. Until they do, we all lose.
Microsoft, one of the largest corporate holders of patents in the United States, received another major bundle of approvals this week from the USPTO. In addition to some interesting sounding utility patents — including a device for identifying and tracking multiple humans over time, a technique for motion-parallax 3-d imaging and several built around the concept of “action trigger gesturing” — the company also brought in a haul of design patents, including one for a new font.
Also in that cache are three new design patents for what’s described as “a display screen with graphical user interface.” These (D706281, D706285 and D706286) one must admit, are a bit more inscrutable. It would appear, at first glance, that USPTO has deemed as “novel” and “nonobvious” the display of various arrangements of rectangles on a digital screen.
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
In what is likely the most bizarre story you will read all week, Seattle resident, trained fighter and self-proclaimed “superhero” (read: costumed vigilante) Phoenix Jones has decided to disband his team, the Rain City Superhero Movement (RCSM), citing an amusing problem: A lot of people seeking to join it aren’t all that…well…super. King 5 News reports:
After starting solo, Jones says, the movement grew so large, many of the off-shoots weren’t always following the rules.
They lacked the physical fitness of an 8th grader, refused to give police their identity, and some even carried illegal weapons.
“Illegal knives, pepper grenades, smoke bombs, really crazy stuff,” Jones said. “A lot of things we do are non-negotiable.”[…]
Jones says isn’t opposed to welcoming old members back into the fold, but they must meet his requirements for superhero activism, like 5 pull-ups and 25 sit-ups in two minutes.
A superhero who once worked alone, Jones doesn’t want to hurt anyone’s feelings, but he says, feelings aren’t what superheroes are all about.
“I’m going to go out there with the most equipped, most protected, smartest team with the best tactical decisions I can, regardless of what that costs me personally,” Jones said.
In other words, Jones was confronting a number of problems that really would plague a vigilante who decided to take the law into his hands. For instance, any time a rogue superhero did something wrong, Jones’ name would be mentioned and he’d be tarred by association. So what to do? Apparently, the answer is to institute Superhero Quality Control. And if you can wrap your head around the seeming absurdity of those three words, it’s a decision that makes eminent sense.
Of course, not everyone is pleased by the news. Rex Velvet (yes, someone really calls themselves that), Phoenix Jones’ self-proclaimed “arch-nemesis,” issued a Facebook message offering any and all rejected superheroes the chance to join in a tell-all documentary about Jones, presumably to try and tar the “superhero” and by extension, damage his ability to do his work.
It’s a case that would be worth writing about for its oddity alone. But when you manage to look past the weird costumes, theatricality and seeming pointlessness of it all, the whole affair is actually something else as well: A lesson on the ability of businesses and professional associations to self-regulate. In fact, even going beyond that, you could even see the travails of the RCSM as a case that the vast majority of occupational licensing is unnecessary.
Imagine that instead of being a self-proclaimed superhero, Jones were simply a street vendor, a job that requires a government license in New York City and Washington, D.C. Now imagine that, all of the sudden, a few other street vendors began popping up selling food that was clearly prepared poorly and even made customers sick in some cases.
The reputation of pretty much every street vendor would be put at risk from such bad behavior, and so it would be perfectly within the rights of other vendors who prepared good food to take steps to try and weed out the bad eggs (no pun intended). Industries are vigilant about their reputation, and the reputational risks associated with having one or two bad actors hijack one’s brand, or one’s reputation, are sufficiently high (especially in the era of Yelp) that industries have a high incentive to self-police.
Phoenix Jones’ particular industry might look goofy, but it’s a model of what much more prosaic trade associations do all the time. What’s more, those who feel unfairly excluded by such organizations often strike back in just the way that Rex Velvet and his band of villains are attempting to do – by bringing yet more public pressure to bear against industry protectionism. And if Rex Velvet were called “Uber” or “Lyft,” we’d probably be pretty sympathetic to him, at that.
