Out of the Storm News

Syndicate content
Free markets. Real solutions.
Updated: 3 weeks 3 days ago

Got Obamacare tax questions? You might be out of luck — FATCA’s here — Koskinen gets the Times treatment

July 02, 2014, 12:08 PM

From Politico:

NORTH CAROLINA VOTERS NOT FANS OF MFA. WRAL reports, “Most North Carolina voters oppose a federal bill that would allow online retailers to collect out-of-state sales tax, according to a poll released Tuesday by the National Taxpayers Union and the R Street Institute. The poll, based on a telephone survey of 400 North Carolinians likely to vote in the 2014 general election, showed that 70 percent of respondents oppose” the Marketplace Fairness Act. http://bit.ly/V9zJRN

Arthur could strike around the Fourth in Morehead City

July 02, 2014, 11:47 AM

Ahead of the Independence Day holiday weekend, the U.S. East Coast is preparing for Tropical Storm Arthur, the first named storm of the 2014 season.

Formed yesterday off the east coast of Florida, Arthur has strengthened to a strong tropical storm, with sustained winds of more than 60 miles per hour, and is expected to strengthen to a Category 1 hurricane at some point Thursday. Storm watchers say it is showing signs of forming a defined eye wall and could strike the Outer Banks of North Carolina – an area typically thronged with tourists this time of year – the morning of July 4.

While it is unusual to see a storm reach this degree of intensity so early in the season, risk modeler AIR Worldwide does not expect significant wind-related claims, anticipating storm surge to be a more significant factor:

According to AIR, if the storm makes landfall in or bypasses North Carolina as a Category 1 hurricane, wind damage to most homes and businesses is not expected to be significant. There may be isolated instances of nonstructural damage to roof coverings and wall cladding, and windows if debris becomes airborne, as well as damage to trees, utility poles, and signage

Should the storm hit North Carolina particularly hard, it will be interesting to see how the two state-backed insurance pools – the North Carolina Joint Underwriting Association (or “FAIR Plan”) and the North Carolina Insurance Underwriting Association (or “Beach Plan”) – cope with the losses.

Under their current financial structure, the pools have about $4.09 billion of claims-paying ability, which comprises $700 million of retained earnings; $1 billion of assessments on member companies; $945 million of traditional reinsurance and an additional $544.6 million of reinstatement layers; $701.8 million of catastrophe bond coverage; and $270 million of post-event bonding coverage.

The first layer of cat bonds (the Tar Heel Re bonds) if losses exceed $2.025 billion. To date, no cat bonds issued by a public insurance authority in the United States have ever been triggered.

According to the most recent wind-speed probabilities advisory from the National Hurricane Center, most directly in Arthur’s path are North Carolina’s Cape Hatteras and Morehead City, which face odds of a tropical storm strike of 82 percent and 75 percent, respectively, and odds of a hurricane strike of 21 percent and 15 percent, respectively.

Other cities facing tropical storm risk include Wilmington, N.C. (55 percent); Nova Scotia’s Halifax (51 percent), Yarmouth (50 percent) and Eddy Point (43 percent); Nantucket, Mass. (44 percent); and Myrtle Beach, S.C. (40 percent).

There’s little risk of a hurricane strike outside of North Carolina’s Outer Banks, with the highest risks seen in Yarmouth, N.S. (7 percent); Nantucket (6 percent); and Wilmington, N.C. (5 percent).

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

Swedish study: After a heart attack, quitting tobacco better than no tobacco

July 02, 2014, 10:10 AM

A recent study by Gabriel Arefalk and colleagues at the University of Uppsala in Sweden, published in the American Heart Association flagship journal Circulation, was purported by the authors, the AHA  and the media to show that continuing snus use or smoking after a heart attack (myocardial infarction, MI) is twice as harmful as quitting.

These conclusions are questionable.  Using the Arefalk numbers, Carl Phillips and I found that snus users, and perhaps even some smokers, are better off than non-users.

We have submitted a letter to the editor of Circulation, and Carl has the full text of our letter in his CASAA blog post.

The bottom line is that the authors tried to spin the results as suggesting that continuing snus use is dangerous after an MI.  In fact, continuing snus users actually had a lower death rate than people who used neither snus nor cigarettes.

Whatever is happening in this population, it clearly does not support the simplistic “snus is bad” mantra.  There is a glaringly obvious explanation for why people who quit snus (or smoking) after an MI fare better than those who do not:  Those who are healthy (except for the recent MI, of course) and hope to recover are more likely to take steps to minimize their risks.  After being advised to give up snus, many also get physical therapy, exercise and maintain a healthier diet.  Meanwhile, those who are less healthy may not make changes in an attempt to regain long-term health.  The Arefalk analysis may not have adequately controlled for these confounding factors.

Of course, this would only partially explain the better outcomes of quitters compared to continuing users; it does nothing to explain why all of them (except those who continued to smoke) apparently fared better than non-users.  There are possible explanations for this in the form of statistical artifacts or real effects.  The key observation is that these unreported results do not support the authors’ main interpretation that snus use is dangerous after an MI.

With the publication of this article, peer review appears to have been woefully inadequate.   The prime statistical error we discovered is the key number reported in the first paragraph of the article’s results section.  Reviewers of this study failed to detect the glaring error.

Even without correcting that error or calculating the mortality rate for non-users, the (incorrect) number for the population as a whole the authors reported can still be compared to rates for people who used snus or cigarettes at the time of their MI.  This is enough to raise red flags about the analysis and conclusions, since it is still higher than the rate for those who kept using snus, and far higher than the rates for those who stopped using either product.

In 2011, Arefalk was lead author on a study making dubious claims about snus use and heart failure.  I described that effort as “neither legitimate nor persuasive until the authors resolve the fundamental questions about the analysis.”

