Coyote Blog

On several occasions, I have warned that government funded health care is becoming a Trojan horse for increasing government micro-management of your life.  The logic is that by paying for your health care, the government can argue it has a financial interest in your not eating fatty foods, not smoking, wearing a bike helmet, exercising, etc, decisions that would otherwise only affect the individual themself.*

For those who often accuse me of exaggerated paranoia when it comes to government intervention, check out this from the UK:

People who are grossly overweight, who smoke heavily
or drink excessively could be denied surgery or drugs following a
decision by a Government agency yesterday.  The National Institute for Health and Clinical Excellence (Nice) which
advises on the clinical and cost effectiveness of treatments for the
NHS, said that in some cases the "self-inflicted" nature of an illness
should be taken into account.

Sorry, but I told you so.  What's next?  Is an unwanted pregnancy "self-inflicted"?  How about an STD from unprotected sex?  The rulers of this process in England might argue that "Oh, we would never include those things" but technocrats in the US have seen parallel things happen as they have lost political control of their similar institutions in the US.

It gets me to wondering whether the Solomon Amendment may be the new template for government control of individual lives.  In both Universities and state governments, the Feds use the threat of withdrawal of federal funds to coerce actions (think 55 mile speed limit, title IX, military recruiting on campus) that the Constitution nominally does not see to give them authority over.  Now, there is the distinct possibility that federal funds to individuals (Social Security, Medicare, unemployment) could be used to increase federal authority and coercive micro-management at the individual level.

*Update: Yes, I do know that "themself" is probably not correct grammar.  I sometimes use they, them, themself as a grammatically frowned-upon but I think less awkward substitute for he/she, his/her, and his-or-herself when trying to be gender-neutral.  Sometimes I just use the traditional male pronoun, sometimes I use the female pronoun generically since women will complain about "he" used generically but men will not complain about "she", and sometimes I mix them up.  There is still some consensus building to do in coming up with gender neutral pronouns, though this person defends the singular "they".

Again, via Reason's Hit and Run:

Yesterday an Institute of Medicine committee released a report on food marketing and children that called for
congressional action "if voluntary efforts by industry fail to successfully shift
the emphasis of television advertising during children's programming away from
high-calorie, low-nutrient products to healthier fare." According to The New York Times, the IOM report "links TV ads and
childhood obesity." According to The Washington Post, it says "TV ads entice kids to
overeat."

It is amazing that the human race has made it this far given that our children are raised by two entities, "TV" and "Congress", who are so often bickering with each other over how to best accomplish the task. 

I have a proposal.  I think we should nominate some smaller group of adults, maybe two on average, to take over the care, feeding, and education of children until they reach adulthood.  Though its probably not an absolute requirement, maybe we could have one of these adults be a female and one a male, to make sure children can draw on the experience and insights of both genders.  These individual child protective guardians could actually live with the children, helping them to avoid making bad decisions about diet, entertainment, and many other life issues.  This would drive accountability for raising children down much closer to the individual level, and relieve from "TV" and "Congress" the need to micromanage decision-making from afar.

The FCC has reversed course and decided that cable companies bundling channels into packages rather than selling them a la carte is bad and requires coercive action from the government to fix.  This issue was originally pushed by religious groups, who I guess did not want signals from naughty content even accessible from their house (the "just don't watch that channel" solution presumably determined to be too difficult).  However, "progressives" on the left have latched onto this issue as well.  I remember a Kevin Drum post, which unfortunately I can find right now, advocating cable unbundling as an example of an agenda progressives should be jumping on.  Beyond the basic rationale that progressives hate cable companies almost as much as Exxon and Wal-mart so anything cable companies oppose they are for, the ostensible logic is that if I pay $50 now for 165 channels, I should only pay $10 if I choose to watch only 33 of those.  Here is their "logic":

The main obstacle for a la carte: programming contracts.
Programmers routinely bar cable operators from selling channels a la carte.

Why? Advertising rates. Cable programmers base ad rates on
the number of viewers they reach. The more they reach, the more they can charge.
If they allowed a la carte, viewership for many channels would likely
plummet.

Gene Kimmelman of Consumers Union says:"This is the essence
of how they squeeze extra revenues out of consumers."

The problem could worsen, he warns, as cable operators "” as
well as broadcasters and satellite TV "” pack on more channels.

"The bundles get bigger, and prices go up," Kimmelman says.
"A la carte would blow this scam out of the water."

This presumes that the number of channels has anything to do with cable cost or pricing.  Which it really doesn't, since the marginal 100 channels or so at the tail end of the viewership curve all just want to be carried for free, in hopes they can get some ad revenue from corporate America for being on the dial.   From a cost standpoint, beyond a few core channels, it costs cable companies about nothing extra, given the infrastructure of high-bandwidth delivery systems is already in place, to send you 20 channels or 150. 

Pricing, though, is not just set based on costs, but on value.  And the government is about to change the value equation, and maybe not in the consumer's failure.  Up to now, cable's value proposition has been "wide selection", a value proposition supported by the multi-channel bundle for one price.  After making this traditional value proposition illegal, there is no guarantee at all that the value proposition that replaces it will be a better, or even equivalent one.

Most consumer advocates tend to assume that bundles are hosing the customer, because they are being forced to pay for stuff they don't want.  But bundles can more often than not be the opposite - including items of value that the customer is not paying full price for.  The the evolution of cable service tends to confirm this.  Cable on a real basis does not cost that much more than it did 20 years ago when you only got 20 or so channels.  My suspicion, which I can't prove, is that you are paying for those 20-25 core channels, and everything else is a freebie.  In this model, bundling is delivering extra value over a la carte, because you really aren't paying much or anything at all for those incremental 130 channels.

In fact, in my years as a consultant looking at pricing, one of the first things we looked at in a company to increase total pricing and profits was unbundling services.  The issue of concern was that more often than not, bundling provided customers with hidden pools of value that they were not really paying for, and unbundling helped make consumers pay full price for things they were previously getting for free.  Airlines, banks, and numerous others make more money by unbundling today.  My suspicion is that this will be the case with cable.

By the way, look under the hood of any business regulation proposed as "consumer protection" and you will usually find the fingerprints of corporations trying to use the government to sit on their competition.  And yes, we have that here.  New entrants AT&T and Verizon want the government to ban the current cable companies' business model, thereby putting them on equal footing in entering the market.  By the way, speaking of these phone companies, does anyone out there really think they are getting a better deal when they pay for call waiting and answering service and long distance and local separately rather than in one of the advertised bundles?

So here are my predictions:

• Assume an average cable bill today is $50 a month for 150 channels.  If the average person watches and really is willing to pay for 15 of those a la carte, then the new pricing is going to result in a $50 bill for those 15 channels.  Count on it.  People will be paying the same amount as before, but for fewer channels.  Or, if they want the same number of channels as before, they will be paying more
• In one year, leftish backers of the bill will realize the above, and will publicly criticize the cable companies for their rational reaction to the coercive government program.  They will propose new pricing regulations to "fix" the problem they say stems from private enterprise, but in fact came from unintended consequences of the original regulation.  This use of negative consequences of regulation to justify further regulation is one of the most important tools in the statist's bag.
• A number of smaller cable channels will go bust.  Even those wanting and willing to pay a la carte for the full 150 channels they got before will not be able to, because many will not exist any more.
• Fewer niche or idiosyncratic channels will exist.  Today, cable companies want to sell the package of 150 channels.  At the margin, adding a channel that caters to a niche not reached by the other channels is better for them than adding yet another channel that caters to the median viewer, because it makes the package as a whole attractive to more viewers.  However, if every channel is sold a la carte, cable programmers will add channels and content aimed at the mass market to maximize sales of each channel.  Each channel must stand on its own. Oddball niches need not apply.  Interestingly, many of these will be things like the Gay Vegan Channel
  that tend to be particularly popular among "progressives".
• Innovation in terms of new cable channel offerings will die, because a la carte pricing will substantially increase the cost for a new entrant to get going.  In the past, they just had to sell 2-3 cable company programming buyers that they should try the new channel in their lineup, and they were off and running.  Now, they not only have to convince cable companies to be on the menu, but have to sell consumers one by one to get into homes.  This is orders of magnitude more expensive.  The stock of current cable companies will go up, because competition will be harder.  In another ironic unintended consequence for "progressives", only large corporations will be able to start new cable channels in the future, increasing media consolidation that progressives decry.
• In one year, religious backers of the bill will be upset that so many people still opt for naughty content, and will propose legislation to increase the difficulty in signing up for certain channels (e.g. physical presentation of proof of age) and to regulate advertisement and promotion of these channels.