So while it’s dubious that this particular “superhero” and his nemesis will be helming any summer blockbusters anytime soon, let’s still be grateful they exist. If nothing else, they’re a good reminder of the power of the market to self-regulate, even when the product is something as seemingly unconventional as costumed vigilantism.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
“I’m a scientist, and I’ve tried to take a very scientific approach to this,” Dr. Brad Rodu, professor of medicine and the endowed chairman of tobacco harm reduction research at the University of Louisville, told Convenience Store Decisions. “We do know this: smoking is killing 400,000 Americans every year—and so I’m stunned that anyone would criticize or otherwise try to ban a product that is known to be a substitute for cigarettes.”
Eli Lehrer, president of the R Street Institute, another panelist at the Brookings announcement, said Republicans will probably spend a year attacking President Obama and the new rules, before there’s a chance of pursuing legislation to supersede the regulations.
“At that point, we’ll be past the  elections and people will have to do something,” said Lehrer, who supports a revenue-neutral carbon tax that cuts income tax rates.
WASHINGTON (June 6, 2014) - The R Street Institute is deeply disappointed by Virginia Department of Motor Vehicle’s cease and desist order to Uber and Lyft this week, ordering the services to immediately stop operating in the commonwealth.
“Virginia is just the latest in a long line of states and municipalities that have seen the overwhelming consumer demand for peer-to-peer transportation and responded by trying to destroy the services filling that need,” said Andrew Moylan, executive director of R Street. “Instead of taking a light-touch approach that fosters new business models like Uber and Lyft, the DMV has chosen instead to smother them in their cribs.”
While minimal regulation of ridesharing services, such as criminal background checks and minimum insurance thresholds, are appropriate requirements to place on all drivers transporting passengers for compensation. However, peer-to-peer services like Uber and Lyft are not transportation companies, and therefore should not be subject to further operating regulations required of companies that own a fleet of cars for hire. The purpose of services like Uber and Lyft is to connect drivers to riders. The services neither employ the drivers nor own the cars.
Moylan also noted that services like Uber and Lyft provide new alternatives and more choices for consumers, something the established transportation companies do not support.
“Virginia’s antiquated taxi and limo industry has worked tirelessly to destroy any possibility of competition. Sadly, the DMV has responded to their agitation by trying to end thriving services like Uber and Lyft,” he said. “This attempt at snuffing out competition will only end up harming consumers, divers and Virginia’s economy.”
Moylan suggested the state government take action to ensure that consumers have as many options and competition available to them as possible.
“More competition provides savings for consumers. Virginia’s legislature should immediately begin working on their own cease and desist letter to the DMV in the form of new laws that make clear that for-profit peer-to-peer hired transportation is a legal business model.”
If you care about fighting poverty, the best thing you can do is to simply give poor people money. That is the view of some of the smartest, most compassionate people I know, and it explains the new enthusiasm, on the left but also in some quarters on the right, for an unconditional basic income—that is, a cash payment to which all citizens would be entitled, with no strings attached.
On the left, the case for an unconditional basic income rests on the notion that low-end service jobs aren’t the kind of fulfilling and valuable work that we as a society ought to preserve. By providing everyone with a guaranteed minimum income, the supply of workers willing to do such work will dry up. The poor will be liberated, and free to pursue their deeper desires. On the right, the argument is that a basic income would eliminate the need for armies of caseworkers and other bureaucrats who (supposedly) do little more than meddle in the lives of the poor. Anti-poverty programs like food stamps, Medicaid and housing vouchers would all be thrown on a bonfire, to be replaced by cold hard cash. No more hand-holding, say conservatives and libertarians who favor a basic income. If we’re going to redistribute, let’s do it in the most straightforward way possible.
As you’ve no doubt guessed, I think that no-strings-attached money is a dangerously bad idea and that it will do far more to undermine poverty-fighting efforts than it will to strengthen them. I also think that meddlesome caseworkers are the unsung heroes of the fight against poverty.
