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:: The Rule of Reason ::

:: Friday, May 30, 2003 ::

The Culture: Reading between the lines of the Jessica Lynch story 

:: Posted by Nicholas Provenzo at 11:38 AM

I just don't get it. It is a well know fact that US prisoners of war in Iraq prior to Saddam's fall were not treated with kid gloves. Beatings were standard fare. The tenets of the Geneva convention were all but ignored. Yet joining the reflexively leftist BBC, the AP now reports that Army Pfc. Jessica Lynch captors would have been just fine had her rescuers been unarmed and attempted to rescue her in broad daylight.

You know what--warfare is all about overwhelming force. You bring as much force to bear on a target as you can, to insure that victory is academic. Had Pfc. Lynch's rescuers been unprepared for whatever contingency they might have faced, there would be howling over the needless casualties to save one soldier.

Besides, in all the coverage, I never heard any claim that there was significant resistance to the rescue operation. By my military background, the operation was a textbook POW rescue operation. I say the criticism of the Pfc. Lynch rescuers is just "feet of clay," nothing more an attempt to smear a successful mission for the simple fact that it was successful, and the people back home were inspired by it.

Cheap.

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:: Thursday, May 29, 2003 ::

The Culture: Moore Website Hacked 

:: Posted by Nicholas Provenzo at 11:39 PM

Dumb Celebs reports that big lefty Michael Moore's website was hacked earlier this week by opponents of his so-called documentary "Bowling for Columbine."

I do not condone hacking, but Micheal Moore is as much a fraud as his so-called documentary. What I think Moore really deserves is a documentary on him. Heck, I'd pay money to see that.

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Antitrust News: Microsoft, AOL Time Warner Settle Suit  

:: Posted by Nicholas Provenzo at 5:57 PM

This in from the AP.

Microsoft Corp. will pay AOL Time Warner $750 million and let the media company license its browsing software for seven years in a settlement to resolve an antitrust lawsuit against the software giant, the companies announced Thursday.

The settlement also calls for Microsoft to license its digital media technology to AOL, as well as work with the company to promote digital media initiatives.

Microsoft will provide technical information to AOL to ensure that its products run effectively on the Windows operating system.

The agreement resolves a lawsuit AOL filed against Microsoft in January 2002 on behalf of its subsidiary, Netscape Communications. The complaint was one of several private antitrust lawsuits still pending against Microsoft over anticompetitive behavior.

AOL had alleged in the lawsuit that Microsoft used anticompetitive business practices to ensure the dominance of its Internet Explorer browsing software over Netscape's software. AOL argued that Microsoft made deals with computer manufacturers and others to shut out Netscape and quash competition.
I'm in the wrong business. Defending antitrust victims from unjust attacks is not nearly as lucrative as suing them.

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Rights and Reason: Muslim Woman Sues to Wear Veil for License 

:: Posted by Nicholas Provenzo at 1:08 AM

A Muslim woman has brought suit against the state of Florida for threatening to revoke her drivers license after she refused to remove her veil for her drivers license photo. The question at bar is if Florida has a compelling interest in regulating drivers that overrides the religious protections afforded one of its citizens. Florida's own conduct in issuing drivers licenses would indicate it does not, as it routinely issues drivers licenses without photos. According to the ACLU, which is representing the woman in court:

Florida officials issued more than 800,000 temporary licenses and/or driving permits - without photographs - in the past five years to individuals in a variety of different categories. Convicted drunk drivers with revoked licenses are legally allowed to drive in Florida using only driving permits without photographs, as are foreign nationals, those who failed their eye or written exams and military personnel.
A drivers license may serve as a proxy for an ID, but in fact, it is nothing more than a license to operate a motor vehicle on government highways. Such a license should not demand invading an individual's privacy if they wish to maintain it.

If the question before the court was regarding the woman's passport, for example, I would probably side with the woman having to remove her veil if she wished to be issued a passport on the grounds that a passport serves as a form of identification and demands the means to physically identify the person in question. But then again, perhaps an individual who objected to having their photo taken could simply provide fingerprints or DNA. If it takes forever to process them, that's their own fault, but I think it is at least possible to provide them reasonable accommodations as they act on their convictions.

In my mind, this particular dispute is an open and shut case. We'll see if the court sees it that way.

UPDATE: This jucy tidbit from the Smoking Gun:

Turns out the Florida woman who is suing for the right to wear a Muslim headdress in a driver's license photograph has previously been subjected to an, um, unveiled government portrait. Following her 1997 conversion to Islam, Sultaana Freeman (formerly Sandra Keller) was arrested in Decatur, Illinois for battering a foster child. Freeman, 35, pleaded guilty in 1999 to felony aggravated battery and was sentenced to 18 months probation. As a result of the conviction, state officials removed two foster children from Freeman's care.
And of course, they got pictures.

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:: Wednesday, May 28, 2003 ::

Antitrust News: Baseball Wins Again 

:: Posted by Skip at 3:20 PM

Yesterday the U.S. Court of Appeals for the Eleventh Circuit thwarted the Florida attorney general’s effort to prosecute Major League Baseball for supposed antitrust violations arising from the now-aborted plan to contract two franchises. While the Court of Appeals’ ruling was a total vindication of baseball, the judges made little effort to hide their official disdain for Major League Baseball’s antitrust exemption. The opening of Circuit Judge Tjoflat’s opinion states things succinctly:

For better or worse, professional baseball has long enjoyed an exemption from the antitrust laws. The scope of this exemption – a judge-made rule premised upon dubious rationales and labeled an “aberration” by the Supreme Court – has been the subject of extensive litigation over the years. In this case, we are called upon to address two key issues: (1) the effect of the federal rule upon state antitrust law and (2) whether the exemption extends beyond antitrust prosecutions into the realm of mere investigations. With regard to the first issue, we hold that the federal exemption preempts state antitrust law. As for the second issue, we hold that the Florida Attorney General cannot proceed with the investigation in this case. This holding is based upon the Fourth Amendment and state law rather than the antitrust exemption. In this vein, our analysis differs significantly from that of the district court, although we ultimately affirm its decision.


In November 2001, MLB owners voted to contract two franchises. The Miami-based Florida Marlins and the Tampa Bay Devil Rays were among the possible contraction candidates, although the Montreal Expos and Minnesota Twins thought to be the favored choices of MLB management. The Florida attorney general then issued a “civil investigative demand,” essentially a political call for prosecuting baseball to curry favor with voters and the media. The idea was to drown baseball in document production and deposition requests to convince them not to contract the Marlins or Devil Rays. As it turns out, no team would face immediate contraction, as MLB’s 2002 labor agreement with its players union tabled any contraction until the expiration of the five-year pact. Simultaneously, however, MLB filed suit against Florida to prevent the civil investigation from going forward.

Businesses generally don’t have to justify closing down failing operations, and even the Eleventh Circuit acknowledged MLB had perfectly valid business reasons for closing the Marlins or Devil Rays. Thus, Florida’s only legal remedy to stop contraction would be to claim a violation of the antitrust laws. Since baseball already enjoys a federal antitrust exemption, Florida tried to claim that state antitrust law could still be applied to MLB. The theory here is that the federal exemption merely removes baseball from the scrutiny of federal antitrust laws, leaving a gap the states may fill with their own regulation. The Eleventh Circuit correctly rejected this theory, relying on the Constitution’s Supremacy Clause as giving baseball “a universal exemption in the name of uniformity.”

Of course, it’s unclear to me how the antitrust laws would prevent contraction in the first place. The antitrust laws might prevent certain activities, such as a league preventing a team from moving to another city (as was the case with the NFL’s Oakland-L.A.-Oakland Raiders), but outright contraction is hardly an affront to traditional antitrust theory. Think of it this way. As outlined by MLB in 2001, contraction would involve the remaining MLB teams collectively purchasing two franchises and liquidating them. In other business contexts, this is hardly an unusual or illegal practice. For example, if McDonald’s were to close one of its failing stores by buying back its franchise from the local owner, it’s doubtful anyone would claim the antitrust laws were violated. But as I noted above, Florida’s case was more about political populism than enforcing the law.

The one curious thing about the Eleventh Circuit’s opinion is its argument that the baseball antitrust exemption—a Supreme Court ruling later written into law by Congress—is somehow illegitimate as a matter of law. The Court of Appeals seems particularly concerned with judicial activism in antitrust, as seen in this passage discussing legislative intent:

Any discussion of whether Congress meant to immunize the business of Baseball from all antitrust law (as opposed to federal antitrust law) is, of course, fanciful because Congress never conveyed its preference one way or the other. The exemption is entirely judge-made, although some decisions have attempted to cloak this disturbing fact in the language of Congressional intent.


Arguing the baseball exemption lacks legitimacy because its “judge made” is intellectually dishonest. All antitrust law is “judge made.” The two principle rules of antitrust analysis—the per se rule and the rule of reason—are fabrications of the Supreme Court, not the mandate of Congress. For more than 100 years, the courts and unelected federal agencies have been given a blank check to write, amend, and enforce the antitrust laws at will without oversight or restriction. It is the judges who bear a large share of the responsibility for this, by not only refusing to strike down the antitrust laws as facially unconstitutional (which they are), but also by indulging every politicized antitrust theory offered by government prosecutors. The Eleventh Circuit considers the baseball exemption an “aberration,” yet the courts permit the Federal Trade Commission to apply the antitrust laws to such things as “superpremium ice cream” manufacturers and private membership associations. This is hardly consistent reasoning.

Of course, one can’t fault the Eleventh Circuit too much for despising the baseball exemption. The Court’s only trying to reconcile the exemption with the theory of morality posited by the antitrust laws, a theory nicely described by the Court as follows: “the antitrust laws form the bedrock of our capitalist system premised upon competition, and that anticompetitive conduct harms consumer welfare.” As CAC has always maintained, this is just plain wrong. Capitalism is a system premised upon individual rights as the bedrock of society. Baseball is entitled to its antitrust exemption, not because it deserves special privilege, but because every business is entitled to the protection of basic economic freedom. Resolving the conflict between the antitrust laws and the baseball exemption should be resolved by repealing the antitrust laws, not by repealing the baseball exemption.

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:: Tuesday, May 27, 2003 ::

Antitrust News: Daily Roundup 

:: Posted by Skip at 4:54 PM

The Justice Department is staying out of the latest round of Microsoft appeals, meaning the Solicitor General won't file any briefs in the D.C. Circuit appeal brought by Massachusetts and West Virginia seeking greater sanctions against Microsoft. It's a fairly cowardly act by the federal government, leaving Microsoft to fend for itself in defense of an antitrust settlement the Justice Department is charged with enforcing. I suspect the Justice Department—and by extension, the White House—is implicitly bowing to political criticism from members of Congress, including key Republicans, who felt the Antitrust Division went too easy on Microsoft in the settlement.

In other news, this morning the U.S. Supreme Court granted certiorari in a civil antitrust lawsuit brought against the United States Postal Service. The Ninth Circuit previously held the Post Office could stand trial for antitrust claims, because the agency was not covered by the sovereign immunity granted to government agencies. Solicitor General Ted Olson is arguing the case for the USPS, which the justices will hear next fall. I'll have more to say on this case later after I have a chance to review the file.

Finally, my colleague Arthur Silber takes on William Safire and Glenn Reynolds, who've both recently argued in favor of government control of private media companies. Arthur demolishes the intellectual argument against "Big Media" and also discusses my recent advocacy in the federal antitrust "settlement" with Village Voice Media and New Times Media.

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Antitrust News: CAC to FTC: Hands off New Mexico Doctors  

:: Posted by Nicholas Provenzo at 9:01 AM

Alexandria, VA—Today the Center for the Advancement of Capitalism (CAC) filed public comments on the Federal Trade Commission's (FTC) consent order in the case of Carlsbad Physician Association, Inc. (CPA), a New Mexico corporation formed to allow its members to negotiate on par with health insurance groups. CAC argued that the FTC's antitrust enforcement efforts violate the rights of doctors and will harm the quality of medical care in America.

The FTC’s complaint charged CPA and eight physicians who constitute the company’s members with illegal price fixing for their attempt to collectively bargain with health insurance companies. Under the proposed consent order, the six doctors are effectively prevented from engaging in any collective bargaining activity for a period of 20 years and CPA will be forcibly dissolved.

"CAC has been closely monitoring the FTC's antitrust enforcement efforts against physicians for over a year. Like earlier prosecutions, every aspect of the FTC's case against these doctors is deficient and crumbles upon proper examination,” says Nicholas Provenzo, CAC chairman." "The FTC's antitrust enforcers claim that recognizing a doctor's right to negotiate his fees in concert with other doctors will hurt patients by increasing costs. The FTC should instead observe the effect of its own actions."

"The FTC has made it clear that the only price strategy it would allow doctors to pursue is one that forces them to see more patents for less money," says Provenzo. "This violates the rights of doctors to control the manner in which they work. In addition, reducing the monetary incentive doctors receive for providing care to their patents can hardly be said to be in the patient's best interest."

"Patents already feel like cogs in a vast, uncaring machine," says Provenzo. "The FTC's crusade against doctors will only increase that feeling. It will drive doctors out of medicine and leave patents with a declining standard of care."

“This case represents the government at its worst—prosecuting innocent citizens whose only ‘crime’ is attempting to assert their right to freely negotiate fees paid in exchange for their skills, while claiming that this somehow protects the marketplace,” says CAC Senior Fellow Sean Oliva, who wrote the Center’s comments. "The FTC's mandate is to protect the market—not destroy it, yet the FTC's consent order is confirmed, the marketplace for medicine will be seriously damaged."

A copy of the CAC comment letter in PDF format can be downloaded at: http://www.capitalismcenter.org/Campaigns/Antitrust/CAC_Comment_on_NMCPA.pdf

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:: Saturday, May 24, 2003 ::

Antitrust News: IUPUI's Confession 

:: Posted by Skip at 11:28 PM

The over-named Indiana University-Purdue University Indianapolis managed to earn itself a place in antitrust lore by turning itself in for "price-fixing":

IUPUI has agreed to refund about $500,000 to more than 46,000 current and former students to avoid prosecution for alleged price-fixing at its bookstores.

"To learn that such activity might have occurred is unacceptable, and we are implementing a restitution plan immediately," Cheryl Sullivan, vice chancellor of external affairs for the campus in downtown Indianapolis, told the Indianapolis Star for a story Friday.

The alleged price fixing between IUPUI's bookstores and an unidentified bookstore covered an 18-month period that ended in December.

Officials at IUPUI discovered the possible price fixing during a routine audit in November and reported it to the U.S. Justice Department's Antitrust Division later that month, said Susan Rivas, an attorney for the Indianapolis law firm Ice Miller.

The Justice Department granted IUPUI conditional amnesty under a program that allows businesses and organizations that report antitrust activity and cooperate with the government's investigation to avoid fines or prosecution, Rivas said.

The bookstores allegedly eliminated a 10 percent discount on new health sciences textbooks and imposed a 2 percent price increase on all new textbooks.

Under the restitution plan, students enrolled in classes anytime from July 2001 through December 2002 will receive an average of less than $5 in credit or refunds. Some students will get as little as 24 cents; two will get the highest payment, $170.


