Feeds:
Posts
Comments

Posts Tagged ‘Regulation’

Although I play basketball (poorly), I’m not a fan of the NBA. As such, I don’t pretend to have much interest in the Donald Sterling controversy.

Some people have wondered whether his rights to free speech are being infringed, but I disagree. He obviously has the right to say whatever he wants, even if he makes himself look like an idiot.

But the National Basketball Association is an organization that has certain rules, and it presumably has the right – by virtue of the contract among team owners – to impose disciplinary measures.

In other words, Sterling has free speech, but that doesn’t mean he is free from consequences if he says something dumb. Just as I have free speech at the Cato Institute, but also would suffer consequences if I said something offensive about a particular group (or, for that matter, if I started supporting tax hikes, bigger government, and statism).

And that’s a good thing. As a libertarian, I don’t want the government policing speech, but there’s nothing wrong with private sector penalties on racists.

And that’s the topic of today’s column. The free market is a powerful and under-appreciated tool for punishing racism and rewarding color-blind behavior.

Here’s some of what Walter Williams wrote on the topic for the Washington Examiner. wew2010He starts by pointing out that Sterling certainly wasn’t racist when making decisions about what basketball players to employ.

Though Sterling might be a racist, there’s an important “so what?” Does he act in ways commonly attributed to racists? Let’s look at his employment policy. This season, Sterling paid his top three players salaries totaling over $46 million. His 20-person roster payroll totaled over $73 million. Here are a couple of questions for you: What race are the players whom racist Sterling paid the highest salaries? What race dominated the 20-man roster? The fact of business is that Sterling’s highest-paid players are black, and 85 percent of Clippers players are black.

Walter draws the obvious conclusions, and he cites the path-breaking research of the late Gary Becker on the economics of discrimination.

How does one explain this? …Let’s use a bit of simple economics… First, professional basketball is featured by considerable market competition. …There’s open competition in joining both high-school and college teams. You just sign up for tryouts in high school and get noticed by college scouts. Then there’s considerable competition among the NBA teams in the acquisition of the best college players. Minorities and less preferred people always do better when there are open markets instead of regulated markets. Recently deceased Nobel Prize-winning economist Gary Becker pointed this phenomenon out some years ago in his path-breaking study “The Economics of Discrimination.” Many people think that it takes government to eliminate racial discrimination, but economic theory predicts the opposite. Market competition imposes inescapable profit penalties on for-profit enterprises when they make employment decisions on any basis other than worker productivity.

In other words, the free market pushes people to make decisions on the basis of ability rather than race.

The takeaway from the Sterling affair is that we should mount not a moral crusade but an economic liberty crusade. In other words, eliminate union restrictions, wage controls, occupational and business licensure, and other anti-free market restrictions. Make opportunity depend on one’s productivity.

And as you can imagine, Walter speaks with authority on these issues. And he’s right that the free market is a weapon against racism.

By contrast, when government gets involved with race issues, you often get nonsensical results, such as EEOC penalties against companies trying to weed out criminals, or legal harassment of financial institutions for trying to make sensible loans.

Read Full Post »

I’ve already suggested that subsidies for the Paris-based Organization for Economic Cooperation and Development are the most wasteful and counterproductive item in the federal budget. At least on a per-dollar-spent basis.

But what about a similar exercise for government red tape?

How would we come up with the worst regulation or the most counterproductive regulatory agency?

Thanks to the IRS, I have a strong candidate for the worst regulation, but if I had to pick the worst agency, I’d probably choose the horribly mis-named Equal Employment Opportunity Commission.

These bureaucrats are infamous for bone-headed initiatives, such as:

The EEOC making it hard for trucking companies to weed out drunk drivers.

The EEOC telling a coffee shop it had too many attractive waitresses.

The EEOC forcing companies to make special accommodations for “pee-shy” employees.

The EEOC trying to give special employment rights to crooks.

We now have another item for the list.

The bureaucrats apparently like forcing companies to hire people who are more likely to rip off customers, though sometimes they find judges that aren’t nearly so tolerant.