The current article in Circulation is a classic example of anti-tobacco propaganda.  Credible epidemiologic studies do not report risks in exposed groups without reporting the comparable baseline risk among the unexposed.  The authors, and the journal editors and reviewers who enabled them, omitted this critical information.  Our letter to the editor gives them a chance to correct these deficiencies.

Poll: Few like sales tax on online purchases

July 01, 2014, 4:26 PM

From WRAL-5:

Most North Carolina voters oppose a federal bill that would allow online retailers to collect out-of-state sales tax, according to a poll released Tuesday by the National Taxpayers Union and the R Street Institute… …”Across the board, there is surprisingly large opposition to changing the law to impose a sort of Internet sales tax collection burden,” said Andrew Moylan, executive director and senior fellow at the R Street Institute.

Poll: South Carolinians reject Internet taxes

July 01, 2014, 4:18 PM

From FitsNews:

The data – released this week by the National Taxpayers Union and R Street Institute – underscores the extent to which the state wants the federal government to adopt a “hands off” approach when it comes to taxing the internet…

…Andrew Moylan, executive director and senior fellow at the R Street Institute, said the data painted an unambiguous picture.

“The voters of South Carolina clearly believe that the Internet should exist to enrich the lives of its citizens, not line the pockets of out-of-state revenue agencies,” Moylan said. “While conservatives strongly oppose such a law, it’s striking that independents and Democrats join them in clearly rejecting new state tax enforcement powers over the Internet.”

Michigan scalping law is 'consumer protection' gone wrong

July 01, 2014, 4:02 PM

So-called “consumer protection” has evolved into a major legislative preoccupation, which would be fine if it was mostly related to protecting citizens from injury – physical or fiscal.

Alas, despite the emotional rhetoric politicians deploy in their floor speeches, much of the legislative output is more targeted at protecting special interests than at keeping the market honest and efficient.

Licensing bills, in particular, are simply impediments to potential competitors.  Many of them are ridiculous – like the 1,200 hours of study and three year’s apprenticeship required by one state to practice hair braiding; mandatory licenses for florists and interior designers; and the laws being passed to protect existing transportation monopolies from the new share economy.

Michigan has a law on the books that prohibits reselling tickets to events for more than face value. What that means is that people who incur charges from services like Ticketmaster charges can’t even recoup their out-of-pocket expenses by reselling the ticket should they be unable to attend the game, concert or other event.

It’s a criminal law, and theoretically one could be imprisoned for three months for a violation.  At a legislative hearing to modernize and decriminalize this behavior at which I testified, a pastor of a suburban Michigan church told how he had been un-theoretically arrested, fined and forced to pay court costs for trying to sell some of the unused tickets his church had bought for a congregation outing outside the event.

Most of the attention on ticket sales reflects consumer interest in sports and popular music concerts.  It is enormously entertaining to watch another run for the Triple Crown, or to see the world’s second highest-paid athlete make an exquisite crossing pass which allows Portugal to tie the United States in last few seconds of a World Cup match. I wasn’t personally affected when the Electric Forest concert this weekend in western Michigan sold out, but I did have friends there and can’t wait to hear about their experiences. A lot of people will pay plenty to have that kind of memory.

About half the states have some kind of prohibition on ticket resales, either a special law to protect NASCAR races, NFL games, events at universities and the like, or, in 11 of those states, a general prohibition.  Of those, all but three states allow commercial resellers to charge a service fee.  (Interestingly, two states – California and Arizona – specifically allow ticket scalping by statute.)

Respected media organizations, public policy institutes and the American Bar Association have all concluded that we have way too many criminal laws.  One recent book relates the story of a 12-year-old girl arrested on the Washington, D.C. subway for eating a single french fry.  As former Sen. Daniel Patrick Moynihan observed, “We started with a few laws, and now we have catalogs of offenses.”

The antiquated Michigan law is a pretty good example of why there is such a strong libertarian streak emerging in the country.  The legal landscape is so littered with criminal laws that nearly every citizen is a violator at least once a day.

Michigan is way out of line with her sister states by slapping criminal sanctions on mostly unsuspecting residents who have tickets to unload; want at least their money back; and may hope to match up with somebody who wants to be there so badly they will happily pay more.

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

Reinsurers starting to drop their terrorism exclusions

July 01, 2014, 3:19 PM

As property insurers lock up their July 1 reinsurance renewals, many are finding a bonus surprise above and beyond the soft pricing environment – the terrorism exclusions that have been standard in reinsurance contracts for the past decade are, in many cases, being completely done away with.

Writing in the Financial Times, Alistair Gray notes:

Reinsurers, which backstop conventional insurers, are agreeing to withdraw the terrorism exclusion clauses that they insisted on after the insurance industry lost about $40bn from the al-Qaeda hijackings of 2001.

Gray also quotes Moody’s Senior Credit Officer Kevin Lee noting that, while the “technology for modelling terrorism risk has improved greatly” since 9/11, the current trend “is largely driven by greater bargaining power among reinsurance buyers.”

A flood of institutional capital into the reinsurance sector – particularly to insurance-linked securities and other forms of collateralized reinsurance – has made it increasingly difficult for traditional reinsurers to find attractive prices in the market that long has been their bread and butter, the North American property catastrophe market. June 1 renewals, which are dominated by contracts covering property risks in Florida, saw rates on line fall by between 12.5 percent and 20 percent, and similar declines of up to 20 percent are expected for the July 1 renewals.

While there remain skeptical observers who feel the tide of institutional money could reverse itself, either in the wake of a significant catastrophe or once the market for fixed-income securities once again begins offering more normal returns, general sentiment is moving toward the conviction that the new money is here to stay. As Lara Mowery, global property specialty leader at reinsurance broker Guy Carpenter, put it in a recent Q&A:

There are things out there that will shape the space going forward, but I think the dynamics in terms of this capital coming in and the way that reinsurers and insurers are reacting is a longer-term proposition now. People are becoming more comfortable that this isn’t fleeting capital.