And I think we call all breath a sigh of relief now that those students are getting their $5 back. Of course, it would have been interesting to see whether the DOJ would have actually pursued the matter, given that it amounted to a $5 per student "injury."

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:: Friday, May 23, 2003 ::

Politics: Addicted to Taxpayer Funds 

:: Posted by Skip at 10:54 PM

If you thought campaign finance "reform" was bad, consider an even more appalling concept: Taxpayer-subsidized advertising against candidates and ballot initiatives. And more appallingly, this is being pushed by Republicans:

House Republicans are attempting to lift long-standing restrictions on a $1 billion anti-drug advertising program in a move that would allow the White House to use taxpayer funds to engage in partisan political activities and campaign against candidates or ballot measures favoring the legalization of drugs.

The provision was quietly tucked into a bill reauthorizing the White House Office of National Drug Control Policy and is set for markup today before the House Government Reform Committee.

Currently, the office and its director, who is commonly referred to as the drug czar, are barred by law from using their annual $195 million anti-drug advertising budget for partisan, political purposes.

Under language included in a reauthorization bill authored by Rep. Mark Souder (R-Ind.), the prohibition would be lifted when the ONDCP director is acting to oppose an attempt to legalize the use of any illegal drug. The measure was approved last week by the Government Reform subcommittee on criminal justice, drug policy and human resources.

As written, the provision would allow partisan radio, print and television ads if the purpose were to oppose the legalization of drug use. Critics said that any candidate or political party that adopts a position promoting such reforms as allowing the medical use of marijuana or reducing drug sentencing provisions could face a government-sponsored advertising campaign against them in the electoral battlefield.

Last year, for example, Rep. Barney Frank (D-Mass.) sponsored legislation that would limit federal intervention aimed at states or localities that adopted ballot measures less restrictive than current law in dealing with marijuana use. Under the eased advertising restrictions, the drug-control office could presumably use television ads against Frank, critics of the proposal said.


The impetus for this legislation, H.R. 2086, came from a controversy that developed in last year's elections, when White House Drug Czar John Walters openly used taxpayer funds to campaign against medical marijuana initiatives in Nevada and other states. The Marijuana Policy Project, a group supporting the initiatives, filed a federal ethics complaint against Walters earlier this year, charging him with violating the Hatch Act, which broadly prohibits officeholders from using their position and government resources to campaign in state elections. Last month, Nevada's attorney general formally rebuked Walters, but then held he lacked the authority to prosecute a federal official.

MPP's lobbying managed to postpone a committe vote on H.R. 2086, but that's not the end of the story. The legislation actually re-authorizes the Drug Czar's office itself, so it's likely to pass in some form. hopefully without the advertising provision. Ideally, of course, Congress would not vote to re-authorize the Drug Czar's office and the entire operation would pass into the night. There's simply no legitimate role for a government-funded lobbyist who goes around harassing states and citizens who so much as try to debate the issue of drug decrimininlization.

And if you want to extrapolate a larger theme, consider the Drug Czar's campaigning a warning sign for what will happen if the McCain-Feingold campaign finance bill is ultimately upheld by the Supreme Court. That bill restricts the First Amendment rights of citizens to engage in voluntary campaign activity. If the law survives, it will directly encourage further regulation in the form of taxpayer-financed campaigns. This means views not considered "mainstream" by government regulators will be shut out of the political process entirely.

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The Culture: You don't see that picture in the news 

:: Posted by Nicholas Provenzo at 4:51 PM

Rachel Corrie, the 23-year-old terrorist sympathizer from Olympia, Washington who was killed in an attempt to obstruct an Israeli bulldozer in March has become the new patron saint of Palestine, complete with internet shrines, the publishing of her e-mails to her family about her anti-Israeli activism and other such propaganda. Little Green Footballs reports on how Naomi Klein in the Toronto Globe and Mail has the audacity to compare Corrie with Private Jessica Lynch.

Trouble is, the deification of Corrie fails to account for this little picture.





Somehow, I doubt Jessica Lynch burned American flags while surrounded by children.

Corrie's own words damned her enough, but if this picture is accurate, it reveals an angry woman light-years apart from the sweet little activist her admirers belive her to be.

I take no glee in this story. I am saddened by this. Corrie could have worked for peace. She could have called for an end to terrorist attacks. She could have educated children that one's ethnic heritage does not define them. But instead, she did just the opposite.

What a waste.

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Health Care: Physicians Obtain Big Settlement 

:: Posted by Skip at 1:01 AM

Score one for the doctors:

Aetna Inc. Thursday broke ranks with other major health insurers, announcing a $470-million settlement of a suit filed by 700,000 doctors.

The physicians said the settlement would allow them greater flexibility in offering comprehensive care and make it easier to refer patients to specialists. They had charged Aetna with unfairly reducing payments and denying patients' coverage.

The eight other giant health insurers, however, said they would continue to fight the suit, filed in U.S. District Court in Miami by the doctors who joined together as a class last September.

Representatives for the doctors and Hartford, Conn.-based Aetna, the nation's third-largest health insurer, said physicians and patients covered by the insurer would soon have wider rights to appeal the company's decisions regarding payments and coverage. Doctors involved in the suit said the settlement must be signed by U.S. District Judge Federico Moreno in Miami before it becomes effective.


Now, some parts of this settlement rub me the wrong way, particularly the $20 million Aetna will pay to create a "foundation to focus on eliminating racial and ethnic disparities in health care." I mean, I can tell you how to do that for free—restore capitalism to the health care market. But overall, it's a good thing the physicians were able to get one major insurer to break ranks and settle. When you think about it, this settlement—which deals most with conduct rather than damages—amounts to a collective bargaining effort by the nation's physicians. This lawsuit probably would not even be necessary if the FTC and Justice Department would simply get out of the way and allow physicians to collectively negotiate with insurers in the first place. After all, it's a lot harder for an insurance company to screw physicians out of their contractual rights when they're able to respond with a group boycott. But under the almighty antitrust laws, the doctors' needs are secondary to the FTC's policy preference for maintaining the monospony power of insurance companies.

Still, the only long-term solution to the physicians' grievances is to put the government-sponsored HMO cartels out of business for good. This settlement is a good first step, but the doctors need to follow up, not just by maintaining their lawsuit against the remaining insurance companies, but by getting behind CAC's effort to exempt physicians from the antitrust laws.

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Rights & Reason: The Gender Wars Continue 

:: Posted by Skip at 12:51 AM

The Associated Press reports on a curious new Wisconsin law:

Wisconsin fitness centers can bar men or women from joining their clubs under a bill Gov. Jim Doyle signed Monday that exempts the gyms from the state's anti-discrimination laws.

Doyle said he hoped the legislation would encourage more people to exercise regularly, pointing out women lobbied for the bill because they said they felt more comfortable working out at a fitness center that caters only to them.

"Government should do everything we can to encourage physical fitness and if this bill can help encourage women to exercise by offering a supportive environment, then it deserves our support," Doyle said.

Wisconsin law prohibits discrimination in public accommodations based on sex, race, color, creed, disability, sexual orientation, national origin or ancestry.

The law creates a narrow exception for fitness centers.

It defines a fitness center as a place "that provides as its primary purpose services or facilities that are purported to assist patrons in physical exercise, in weight control, or in figure development."

Sen. Judy Robson, D-Beloit, opposed the bill, fearing someone could use the definition to justify a men-only golf course or similar venture.

She said the legislation opens the door to discrimination and creates the possibility it will spread to other public accommodations.

"Women have fought for years to end gender discrimination, especially in athletics," Robson said. "Now that we have arrived at almost full equality, this could set us back."


I'm not sure what's worse: Robson using a specious sex discrimination claim to argue against a bill women asked for, or Governor Doyle tying the constitutional right of free association to some government-approved cause like promoting "physical fitness."

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Antitrust News: CD Settlement 

:: Posted by Skip at 12:43 AM

The infamous compact disc price-fixing settlement nears final approval:

PORTLAND, Maine - A federal judge plans to rule next week on the proposed settlement of a music antitrust lawsuit that would put roughly $12.60 in the pockets of 3.5 million consumers.

Judge D. Brock Hornby heard testimony for more than three hours Thursday on the fairness of the agreement that calls for music distributors and retailers to pay $143 million in cash and compact disks.

Terms of the settlement call for checks to be mailed to 3.5 million people who filed claims under the class-action lawsuit. The actual amount depends on how much money goes to lawyers and distribution fees.

The payout would culminate an antitrust suit that was started by prosecutors in several states in 1996.

The lawsuit, signed by the attorneys general of 43 states and territories and consolidated in Portland in October 2000, accused major record labels and large music retailers facing competition from discount retailers like Target and Wal-Mart of conspiring to set minimum music prices.

The defendants — Sony Music Entertainment, EMI Music Distribution, Warner-Elektra-Atlantic Corp., Universal Music Group and Bertelsmann Music Group, as well as retailers Tower Records, Musicland Stores and Transworld Entertainment — deny any wrongdoing. Attorneys representing the companies declined to testify in court.

Of the total settlement amount, $75.7 million would be distributed in the form of 5.6 million music CDs sent to libraries and schools throughout the nation.

The proposed cash settlement in the case totals $67.3 million.The actual cash distributed to the public is expected to be around $44 million. Payments should be mailed out within weeks of the settlement's approval. The remaining cash will be eaten up by distribution costs and attorney fees.


This case is first and foremost about enriching attorneys. No serious person would argue consumers suffered a legal injury because they chose to buy a CD at a given price. Whether or not the record companies agreed to set minimum prices is irrelevant, since it's their product to sell in the first place. This settlement effectively grants consumers a government-coerced rebate.

The state attorneys general behind this case win on every front: they enrich their trial lawyer buddies, who in turn will support their future election campaigns; consumers get a warm fuzzy over the $12 and change they get for doing absolutely nothing; and a group of major companies lose a chunk of their hard-earned wealth, thus further eroding America's belief in capitalism as the proper basis of society. All in all, not a bad day's work if you're a parasitic state attorney general.

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:: Thursday, May 22, 2003 ::

Rights & Reason: Servicing Kerry 

:: Posted by Skip at 8:00 PM

John Kerry must be desperate if he's already playing the "public service" card:

The United States would be strengthened at home and abroad by a fresh emphasis on public service, Senator John F. Kerry said yesterday, as he outlined a citizenship program whose hallmark would be a free public-college education for anyone who spends two years as a volunteer.

The Democratic presidential contender, speaking first at an American Legion post and later at the prep school he attended, also proposed a federally mandated -- but locally designed -- requirement for public service by high schoolers; a ''Retired but not Tired'' work program for senior citizens; a ''Summer of Service'' program for teenagers not yet old enough to work; almost a quadrupling of the Peace Corps from 6,700 to 25,000 volunteers; and a recruitment drive led by the commander in chief to expand the ranks of the US military.

The Massachusetts senator accused President Bush of failing to quench a public thirst for service in the aftermath of the terrorist attacks of Sept. 11, 2001, and of not fulfilling his campaign promise to ''rally the armies of compassion.'' Kerry's program would cost an estimated $3.2 billion annually, which he said could be paid by closing more than $60 billion in corporate tax loopholes.


Taking money from corporations that earn it to subsidize volunteers who are leeching off the government. Sounds like a fine way to instill a sense of perpetual dependency in our young. As blogger Joanne Jacobs opined about Kerry's proposal: "I envision eager youths and cheerful seniors marching off to their work assignments, singing patriotic songs. Only they're singing in Russian, for some reason."

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Antitrust News: Pate Aces Confirmation Test 

:: Posted by Skip at 12:38 AM

I'll have more to say later today on the confirmation hearing of R. Hewitt Pate, the soon-to-be permanent head of the DOJ's Antitrust Division. For now, here's the Washington Post's take:

R. Hewitt Pate yesterday moved closer to becoming the permanent chief of the Justice Department's antitrust division when he breezed through a Senate confirmation hearing.

Pate, 40, has been acting assistant attorney general for antitrust since November, when Charles A. James left the job. Pate is less of a lightning rod than James, whose handling of the government's settlement with Microsoft Corp. was criticized by some technology companies and members of Congress.

Pate was asked few controversial questions at yesterday's two-hour Judiciary Committee hearing. Senators repeatedly implored Pate to guard against a spate of media mergers and acquisitions after the Federal Communications Commission relaxes ownership rules in the industry, as it is expected to do next month.

"The antitrust division will stand as our last line of defense against excessive media concentration," said Sen. Herb Kohl (D-Wis.).

Pate stressed that the Justice Department, under the Sherman Antitrust Act, would narrowly review such deals for their potential economic impact on local markets, rather than for their effect on television and radio programming.

"I can certainly assure you we will be in place and if there are transactions that present anticompetitive problems we will stop them," Pate said. "When we step in, that may, as a byproduct, also preserve a diversity of voices and that's all for the good."

Sen. Arlen Specter (R-Pa.) pressed Pate to speed up an investigation of Orbitz LLC, which runs a discount travel Web site controlled by five major airlines. Three years ago, the antitrust division opened an investigation of Orbitz, citing a guarantee that airlines would offer their lowest fares on the site.

"Sounds to me on its face like a restraint of trade," Specter said.

Pate said upheaval in the airline industry and "the post-September 11 environment" complicated the antitrust review. "I can assure you we're not sitting on it," he said. "It's just as important to get the right result as to move quickly in those investigations."

Pate said the division will "continue to be vigilant" in making sure that Microsoft lives up to the terms of its settlement. He declined to discuss about other pending cases, including a review of a $6 billion deal that would give News Corp., one of the world's largest owners of television networks, control of Hughes Electronics Corp.'s DirecTV, the biggest U.S. satellite television service.

The Judiciary Committee could vote today on Pate's nomination. Sen. Orrin G. Hatch (R-Utah), the committee chairman, signaled that confirmation was not in question. "I'm totally in support of your nomination," Hatch said. "It's one of the best nominations we could possibly have."

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:: Wednesday, May 21, 2003 ::

The Culture: Danny Glover's Lethal Weapon 

:: Posted by Nicholas Provenzo at 12:51 PM

Maybe it's just me, but it seems that despite general approval of MCI's release of actor Danny Glover as their pitchman, more than one commentator I've read does not approve of the use of boycott to oppose an ideological foe. It's as if hitting a guy in his livelyhood is seen as just too much of a stab.

I don't think so. When we make public statements, our worlds often have an impact beyond ourselves. While every individual has a right to speak their mind free from government coercion, they do not have a right to public support for their statements. Glover, a long-time leftist and political activist, signed a statement in support of Cuba's communist dictatorship. For the victims of that dictatorship and those who sympathize with them, Glover's stance and his omnipresence as an MCI pitchman became intolerable. So they called on MCI to release him.

Where is the coercion? MCI could have stood firm, but instead decided that Glover's private statements offended the very people MCI sought to reach and diluted his effectiveness as a pitchman. Glover is still free to speak his mind, but now he has to recognize that his words come with a price.

Yet leave it to a leftist to demand the unearned as a matter of right.

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:: Tuesday, May 20, 2003 ::

Rights & Reason: Doing Time 

:: Posted by Skip at 10:14 PM

Here's a happy thought from our favorite assistant attorney general-to-be:

Hewitt Pate, acting head of the Justice Department's antitrust division, says the new white-collar sentencing law means a price fixer previously eligible for a three-year sentence could now get 23 years if he is also convicted of obstructing justice. Pate says this should get the attention of potential corporate offenders: "Even very large fines imposed on corporations may be seen as a cost of doing business. Prison sentences are the single most effective deterrent."