Let’s see what the Wall Street Journal had to say about the “hilariously caustic rebuke of the Equal Employment Opportunity Commission by the Sixth Circuit Court of Appeals.”

The EEOC had sued Kaplan, the for-profit education company, for using “the same type of background check that the EEOC itself uses,” as Judge Raymond Kethledge cheekily put it in the first sentence of his ruling in EEOC v. Kaplan. Despite its own practices, the Obama EEOC has made a cause of suing private companies because it claims that credit and criminal background checks discriminate against minorities.

But so-called disparate impact doesn’t mean discrimination.

Judge Kethledge eviscerated the EEOC like a first-day law student, writing that Kaplan had good reason to conduct credit checks… As for proving disparate racial impact, Judge Kethledge noted that “the credit-check process is racially blind; the [credit-check] vendor does not report the applicant’s race with her other information.” …The unanimous opinion was joined by Damon Keith, one of the most liberal judges on the entire federal bench. If government officials were accountable, EEOC General Counsel P. David Lopez would be fired for losing in such humiliating fashion.

But that’s just one crazy case.

The Wall Street Journal also opined about another strange example of EEOC quackery. The bureaucrats actually believe that stealing should be a protected disability.

Or, to be more technical, that stealing should be an acceptable behavior because of a supposed disability.

In September 2008, Walgreens employee Josefina Hernandez claims she had a hypoglycemia attack, grabbed a bag of potato chips off a shelf and ate them to boost her blood sugar. The drug-store company has a strict policy against “grazing” (i.e., stealing) and so a supervisor fired Ms. Hernandez, an 18-year veteran of the company. Three years later, the EEOC sued Walgreens for discrimination under Title VII of the 1964 Civil Rights Act and the 1990 Americans With Disabilities Act and asked for punitive damages. …The ADA requires employees to request an accommodation for a medical condition, which Mrs. Hernandez never did. Nor does federal law sanction illegal activity—i.e., theft—under cover of a disability, as the Supreme Court made clear in 2003’s Raytheon v. Hernandez.

A green light for thievery from the EEOC

Seems like this should be an open-and-shut case. Which raises the interesting question of why the EEOC decided that the federal government should intervene on behalf of potato chip thievery.

So why pursue such a case in the first place? The EEOC’s lawyers probably figured they had nothing to lose. If they landed a sympathetic judge, they could set a new legal precedent. If they lost, taxpayers would pay for the case anyway. And sure enough, U.S. District Judge William Orrick, an Obama appointee, ruled against the store’s motion for summary judgment last week. The question now is whether Walgreens will continue to fight for the right to fire employees who steal from company shelves, or simply settle to get the EEOC’s lawyers to go away.

I hope all companies fight meddling and stupidity by the federal government.

I do understand that sometimes it makes sense to acquiesce to extortion, at least in the short run. The long-run costs of surrender, though, are very high.

Which is why companies should fight, but they should get support from Capitol Hill. The EEOC budget should be slashed to show that there are consequences to bureaucratic insanity.

P.S. I shared some political humor last year about a make-believe Obama Administration initiative called the “Americans with no Abilities Act.”

Anybody want to guess when that becomes official EEOC policy?

I’m only partially joking. It’s sort of happened already in the United Kingdom.

P.P.S. Don’t forget that EEOC regulation is just one straw of red tape on the camel’s back.

Americans spend 8.8 billion hours every year filling out government forms.

The economy-wide cost of regulation is now $1.75 trillion.

For every bureaucrat at a regulatory agency, 100 jobs are destroyed in the economy’s productive sector.

The Obama Administration added $236 billion of red tapein 2012.

Read Full Post »

I’ve complained many times about government intervention in the financial sector.

The financial and housing crisis, for instance, was largely a consequence of the Federal Reserve’s easy-money policy, combined with the system of corrupt subsidies put in place by Fannie Mae and Freddie Mac.

But there’s another government-imposed cost that burdens the financial sector.

Writing for the Wall Street Journal, Paul Kupiec of the American Enterprise Institute reveals some very sobering – and disturbing – data on pay levels for both the financial industry and its regulators.