As of yet, there is no national proposal to greatly increase the flow of no-strings-attached money to poor households in the United States, though the idea has been gaining ground among the pundit class of late, amid fears that robots will soon take all of our jobs.
But my hometown, New York City, is on the cusp of a grand experiment to increase the flow of no-strings-attached money to its poor citizens. If past experience is anything to go by, this experiment will end badly.
Under Mayors Rudolph Giuliani and Michael Bloomberg, New York City dramatically overhauled its approach to fighting poverty. As Robert Doar, who served as commissioner of the New York City Human Resources Administration under Bloomberg, recounts in a recent article for National Review, the cash-welfare caseload in the five boroughs fell from 1.1 million in 1995 to 347,000 at the end of 2013, when Bloomberg left office. Over the same period, the city experienced a substantial decline in child poverty, from 42 percent in 1994 to 28 percent in 2008 to 32 percent in 2011, as the lingering after-effects of the Great Recession continued to take their toll. The really encouraging news from the Giuliani-Bloomberg era is that work rates also increased. Among single mothers, for example, the work rate went from 43 percent in 1994 to 63 percent in 2009.
One of the reasons Doar placed such a heavy emphasis on the importance of work rather than, say, training and education programs is that, as he explains, getting real-world work experience is key to helping welfare recipients not only get but also keep jobs over time. Training and education have a place, but they work best as a complement to on-the-job training rather than as a substitute.
But there is a new sheriff in town. New York City’s new mayor, Bill de Blasio, has installed Steve Banks as Doar’s successor, and Banks, as Heather Mac Donald of City Journal reports, takes a very different approach. Banks and de Blasio are firm believers in training and education programs, and they’ve announced their intention to ease the enforcement of work requirements. They will no longer require that food-stamp applicants provide proof of their housing expenses, nor will they ask able-bodied adults without children to look for work in exchange for food stamps.
Is this a badly needed correction from the bad old days of Bloomberg? It is important to understand that, for better or for worse, the Bloomberg administration was very accommodating when working poor applicants sought to enroll in the food stamp and Medicaid programs. A big part of the reason was simply that the city government didn’t set the eligibility rules for these programs, and the federal and state governments had grown more permissive over time. But it also reflected a public philosophy that the billionaire mayor was never very good at articulating—that those who can work and choose not to do so are different from those who do not.
This is a distinction that advocates of an unconditional basic income see as pernicious and that those who want to ease up on work requirements see as needlessly punitive. But it is a distinction that makes eminent public policy sense. The welfare reformers of the 1980s and 1990s didn’t call for work requirements because they wanted to punish the poor. They did so because of mounting evidence that worklessness in high-poverty neighborhoods contributed to the entrenchment of poverty and to the social isolation of those living in welfare-dependent households. Drawing welfare recipients into the workforce was seen as the best way to get them on the ladder to upward mobility. Despite massive shifts in the economy that have been particularly hard on less-skilled adults, work requirements have been a success, by and large. Meanwhile, experiments conducted in the 1960s and 1970s by the federal government found that a no-strings-attached basic income reduced work effort and encouraged marital breakup. Given what we’ve learned about the consequences of family breakdown for children, and particularly for male children, in the years since, this is nothing to scoff at.
Moreover, whatever their practical effects, work requirements are central to the moral legitimacy of poverty-fighting efforts in the United States.
In her essay on “Rethinking Welfare Rights,” Amy Wax, a professor at the University of Pennsylvania Law School, identified a deep-seated, widely held set of beliefs among Americans about welfare. While most Americans accept the idea that we as a society have a shared responsibility for the well-being of the poor, they also differentiate between those who deserve help and those who don’t. Those who deserve help are those who make an effort to support themselves and their families to the extent they can. Many people simply can’t earn enough to support themselves by dint of disability, limited skills or a lack of the community ties that enable one to identify and pursue economic opportunities.