Prison sentences will do nothing to deter antitrust violations, since no businessman actually knows what conduct will run afoul of the law. Under Mr. Pate's watch, the antitrust laws are violated if two businessmen in the same field merely exchange price information. Few Americans think such behavior warants one day in jail, much less 23 years.

But to be fair, Pate is not responsible for the new sentencing rules. You can thank a panicky post-Enron Congress for that.

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Antirust News: Verizon Wins a Round 

:: Posted by Skip at 10:07 PM

In the fall, the U.S. Supreme Court will hear an antitrust appeal brought by telephone giant Verizon over a Second Circuit decision forcing the company to stand trial over antitrust charges brought by a competitor’s disgruntled customers. Today, >another antitrust case against Verizon went better for the company:

A divided federal appeals court on Tuesday upheld a judge's dismissal of Cavalier Telephone's $635 million antitrust lawsuit against Verizon Virginia.

Cavalier, a Richmond-based company that sells local telephone service in competition with Verizon, alleged that Verizon had engaged in anticompetitive conduct aimed at reducing or eliminating Cavalier's ability to reach customers and raising its costs of competing with Verizon.

U.S. District Judge James R. Spencer dismissed the lawsuit in March 2002, ruling that the conduct cited by Cavalier amounted to federal Telecommunications Act violations "dressed up in antitrust garb." The 1996 Telecommunications Act laid the groundwork for competition for local telephone service.

In a 2-1 ruling, a panel of the 4th U.S. Circuit Court of Appeals agreed with Spencer. Judge Paul V. Niemeyer wrote in the majority opinion that "Cavalier's recourse is to the procedures and remedies afforded by the Telecommunications Act, not to those afforded by the antitrust laws."

Judge Morton I. Greenberg, a member of the 3rd U.S. Circuit Court of Appeals who was called in to hear the case, dissented. He wrote that while he agreed with much of the majority's opinion, Cavalier stated a claim that warranted further court proceedings.

Cavalier had alleged that Verizon was violating various federal anti-monopoly laws and telecommunications regulations and had breached an interconnection agreement. The lawsuit also claimed violations of the state's Uniform Trade Secrets Act, interference with contracts and economic advantage, and intentional misrepresentation.


There is an underlying conflict between the 1996 Telecommunications Act and the antitrust laws, the result of Congress’ deliberate decision not to incorporate an antitrust exemption into the 1996 law. This has led to significant confusion among the federal courts on whether violating the 1996 law—which imposes a number of burdens on the “Baby Bells” to open their networks to competitors—can justify an antitrust claim. In 2000, the Seventh Circuit in Chicago dismissed an antitrust complaint against Ameritech, holding that the antitrust allegations were inseparable from the Telecommunications Act allegations, and that alone could not sustain the antitrust claim. This ruling was something of a judicial standard until the Second Circuit’s contradictory decision in the Verizon case now before the Supreme Court.

In one sense, it would actually be better if Verizon loses its Supreme Court case, because then Congress would be forced to deal with the mess it created. The antitrust establishment already recognizes the potential disaster that would result if telecommunications companies were subject to antitrust suits for alleged violations of the 1996 Act. The Federal Trade Commission, in fact, filed an amicus brief with the Supreme Court calling for the Second Circuit’s decision to be reversed, citing concern that the lower court’s precedent would “improperly trivialize the antitrust laws” by encouraging parties to “seek antitrust remedies for ordinary commercial and regulatory disputes.” This is an odd charge coming from an agency that routinely pursues trivial matters, such as the ethics codes of private honorary societies.

Of course, what the FTC really means to say is that only they should engage in such trivial pursuits; letting everyone in on the fun would simply paralyze our court system, and by extension our economy.

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The Courts: Eleven for Nine 

:: Posted by Skip at 12:28 AM

Conservatives want to break up the U.S. Court of Appeals for the Ninth Circuit because they consider the judges too liberal as a group. But the real reason the Ninth Circuit should be split in two was demonstrated Monday when eleven judges of that court voted to rehear a case en banc and yet failed to produce a majority. They needed 12 judges to grant rehearing. Given the 9th Circuit's large size—28 active judges at full strength—and the accompanying caseload, it's simply bad jurisprudence to keep the entire court intact, because even in cases where there's significant momentum for rehearing en banc, the sheer number of judges required makes such a task impossible in all but the most obvious of matters (i.e., those where there's an unavoidable conflict between the circuit's opinions.)

At the same time, though, I also wonder whether it might be time to scrap the rule requiring a majority vote for rehearing en banc. After all, the U.S. Supreme Court only requires four justices out of nine to vote in favor of granting a petition for certiorari. Rehearing en banc, like certiorari, is a discretionary review process. The idea behind the Supreme Court's "Rule of Four" is that a substantial minority which questions the pervious decision should have the right to place cases on the Court's calendar with the intent of persuading at least one more justice to join them. An absolute rule of five would perclude much of the useful appellate review now provided by the Supreme Court. The same could be said of rehearing en banc petitions. If eleven judges in the Ninth Circuit thought the case was worth another look, chances are it was. You would rarely (if ever) get that many judges on the record in support of a wholly meritless appeal.

Turning to the case denied rehearing, Suzuki Motor Corporation v. Consumers Union, the eleven-judge dissent produced an opinion authored by Circuit Judge Alex Kozinski, whom CAC lauded last week for his excellent dissent from rehearing en banc in support of the Second Amendment. Kozinski goes 2-for-2 with today's dissent, which correctly seeks to dismiss a meritless—and potentially dangerous—product disparagement lawsuit brought against Consumer Reports by an unhappy auto manufacturer. The trial court granted summary judgment to Consumer Reports, finding no evidence of "actual malice," a key element to sustain a product disparagement claim. A 9th Circuit panel reversed the trial court last June and ordered the case tried. Judge Kozinski's Monday opinion dissents from the panel's decision:

KOZINSKI, Circuit Judge, with whom PREGERSON, REINHARDT, T.G. NELSON, HAWKINS, THOMAS, McKEOWN, WARDLAW, W. FLETCHER, FISHER and BERZON, Circuit Judges, join, dissenting from denial of rehearing en banc:

For over half a century, Consumers Union has been testing and rating consumer products and publishing the results in its magazine, Consumer Reports. A significant portion of the American public relies on CU’s ratings on a regular basis, and almost everyone consults Consumer Reports now and then before making a significant purchase—whether a sound system, a dishwasher or a car. What makes CU’s ratings particularly useful is the thorough explanation of the testing procedures employed, which lets consumers judge whether the ratings fairly represent the product.

The Suzuki Samurai article, the subject of this lawsuit, is no exception. Running some 6500 words, it tells readers precisely how CU came to conclude that “The Suzuki rolls over too easily,” starting with an incident during the vehicle’s break-in period where the Samurai “flopped over on its side” during a low-speed maneuver. The explanation is not written for morons; like other CU reviews, it is geared to an intelligent, informed consumer. Yet the careful reader will not fail to understand the central facts that undergird Suzuki’s claim in this lawsuit, namely, that the Samurai did well on CU’s standard course, that CU then modified the course to make it more challenging and, as a result, the Samurai did far worse than its competitors.

I find it incomprehensible that a review truthfully disclosing all this information could be deemed malicious under New York Times Co. v. Sullivan, 376 U.S. 254 (1964). If CU can be forced to go to trial after this thorough and candid disclosure of its methods, this is the death of consumer ratings: It will be impossible to issue a meaningful consumer review that a band of determined lawyers can’t pick apart in front of a jury. The ultimate losers will be American consumers denied access to independent information about the safety and usefulness of products they buy with their hard-earned dollars. The majority sets a dangerous precedent, and the full court errs
grievously by failing to take the case en banc to correct the error.


Taking Judge Kozinski's warning a step further, just imagine the potential lawsuits for reviewers and critics of all types if they were subject to "disparagement" lawsuits: an angry film executive sues Roger Ebert for giving her film a "thumbs down"; a restaurant owner files a defemation claim against a magazine reviewer who didn't like the fish; or, to take a real life example, a talk show host gets sued for doing a show on the potential dangers of tainted beef. The reason the law requires "actual malice" is to separate basic acts of free speech from actual torts. The courts must vigorously defend objective standards against efforts to water them down, rather than simply letting things proceed to trial in the hopes the jury will figure it out.

Eugene Volokh, a former clerk for Judge Kozinski, discusses the substance of this case and Kozinski's dissent in this excellent post

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:: Monday, May 19, 2003 ::

Antitrust News: Restraining Technology 

:: Posted by Skip at 11:50 PM

The Justice Department's Antitrust Division isn't opposed to technology, so long as it doesn't help producers exchange price information:

The Department of Justice today said that it cleared a proposal by Texas-based BroChem Marketing Inc. (BroChem) to establish a computer database aimed at giving chemical distributors efficient access to the information they need when marketing chemicals sold to them by chemical producers. The Department approved the proposal after BroChem agreed to make substantial modifications to address the Department's competitive concerns.

"The database could produce procompetitive efficiencies by making it easier for chemical distributors to access information and eliminating a large percentage of time-consuming, costly telephonic communications between chemical producers and distributors," said R. Hewitt Pate, Acting Assistant Attorney General for the Antitrust Division.

The Department's position was stated in a business review letter from Pate to counsel for BroChem.

According to the Department's business review letter, BroChem modified its original proposal by agreeing to establish computer safeguards to ensure that price-sensitive information is not accessible to competitors or others who should not have access to it. In addition, BroChem modified its proposal to ensure that the database will not include information added by BroChem that could facilitate price coordination.


In other words, it's okay to have a database so customers can access price information, so long as producers can't learn the prices their competitors are charging. Now in the real world, exchanging information is not a crime. But in the world of antitrust, anything that could be used as a "restraint of trade" is presumed illegal.

Here's another way to look at it: If I download information off the Internet on how to build a bomb, that's legal so long as I don't act upon that information and actually build a bomb. But if I'm a chemical manufacturer, I'm banned from even asking my competitor what he charges for his product, even if I never act upon that information. In the DOJ's mind, there's no divorcing thought from action, and mere acts of speech are considered overt acts for purposes of labelling behavior legal or illegal.

The other interesting thing about this story is that the DOJ actually reviews business practices in advance. According to the DOJ: "Under the Department's business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the Division would challenge the action under the antitrust laws." Well isn't that a wonderful policy? Again, in the real world, prior restraints of this kind are frowned upon, if not outright forbidden. But in the antitrust world, businessmen may act only by government permission.

Incidentally, "Acting" Assistant Attorney General Pate has been nominated to take over the Antitrust Division permanently. The Senate Judiciary Committee is holding a prefunctory confirmation hearing this Wednesday morning. at 10 a.m. I plan on attending, so if you're in the neighborhood of the Dirksen Senate Office Building, stop by and say hello.

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Foreign Policy: A Coalition of the (Constitutionally) Unwilling 

:: Posted by Skip at 7:15 PM

The Bush administration is now backing an international anti-tobacco treaty:

The announcement represented an about-face for the administration, which said in March it could not accept several key provisions of the draft accord related to packaging, labeling, advertising and sales, among other things.

Formally called the Framework Convention on Tobacco Control, the world's first treaty on health seeks to tackle the consequences of tobacco use with measures ranging from a halt in advertising to a crackdown on smuggling and a ban on cigarette sales to minors.

The United States, along with Germany, had opposed a clause to ban advertising, saying it would violate constitutional guarantees to free speech.

Asked whether he would push for any changes to the pact, [HHS Secretary Tommy] Thompson said, "No, we're not going to seek any changes or any reservations."


Interestingly, Secretary Thompson never said his initial constitutional reservations were unjustified, only that the U.S. wouldn't press the issue for the sake of preserving the treaty. The message I take from that is that the Bush administration is putting international popularity ahead of constitutional principle. That's an interesting reversal from the administration's war policy.

Ironically, this also sounds like the peer pressure argument that teenagers use to get their friends to smoke: You know it's wrong, but everyone else is doing it, so why don't you give it a try?

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Foreign Policy: Zionism and Racism 

:: Posted by Skip at 7:02 PM

Yesterday in Washington, a group of self-proclaimed Jewish and Christian Zionists held a "leadership summit" to discuss the state of the Israeli-Palestinian situation. Several speakers commented on the source of Israel's legitimacy:

Gary Bauer, president of American Values and a Republican presidential contender in 2000, declared, "The land of Israel was originally owned by God. Since He was the owner, only He could give it away. And He gave it to the Jewish people."


And the last thing God wants is Muslims on His chosen people's land:

Calling the peace proposal "a Satanic road map," Earl Cox, executive producer and host of Front Page Jerusalem, a radio program, asked, "Do any of you believe [Palestinian leader] Yasser Arafat will embrace traditional family values? There will be a mosque on all the holy sites. How can anyone who's a Jew or a Christian support such a proposal?"


The sad thing about this is Israel doesn't need to resort to mysticism to defend its right to exist. It certainly can do without the overt bigotry. The Israelis have done a remarkable job over the sixty-plus years taking a barren wasteland and converting it into a modern state that lives according to quasi-Western values (there is still that slight problem separating synagogue and state.) Folks like Bauer do an enormous disservice by, in effect, dismissing Israel's right to exist as nothing more than shifty prophecy. The Bible is certainly a great and important cultural work of mankind, but it is not a land deed. And if mainstream Israeli society chooses to defends its right to exist on grounds of "God says it's ours," then the Palestinians will have been given an opening, however unearned, to seize the moral high ground.

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Antitrust News: SBC Appeal Denied 

:: Posted by Skip at 6:47 PM

From the San Antonio Business Journal:

The U.S. Supreme Court has rejected an appeal by SBC Communications Inc. involving a $20 million judgment for violation of Oklahoma's antitrust laws, according to a Dow Jones news report.

SBC subsidiary Southwestern Bell Telephone Co. was sued by several smaller pay phone companies under Oklahoma's antitrust laws. The companies alleged that SBC had locked up the local pay phone market by reaching restrictive contracts with the owners of the pay phone locations.

SBC spokesman Walt Sharp says the telecommunications giant continues to believe that it did nothing wrong.

"SBC continues to believe that we have acted properly in all matters related to payphone competition in Oklahoma and everywhere else in our region of coverage," Sharp says. "We have complied with the terms of the judgment (in January) and it has been settled."

The 10th U.S. Circuit Court of Appeals in Denver denied SBC's appeal of the judgment last year.


You have to love the fake horror at the core of antitrust cases like this one. What I mean is this: Were SBC's competitors legitimately surprised that their opponent would actually seek contracts to restrict their entry into the market? If they were in SBC's position, they would have done precisely the same thing.

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Rights & Reason: Kentucky Bar Rewrites Ad Rules 

:: Posted by Nicholas Provenzo at 5:13 PM

Law.com reports on new regulations the Kentucky Bar seeks to impose on attorney advertising.

Since the Supreme Court ruled in 1977 that outright bans on lawyer advertising are unconstitutional, every state has grappled with what lawyers may say about themselves.

The high court allows restraint on ads that are false, deceptive or misleading. Bates v. State Bar of Arizona, 433 U.S. 350 (1977).