Most banks in this country are small businesses and pay employees modest salaries. The Bureau of Labor Statistics reports that the average annual salary of a bank employee was $49,540 in 2012, not much higher than the average annual across all occupations, $45,790.

In other words, there are some very well paid people working for big banks, but most employees in the financial sector earn modest incomes.

But notice that I wrote “most employees.” That’s because there is a big group that is very well paid.

But they aren’t in the business of making loans, allocating credit, and helping to finance future growth.

That’s because these highly compensated folks aren’t in the private sector. They are regulatory bureaucrats.

…one group in banking stands out as highly paid—federal bank regulators. Before the Dodd-Frank Act, the average employee of a federal bank regulatory agency received 2.3 times the average compensation of a private banker. By 2013 this ratio increased to more than 2.7—and in some cases considerably more.

Kupiec provides details on how these bureaucrats get paid much more than wealth creators.

The average compensation at the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corp. (FDIC) and the Consumer Financial Protection Bureau (CFPB) exceeded $190,000 in 2012. The staff at the Federal Reserve is likely even better compensated, but the Fed refuses to release employee salaries. You might think high-paying jobs at these agencies require special skills. Not so. At the OCC, secretaries make on average $79,182 per annum. Motor vehicle operators (the agency’s limo drivers) at the FDIC earn $82,130. Human resources management trainees at the CFPB make $110,759 a year. Averages tell only part of the story. In 2012, 68% of FDIC and CFPB staff—and 66% at the OCC—earned above $100,000 a year. Nearly 19% of the CFPB and OCC staff earn more than $180,000 a year. At the OCC, 10.5% of workers earn above $200,000 a year, at the FDIC 9.3%. Fewer than 7% of employees in any of these regulatory agencies earned less than $50,000. In other words, 93% of the employees in these federal bank regulatory agencies earned more than the average banker’s salary in 2012.

So what’s the rationale for overpaid bureaucrats?

Defenders of the status quo claim that high pay is necessary to attract skilled professionals.

Needless to say, that’s not true.

Instead of raising salaries to attract and retain employees for specialized, hard-to-fill jobs, federal bank regulatory agencies have increased the salaries of all employees. Ironically, the hard-to-fill jobs that require substantial education or professional experience—such as attorneys and economists with banking experience—have the smallest premiums over comparable private positions. Salary premiums are especially large for easy-to-fill jobs that require no specialized, hard-to-hire skills.

But here’s the bottom line. Consumers and taxpayers are paying higher fees and receiving fewer benefits because so much money is being diverted from the industry to finance the bureaucracy.

Who pays for these generous salaries? Bank shareholders pay directly through insurance premiums on deposits and examination fees levied by the bank regulatory agencies. These costs are passed on in higher customer fees and loan rates. The high compensation of CFPB employees is funded by taxpayers through the Federal Reserve. The runaway labor costs of these regulator agencies are not subject to congressional control, and they add up. Employee compensation accounts for about 80% of the operating costs of bank regulatory agencies. If the average regulatory employee’s compensation were equalized between bankers and regulators, the direct cost of bank regulation would fall by more than 50%.

At the risk of adding more bad news, the numbers for the financial sector are just the tip of the iceberg.

This video explains how the people who pay taxes get far less compensation than America’s bureaucrat class.

P.S. Lest I leave people a bit depressed, I want to share some good news.

I wrote back in 2011 about a motorist getting nailed for flashing his headlights to warn other drivers about a speed trap.

Here is an excerpt from a report in the Atlanta Journal Constitution about a Judge throwing out a similar charge.

Chris Hill noticed a sheriff’s deputy behind him and flashed his lights to warn a UPS driver coming the other way. The deputy pulled over Hill on U.S. Highway 140 in White City and handed him a $260 ticket for improperly using his headlights, saying another deputy had seen the flashing lights from behind the UPS truck and alerted him to stop the log truck because of the signaling. Outraged, Hill decided to fight the ticket, and on Wednesday, a Jackson County Justice Court judge dismissed the citation, finding that motorists flashing their headlights amounts to speech protected by the Oregon Constitution.