All of which should be taken as support for the approach taken in the U.S. House toward extension of the Terrorism Risk Insurance Program, including raising the trigger level for conventional terrorism to $500 million. Guy Carpenter recently issued a report finding that multiline terrorism reinsurance capacity is about $2.5 billion per program for conventional terrorism and about $1 billion per program for coverages that include nuclear, biological, chemical and radiological risks.

Those trends already supported raising the program’s trigger level from the current $100 million. With a growing number of reinsurers offering to include terror cover as part of an overall reinsurance program, that further strengthens the argument that the private market is ready and willing to take on more risk than it has in the past, and that the government should ensure that it does not crowd out the capacity that is coming on line.

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

New poll shows N.C. residents oppose federal bill targeting sales tax for online purchases

July 01, 2014, 12:06 PM

From the Locker Room:

Sen. Thom Goolsby, R-New Hanover, joined R Street executive director Andrew Moylan and NTU executive vice president Pete Sepp today in presenting the poll results during a news conference at the state Legislative Building. Click play below to watch the 44:25 news conference.

Internet Sales Tax Polls

July 01, 2014, 9:50 AM

The R Street Institute has teamed up with the National Taxpayers Union to launch a 20-state tour to announce new poll results showing just how toxic the so-called Marketplace Fairness Act’s Internet sales tax plan is among voters across the country.

Throughout the next several weeks, representative from R Street and NTU will appear in each state to present the polling data to local representatives, press and business interests. You can view each of those presentations here after the event.

Check back here often for updates from new states, and keep up with the latest on the issue at http://www.donttaxtheinter.net

Results are available for the following states:

Slender Man or slender minds?

July 01, 2014, 8:00 AM

Much of the media have been consumed in recent weeks by a lurid story with all the hallmarks of a psychological horror film by the likes of Guillermo del Toro.

The facts of the case, referred to as the “Slender Man Stabbing” for reasons that will become obvious, are as follows: A 12-year-old girl was discovered, barely alive and apparently having crawled to civilization, lying on a sidewalk after having been stabbed 19, allegedly by classmates Morgan Geyser and Anissa Weier. According to Geyser and Weier, they were trying to impress the fictional “Slender Man,” a creature created by internet horror writers in a genre known as “Creepypasta.”

What is Creepypasta? An excellent December 2013 article from Aeon Magazine explains:

The word ‘creepypasta’ derives from ‘copypasta,’ a generic term for any short piece of writing, image or video clip that is widely copy-and-pasted across forums and message boards. In its sinister variant, it flourishes on sites such as 4chan.org and Reddit, and specialised venues such as creepypasta.com and the Creepypasta Wiki (creepypasta.wikia.com), which at the time of writing has nearly 15,000 entries (these sites are all to be avoided at work). Creepypasta resembles rumour: generally it is repeated without acknowledgement of the original creator, and is cumulatively modified by many hands, existing in many versions. Even its creators might claim they heard it from someone else or found it on another site, obscuring their authorship to aid the suspension of disbelief. In the Internet’s labyrinth of dead links, unattributed reproduction and misattribution lends itself well to horror: creepypasta has an eerie air of having arisen from nowhere.

Slender Man — a faceless albino humanoid creature between eight and twelve feet tall with multiple sets of arms, constantly depicted as wearing a suit (the tailoring is not explained) and preying on children — is one of the oldest, most infamous and widely acknowledged characters from this genre. Having originated with several photoshopped images purporting to show the creature in the background of old black and white photographs on the Something Awful forums, Slender Man (or “Slendy” as some fans call him) has since spawned his own exhaustive online mythos, as well as countless pieces of fanart, including stories, drawings, documentaries, web series purporting to be found footage of the creature (Marble Hornets being the most popular), and even a well-regarded video game in which players try to collect eight pages of a previous victim’s writing while being stalked through a dark wood by the creature. A full primer on the Slender Man mythos can be found here.

Naturally, since the stabbing, the creators of Slender Man and the administrators of the Creepypasta Wiki — the largest Creepypasta archive on the internet — have gone to great lengths to make it clear that the Slender Man mythology does not sanction or encourage violence. The Creepypasta Wiki has also, as of this writing, instituted an age check before allowing users to peruse its archives. These responses are understandable and admirable, but ultimately should have been unnecessary, for a very simple reason: While the girls in this instance may claim to have been inspired by Slender Man, who they appear to have believed is a real figure who would be impressed by their crime, their brutal act self-evidently bears no relation to the actual substance of the Slender Man mythos. For that reason, any attempt to lay blame at the feet of the creators of Slender Man is as unpersuasive as it would be to blame animal husbandry for the famous “Son of Sam” serial killer, who believed his neighbor’s dog was commanding him to kill.

Perhaps the most notable inconsistency between these disturbed children’s fantasy and the real Slender Man mythology is that it appears the girls believed Slender Man was someone to be sought out. According to one account, they believed he had a mansion in the Wisconsin woods where they would go to live with him after the attack. Not only is such a mansion not mentioned anywhere in the written material on Slender Man (the creature’s living conditions are entirely unexplained), but even if it were, no one who had read or seen anything of the Slender Man literature would want to set foot in it for any amount of money. The central element of Slender Man’s characterization is that he kidnaps unwilling victims, and that the attentions of the creature can be presumed to result in death or worse. To hope to meet him would be similar to hoping that there really is a monster in one’s closet and that it weren’t so shy, or that one might be spirited off to hell after reading Dante’s Inferno. Only a lunatic would wish for such a thing.