Reason's Hit and Run has more along the same lines.

Postscript:  In the past, FCC and Congressional rules have actually mandated bundling.  For example, still on the books are must-carry laws that say that cable companies have to carry every local broadcast channel.  It will be interesting to see if I can opt out of ABC.  I bet I won't be able to - legislation pre-empts FCC rule-making.  Which will create an interesting discriminatory aspect to the regulation, which is that the cable companies must bundle in companies that also broadcast their content over airwaves but must unbundle non-broadcast content.  Which also leads to the irony that cable will have to include content that consumers have an alternative source for (e.g. ABC via an antenna) but have to be ready to exclude content that consumers have no alternative source for (e.g. the History Channel).

Final Thought: What's next from the FCC?  If I only listen to FM 93.3 on my radio, are radio makers going to be required to unbundle the capability to receive all those other stations to give me a radio that only gets 93.3?  And does anyone think that radio would be cheaper?

Frequent readers of this blog know that I have a particular disdain for technocrats and the damage they do via government coercion.  Just to make sure that I am not subject to the Princess Bride accusation of "You keep using that word -- I do not think it means what you think it does", I will define my terms.

In my parlance, a technocrat is someone who believes that individuals, either acting alone or in groups, are making the wrong decisions and that a few very smart people can make things better for everyone by overriding everyone else's decision-making. 

Technocrats sometimes have a "macro" flavor, focusing on the broad sweep of the economy, seeing market failures everywhere that they feel they could override if only someone would follow their "plan".  This hubris was of course one of the foundations for that juggernaut Soviet Russian economy, and was in fact the thinking behind America's closest brush with fascism, Roosevelt's NRA, which was modeled on Mussolini's economic work.  My college roommate Brink Lindsey has a lot of background on the early 20th century roots of technocratic opposition to capitalism in his book Against the Dead Hand: The Uncertain Struggle for Global Capitalism.

Technocrats also can have a "micro" flavor, focusing on individuals who they feel are making bad decisions for their own selves.  Classic examples are helmet and seat belt laws, where "smarter" people use government coercion for your own good.  We typically call these micro technocrats nannies.  I discussed governments overriding individual decision-making here.

Just the other day I mentioned in this post that I had had a conversation with a technocrat who was:

lamenting that allowing a company like GM to die is dumb, and that a
little bit of intelligent management would save all those GM jobs and
assets.  Though we did not discuss specifics, I presume in his model
the government would have some role in this new intelligent design (I
guess like it had in Amtrak?)

I went on to describe why it was OK to let GM fail.  In particular I noted that it was bad for everyone to artificially force quality assets (people and facilities) to remain in an under-performing corporate structure, which is what the government in effect does when it tries to override the market's decision that a corporation needs to die.

I bring this all up because I saw this classic example of technocratic statism from David Ignatius in the Washington Post. 

Economist Philip Verleger was traveling in Asia last month when the news
broke that General Motors was slashing 30,000 jobs to try to reverse its death
spiral. A Japanese economist he had known for many years asked him a stark
question: "What great nation will allow its major manufacturing company to
fail?"

The convulsions wracking GM are scary, but they're getting surprisingly
little attention amid America's sea of other troubles. Certainly, we've heard
barely a peep out of the Bush administration, which evidently worries more about
keeping energy companies happy than Rust Belt manufacturers. Commentators have
blamed GM management for being too shortsighted and its workers for being too
greedy. But few people seem to appreciate that the nation as a whole has a stake
in maintaining a dynamic industrial base, or that government policies could help
reverse our industrial decline....

But suppose we took GM's near-death experience as a national wake-up call and
decided to get serious about reviving the long-term health of the U.S.
manufacturing sector. What if political leaders treated this as a fundamental
national mission, equivalent to President John F. Kennedy's call to put a man on
the moon? Could government make any difference?

Try this thought exercise: Suppose a government plan could revitalize the
automobile industry and the rest of the transportation sector, encouraging it to
leapfrog several generations of technology; suppose this same plan could cut
U.S. dependence on foreign oil to zero; and suppose, finally, that the plan
could develop new technologies that would bump our economy to a higher growth
path and foster U.S. economic leadership in the 21st century. Would that idea be
worth exploring?

Yes, good idea, lets hand over the automobile industry to the same folks who built and maintained the levees in New Orleans.  It is interesting he quotes a Japanese economist chiding the US for letting its major companies fail.  The author is basically advocating the Japanese MITI approach, making technology choices and managing industries and preventing large organizations in which national pride is somehow tied up from failing.  Which, of course, has resulted in a 15 year recession in Japan.  And Europe.  Don Boudreaux at Cafe Hayek responds further:

I'm tempted to do a long riff here on all the details that Ignatius misses "“
such as, for example, the fact that it's simply not true that as goes GM so goes
America; such as the fact that there is
nothing at all special or inherently better about manufacturing and
manufacturing jobs over service-sector production; such as the fact that
infecting decisions about investment and production with politics will reward
political appeal at the expense of genuinely economically sound uses of
resources.

But it's late, so I'll just point you to Ignatius's closing paragraph:

I'm no technologist, so I can't evaluate the technical details of Lovins's
proposal. What I like is that it's big, bold and visionary. It would shake an
America that is sitting on its duff as foreign competitors clobber our
industrial giants, and it would send a new message: Get moving, start
innovating, turn this ship around before it really hits the
rocks.

This paragraph reflects an attitude that is rich soil for totalitarianism to
take root. It ignores individual freedom; it ignores the possibility that the
admired Big Plan might be flawed, either technologically or economically or
both. Ignatius is all orgasmic simply because The Plan is centralized and Big
and (allegedly) will compel or inspire the masses once again to behave in ways
that promote national greatness.

Heaven help us.

If you think he is exaggerating, as many people do, by invoking the threat of fascism, go back and read what the fascists of the 1930's were writing.  It is nearly identical to Ignatius's words.

There are two lessons technocrats never learn:  1) Their grand plans never work and 2) The statist machinery they create via their grand plans is always taken over from the well-meaning by the power-hungry and corrupt.  As I stated before:

Technocratic idealists ALWAYS lose control of the game.  It may feel
good at first when the trains start running on time, but the
technocrats are soon swept away by the thugs, and the patina of
idealism is swept away, and only fascism is left.  Interestingly, the
technocrats always cry "our only mistake was letting those other guys
take control".  No, the mistake was accepting the right to use force on
another man.  Everything after that was inevitable

And, in fact, you are seeing just this today, as technocrats on the left lament that the machinery of state control they created, from the FDA to public schools, is being taken over by their political enemies.  Unfortunately, they lament the loss of control, not creating the all-powerful state in the first place.  Much more on this topic here and here.

Postscript:  I tossed off the statement above about letting the same organization that built the New Orleans levees fix the automobile industry.  That quick joke makes a valid point, but I should mention that Ignatious does try to preempt this argument:

But then, who can expect individuals to act responsibly when we have an
administration that asserts, in apparent sincerity, that the proper response to
our massive deficits is more tax cuts that plunge us even deeper into debt?
We've become so inured to public-sector mismanagement that the idea of
government solving problems is almost laughable.

In effect, he is arguing that yes, the government has mismanaged things, but this is only because they did not let the really smart people run things.  This is a particularly seductive argument for the left, where most technocrats reside, since it lets them say that government is inefficient only because that idiot Bush is in charge. 

But this ignores the fact that the stupid and corrupt always take over the machinery of state.  Technocrats love railroads, and think America is stupid for not riding the train, like those brilliant Europeans are.  Many supposedly smart people, both Democrats and Republicans, have had their shot at Amtrak, and it still sucks and loses money.  One reason among many for this failure is that incentives matter.  The government has the incentive to patronize powerful voting blocks, not to run an efficient operation or serve customers well.  That's why we get half-billion dollar bridges in Alaska to islands with populations of fifty people.  That's why scientific decisions at the FDA get politicized.  That is why have the government backing a technology ostensibly to reduce fossil fuel use (ethanol) that has been proven to actually increase fossil fuel use.  In effect, government always turns smart people stupid.  More on the specific dangers of government industry building here.