The proposed regulations "attempt to implement the Kentucky Supreme Court's rules by defining 'false, misleading and deceptive,'" said Benjamin Cowgill, chief counsel for the Kentucky Bar Association.

One regulation, for example, says that if an ad speaks to monetary recovery it "must include an appropriate explanation of the legal requirements" to win and must say "that recovery may be dependent on the ability to collect from the responsible party."

The dispute, however, is not just about what kinds of commercial speech can be proscribed under the First Amendment. The real flap is about an 11-year-old rule that some attorneys say amounts to an illegal prior restraint of commercial speech.

Since 1992, the Kentucky Supreme Court has required lawyers to submit certain kinds of advertising for pre-approval to the Bar's Attorney Advertising Commission.

"That's prior restraint," said Lucian Pera, an attorney who represents Louisville, Ky.'s Becker Law Office. "And that's unconstitutional."
I think the Kentucky Bar is committing more then just prior restraint. It is placing attorney advertising in the same regulatory ghetto that the commercial speech doctrine places regular commercial advertising. Why is it that speech that advances one's political interests is protected by the First Amendment, but speech that advances one's economic interests is not?

I think the real question ought to be, "where is the victim and how was he harmed." Fraud statues alone provide actual victims with protection and redress from false or exaggerated claims. Rather than create paternalistic regulations that assume idiocy on the part of common man, bar associations ought to instead acknowledge that the courts are more than able to protect the people from errant lawyers. Instead of acting like advertising czars, bar associations would be better off instilling in their members an appreciation for the principle of individual rights.

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Rights & Reason: Virginia's Latest Threat to Reproductive Rights 

:: Posted by Nicholas Provenzo at 11:31 AM

George Mason University student and GMU Objectivist Club member Jim Woods dissects the latest attack on reproductive rights to come out of Virginia at Initium.

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:: Sunday, May 18, 2003 ::

Foreign Policy: Race and Iraq 

:: Posted by Renee at 12:09 PM

Muhammad Al-Shibani, in his May 16th ArabNews.com article "Iraq War: The Agenda Is No Longer Hidden", writes that "Arab governments and peoples are united in their abilities to forget. They have forgotten and abandoned a major Arab country which has now fallen under foreign occupation."

Never mind the ambiguity left in the rest of the article as to how exactly "they" have forgotten and abandoned Iraq (didn't Arab News run a number of articles before on aid such as medical assistance to Iraqis that the Saudi government was implementing?) Instead Al-Shibani automatically disapproves of American troops just for being "foreign" and makes an implicit call for loyalty along racial lines. Is race primary criteria to judge an occupying force? Is a ruthless tyrant of one's own race better than a freedom-promoting foreign army? Al-Shibani seems to think so.

The proper criteria to judge an occupying force or permanent government structure is not by the pigment of their skin, but by how fully and consistently the rulers respect and protect individual rights. Perhaps Al-Shibani and others who entertain similar racist thinking might want to compare the US-led coalition occupation with the growing body of knowledge of the horrors that their Iraqi "Arab brethren" in power committed against their other "Arab brethren" in subjugation.

To be fair though, thinking along racial lines is nothing peculiar to Arabs in the Middle East, but instead is a problem of global proportions and includes the thinking of many Americans. Where race continues to trump merit in hiring practices and university admission as mandated by the government, then individual rights are violated.

Perhaps both Arabs and Americans should abandon racial favoritism, and instead recognize the universal applicability of individual rights, regardless of the racial composition of those who first formulated or now implement these rights.

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:: Saturday, May 17, 2003 ::

Rights & Reason: Sullivan puts pragmatism over principle 

:: Posted by Skip at 1:58 AM

Andrew Sullivan is a fine writer, but sometimes he says things that are just plain stupid:

The president may not want to endorse gay marriage; but there are concrete measures he could take to strike a centrist position. The most obvious would be to endorse the Employment Non-Discrimination Act, which would give gays the same workplace protections as other minorities. 88 percent of the country endorses this. It's a simple case of workplace fairness. It doesn't involve any approval of homosexual sex, since this is about public workplaces. It could and should exempt religious groups. And it would be a huge sign to the center of the country that Bush is actually an inclusive and compassionate president. I've had my libertarian doubts about such laws in the past; but I cannot see any reason why they should apply to every other group - including religious denominations - but not to gays.


Violating the rights of business owners to choose their own employees is not a “libertarian” issue, but a basic question of individual rights. And if such “non-discrimination” laws are justified for certain businesses, then why are they not okay for religious groups? Contrary to Sullvan’s definition, private businesses are not “public workplaces.” This is the same language used by those who would justify smoking bans in restaurants and oppressive zoning laws. It is not the kind of thing that should be advanced in the name of protecting the rights of gays or any other self-proclaimed group within society.

Statements like Sullivan’s do nothing more than play into the hands of irrational bigots like Rick Santorum by turning the issue away from protecting individual rights to using the government as a means of shoving “tolerance” down people’s throats. Let me be clear: The government has no right to legislate the private sexual behavior of consenting adults. But at the same time, the government also has no right to legislate the private business practices of employers, no matter how distasteful they seem to 88% of the electorate.

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:: Friday, May 16, 2003 ::

FTC news: the Institute of Store Planners 

:: Posted by Skip at 6:33 PM

Today I filed public comments in the FTC's latest settlement, this time against that well-known cartel (*cough*), the Institute of Store Planners. I began my comments by outlining the facts of the case:

On Thursday, April 17, 2003, the Federal Trade Commission (FTC) announced a proposed consent order (proposed order) with the Institute of Store Planners (ISP), a New York-based association composed of approximately 860 members. ISP’s members include various professionals who design and construct retail store interiors. ISP maintains a voluntary ethics code which is the subject of the FTC’s complaint and proposed order.

The complaint alleges three provisions of the ISP ethics code violate Section 5 of the FTC Act, which generally prohibit “unfair methods of competition.” The challenged provisions, according to the complaint, are as follows:

  1. “a member shall not render professional services without compensation.”


  2. “a member shall not knowingly compete with another member on the basis of professional charges, or use donations as a device for obtaining professional advantage.”


  3. “a member shall not offer his services in a competition except as provided by such competition codes as the Institute may establish.”


The FTC claims these statements, taken alone and without context, injured the legal rights of consumers by “discouraging and restricting price competition,” thus depriving consumers of “the benefit of free and open competition among store planners.”

The proposed order addresses the FTC’s concerns by forcing ISP to amend its ethics code and other governing documents to reflect FTC viewpoints. Specifically, the order prohibits ISP from “[r]egulating, restricting, impeding, declaring unethical or unprofessional, interfering with or advising against price competition by its members, including, but not limited to, the provision of free or discounted services or restricting members from offering their services in a competition unless they conform to rules or regulations established by ISP.”


My first objection dealt with the FTC's failure to establish any consumer injury:

The FTC alleges the mere existence of certain provisions of ISP’s ethics code constitutes a legal harm to consumers. The Commission’s complaint states ISP engaged in “unfair competition” under the FTC Act by “discouraging and restricting price competition among store planners,” and by denying consumers “the benefit of free and open competition among store planners.” Both of these statements are false. ISP never restricted legitimate competition among its members, and consumers suffered no demonstrable injury.

Since the FTC refuses to provide any context for ISP’s ethics code (or even a complete copy of the code itself), the public is left with little useful information to assess the Commission’s claims of anticompetitive behavior. Nevertheless, CVT’s independent investigation into ISP’s affairs turned up some useful information. CVT has determined that ISP’s ethics code was never intended, or applied, as an agreement to restrict competition in any manner. Rather, ISP adopted its current ethics code in the 1960’s as a means to advise members on how to avoid potentially illegal activities. The code is purely advisory in nature, and has never been enforced with respect to the provisions now challenged by the FTC. Any suggestion by the Commission to the contrary is simply untrue.


But even if the FTC had established some consumer injury—which in antitrust-speak means that prices went up—the punishment imposed on ISP in this case could not overcome an inconvenient constitutional barrier:

In case the FTC needs reminding, the First Amendment forbids the federal government from “abridging the freedom of speech, or of the press; or the right of the people to peaceably to assemble.” The amendment applies to all agencies and instruments of the government, including the FTC, and no affirmative grant of power under the Constitution can be interpreted so as to override, restrict, or impede the First Amendment’s protections. This includes Congress’s power to regulate interstate commerce under Article I, Section 8, which power Congress created the FTC under. Thus, the FTC cannot suspend the First Amendment simply be alleging ISP engaged in “unfair competition” or acted to injure consumers. The antitrust laws are not a license to censor private acts of speech.

Yet censorship is the explicit function of the proposed consent order. ISP is forbidden from so much as “declaring unethical or unprofessional” certain acts the FTC considers sacrosanct. The effect of this is to criminalize the opinions of those who disagree with the FTC, since the Commission is essentially restricting the fundamental liberty rights of ISP and its members. Such acts go far beyond the government’s constitutional power, and they even exceed the intent and scope of the FTC Act. ISP’s members did not commit fraud or engage in false advertising, actions which might justly incur the FTC’s wrath. Instead, ISP is being targeted for forming an opinion on ethical matters, and having the nerve to actually say it out loud. In this sense, the FTC is not just assaulting First Amendment liberties, but the basic ability of individuals to think and act upon their mind’s judgment. Such vicious assaults may have had a place in Saddam Hussein’s Iraq or the Torquemada’s Inquisition, but not in 21st Century America.


Next, I discussed other recent cases where the FTC forcibly rewrote the ethics codes of private association. Obviously there's a pattern at work here, and it's not "protecting consumers" from these codes. The FTC's actual agenda was something far more pedestrian—protecting their own budget:

In the FTC’s recent annual review, the Commission tried to spin their attack on private ethics codes as a noble cause:

The FTC pursued significant investigations involving the rules of conduct for various professional associations. Agreements among professionals that limit competition among themselves, often under the guise of professional association by-laws or codes of conduct, harm consumers much like “smoke-filled room” conspiracies.


This paragraph is utter nonsense. All three of the recent professional association cases involved ethics codes that were publicly known for years, if not decades. The FTC never presented any evidence which shows these organizations did anything behind closed doors in an underhanded manner. If anything, it is the FTC which operates as a “smoke-filled room” conspiracy by routinely coercing defendants into signing consent orders, then presenting the public with an inaccurate view of the persecuted groups. Beyond that, the FTC takes every precaution to avoid having to explain their actions. For example, the FTC has never responded to CVT’s comments opposing the NAA and AICHAW settlements. Nor has the Commission, in this case or the two previous ones, provided even basic evidence to establish any consumer was harmed by the respondents’ allegedly illegal conduct.

It seems that this case, and the other “smoke-filled room” cases, is nothing more than a smoke-screen for the FTC’s real agenda, which is protecting the agency’s budget from congressional scrutiny. According to the FTC’s own “Performance Review,” the Commission has a quota of “45 to 70 nonmerger investigations” per year. This means the FTC is tying their own success rate to the number of businesses successfully prosecuted for antitrust violations. Meeting this quota allows the FTC to justify current funding levels to congressional appropriators, and allows the Commission to claim a substantial record of accomplishment to the public at-large.

But as demonstrated in this case, the FTC’s “accomplishment” reflects little more than the Commission’s ability to coerce respondents into signing a consent order. As the FTC itself admits: “A law enforcement agency that prevails in every litigated matter may do so because it pursue only the cases that are easiest to win.” Here, the FTC pursued a small professional society in an industry of limited scope and influence, and effectively bullied said group into renouncing their First Amendment rights. This is not the proper mission of a law enforcement agency, and it certainly is not the actions of a government that is supposed to uphold individual rights as society’s basic organizing principle.


Today was the final day for filing comments, and the FTC will likely issue a final order in the next two weeks. But that won't be the last we hear of this issue; I've already heard that several other professional associations are under investigation by the FTC over provisions in their ethics codes.

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FTC news: Continuing to dodge responsibility 

:: Posted by Skip at 6:13 PM

After filing a number of comment letters with the FTC, I became curious about just how much the Commission was spending on these various settlements. In January, I filed a Freedom of Information Act (FOIA) request with the FTC asking for some budget information. Specifically, I wanted to know how much of the FTC’s annual budget (about $140 million) goes directly to the Bureau of Competition, the Commission’s antitrust enforcement arm. In addition, I asked how much the Bureau spent on seven specific cases that I filed comments in. I thought this was a fairly routine request, given that budget information is considered a legitimate public record.

Apparently that’s just too much accountability for the FTC. While the Commission did give me budget information for the Bureau of Competition (about $31.7 million annually) and five of the cases I requested, FTC staff decided to withhold disclosing the spending on two cases, those involving the National Academy of Arbitrators (NAA) and MSC Software Corporation. The FTC said both figures were exempt from FOIA disclosure because it constituted “information compiled for law enforcement purposes the release of which could reasonably be expected to interfere with enforcement proceedings.”

This explanation, known as FOIA exemption 7(A), is intended to prevent individuals from using FOIA to get around normal discovery rules in contested proceedings. For example, a company under investigation by a federal agency cannot use FOIA to obtain records related to their investigation. Such requests could reasonably interfere with the agency. But that has nothing to do with my FOIA request, which simply asked for an aggregate spending level on two cases that have already been deemed closed by the commission. Even if the cases are still pending, releasing budget information for previous fiscal years would not prejudice any current activities.

On these grounds, I appealed the denial of the NAA and MSC budget figures to the FTC general counsel, William Kovacic. Earlier this week, Kovacic partially granted my appeal:

Dear Mr. Oliva:

This responds to your recent Freedom of Information Act ("FOIA") appeal, which was received in this office on April 14, 2003. By letter dated January 31, 2003, you had requested access to: 1) line-item budgets for the Bureau of Competition for fiscal years 2000, 2001, and 2002; and 2) records detailing the Bureau of Competition's expenditures in relation to seven specific matters during this same time frame. By letter dated March 27, 2003, Ms. Joan Fina granted your request in part, providing you with a one-page table reflecting the "dollars used" in FY 2000, FY 2001, and FY 2002, on five of the seven matters you specified. Citing FOIA Exemption 7(A), 5 U.S.C. § 552(b)(7)(A), she redacted from this chart the figures reflecting dollars spent on the other two specified matters. You have appealed this determination. Because I agree that the material that Ms. Fina withheld was protected by Exemption 7(A), I am denying your appeal.

The information that you requested about the MSC Software Corporation matter, Docket No. 9299, was, and continues to be, protected by FOIA Exemption 7(A), which protects information compiled for law enforcement purposes the release of which could reasonably be expected to interfere with enforcement proceedings. See Robbins Tire & Rubber Co. v. NLRB, 437 U.S. 214 (1978). With respect to the National Academy of Arbitrators matter, File No. 0110242, however, I am exercising my discretion to release the redacted figures because, according to the attorneys assigned to that matter, very recent developments have made it less likely that releasing this information could reasonably be expected to interfere with the case. Thus, while it is clear that this material was exempt at the time of Ms. Fina's determination on your FOIA request, it appears to no longer be exempt.


It’s not clear what the “very recent developments” were in the NAA case, though I heard that FTC staff was looking into prosecuting a sister group of NAA’s. As for MSC, it’s completely unclear to me why this is still considered a pending matter. That aside, the Kovacic’s letter denying my access to MSC’s budget figure has no basis in law, at least none that Kovacic provided in his letter. The FTC cites one case, Robbins Tire v. NLRB, but this decision has nothing to do with my request. Robbins Tire involved the subject of a National Labor Relations Board investigation trying to obtain witness statements in a pending case. The NLRB had a justifiable interest in withholding information that could be used to undermine their case—they were probably concerned that Robbins Tire would try and intimidate or interfere with witnesses.

Budget figures are a completely different animal. The cornerstone of government power is the ability to tax the people and spend their money on public affairs. Congress is granted the exclusive power of appropriations for this very reason. Every agency of the Executive Branch has an obligation to maintain open, honest books, and to make financial records available for public inspection. Even in national security matters, the people are aware of the aggregate amount being spent, even if specific line-items are classified. But nothing the FTC touches even remotely deals with national security. Indeed, the FTC acts a civil law enforcement agency most of the time, as they were in the NAA and MSC cases. Thus, the FTC has no excuse for not turning over the numbers I requested.

(Incidentally, the NAA case—which involved forcing a group to delete three sentences from their ethics code—cost the FTC (and the taxpayers) $24,319. And that was one of the cheaper settlements.)

On Monday, I will send Mr. Kovacic a letter giving him one last chance to release the MSC budget figures. If he fails to do so, I will file a lawsuit to compel the FTC to turn this information over. The FTC’s days of evading public scrutiny are over.

And by the way, lawsuits aren't free, so if any of you want to help me stick it to the FTC, consider becoming a CAC contributor.

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Food for thought: The Internet is a bathroom wall  

:: Posted by Nicholas Provenzo at 1:50 PM

Eugene Volokh notes Eric Zorn's view that the Internet is basically a bathroom wall:

Consider: Anyone can write anything on a bathroom wall. There's little accountability on a bathroom wall. It's hard to tell who wrote what on a bathroom wall. Truth looks just like rumor on a bathroom wall. Great stuff is interspersed with awful, stupid stuff on a bathroom wall.

Most people know instinctively not to offer as verification or a point of information the phrase "Well, you know, I read on the bathroom wall that. . ." Yet far too many seem willing to lace their discourse and communications with "facts" gleaned from bulletin boards, e-mail and Web sites.

The sad fact, which I've noted in many posts over the past year (and even setting aside egregious examples like the Jayson Blair affair), is that most media turn out to be a bathroom wall, too. An exaggeration, but less of an exaggeration that I'd like it to be.
One's credibility does not depend on the medium in which one communicates, it depends on their objectivity. One's association with others who have already established their credibility lends an imprimatur that one might not have otherwise, but the process of objectivity is the primary process, and its understanding its workings is oft neglected, if not outright ignored. To focus on mediums to the exclusion of how objectivity makes a person credible in the first place is not far removed from focusing on trees to the exclusion of the forest. The real question I ask is why aren't there more truthful people out there?

For example, for all the brouhaha over the Jayson Blair scandal at the New York Times, I haven't seen any one effectively take on what led a bright young reporter to think for even an instant that he could be utterly non-objective (i.e. make s&$% up) and not destroy his career. I know what it's like to blind myself to facts, but to engage in outright fakery, I can't comprehend it. The truth is out there. Reporting on it is not that hard. Other then time, how difficult is it to follow your subjects? To come to understand what is relevant and irrelevant for your audience? To focus on the primaries of a story?

In my job, I try to convince people that certain principles are better and truer than others. If I lied once, I'd be dead. On the contrary, I have to be able to make ever more complex identifications and intergrations, or I fail in my mission. And every time I come up short, it hurts me, and often in the worst way. The process of objectivity is a life-saver, whatever one's field.

I don't care where I hear an idea or a fact. If I decide it's relevant to me, all I can ask myself is, "Is it true?" The better I am able to answer that question, the better off I am. It's that simple, and that complex.

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Rights & Reason: Bill Clinton's interns never had this problem... 

:: Posted by Skip at 1:40 PM

The Washington Times' John McCaslin reports on a new form of housing discrimination:

"Greetings from Snellville, Georgia!" Chuck and Linda Moseley write to Washington landlord Peter Kelley, whose name is listed in a directory of apartments on Capitol Hill.

"Our son is a rising senior at the University of Georgia. He has been chosen as a full-time Intern for [Georgia Republican] Congressman John Linder beginning Sept. 1, 2003, and ending Dec. 12, 2003. Please advise availability and any additional information you require. We will not be able to visit D.C. until after June 5, 2003 due to his classes. Thank you for your time."

Nice enough letter from the proud parents.

"Hello Moseleys," Mr. Kelley writes back. "Thank you for contacting us about your son staying at the Loj during his internship. I'm usually very encouraging of young people doing congressional internships and staying here while they do them.

"However, I do have to say that as a full-time employee of an environmental group, and as someone personally quite alarmed about the direction that Congress and the president are taking with the environment, I have concerns about Rep. Linder's record.

"He has a 5 percent score on the League of Conservation Voters environmental scorecard, and his Web site lists the following votes, all of which I deeply disagree with: Voted NO on raising CAFE standards, incentives for alternative fuels (Aug 2001); Voted NO on prohibiting oil drilling & development in ANWR (Aug 2001); Voted NO on starting implementation of Kyoto Protocol (Jun 2000).

"I am torn," concludes Mr. Kelley, "because I hope that your son will have a wonderful experience in Washington and I know that working for any congressman, even one with Rep. Linder's views, will be an invaluable experience that he will treasure his entire career.

"However, I would not feel right about having someone stay at our place who was working to advance views such as these, which I believe amount to abandoning our responsibility to future generations. And so I must decline your request for a room here."


McCaslin reports several lawyers have offered to file a lawsuit on the Moseleys over Kelley's "housing discrimination." Now, one can berate Kelley for his tying a housing rental to the occupant's political views, but in the end it's his property and his mistake to make. I wonder if Rep. Linder, a good conservative Republican, will rise to the defense of property rights, or whether he'll explout his intern's ploy for political purposes. Sadly, my money would have to go on the latter.

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Politics: The foul smell of jock taxes 

:: Posted by Skip at 1:35 PM

As part of the District of Columbia's desperate plea for the Montreal Expos, D.C. Delegate Eleanor Holmes Norton has introduced legislation which would permit the District government to impose a special tax on any income "derived from services rendered within the District as a member of a professional baseball team." In other words, anyone who plays Major League Baseball within D.C.'s borders will get a special income tax surcharge—perhaps as high as 20%—for each day they spend in the city. The District will then presumably use this money to help defray the costs of publicly financing a new baseball stadium.

Major League Baseball is not happy about this idea, nor obviously is the players union. I sympathize with the union on this, but the baseball owners have no standing to complain here. After all, these same owners are demanding D.C. foot the entire bill for a new stadium via taxpayer funding. If it's not okay to tax their players, why is it any more acceptable to have all city residents—most of whom have no use for baseball—pay extra sales taxes?

Of course, once you take the D.C. government's position that private property rights are subservient to the interests of city leaders, it becomes a race to the bottom to see whose rights get more violated. In the end, everybody loses under that system.

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Rights & Reason: VMI shall rise again... 

:: Posted by Skip at 1:26 PM

Virginia Attorney General Jerry Kilgore has asked the full U.S. Court of Appeals for the 4th Circuit to review a panel's decision declaring the Virginia Military Institute's "supper prayer" unconstitutional. I discussed the panel's opinion earlier at this post, and nothing in General Kilgore's statement announcing the petition for rehearing changes my opposition to VMI's practice:

"By arguably treating the mere hearing of prayer as tantamount to participating in it, the decision jeopardizes prayer in any governmental setting," Kilgore wrote in the petition to the Court. "For example, in this Court -- as in the Supreme Court -- each session begins with a brief invocation. No one is required to close his eyes or bow her head. If hearing -- or standing -- is the same as participating, it is difficult to explain how these invocations could be constitutional."

Kilgore pointed out that the U.S. Supreme Court never has addressed the constitutionality of prayer in university or military college settings -- only the question of school-sponsored prayer in kindergarten through 12th grade.

"It is not just the military colleges that will be affected," Kilgore wrote. "By implicitly equating institutions of higher education with grades K-through-12, the panel opinion is written in terms so sweeping as to jeopardize the ability of any public college to include an invocation or benediction at any ceremony -- including graduation ceremonies."
The Supreme Court's "invocation" is nothing more than a brief proclamation that "God save the United States and this Honorable Court." It is not a participatory prayer or an attempt at proselytization. The VMI supper prayer was both of those things, and it took place within the inherently coercive environment of a state-run military college. That the prayer is unconstitutional as practiced by VMI should not even be a topic of serious debate. I understand Kilgore has political reasons for pursuing this matter—such as boosting his support among conservatives for his 2005 gubernatorial campaign—but even he realizes the 4th Circuit will likely not rehear this case.

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Stuff we love: 'Court Gives Bryco/Jennings the (Index) Finger' 

:: Posted by Nicholas Provenzo at 1:18 PM

Capitalism Magazine eviscerates a recent anti-gun lawsuit in California. Which makes me ask, who is Carter Laren and how did he get to be so cool? I never even thought to have include my pistol in my Capitalism Magazine head shot.

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Antitrust News: Microsoft II 

:: Posted by Nicholas Provenzo at 9:05 AM

When is an antitrust settlement not worth the paper it is printed on. When you're Microsoft.

Six months after a federal settlement was ordered to remedy Microsoft Corp.'s anti-competitive conduct, two states, several business rivals and some users still say the software company wields too much power in the marketplace.

Attorneys General Thomas Reilly of Massachusetts and Darrell McGraw of West Virginia are continuing the battle for tough antitrust remedies after the U.S. District Court for the District of Columbia approved the settlement last year. In a brief filed with the U.S. Court of Appeals for the D.C. Circuit last week, the states argued that the remedies do not stop Microsoft's illegal conduct, restore competitive conditions or deny the Redmond, Wash., software company the fruits of its anti-competitive behavior.

A key sticking point for critics is that the remedy does not require Microsoft to unbundle middleware code from the Windows operating system but allows only users and PC manufacturers to remove the middleware icon from the desktop. Critics also said the API and protocol disclosure leave too much discretion to Microsoft to define terms.
Microsoft settled with the government, but it has never seen the benefit of that settlement. It's still being hauled to court as a matter of course, be it by the ravenous state AG's, class action litigants, or whatever other form of parasite with a law degree and a nose for the unearned.

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Antitrust News: Microsoft 

:: Posted by Nicholas Provenzo at 8:55 AM

The EU is after Microsoft yet again, this time for competing head-to-head with Linux:

The European Commission is considering whether to order Microsoft to hand over internal memos revealed in the International Herald Tribune and New York Times newspapers that describe sales practices the European regulator suspects may break its antitrust rules, people close to the Commission said Thursday.

The sister newspapers reported that Microsoft's top salesman, Orlando Ayala, last July circulated a confidential memo to senior executives of the company around the world laying out a strategy to offer big discounts to governments and institutions, and in some cases to offer the company's software for free.

Ayala is reported to have told colleagues that the aim of the strategy is to dissuade clients from switching to rival PC operating system providers -- and especially to Linux, the open source software platform which is starting to steal market share from Microsoft in the server software market.

"Under NO circumstances lose to Linux," Ayala is reported to have written in the memo dated July 16, 2002.

Most discounting is viewed as normal competitive business behavior, but European Union antitrust law prohibits companies that dominate their markets from offering big discounts if their main aim is to exclude rivals, or if the discounts are only offered to certain clients. [InfoWorld]
Gee, and I though antitrust encouraged competition.

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:: Thursday, May 15, 2003 ::

Antitrust news: copper 

:: Posted by Skip at 8:19 PM

Beware Big Copper:

Manipulation in the copper market may be as old as the market itself, but traders and analysts say the antitrust probe launched this week into a possible cartel in concentrates might lead nowhere and ultimately just reflect market dynamics.

Even though copper has a colorful history of scandal, the red metal is no more ripe for trading shenanigans than other commodities, nor does it hold any intrinsic quality lending itself to price-doctoring, they said.

Canadian, U.S. and European competition regulators are investigating allegations of price fixing of copper concentrate, the mined product refined into metal.


European regulators have recently conducted "raids" on numerous copper companies. I'm a little unclear as to how such a raid operates. Are there restraint-of-trade-sniffing dogs who can located price-fixing agreements?

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Antitrust news: jet fuel 

:: Posted by Skip at 8:05 PM

Antitrust law isn't just for airlines. Airports can now join in on the fun as well:

Development of the last 15 acres at Boca Raton Airport continues to taxi, its takeoff hampered by years of litigation, political snafus - and now charges of antitrust violations.

It's the latest strike in the air assault between Premier Aviation of Boca Raton, which in 2000 signed a 35-year lease with the Boca Raton Airport Authority to develop a fixed-base operator, and Boca Aviation, currently the only FBO at the airport.

On April 23, Premier lawyer Gerald Richman filed two antitrust lawsuits against Boca Aviation in the U.S. District Court for the Southern District of Florida. Premier Aviation, the plaintiff for one of the complaints, claims Boca Aviation "currently enjoys and is illegally seeking to protect a longstanding and unbridled monopoly over the sale of jet fuel, aviation gas and related aviation services at Boca Raton Airport, and has instituted sham litigation to maintain its practices."

In the second complaint, the plaintiffs are David S. Blue and S. Brent Blue, who claim that Boca Aviation "has enjoyed inflated profits that result directly from being the sole fixed-base operator at the airport since 1984."

Richman said he is seeking a class status and plans to file a motion for certification within 90 days. He deferred a request for further detail about the plaintiffs or their business to an associate who was not available.

"An anticompetitive environment is against public policy," said Richman, a partner in the West Palm Beach-based law firm Richman Greer Weil Brumbaugh Mirabito & Christensen. "Boca Aviation wants to maintain its monopoly. Period."

Mark Wantshouse, president of Boca Aviation, views the lawsuits as a gambit to sway public opinion. In 30 percent to 40 percent of U.S. airports, there is only one fixed-base operator, he said. "These are frivolous lawsuits only made as defamations of Boca Aviation for public relations reasons," he said.

If his company has been practicing monopolistic pricing, Wantshouse reasoned, then pilots and other airport users would have repeatedly logged complaints with airport manager Ken Day. But Day has never contacted Boca Aviation about such complaints, Wantshouse said.


I particularly love the statement "[a]n anticompetitive environment is against public policy." Lots of monopolies exist under public policy: the Postal Service, Amtrak, and, well, government-run airports.

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China Threatens to Execute SARS Spreaders  

:: Posted by Nicholas Provenzo at 11:52 AM

From the AP:

The SARS emergency worsened in Taiwan, which had its biggest one-day jump in cases Thursday, while China threatened possible execution for people who cause death or injury by deliberately spreading the disease.

The warning by China's Supreme Court, reported by the official Xinhua News Agency, appeared to be an effort to force compliance with quarantines and other restrictions. It cited existing laws with tough penalties, including a possible death penalty for even nonviolent offenses.
So this is how a dictatorship deals with a public health crisis.

China may not be the Maoist state it once was, but when push comes to shove, it is still all too willing to engage in bloodletting to preserve myth that the Communist Party provides stability for the Chinese people.