I’m in favor of being tough on crime, but only when laws are just.

So kudos to the Judge in this case. And hopefully jurors around the nation will use their nullification power to block similar cases of government over-reach.

Read Full Post »

If you had to pick the most inane, pointless, and intrusive example of government stupidity, what would you pick?

We have lots of examples of regulators running amok.

But we also have really absurd examples of wasteful spending.

We even have examples of government stupidity that can be characterized as a combination of wasteful spending and foolish regulation, such as one part of the government squandering money on research about how to encourage condom use by providing prophylactics of different sizes while another part of the government has regulations preventing the private sector from providing prophylactics of different sizes.

Today’s post, however, could win a prize for the most profound and disturbing example of government stupidity. It mixes foolish red tape with over-the-top political correctness.

Here are some jaw-dropping details of the federal government running amok in Michigan.

A set of seating is being torn down outside the Plymouth Wildcats varsity boys’ baseball field, not long before the season begins, because the fields for boys’ and girls’ athletics must be equal. A group of parents raised money for a raised seating deck by the field, as it was hard to see the games through a chain-link fence. The parents even did the installation themselves, and also paid for a new scoreboard. But, after someone complained to the U.S Education Department’s Office for Civil Rights, an investigated by the department determined the new addition was no longer equal to the girls’ softball field next door, which has old bleachers and an old scoreboard.

This is utterly absurd for several reasons, most notably that the federal government shouldn’t have any role in education, much less efforts to micro-manage high school sports facilities.

But even if one accepts that Washington bureaucrats should interfere in such matters, it’s important to understand that it is bureaucratic lunacy to interpret “Title IX requirements to offer equal athletic opportunities to both boys and girls” to somehow mean equal seating.

Sexist bleachers?!?

What happens if there are fewer people who want to watch female sports? Should there be a requirement to build bleachers that are mostly empty?

Or maybe we can blend Obamacare to Title IX and create a mandate that parents and others in the community have to attend female sporting events 50 percent of the time?

Actually, I shouldn’t even joke about such an idea, lest some bureaucrat think it’s a serious proposal.

P.S. The Keynesians will be happy. They like it when wealth and/or capital is destroyed since that supposedly forces “stimulative” rebuilding exercises.

Read Full Post »

Two years ago, I shared a video about the Environmental Protection Agency’s brutal and thuggish tactics against an Idaho family.

Constitution Limits Government PowerThat story had a very happy ending because the Supreme Court struck a blow for property rights and unanimously ruled against the EPA (too bad that similarly sound analysis was absent when the Justices decided the Kelo case).

Now we have a new example of the EPA running amok

Let’s look at a horrifying report about another family in the cross hairs of a rogue bureaucracy.

All Andy Johnson wanted to do was build a stock pond on his sprawling eight-acre Wyoming farm. He and his wife Katie spent hours constructing it, filling it with crystal-clear water, and bringing in brook and brown trout, ducks and geese. It was a place where his horses could drink and graze, and a private playground for his three children.

Sounds like the American dream, but also responsible stewardship since ponds usually have a positive role in limiting erosion.

Unfortunately, the EPA’s pinhead bureaucrats saw an opportunity for pointless and destructive intervention.

But instead of enjoying the fruits of his labor, the Wyoming welder says he was harangued by the federal government, stuck in what he calls a petty power play by the Environmental Protection Agency. He claims the agency is now threatening him with civil and criminal penalties – including the threat of a $75,000-a-day fine. …The government says he violated the Clean Water Act by building a dam on a creek without a permit from the Army Corps of Engineers. Further, the EPA claims that material from his pond is being discharged into other waterways. Johnson says he built a stock pond — a man-made pond meant to attract wildlife — which is exempt from Clean Water Act regulations.  The property owner says he followed the state rules for a stock pond when he built it in 2012 and has an April 4-dated letter from the Wyoming State Engineer’s Office to prove it. …But the EPA isn’t backing down and argues they have final say over the issue. They also say Johnson needs to restore the land or face the fines.

As you can imagine, this was not exactly good news for the property owner.