And so the role of government, according to Wax, is to help close the gap between what people can earn by doing their best to provide for themselves and what they need to lead decent lives. This gap is real, and there is a distinct possibility that it will grow as our economy and society continue to evolve. To protect programs that close this gap, and to grow them if necessary, it is vitally important that welfare disbursements are perceived as fair. In the long run, those who choose to work will not support welfare programs that appear to offer a better deal to those who do not, nor should they be expected to do so. The failure to enforce work requirements thus undermines the legitimacy of welfare, and it endangers the good that welfare can do.
This notion of “conditional reciprocity” is particularly important in diverse societies. A number of scholars, including the economists Edward Glaeser and Alberto Alesina, have found that more diverse societies are less likely to support high levels of social spending than more homogeneous societies. But more recently, Bo Rothstein, a Swedish political scientist and defender of the welfare state, has found that what really undermines social solidarity and social trust is not diversity, per se, but rather the perception that public authorities are corrupt, dishonest, discriminatory and partial as opposed to clean, impartial and honest. One of the reasons the Danish welfare state enjoys such widespread support, for instance, isn’t just Denmark’s famous ethnic homogeneity: It’s also that Danish work requirements are extremely strict by international standards, and they’ve grown tighter over time. Unemployed Danes must demonstrate their “labor market availability” by searching for jobs, taking jobs at local job centers and taking part in so-called activation programs run by hard-nosed caseworkers. The Danish state is indeed generous, but its generosity comes with strings attached, and that’s how Danish voters like it. We could learn a thing or two from them.
There is far more to say about how we can fix America’s social welfare programs. But before we can expand them or shrink them or modernize them, we must first ensure that they rest on a solid moral foundation. And that, ultimately, is what work requirements are all about.
June 5, 2014
The Hon. Harry Reid
522 Hart Senate Office Building
Washington, DC 20510
Dear Sen. Reid:
We are writing to urge you to advance the Smarter Sentencing Act (S. 1410), a bipartisan, bicameral bill that promotes more effective and just criminal sentencing without reducing public safety.
Advancing this reasonable reform this year is both warranted and necessary. As conservatives, we are deeply concerned about the federal prison system’s size and cost, which have grown enormously since 1980. Federal prisoner costs now consume about 30 percent of the Department of Justice’s budget. Federal prisons operate at nearly 140 percent of their capacity, a condition that make prisons less safe and less rehabilitative places and leads to recidivism. Instead of returning police power to the states, we are expanding the federal criminal justice system, its reach and its costs. Requiring lengthy prison terms for nonviolent drug crimes has fueled this growth. Half of all federal inmates – more than 100,000 people – are incarcerated for drug offenses. Crime is undeniably serious and demands accountability. But just punishments must be proportionate to the harm caused to victims and society, and they should also restore victims, offenders and communities. Our limited criminal justice dollars are used most effectively when focused on assisting victims and police, and when we reserve prison cells for violent offenders and terrorists.
The Smarter Sentencing Act (SSA) is a modest, incremental approach that impacts only nonviolent drug offenses and does not repeal any mandatory minimum sentences. The SSA reduces the length of mandatory minimum sentences for nonviolent drug offenses by half. Over time, this will reduce prison growth and costs to manageable levels. Long mandatory minimum terms are preserved for drug offenses that result in serious bodily injury or death. The bill also gives judges limited, clearly-defined discretion to sentence low-level, nonviolent drug offenders with negligible criminal records below the mandatory minimum term. Finally, the SSA allows certain inmates sentenced before the effective date of the Fair Sentencing Act of 2010 to petition for sentence reductions consistent with that law. The Fair Sentencing Act, which Congress passed unanimously, reduced an unjustifiable sentencing disparity between crack and powder cocaine offenses. The SSA does not let anyone serving a sentence under the old law get a reduction automatically – courts must do an individualized review and approve each request before a reduction can be granted, thus protecting public safety.