What does need to be acknowledged in this case is the degree to which mental illness remains one of the most difficult policy questions to resolve. Unlike previous cases — such as the shooting in Newtown, Conn., where warning signs of Adam Lanza’s mental illness could have been identified for the abnormalities that they were – there really is no easy answer here. It appears the only warning signs the culprits evidenced were vivid imaginations. In the wake of the stabbing, one published fantasy author shared reflections on a similarly morbid (though entirely nonviolent) creative relationship she shared with another girl at a similar age.  It would surely be impractical, inhumane and silly to involuntarily commit anyone who displays signs of creativity or imagination that inclines toward the macabre. So what to do?

Ironically, I can think of one counter-intuitive answer, and that is to stop treating mental illness as something to be repressed or hidden. By this, I do not mean that we should abandon efforts to treat mental illness, but rather that we should cease treating its existence as a character flaw to be hidden at all costs. No one thinks less of an asthma sufferer for having asthma attacks and seeking an inhaler. No more should we treat mental illness as the functional end of a person’s ability to function in polite society.

Had these girls felt allowed to express their morbid fantasies, how much sooner might their murderous character have been noticed? How much easier, with the right treatment, would it have been for that dark creativity to be channeled into something better, such as writing or art of the kind that inspired the creation of “Slender Man” in the first place? Illness of any kind cannot be treated without first being detected, and our culture’s treatment of mental illness as a defect in one’s character creates systematic incentives for its sufferers to remain in the shadows.

Slender Man may be fiction, but it is time we stopped allowing society to encourage some of its simultaneously most dangerous and most vulnerable members to simply let themselves be kidnapped by the darkness in their own minds.

 

 

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

Tour featuring new polling on unpopular Internet sales tax scheme hits the road

June 30, 2014, 11:56 AM

WASHINGTON (June 30, 2014) – Today, National Taxpayers Union (NTU) and the R Street Institute begin a 20-state tour to announce new poll results showing just how toxic the so-called Marketplace Fairness Act’s (MFA’s) Internet sales tax plan is throughout the country.

The first stop on the tour is South Carolina, where R Street Executive Director Andrew Moylan and NTU Executive Vice President Pete Sepp will host a press conference at the state house in Columbia to review the results of the latest poll, which found Palmetto State voters reject an Internet sales tax mandate by a wide 51-36 percent margin.

“New Internet sales tax laws are bad policy, but this polling proves that they’re terrible politics as well,” said R Street’s Andrew Moylan. “It shows that strong majorities across the country seek an Internet that enriches their lives, not out-of-state revenue agents.”

NTU’s Pete Sepp said: “Special interests might convince some in Washington, but in the states, voters are not fooled by any attempts to unleash tax collectors from reckless states like New York and Illinois on their hometown businesses.”

Last year a national NTU and R Street Mercury poll found 57 percent of respondents were opposed to an Internet sales tax scheme like MFA.

Today’s press conference begins at 2 p.m. ET. On Tuesday, the tour continues to North Carolina, and then 18 more states.

To keep up with the latest, visit “DontTaxtheInter.net.”

Full presentations on the polling are available for the following states:

 

California Senate panel lowers insurance requirement for TNCs

June 27, 2014, 9:27 AM

California’s A.B. 2293 – sponsored by Assemblymember Susan Bonilla, D-Concord – crossed another hurdle Wednesday by earning approval of the state Senate Insurance Committee. Having earlier been amended by Senate Energy, Utilities and Commerce Committee, the bill was further modified by the Insurance Committee to clarify the definitions of transportation network company services and the minimum insurance requirements for each period of service.

Specifically, the amendments define TNC services as “app on,” meaning that a driver is acting in a commercial capacity whenever he or she is logged in to a TNC application and signals availability to take fares. The bill also sets the minimum liability coverage at $750,000; allows for limits to be met by a combination of policies obtained by the driver and/or the TNC; and requires TNCs to maintain coverage for uninsured motorist, underinsured motorist, comprehensive and collision, at amounts to be set by the CPUC..

During the Insurance Committee’s hearing, support for and opposition to the bill came generally from the same quarters as during the Energy, Utilities and Commerce Committee’s hearing. However, some Uber drivers come out in support of the bill, because they want the right to unionize. Moreover, the Department of Insurance now opposes the bill, because the amended version lowered the minimum coverage threshold from the original $1 million.

A few committee members questioned about the lack of data to determine what a minimum threshold should be, and warned that setting the level too high could stifle innovation and technology. However, Chairman Bill Monning, D-Carmel, noted the committee holds “the responsibility to make sure there is sufficient protection for passengers, pedestrians, drivers and to the companies.”

Ultimately, the bill passed the committee by a 9-1 vote. Its next stop is the Senate Appropriations Committee.

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

No easy fix for California's replacement parts regs

June 27, 2014, 8:30 AM

Henry Ford would be gratified to see how far mass production has come. Entire cars are constructed in a matter of hours. He would be somewhat less impressed by how difficult and costly it has become to replace parts.

Why is it that certain parts – bumpers, for instance – are such a headache to repair? The root of the problem is related to something simple: expectations.

Insurers that sell automobile insurance policies agree to return the covered vehicle to its pre-loss mechanical condition in the event of a claim. What, exactly, such an agreement entails is subject to debate.

By way of example, contemplate a scenario in which your car’s bumper has had an unexpected rendezvous with a parking lot lamppost. The bumper is left misshapen and in need of replacement. Parts like your car’s bumper are considered “crash parts.” These are parts of the vehicle that are non-mechanical, non-structural and non-safety related. That means that crash parts tend to serve a cosmetic function and are made of sheet metal or plastic.