Johnson says he was “bombarded by hopelessness” when he first received the administrative order from the EPA. …The EPA order on Jan. 30 gave Johnson 30 days to hire a consultant and have him or her assess the impact of the supposed unauthorized discharges. The report was also supposed to include a restoration proposal to be approved by the EPA as well as contain a schedule requiring all work be completed within 60 days of the plan’s approval. If Johnson doesn’t comply — and he hasn’t so far — he’s subject to $37,500 per day in civil penalties as well as another $37,500 per day in fines for statutory violations.

But kudos to Mr. Johnson. Unlike so many others, he’s not going to roll over and acquiesce to EPA brutishness.

Johnson plans to fight. “This goes a lot further than a pond,” he said. “It’s about a person’s rights. I have three little kids. I am not going to roll over and let [the government] tell me what I can do on my land. I followed the rules.”  …Johnson says his legal fight with the government agency is a teachable moment for his kids. “This is showing them that they shouldn’t back down,” Johnson said. “If you need to stand up and fight, you do it.”

Needless to say, the EPA is not the only out-of-control bureaucracy in Washington.

Let’s now read about the thuggish actions against blueberry growers by the Department of Labor.

Bureaucrats from that entity decided to launch a legal jihad against some growers and they relied on bad numbers and grotesque strategy.

Another example of big government run amok.

In late July 2012, officials from the Department of Labor’s Wage and Hour Division visited Pan-American Berry Growers, B&G Ditchen and E&S Farms for spot inspections. …the Labor Department’s Wage and Hour division district director, Jeff Genkos, accused the growers of minimum-wage violations and declared the blueberries “hot goods” under the 1938 Fair Labor Standards Act. This charge is usually reserved for, say, T-shirts sewn by child laborers. The effect was to stop the fruit from being shipped to customers. He then ordered the growers to pay back wages and penalties and asked them to sign away any right to appeal the deal.

What was most shocking about the DOL’s actions is that they engaged in Mafia-type tactics and “made an offer they couldn’t refuse.”

This put the growers in an impossible spot. Either they could collectively pay $240,435 or let millions of dollars’ worth of berries rot. And they only had a day or two to make a decision. They did what any prudent employer would do: They paid the money, and the hot goods order was lifted.

And you won’t be surprised that the bureaucracy cooked the numbers in the first place.

It turns out that Labor’s bureaucrats had divined that the average worker could only pick around 60 pounds of blueberries an hour, some 30 pounds below what workers usually pick. They then counted the number of workers employed and concluded the growers must have had workers employed off the books. …In January, Oregon magistrate judge Thomas M. Coffin ruled for the growers. “In essence, to avoid the potential loss of millions of dollars worth of berries, defendants had to agree to the DOL’s allegations without an opportunity to present a defense or confront the DOL’s evidence in an administrative or court hearing,” he wrote.

I’m glad at least one court has ruled against the Department of Labor. Let’s hope that the final result is positive when all the appeals have been exhausted.

Both of these stories belong in my collection of “Government Thuggery in Action.”

Previous examples include:

If you peruse those examples without getting angry at big government, you probably need a lengthy bit of soul-searching.

If you’re a normal person, you’ll want this t-shirt (and don’t be a perv, just the t-shirt!).

Read Full Post »

The headline of this post might not be completely honest. Indeed, if you asked me to grade the accuracy of my title, I’ll admit right away that it falls into the “if you like your plan, you can keep your plan” category of mendacity.

Krugman WeatherBut I’m only prevaricating to set the stage for some satire about Keynesian economics.

But this satire is based on a very bizarre reality. Advocates of Keynesian economics such as Paul Krugman have claimed that war is stimulus for the economy and that it would be good if we were threatened by an alien invasion. As such, it doesn’t take too much imagination to think that conversations like this may have taken place inside the Obama White House.

Particularly since Keynes himself thought it would be good for growth if the government buried money in the ground.

So enjoy this satire from The Onion.

By the way, Krugman also said the 9-11 terrorist attacks would “do some economic good.”

So the folks at The Onion need to step it up if they want to keep pace.

Now let’s share a serious video.