UPDATE: But then again, perhaps I am too harsh on our Chinese friends. After all, the FTC is willing to prosecute doctors under antitrust to preserve the myth that the goverment provides low prices and innovation for Americans.

Sure, it ain't the death penalty, but then again, the US ain't China.

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:: Wednesday, May 14, 2003 ::

Antitrust news: 3M 

:: Posted by Skip at 9:18 PM

Forget Microsoft, 3M is the new hot monopolist:

A California court has been asked to decide a sticky legal question: whether an alleged scheme by technology giant 3M Co. to control the market for transparent tape cost the state's consumers millions of dollars.

The lawsuit, filed Tuesday in Los Angeles Superior Court, draws on the same allegations made against 3M in a 1997 federal anti-trust action by LePage's Co., its main competitor in the $800-million U.S. cellophane tape market.

In 1999, a federal jury in Philadelphia awarded $68.4 million in damages plus interest to LePage's, which is owned by privately held Conros Corp. of Toronto, and ordered 3M to dismantle a retail incentive program aimed at boosting tape sales.

In March, a U.S. appeals court upheld the verdict, but 3M -- whose products range from sandpaper and industrial adhesives to drugs and Post-It notes -- said it will ask the U.S. Supreme Court to review the decision.

LePage's president Navin Chandaria said he, too, planned to return to court to ask for sanctions against 3M, alleging the $16 billion company has found "legal ways of doing the same thing to violate the spirit of the law."

A spokesman for 3M had no immediate comment.

The California class action by tape consumer Elaine Culotti accuses 3M of violating the state's anti-trust and unfair business practices laws to protect its monopoly and restrict the availability of cheaper tape brands statewide.

Culotti's lawsuit contends that 3M accomplished this by offering rebates and lump-sum cash payments to retailers who agreed to buy several 3M lines and to meet retail sales goals.

Kmart, Staples, Sam's Club and other retailers who accepted the incentives canceled their tape purchases from LePage's and Tesa Tuck Inc. to meet 3M's sales targets and avoid losing the price breaks, the lawsuit alleged.

"What 3M did to LePage's had an impact on consumers in California -- namely, lack of consumer choice and increased prices for Scotch tape," Culotti's attorney Kevin Roddy said.

The California lawsuit contemplates a class of "hundreds of thousands of consumers" and damages in the millions, he said.


CAC plans to file an amicus brief in support of 3M's forthcoming Supreme Court petition. Contrary LePage's assertion above, 3M is not violating "the spirit of the law." Indeed, 3M's underlying conduct—utilizing its wide product line to increase tape sales—is not illegal under the Sherman Act or any other law. The trial jury and the Third Circuit decided to invent new law on the fly by deciding to punish 3M simply for acting in its economic self-interest. What the article above omits is the fact that LePage's still dominates the so-called "store brand" tape market, the market which they based their antitrust lawsuit on (3M dominates its own "Scotch" brand, which is a redundant statement since Scotch is a trademark.) LePage's sued to avoid having to compete in the marketplace. The resulting jury verdict was based on nothing more than speculation: If 3M is allowed to compete, LePage's might lose market share. This new private lawsuit is based on this same non-objective legal theory.

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The race police strike again 

:: Posted by Skip at 9:21 AM

Looks like baseball's antitrust exemption doesn't exempt individual teams from arbitrary "affirmative action" policies:

Baseball commissioner Bud Selig is investigating whether the Florida Marlins followed minority-hiring guidelines when they replaced manager Jeff Torborg with Jack McKeon.

"Bud's looking into it," Bob DuPuy, baseball's chief operating officer, said Tuesday.

In 1999, Selig sent a letter to teams requiring them to notify him about certain job vacancies, including manager. Teams are to provide a list of minority candidates, and the commissioner's office reviews the names before anyone is hired.

The Marlins could be fined if it's determined they failed to follow Selig's guidelines. He has the power to fine teams up to $2 million.


McKeon is white, in case you hadn't figured it out. He was recently hired to replace Torborg. Reports suggest McKeon was the only candidate actually considered. Given that this was a mid-season hiring, this should come as no great surprise to anyone. Most teams would have a candidate in mind when firing their manager while the season is actually going on. It's not an ideal time for an open-ended national search.

The commissioner shouldn't be exercising any control over individual franchise hiring decisions. I'm amazed the normally independent baseball owners would allow Selig to fine them for not placating the Jesse Jacksons of the world.

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It's a Byrd! It's a Plane! It's an Institute for Advanced Flexible Manufacturing! 

:: Posted by Nicholas Provenzo at 12:47 AM

This bit yesterday in Best of the Web Today brought me to tears:

Craig Bozman of Rockville, Md., in a letter to the editor of the Washington Post, lists some of the government facilities in West Virginia that are named for the state's (and the nation's) senior senator:

The Robert C. Byrd Highway; the Robert C. Byrd Locks and Dam; the Robert C. Byrd Institute; the Robert C. Byrd Life Long Learning Center; the Robert C. Byrd Honors Scholarship Program; the Robert C. Byrd Green Bank Telescope; the Robert C. Byrd Institute for Advanced Flexible Manufacturing; the Robert C. Byrd Federal Courthouse; the Robert C. Byrd Health Sciences Center; the Robert C. Byrd Academic and Technology Center; the Robert C. Byrd United Technical Center; the Robert C. Byrd Federal Building; the Robert C. Byrd Drive; the Robert C. Byrd Hilltop Office Complex; the Robert C. Byrd Library; the Robert C. Byrd Learning Resource Center; and the Robert C. Byrd Rural Health Center.

Last week Byrd accused President Bush of "flamboyant showmanship" after the president gave a speech on the USS Robert C.--whoops, make that the USS Abraham Lincoln.
And then there was this in today's Best of the Web:

Yet another commentator is experiencing psychosomatic symptoms purportedly brought on by President Bush's speech on the USS Lincoln. Here's San Francisco Chronicle columnist Jon Carroll:

I have not commented on the George Bush aircraft carrier photo-op fiasco until now because, quite candidly, the level of manipulation and cynicism gave me the vapors. I had to lie down on the daybed and have wet cats thrown at me for many hours before I was sentient again.

If only he'd start penning his column while sentient.

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:: Tuesday, May 13, 2003 ::

Affirmative action and the N.Y. Times 

:: Posted by Skip at 5:26 PM

I haven't spent a great deal of time considering the downfall of Jayson Blair, the New York Times' lying reporter. A number of conservative pundits want to treat Blair's story as a parable on the evils of affirmative action, since Blair was an African-American hired under a Times "diversity" initiative. I'm not convinced that this is a race story. Diversity surely can lead to inferior quality, be it in business or academia, but the problem at the New York Times seems to run much deeper. I suspect Cynthia Cotts, the perceptive media reporter for the Village Voice, is close to the truth:

One Times veteran suggests Blair received excess favor not so much because he was black, but because he was green. According to this source, Blair is typical of the latest crop of reporters anointed by the [Howell] Raines administration. "They're young, they're energetic, they say the right things, they kiss ass—but they don't have the skills to do the jobs they're handed," says the source. "This kind of favoritism is repulsive to people who have been there awhile."

Other insiders say the Blair case is symptomatic of a deeper issue: The Times newsroom does not operate as a meritocracy. Instead, sources say, Raines and [managing editor Gerald] Boyd pick their favorites for whatever reasons and become so invested in showcasing these reporters that they turn a blind eye to their flaws, which are said to range variously from inexperience and laziness to intellectual dishonesty and a high volume of factual errors.
Raines is a whim-worshipping autocrat who lacks the integrity to edit a tabloid, much less a major metropolitan daily. The great thing about the Internet-age, however, is that self-proclaimed authorities like the New York Times are becoming less relevant by the hour. Hopefully the Blair scandal will elevate the Times' decline into irrelevancy.

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BudPAC 

:: Posted by Skip at 4:57 PM

Major League Baseball has its own political action committee:

Baseball, which is the only sport with a PAC, formed the committee last year, when the House and Senate judiciary committees were considering legislation to partially rescind the sport's antitrust exemption. Among other things, that exemption has allowed baseball to prevent teams from moving from city to city, as has happened in other sports.

Baseball lobbied to preserve the exemption and made contributions to judiciary committee members in both houses of Congress. It also dropped plans to eliminate two teams, which had sparked the bill. The legislation never made it out of committee.

The sport is also working to preserve its copyrights on the Internet, an issue that comes under the jurisdiction of the House and Senate commerce committees. A majority of the PAC's contributions went to members who sit on either judiciary or commerce.


Baseball Commissioner Bud Selig exercises control over the PAC. This will no doubt lead several anti-Selig sportswriters to renew their call for repealing the antitrust exemption. Selig opponents, however, should be mindful of the dangers of granting politicians more leverage over baseball's affairs:

Selig's predecessor, Fay Vincent, who was forced out as commissioner in 1992, said Congress has real power over the sport. He said Senate pressure in the 1980s led baseball to award expansion franchises to Denver and Miami in 1991.

"I don't think baseball would have expanded had it not been for the Senate, which really pushed very hard for teams in Colorado and Florida," Vincent said.

He recalled that senators, especially from those two states, threatened to push legislation rescinding baseball's antitrust exemption.


Baseball's over-expansion has been far worse for the sport's economic health than the antitrust exemption. It's forced the game to dilute its talent pool to the point of further exaggerating the gap between the high-income and low-income franchises. These are not things politicians consider, however, when they make their grand denounciations of the antitrust exemption; to members of Congress, baseball is simply another convenient political whipping boy.

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Antitrust news: American Airlines 

:: Posted by Skip at 1:05 PM

Everyone knows airlines need more revenue to stay afloat right now. Everyone, that is, except the Department of Justice:

The Justice Department is scrutinizing the $10-per-round-trip fare increases made by the nation's largest airlines to determine whether carriers violated an antitrust ruling enacted nearly a decade ago.

At issue is the way in which airlines make fare changes that do not go into effect immediately, raising the possibility that they could signal future pricing plans to competitors.

"We are looking into it," Gina Talamona, a spokeswoman at the department's antitrust division, said Monday.

On Thursday, American Airlines raised non-sale fares on its North American routes by $10 per round trip starting June 1. United, dominant carrier at Denver International Airport, matched the increase the next day, and eight other carriers had fallen in line by late Monday.

The industry raised fares in anticipation of the government's upcoming four-month suspension of security fees, which amount to $2.50 per flight segment, maxing out at $10 per round trip.

"Airlines were faced with two choices: give consumers up to a $10 round-trip break, or raise fares," said Jamie Baker, J.P. Morgan's airline analyst. "Not surprisingly, the industry chose the latter."

Analysts and executives have said for months that the industry, which lost $3.5 billion in the first quarter, needs to find ways to boost revenue even as it struggles to cut costs. Fares have been kept extremely low to lure anxious and penny-pinching travelers back to the skies.


Under a 1993 Justice Department mandate, airlines cannot announce planned fare hikes. This amounts to price-fixing under antitrust doctrine, the same way doctors can never, never, never discuss prices among themselves without runnning afoul of FTC or DOJ regulators. In the current situation, American claims they've already implemented their fare hikes through computer reservation systems, thus rendering their behavior acceptable under the 1993 rules. Of course, that doesn't mean a damn thing. When antitrust regulators don't like a business practice, they simply change their rules after the fact. It may not be constitutional, but most folks look the other way because it, cough, "benefits consumers." As if air travelers enjoy a constitutional right to be spared a $10 fare hike on round trips from New York to Chicago.

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:: Monday, May 12, 2003 ::

MasterCard attacked again 

:: Posted by Skip at 10:21 PM

Just a week after settling its last antitrust attack, MasterCard is on the defensive once again:

Paycom Billing Services, Inc., an Internet Payment Service Provider, processing credit card and check transactions for Internet merchants, filed a multi-million dollar lawsuit today in Federal Court in Los Angeles against MasterCard International for antitrust violations, fraud and other issues.

Paycom's suit alleges that MasterCard has established monopolistic rules that allow it unreasonable discretion to dominate Internet merchants, and it has exercised this power to illegally impose fines and penalties in the millions of dollars.

Former Federal Prosecutors for the US Department of Justice, William McD. Miller and Richard P. Crane, Jr. of the Los Angeles law firm Musick, Peeler & Garrett LLP and Dennis M. P. Ehling, filed the lawsuit on behalf of the Plaintiff. Mr. Crane stated, "A United States Federal District Court has already determined that MasterCard is a monopoly. MasterCard's continued unfair dealings and the imposition of baseless fines, penalties and fees on Internet merchants, such as Paycom, simply prove the abusive control that one
finds in a monopoly."


This is yet another example of the parasitic, entitlement mentality that dominates antitrust law. Paycom's business model is based on processing credit card transactions. Thus, without MasterCard's large, well-developed credit card network, businesses like Paycom wouldn't even exist in the first place. Yet now Paycom is attacking its benefactor for being "monopolistic."

The way Paycom's lawyers see it, MasterCard is some sort of public resource that their clients are entitled to use at their discretion. MasterCard, I presume, sees their network as their private property, hence they get to determine the terms of its use. MasterCard does charge Paycom more to process transactions than traditional "bricks and mortar" businesses, but there are numerous business justifications for this practice, such as the higher security costs of online transactions and the relative instability of many Internet retailers.

Paycom's federal complaint can be found at this link.

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The Antitrust Action Center 

:: Posted by Nicholas Provenzo at 6:50 PM

We've just launched what we are calling our "Antitrust Action Center." This part of our website will become ground zero in the Center's defense of the productive, and will feature cases we are monitoring and taking action on. It also will be where you can help us by engaging in your own intellecual activism.

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Fun with market definition 

:: Posted by Skip at 6:44 PM

As Nick mentioned below, I've been following a Justice Department antitrust case involving the supposed market for "alternative newsweekly" publications. Today I filed a second amicus brief with the federal court overseeing the proposed Village Voice-New Times settlement. Among the topics I discuss is the government’s seemingly vague market definition:

“Alternative Newsweekly” means a publication (such as the Cleveland Scene or LA Weekly) that possesses more than one of the following attributes: (i) it is published in a geographic area served by one or more daily newspapers to which residents turn as their primary source or sources of printed news; (ii) it is published weekly (or less frequently), and at least 24 times annually; (iii) it is distributed free of charge; (iv) it is not owned by a daily newspaper publishing company; and (v) it is a general interest publication that does not focus exclusively on one specific topic, such as music, entertainment, religion, the environment, or a political party or organization.


Under these criteria, the DOJ concluded that Village Voice and New Times were “monopolizing” the geographic markets of Los Angeles and Cleveland, respectively. But that’s not exactly true. The definition says a “publication” need to meet only “more than one” of the five characteristics mentioned.

Take this blog, for example. This is a publication, albeit an electronic one. It is distributed free of charge. It is not owned by a daily newspaper publisher. It is a general interest publication not fixated on any one topic. That’s three of the five. And this blog is accessible in Cleveland and Los Angeles. That should, in theory, make this blog (and every other blog in the country) a direct competitor of the “alternative newsweekly” papers put out by Village Voice and New Times.