Secondary manufacturers around the world are able to reverse-engineer and manufacture your damaged car’s bumper. Replacement parts makers that have the blessing of the vehicle manufacturers are referred to as “original equipment manufacturers,” or OEM, for short. Other crash part manufacturers must be content with being referred to by the less poetic and negative term “non-OEM.”

Names aside, the bottom line is that non-OEM crash parts typically cost between 20 percent and 65 percent less than OEM crash parts. This cost difference makes non-OEM crash parts extremely attractive for cost-conscious repair. To combat their bottom-line disadvantage, OEM manufacturers maintain that the non-OEM parts are not of the same “like, kind and quality” as OEM crash parts.

The cost/quality debate forms the background to expectations and disputes regarding an insurer’s contractual obligation to return your car to its pre-loss condition. For years, meeting expectations concerning crash part replacement has been a flashpoint between insurers, automobile manufacturers and repair shops.

Since 2005, the Legislature in Sacramento has witnessed the introduction of 10 pieces of legislation designed to bend the cost curve away from one industry and toward another. The powerful interests aligned on each side have seen repeatedly that most of these attempts fail in the first step, with the first committee to hear the issue.

Thus, it was with alarm that insurers reacted to a regulatory decision by the California Department of Insurance (CDI) to create a new auto claims world, using its existing scope of devolved authority, by promulgating regulations that remove the incentivize to use non-OEM crash parts.

Regulatory usurpation of legislative matters works real political violence and undeniably is dictatorial in effect. Moreover, the nature of regulatory promulgation allows debate only on the details on a legal product created by government. Regulation can be a premeditated, non-market-based, government-originated effort to create winners and losers by fiat. In contrast, legislative debates are more likely to preserve fairness. For those apparently selected to be losers by the flex of regulatory muscle, the legislative process is understandably preferable.

Yet, before going further, consider again your car’s damaged bumper. When the car goes in for repair there are a variety of options available when it comes to replacing the damaged parts. By law, you have the right to determine where the car is taken for repairs and what specific repairs/parts are used on your vehicle. Thus, you can elect to order replacement parts directly from the factory of the vehicle’s manufacturer. This option tends to be expensive, but in theory, it could be a guarantor of quality.

Given that OEM crash parts are more expensive than non-OEM crash parts, an insurer’s estimate of the appropriate cost of repair may only cover a portion of the cost necessary to install OEM parts. This is because the insurer believes that it can discharge its obligation to return your car to pre-crash condition by using less expensive non-OEM parts.

The CDI characterizes instances in which an insurer’s estimate covers only the cost of less expensive non-OEM parts as “requiring” the use of such parts. The significance of this distinction is borne out by the regulations. The regulations oblige any insurer that “requires” non-OEM parts to guarantee the quality of those parts. The obligation is puzzling, because insurers do not certify, manufacture, replace or otherwise interact in a legally-significant way with parts themselves. Instead, insurers maintain a contractual relationship with their insured to return vehicles to pre-loss condition; a relationship which is only incidentally related to the repair shop/part manufacturer industry’s work on vehicles. Without a concrete nexus to the part itself, insurers are ill-suited to shoulder liability for defects.

By purposely conflating a warranty for repair and a warranty, the CDI has heavily burdened insurers, at the expense of their policyholders.

At the time they were promulgated, insurers speculated the regulations, in effect now for a little over a year, would cause a decline in the use of non-OEM crash parts and an increase in the cost of repairs. Though data bearing out those claims does not yet exist, the merit of those claims is apparent.

For instance, hindering the use of non-OEM parts would be expected to lead to an increase in the use of OEM parts, in turn, leading to an increase in the number of vehicles which reach the dollar threshold at which vehicles are declared a total loss. This is undesirable when one considers that, depending on the value of your car, faced with the prospect of repairing that bumper using an expensive OEM part, it could end up totaled.

To rectify the perceived problem with non-OEM crash part quality, insurers repeatedly have proposed systems by which such parts could be certified as equivalent to OEM quality. These proposals have consistently been opposed by automobile manufacturers and body shops alike. The great irony of their opposition is that it is commonly known that both non-OEM and OEM parts are manufactured overseas, often at the same plant!

Whether intentional or not, the CDI, having acceded to the agenda of the automobile manufacturers and the body shops, has set a course for higher costs and no discernable increase in consumer protection. It is time for the Legislature to step in and to create a uniform system by which crash parts of all kinds are rendered regulatory identical. Perhaps then a bumper repair would be an easy fix.

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

The case for e-cigarettes

June 26, 2014, 5:34 PM

There are about 46 million smokers in the United States, and an estimated 480,000 deaths per year are attributed to cigarette smoking. Despite our best efforts, these numbers have not budged in the last ten years. Electronic cigarettes may be our best hope for changing that.

Before e-cigarettes, the best we had to offer smokers was a set of pharmaceutical-based smoking-cessation protocols that failed about 90 percent of smokers even under the best of study conditions, when results are measured at six to twelve months. The flaws in these “evidence-based” protocols are fairly obvious. They do not satisfy or eliminate the urge to smoke in the majority of smokers, the dose is too low, and the duration of treatment is too short.

E-cigarettes and similar vapor devices compare quite favorably to these methods. E-cigarettes enable the user to inhale nicotine without the witches’ brew of toxic chemicals found in cigarette smoke. They have proven extremely popular among smokers who have been unable or unwilling to quit, and studies show e-cigarettes to be as good as to much better than the pharmaceutical products. In addition, e-cigarettes have been shown to be easier to quit than cigarettes, enabling the now-ex-smoker to finally end his or her addiction to nicotine. While some non-smoking teens may experiment with e-cigarettes, very few will continue their use. As with adults, almost all e-cigarette use by teens is by smokers attempting to cut down or quit.