Another Postscript: By the way, people smarter than me do change industries all the time.  The are called "entrepeneurs" and they raise capital from people voluntarily and they succeed or fail only if individuals choose to do business with them.  I find it fascinating to compare Sam Walton with Mr. Ignatius.  Sam Walton raised money voluntarily to support a different vision of retailing, and was successful because many, many people have chosen voluntarily to shop at his stores.  Mr. Ignatius wants to change the automobile industry at the point of a gun, using government's coercive power to force companies to adopt certain technologies and build cars in certain ways, funding the effort with tax dollars taken unwillingly from productive Americans.  Isn't it amazing that "progressives" will want to rally around Mr. Ignatius's vision while excoriating Wal-mart at every turn? 

OK, another Postscript:  At the heart of many of Mr. Ignatius's concerns, and of many people on the left, is that America is "losing" to other countries.  Could someone on the planet please provide maybe just one single fact to support what they mean by this.  I mean, I hear this all the time, but what is it referring to?  Other than, of course, the lamentable fact that 43-year-old Ivy League educated men still can't stop ending sentences with a preposition.

Since 1990, the US economic growth rate has dusted that in most of Europe and Japan.  Only developing nations like China have growth rates that outpace us, and I guess that is what these folks are worried about.  But this is what is never said:  If you don't want countries like China to "catch up" with the US in technology and economy, then you have to be willing to consign billions of people to eternal poverty.  It is amazing to me that "progressives"  who ostensibly care about the poor get so upset when countries like China develop real capabilities that can finally pull themselves out of poverty.  Inevitably, as they do this, they will do some things better than we do.  Over time, our economies will shift, as we do the things we are good at and vice versa.  I know this is kind of novel for some - its an idea that has only been around for 200 years or so.  Having other people get wealthier is only a threat if you believe economics are zero-sum, another urban legend popular on the left that can be demolished with about 5 seconds thought.

One of the virtues of being a bit older is that you can start personally observing history repeating itself.  In the late 80's and early 90's everyone was running around screaming that we were "losing" to Japan and we had to imitate their statist technocratic approach.  Fortunately we did not.  Only in politics could you hear people like Mr. Ignatius being taken seriously when they scream "our economy is losing - lets go out and imitate the people losing even worse"

Update: Sorry this is getting so long, but I can't ignore Virginia Postrel on the same topic of technocrats:

Competition provides not only useful criticism but a continuous
source of experiments. It gives people...the ideas with which to create still
more progress and encourages them, too, to come up with incremental
improvements. By picking winners, stasist protectionism eliminates this learning
process, which includes learning what does not work.

"Premature choice," warns the physicist Freeman Dyson, "means betting all
your money on one horse before you have found out whether she is lame."
Protecting established interests from new challengers is one form of premature
choice. But technocratic planners also sometimes kill existing alternatives to
force their new ideas to "succeed." To protect the space shuttle, NASA not only
blocked competition from private space launch companies, it also eliminated its
own expendable launchers. Such pre-emptive verdicts often mark public works
projects. Planners pick an all-purpose winner, squeeze out alternatives, and
eliminate any real chance of experiment and learning.

Consider the infamous Denver International Airport. Aviation officials touted
the $4.9 billion project as essential to keep up with the region's growth. They
promised it would be a vast improvement over the old Stapleton Airport, which
was often socked in by bad weather. But its sponsors foisted DIA on unwilling
customers. The airport is 25 miles outside Denver, pretty much in the middle of
nowhere, while Stapleton was just 15 minutes from downtown. To make matters
worse, there are no hotels near DIA. And the new airport's cost per passenger is
somewhere between $11.75 and $18.14, depending on how you count--substantially
more than either the $4.59 at Stapleton or the $9.91 promised by former Mayor
Federico Pena. Frequent travelers resent the inconvenience and the generally
higher ticket prices. "I liked Stapleton better," one told The Denver Post. "You
could literally leave about 45 minutes before your plane departed. With DIA, you
have to leave an hour and a half before." A flight attendant expressed a common
sentiment: "It's a beautiful airport. But we hate it."

On the airport's first anniversary, journalists had trouble reaching a simple
verdict on DIA. There were complaints all right--lots of them. But some
passengers liked the spiffy new airport, with its marble floors and inviting
shops. And flight delays had in fact dropped dramatically. The first-anniversary
stories were confused, lacking a central theme.

The reporters had missed the main problem: The city had eliminated the most
obvious source of feedback--competition from the old airport. It had made DIA a
protected monopoly rather than an experiment subject to competitive trial. By
shutting down Stapleton, DIA's political sponsors had made it impossible to rule
the new airport a definite error. No matter how many complaints passengers
lodge, officials can always point to other advantages. At the same time,
however, DIA's monopoly keeps it from becoming an accepted success. Without a
genuine trial, we simply have no way to tell whether travelers (or airlines)
would rather trade a convenient location for fewer weather-related delays. One
airport must fit all: Love it or hate it, if you're flying from Denver you don't
have a choice.

Technocrats often decry competition as wasteful, and always use examples of failed companies and poor private technology choices (e.g. dot com bust companies) as an example of inefficiency of a competitive marketplace that technocrats could avoid.  As Postrel points out, though, these individual failures are not failures of the system, but rather are triumphs.  In the immortal words of the Microsoft tech center, they are a feature, not a bug, and a critical feature at that.

Every once in a while I post something off the cuff and find retroactively that I have tapped into a rich source of blogging material.  Such is the case with my post a couple of days ago about technocrats on the left regretting loss of control of the statist institutions they created.  In that article I cited examples of the left freaking out over a conservative-controlled FDA halting over-the-counter approval of the Plan B morning after pill and the injection of certain conservative dogmas (e.g. intelligent design) into public schools.  The moral was that the left is lamenting the loss of control, when they should be reevaluating the construction of the regulatory state in the first place.

David Bernstein at Volokh brings us another example with the Solomon Amendment, the legislation that requires universities that accept public funds to allow military recruiters on campus.  Folks on the left hate this act, many because they oppose the military at all junctures while others more narrowly oppose recruiting as a protest against the Clinton-era "don't ask, don't tell" policy law brainchild.  Eskridge and Polsby debate the pros and cons at the ACS Blog.  I tend to be sympathetic to the private universities, who rightly don't feel like acceptance of federal money or research grants should negate their control of their institution.

But my point is not the merits of the Solomon Amendment, but to point out the irony, very parallel with the FDA and public schools examples previously:  The Solomon Amendment is built sturdily on the precedent of Federal Title IX legislation, legislation that is a part of the bedrock of leftish politics in America.  Title IX first established the principal that the Federal government could legally override the policy-making and decision-making at private universities if they accepted any federal cash.  It was the left that fought for and celebrated this principal.  The left ruthlessly defended the state's right to meddle in private universities in substantial ways, and passed legislation to shore Title IX up when the Supreme Court weakened state control (from the Bernstein post):

The Court's attempt to preserve some institutional autonomy for universities
from anti-discrimination laws caused uproar among liberal anti-discrimination
activists. They persuaded Congress to pass the "Civil Rights Restoration Act."
This law ensured that if a university receives any federal funds at all,
including tuition payments from students who receive federal aid, as in Grove
City's case, all educational programs at that university are subject to Title
IX.

The Solomon Amendment is modeled after the Civil Rights Restoration Act's
interpretation of Title IX.

In fact, in the linked articles, Solomon is being attacked by the left precisely because it does not allow universities the freedom to set their own anti-discrimination policy (in this case, banning recruiters judged discriminatory to gays), when the whole issue of Title IX was precisely to override a university's chosen anti-discrimination policy (or lack thereof).  So again we have the case of the left building an government mechanism to control private decision-making, and then crying foul when their political enemies take control of the machinery.

In my naive youth, I would have assumed that this contradiction would quickly be recognized.  However, the left (and the right too, but that is for another post) has been able for years to maintain the cognitive dissonance necessary to support the FDA's meddling in every single decision about what medical procedures and compounds a person can have access to while at the same time arguing that abortion is untouchable by government and that a woman should make decisions for her own body.  In this case, it will be interesting to see if the left is able to simultaneously decry state control of discrimination policies at private universities in Solomon while continuing to support state control of private university discrimination policies as essential in Title IX.

Correction: You learn something every day.  I called don't-ask-don't-tell a "policy, as I had assumed that it was merely an internal military policy.  Apparently it is a law.

Over the past fifty years, a powerful driving force for statism in this country has come from technocrats, mainly on the left, who felt that the country would be better off if a few smart people (ie them) made the important decisions and imposed them on the public at large, who were too dumb to make quality decision for themselves.  People aren't smart enough,they felt, to make medication risk trade-off decision for themselves, so the FDA was created to tell them what procedures and compounds they could and could not have access to.  People couldn't be trusted to teach their kids the right things, so technocrats in the left defended government-run schools and fought school choice at every juncture.  People can't be trusted to save for their own retirement, so  the government takes control with Social Security and the left fights giving any control back to individuals.  The technocrats told us what safety equipment our car had to have, what gas mileage it should get, when we needed to where a helmet, what foods to eat, when we could smoke, what wages we could and could not accept, what was and was not acceptable speech on public college campuses, etc. etc.