I’ve written before about how the Food and Drug Administration’s risk-averse policies lead to needless deaths.

Econstories builds upon that hypothesis, using the Dallas Buyers Club to make excellent points about why markets are better than command-and-control regulation.

Very similar to what Steve Chapman wrote about bureaucracy, competency, and incentives.

By the way, the bureaucrats at the FDA also have engaged in pointless harassment of genetic testing companies, even though nobody claims there is even the tiniest shred of risk to health and safety.

And nobody will be surprised about the bureaucracy’s anti-smoking jihad.

But nothing exemplifies brainless bureaucracy more than the raid by the FDA’s milk police. Though the FDA’s strange condom regulations might be even more bizarre.

It’s hard to decide when bureaucracies do so many foolish things.

P.S. The prize for the craziest bit of red tape still belongs to Japan, where the government actually regulates providers of coffee enemas, though the Department of Agriculture’s rules for magic rabbits is a close competitor.

Read Full Post »

I wish there was a magic wand that somebody could wave and all of us would have more money. Or maybe Santa Claus could play that role, or some version of the Tooth Fairy.

And if that magic person only had limited powers, I would want more money specifically for those with modest incomes.

Unfortunately, we don’t live in this fantasy world. As a society, we can’t enjoy output unless we first go through the toil and trouble of working, saving, and investing.

Heck, even some leftists have admitted that you can’t redistribute unless somebody first produces.

But that doesn’t stop some politicians from practicing free-lunch economics. They tell us, for instance, that government can impose a higher minimum wage with no job losses.

And now the Obama Administration is claiming that it can expand overtime eligibility rules without any adverse impact of base pay, hours, or employment.

In my role as the designated bad guy who has to inform people there’s no magic wand or Santa Claus, here’s what I told the New York Times.

“There’s no such thing as a free lunch,” said Daniel Mitchell, a senior fellow with the Cato Institute, who warned that employers might cut pay or use fewer workers. “If they push through something to make a certain class of workers more expensive, something will happen to adjust.”

I also shared my putative wisdom with the International Business Times, underscoring the principle that government shouldn’t intervene in labor markets.

“Our view is pretty straightforward,” Daniel Mitchell, a fellow at the libertarian CATO Institute in Washington D.C., told International Business Times by phone on Wednesday. “From a philosophical perspective the government shouldn’t get involved with labor contacts between two consenting adults. You can’t impose more labor costs and have them magically disappear.”

I also pontificated on this issue for CBS News radio, but the “highlight” of the day was having to dispel economic myths in a series of TV interviews.

In this debate for Nightly Business Report, I had to explain that faster growth was the only effective way to improve living standards, but my opponent somehow thought we should go back to the glorious 1970s.

And in this interview with Ali Velshi on AJ, I’m stunned that he blames today’s weak job market on free markets.

Last but not least, I made what will probably be my last appearance on Larry Kudlow’s great show on CNBC and used the opportunity to say we shouldn’t copy Europe’s failed welfare states.

Larry is retiring at the end of the month and he will be sorely missed.

P.S. Lots of people are suffering because of Obamacare, especially taxpayers and patients.

But since our main topic today is jobs, let’s not forget that millions of workers are being screwed over by this bad law. They’re losing jobs, losing hours, and/or losing take-home pay thanks to Obama’s ham-fisted intervention.

If you like gallows humor, Reason TV addresses this issue in a new video. Enjoy.

And if you like Obamacare parody videos, here are the other ones that will produce some smiles and laughs.

*The head of the National Socialist Workers Party finds out he can’t keep his health plan.

Varvel Obamacare Ambulance*A creepy version of Uncle Sam wants to know about your sex life.

*Young people discover that they’re screwed by Obamacare.

*One of the biggest statists of the 20th century is angry that the Obamacare exchanges don’t work.

*A consumer tries to buy Obama-coffee.

By the way, if you’re concerned about America’s fiscal future, here’s a video on Obamacare that definitely is not funny.

Read Full Post »

Older Posts »

Follow

Get every new post delivered to your Inbox.

Join 2,411 other followers

%d bloggers like this: