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:: The Rule of Reason ::

:: Tuesday, September 30, 2003 ::

The Courts: Briefing to the Max 

:: Posted by Skip at 9:25 PM

Eugene Volokh explains the rules for filing inimicus curiae--or "enemy of the court"--briefs in federal court:
1. Focus primarily on repeating the arguments of your favored party. After all, anything worth saying once is worth being said by everyone who wants to say it. The official term for this (originally from Law French) is the "moi aussi principle."

2. If you do have a genuinely original twist to add to the analysis, don't just stick with it -- that's bad form. Be sure to surround it with lots of other points that echo what your favored party says (see item 1 above). A ratio of 10 page of repetition to 1 page of new material is the norm, though experts believe that even this is too low.

3. Always include lots of general rhetoric, such as "The importance of the timeless guarantees of the First Amendment cannot be overstated in our marketplace of ideas, and the republic on which it rests." Judges and law clerks just love that sort of stuff. This is especially true when filing briefs before the Supreme Court. The sorts of close and difficult cases that the Court hears are almost always decided primarily by applying general slogans. In fact, it's considered disrespectful of the Court to focus on mere factual details, or to use more mundane language.

4. Always keep in mind that (according to Rule 3.7), "The primary purpose of an inimicus curiae brief is to allow the inimicus to tell donors and other supporters that the inimicus Has Filed A Brief Before The Court expressing the timeless verities for which the inimicus and its supporters stand." Any departure from this purpose is frowned on.
Eugene, of course, is humorously describing common problems with amicus curiae briefs. As the person resonsible for drafting CAC's amicus briefs, I have seen all of these foibles many times over. Here at CAC, we try to avoid making these mistakes, though admittedly we're not always successful. Our brief in the Michigan affirmative action cases was largely repetitive of the general arguments offered--but then again, with more than 90 amicus briefs filed, it's hard to say anything original. At least we kept our brief to eight pages, likely making CAC's contribution to that case the shortest of the 90-plus participants.

In our briefs in Nike v. Kasky and United States Postal Service v. Flamingo Industries, however, I believe CAC made a valuable contribution. In both cases we brought up constitutional arguments that were not addressed at all by the parties. In Nike, we challenged the constitutionality of California's "private attorney general" statute under the Guarantee Clause of the Constitution (which requires all states to maintain republican governments rather than direct democracies). And in Postal Service, we argued the structure of the USPS violates the Supreme Court's requirements for a sovereign agency under Morrison v. Olson (which defines the difference between "superior" and "inferior" officers of the Executive Branch). Whatever impact our briefs had on the ultimate outcome (none in Nike; to be determined in Postal Service), we upheld our role as legitimate "friends of the court".

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The Culture: So where do you advance Objectivism? 

:: Posted by Nicholas Provenzo at 12:08 AM

An anonymous Objectivist scholar has been bloging on the apparent collapse of David Kelley's "Objectivist Center." TOC is a quintessential libertarian organization in that it is an organization without either a worthwhile intellectual base or a practical focus. I have ignored it accordingly. While I agree with the post on the substantive points about TOC, I was struck by his comments that TOC's efforts are likely run out of "some guy's apartment in Alexandria." That's hardly damming in my mind. After all, I run the Center out of my Alexandria apartment. But the comment, however directed, irritated me enough to get me thinking.

In her 1962 Ford Hall Forum talk, "America's Persecuted: Big Business," Ayn Rand called for a civil liberties group for businessmen. The founding vision of the Center is for it to be just such a group. Dare I brag, our activities have pioneered now ground in the advancement of Objectivism (after all, there have been three Objectivists that have appeared on national broadcast TV--Ayn Rand, Leonard Peikoff, and me). But given our resources, I run the Center out of my Alexandria apartment. I do so because the Center does not enjoy the financial support to allow it to pay for commercial office space.

Does that diminish the value of the Center's accomplishments? In the past year, the Center has filed briefs with the US Supreme Court defending equal treatment under the law (Gratz v. Bollinger and Grutter v. Bollinger), the rights of businessmen to full protection of their speech (Nike v. Kasky), and attacking government-created monopolies (United States Postal Service v. Flamingo)? The Center has issued a continuous stream of comment letters defending the victims of antitrust prosecution. Objectivist arguments will win in political and legal debates once they are engaged by our opponents. Of course, this requires our opponents hear our arguments in the first place, particularly given that these people currently control the political and legal forums in which these debates occur. The Center has fought for capitalism where no Objectivists have before--in the corridors of power that squelch our freedom and potential for prosperity and with the very people that suffer accordingly.

I wish I had all the funding I needed to fully advance the Center's goals. I want nothing more then to one day lay the cornerstone for what I envision would be both an office and Objectivist community center here in Washington. But in the meantime, I am proud of the record accomplishments of the organization I lead, however humble our digs.

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:: Monday, September 29, 2003 ::

Antitrust News: A Battle of Steel Wills 

:: Posted by Skip at 8:37 PM

The Washington Times' editorial page has discovered a potential barrier to economic efficiency--antitrust:
Steel analysts agree that consolidation can only help a global market burdened with oversupply. Anti-trust regulators could differ with this consensus, however, to the detriment of the U.S. steel industry. Consolidation cops have an undistinguished record on blocking steel mergers, such as preventing U.S. Steel's attempt to buy National Steel in 1994.

In the coal industry, there has been more recent evidence of overzealous anti-trust policing that analysts say augurs badly for future steel mergers, with the Federal Trade Commission giving Arch Coal a second information request on its bid to buy Triton Coal. "This is a review," said Merrill Lynch metals analyst Dan Rolling, "that should have taken five minutes," since there is a gross overabundance of coal. Instead, regulators are effectively suspending a merger that should have gotten speedy approval.
Just a few months ago, the Times' editors were chomping at the bit to subject Major League Baseball to antitrust prosecution because owners wouldn't relocate the Expos to Washington, DC. And the Times, like most major media outlets, provided no substantial coverage or scruting of the Bush administration's antitrust misdeeds in other industries. Still, the Times' comments are welcome here, if only because it demonstrates not all conservatives consider antitrust an enlightened form of government intervention.

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Rights and Reason: The Real Costs of Healthcare 

:: Posted by Skip at 8:33 PM

Today's Wall Street Journal reports health care costs are expected to rise 12% for businesses that provide coverage for their employees. This would be the fifth consecutive year of double-digit percentage increases. This year costs rose an average of 16%.

Jim Foreman, managing director of Towers Perrin, the consulting firm that produced the survey, noted that employers' were facing added strains of providing health benefits in a bad economy because "[t]here's no way you can pass these costs on to customers." And therein lies the problem. Most of American healthcare financing policy is now based on the axiom "the consumer must never pay market value". Federal policymakers have gone to great lengths to install smoke and mirrors throughout the healthcare system to hide the true costs from consumers. Employers are given tax breaks to provide healthcare coverage, something which is not inherent to the employer-employee relationship. The FTC and DOJ prosecute doctors that try to protect the erosion of their incomes by government-sponsored managed care companies. The managed care firms, in turn, acclimate the consumer population to paying more for an inferior level of service. And all the while, political leaders are looking for ways to further mask consumer costs--exhibit A being the ongoing effort to provide government-sponsored prescription drug benefits.

Major labor unions--which enjoy cartel protections under federal law--firmly oppose any effort by employers to shift the cost of healthcare back to consumers. This is not just a matter of short-term practicality, but of long-term ideology: the AFL-CIO backs government-run socialized healthcare, and the best way to get that is by driving employers to the brink of financial ruin over healthcare costs. That way big business will be clamoring for socialized medicine just to get the cost monkey of their backs. This is why, for instance, many larger corporations have thwarted efforts to give physicians an antitrust exemption . Corporate America will condemn physicians to serfdom rather than take a principled stand for free markets.

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The War: Treason in the White House? 

:: Posted by John Bragg at 11:40 AM

From the Washington Post:

At CIA Director George J. Tenet's request, the Justice Department is looking into an allegation that administration officials leaked the name of an undercover CIA officer to a journalist, government sources said yesterday.
In July, the odious Robert Novak wrote a column exposing Valarie Plame, the wife of former Ambassador Joseph Wilson (the author of the report debunking the Niger uranium story), as a CIA agent or operative. Novak cited two senior administration officials.

According to the Post, yesterday another senior administration official revealed that the two officials were shopping the "story" to six different journalists, and that the motivation of the two officials was revenge against Joseph Wilson.

At least, Robert Novak has revealed the identity of an alleged CIA agent. If Novak is telling the truth, then two people in the Administration need to go to jail and he is shielding them. If the Post's senior administration official is telling the truth, then five other journalists also know who the culprits are, and are concealing the truth. In addition, the senior administration official knows the truth and is remaining silent, in public at least.

Someone needs to go to prison for this.

The Washington Post Article

The Bob Novak column



UPDATE: Novak has changed or updated his story. From the Drudge Report, with no attribution:

'Nobody in the Bush administration called me to leak this. In July I was interviewing a senior administration official on Ambassador Wilson's report when he told me the trip was inspired by his wife, a CIA employee working on weapons of mass destruction. Another senior official told me the same thing. As a professional journalist with 46 years experience in Washington I do not reveal confidential sources. When I called the CIA in July to confirm Mrs. Wilson's involvement in the mission for her husband -- he is a former Clinton administration official -- they asked me not to use her name, but never indicated it would endanger her or anybody else. According to a confidential source at the CIA, Mrs. Wilson was an analyst, not a spy, not a covert operator, and not in charge of undercover operatives'


Part of this quote is duplicated on
cnn.com in the 9th paragraph
and given as something Novak said on Crossfire today.

According to the Washington Post's anynonymous source, there are five journalists who can either corroborate Novak's story or contradict his account of what Novak's anonymous sources said. This might not be a matter of criminal conduct, but of Novak's trademark sloppiness. Why does this guy keep his job again?