Throughout these years, libertarians like myself argued that there were at least three problems with all of this technocratic statism:

• You don't have the right to make decisions for other people. Period.  No matter how high-minded and idealistic you want to portray
  it, at the end of the day you are proposing to use force to coerce another man into doing your will.  You may stop them from using force or fraud against others, but an adult may make decisions for themselves, even if they are bad.  I am reminded of a great line from the HBO show Deadwood, "Can you let me go to hell the way I want to?"

• You can't make better decisions for other people, even if you are smarter, because every person has different wants, needs, values, etc., and thus make trade-offs differently.  Tedy Bruschi of the Patriots is willing to take post-stroke risks by playing pro football again I would never take, but that doesn't mean its a incorrect decision for him.

• Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry "our only mistake was letting those other guys take control".  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

I am reminded of all this because the technocrats that built our regulatory state are starting to see the danger of what they created.  A public school system was great as long as it was teaching the right things and its indoctrinational excesses were in a leftish direction.  Now, however, we can see the panic.  The left is freaked that some red state school districts may start teaching creationism or intelligent design.  And you can hear the lament - how did we let Bush and these conservative idiots take control of the beautiful machine we built?  My answer is that you shouldn't have built the machine in the first place - it always falls into the wrong hands.  Maybe its time for me to again invite the left to reconsider school choice.

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter.  And, knock me over with a feather, it appears that the decision was political, based on a conservative administration's opposition to abortion.  And again the technocrats on the left are freaked.  Well, what did you expect?  You applauded the Clinton FDA's politically motivated ban on breast implants as a sop to NOW and the trial lawyers.  In establishing the FDA, it was you on the left that established the principal, contradictory to the left's own stand on abortion, that the government does indeed trump the individual on decision making for their own body  (other thoughts here).  Again we hear the lament that the game was great until these conservative yahoos took over.  No, it wasn't.  It was unjust to scheme to control other people's lives, and just plain stupid to expect that the machinery of control you created would never fall into your political enemy's hands.

OK, rant over.  No one wants to hear "you asked for it", but that is indeed my answer to many of the left's laments today about conservatives taking over their treasured instruments of state control.  I hate to be a geek here, but even Star Trek figured out this whole technocrat losing control of the fascist state thing 40 years ago.

Update:  Wow, I am not that skilled with reading academix-speak, but I am pretty sure that Ed Glaeser via Margina Revolution is saying the same thing:

Soft paternalism requires a government bureaucracy that is skilled in
manipulating beliefs.  A persuasive government bureaucracy is inherently
dangerous because that apparatus can be used in contexts far away from the
initial paternalistic domain.  Political leaders have a number of goals, only
some of which relate to improving individual well-being.  Investing in the tools
of persuasion enables the government to change perceptions of many things, not
only the behavior in question.  There is great potential for abuse.

Update:  Cafe Hayek discusses how the FDA is failing even technocratic objectives and this is an amazing data-rich in-depth analysis of the FDA vs. markets in managing drug risk/reward choices:

The debate over off-label prescribing is not about perfect safety; it is about
whether unavoidable trade-offs are best made for everyone by a centralized authority
such as the FDA or whether those decisions are best made by patients and doctors
acting independently. Whoever makes a decision to try (patient), prescribe (doctor),
or approve (FDA) a drug must face the trade-off between the costs of prescribing a
potentially unsafe medicine (a type II cost) and the costs of not prescribing a drug
that could have saved a life (a type I cost)....

The FDA tends to overemphasize the cost of using a potentially unsafe medicine,
because type II costs are highly visible and result in punishment of the FDA, whereas
type I costs are invisible and do not result in punishment.

If the FDA approved a drug that killed thousands of people, that story would make
the front page of every newspaper in the nation. Congressional hearings would certainly he held, the head of the FDA would probably lose his or her job, and the agency would be reorganized. But if the FDA rejected a drug that could save thousands of people, who would complain? When a drug kills a patient, that person is identifiable, and family and friends may learn the cause of the death. In contrast, the patient who would have lived, had new drugs been available, is identifiable only in a statistical sense. Family and friends will never know whether their loved one could have survived had the FDA not delayed the introduction of a new drug. In some cases the drug that could have saved the patient's life is never created, because the costs of the FDA's testing procedures make the necessary research and development appear unprofitable...

Patients and doctors do not face the same biased incentives as the FDA and thus
tend to pay more attention to the costs of not using a drug that could save a life.

Jason McBride was arrested for selling gasoline at too high of a price during the shortages that followed Katrina, under an Alabama anti-price-gouging law.  What was the legal price he violated?  Well, the law doesn't actually set a price maximum, it just makes you liable to be arrested if a random government bureaucrat feels like your price is too high.  Mr. McBride followed up with more information on his original story to Christopher Westley at the Mises Blog:

I recently heard from Jason McBride, who was the subject of my last Mises.org
article, "The Right to Set Your Own
Price". McBride, a gas station owner from Aliceville, Alabama, was arrested
for violating Alabama's "anti-gouging" law on the day that Hurricane Katrina
slammed into the Gulf Coast.

Jason told me that there was more to the story than what had been reported in
the newspapers. He said that the price he charged for a gallon of gas that day
was actually $3.49 (not the $3.69 that was reported) and that he purchased that
gas that very day for $3.29 a gallon. He said that this information was provided
to the district attorney during his investigation.

But there's more. Jason told me that he sold gas for only three hours at the
$3.49 price until he received a call of complaint from the D.A.'s office. His
response was to shut down his pumps until the the State of Alabama contacted him
with a "correct price." His pumps were shut down for 18 hours until the
state told him he could sell gasoline for $3.09 a gallon. This happened in the
midst of a crisis when consumer demand for gasoline increased dramatically.

Despite his bending over backwards to comply with the law, and despite zero
evidence of malicious intent, the district attorney's office still arrested him.
His picture was on the front page of a state newspaper the next day (while, he
pointed out, a report on a murder was relegated to page 6).

Gee, why isn't the Congress doing something about this price gouging in a scarce commodity post-Katrina?

Burger King is offering a $6,000 signing bonus to anyone who agrees to work for
a year at one of its New Orleans outlets. Rally's, a local restaurant chain, has
nearly doubled its pay for new employees to $10 an hour...

On any given day, contractors and business owners pass out flyers in
downtown New Orleans promising $17 to $20 an hour, plus benefits, for people
willing to swing a sledgehammer or cart away stinking debris from homes and
businesses devastated by Hurricane Katrina ...

"I'd say I'm paying two to three times as much as I would in normal
circumstances," said Iggie Perrin, the president of Southern Electronics, a
supplier in New Orleans, who has offered as much as $30 an hour when seeking
salvage workers on Canal Street...

One of the things that takes some of the fun out of running a small business is knowing that, despite all your best efforts, you are probably violating the law somewhere and there is a bureaucrat (or in California, a tort lawyer) trying to make a name for themselves by nailing you for this technical violation.  Now, I'm not talking about chaining employees to the assembly line or even paying below the minimum wage.  I am talking about $45,000 fines for not splitting the two portions of a Davis-Bacon wage out correctly on a pay stub or getting sued for not properly posting one of your required labor department posters or having a counter 1/2" too high for ADA regulations.

Via Overlawyered comes this Independence Institute (pdf) report about the criminalization of everything, a practical primer on the philosophic  musings on individual decision-making here.

There is a principle in jurisprudence that "ignorance of the law is no excuse." In other words, no one can justify his illegal conduct on the grounds that he was unaware of the law. But what happens when the sheer volume, complexity, and ambiguity of the law means that neither citizens, nor the government, can reasonably know
what is and is not against the law?

Colorado currently has some 30,000 laws filling more than 50 volumes of the Colorado Revised Statutes, both criminal and regulatory. Every session, the Colorado General Assembly passes hundreds of new laws for government to enforce and citizens to both understand and obey. Aside from the sheer number of laws, the definition of what constitutes a criminal act has changed; often the legislature actually creates new crimes, and thus, new criminals, where no inherent criminality exists.

We operate in 11 states.  Think of it.  50 volumes times 11 states plus the federal code.  Eeek.