The federal prison population has increased by 3.2 percent annually over the past decade. In contrast, total state prison populations continue a three-year decline, partly because states are using just, effective, cost-saving alternatives like probation and parole to save expensive prison beds for violent offenders. Crime has continued to decline in states that have used these alternatives or reduced or reformed mandatory minimum sentences for nonviolent offenders. A recent poll revealed that 63 percent of Americans think this sentencing reform trend is a good thing. Nationwide, these reforms recognize that lengthy prison sentences for nonviolent offenders can actually be harmful: prolonged incarceration destroys family unity, increases reliance on government aid, hinders reintegration into society and stunts the economic growth of individuals and families. In short, states and the public are getting smart on crime, and the federal government should, too.
The need for this legislation’s moderate but positive improvements is urgent, and we respectfully ask you to advance the Smarter Sentencing Act as soon as possible. Thank you for considering our views.
Coalition to Reduce Spending
National Association of Evangelicals
Justice Fellowship/Prison Fellowship Ministries
Former chair, American Conservative Union; current opinion editor, The Washington Times
City of New York (Retired)
R Street Institute
Heritage Action for America
Americans for Tax Reform
Taxpayers Protection Alliance
The June 2 edition of the journal Pediatrics features a study of e-cigarette advertising on television from 2011 to 2013. The research, led by Jennifer Duke of RTI International in North Carolina, found that exposure among youth (12-17 years old) to television ads for e-cigs increased 256 percent over that period.
The author casts the industry as villain: “It appears that youth are being exposed to a sustained level of marketing about the benefits of e-cigarettes.” ABC News was less subtle, with a piece titled: “E-cigarette TV ads target kids.”
In fact, the results in Figure 1 of the study (left), which were not fully described by the authors, show that the advertisements’ effects were mainly on adults. The authors report exposure to e-cig ads in terms of target rating points (TRPs), a standard unit of measurement for the proportion of people exposed to an ad and its frequency.
Duke and colleagues report that exposure of 12-to-17-year-olds to e-cig advertising peaked in the second quarter 2013 at 347 TRPs. Young adults (18-to-24 years old), for whom purchase of e-cigarettes is legal almost everywhere, had peak exposure of 611 TRPs in 2013, indicating much higher exposure than youth.
The authors fail to note that older adults had far higher peak levels of exposure to e-cig ads. My table contains the estimated peak TRPs for each age group in Figure 1.Peak exposure to e-cigarette television advertising (TRPs) by age groups in Q2 2013 Age Group (years) Population (millions) Peak Exposure (TRPs) 12-17 24 347 18-24 30 611 55-34 41 611 35-54 86 820 55+ 77 850
This data shows that 234 million adults 18 years or older were the primary recipients of e-cigarette advertising.
Back in 2012, Kyle Bartlow and Mariah Gentry were juniors at the University of Washington’s Foster School of Business, looking to live out the American dream of entrepreneurship. Together, they formed JoeyBra LLC, a company dedicated to making and marketing specially designed women’s undergarments that include pockets on the wings (see the image above.) As the pair describes the item on their website:
Inspired by UW’s vibrant Greek system, JoeyBra was created for women who are constantly on the go and struggle to find a place to put their ID, keys, or phones. From their own personal experience, they know that women hate taking purses to dances, bars, or dance clubs. Leaving these items at home can pose a safety risk, but with JoeyBra women will never have to worry losing or damaging their valuables again.
Things got off to raring start for JoeyBra. A successful KickStarter campaign raised more than $10,000 in seed funding, which was supplemented by another $5,000 award when the company was named a finalist in the Foster School’s annual business plan competition.
Alas, like many fledgling entrepreneurs, Bartlow and Gentry soon discovered the road to riches was bound to have a few potholes. Theirs came in the personage of Mr. Charles Robinson, a British man who in 2001 was granted a patent (D448541) by USPTO for the ornamental design of a brassiere that, similarly, included pockets on the wings. An illustration of his design is below:
Robinson brought an infringement suit in Virginia against both JoeyBra LLC, and Bartlow and Gentry as individuals, seeking a preliminary injunction to bar them from marketing their wares.