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Rights and Reason: Barriers to Entry 

:: Posted by Skip at 9:44 AM

Thomas Sowell attacks one of the major reasons for the shortage of qualified teachers in government schools:
You may have heard how hard it is to find enough teachers -- and therefore how necessary it is to raise salaries, in order to attract more people into this field. One example can demonstrate what is wrong with this picture, though there are innumerable other examples.

A young man who graduated summa cum laude from elite Williams College decided that he wanted to be a teacher. He sent letters and resumes to eight different school districts. Not one gave him even the courtesy of a reply.

Does that sound like there is a teacher's shortage? Moreover, any number of other highly qualified people have had the same experience.

The joker in the deal is that, no matter how highly qualified you are, your desire to become a teacher is not likely to get off the ground unless you have jumped through the bureaucratic hoops that keep people out of this field -- thereby protecting the jobs of unionized incompetents who are already in our schools.

The most important of these hoops is taking unbelievably dreary and stupid courses in education. Using these costly and time-consuming courses as a barrier, those in the education establishment "maintain low standards and high barriers at the same time," as Secretary of Education Rod Paige has aptly put it.

Factual studies show no correlation between taking these courses and successful teaching. Private schools are able to get good teachers by hiring people who never took any such courses. That is where our Williams graduate finally found a job.

The very people in the education establishment who maintain barriers to keep out teachers are the ones constantly telling us what a shortage of teachers there is -- and how more money is needed. This is a scam that has worked for years and will probably work for more years to come.
State licensing of professionals constitutes a major barrier to entry, yet you rarely hear much about this from antitrust regulators. Instead, the Federal Trade Commission has spent its resources attacking voluntary professional societies that try to maintain ethical standards without resorting to government coercion. The FTC, of course, sees voluntary action as illegal, but not state-imposed licensing regimes, which like antitrust are designed to, cough, "protect the public interest".

In the past year, the FTC prosecuted three groups for minor provisions in their ethical codes that did not meet the standards set by Commission lawyers. In all three cases, the FTC explicitly banned the groups from expressing any opinion about ethics that conflicted with the views of the Commission. To give you an example of what we're talking about, one group--the Institute of Store Planners--had an ethical rule that said members should avoid participating in certain types of bid competitions. Store planners, who design retail interiors, had been screwed in the past by unethical customers who solicited designs from multiple store planners, then after picking one designer, the winning bidder would steal design elements from his competitors. The losing bidders, meanwhile, received little to no compensation for their work. ISP's rule was thus designed to prevent store planners from hurting themselves. ISP never enforced the rule, since it was understood to be an ethical opinion. But the FTC spent thousands of dollars to force ISP to drop the opinion from their ethics code on grounds that consumers were being harmed.

The FTC then misled Congress about the ISP and other voluntary ethics code cases. In a formal report to Congress, the FTC said their actions in these cases broke-up "smoke-filled room conspiracies"--their words, not mine--and that consumers significantly benefitted. In fact, there was no evidence of consumer benefit, and these "conspiracies" all involved ethics codes that had been public knowledge for years--in ISP's case, for more than three decades.

If the FTC put half the energy it spends violating the First Amendment into fighting the teacher unions, then we might see some "consumer benefit". But attacking large, well-financed targets is not the FTC's preferred method of operation.

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:: Sunday, September 28, 2003 ::

Politics: Objectivism in Action 

:: Posted by Skip at 7:14 PM

I bitch when Objectivists sit on their fat hides and don't do anything, so it's only fair I praise the ones that do. D. Logan Darrow Clements is an Objectivist running for governor on the California recall ballot. He seems to have the rhetoric down nicely:
Ayn Rand knew that big government ruins all it touches while freedom leads to incredible prosperity. I know, as did she, that the economy will roar to life if we liberate it from excessive taxation and abusive regulation. See the work of freedom in grocery stores filled with food, hospitals filled with lifesaving technology, and a computer industry filled with innovation. See the work of big government in power blackouts, failing schools and traffic jams. The more important the task, the more reason it should be handled by resourceful companies motivated by profit, not bumbling politicians motivated by power.
His website constantly refers to Atlas Shrugged as "America's 2nd most influential book". I believe it came in behind Dr. Phil's new weight loss book.

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Rights and Reason: Commerce on commerce 

:: Posted by Skip at 10:58 AM

Commerce Secretary Donald Evans has an op-ed in today's Washington Times explaining the Bush administration's approach to business:
Past government leaders have failed to address the growing burdens American businesses carry. Inaction in the 1990s on problems such as growing health care costs, runaway junk lawsuits, insufficient energy and unreasonable business regulations now are forcing businesses to lay off employees.

The Bush administration came to office to solve problems — not pass them on to future generations. The president is working with Congress to create the conditions under which businesses can grow and create jobs.

The president's tort reform and medical liability reform will make our businesses more competitive. Junk lawsuits — especially the ones aimed at our doctors — might enrich trial lawyers, but they bankrupt good businesses and put blue-collar Americans out of work.
Evans' fine rhetoric, unfortunately, does not explain why the administration's antitrust policy has become more aggressive and destructive with each passing month. Evans highlights the unique burden doctors face from tort lawsuits, yet he expresses no understanding of the antitrust burden thrust upon them by the government's antitrust lawyers. Evans notes unfair regulations destroy jobs, yet he makes no acknowledgment of the wealth that is destroyed by the FTC's efforts to undo mergers years after the fact or the jobs that have been lost when businesses are forced to shut down rather than face antitrust investigations where they are afforded few, if any, constitutional due process rights.

Every day this administration is in office, its antitrust regulators hurt the rights and economic livelihoods of "average Americans". Until Secretary Evans (and his boss) realize this, we must continue to treat the current administration as an enemy, not a friend, of individual rights and capitalism.

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:: Saturday, September 27, 2003 ::

Sports: Dissent in the Ranks 

:: Posted by Skip at 12:56 PM

Perhaps I've been unfair in treating the sports media's position on Maurice Clarett as monolithic. The Washington Post's Michael Wilbon thinks Clarett's case is full of holes. Wilbon even provides an answer to the charge that the NFL's three-year rule is not explicitly incorporated into the Collective Bargaining Agreement:
As far as this nonsense that the draft eligibility rule isn't really part of the current agreement as has been reported in some places, [former NFL assistant general counsel David] Cornwell points out that the NFL and NFL Players Association wrote the rule into the constitution and by-laws in 1988 (allowing Barry Sanders to enter after his third year instead of four full years). Why wasn't it in the CBA originally? Because there was no CBA at the time. The league was coming off its 1987 work stoppage. But Paragraph 1 of the CBA adopts the constitution and by-laws, including the draft eligibility rule.
I'm not sure what Wilbon means by "Paragraph 1", but Article III, Section 1 of the CBA says the following:
This Agreement represents the complete understanding of the parties on all subjects covered herein, and there will be no change in the terms and conditions of this Agreement without mutual consent. Except as otherwise provided * * * the NFLPA and the Management Council waive all rights to bargain with one another concerning any subject covered or not covered in this Agreement for the duration of this Agreement, including the provisions of the NFL Constitution and Bylaws; provided, however, that if any proposed change in the NFL Constitution and Bylaws during the term of this Agreement could significantly affect the terms and conditions of employment of NFL players, then the Management Council will give the NFLPA notice of and negotiate the proposed change in good faith.
The three-year rule was written into the NFL constitution and bylaws in 1988; the CBA was adopted in 1993, amended in 1996, and reaffirmed in 1998. The union explicitly waived their right to negotiate the three-year rule, which by extension means the rule is the proper subject of labor negotiations, and thus immune from antitrust scrutiny as a matter of federal law. If the NFL wanted to amend or abolish the rule, for instance, the union would then have the right under Article III to negotiate said changes with the league.

But what about Clarett, who is not currently a member of the NFL Players Association? Why should he be bound by a CBA he never agreed to. That's been a common argument of Clarett supporters, but it fails as a matter of labor policy. The CBA's preamble clearly applies the contract to all current and future NFL players. Clarett has no right under law to negotiate his own labor agreement. That is, after all, the entire point of collective bargaining.

Technical questions of law aside, Wilbon also defends the validity of the three-year rule on policy grounds, and questions why the NFL should bend over backwards to accomodate Clarett's impatience:
The NFL and NFLPA also found through a ton of research that players who earn their college degrees fare much better and have much longer careers than players who don't. In other words, the NFL is like most industries. An apprenticeship helps. "It's a way more mental game than people think," [Washington Redskins linebacker LaVar] Arrington said. "I wouldn't have come out [of Penn State] as a sophomore because there's still too much education involved in the game, to become a better player. I mean, Ohio State is a great program. . . .

"Why are you in such a rush? You can't let greed blind you from having a good experience in college, man. The money is going to be there. I don't know what his reasoning is. Maybe there are some people who really, really need him to make money. But I look at it like this: He's been in the financial situation that he's been in thus far, so what's another year? What's another year or two?"

He's in a rush because he didn't want to go to school and probably went to the wrong school in the first place. He's in a rush because he wanted to go straight to the pros like his boy LeBron James. He's in a rush because, just as Arrington suspects, there are folks around him who want to get paid, who have seen him as a lottery ticket since he turned 15. So the NFL, because Clarett is in a rush, ought to capitulate and take on not just this kid, but everybody who'll rush in once the flood gates are open? At a time when patrons and viewers and sponsors are demanding more standards, Clarett and his supporters want fewer standards.
It should tell you something when a linebacker makes more sense than most antitrust lawyers and media pundits.