Further, e-cigarettes contain the same type of nicotine as the pharmaceutical products, and like those products e-cigarettes do not contain tobacco. E-cigarettes’ other ingredients are well known, and consist of propylene glycol (theatrical fog), vegetable glycerin, citric acid, distilled water, and food flavoring. In the absence of FDA regulation (which is the fault of FDA, not the e-cigarette companies), the e-cigarette industry has developed and put into place voluntary standards to ensure the quality and consistency of e-cigarette fluid.

All told, the reduction in risk offered by e-cigarettes relative to traditional cigarettes is about 98 percent. Smokers find the vapor products far more satisfying, and, in many cases, far more effective than the pharmaceutical alternatives.

The case for e-cigarettes is based on solid research and the excellent safety record of the pharmaceutical nicotine-delivery products, which are chemically similar. When it comes to reducing the death toll of smoking, vapor products are the best option we have.

Letter to Senate Select Committee on Intelligence: Oppose CISA

June 26, 2014, 3:25 PM

June 26, 2014

Chairman Dianne Feinstein

U.S. Senate Select Committee on Intelligence

Washington, DC 20510

Vice Chairman Chambliss

U.S. Senate Select Committee on Intelligence

Washington, DC 20510

 

Dear Chairman Feinstein, Vice Chairman Chambliss, and Members of the Senate Select Committee on Intelligence:

We the undersigned write to express our grave concerns with the Cybersecurity Information Sharing Act of 2014 (CISA).  Over the last year, the public has learned that the National Security Agency (NSA) and other government agencies have significantly stretched the meaning of statutory provisions of law in order to gather sensitive information on hundreds of millions of Americans.  The NSA has, without a warrant, searched for the communications of Americans among those collected under laws authorizing surveillance of persons abroad, and engaged in questionable cybersecurity practices, such as compromise of security standards and failure to promptly inform technology companies about security vulnerabilities in their software.  CISA ignores these revelations. Instead of reining in NSA surveillance, the bill would facilitate a vast flow of private communications data to the NSA.  CISA omits many of the civil liberties protections that were incorporated, after thorough consideration, into the cybersecurity legislation the Senate last considered.  For the following reasons, we strongly oppose this legislation and urge against Senate consideration:[1]

  • Militarization of the Civilian Cybersecurity Program: CISA requires that cyberthreat indicators shared from the private sector with the Department of Homeland Security (DHS) be immediately disseminated to the Department of Defense, which includes the NSA and U.S. Cyber Command.[2] This new flow of private communications information to NSA is deeply troubling given the past year’s revelations of overbroad NSA surveillance.  It would enhance the NSA’s role in the civilian cybersecurity program, risking militarization of the program, which would diminish transparency and accountability.
  • Inadequate Use Limitations:CISA’s inadequate use limitations risk turning the bill into a backdoor for warrantless use of information the government receivesfor investigations and prosecutions of crimes unrelated to cybersecurity.  CISA permits state, local, and tribal governments to use cyber threat indicators to prevent, investigate, or prosecute any crime to which the sharing entity assents.[3]  It also allows the Federal Government to use information it receives for an unacceptably broad range of law enforcement purposes, including investigations and prosecutions under the Computer Fraud and Abuse Act (CFAA) and the Espionage Act.[4]  Exemption from disclosure law may obstruct transparency regarding law enforcement use of such information. The legislation should contain reasonable use restrictions, similar those in the July 2012 Cybersecurity Act.[5]
  • Failure to Protect Personally Identifiable Information:CISA requires private sector entities to remove personal information that pertains to knownU.S. persons before they share cyber threat indicators. In practice, this will provide little privacy protection because private sector entities will not know the citizenship of the person to whom the information pertains.  Further, the bill does not require any effort by the government to remove personal information before sharing cyber threat indicators. Finally, the bill does not require that federal privacy rules be in place before information-sharing begins, increasing the risk of improper dissemination of potentially sensitive personal information.
  • Overbroad Liability Protection for Countermeasures:CISA defines “countermeasure” broadly, and unwisely provides an affirmative defense when a countermeasure causes damage to an entity’s network or information system, including actions that would otherwise violate the CFAA, the Wiretap Act, and the Stored Communications Act. This invites reckless and careless use of countermeasures that could inadvertently harm bystanders.
  • Arbitrarily Harms Average Internet Users: The definition of “cybersecurity threat” is overbroad, and includes “any action” that may result in an unauthorized effort to adversely impact the security, confidentiality and availability of an information system or of information stored on such system. Countermeasures can be employed against such threats absent risk of liability.  This could lead to use of countermeasures in response to mere terms of service violations.  For example, logging into another individual’s social networking account – even with their permission – typically violates the website’s terms of service, and therefore qualifies as unauthorized access under the CFAA, and could be treated as a “cybersecurity threat.”  A provision preventing this harm appeared in the July 2012 Cybersecurity Act[6] and should be included in CISA.
  • Infringing on Net Neutrality Policy:Likewise, the July 2012 bill also contained provisions clarifying that nothing in the Act, including overbroad application of the terms “cybersecurity threat” and “countermeasure,” could be construed to modify or alter any Open Internet rules adopted by the Federal Communications Commission.[7]  Net neutrality is a complex topic and policy on this matter should not be set by cybersecurity legislation.

Cybersecurity legislation intended to protect national security, financial systems, computer users, and the Internet must not undercut essential privacy rights.  Accordingly, we urge that these changes be adopted before this legislation moves forward.

Please contact Greg Nojeim, Director of CDT’s Project on Freedom, Security & Technology, gnojeim@cdt.org, or Jake Laperruque, CDT’s Fellow on Privacy, Surveillance, and Security, jake@cdt.org, regarding any questions.