In his book Drug War Addiction, Sheriff Bill Masters of San Miguel County Colorado describes his discovery of the Colorado Statutes of 1908. At the time, "all the laws of the state fit in one volume. Murder, rape, assault, stealing, and trespassing were all against the law in 1908.

So the other 49 volumes outlaw, what?

Update:  Welcome Overlawyered readers.  More thoughts on the dangers of the over-regulated state here.

Only the government (in this case the state of Texas) could have a line on a form like this:

17.  Enter the ending date of the twentieth week of employment in the calendar year in which this organization had at least one person employed in Texas

So I am confused about this.  What week do I enter if operations started in September of this year, pushing 20 weeks into next year?  Well, fortunately the state included a sheet along with this form to provide instructions for filling it out.  This is how these instructions explain it:

Item 17:  Enter the ending date (Saturday) of the 20th week of the calendar year in which one or more individuals performed services in Texas.

Well, now its clear.

...the spectacle of Congress calling oil executives on the carpet
for not investing enough in domestic oil exploration, and then 24 hours
later extending the ban on oil exploration in the ANWR. 

Priceless.

The other day in my post on Politics without Philosophy, I mentioned in passing the philosophical inconsistencies on the National Organization for Women (NOW) website.  Specifically, I referred to the premise that women should control the decision-making for their own body (a premise I accept) and noted the inconsistency of some of their positions, notably opposition to breast implants, with this position.  As usual, I got several emails on "my attack on women", which is pretty normal nowadays:  People tend to associate an attack on an organization purporting to represent a certain group with an attack on the group itself. 

Anyway, this post was just going to be an update, to provide the specific links on NOW's seemingly conflicting positions on abortion and breast implants, but in the process, I discovered another very interesting inconsistency, which I will get to in a few moments (its in bold at the bottom if you really can't wait).

In posting on the breast implant - abortion conundrum, I should have linked to this post, where I explained in more detail:

When it comes to defending abortion, women's groups are great
libertarians. They will point out that abortion is about the right to
choose and about protecting the "fundamental civil and human right of
women to make the most intimate decisions about their bodies and their
lives".  Its about not letting the government interfere with individual
decision-making or a "woman's right to privacy".  Its about assuming
women are grown-up enough to make difficult choices about their fetus
and their own health and safety.  Opponents of such choice are
"ultra-conservatives trying to deny women control over their own
bodies".  (all quotes from the NOW web site).

So, women's groups seem to be good libertarians concerned with the primacy of women's decision-making over their own body.  Except when they're not.
NOW has been feverishly campaigning to get the government to limit a
women's right to choose breast augmentation, despite the fact that the
science is overwhelmingly behind the safety of implants.  Sure, as in
any medical procedure, there are some risks, but I defy anyone to tell
me that the risks associated with breast implants are greater than the
risks associated with abortion.  Abortion is a much weightier and more
difficult decision, and, unlike breast implants, it is irreversible.
If women are mature enough to make abortion decisions, they certainly
are mature enough to weigh the risks of breast implants.  Or take the
birth control pill -- the impact to a woman's body of silicone sacks in
their boobs is far less than that of trashing their entire hormone
balance.  Sure, the pill makes sense for a lot of people and its great
that the option exists, but don't tell me that the the changes the pill
engenders in the body are OK but bags of silicone are not.

Note that if you accept the notion of a woman's right to choose for her own body, the risks of breast implants shouldn't matter.  A good government might make sure these risks are revealed, but would leave decision making on the risks vs. rewards to the individual.  For the sake of completeness, though, here is NOW's argument that breast implants are just too risky and here is the counter-argument, supported by most scientists and the medical profession, that there is nothing wrong with them.  Note, however, the NOW would not tolerate casting the abortion debate around safety or risk, arguing in that case that it is up to the woman to make these informed trade-offs.

Anyway, here is what I learned from grabbing a few of the links above.  Consistent with their position on breast implants (and their heavy funding from the tort bar) NOW also is criticizing the FDA for allowing the Vioxx painkiller on the market.

Whether it's Vioxx or Bextra or silicone implants, the rule now
is 'Buyer Beware, said [NOW President Kim] Gandy. The drug and device companies own
the FDA and it is the companies' profit potential that rules the
review and approval process - except when the profit motive is
overridden by the White House morality police, as with the
morning-after pill.

Yep, the FDA is apparently not doing a good job in limiting the number drugs or procedures women choose to put in their bodies (more on Vioxx on the NOW web site).  But this is still not the really funny part, just another illustration of how NOW only seems to apply "Its her body" to abortion, rather than any other decision.  What was really interesting was this (emphasis added):

An assisted suicide
bill (AB 654) passed the Democrat-controlled Assembly Judiciary
Committee on Tuesday, following two hours of debate. It now moves to
the full Assembly, where a vote may come in May.

Groups
officially supporting the bill include the pro-euthanasia group
Compassion & Choices; the American Civil Liberties Union, the
California Alliance for Consumer Protection, the California National Organization for Women; the Conference of Delegates of California Bar Associations; Drug Policy Alliance Network; and End-of-Life Choices.

I am OK with legal suicide as the last-ditch pain-relief strategy, though I am uncomfortable allowing doctors to help, given the inherent conflicts (maybe create a new suicide midwife profession?)  Anyway, note from this that while NOW opposes women's access to legal Vioxx, they support legal access to assisted suicide.  In case you are missing the full irony, I will restate it:  NOW supports the legality of a pain-relief strategy (assisted suicide) with a 100% chance of death but opposes the legality of a pain-relief strategy (Vioxx) with a less than 1% chance of death.

I don't really mean to pick on NOW in particular.  As I said before, nearly any organization on the right or left tends tends to espouse contradictory positions in the same manner.  NOW is just a particularly easy target since it takes positions on so many things.  Also, I must admit that they particularly piss me off some, articulating a fine libertarian point of view that women, and not the government, should control decision-making for their own body, and then abandoning this premise on nearly every non-abortion topic they address.

Anyway, you can read more on how the left really doesn't want to address the full implications of the Roe v Wade privacy right here.  If you want to understand why NOW takes the positions it does, beyond the usual we-know-better-what-is-good-for-women-than-they-do-themselves elitism, you might look at the NOW relationship to the tort bar.  NOW is usually prominently featured on the ATLA web site.

Last week, I posted on why Wal-Mart may be calling for higher minimum wages, and hypothesized that it may be because it won't hurt them (since they already pay well higher than the minimum) and may hurt competitors.  Llewellyn Rockwell of the Mises Institute, one of the few people in America with three sets of double-L's in his name, expands on this hypothesis:

The current minimum is $5.15. According to studies, Wal-Mart pays between
$8.23 and $9.68 as its national average. That means that the minimum wage could
be raised 50% and still not impose higher costs on the company....

So who would it affect if not Wal-Mart? All of its main competitors. And the
truth is that there are millions of businesses that compete with it every day.
Many local stores have attempted to copy Wal-Mart's price-competitive model, but
face lower costs and can actually thrive....

Even similar stores such as K-Mart can pay lower wages, and that can make the
margin of difference. K-Mart pays over a much wider range, as low as $6.75 an
hour. A major competitor is mainstream grocery stores, where workers do indeed
start at minimum wage. Target too pays starting employees less than Wal-Mart, if
the Target Union can be
believed.

Now, if Wal-Mart can successfully lobby the government to abolish lower-wage
firms, it has taken a huge step toward running out its competition. The effect
of requiring other firms to pay wages just as high as theirs is the same as if
the company lobbied to force other companies to purchase only in high
quantities, to open large stores only, or to stay open 24 hours. By making
others do what Wal-Mart does, the company manages to put the squeeze on anyone
who would dare vie for its customer base.

Now here is the great irony. The left has long been in a total frenzy about
how Wal-Mart saunters into small towns and outcompetes long-established local
retailers. Wal-Mart's opponents have whipped themselves into a frenzy about the
company's success, claiming that it always comes at a huge social cost.

Now, most of this rhetoric is overblown and ignorant. Wal-Mart would not have
made any profits or grown as it has without having convinced the consuming
public to purchase from the store. Consumers could put the company out of
business tomorrow, just by failing to show up to buy.

The left's claims of unfair practices would be valid if Wal-Mart did indeed
work to impose legal disabilities on its competitors "” in effect making it
illegal to outcompete the company. And yet that is precisely what raising the
minimum wage would do: impose a legal disability on those companies engaged in
lower-wage competition with Wal-Mart. So the economically ignorant left
advocates raising the minimum wage.