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Rights and Reason: Prioritizing Rights 

:: Posted by Skip at 12:33 PM

This will be my last post on Do Not Call for awhile, at least until the Tenth Circuit decides what to do. The FTC has appealed and asked the district court in Denver to stay its decision and allow the registry to take effect while the appeals are pending. I found this paragraph from the FTC's brief in support of the stay motion quite fascinating:
There will be irreparable harm if a stay is not granted. Already, consumers have registered more than 50 million telephone numbers onto the registry. By doing this, millions of consumers have indicated that they find unwanted telemarketing calls to be abusive and they want them stopped. Again, as this Court noted, “protecting the well-being, tranquility, and privacy of the home is of the highest order in a free and civilized society.” Order at 20. The Rule’s registry provisions that protect consumers were scheduled to take effect on October 1,
2003. If this Court’s Order is not stayed, these consumers will continue, after that date, to receive abusive telemarketing calls. There is no remedy for the countless intrusions on privacy such abusive calls will impose on these consumers during the time an appeal in this case is pending.
The FTC's argument would have more credibility with me if the agency didn't spent the majority of its resources violating the fundamental rights of Americans. While the FTC considers "privacy of the home" sacrosanct in this context, the Commission thinks nothing of stripping the nation's physicians of their right to contract, forbidding private associations from expressing ethical opinions, or taking the property of private companies to serve an undefined "public interest". Yet when it comes to thwarting telemarketers, the agency will spare no expense (or rhetoric) in defense of individual liberties.

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:: Friday, September 26, 2003 ::

The Culture: Defining Divinity 

:: Posted by Skip at 9:23 PM

Ann Coulter offer this insight on religion: "There is no surer proof of Christ's divinity than that he is still so hated some 2,000 years after his death." By that standard, Hitler will become a mainstream deity in about 1,942 years. Except among the French.

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Sports: Every Rule Has an Exception 

:: Posted by Skip at 9:20 PM

Eric McErlain, who runs the Unofficial Official Blog of the Maurice Clarett case (with this site running a close second), points to Dave Anderson's New York Times story on one player that got around the NFL's three-year rule in 1991. Well, sort of:
But two years before that 1993 agreement was signed, Eric Swann, a 300-pound defensive lineman who had been out of high school in Lillington, N.C., for only two years, was drafted by the Arizona Cardinals with the sixth pick in the first round of the 1991 draft.

Swann, who never enrolled in college, had been playing semipro football for the Bay State Titans, according to the Cardinals media guide, while lugging pipe for an electric company and running errands for a restaurant.

The three-year rule had been inserted in the N.F.L. constitution in 1990, but when Swann's eligibility for the draft developed in 1991, the N.F.L. was involved in other legal cases, notably those involving Freeman McNeil and Marvin Powell. It chose to ignore Swann's situation. Despite chronic knee injuries, Swann, a Pro Bowl alternate in 1993, endured for a decade with the Cardinals and the Carolina Panthers.

The N.F.L. will argue that Swann's arrival predated the 1993 collective bargaining agreement, but it remains a precedent that could haunt the league in the Clarett case. Why is the three-year rule so vital now, the judge may want to know, when Swann was out of high school for only two years when he was drafted?
McErlain argues that Swann's case demonstrates why the three-year rule is inherently arbitrary, and that a "player's right to try" and make it in the NFL, regardless of age, should be protected. The issue, though, is whether the government should force the NFL to afford Maurice Clarett that "right". As I've said all along, everyone seems concerned about Clarett's rights, yet the NFL's rights as a business owner are simply disregarded.

Another thing to consider: Much of the anti-NFL position in the press stems from the view that college football provides a free minor league to the NFL, and that this is inherently unfair. You won't get any disagreement from me there. But one reason--a big reason, if you ask me--that the NFL doesn't develop its own minor league is the same antitrust laws folks consider Maurice Clarett's liberator.

The reason baseball has such a successful minor league system is because that system is expressly exempt from the antitrust laws. Without that exemption, Major League Baseball would have little incentive to maintain a proprietary minor league. The minor leagues are the last vestige of the old "reserve clause". The original reserve clause basically assigned a player's rights in perpetuity to the first Major League team that acquired them. There was no free agency under this system. The rise of the player's union put an end to that nonsense. But what remains is the ability of clubs to sign players--many just out of high school--and assign them to affiliated minor league clubs. This creates value that justifies the Major League teams substantial investment in supporting their lower affiliates. This, in turn, allows the minor leagues to survive, and in many markets thrive.

Hockey has a similar system. Why it's never been challenged under U.S. antitrust laws I couldn't say; most likely the cross-border nature of hockey's minor leagues--Canada's unlikely to challenge the system under its antitrust laws for cultural reasons--makes it a non-issue. Football and basketball, however, are U.S.-based sports with no antitrust exemption. Thus, they are legally restrained from emulating baseball's successful model.

If the antitrust laws were repealed, and the NBA and NFL were free to operate their own minor leagues, situations like Clarett's would quickly become a thing of the past. Players in those sports could bypass the corrupt amateurism of the NCAA and try their hand in truly developmental professional leagues. Yet you're unlikely to hear much call for antitrust repeal among the sports media elite.

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Rights and Reason: Do Not Call Battle Rages On 

:: Posted by Skip at 9:01 PM

Only eight House members voted against yesterday's congressional decision to grant the FTC explicit authority to implement the national Do Not Call registry. A number of reactionary bloggers posted the phone numbers of the eight members—along with the Oklahoma judge that issued the ruling prompting the congressional action—demanding the people harass said members for failing to adhere to mob rule. National Review Online's Jonathan Adler was a rare voice of reason in the rush to demonize the dissenters:
Rather than harass those who voted against creating a federal "do not call" list, I'm inclined to recognize these members of Congress as profiles in courage for recognizing that this sort of thing is simply not a proper responsibility of the federal government. There are voluntary, albeit imperfect, private do not call list, as well as numerous services and technologies that can block unsolicited calls. It is rare for a member of Congress to stand up and say a popular initiative is beyond the scope of federal power. On such rare occasions, we should applaud those who stand on such principle.
Shortly after Congress essentially mooted the Oklahoma judge's ruling, another U.S. district judge sitting in Denver ruled the Do Not Call registry unconstitutional under the First Amendment. I have not yet reviewed the full text of the judge's opinion, but the gist of it as I understand it is that becaue the FTC requires commercial telemarketers, but not charitable or political telemarketers, to adhere to the registry, the FTC is unconstitutionally favoring one category of speech over another. Because the "governmental interest" here is supposed to be protecting privacy, there is no basis for distinguishing commercial and noncommercial speech. An unsolicited caller taking a poll violates the listener's privacy just as much as a caller selling consumer products.

This point appears lost on Congress and the FTC's somewhat hysterical backers. Equally lost is the fact that Congress previously gave the FCC explicit authority to create the Do Not Call registry, and that when they properly decided not to exercise that authority, the FTC simply did it on its own without authorization. I guess this is what you'd call "competing governments" theory in practice.

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Antitrust News: Reliance on Microsoft Called 'Risk' to U.S. Security 

:: Posted by Nicholas Provenzo at 10:53 AM

The Computer & Communications Industry Association, the same people who have built careers out of hating Microsoft, now claim that Microsoft software is a national security risk

“As fast as the world's computing infrastructure is growing, vulnerability to attack is growing faster still,” said Dan Geer [the principal author of CCIA’s paper]. “Microsoft’s attempts to tightly integrate myriad applications with its operating system have significantly contributed to excessive complexity and vulnerability. This deterioration of security compounds when nearly all computers rely on a single operating system subject to the same vulnerabilities the world over.”

* * *

“This report underscores and explains many of the dangers that we have warned of for some time,” said Ed Black, President and CEO of the Computer & Communications Industry Association. “Microsoft’s monopoly threatens consumers in a number of ways, but it is clear that it is now also a threat to our security, our safety, and even our national security.”
Black forgot to add that his members will be happy to sell you an alternative product.

And in case you thought that this was useful information presented by people who wanted you to think it over and act on your own good judgment, note Black’s use of the words “threaten” and “monopoly.” Fee, fi, fo, fum, do I smell a legal remedy?

Of course, none of this is a problem, since Microsoft has put antitrust behind them—the same way a thief in the night is behind you when you turn your back to him.

UPDATE: Jonathan Krim of the Washington Post reports that Dan Geer was fired by his employer AtStakeInc., a computer security firm that does business with Microsoft, for his contribution to the CCCCIA report. It seems Microsoft is not completely asleep to the implications of CCIA's paper.

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Politics: The GOP's Mexican Standoff 

:: Posted by Nicholas Provenzo at 9:15 AM

But then again, there is some substance to Schwarzenegger after all. The actor-turned candidate had this to say in a Wall Street Journal op-ed on Wednesday:

I have often said that the two people who have most profoundly impacted my thinking on economics are Milton Friedman and Adam Smith. At Christmas I sometimes annoy some of my more liberal Hollywood friends by sending them a gift of Mr. Friedman's classic economic primer, "Free to Choose." What I learned from Messrs. Friedman and Smith is a lesson that every political leader should never forget: that when the heavy fist of government becomes too overbearing and intrusive, it stifles the unlimited wealth creation process of a free people operating under a free enterprise system.

And that is the essence of the economic and fiscal crisis that confronts the state of California today. Over the past five years our state budget has grown nearly three times the pace of inflation. Our debt burden has risen by more than the other 49 states combined. The matrix of onerous regulations we impose on property owners and businesses has made the cost of doing business in California almost twice as high as in neighboring states. Our tax rates have become among the highest in the nation.

And perhaps worst of all our governor, Gray Davis, has created a counterproductive culture in Sacramento where businesses and entrepreneurs that dare make a profit are treated as if they are enemies of the state. Mr. Davis says he wants jobs, but he has done everything possible to chase away job creators. Thanks to the economic policies of this administration, for the first time in California history more native-born Americans are leaving this state than are moving here. No one would confuse the destructive economic policies of Gov. Davis and Lt. Gov. Cruz Bustamante with the pro-growth ideas of Milton Friedman or Adam Smith.
That’s pretty good stuff. The money line is this one though:

California does not have a taxing problem, it has a spending problem.
A spending problem indeed.

This is a Mexican standoff, par excellence.

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Politics: The GOP's Mexican Standoff 

:: Posted by Skip at 12:31 AM

Arthur Silber lays out a persuasive case for Tom McClintock over that other GOP candidate for governor.

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:: Thursday, September 25, 2003 ::

Rights and Reason: Texas University Shuts Down Bake Sale 

:: Posted by Nicholas Provenzo at 9:34 PM

You would think that a college as large as Southern Methodist University would protect its student's right to make a point. The AP reports no:

Southern Methodist University shut down a bake sale Wednesday in which cookies were offered for sale at different prices, depending on the buyer's race or gender.

The sale was organized by the Young Conservatives of Texas, who said it was intended as a protest of affirmative action.

A sign said white males had to pay $1 for a cookie. The price was 75 cents for white women, 50 cents for Hispanics and 25 cents for blacks.

Members of the conservative group said they meant no offense and were only trying to protest the use of race or gender as a factor in college admissions.

Similar sales have been held by College Republican chapters at colleges in at least five other states since February.

A black student filed a complaint with SMU, saying the sale was offensive. SMU officials said they halted the event after 45 minutes because it created a potentially unsafe situation.

"This was not an issue about free speech," Tim Moore, director of the SMU student center, said in a story for Thursday's edition of The Dallas Morning News. "It was really an issue where we had a hostile environment being created."

The sale drew a crowd outside the student center and several students engaged in a shouting match, Moore said.

David C. Rushing, 23, a law student and chairman of Young Conservatives of Texas at SMU and for the state, said the event didn't get out of hand. At most, a dozen students gathered around the table of cookies and Rice Krispies treats, he said.

"We copied what's been done at multiple campuses around the country to illustrate our opinion of affirmative action and how we think it's unfair," he said.

Matt Houston, a 19-year-old sophomore, called the group's price list offensive.

"My reaction was disgust because of the ignorance of some SMU students," said Houston, who is black. "They were arguing that affirmative action was solely based on race. It's not based on race. It's based on bringing a diverse community to a certain organization."
By using race as a proxy. Nice try.

If the students were black and sold blacks cookies at 3/5th the price they charged whites, so as to remind students of the three-fifths compromise, I wonder if Southern Methodist would have shut them down.

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The Courts: Flamingo Arguments Scheduled 

:: Posted by Skip at 7:28 PM

Oral arguments in United States Postal Service v. Flamingo Industries Ltd. will be held at the Supreme Court on Monday, December 1, at 10 a.m. CAC filed a brief in support of neither party but supporting the Ninth Circuit's decision to hold USPS amenable to suit under the antitrust laws.

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Rights and Reason: Recall vs. Republicanism 

:: Posted by Skip at 6:15 PM

Ashland University professor John Lewis offers a valid critique of California's recall mechanism:
Under republican government, the citizens select official representatives, for defined terms, with specific powers. The officials then administer the government. The people may not demand the removal of an elected official unless his actions are manifestly illegal. This is so even if the majority favors the recall. The requirements of the constitution elevate the rule of law over the short-term desires of the people.

In contrast to a republic, a democracy runs on direct citizen action. The citizens may assemble, in the voting booth, and exercise their power directly, by affirming particular policies. This is what voters do when they remove sitting officials in the mid-term, in defiance of the terms mandated by the constitution.

The recall is a solidly democratic action. Power is no longer delegated by the people, but exercised directly, in the form of popularity contests that may descend on an official at any moment. This is a repudiation of republicanism in favor of democracy.

The clause in California’s constitution that permits this is a deadly concession to democracy, and a repudiation of the constitution’s own principles. A constitution that allows the people to override its own mandates provides no means to stop such popular referenda from becoming the norm. Such a constitution sows the seeds of its own destruction.
In Nike v. Kasky, CAC argued that California's "private attorney general" law, which gives every citizen in the state standing to sue any business for unfair competition without having to allege personal injury, violated the federal Constitution's requirement that every state maintain a "republican form of government". Dr. Lewis' criticism falls within that same argument. If the government is to serve as a monopoly on the use of force, the power to use that monopoly must be constrained under clearly stated procedures. Direct democracy, however, operates without effective constraints, and encourages mob rule over the rule of law.

Some have compared the California recall experiment to parliamentary democracy, such as that of Canada or Britain. But that's not a valid comparison. In a parliamentary republic, power is vested in a parliament, which in turn appoints senior government officials from its own ranks. While there is a maximum term a parliament can remain in office without an election, five years, early elections can be called. But such early elections are either called by the government itself, or following a vote of no-confidence by parliament--in essence, a self-imposed recall.

It's not a perfect system by any means. I've never cared for the idea of governments calling "snap elections" to take advantage of current political advantages. Yet this is still not the same thing as what's transpiring in California. For one thing, even a sudden parliamentary election takes place according to the same rules as any regular general election. Each party nominates candidates, the leaders hold debates, and elections are held within a fixed period. The California law completely obliterates the regular election order, instead permitting just about anyone to run without regard to traditional party organizations. I've never heard of a parliamentary contest with 135 candidates.

Electing a unitary executive outside regular election cycles is also far different than electing a new parliament on short notice. A British or Canadian prime minister only takes office if his supporters win a majority of parliamentary seats. The next California governor, in contrast, could take control with less than one-third of the total ballots cast. This makes it substantially more likely a governor beholden only to a particular, narrow interest group will exercise power. The very mechanism that makes such narrow victories impossible in a parliamentary system, however, is completely missing from the California process.

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Rights and Reason: Maybe if They Gave the Profits to the Football Players... 

:: Posted by Skip at 5:57 PM

In the wake of the University of Michigan affirmative action case, conservative activists have been staging race-preference "bake sales" on campuses, charging different prices based on the customer's parentage. It's a cute joke, even if it lacks subtlety. Southern Methodist University, a private college in Texas, shut down one such bake sale on their campus due to, cough, "safety concerns". For those of us who follow college sports, SMU is known for being the first (and I believe only) NCAA Division I school to receive the "death penalty" for corruption in their athletic department. SMU's football program was shut down completely for a year and the school has never fully recovered. This really has no direct correlation to the bake sale incident, but I find it funny SMU would react quickly to it while sitting on their hands for years while its football players received illegal payoffs.

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Politics: And What Issues Would Those Be? 

:: Posted by Skip at 5:45 PM

Gen. Henry Shelton, former chairman of the Joint Chiefs of Staff, offers this fascinating remark about Gen. Wesley Clark's departure as NATO Supreme Commander:
I've known Wes for a long time. I will tell you the reason he came out of Europe early had to do with integrity and character issues, things that are very near and dear to my heart. I'm not going to say whether I'm a Republican or a Democrat. I'll just say Wes won't get my vote.
I hope Gen. Shelton plans to elaborate on this, because it sounds, um, kind of important.

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Sports: Breaking Down the System 

:: Posted by Skip at 5:42 PM

My colleague Eric McErlain offers his usual valuable insight, here on the larger issues in the Maurice Clarett case:
But what I cannot get over, is the singular fact that athletes in many other sports regularly turn professional before their 18th birthdays. Here in North America, we've been conditioned to simply shrug when we see teenage girls become instant millionaires after stepping of the balance beam, ice rink, or tennis court.

In Europe, professional soccer teams regularly sign boys before their 18th birthday, and most maintain a feeder system of players that can include local pre-teens who aspire to one day don their kits as professionals. In Canada, parents enthusiastically ship their sons across the country in their early teens to play major junior hockey -- a de facto professional league that is acknowledged as the best path to the NHL.

Are the young men who play college football any less professional than their counterparts in the minor leagues of any other sport? I don't think so, and the rules and regulations governing their conduct ought to be radically changed to acknowledge that fact.

At bottom, college football players at larger institutions essentially function as full time employees, albeit ones charged with the responsibility of representing thier institution and helping to raise its public profile. It's far past time that their work as professionals be recognized by the rules of the NCAA, and the rule of law as well.
The NCAA's philosophy of "amateurism" is obscene and irrational on every level. It's not that amateurism per se--playing a sport for enjoyment of the game without compensation--is bad. When practiced voluntarily, it is usually a virtue. But when amateur status is forced upon an entire class of athletes by institutions that actively seek financial profit for themselves, that is a moral wrong. Ohio State does not run its football program as a charity but as a revenue-producing arm of a larger corporate entity. The funds generated by football finance other athletic and university programs. Yet a key component of that revenue's producers, the athletes, are told they are wrong to seek full compensation for their efforts. In the eyes of the higher education elite, it is moral for a school to use football revenues to finance insolvent women's sports teams, but immoral to give football players even a modest monthly stipend. This is altruism at its classic worst.

We must also note that Ohio State, and many other NCAA schools, are government-run institutions. This makes the NCAA's moral corruption a matter of legitimate public concern. If I were a state legislator or governor, I would do everything in my power to prevent taxpayer-supported institutions from belonging to the NCAA or any other organization that promotes amateurism as a moral ideal. To condone the NCAA's behavior under color of government authority is no different from accepting the Mafia as a legitimate form of business organization.

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Antitrust News: FTC Strikes Washington State 

:: Posted by Skip at 5:29 PM

The Bush administration's war on physicians moves to Yakima, Washington, with news of the latest surrender:
A group of surgeons in Yakima, Washington, has settled Federal Trade Commission charges that it increased the cost of health care for consumers in Yakima by jointly fixing prices in contract negotiations with insurers in violation of federal laws. The proposed consent order with Surgical Specialists of Yakima, P.L.L.C. (SSY) and two of its members – Cascade Surgical Partners, Inc., P.S. (CSP) and Yakima Surgical Associates, Inc., P.S. (YSA) – is designed to remedy SSY’s allegedly anticompetitive collective-bargaining practices. According to the FTC, such conduct is detrimental to consumers in the Yakima, Washington, area and has resulted in higher prices for services SSY’s doctors provide.
The targeting of these small specialist groups may produce a backlash unexamined by FTC lawyers. Specialists, after all, face a far greater struggle to obtan market-level compensation for their valuable work, and in markets where managed care plans use the force of antitrust to impose their prices, these specialists can simply quit the market altogether. Yesterday I spoke to a healthcare management consultant in one major metropolitan area, and she told me of a hospital that lost all of its orthopaedic specialists because because the doctors practicing there felt under siege from the dominant HMO. Because the specialists realized any effort to negotiate prices would result in an antitrust prosecution, they simply left the market and went to work in other cities.

The FTC has never publicly acknowledged this possibility; after all, the agency is fixated on short-term price levels to the detriment of all other factors. But given the FTC's institutional hostility towards the economic rights of physicians, we might someday see the agency attempt to force physicians to stay in unprofitable markets, lest they violate the "right" of consumers to receive specialty care.

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Rights and Reason: General Clark's Redistribution Plan 

:: Posted by Skip at 5:20 PM

The Associated Press reports freshly minted Democratic presidential candidate Wesley Clark has a plan to help the economy by, you guessed it, having the government play economic God:
Delivering a 20-minute policy speech at a park along [New York's] East River, Mr. Clark said he would take the money that Mr. Bush gave the wealthy in tax cuts and create three funds: for homeland security, business tax incentives and relief for state governments.

Mr. Clark, who declared his candidacy last week, said he would allocate $40 billion for improvement of homeland security and the creation of security-related jobs such as police, fire and the Coast Guard.

Another $40 billion would be earmarked for state governments struggling under federal tax cuts, and $20 billion would be used as tax incentives for businesses that hire new employees.

The plan, Mr. Clark said, "will not increase the deficit. It simply moves $100 billion from tax cuts for households making more than $200,000 a year and directs it into job-creating funds that will help middle-income and working-class families."

"This job creation plan is part of my overall approach — one that I will be explaining over the course of the campaign," he said.
Clark's plan is obviously nothing more than a wealth transfer from producers to consumers, a staple of any Democratic economic plan. Contrary to this report, the tax cuts passed by Congress did not "give" the "wealthy" anything that wasn't taken from them by the government in the first place. Nor is it clear why Clark thinks $20 billion in "tax incentives" couldn't easily be replaced by simply cutting business taxes an additional $20 billion and off-setting them with federal spending cuts--another thing that appears to be missing from Clark's plan.

The fact that Clark is a former four-star general says a lot about his economic plan. The military is not designed to be a free-market organization, nor should it be. But the top-down decisionmaking of the Army is not appropriate for governing the private-sector economy, nor does it do much to protect individual rights generally. I would also suggest that Clark's experience as a top-level general is poor ideological preparation for the presidency in that high-ranking generals are more politician then they are pure soldier. By this, I mean the main component of a senior general's (or admiral's) job is fighting for allocation of resources within the insular, non-market world of the Pentagon. Military leaders are, in this sense, just another Washington interest group fighting for more money. I say this not to denigrate the military, or even to say the Army is the equivalent of, say, the National Education Association; what I am saying is that rational ideology requires objectivity, and that's hard to attain when your life's work is contained in an organization that consumes economic resources without producing them. I would no more favor a career general for the presidency than I would a lifelong union leader. You're just asking for narrow, concrete-bound leadership that way.

On a final note, Clark's proposed $40 billion to fund state governments "struggling under federal tax cuts" is obscene. As we've seen with many states, notably California, states are struggling because their own high taxes and anti-business regulation are reducing wealth creation. California Gov. Gray Davis recently signed union-backed legislation requiring most private employers to provide costly health insurance benefits to employees. If Clark is serious about promoting job creation, he should be calling out states that pass laws of that variety, rather than handing them a federal welfare check to encourage future bad behavior.

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The War: More Weapons-Grade Uranium Found in Iran 

:: Posted by Nicholas Provenzo at 4:54 PM

This report by George Jahn of the AP:

U.N. atomic experts have found traces of weapons-grade uranium at a second site in Iran, diplomats said Thursday. The development heightened international concerns about the nature of Tehran's nuclear activities.

The diplomats said minute quantities of the substance were found by the International Atomic Energy Agency at the Kalay-e Electric Co., just west of Tehran. They did not specify where at the site the uranium was found.

Earlier this year, U.N. inspectors found weapons-grade highly enriched uranium particles at a plant in Natanz that is supposed to produce only a lower grade for energy purposes.

Iran's Atomic Energy Organization said it had been informed of the new discovery and was evaluating the report.

Iran says traces of the new material were imported on equipment purchased from abroad, while the United States and its allies say it is further of evidence of a nuclear weapons program.

"These are part of a long-standing pattern of evasions and deception to disguise the true nature and purpose of Iran's nuclear activities," said Scott McClellan, spokesman for President Bush.

The U.N. agency has set an Oct. 31 deadline for Iran to prove that its nuclear program is for energy purposes, as it claims, and not for weapons.
Or what? If Iran’s raving jihadists are allowed to develop nuclear weapons, its going to be all but impossible to contain them. The UN is hardly the institution able to face down Iran's nuclear menace.

This is why President Bush's speech before the UN this week was a failure. Rather then prattle on about the slave trade, which presents no security threat to the US, Bush should have focused solely on nuclear preemption, if even address the UN at all.

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FTC News: Do Not Call Backers Rally 

:: Posted by Skip at 9:05 AM

Many people are unhappy with Judge Lee West's ruling that the FTC exceeded its authority in creating the Do Not Call registry. A number of Internet sites have posted the phone numbers for Judge West's chambers in an effort to encourage telemarketing-like harassment of the good judge. On one level this is silly, but it also reveals a very disturbing theme. I've read more than one comment, from a number of nominally conservative and libertarian folks, suggesting that Judge West's ruling should be overturned because...well, just because they really, really hate telemarketing and want a Do Not Call registry. The fact that Judge West persuasively argued the FTC had no authority to implement such a program is seen as a trivial detail, a judicial obstacle thwarting the people's demands.

Give the FTC credit. Unlike the always-unpopular Justice Department, the FTC knows how to act popular and make friends. They knew the Do Not Call registry exceeded their authority, but they also knew that enough people would like the idea to ignore that trivial detail. A classic example of the ends justifying the means. This, in fact, is the FTC's modus operandi. They justify all sorts of unconstitutional and illegal activities--such as the persecution of physicians--on grounds that it "benefits consumers," as if invoking such a rhetorically noble process gives one license to steal. By and large, it does: Congress rarely exercises any oversight over the FTC, preferring to accept the dangerous myth that everything the Commission does, it does for the sake of helping consumers.

My biggest objection to the idea of a Do Not Call registry is that the FTC is running it. There are rational arguments in favor of Congress creating such a registry, and I would not condemn such congressional action as per se unconstitutional. But the FTC has demonstrated a unique unwillingness to follow the Constitution and the law, especially under the current leadership. Handing them a broad weapon to use against telemarketing firms would be like handing a blow torch to a serial arsonist. If Judge West is affirmed and Congress decides a Do Not Call registry is ultimately necessary, they should find another agency within the Executive Branch to oversee it, such as the Commerce Department.

UPDATE: The FTC has appealed Judge West's order and asked for a temporary stay pending disposition by the Tenth Circuit. I would not grant the stay. This is a case where the status quo--the registry wasn't scheduled to take legal effect until October 1--should be maintained during appeal. The FTC will suffer no irreparable harm if they're forced to wait a few weeks to begin prosecuting rogue telemarketers.

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:: Wednesday, September 24, 2003 ::

Antitrust News: Paper Money 

:: Posted by Skip at 11:18 PM

Weyerhaeuser, International Paper, and Georgia-Pacific settled a class action lawsuit brought by disgruntled consumers of cardboard. Weyerhaeuser, which is currently fighinting a multi-million dollar verdict in another antitrust suit brought by its competitors, will take a $15 million charge to cover its share of the settlement. Weyerhaeuser's general counsel maintains that the settled class action case was "without merit," but that it was "in the interests of our shareholders given the complexity, time and cost of litigation, and uncertainty of court proceedings."

Given that Weyerhaeuser is vigorously fighting one antitrust judgment, it's not necessarily unreasonable that they've chosen not to fight on a second front. But at the same time, anytime a business settles a lawsuit they believe to be "without merit," it is inevitable that future meritless litigation will follow, especially when it involves the inherently subjective antitrust laws. It would also be interesting to learn whether Weyerhaeuser initiated the settlement talks, or whether they were cornered into it by one or both of their co-defendants.

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FTC News: Do Not Call Struck Down (For Now) 

:: Posted by Skip at 5:21 PM

Yesterday U.S. District Judge Lee West, sitting in Oklahoma City, ruled the FTC exceeded its authority in creating the national "Do Not Call" registry without express congressional authorization. This is probably not a long-term defeat for the Commission, since the ruling could be reversed on appeal to the U.S. Court of Appeals for the Tenth Circuit, and failing that Congress will likely give the express authorization Judge West found to be lacking.

Still, this is an important ruling in that it demonstrates the "house of cards" nature of the FTC's exercise of power. FTC leaders inferred their authority to create the Do Not Call registry from various legislative directives permitting the regulation of "abusive" telemarketing practices, yet Congress never actually said "create a Do Not Call registry and fine violators $11,000 per violation." Like most regulatory agencies, the FTC recognizes no inherent limits on its own power, and given the agency's longstanding and vehement opposition to the principle of individual rights, it's no surprise the Commission decided to impose the most stringent form of regulation it could come up with.

This is not the first time the FTC's expansive self-image has been slapped down on appeal. During the 1990s, the FTC lost a series of court battles trying to prevent mergers in the hospital industry. A few years ago, the U.S. Supreme Court rejected the FTC's effort to broadly regulate the voluntarily regulated California Dental Association. Yet no matter how many appellate judges tell the FTC otherwise, the Commission continues to believe it has unrestricted power to govern any aspect of the economy according to its whims. This is why ultimately it is Congress, not the courts, that must step in and cut the FTC down to size (if not eliminate the FTC in its present form altogether).

Such actions are unlikely, however, given Congress' traditional favoritism toward the FTC as a useful tool to attack businesses that have fallen out of political favor. Which is why Congress will almost certainly take pity on the FTC now and authorize the Do Not Call registry.

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Antitrust News: Univision Battle May Continue 

:: Posted by Skip at 10:34 AM

TheDeal.com has this report:
Activists are poised to ask a federal appeals court to overturn a Federal Communications Commission order allowing Univision Communications Inc. to buy Hispanic Broadcasting Corp.

Though the National Hispanic Policy Institute has yet to make a final decision about whether to ask the U.S. Court of Appeals for the District of Columbia to intervene, Arthur Belendiuk, a lawyer who represents the New York advocacy group, said Tuesday, Sept. 23, he fully expects to force the FCC to defend its order. "This is not the last you have heard of this case," said Belendiuk, a partner in Washington law firm Smithwick & Belendiuk. "There are serious legal flaws in the FCC decision."
NHPI spent months running overtly racist ads encouraging the FCC and other political leaders to stop the Univision-Hispanic Broadcasting merger on political, not legal, grounds. A number of NHPI's ads argued that Univision executives should be punished for their political beliefs, including allegedly supporting California Proposition 187 several years ago (which cut off state welfare funds to illegal immigrants). NHPI, which is led by a Democratic New York State legislator, also pressed Hispanic Democrats in the House to complain that Univision's news programming was too biased in favor of Republicans.

The amazing thing is that "activist groups" are allowed to appeal FCC decisions like this in the first place. A private transaction between two businesses should not be the subject of a third-party lawsuit. But since broadcast licenses are still considered "public property", the courts are forced to entertain these political actions.

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Antitrust News: Beware the FTC 

:: Posted by Skip at 10:15 AM

Jeff Brennan, the FTC's chief inquisitor on healthcare, has threatened a new physician network in San Francisco with prosecution unless they follow the Commission's antitrust regulations that forbid doctors from acting in their economic self-interest. Here's the key paragraph in Brennan's letter to the proposed group, Bay Area Preferred Physicians (BAPP):
BAPP will be authorized to contract with any payer on behalf of physicians whose minimum payment requirements are at or below the payer's offer. The BAPP messenger also will notify those physicians whose minimum payment demand exceeds the offer that they have one opportunity to "opt in" to a contract containing the payer's offer. This notice will not reveal the number or percentage of BAPP physicians whose payment levels met or were below the payer's offer. BAPP also might provide objective information to its members to help them understand the contract terms. You have represented that BAPP and its messenger will not recommend that the physicians accept or reject an offer, opine on the appropriateness of price or other competitive terms, present contract information that suggests an opinion on whether the physicians should accept a particular contract term, or otherwise attempt to facilitate any coordination among the physicians on such terms.
This is a naked restraint of free speech. It is also a deliberate effort by the FTC to sabotage the ability of physicians to negotiate higher prices with managed care programs. If physicians cannot talk to one another about their negotiations with an HMO, the result will be low contracts for everyone. Brennan's letter literally makes it a criminal act for two doctors to have lunch and talk about a proposed HMO contract.

And in the end, BAPP can do everything they told the FTC they would and still find themselves in violation of the antitrust laws. Since the FTC has unilateral and arbitrary authority to decide what conduct is legal, they can simply decide BAPP's mere existence is too big a risk to the financial interests to HMOs. I strongly suspect BAPP won't survive when all is said and done.

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Rights and Reason: History Repeats Itself 

:: Posted by Skip at 12:54 AM

Bruce Bartlett explains why any accomodation of John Banzhaf and his terrorist lawyer colleagues is suicide:
Unfortunately, the tobacco companies seem to have learned nothing from their experience with anti-smoking zealots and are actually opening the door to lawsuits against their food divisions. They don't seem to understand that their enemies are not driven by genuine concerns about health or even by greed, but by ideology. They bring a religious fervor to their efforts that combine a Marxist hatred of capitalism with extraordinary naivete about human nature, mixed together with a tort liability system that is eager to award large damages based on the flimsiest of evidence.

Nevertheless, Kraft Foods, a division of Altria Group (formerly known as tobacco giant Philip Morris), thinks it can buy off its prosecutors by cutting portion sizes, reducing fat and sugar in its products, and scaling back marketing to children. These may all be worthwhile things to do, but to its enemies it is virtually an admission of guilt. Just as warning labels on cigarettes proved to be no defense against tobacco lawsuits, neither will Kraft's pre-emptive capitulation. It will only embolden its enemies and provide new lines of legal attack.
There are two explanations for this type of corporate behavior. One is that executives believe that they can gain profits in the short-term even if they risk long-term defeat; the other is that the executives actually believe they're guilty of what they're opponents accuse them of. Neither option is particularly comforting to those of us who advocate capitalism as a moral way of life. But on the bright side, most Americans are not ready to cross the line of destroying food companies over the "obesity epidemic" just yet. And the food industry is mounting a campaign, through it's lobbying arm at the Center for Consumer Freedom, to discredit Banzhaf and company. But we must keep pressuring the food companies to expand their fight and not be content simply to fight their persecutors to a draw in the legal arena. Nothing short of total defeat of Banzhaf and his can suffice.

UPDATE: Overlawyered.com cites Banzhaf spinning his loss in the recent McDonald's lawsuit by arguing "it takes time for legal theories to coalesce in a way that forces major societal change." Note the word "forces". Banzhaf has no interest in rationally persuading people of his theories; he intends to use force--primarily the deliberate abuse of the court system--against all Americans who disagree with him.

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Antitrust News: Climbing the Mountain 

:: Posted by Skip at 12:33 AM

On Tuesday afternoon, I filed a motion with the U.S. district court overseeing the Justice Department "settlement" with the now-defunct Mountain Health Care (MHC). The motion asked for permission to add me as a party to the case so I can appeal part of the district judge's order signing off on the settlement. That part deals with whether the DOJ disclosed all of the documents they were legally required to. For more than six months now, I've argued to the court that the DOJ intentionally withheld material information about MHC's operations and activities. At every turn, the DOJ has resisted calls to release even basic information about their investigation of MHC--an investigation that led to a coerced "settlement" that forced MHC to dissolve before the court even had an opportunity to examine the government's case.

MHC is part of the Bush administration's ongoing campaign to eliminate the free market for physician services. For nearly a decade, MHC was a physician-owned healthcare network that provided reliable service to customers in western North Carolina. Managed care groups, i.e. HMOs, were unhappy with MHC's popularity in the marketplace. So they whined to the DOJ, which launched a two-year investigation of MHC in a scavenger hunt for "antitrust" violations. The result was a broad charge that MHC engaged in illegal "price fixing" by maintaining a voluntary fee schedule that all member physicians adhered to in dealing with managed care payors.

This fee schedule may or may not exist. The DOJ won't disclose it, and my discussions with MHC officials indicate there was never any mandatory price list--individual physicians were free to set their own prices for many services--and that MHC was complying with all DOJ antitrust requirements in their operations.

The DOJ says MHC's very existence raise prices for physician services above "competitive" levels. Yet the DOJ never explains how the "competitive" price level for the market is determined, or even how far above this level MHC's alleged fee schedule was. When this issue was raised by me during the public comment period, the DOJ arrogantly asserted that I had no knowledge of the market and was motivated solely by ideological opposition to antitrust. While they're correct about my ideology, it's irrelevant to whether the DOJ disclosed required documents related to the settlement. The point of the statutory process is to allow the public opportunity to analyze whether a proposed antitrust settlement will remedy allegedly anticompetitive actions. How can one determine the effects of a settlement, however, if one is not told the precise nature of the problem being remedied?

The law requires the DOJ disclose any document that was "determinative" in formulating a proposed settlement. In almost every antitrust settlement that's been subject to review, however, the DOJ claims there are no "determinative" documents. The DOJ admits they take a very narrow view of the disclosure requirement. They argue that if they were forced to disclose documents such as the ones I describe, it would bring the entire antitrust settlement process to a halt. The DOJ claims it's an unreasonable hardship to expect the Government to actually prove what it's saying is true. But in this case at least, I only asked the DOJ to disclose documents that were already in their possession. If the line between settling a case and costly litigation is the inability to make photocopies, then we're dealing with a DOJ that's lazy as well as morally corrupt.

This, then, is what my appeal to the U.S. Court of Appeals for the Fourth Circuit will focus on. I won't seek to overturn the actual judgment--after all, MHC is out of business--but I will seek a definite answer from the courts on what exactly the scope of "determinative" is under the law. There is precious little case law on this question, largely because no organization or individual has taken up the cause of fighting antitrust on a consistent, principled basis. Since I'm the resident Village Idiot, I might as well be the trailblazer.

Incidentally, I'm laying out my own money to fight this appeal, so a donation to CAC to defray my costs would be much appreciated right now. Considering the number of people who allegedly give money to self-absorbed bloggers (I'm looking in your direction, Mr. Sullivan), I'm hoping a few people can spare a buck or two to fight for the principles we presumably share.

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:: Tuesday, September 23, 2003 ::

Rights and Reason: Adelstein Defends Diversity 

:: Posted by Skip at 11:34 PM

After several months of political wrangling, the Federal Communications Commission voted 3-2 to approve Univision Communications' $3.1 billion purchase of Hispanic Broadcasting Corporation, a merger that stregnthens the nation's largest Spanish-language media company. Jonathan Adelstein, a Democrat, was one of the two FCC commissioners to vote against permitting the deal. His rationalization, not surprisingly, is rooted in the Democratic Party's main recurring theme--diversity:
Adelstein said the "FCC is turning a deaf ear to millions of Spanish-speaking Americans."