Robinson’s basis for seeking an injunction was that it would cause him “irreparable harm,” even though he had never actually brought a product to market in the dozen years that he held the patent. In March 2013, U.S. District Court Judge Norman K. Moon denied the injunction, in part because Robinson could show no material harm, but also because, Moon wrote, “a brief patent search reveals that a pocketed bra is, in fact, not a ‘very novel element.’”
[T]hough the pocket on Defendants’ JoeyBra product is, like Plaintiff’s claimed design, on the side of the bra (rather than the cup), the size, orientation, and accessibility of that feature appear to be substantially different; as a consequence, and more significantly, the carrying capacity and overall functionality of the allegedly infringing product also appear substantially different. The pocket on Plaintiff’s design appears to be fit for a key, and after twelve years since receiving his patent, he does not have a product on the market. Defendants’ JoeyBra product, on the other hand, holds an iPhone and credit cards, among other items.
Moon also granted Bartlow and Gentry a motion to dismiss the claims against them personally, on jurisdictional grounds, though he would allow the case against JoeyBra to continue (three of the KickStarter funders lived in Virginia, which was enough to establish Robinson’s jurisdictional claim.)
Robinson filed a motion to reconsider, which Moon denied in May 2013. Following that ruling, there was no further action in the case until it was ultimately dismissed (but without prejudice) in March 2014 for “failure to prosecute.”
Having spent two crucial years of their young entrepreneurial career fending off this spurious claim, Bartlow and Gentry attempted to recover their legal fees. Specifically, under Title 35, Section 285 of the U.S. Code, “the court in exceptional cases may award reasonable attorney fees to the prevailing party.”
Alas, in a new order handed down June 3, Judge Moon broke the bad news: just because you won the case doesn’t mean you “prevailed.”
Moon noted that in only one case, Velez v. Portfolio Recovery Assoc., has a federal court determined that a party granted a motion to dismiss on jurisdictional meets the definition of a “prevailing party.”
What’s more, the Fourth Circuit has ruled that a party granted a preliminary injunction is not a “prevailing party,” because consideration of the merits of such cases are “necessarily abbreviated.” The Fourth Circuit has not ruled on whether denial of a preliminary injunction could render one a “prevailing party,” but the Tenth Circuit has ruled that it does not.
Of course, even if JoeyBra and its principals were declared “prevailing parties,” they’d face a whole other hurdle in establishing that their case met the definition of “exceptional.” In a unanimous decision in April in the case Octane Fitness LLC v. ICON Health & Fitness Inc., the U.S. Supreme Court ruled that the exceptionality test for award of attorney fees had set too high a bar, remanding the matter back to the Federal Circuit.
These are, of course, precisely the kinds of issues that were to be addressed by the patent reform bill that Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., has tabled indefinitely. Perhaps one day Congress really will get back to work to resolve them.
Until then, JoeyBra isn’t taking any chances. They’ve applied for a patent of their own.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
R Street Executive Director Andrew Moylan joined David Williams of the Taxpayers Protection Alliance on TPA’s “Taxpayer Watch Podcast” to discuss the June 1 start of the Atlantic hurricane season and the work done by the SmarterSafer Coalition to bring budget watchdogs, insurance companies and environmental activists together for a common cause. You can check it out here or click the embedded player below.
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Residents of 11 Utah cities would be billed as much as $20 a month, as part of a plan to salvage the state’s once-heralded UTOPIA fiber optic network.