Apparently, though I can't dig up a link right this second, Wal-mart is putting its support behind a higher minimum wage.  One way to look at this is a fairly cynical ploy to get the left off its back.  After all, if Wal-mart's starting salary is $6.50 an hour (for example) it costs them nothing to ask for a minimum wage of $6.50.

A different, and perhaps more realistic way to look at this Wal-mart initiative is as a bald move to get government to sit on their competition.  After all, as its wage rates creep up, as is typical in more established companies, they are vulnerable to competitors gaining advantage over them by paying lower wages.  If Wal-mart gets the government to set the minimum wage closer to the wage rates it pays, it eliminates the possibility of this competitor strategy.  Besides, a higher minimum wage would surely put more low-skilled people out of work, increasing the pool of people Wal-mart can hire  (and please do not bring up the NJ convenience store study that supposedly shows that higher minimum wage increase employment - no one in their right mind really believes that demand for labor goes up when the costs go up).  I am not sure what the net effect on Wal-mart's customers would be -- some would have more money, from higher wage, and some would have less, from fewer hours or due to being laid off.

I have defended Wal-mart in the past, but I am going to stop if they become the new auto or steel industry and use the government to protect their market position.  Already they are losing my sympathy with their whoring for local relocation subsidies and eminent domain land grabs.  I wrote on minimum wage from a small business perspective here.

I had seen some Internet posts on this before, but I thought it was from the "Aliens were behind the 9/11 attacks" crowd.  But it does appear to really be Big Brother at work:

The pages coming out of your color printer may contain hidden information that
could be used to track you down if you ever cross the U.S.
government.

Last year, an article in PC World magazine pointed out that printouts
from many color laser printers contained yellow dots scattered across the page,
viewable only with a special kind of flashlight. The article quoted a senior
researcher at Xerox Corp. as saying the dots contain information useful to
law-enforcement authorities, a secret digital "license tag" for tracking down
criminals....

Yesterday, the Electronic Frontier Foundation, a San Francisco consumer privacy
group, said it had cracked the code used in a widely used line of Xerox
printers, an invisible bar code of sorts that contains the serial number of the
printer as well as the date and time a document was printed...

The EFF said it has identified similar coding on pages printed from
nearly every major printer manufacturer, including Hewlett-Packard Co., though
its team has so far cracked the codes for only one type of Xerox
printer.

The U.S. Secret Service acknowledged yesterday that the markings, which
are not visible to the human eye, are there, but it played down the use for
invading privacy.

This kind of stuff really scares me.  Is there anyone out there that thinks that this won't be used to trace a leak, track down a whistle-blower, or identify an anonymous political critic?  And, even if you are able to conjure up trust that the US government will not use these codes for anything other than fighting counterfeiting, what about use of these codes by private parties?  Or, even more depressing, remember that these printers are being sold today in China, Syria, Iran, Zimbabwe, etc.  Does anyone at all doubt that these governments will use the print codes to identify and silence dissent?

Shame on the government for instituting this program.  Double shame on HP and Xerox for going along in silence, joining the ranks of Microsoft, Cisco, and Yahoo in making adjustments to their technology to make government surveillance and censorship easier.  I don't know of any legislative mandate that requires these printer companies to go along with this, so they are doing this voluntarily - sort of (see below).

For those on the left feeling smug that this is solely a right-wing Bush-is-a-fascist problem, shame also on those who built the economic regulatory state that we live in.  In a truly free economy, HP and Xerox would likely have told the government to take a hike.  However, the government holds a huge regulatory hammer over corporations' head in so many realms that companies in our society find it difficult to tell the government off when they get this type of request.  Its the same story with airlines and banks, who feel compelled to share otherwise private customer data with Homeland Security under the threat of having government retribution fall on them from any number of directions.  We have got to start realizing that government control of economic activity is just as much an imposition as government control of speech or the press.  Freedom of expression does not become voided just because money changes hands.

Many thanks to Marginal Revolution for the link.  Their comment:

Would the Berlin Wall have fallen if East European governments had access to
this kind of technology twenty years ago?

I read an interesting article in the NY Times, via Marginal Revolution, interviewing the CEO of homebuilder Toll Brothers about housing prices.  His assertion was:

"In Britain you pay seven times your annual income for a home; in the U.S. you
pay three and a half." The British get 330 square feet, per person, in their
homes; in the U.S., we get 750 square feet. Not only does Toll say he believes
the next generation of buyers will be paying twice as much of their annual
incomes; in terms of space, he also seems to think they're going to get only
half as much. "And that average, million-dollar insane home in the burbs? It's
going to be $4 million."

I don't necessarily buy this whole story.  For one, Mr. Toll has business reasons for taking a public position that prices will keep rising - after all, his customers buy his product in part as an investment, and would be leery about paying current prices if they thought prices might fall in the future.  Second, as I have talked about a number of times with petroleum, when prices of any product start to rise, observers always tend to underestimate market and technology responses that might bring supply more into balance.

However, the one exception I did make in my oil price posts was that government supply restrictions, both on lands that can be explored for oil as well as things like refinery permitting, may indeed put structural upward pressure on prices.  And in fact, this is where Mr. Toll puts the blame for high housing prices as well:

Toll agrees with Glaeser et
al. that the key force driving up prices is zoning and growth regulations. 
In New Jersey it now takes Toll Brothers up to two million dollars in legal fees
and ten years in time to get the permits necessary to build.

Which got me thinking that home owners (of which I am one) may be the worst rent-seekers of all.  Most people are already familiar with the very large tax breaks for home buyers, in the form of the mortgage interest tax deduction, that is not available to people who rent or to people who borrow for purposes other than home purchase.  However, it may be that a much larger implicit subsidy to home-owners is the government restrictions on new home supply.  By restricting supply, the government is keeping prices up for current home-owners and restricting new entrants who might compete with our homes in the resale market.

Apparently, some of our local politicians in the Phoenix area are upset about payday loan companies.  According the an AP report in the AZ Republic:

The stores cater to customers who live paycheck to paycheck who need
quick access to a few hundred dollars for rent, car repairs or just to
make ends meet. Banks traditionally don't make those type of small,
short-term loans.

So these stores provide loans to people no one else will touch.  And customers use their services of their own free will.  So what is the problem?  Well, not surprisingly, the rates on these loans are high, and the default terms tend to be drastic.  "Activists" think that people are making the wrong decision using these services, and, to be fair, I would certainly advise anyone who asked to try to find another alternative.  But what do my preferences matter?  Its easy for me to say in my middle-upper class hubris that such services don't make sense, but I have a steady job and ready access to bank loans.  In a free society, both I and those activists are free to convince people to not use these services, but its wrong to artificially limit people's choices out of some elitist sense that we can make decisions for other people better than they can for themselves.

Besides, lets think about the alternative.  These folks are not going to get bank loans -- in fact many customers may be illegal aliens who are, post 9/11, effectively barred from the banking system.  The only other alternative before these payday loan companies were loan sharks, whose interest is even higher and whose penalty for non-payment even more dire. This reminds me of the people who decry Nike "sweatshop" jobs in poor countries.  "Activists" similarly decry these jobs as if the alternative is $25 an hour office work, when in fact the alternative is actually grinding subsistence agricultural work for half the pay.  You may not like the payday loan companies, but they are replacing a much worse system.

But the really funny thing about this article is their proposed solution to the problem of rates for these payday loan services being too high.  Their solution?  Limit competition!  (emphasis added)

Arizona now has more than 600 payday loan stores - with 165 in the [Phoenix suburb] Mesa area alone - and some residents are upset about it.

"People are sick of it in west Mesa," said Dave Richins, a neighborhood
activist and executive director of the West Mesa Community Development
Corporation.

Richins and other critics claim the stores exploit customers with high interest rates.

[Phoenix suburb] Peoria blocks the shops from opening within 1,000 feet of a competing
store. Phoenix and Tucson are looking to that city's restrictions as a
model for new rules in their communities, with action possible by early
next year.

Gee, I bet that will help keep rates down -- make sure there are no competitors nearby!  Lets make sure it is as hard as possible to compare rates, particularly since the customer base is one that can't afford the gas, or doesn't even have a car, to drive all over town shopping.  I wonder why no one is suggesting the same thing for gas stations to keep gas prices down, lol.

California has another confusing slate of initiatives on the ballot for the next election, including several related to various interventions in pharmaceutical pricing  (helping to demonstrate that grass roots democracy can be just as tyrannical to individual rights as any other form of government).  Bill Leonard, of the California BOE, notes in his weekly email:

Proposition 79 seeks to capitalize on public outrage over high drug prices by creating a new big government program that would supposedly mandate drug discounts for low-income Californians.