And there are other publications which fill similar markets to the well-known “alternative newsweekly” papers, such as college newspapers. Yet none of these choices were included in the DOJ’s marketplace definition in this case. Then again, it’s probably a good thing the DOJ didn’t take their market definition that seriously. By gerrymandering an “alternative newsweekly” market, the DOJ simply undermines their own credibility.

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First Amendment Follies 

:: Posted by Nicholas Provenzo at 1:19 PM

Skip Oliva reports that the Justice Department now appears to believe the First Amendment does not apply to individuals, or at least not to individual corporations. This novel legal theory is being peddled before a federal judge in Ohio overseeing the DOJ’s antitrust settlement with Village Voice Media and New Times Media, two national publishers of “alternative newsweeklys.”

Read Skip's essay at Initium.

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:: Sunday, May 11, 2003 ::

I don't want to talk about this... 

:: Posted by Skip at 10:23 AM

One of the nice things about the blogosphere is that when you don't have the time (or stomach) to blog about a story, you can get somebody else to deal with it. That's just what I did with a story about Jesse Jackson and his latest tirade. Thanks, John!

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:: Saturday, May 10, 2003 ::

Case Western business school building 

:: Posted by Nicholas Provenzo at 2:45 PM

This caught my eye about the shooting yesterday at Case Western University:

The distinctive structure of the Frank Gehry-designed Case Western business school building, with hallways that dip and swerve, complicated the job for police.

"As the SWAT team entered the building, they were constantly under fire," Lohn said. "They couldn't return fire because of the design of the building. They didn't have a clear shot."

Lohn said a SWAT team engaged in "firefights" throughout the building with Halder and finally cornered him in a room. Police weren't sure when Halder was shot, but said he was apprehended without incident. [AP]
The School of Management has a website dedicated to showcasing their Frank Gehry design. I always thought that Gehry designs were mush on the outside, but I never realized that this mush also extended to the interior.

My dream is that one day CAC will have its own building, something of an Objectivist community center here in Washington, and I've often thought about how its architectural design would serve to communicate the Center's values of reason, individual rights, productivity and pride. I look at a Frank Gehry and all I can think of is a melting world--Gehry's designs are perhaps the exact opposite of what I would want to create in a building. If it can be said that a building has a soul, Gehry's twisted corridors, lopsided rooms and melting walls would seem to indicate a twisted and tortured soul. And Gehry supposedly represents the state of the art in the application of computer technology to architecture.

It's a leap, but I can't help but wonder if the building the murderer committed his rampage in helped contribute to his psychosis. It may not have, but I would not be the least bit surprised if it somehow did.

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Sowell on health insurance 

:: Posted by Skip at 1:33 PM

Thomas Sowell has produced a superb series of columns on health insurance and government regulation. In his latest installment, Sowell exposes the anti-capitalist origins of health insurance itself:

When and why did health insurance, paid by third parties, become widespread in the American economy? Like so many things that the government does, third-party health insurance grew out of problems created by previous government policies.

During World War II, the government imposed wage and price controls. This meant that employers who wanted to hire more workers were forbidden to offer higher wages to attract them. So employers started offering various benefits instead. One of these benefits was employer-paid health insurance.

Since these benefits were not taxed as income, and could be treated as a business expense by the employer, everybody seemed to be better off. But, long after the war was over and wage and price controls were gone, the idea that third parties ought to pay for health insurance continued on. Eventually the government itself got into the business of providing health insurance and now some politicians depict it as a scandal that not everyone has health insurance paid for by third-parties.

This might make some sense if third-party insurance was cheaper or better than insurance that each individual pays for directly. All the evidence is that it is just the opposite. When third parties pay, use of the insurance -- and of the medical resources that it pays for -- has skyrocketed beyond anything contemplated at the outset.


When you hear leftist politicians speak of "universal health care," what they're talking about is health insurance which everyone is forced to pay for and use. It's an egalitarian approach to medicine: universal mediocrity. In a truly capitalist system, health insurance would not exist to the extent it does in today's mixed economy. Indeed, the modern HMO was virtually non-existent before the creation of Medicare and Medicaid.

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Two-thirds is good, but Three-thirds is better 

:: Posted by Skip at 1:27 PM

D.C. Mayor Anthony Williams is under attack on multiple fronts these days. Congress is unhappy with the high salaries of numerous city administrators. Congressional delegate Eleanor Holmes Norton had a meltdown when Williams endorsed the concept of school vouchers. The city council wants more police on the street and lower taxes. And the Washington Times is befuddled by the mayor's religious crusade to bring the Montral Expos to Washington:

Mayor Williams, who never impressed anyone as a sports fanatic in earlier years, has become increasingly obsessed with bringing baseball back to the District. So obsessed, it seems, that the mayor appears to have opened up a bidding war with himself to lure the Montreal Expos to the nation's capital.

How else to explain the mayor's recent hefty increase in public-sector support for building and financing a new ballpark? More than two years ago, as Eric Fisher of The Washington Times reminded us in yesterday's news story, Mr. Williams offered public support totaling $200 million to lure a major league team to the District. Last winter, D.C. officials provided MLB executives with a preliminary financing outline that would have limited public stadium financing to $275 million.

This week, the mayor upped the ante by more than $60 million. He has now presented the D.C. Council with a ballpark package totaling $338.7 million, which includes $40 million to fund lending reserves and $9 million in bond acquisition costs. The package also includes $15 million to renovate RFK Stadium, where the team would play its first two or three seasons while a new $436 million ballpark was constructed. The balance of the package — $275 million — would directly subsidize the construction of the ballpark, representing nearly two-thirds of its cost. Despite its disproportionate contribution, the mayor's package would unaccountably allow the team's eventual owners to defray their share of ballpark costs by the amount of the stadium's naming rights, which would generate between $2 million and $4 million per year.


The mayor's generosity with taxpayer funds may not be enough, however. Reports suggest that Major League Baseball's relocation committee wants whatever city acquires the Expos to fully subsidize the stadium for the new ownership—two-thirds just won't cut it. Keep in mind the Expos are currently owned by the other 29 Major League owners. Their goal is to sell the team for as much money as possible. If a potential buyer has to incur the costs of constructing a new stadium, that will mean less for baseball. None of this justifies MLB's blatant extortion of Washington, but at the same time Mayor Williams—who came into office with a reputation for fiscal responsibility—is the one who's playing games with public funds.

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Do it for the children! 

:: Posted by Skip at 1:19 PM

Since taking over the FCC, Michael Powell has done some positive things, such as attempting to loosen arbitrary restrictions on media cross-ownership. But for every good thing Powell, an antitrust lawyer by nature, has done, he has also flirted with some genuinely bad ideas. The latest is his genuflecting before so-called "pro-family" groups who want the FCC to act as a censor over broadcast networks. Consider this column from Peggy Nance of the "Kids First Coalition":

Our rules run to the licensee. At some point, enough is enough." With those words, during his speech to the annual National Association of Broadcasters convention in Las Vegas earlier this month, Federal Communications Commission Chairman Michael Powell sent a shiver through the broadcasting industry. The FCC is now talking seriously about revoking broadcast licenses for egregious violations of its decency rules.

This is welcome but long overdue, and it is not by accident. FCC commissioner Kevin Martin met with representatives of a dozen pro-family organizations on March 26. The representatives emerged from that meeting optimistic that support for their position — that the FCC had to be far more aggressive in enforcing its decency standards on television and radio — is growing significantly within the commission.

Both Commissioner Martin (a Republican) and Commissioner Michael Copps (a Democrat) have been quite outspoken in recent months about the need to return to a family hour, when parents and children can gather in front of the screen and enjoy entertainment together without having their values and senses assaulted.

Both the ABC and PAX networks have begun to deliver more family-friendly programming in the first hour of their prime time lineups. This sign is encouraging as networks continue to discover that family-friendly programming can be profitable.


Nance's message seems to be: The networks will do what we think is right, but if they don't the government should force them. Kepp in mind that Nance's views do not represent the majority of Americans, or even a substantial minority. Americans are not demanding FCC censorship of broadcasters. And make no mistake, censorship is precisely what Nance is calling for. She is unhappy with network programming, and since she considers her preferences to be the "correct" ones, it follows that the FCC should implement her will.

Of course, if Nance was that upset about what the networks are airing, she could simply encourage people not to watch television. Alternatively, she could organize an effort to buy her own network.

The "family hour" scheme—essentially censoring network programs between 8 and 9 p.m.—is particularly idiotic. First, many kids are up past 9 p.m. and watching television. Second, the FCC can't regulate cable programming, so the smut will continue to freely flow 24 hours a day. Third, the networks will be forced to cater programming to a particular segment of their audience without regard for the network's own financial and programming needs. The first hour of prime-time is a major revenue generator, and losing even a fraction of that audience to cable could cost a network like NBC millions.

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:: Friday, May 09, 2003 ::

Does this mean there's an opening on the FTC? 

:: Posted by Skip at 11:18 PM

The Wall Street Journal’s Jackie Colmes reports that “Bush allies” are looking at two possible replacements for outgoing budget director Mitch Daniels: White House deputy chief of staff Josh Bolten and Federal Trade Commission Chairman Tim Muris.

I have no opinion of Bolten at this time. But I definitely have an opinion about Muris. Now, I won’t launch a preemptive attack; Colmes says Muris “is said to like his current job,” and that makes sense to me. I don’t see Muris leaving a position where he has virtually unchecked power to impose his will on America’s businessmen for a job where he’d be under constant congressional scrutiny. Unless, of course, Muris is a sadist, which is a possibility given the way he’s treated recent FTC defendants.

Okay, maybe that was a preemptive attack. But, hey, Muris started it.

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Antitrust news 

:: Posted by Skip at 5:19 PM

From the Department of "Justice":

The Department of Justice today announced an agreement with BB&T Corporation which requires the company to make substantial divestitures in order to resolve antitrust concerns about the company's pending acquisition of First Virginia Banks Inc.

Under the agreement, BB&T will divest 11 First Virginia bank branches and two First Virginia drive-in facilities, with about $290 million in total deposits and loans associated with these branches.

"This divestiture will ensure that banking customers in Virginia will continue to have competitive banking services available," said R. Hewitt Pate, Acting Assistant Attorney General of the Department's Antitrust Division.

In addition, BB&T has agreed that, for a period of time, it will sell or lease any of the branches closed as a result of the merger in specified banking markets to any commercial bank, as long as the bank's offer is equal to or better than any non-bank offer.

The proposed merger is subject to the final approval of the Board of Governors of the Federal Reserve System. The Department said that it will advise the Federal Reserve Board that, subject to the divestiture of specified branch offices and associated loans and deposits, the Antitrust Division will not challenge the merger.

BB&T Corporation is headquartered in Winston-Salem, North Carolina. It has consolidated assets of $80.2 billion and consolidated total deposits of $51.3 billion. BB&T is a financial holding company that conducts its principal activities through three banking subsidiaries.

First Virginia Banks Inc. is a bank holding company headquartered in Falls Church, Virginia. It has consolidated assets of $11.2 billion and deposits of $9.2 billion. First Virginia conducts its principal banking activities through eight subsidiary banks.


Here's my question: Did anyone at the DOJ ask First Virginia's customers what they wanted? Maybe they wanted to be part of the merged BB&T-First Virginia bank. Let's suppose, for argument's sake, that every customer belonging to the divested branches decide to switch their accounts to BB&T. Would the DOJ then prosecute the customers for the sake of "preserving competition"?

I'm also curious as to how the divested branches were selected. Is there some overpaid DOJ lawyer sitting down with a list of First Virginia branches saying "keep this one, lose this one..." Talk about an obvious waste of taxpayer funds.

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House OKS $550 Billion Tax-Cutting Bill  

:: Posted by Nicholas Provenzo at 2:45 PM

Republicans muscled a tax cut bill through the House on Friday that they said would right the teetering economy, overcoming Democratic arguments that it would swell federal deficits already expected to set a record this year.

The legislation, which would reduce taxes by $550 billion through 2013, was approved by a 222-2-3 party-line vote. The Republican-led Senate plans to vote on a similar but smaller measure next week, after which the two chambers — joined by White House officials — will negotiate a final package. [AP]
Good. But it will be interesting to see what the Senate and conference committee now does.

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N.Y. Abortion M.D.'s Killer Gets Maximum  

:: Posted by Nicholas Provenzo at 2:26 PM

The AP reports that James Kopp, the anti-abortion sniper who gunned down an abortion doctor in his home five years ago, was sentenced Friday to the maximum sentence of 25 years to life in prison.

Kopp struck in the suburbs of Buffalo, my old hometown. The AP writes:

Kopp was lying in wait behind Slepian's suburban Amherst home Oct. 23, 1998, and fired once through a rear kitchen window after the doctor returned from a memorial service for his father. Slepian's wife and four sons were home at the time.

A suspect soon after the shooting, Kopp fled to Mexico and then Ireland before ending up in France. He is a suspect in the non-fatal shootings of four other abortion providers in Canada and Rochester between 1994 and 1997.
I, for one, am glad that there is one less madman on the streets who threatens the rights of women to control the process of their own bodies, and the health providers who attend to their needs.

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Typing Monkeys Don't Write Shakespeare  

:: Posted by Nicholas Provenzo at 11:46 AM

This just in from the AP:

Researchers at Plymouth University in England reported this week that primates left alone with a computer attacked the machine and failed to produce a single word.

"They pressed a lot of S's," researcher Mike Phillips said Friday. "Obviously, English isn't their first language."

A group of faculty and students in the university's media program left a computer in the monkey enclosure at Paignton Zoo in southwest England, home to six Sulawesi crested macaques. Then, they waited.

At first, said Phillips, "the lead male got a stone and started bashing the hell out of it.

"Another thing they were interested in was in defecating and urinating all over the keyboard," added Phillips, who runs the university's Institute of Digital Arts and Technologies.

Eventually, monkeys Elmo, Gum, Heather, Holly, Mistletoe and Rowan produced five pages of text, composed primarily of the letter S. Later, the letters A, J, L and M crept in — not quite literature.

Phillips said the project — funded by England's Arts Council rather than by scientific bodies — was intended more as performance art than scientific experiment.
Some performance. I actually visited the sponsoring group's website. I'm not sure who's more imbecilic, the monkeys, or the organizers. There are brilliant artists who have something profound to show, but England's Arts Council chooses to support this monkey business. Brilliant.

For a wonderful antidote, visit here, and see why they call themselves the "Art Renewal Center."

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The FTC and me 

:: Posted by Nicholas Provenzo at 11:04 AM

Today, I am researching the 1998 congressional testimony of former FTC Chairman Robert Pitofsky. Pitofsky testified before the House Committee of the Judiciary in opposition to a bill that would give physicians an antitrust exemption so they could negotiate on-par with HMO's.

Reading through this testimony is like watching the Sunday morning talk shows--you just want to scream. According to Pitofsky:

The Commonwealth of Puerto Rico developed a program for providing health care coverage for the uninsured, known as the Reform, which currently covers about 30% of the population. In late 1996, the College of Physicians and Surgeons decided to take collective action in an attempt to raise their reimbursement level under the Reform, which would have raised the costs of health care to the citizens of Puerto Rico. The College ultimately called an eight-day strike, with physicians closing their offices and, in some cases, canceling elective surgery without notice. The potentially serious impact on patients of such anticompetitive behavior is obvious. The FTC and the Commonwealth of Puerto Rico jointly filed a complaint and obtained a consent agreement, under which the College and three large medical groups that contracted with the government paid $300,000 in restitution and agreed not to engage in future boycotts or unintegrated collective price fixing.