 

Thank you for your consideration,

American Civil Liberties Union

American Library Association

Center for Democracy & Technology

Competitive Enterprise Institute

The Constitution Project

Council on Islamic American Relations

Cyber Policy Project

Defending Dissent Foundation

Demand Progress

DownSizeDC.org, Inc.

The Electronic Frontier Foundation

Free Press Action Fund

FreedomWorks

Government Accountability Project

Liberty Coalition

National Security Counselors

New America Foundation’s Open Technology Institute

PEN American Center

People For the American Way

PolitiHacks

R Street

TechFreedom

 


[1]The concerns posed by this problematic legislation are far- reaching in their effects, and implicate a broad array of issues, including privacy, open government, civil liberties and the integrity of our information technology infrastructure.  Many of the undersigned groups share several or all of these concerns as described in today’s letter circulated by CDT, which highlights technology and privacy issues with the bill, and a letter organized by the ACLU, which focuses on serious concerns the bill poses for open government, whistleblower protections and civil liberties.  These concerns are complementary and overlapping, as evidenced by the significant number of groups signing onto both letters.
[2] Cybersecurity Information Sharing Act of 2014, Sec. 5(c)(1)(C).
[3] Cybersecurity Information Sharing Act of 2014, Sec. 4(d)(4)(A)(i).
[4] Cybersecurity Information Sharing Act of 2014, Sec. 5(d)(5)(A).
[5]S. 3414, Sec. 704(b), 2012.
[6]S. 3414, Sec. 708(6)(B), 2012.
[7] S. 3414, Sec. 707(a)(10), 2012.

About that creepy biometric database, FBI, we’d like to know a bit more

June 26, 2014, 12:04 PM

From Reason:

Yesterday, 32 organizations from across the political spectrum, including the American Civil Liberties Union, the Electronic Frontier Foundation (EFF), and R Street Institute, asked Attorney General Eric Holder to explain just how the United States government plans to use the system it’s building and the data contained therein. Specifically, they want the federal government to perform a formal Privacy Impact Assessment (PIA) to follow up on the last such report, done in 2008.

Snus nicotine lowers risk for multiple sclerosis, may be therapeutic for other nerve disorders

June 26, 2014, 11:00 AM

New research published in Multiple Sclerosis Journal and authored by Anna Hedström of Stockholm’s Karolinska Institute of Environmental Medicine confirms that snus users have a significantly lower risk for multiple sclerosis than nonusers of tobacco. Five years ago, I discussed the researchers’ earlier findings on this subject here.

Hedström’s study is based on some 7,900 Swedes with MS and 9,400 controls. Compared with never users of tobacco, snus users had a lower risk for MS (odds ratio OR = 0.75, 95 percent confidence interval, CI= 0.63 – 0.90). Hedström also showed an increased effect at higher duration-dose levels of snus. For example, users with greater than 10 packet-years (the number of snus doses per day and years of use) had an OR of 0.45 (CI= 028 – 0.68). Smokers had modestly increased risk (OR= 1.49, CI= 1.40 – 1.59), a finding that is similar to that reported in Hedström’s previous study.

Scientific research is methodically unveiling the benefits of nicotine and smoke-free tobacco use with respect to degenerative brain diseases. A finding that nicotine may improve performance in people with mild cognitive impairment has resulted in calls for more research on nicotine’s effect on dementia.

The impact of nicotine/tobacco use on Parkinson’s disease is well documented. An American Cancer Society study provides clear evidence that smokeless tobacco use may be protective for Parkinson’s disease (RR = 0.22, CI = 0.07 – 0.67). In fact, nicotine is being discussed as therapy for this disorder (see here, here  and here).

Alzheimer’s disease is the sixth-leading cause of death in the United States and Parkinson’s disease is the fourteenth. The role of nicotine and smoke-free tobacco in reducing risk of or treating these disorders is of significant import.

Let it grow

June 26, 2014, 8:30 AM

Last week, the Washington Post detailed a phenomenon which, to many twenty-something residents (or former residents) of the District of Columbia, is all too familiar: young people are leaving Washington proper in droves:

They were once a part of the free-spending group of young people who jolted Washington’s economy. Now older and with more financial strains, they are trying to find a new place in it.

Amid the talk of young newcomers and their fondness for social leaguesand artisanal-coffee shops, another reality exists: Many are struggling to keep pace with the city’s rising cost of housing. And as new millennials move into the District, older members of that generation — loosely defined as ranging from 18 to 34 years old — are heading out.

This odd, migratory pattern among younger D.C. residents is undoubtedly a problem, and one with which this author can personally identify, having moved last year from a squat, overpriced studio in Kalorama to a spacious two bedroom in Arlington, when the combination of lower taxes and split rent became simply too attractive to turn down. For others, such as those cited in the article, similar factors are no doubt at work.

Since the article’s publication, its author, Robert Samuels, has posited a number of potential remedies for the relevant problem. For instance, he has suggested making neighborhoods more walkable, or reforming and expanding the public transit system (which, in WMATA’s case, is decades overdue). Lower crime rates also would be essential for some of the more affordable areas of the city to attract new residents, Samuels notes.

All of these are good suggestions, as far as they go, but there’s one obvious solution that is completely ignored both in the original article and its sequel.