UTOPIA, short for the Utah Telecommunications Open Infrastructure Agency, was conceived in 2002 as a local government-managed alternative to commercial cable, telco and satellite broadband and has struggled ever since. It lost $19 million in fiscal year 2011. As of late 2012, the agency was $120 million in the red and had fewer than 10,000 customers
While there have been plenty of municipal broadband failures in the past, this may be the first time a government has actually considered reaching directly into consumer pockets to cover the cost of underperformance. Under the proposal, Macquarie Capital, an Australian investment group, would take over construction and operation of the financially troubled UTOPIA project in return for a share of the profits. The catch, however, is that households in the UTOPIA cities would be hit each month with a special “availability fee” of $18 to $20 to pay for the project’s completion, whether they opt to get service or not. This fee would be adjustable each year.
The terms themselves are measly. The “availability fee” would entitle consumers to only three megabytes per second of bandwidth (UTOPIA originally promised one gigabyte per second — 341 times as fast) and a monthly cap of 20 gigabytes, or enough for five or six high-definition Netflix movies. This compares to the 12 to 15 Mb/s available for $50 to $60 a month, with unlimited data, from most cable companies. AT&T’s U-Verse and Verizon’s FiOS offer faster connections.
In return for a 30-year public-private partnership, Macquarie would promise to complete UTOPIA’s build-out to 155,000 total residential and business addresses in 30 months. The network will continue to serve as a wholesale backbone for retail Internet service providers, and Macquarie would aggressively promote the network and extend it to any additional city that wants to accept its terms.
Five UTOPIA cities–Lindon, Murray, Layton, Tremonton and Centerville–have scheduled public meetings in the coming weeks to debate accepting the Macquarie proposal. Another three –Murray, Lindon and Orem–are polling residents to gauge sentiment on key elements of the plan, including its proposed $18 to $20 fee. Brigham City is studying the proposal and Midvale and West Valley City already have accepted it. Macquarie’s deadline is June 27.
Utah’s largest city, Salt Lake, in a prescient decision, opted out of UTOPIA participation.
It’s another unenviable position for cities that went the muni broadband route. The UTOPIA 11 are on the hook for the debt, and the best option means hitting up customers for service that’s inferior to what’s on the market now. At the same time, advocates of free-market solutions, and limiting government activity in the commercial sphere, warned that taxpayers were going to bear the brunt of any muni failures.
Even as this week’s news brings word of a new Google effort to launch satellites that will facilitate rural broadband, progressives still insist that government broadband is needed to respond to “market failure” in broadband provision. Really? It seems the only consistent failure in broadband have been municipal project after municipal project.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Treating like cases alike is central to the U.S. legal system. Socially and morally, the advantages of juridical consistency are assumed to be foundational. For this reason, among the very first in a line of crucial terms that a first-year law student learns is “stare decicis“, the Latin phrase for “stand by things decided.”
A prime reason that courts “stand by things decided” is that, in cases coming before them, they typically encounter standard iterations of well-defined legal themes. It is a rare day when a truly novel legal or factual issue arises. In practice, stare decicis means that, when a court encounters a case with issues of fact and/or law implicated that it has encountered before, that court will defer to its existing patterns of thought in lieu of starting from scratch. As a matter of judicial economy, stare decisis is invaluable, but it serves other, perhaps more important, purposes: judicial predictability and private coordination.
Lines of precedent are relied upon by private parties as they plan for the future. Plainly, complying with the law is less of a chore when its application is discernible. Businesses, in particular, rely on the consistent application of the law, because they are among the most likely to be targeted for liability when precedent abruptly shifts or moves.
To draw attention to the problem of a moving legal target and other court-related maladies, the U.S. Chamber of Commerce releases an annual list of the nation’s “Judicial Hellholes“. These uncertain jurisdictions, found in red and blue states alike, may not be pure creations of political ideology. Instead, what connects them is that they exist within, and create expansive and amorphous zones of, civil liability. It’s bad enough when poor or ill-considered public policy choices of the electorate and their representatives are the cause. Deplorably, courts are also playing a significant role.