"By allowing this transaction to go forward with no protections for consumers, the FCC denies Spanish speakers their right to receive a diversity of perspectives over the nation's airwaves," Mr. Adelstein said.
How exactly does a group obtain a "right" to diversity? In the absence of private property owners to develop commercial television stations, there would be no "perspectives" at all over the airwaves. What would Adelstein do if there was only one Spanish-language media company to begin with? Or what about the various language groups that don't have any broadcast stations dedicated to their interests? Should the FTC force the networks to develop "Russian-language" or "French-language" formats to satisfy the "right" to diverse programming?

Adelstein's view also assumes, as most anti-business regulation does, that consumers are incapable of making their demands known to the marketplace in the absence of government intervention. If Spanish-speaking Americans are dissatisfied with their media choices, they will act accordingly within the market, and if a large company like Univision doesn't satisfy consumer demand, those consumers will seek other alternatives, even if that means looking for entertainment and information outside the limited spectrum of broadcast television and radio--say through cable and satellite television and, um, that Internet thing.

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Antitrust News: Clarett Complains Too Much 

:: Posted by Skip at 6:46 PM

The money line, literally and figuratively, from Maurice Clarett's federal complaint against the NFL comes in paragraph 31:
Had Clarett been eligible for the 2003 [NFL] Draft, it is almost certain he would have been selected in the beginning of the First Round and would have agreed to a contract and signing bonus worth millions of dollars.
Even by antitrust standards, this is a huge assumption. Clarett is seeking triple damages to compensate his alleged losses in not being a high first-round pick in last April's draft. There's no objective way to prove such a claim. It's possible an NFL owner might argue "I wanted to take Clarett with the #3 pick, but I knew he wasn't eligible," but somehow I doubt that's going to happen.

Mel Kiper, Jr., the best-known analyst of the NFL Draft, says Clarett is "no better than a second-round pick at this point." Clarett hasn't even played one full year of college football, as he was injured for part of the 2002 season. Len Pasquarelli, who covers the NFL for ESPN, cites numerous NFL scouts as projecting Clarett as a second- or third-round pick. This is not a trivial difference from a financial standpoint, and Clarett knows this, which is why the complaint insists he's a guaranteed first-round pick, despite the lack of supporting evidence.

Under the current system, which permits college juniors to leave one year early for the NFL, 10 of the 32 first round picks this year were eligible underclassmen. Of those 10 only one plays running back, Clarett's position, and that was Miami's Willis McGahee. Overall, only 23% of the college juniors that declared for the draft were taken in the first round, and 34% weren't taken in any of the draft's seven rounds. This hardly spells a guaranteed multi-million dollar contract for a freshman running back with less than a dozen games to his credit.

Here's one problem I see: Suppose the court permits Clarett to enter the 2004 Draft, and he's not taken until the third round. Will he then go back to Court and argue the owners are "colluding" against him because, in his mind, he should have been a first round pick? And to take that hypothetical one step further, will future underclassmen who enter the draft and don't get picked as high as they want seek antitrust relief? As things stand now, these would be ridiculous scenarios. Underclassmen get shafted all the time in the NBA Draft and there are no antitrust complaints. But if Clarett is allowed to recover damages from the NFL under his "I was definitely a first-round pick" theory, all bets could be off.

And incidentally, Clarett's complaint omits any mention of the fact he was kicked off the Ohio State team, or that he's currently facing criminal charges in Ohio over filing a false insurance claim.

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Antitrust News: Clarett Sues NFL 

:: Posted by Skip at 5:20 PM

While not a surprise, this is still disappointing:
Suspended Ohio State tailback Maurice Clarett sued the NFL on Tuesday, asking a judge to throw out a league rule preventing players from entering the draft until they have been out of high school three years.

Clarett, who rushed for 1,237 yards and led Ohio State to a national championship last year as a freshman, is not eligible for the draft until 2005 under current rules.

The suit, filed in Manhattan federal court, claims the NFL rule violates antitrust law because it is separate from the NFL's current collective bargaining agreement with its players' union.

"The rule is a restraint of amateur athletes who were strangers to the collective bargaining process," the suit says.
The first word of this report requires emphasis--"suspended". The only reason Maurice Clarett is going to court now is because he intentionally violated NCAA rules and got himself thrown off the Ohio State team. Yes, the NCAA promotes the immoral, anti-capitalist philosophy of "amateurism", and many of the association's rules are ill-conceived. But Clarett knew what he was getting into when he signed up. It was his choices that got him in trouble, and now he's seeking to deflect that blame onto the NFL, an innocent third party.

Many, if not most, sports media commentators will talk about Clarett's "right" to seek employment; few, if any, will speak of the NFL's right to decide its own rules in pursuit of the league's self-interest.

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Antitrust News: FTC Finds Limits on Power Problematic 

:: Posted by Skip at 5:15 PM

In antitrust there's something known as the "state action doctrine." This doctrine, like most antitrust rules, a creation of the Supreme Court, says that a state government can ignore the federal antitrust laws and "replace competition" with a state regulatory regime. The reason for this doctrine is that the courts concluded that the antitrust laws were not applicable to state governments. Federal antitrust authorities, not surprisingly, don't like this doctrine, since it restricts their ability to go after private businesses that obtain protection from states.

The moving industry is a common target of FTC-state action tension. Many states permit trade associations of competing movers to file joint tariffs with state authorities. These tariffs are legally required statements of prices movers charge customers. The FTC considers joint tariff-filing akin to price fixing, and wants to eliminate it in every state. The legal issue then becomes whether the state action doctrine protects joint tariff filing; the courts have generally said yes, but the FTC always says no.

Given this background, it's interesting to consider this press release today from the FTC:
In a staff report released today, the Federal Trade Commission’s State Action Task Force concludes that the scope of the antitrust state action doctrine has expanded dramatically since first articulated by the Supreme Court in 1943. The doctrine has become unmoored from its original objectives, the report concludes, and is frequently invoked to protect private commercial efforts with no relation to state policy. Accordingly, the “Report of the State Action Task Force” recommends a number of specific clarifications of the doctrine, including more rigorous application of the “clear articulation” and “active supervision” requirements.

“The state action doctrine can have significant benefits, but over-broad interpretations impose significant costs on consumers,” said FTC Chairman Timothy Muris. “The Task Force has identified instances in which parties with a direct financial interest in the regulated field have attempted to characterize their own protectionist efforts as the will of the state. The Supreme Court never intended to shield such conduct from antitrust enforcement.”

The report identifies recurrent areas of concerns in recent state action case law, and challenges the conventional wisdom that the anticompetitive impact of an over-broad interpretation of the doctrine can be limited to a single state.

“The Task Force Report confirms once again why exemptions from the antitrust laws must be construed narrowly,” noted Todd Zywicki, Director of the FTC’s Office of Policy Planning. “Extending the protection of the state action doctrine to parties operating under a vague grant of authority, with little or no state supervision, not only harms consumers in the state in question, but frequently results in harm to consumers outside the state imposing the restraint.”
Translation: An FTC-appointed task force decided the FTC doesn't have enough control over the economy. The argument that antitrust exemptions "must be construed narrowly" is particularly telling. You will never hear the FTC argue that their authority should be construed narrowly, or for that matter, that the FTC should even be bound by any objective law.

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The War: Airman at Guantanamo Charged With Spying 

:: Posted by Nicholas Provenzo at 3:55 PM

This report in from Matt Kelly of the AP:

An Air Force translator at the U.S. prison camp for suspected terrorists has been charged with espionage and aiding the enemy, a military spokesman said Tuesday.

Senior Airman Ahmad I. al-Halabi is being held at Vandenberg Air Force Base in California, facing 32 criminal charges, spokesman Maj. Michael Shavers said.

Al-Halabi worked as an Arabic language translator at the prison camp for al-Qaida and Taliban suspects at Guantanamo Bay, Cuba, Shavers said. The Air Force enlisted man knew the Muslim chaplain at the prison arrested earlier this month, but it's unclear if the two arrests are linked, Shavers said.

The translator was arrested more than six weeks before the chaplain, Shavers said.

Al-Halabi is charged with nine counts related to espionage, three counts of aiding the enemy, 11 counts of disobeying a lawful order, and nine counts of making a false official statement.

Al-Halabi was based at Travis Air Force Base in California and assigned to a logistics unit there, Shavers said.

Pentagon officials said an investigation into possible security breaches at Guantanamo Bay continues.
Two members of the American Armed forces are accused of espionage? In support of al-Qaida and the Taliban? These allegations are simply stunning.

So what if both are practitioners of the Islamic faith. They are both Americans who grew up with the benefit of a secular and free culture. If these charges are true, I would like to understand exactly what thought process turned these men against their freedom.

And then I would like to see them hang.

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Capitalism & the Law: Resturant Scoffs Law Professor  

:: Posted by Nicholas Provenzo at 3:35 PM

Blaine Hardenof the Washington Post reports that a Seattle resturant is sticking it to John Banzhaf, GW Professor of Public Interest Law.

In an attempt to make a law professor in the other Washington look silly, a popular restaurant here is requiring customers to sign a liability waiver before they eat a fat-by-design dessert called The Bulge.

The waiver, a semi-serious gimmick that might be the first of its kind in the United States, is displayed in poster-sized dimensions near the front door of the 5 Spot, an eatery on Seattle's affluent Queen Anne Hill.

"I will not impose any of sort of obesity-related lawsuit against the 5 Spot or consider any similar type of frivolous legislation created by a hungry trial lawyer," the release says. After a diner signs it, a waiter hauls out a sugarcoated, deep-fried, ice cream-swaddled, caramel-drizzled, whipped-cream-anointed banana.