It turns out that the initiative contains a little-noticed provision that will allow private trial lawyers to sue drug companies for the new tort of "profiteering in prescription drugs."  Under this sneaky provision, which will be effective immediately even if the drug discount program is never implemented (Federal approval is required), drug makers would be prohibited from demanding "an unconscionable price" or demanding "prices or terms that lead to any unjust and unreasonable profit." These terms are not defined anywhere in the initiative or elsewhere in state or federal law, so your guess as to what these terms mean is probably as good as mine.  A violation of this new offense would carry a minimum fine of $100,000 or triple the amount of damages (whichever is greater) plus court costs and legal fees.  You can see why the trial lawyers love this initiative!  It is bad enough to have government bureaucrats setting drug prices, but imagine having drug prices set by randomly-selected jurors!

Can you imagine offering a product in a market and not knowing if your pricing was legal until after a jury trial?  Actually, until after multiple jury trials, since in cases like this there is effectively no restriction on being tried one, two, or ten thousand times for the same thing.  Not only will prices be set by a jury, but they will be set by the single most aggressive jury in what is sure to be an onslaught of trials.

In case you have any confusion or failure of imagination as to how poorly this will work out, California tort lawyers have slipped this same provision into other laws, notably the sue your boss over picayune labor code violations law and the Unruh Act, which allows lawyers to serially sue businesses for picayune technical violations of the ADA.  Here is an example of Unruh at work:

Molski, who lives in Woodland
Hills, has sued dozens of Central Coast businesses, from the Santa Ynez
Valley to Paso Robles, for alleged violations of the ADA. Among them
are Firestone, Fess Parker and Kalyra wineries in the Santa Ynez
Valley, Cambria Winery in northern San Luis Obispo County, and Fosters
Freeze restaurants in San Luis Obispo and Morro Bay.

A provision of California state law known as the Unruh Act allows Molski to demand $4,000 in damages per violation, per day.
                  

Molski
has said in the past that an average settlement is $20,000. He
testified in the Los Angeles trial that he personally nets an average
of $4,000 per settlement, after paying attorney's fees, Beardsley said....

As of Friday, 528 cases were listed under Molski's name in federal civil courts....
   

Also
fighting Molski in court is Harmony Cellars in northern San Luis Obispo
County. Winery owner Chuck Mulligan sees the L.A. decision as a good
sign, but isn't counting on winning.

"You
just never know. A jury trial is always a crap shoot," Mulligan said.
"I think the public sees through this whole quagmire that's going on.
They claim they are trying to do something for society but it's really
just pulling money away from society that could be used for jobs," and
other purposes, he said.
                   

Molski's
suit against the Hitching Post in Casmalia alleged a wheelchair ramp
was too steep, and the bathroom wasn't accessible because the toilet
was a half inch too close to the wall; and the sink was three inches
too high, and the soap dispenser was too high.
                   

Stricklin contends the bathroom is fully accessible.
                   

"Our
restaurant's accessible and has been for a long time. Our mother is in
a wheelchair. Of course it would be accessible," Stricklin said. "Every
customer we have that's disabled has gotten into our restaurant, and
we've never had a complaint."

"I've
talked to about five people in Solvang and Cambria who have been sued
twice in the last year," Stricklin said. "They're stuck. Unless you
close your doors, somebody else can come along and sue you, and that's
why we're fighting. If they can see that we're not going to roll over
and settle, they'll think twice about going to trial."

At least in the case of Unruh, there is a defined legal standard, even if suing for $4000 per day for violations of 1/2-inch are ridiculous.  Prop 79 would allow suits with no standards, except whatever a jury happens to come up with on a particular day.  And we all know how smart and thoughtful juries can be (from recent Vioxx case):

Jurors who voted against Merck said much of the science sailed right over their
heads. "Whenever Merck was up there, it was like wah, wah, wah," said juror John
Ostrom, imitating the sounds Charlie Brown's teacher makes in the television
cartoon. "We didn't know what the heck they were talking about."...

... [juror] Ostrom, 49, who has a business remodeling homes, was also disturbed
that former Merck Chief Executive Raymond Gilmartin and another top Merck
official gave videotaped testimony but weren't in the courtroom. "The big guys
didn't show up," said Mr. Ostrom. "That didn't sit well with me. Most definitely
an admission of guilt."...

One juror, Ms. Blas, had written in her questionnaire that she
loves the Oprah Winfrey show and tapes it. "This jury believes they're going to
get on Oprah," Ms. Blue told Mr. Lanier. "They only get on Oprah if they vote
for the plaintiff."

Previously, I made my own tongue-in-cheek suggestions for follow-ups to Unruh, but prop 79 may be worse than any of these:

So, I would like to propose my
own Unruh II law.  I propose that in California, every citizen now has
the right to sue any other person they observe violating any sort of
traffic law.  If you observe someone speeding, doing a rolling stop at
a stop sign, failing to signal a lane change or turn, with a burned out
tail light, not wearing a seat belt, jaywalking, etc, you may now sue
them for $4000 per occurrence. 

Coming in future posts, I will
propose Unruh III to empower citizens to sue over health code
violations, Unruh IV to empower citizens to sue over fire code
violations, and Unruh V to sue anyone for any reason if they have a net
worth higher than you do.

It strikes me that my suggestion for Unruh V is where we are really going.

Update: More bounty hunting here, via Overlawyered.

Truck and Barter is not very impressed with Bush's call for us all to drive less. 

I'd like to know just why I should conserve. We supposedly live in a
capitalist society based on property-rights and free-trade; why, all of a
sudden, do you ask that I not trust that the price of fuel incorporates all the
scarcities at every level of production? What economic lever broke in the past
month? Why do you think the price system is failing so bad that we need to
"conserve" more than the price signal warrants?

I won't pretend that market prices don't exist, or that markets have suddenly
stopped working; I won't pretend that prices are inefficient allocators of
resources; I won't pretend that I cannot buy as much gasoline as I can afford at
current prices.

Furthermore, Mr. President, I will not pretend that you have legal or moral
authority to tell me how much gasoline I may purchase. I will not pretend that
your feeble call to use less has any impact whatsoever on my psyche. I will not
pretend that the Federal Government knows better than me how much gasoline I
should purchase.

Awesome, well said.  Maybe if Bush had worn a cardigan, like Jimmy Carter did when he asked the same thing, he might have been more successful.  Or then again, maybe Bush should have thought twice about channeling Jimmy Carter on any energy or economics related issue.

By the way, there is much more to the post - make sure to read it all.

Update: This one attracted a number of comments fast.  Here are some additional thoughts

Doesn't it make sense to conserve gas?  Isn't what Bush said correct?

Sure it makes sense, but I didn't need Bush to tell me.  Seeing my average 15 gallon fillup go from $30 to $45 nearly overnight told me everything I needed to know.   I adjusted my driving behavior based on how I value various types of trips.  And so, apparently, did everyone else, as gas consumption in this country dropped almost 10%.  Bush doesn't have to tell you to refinance your home when mortgage rates drop, or to buy less OJ when the orange crop failed -- prices signal these things quite nicely.

By the way, I limited my driving years ago (e.g. I live 1 mile from my office) but not because of gas prices.  Lets say 1 hour of driving gets me 30 miles in the city, and requires 1.5 gallons of gas.  The recent increase in gas prices has increased the cost of that 1 hour of driving by about $1.50.  That is NOTHING compared to how I have increased how I value my free time as I have grown older.  That hour may use up five bucks of gas but hundreds of dollars of my leisure time.  I have often told people that the biggest change you go through getting older is how much your internal valuation of your own free time goes up.  In college, I would wait for 8 hours in a line to get concert tickets at face value.  Today, I buy them market up at eBay, because that 8 hours is now worth far, far more to me than the markup.

Wouldn't voluntary conservation beyond what you have already cut back help reduce gas prices in the US?

Sure, if everyone cut back some percentage more than what they would have already done due to the price increase, then yes that might help push prices down.  Of course every person who did this would lose from doing so.  When the price increases, everyone eliminates their marginal use of gasoline, ie every use or trip that is worth less to them than the cost in fuel.  That means that the trips that remain are worth more to them than the gas (and other)  costs.  Therefore, remaining trips are a net increase to their well-being.  If a remaining trip is then eliminated voluntarily, or the cost of that trip is increased due to the increased hassle of carpooling or using public transit, then their well-being is reduced. 