I refer to the century-old Height of Buildings Act of 1910, which restricts buildings in the District of Columbia to the rather diminutive height of 110 feet. While this particular height probably seemed formidable in 1910, today it only recalls a hilariously anachronistic phrase from the Rogers and Hammerstein musical Oklahoma:

Everything’s up to date in Kansas City

They’ve gone about as far as they can go

They went and built a skyscraper seven stories high

About as high as a building oughtta grow

Here in D.C., regulators appear to believe eight stories is about as high as a building ought to grow. What seems to concern them less is how high this causes rent to grow. As Danny Vinik noted in The New Republic in May:

Zillow, a real-estate database, rates D.C. as the seventh-most expensive metro area in the country for residential renters. Office rents are third-highest in the U.S, according to commercial real estate firm Cassidy Turley. Increasing the supply of housing would bring down these rents significantly. That leaves more money in consumers’ pockets to spend on goods and services and more money with companies to boost wages or invest. That means more jobs, including many from the construction boom that would result from a relaxation of height restrictions. The increased density would lead to a larger underlying tax base and boost revenue to put toward city services. And, as Matt Yglesias has often written, allowing companies to cluster near each other has significant economic benefits.

One doesn’t have to be in favor of transforming the much-beloved D.C. skyline into a Tokyo-esque hive to see the problem, nor why even a modest increase in the height limit could drive down rents and allow more young people to stay in the city. Such an improvement would be at least as important as, say, updating the city’s public transit.

Of course, as in any policy fight, there are both economic interests and inherent resistance to change to be overcome. On the economic interests front, one can easily see how landlords and homeowners prefer a policy that sees their rents rise every year, irrespective of the age of the tenants who happen to be paying them, or that keeps the value of their homes increasing, irrespective of whether anyone can afford them.

As to resistance to change, one need only look to the fuss that more senior residents of the district raised over the addition of late night bars and bike lines to neighborhoods like Cleveland Park. Shortening their beloved skyline, even by a few stories, may be a bridge too far.

Still, D.C. has a choice: Embrace the future by letting its buildings grow up along with its younger inhabitants, or simply serve as one temporary stop for those young people on their way to environments with less regulatory meddling. It may be that many residents probably are all too happy to choose the second option, but they may need a reminder that economic growth also implies growth within the city. In this case, that growth may have to be vertical.

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

University of California has strong opinions on peer-to-peer business

June 26, 2014, 7:50 AM

Earlier this week, the University of California’s Office of the President (UCOP) determined that, as a result of a perceived shortfall in regulation, it would not reimburse faculty members who use transportation network companies (Uber, Lyft, Sidecar, etc.) or other peer-to-peer services like Airbnb while engaged in UC-related business. The message is recreated below:

Dear Colleagues,

UCOP’s Office of General Counsel has determined that third-party lodging and transportation services, commonly referred to as peer-to-peer or sharing businesses, should not be used because of concerns that these services are not fully regulated and do not protect users to the same extent as a commercially regulated business. As the market matures and these businesses evolve, the university may reconsider whether reimbursement of travel costs provided by peer-to-peer or sharing businesses will be allowed.

Therefore, until further notice, please do not use services such as Uber, Lyft, Air B&B or any other similar business while traveling on or engaging in UC business.

What or who would drive the president of the University of California (Janet Napolitano) to steer recklessly into a collision with the regulatory decision of another duly delegated California state body that has far greater expertise? Why does Ms. Napolitano even have a position on how TNCs should be regulated?

This is an instructive example of the unexpected reach of state bodies and their ability to choose winners. The UCOP has decided to augustly articulate a legal, but policy-deficient, rationale for their judgment about the sufficiency of the current regulatory regime.

What precisely does the UCOP mean by “not fully regulated”?

Setting aside the other peer-to-peer services, in California, TNCs are regulated by the California Public Utilities Commission (CPUC). The CPUC has promulgated preliminary regulations and insurance requirements to TNCs which, while still being refined, do hold the force of law. In fact, the CPUC has already issued licenses to operate to five separate providers of TNC services. As far as the CPUC is concerned, it has enough of a handle on the situation to allow for TNCs to continue to operate.

The sufficiency of the regulation surrounding TNCs is more about resolving hitherto latent ambiguities which have been emphasized by incumbent industries. No doubt, such concerns deserve serious attention from regulators and policy-makers alike. But, such attention does not signal that TNCs are somehow without “full regulation.”

More frustrating still is that the UCOP has determined, with no or limited subject-matter expertise, that other “commercially regulated businesses” offer consumers a greater degree of protection. Here, the UCOP is conflating different activities. TNCs are under the regulatory purview of the CPUC because they are considered charter-party carriers – a designation populated by limousine services. They are not regulated as taxis are, by local authorities. Since TNCs have a different regulator and a different business model, comparisons between their regulatory environment and the regulatory environment in which taxis exist is awkward and misleading.

The UCOP, if utterly compelled to act, should have at least done so with an eye on the angle that the California Legislature is taking. There is little doubt that, whatever the final product looks like, there will be a meaningfully cognizable difference between what is required of taxis and what is required of TNCs. The University of California, unfortunately, is doing its part to express a policy preference for disregard of other state regulators and apparently for onerous regulation. California-licensed TNCs are lawful vendors. In fashioning its policy judgment, the UCOP erred.

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

The risks of allowing Internet censorship

June 25, 2014, 2:16 PM

From NCPA:

The Supreme Court of British Columbia has ordered Google to remove information from the internet, reports Zach Graves for R Street.

The Canadian case involves the sale of counterfeit products, but it is similar to a ruling by the European Court of Justice last month, which ruled that search engines could be required to remove links that infringe upon a person’s privacy rights.

The decisions are distinct, but both have a wide reach:

  • The European decision applies even to factual information in the public record.
  • Unlike the European decision, the Canadian decision applies beyond Canadian sites, requiring Google to remove information that can be assessed from anywhere in the world.

The ruling, writes Graves, leads to some important questions. What if a ruling in one country conflicts with another? He notes that China, Korea and Russia are already pursuing ways to possibly censor the Internet.

People depend on search engines for information, and allowing a country to set restrictions on the type of information available on the internet is concerning.   

Source: Zach Graves, “The Dangerous Proliferation of the ‘Right to be Forgotten’,” R Street, June 18, 2014.