To describe the phenomenon of courts making public policy choices from the bench, commentators have popularized the phrase “judicial activism.” Unfortunately, hyperbole in its use and over-breadth in its application have left the phrase unmoored from easily discernable meaning.
Commendably, Colleen Pero, writing for the American Judicial Partnership, seeks to re-introduce meaning to the phrase by outlining indicia of judicial activism. She concludes that courts are being judicially activist when they deviate from an otherwise predictable outcome in favor of a particular policy outcome. Common examples include the use of non-mandatory authority as the basis of an opinion and the insertion of novel language into a statute to allow the law to support a meaning consistent with a desired outcome.
Courts typically have a degree of freedom to determine how they will interpret statutes. Some methodological flexibility is unavoidable. However, where methodological flexibility significantly reduces consistency and predictability, justice may be distorted. Differing interpretations of different facts may be legitimate, but inconsistent interpretations of similar bodies of law marks the very definition of judicial activism. Among all forms of judicial activism, methodological activism is particularly undesirable from a coordination perspective.
To counteract or defend against such judicial unpredictability, states should be led to embrace systems of methodological stare decicis. Such systems cement into law – for the benefit of courts and the public – interpretive road maps that provide a slew of benefits. Predictability is improved, since parties coming before the court understand what to prioritize in their briefs and what types of arguments the court would find compelling. Stability is improved, because parties can better evaluate what sorts of claims are worthy of pursuing in litigation. Efficiency is improved, because courts are not forced to select from a panoply of interpretive doctrines currently in circulation.
Most importantly, when methodological decisions are given a stare decisis effect, the complexion of the judiciary’s role changes. It shifts away from a law-making task for which it is ill-suited and toward greater predictability in the application of law.
One state, Oregon, conducted an experiment with methodological stare decicis. In PGE v. Bureau of Labor and Industries, the Oregon Supreme Court instructed its courts to adhere to a strict analytical hierarchy to help observers predict when, how and what to bring before Oregon courts. The system directed interpretive action to adhere to a three-step process. First, courts were instructed to take a look to the text of the statute and its surrounding context. Next, if the text contained unresolvable ambiguity, the court was to look to legislative history. Finally, in the event that understanding could not be gleaned from the first two tiers of scrutiny, the court was bound to look to maxims of statutory construction.
The result was that private parties in conflict, the Legislature and lower courts knew broadly what to expect, both in decisional reasoning and, ultimately, outcome. In an article on the topic, Abbe Gluck observed that from 1993 to 1998, the Oregon Supreme Court looked at 137 statutory-interpretation cases, reaching legislative history 33 times and substantive canons only 11 times. From 1999 to 2006, the court applied the statutory-interpretation framework 150 times, reaching legislative history nine times and never reaching the canons of construction. Clearly, a methodological preference for textualism was carrying the day in the period that followed PGE and its progeny.
Naturally, the content of any such interpretive roadmap is crucial. Some interpretive methodologies are preferable to others from a free-market perspective. Still, for the purposes of achieving the benefits of coordination and predictability, there is no need to come to any particular conclusion about the desirability of one system of statutory-interpretation over another, since methodological stare decisis would see the development of methodological precedent. Matters relating to a particular statute would be reliably interpreted according to an attendant methodological precedent.
At its core, methodological stare decisis is an institutional solution to the problem of extreme decisional variations and a reminder that all forms of legal precedent matter. Once an issue is decided – even if it is, from one’s own perspective, decided wrongly – the way that it is decided methodologically becomes ensconced in the body of law, to be referred to and relied upon by others moving forward.
This is not to say that stare decisis is immutable. It is not. Judges consistently revise, rework and reimagine the law as it relates to novel variations in its application. But the limiting function of stare decisis remains essential. At the very least, it serves to stymie rapid transformations that upset the public’s ability to rely upon the law. In essence, it is a procedural mechanism whereby the law expresses a preference for incrementalism.
Society as a whole benefits when risk, even in the form of judicial outcomes, can be assessed and accounted for.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.