However, this is the great thing about America:  If you personally value voluntarily reducing your gas consumption to help reduce prices for others, in a free society, no one is going to stop you.

By the way, here is the reason I don't worry about it:  I am old enough to have been driving in the late 1970's.  And I know from experience that allowing prices to shoot up for a period of time, without government price caps or windfall profit confiscation silliness, is going to lead to more supply and lower prices in the future.

Don't you think its unethical not to conserve in times like this?

No.  I don't associate consumption and ethics.  If it is sold legally at a certain price, and I can afford and wish to pay that price, then I don't see that morality or ethics come into play.  While there certainly can be ethical problems spending money unwisely (e.g. blowing money on coke or gambling that was needed to feed your kids), that is a different situation.  I don't feel guilty about consuming gas.

Isn't it a security issue?  Shouldn't we be asked or forced to conserve more to make the US independent of foreign oil?

There is only one time this argument makes any sense - if the world is in a full scale shooting war and all foreign trade and international markets are halted, and then we would have much bigger problems.

Short of the breakdown of world trade and markets, being "independent of foreign oil" is a mirage, an impossible non-goal.  Lets say that the world energy supply and demand was exactly the same as it was today, except that the US produced domestically exactly enough oil to satisfy domestic demand.  But in this case there is still a world market for oil.  The price of oil and gas in this country would not be more or less than it is today, except maybe for a few cents of transportation cost differences.  And if there is an oil supply shock, the pricing in the US will be virtually the same in this hypothetical situation as it would be in today's structure.

Shouldn't the President be doing something?

Sure.  Get the hell out of the way of the people who can fix the problem.  Rethink the regulatory regime that is preventing refinery construction.  Revamp the licensing approach for nuclear power.  Open up oil drilling in proscribed areas.  And find his lost veto pen and ax any dumbshit regulation out of Congress managing energy prices, taxing windfall profits, or attempting to pick winners via subsidies.

Technorati Tags:  Energy, Economics

Yes, it has a stake in its heart along with a couple of silver bullets, but a number of members of Congress are attempting to reanimate the broadcast flag.  I celebrated its demise here, perhaps prematurely.  I am sad to say that my Congressman John Shadegg, according to Boing Boing, seems to be among the twenty Frankensteins responsible for this effort.  I have given props to Shadegg a couple of times, and now I have to express my deep disappointment in him.

I know, I know. We keep killing
this thing, and it keeps on coming back. But the important thing is
that we keep killing it. Us. They put tens of millions of bucks into
this bid to make technology subservient to the superstitious fantasies
of venal film execs, and we killed it by sending thousands and
thousands and thousands of letters, calls, and faxes to DC. We made it
happen. We'll make it happen again. They're not going to win this one,
EVER

Frequent readers of this blog, all 12 or so of them, are probably tired of my recent obsession with Katrina examples of how government values control over results (posts here, here, here, here, here, and here, lol).  So I will let someone else say it now:

There has been a lot of political and ideological discussions surrounding
Katrina. Clearly the political sector handled the disaster with great
inefficiency. Yet many people, including (as usual) most of the media, seem to
believe government failure somehow proves we need bigger government.

This is an odd conclusion. If the voluntarily sectors (market and civil
society) fail we hardly conclude that government must shrink. To put it another
way, if Katrina had been handled with great efficiency by the state the same
people would conclude this was an argument for even stronger government. But now
the exact opposite is also taken as meaning we need greater government. I am
curious to know if there is any world development the NYT does not see as
evidence for expanding the welfare state, at the expense of individuals and of
the civil society.

There is much more, from Truck and Barter.

The FEC is suing the Club for Growth for campaign finance violations, basically arguing that they are controlled by the Republican Party and therefore not an independent political group (or whatever, I can't really be bothered to understand just what argument the FEC is using to trash the First Ammendment).

So I have Exhibit #1 for the trial.  Yesterday I published a blog piece blasting the Republican Party, concluding:

The Republicans are lost.  Combine this kind of spending with their
Patriot Act and Sarbabes-Oxley driven Big-Borther-Is-Watching
intrusiveness, luke-warm committment to free-trade, and bizarre , and I find nothing at all attractive about the party.  Only the economic insanity of the opposition party continues to keep Republicans in power.

If the Club for Growth is a subsidiary of the Republican Party, then why are they linking my post today from their home page? 

Cafe Hayek has a fabulous fisking of Missouri governor Matt Blunt's letter to the editor explaining why his call for price controls on gasoline is consistent with his free market principals.  Its all good, I can't pick out any one quote.  Read it all.

But wait!  This just in!  Maybe our governor IS this dumb.

Our great benevolent leader, Janet Napolitano, has stated in press conference
the she is going to investigate these fuel prices of ours. Mostly she was
ruffling her feathers right after Hurricane Katrina shutdown a good 30% of the
domestic supply source. So of course prices increased slightly to account for
the lack of supply. This trend that followed exactly what even very simple
supply and demand theory would predict was not enough to convince miss Gov. J.No
not to call for yet another investigation. No way! She was not going to be
swayed by facts, reality or "assurances from the oil industry" that these were
fair market prices. Nope. An investigation was needed.

A little over a year ago, a pipeline broke and the only source of gasoline into Phoenix was stopped.  Due to EPA regulations, Phoenix requires a special gas blend made in only one refinery coming to us through one pipeline, so it is not surprising that if that source is interrupted, gas might be short here for a while and prices might spike up.  Which they did.  Governor Napolitano at that time blamed the whole situation on the oil industry and called for investigations.  Tellingly, she took only three policy actions:

• Temporarily waived regulations for a special blend of gas in Phoenix
• Temporarily waived regulations on truckers that were preventing them from filling in for the broken pipeline
• Considered circumventing regulations that were preventing a local refinery to serve the Phoenix market from being built.

So the rhetoric at the time was "its all the oil companies faults" but the solution was "repeal government regulations".  Hmmmmm.  By the way, the Commons Blog created a nice chart showing how those filthy rich oil companies are making, uh, ahem, lower profits than average for US industry (click to enlarge).  I wish they were more profitable- we would probably have a lot more oil.

Following up on posts here, here, here, here, and here is yet another in a series on government preference for control over results, this time via Overlawyered.com:

In the midst of administering chest compressions to a dying woman
several days after Hurricane Katrina struck, Dr. Mark N. Perlmutter was ordered
to stop by a federal official because he wasn't registered with the Federal
Emergency Management Agency. "I begged him to let me continue," said Perlmutter,
who left his home and practice as an orthopedic surgeon in Pennsylvania to come
to Louisiana and volunteer to care for hurricane victims. "People were dying,
and I was the only doctor on the tarmac (at the Louis Armstrong New Orleans
International Airport) where scores of nonresponsive patients lay on stretchers.
Two patients died in front of me.

"I showed him (the U.S. Coast Guard official in charge) my medical
credentials. I had tried to get through to FEMA for 12 hours the day before and
finally gave up. I asked him to let me stay until I was replaced by another
doctor, but he refused. He said he was afraid of being sued. I informed him
about the Good Samaritan laws and asked him if he was willing to let people die
so the government wouldn't be sued, but he would not back down. I had to
leave."

In a formal response to Perlmutter's story, FEMA said it does not accept the
services of volunteer physicians:

"We have a cadre of physicians of our own," FEMA spokesman Kim Pease
said Thursday. "They are the National Disaster Medical Team. ... The voluntary
doctor was not a credentialed FEMA physician and, thus, was subject to law
enforcement rules in a disaster area."

So for those of you who draw the conclusion from Katrina that we need more big government rather than less, that would help.... how?

Technorati Tags:  Katrina

From the Mises Blog:

For those who maintain that the government "failed" its "mission," I must say
that they are wrong. True, the government with its ham-fisted policies of
blocking relief missions, imposing price controls, and acting in a dictatorial,
but incompetent style, seems to have "failed" in making things better,
especially in the days directly after the storm passed. But, if you understand
that government is a mechanism by which some people impose their will by force
over others, then you would have to admit that the government succeeded and
succeeded beyond its own expectations.

Thus, I leave readers with this question: If you believe that the government
"failed" in the aftermath of Katrina, will the government then have less or more
"authority" when the next disaster strikes? I think all of us know the
answer.

You can always expect government to behave exactly like government. When you
consider your political position, consider whether this institution ought to be
put in charge or disaster relief at all, or the economy, or society, foreign
policy, health care, education, courts, the environment or anything at all.
Katrina and its aftermath is only the latest exhibit in the ongoing historical
documentary in favor of a government-free society

I had similar thoughts here and here.