"We thought, what can we do to illustrate how stupid it is to make restaurants responsible for monitoring the eating habits of Americans?" said Peter Levy, co-owner of the 5 Spot. "We came up with the most fattening and delicious dessert we could think of."

In the week since The Bulge appeared on the menu (and has been ordered by more than 150 patrons, most of them women), Levy said he has been besieged by calls from foreign radio stations. "They all ask the same question: 'What are you crazy Americans doing now?' "

The lawyer being mocked by the fat banana is John F. Banzhaf III, a professor of public interest law at George Washington University Law School. He is a successful anti-tobacco litigator who recently turned his attention to America's obesity epidemic.
Too funny.

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Foreign Policy: Iranian Nuclear Program 

:: Posted by John Bragg at 2:08 PM

It's been a few days since our last call for a military strike on Iran's nuclear capabilities before Iran becomes the North Korea of the Middle East. NRO's Michael Ledeen argued last week that the Iranian people's time is up, and that it is time for US military action against the Teheran government.

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The Culture: They should have quit while they were ahead 

:: Posted by Nicholas Provenzo at 12:13 AM

Andrew Sullivan took a cheap swipe at Rhodes Scholars when discussing Wesley Clark at his blog yesterday:

To my mind, the most important thing about Clark is that he was a Rhodes Scholar. Almost to a man and woman, they are mega-losers, curriculum-vitae fetishists, with huge ambition and no concept of what to do with it.
That's the kind of worthless hyperbole that most people dismiss out of hand--unless of course you are a mega-loser Rhodes Scholar. At the Volokh Conspiracy, they have three of them guest bloging today. Two of them have seen fit to respond to Sullivan.

Mega-loser, er, Rhodes Scholar Josh Chafetz provides exhaustive linked analyses of every complementary thing Andrew Sullivan has said about his Rhodes Scholar peers, as well as a list of Rhodes Scholars and their stations in life, just to show how much "diversity" exists in Rhodes Scholar ranks. Mega-loser, er Rhodes Scholar II David Adesnik then writes for about 1,200 words on the "intense religiosity" (among other virtues) of his class of Rhodes Scholars. “While I have not had in-depth discussions with all of my fellow scholars, I sense that their awareness of a greater force above them places the significance of their resume in proper perspective.”

I suppose some may find it reassuring that Rhodes Scholars are “diverse” and some are humbled by constructs that no honest intellectual ought to believe in, but I do not. Yet as one in the ranks of today’s elected, Adesnik nevertheless struggles with it. Speaking of some conservatives' view that “equality is the hand-maiden of mediocrity,” Adesnik writes:

[W]hy (other than having such a large population) has the US been able to produce constantly such outstanding inviduals (sic) in all of these categories? Because the meritocratic order taps the vast potential inhrent (sic) in that great unwashed mass once consigned to irrelevance by the old aristocracies.
Not really. Perhaps freedom might have something to do with it. Freedom does not mean rule by those with merit. It means the rule of reason.

So as far as the Rhodes Scholars go, perhaps if William Jefferson Clinton, the scholars' most prominent member hadn’t attempted to overthrow the definition of a verb of being during a sexual harassment deposition, it would be easier to respect the intellectual integrity of the Rhodes Scholars. While the crimes of the one do not reflect on the many, the fact of the matter is Rhodes Scholars are allegedly the best products of today’s educational orthodoxy. In my field (political philosophy), the sooner that orthodoxy is overthrown and replaced, the better.

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:: Monday, September 22, 2003 ::

FTC News: Hurricane victims beware! 

:: Posted by Skip at 7:25 PM

You can't make this up:
The Federal Trade Commission has issued a Consumer Alert, “After a Disaster: Repairing Your Home,” that warns consumers of potential “home repair rip-off artists” who may overcharge, perform shoddy work, or skip town without finishing the job. After a natural disaster, the demand for qualified contractors usually exceeds the supply. Because many legitimate companies are booked for months, frustrated consumers may not take the necessary precautions when hiring contractors.
It's nice to see the FTC possesses a rudimentary understanding of supply-and-demand. Among the FTC's helpful tips to consumers: "Take your time before signing a contract. Get a written estimate that includes all oral promises made, but make sure to ask if there is a charge for an estimate. Do not automatically choose the lowest bidder. Obtain a copy of the final contract." Good advice. The FTC should follow it when they're prosecuting physicians and other businesses; the FTC gets very upset when producers refuse to offer the lowest price demanded by a consumer.

Beyond the superficial hypocrisy, however, the FTC's "consumer alert" is a fairly patronizing document that assumes consumers are blithering idiots who can't act in their own best interests without a government lawyer telling them what to look out for. Consider this gem: "Ask friends, family, or insurance agents for recommendations" of contractors. It's hard to imagine anyone who wouldn't think of this advice until going to the FTC's website and reading that.

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Antitrust News: What are the DOJ's priorities? 

:: Posted by Skip at 7:07 PM

The Wall Street Journal has been reporting that the Justice Department has more than 70 grand juries convened throughout the United States to investigate price fixing and other criminal antitrust violations. At a time when the nation is engaged in an ongoing war against terrorist organizations and the economy is recovering from a prolonged downturn, the Justice Department is running around looking to charge businessmen with criminal price fixing in industries such as glass and industrial chemicals. This is on top of the DOJ's massive civil antitrust enforcement regime that wins more than 90% of its cases by settlement.

Hewitt Pate, the Republican head of the DOJ's Antitrust Division, is steadfast in his belief that antitrust is the pillar of a successful market economy, despite all evidence to the contrary. Pate also is a leading advocate of expanding antitrust's international reach--he considers antitrust a leading "export" of American ideals. One wonders if Pate and company aren't prepared to introduce antitrust into Iraq. After all, if you accept Pate's philosophy, it's impossible to have a free market without antitrust.

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Rights and Reason: 'Why Anti-sweatshop Campaigners Should be Pro-logo' 

:: Posted by Nicholas Provenzo at 5:05 PM

Steve Hilton at brandchanel.com says branded merchandise will uplift the world. (Brandchannel.com is managed by Interbrand, one of the world's largest branding agencies).

If you are an intelligent, thoughtful person who cares about the developing world, there are two possible opinions for you to hold about brands and sweatshops.

The first was best articulated by the Harvard economist Jeffrey Sachs, well known in activist circles for his work with Bono on the Jubilee 2000 Drop the Debt campaign. In the New York Times in June 1997, Sachs wrote: “my concern is not that there are too many sweatshops but that there are too few…those are precisely the jobs that were the stepping stones for Singapore and Hong Kong, and those are the jobs that have to come to Africa to get them out of back-breaking rural poverty.” In other words, sweatshops and all they represent are a positive symbol of economic development, part of the reason that lives are getting better in those countries which have welcomed Nike, Reebok, adidas and all the other alleged globalization “exploiters.”

We may feel guilty about less well-paid people in factories on the other side of the globe producing consumer products on our behalf, but the truth is that working for a multinational corporation will almost certainly provide better pay and conditions than any other type of work that’s available. It’s frequently the only way that women can escape the second-class citizen status that is their lot in many traditional rural areas, and it creates not just jobs but a lasting legacy of new skills and technological expertise that is the foundation for future prosperity, leading to better educational provision, higher standards of public health and longer life expectancy.

If you take this robust view of the benefits of globalization, you will resist the simplistic bans, boycotts and bellyaching that so disfigures much discussion of this issue. You will resist them because you know that by trying to close down sweatshops and “eliminate” child labor (the vast majority of which occurs in the rural agricultural sector, incidentally), you will probably be throwing young women -- and yes, girls -- into poverty, oppression, the sex trade or all three. . .

But if this line of argument is too rich a sauce for your liberal sensibilities, try the second sensible opinion that you might hold about brands and sweatshops. The next time someone throws the Naomi Klein book at you, respond by saying: no logo, no knowledge of what’s going on in the developing world.” Global brands make the connection on a mass scale between consumer choices “here” and economic and social realities “there.” Brands are a battering ram for positive social change. In part, positive social change is a natural process that goes hand in hand with economic development, in the same way that social conditions in the rich West have improved since the Victorian era. But in the developing world today, it’s happening more quickly than it otherwise would specifically because of corporations’ need to protect brand value by meeting consumers’ expectations.

So whichever way you look at it, brands are not the enemy of those wanting to make world a better place, but their greatest ally.
Maybe the real problem is appealing to liberal sensibilities in the first place. The anti-globalization activists want workers to earn an income with no connection to the value that they actually produce. But just who then will produce the wealth that will go to the indigents of the world? What incentive will they have to produce this wealth? And by what right will this wealth be taken from its producers in the first place?

The anti-globalization activists say it is unfair that the third world does not enjoy the material benefits of the industrialized west. Yet they forget that these benefits were produced in the first place by businessmen and women who were left free to create the very markets that now supposedly exploit the third world. The anti-globalization activists are not just attacking corporations and brands--they are attacking capitalism and the capitalist principle that one has a right to only what he earns, or what is freely bestowed upon him by others.

Yet every social system that places the interests of others before the individual’s self-interest stagnates and suffers. Hilton overstates the impact of brands in lifting the poor from their poverty and misses the debate that really impacts the value of brands in the marketplace. Commercial brands are a product of freedom and economic success--they are not its cause. After all, collectivism went though great lengths to brand itself with posters, parades, and smooth-talking spokesmen, only to fail because of its moral bankruptcy. Commercial brands only have value because of the property they represent and the selfish interests that created them is protected. It is the fundamental protection of individual rights that most of the third world finds itself wanting--a condition the anti-capitalist activists seek to make worse.

Every third-world ‘sweatshop’ employee earns what he produces and for the first time in perhaps generations is in control of his economic destiny. Defend people’s freedom to pursue their rightful ambitions and they will--even the impoverished people of the third world.

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