We believe that sound antitrust enforcement in situations like the one in Puerto Rico has been a major factor in permitting the emergence of alternative health care arrangements that today vie for the patronage of consumers, private employers, and government purchasers. Although health care markets have changed dramatically over time, and continue to evolve, collective action by health care providers to block innovation and interfere with cost-conscious purchasing remains a significant threat to consumers. The prospect of effective antitrust enforcement therefore continues to be a crucial, positive influence on the marketplace which encourages better responses to consumer demands for high-quality and cost-effective health care.
The FTC's antitrust enforcement is a positive influence on the marketplace if you believe that doctors have no right to barter a better deal with those who pay them.

Let's look at it this way: a group of doctors, professionals committed to medical excellence, decided to walk out of their jobs rather than carry on with the status quo. They exercised the principle that their work belongs to them and they have the right to control their financial destiny. For that crime, they were sacked with a $300,000 fine and ordered never to exercise their interest collectively again.

How does this help consumers? Myopically, it leads to artificially lower prices, but long term, it leads to the destruction of the healthcare profession. You can not consistently pay the members of a profession less than what they are worth and expect them to continue to work or for new talent to come into the profession. Antitrust enforcers continuously prattle on about how they enforce low prices and innovation in the name of consumers. By definition, they can not. Antitrust enforcers only have the power to use force, and force does not treat a single patient or develop a single cure.

Antitrust is nothing more than nonsense on stilts, but what amazes me is that some people say we must negotiate with the FTC and that we can't go in demanding up front that they respect the businessman's right to his work. I freely accuse the FTC of being ignorant and shortsighted, but maybe that judgment deserves to be directed toward other targets.

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:: Thursday, May 08, 2003 ::

Simply Semper Fi 

:: Posted by Nicholas Provenzo at 11:21 PM

Roger Roy with the Orlando Sentinel has a motivating article on his time as an embedded reporter with the Marines in Iraq.

It certainly made this old veteran wish he had never left the Corps.

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:: Posted by Nicholas Provenzo at 11:37 AM

Thanks to Yuen Liang, who sent this WSJ article to me:

Patients Face Cancellations, Delays As Doctors Protest Insurance Rates

By ALEX FRANGOS
Staff Reporter of THE WALL STREET JOURNAL

For months, physicians around the country have been protesting the skyrocketing cost of malpractice insurance. Now, patients are starting to feel the impact.

Over the past week, in an escalation of tactics, between 5,000 and 6,000 Pennsylvania physicians either refused patients or shut their offices down completely in protest. In Jacksonville, Fla., about 100 surgeons and obstetrician/gynecologists shut down their offices on May 3, forcing public health officials to open an emergency operations center to coordinate care. That is a strategy usually reserved for hurricanes.

More doctors will be away from their offices as part of protests planned for Illinois, New York state and Washington state. A rally of as many as 5,000 physicians is expected to close many offices next week in New Jersey. . .
It's no secret that doctors are getting the shaft in favor of trial-lawyers, and its refreshing to see them take a stand in defense of their rights. But doctors are also getting the shaft under the antitrust laws, and they need to be just as principled in that fight.

But you already knew that, don't you. :-)

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A Norwegian NATO Secretary General? 

:: Posted by Nicholas Provenzo at 11:24 AM

Fredrik Norman hopes so. Plus, and I say this with love, she's a US flag-wearing total babe. Whoa!

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That was quick 

:: Posted by Nicholas Provenzo at 10:52 AM

Now this from the AP:

US Secretary of State Colin Powell has said that trans-Atlantic divisions over the US-led war on Iraq were a thing of the past and the United Nations would play a vital role in that country's future.

Most of Powell's speech went to praising ties between the United States and the EU and within the North Atlantic Treaty Organisation.

"We are driven forward by common values," he said, "and when we disagree it is usually over means rather than the ends."

After the fall of Iraqi leader Saddam Hussein (news - web sites) last month, Powell said France would "pay a price" for leading opposition to the war in the UN Security Council.

But in his speech he explicitly mentioned neither France nor the other prominent EU critic, Germany. Instead, he said "honest, open, rigorous debate" was a virtue and "we should never seek agreement for agreement's sake."

The closest he came to criticising them was when he congratulated Eastern European candidate members of the EU who supported the war, "rather than sit back and be intimated and silent".

Powell repeated what he had told reporters at the United Nations earlier: that the United States would present a draft resolution on Iraq to other Security Council members this week.

"The United States has every expectation that the United Nations will play a vital role," he said, without giving details.
The UN will play a vital role in the rebuilding of Iraq? The differences over Iraq were over means, not ends? Powell's statements are complete and utter BS. France and Germany's anti-US position was a vote for impotence in the face of a bloody dictators. And remember all those stupid protests in Europe where the US was portrayed as worse than Iraq? That's about as big a difference as one can fathom.

Why is Colin Powell throwing these people bones? Talk about moral appeasement. And you know what, I blame President Bush. There is no reason for the US to be kissing the asses of our European foes. Contempt for France and Germany in the US remains at unprecedented levels. The President needs to reign Powell in and have the courage to say that the US judges both principle and deeds in deciding who its allies are.

I can't help but wonder if this is all designed for soccer moms, who hate conflict of any stripe. Sure, we hate our European foes, and we will quitely act against them, but publicly, it's all nicey nice. I can't imagine anyone outside of the US respecting such a policy.

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And why would we do this? 

:: Posted by Nicholas Provenzo at 10:33 AM

According to Reuters:

The European Union's foreign policy chief asked the United States on Wednesday to deal with Europe as a whole rather than pick out individual allies because they happened to agree with U.S. policies.

Javier Solana, speaking at a dinner alongside Secretary of State Colin Powell, said in many areas the United States could best obtain what it wants from Europe by dealing with the European Union collectively.

'The European Union is more than the sum of its parts. Therefore, I am concerned when I hear ... influential voices asking whether the United States would be better served by disaggregating Europe,' he told the Foreign Policy Association.

'Such an approach would not only contradict generations of American wisdom, it would also be profoundly misguided,' he said.

Solana's remarks reflected European fears that splits in Europe over the U.S. invasion of Iraq in March would drive Washington away from its policy of encouraging European unity and integration.
It's not the US that split Europe--it's France and Germany that split Europe by failing to support the removal of a bloody dictator despite UN promises to the contrary. And now the US is supposed to put Europe back together again? Old Europe is broke and deserves to wither in isolation. We owe it nothing.

I think there are limits to American generosity, or at least their ought to be.

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But I love America, and what it has done to the rest of the world  

:: Posted by Nicholas Provenzo at 12:08 AM

Margaret Drabble hates America and "what it has done to the rest of the world" because, among other things, our warplanes have shark teeth painted on them. I, for one, like the shark teeth, which I'm pretty sure go all the way back to the Flying Tigers. They say to me, "screw with the US, and we're going to bite you in the posterior."

That's not the best part though--it gets even better.
"I detest American imperialism, American infantilism, and American triumphalism about victories it didn't even win.

On April 29, 2000, I switched on CNN in my hotel room and, by chance, saw an item designed to celebrate the 25th anniversary of the end of the Vietnam war. The camera showed us a street scene in which a shabby elderly Vietnamese man was seen speaking English and bartering in dollars in a city that I took to be Ho Chi Minh City, still familiarly known in America by its old French colonial name of Saigon.

"The language of Shakespeare," the commentator intoned, "has conquered Vietnam." I did not note down the dialogue, though I can vouch for that sentence about the language of Shakespeare. But the word "dollar" was certainly repeated several times, and the implications of what the camera showed were clear enough.

The elderly Vietnamese man was impoverished, and he wanted hard currency. The Vietnamese had won the war, but had lost the peace.
Somebody please hand this poor pathetic woman a hankie.

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:: Wednesday, May 07, 2003 ::

But on the other hand. . . 

:: Posted by Nicholas Provenzo at 7:37 PM

One thing has been nagging me this week. Are tax cuts without corresponding cuts in government spending just another form of Keynesism? This from none other than Henry Hazlet:

John Maynard Keynes was, basically, an inflationist. This has not been clearly recognized because he never spelled out, step by step, the consequences of his proposed remedy for unemployment and depression. That remedy was deficit spending by the government. He recognized that increased government spending paid for by equally increased taxation would not "add purchasing power." The increased taxation would offset any "stimulus" that the increased government spending would provide. What counted, he confessed, was the government deficit. But he failed to take his readers beyond this step. How would that deficit be financed? Either the money would have to be borrowed, or new (paper) money or credit would have to be created. But if the money were borrowed, then the previous spending stimulus would be reversed by a deflation when the borrowing was repaid. The only thing to prevent this reversal would be to allow the new spending to remain outstanding. In other words, the Keynesian solution to every slowdown in business or rise in unemployment was still another dose of inflation.
There is no such thing in my mind as a bad tax cut--any attempt to return money to those who produce it is something I support automatically. But if the goal of the Bush tax cuts is to spark the economy, doesn't the president need to be just as aggressive in cutting government spending, or ultimately, the tax cuts are for nought?

What do you think? I'd like to know.

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Senate GOP Reaches Dividend Tax Deal  

:: Posted by Nicholas Provenzo at 7:27 PM

This just in from the AP.

The Senate's Republican tax writers struck on agreement Wednesday on a dividend tax cut, ensuring that a scaled-back version of President Bush's call to eliminate such taxes entirely for shareholders will win support in the Senate Finance Committee.

The proposal combines elements favored by GOP moderates and conservatives. Shareholders would not pay taxes on the first $500 of dividend income. Committee Chairman Charles Grassley, R-Iowa said that covers the 86 percent of taxpayers who receive dividend income. . .

. . .The redrafted dividend tax cut won support from Sen. Olympia Snowe, R-Maine, who had forced Republicans to bargain for a smaller dividend tax cut. It is still opposed by Democrats on the panel.
A Republican who doesn't wholeheartedly support a tax cut is like a fish that doesn't wholeheartedly support water. Sure, this tax cut favors 86% of taxpayers who receive dividend income, but frankly, it's that other 14% who really drive the US economy. I wonder when those in Washington are going to catch wind of that minor fact.

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On the hill 

:: Posted by Nicholas Provenzo at 6:10 PM

Skip Oliva and I met today with the staff of Congressman Ron Paul (R-TX), the sole sponsor of the H.R. 1247, the liberation of physicians from antitrust bill. There are some issues we disagree with Rep. Paul, but he is 100% right on exempting physicians from antitrust. The gist of our meeting:

• The Center will continue to build a coalition of doctors, concerned citizens, and trade associations in support of H.R. 1247.
• The Center seeks a House hearing on the Federal Trade Commission's enforcement of the antitrust laws against physicians. We want our experts to provide testimony at that hearing detailing our year-long observations of FTC antitrust enforcement against physicians, and we are able to provide compelling witness testimony from individual victims of the FTC investigation and consent decree process.

Now comes the hard part--getting this bill though committee. I'll be setting up meetings with relevant members of the House Judiciary Committee for next week. It would be nice if I had the funds to get our Legislative Action Center running so we could orchestrate an e-mail campaign. Maybe you can help with that.

We have nowhere to go but up on this issue, and I look forward to translating our principles into actual government practice.

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:: Tuesday, May 06, 2003 ::

Microsoft settlement of the day 

:: Posted by Skip at 9:51 PM

Need some new computers for your school? Sue Microsoft:

Microsoft Corp. has reached a $12.3 million settlement with Montana consumers who accused the computer software giant of violating the state's antitrust and unfair competition laws.

The agreement, disclosed Monday, requires payments be made in the form of vouchers that can be used toward purchases of computers and software. Half of any money remaining after a four-month period for those claims will be offered to the state's poorest schools for hardware, software or training.

Microsoft estimated that 325 Montana schools, with total enrollment of 38,325 students, will be eligible for leftover settlement proceeds.

Linda McCulloch, state superintendent of public instruction, said the benefit to Montana schools is badly needed.

''All our schools are facing daunting budget problems,'' she said. ''This settlement is most welcome and will be put to good use in classrooms across Montana.''

Jennifer Hendricks, one of the Helena attorneys behind the lawsuit, said schools are all but certain to get something from the settlement since it's unlikely all the money will be claimed by consumers.


Montana's schoolchildren won't just be getting free computers, they'll be getting a valuable lesson: If someone has something you want, you should just take it from them by force. I suppose this is easier than actually teaching students about individual rights and capitalism. That would require actual intellectual effort.

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The Businessman's Self-Defense Kit 

:: Posted by Nicholas Provenzo at 9:44 AM

Here's the text to my speech before the doctors of the Colorado Medical Society at their conference "Physicians are Not Criminals." Not all of my speech was written out, but I think you will get the main theme nevertheless. And thanks again to the Colorado Medical Society for giving me the opportunity to address their members.

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:: Monday, May 05, 2003 ::

Madigan v. Telemarketing Associates 

:: Posted by Skip at 1:52 PM

This morning the Supreme Court unanimously reinstated a fraud lawsuit brought by Illinois Attorney General Lisa Madigan against a telemarketing firm, Telemarketing Associates, Inc. Madigan seeks to try Telemarketing Associates over the company’s charitable solicitation practices, which she says involves lying to potential donors over how much of their contribution is actually used for charitable purposes.

Within the nonprofit community, it’s well understood that telemarketing campaigns yield only a small percentage of contributions to the actual organization. Most of the contributions—85% in the Telemarketing Associates case, allegedly—are retained by the telemarketer as fundraising costs. Despite the low rate of return, many nonprofit groups willingly use telemarketing. For example, Mothers Against Drunk Driving argued in an amicus brief that simply getting their name and message out via telemarketing was just as valuable as the actual contributions received. For many other groups, telemarketing campaigns produce first-time donors who turn into regular contributors. Nonprofit telemarketing is really more about advertising the group than pure fundraising, thus justifying what sounds like high fundraising costs.

The Supreme Court has repeatedly protected these practices from state interference. For instance, the Court has ruled that a state may not arbitrarily limit the percentage of contributions an organization may pay a telemarketer. Aside from the right of voluntary contract, such actions are considered protected First Amendment activity, since the fundraising is directly related to speech interests.

In this case, however, Madigan is alleging actual fraud. She accuses Telemarketing Associates of telling potential donors that “a significant amount of each dollar donated would be paid over” to a particular charity, when in fact the telemarketers were contractually promised 85% of contributions. Since the underlying charity, a service organization for Vietnam Veterans, was looking to provide services directly to individuals, Madigan claims Telemarketing Associates’ actions should not be exempt simply because their efforts raised awareness or advertised the group’s mission.

Whether Madigan can prove her claims remains to be seen. But this appeal deals only with the Illinois Supreme Court’s decision to dismiss the case before trial. In this respect, the Supreme Court seems to have acted reasonably in reversing the lower court’s decision and remanding the case for trial. Writing for the Court, Justice Ruth Bader Ginsburg makes clear the Court is not trying to weaken the Constitution’s protection of telemarketers:

The Illinois Supreme Court in the instant case correctly observed that “the percentage of [fundraising] proceeds turned over to a charity is not an accurate measure of the amount of funds used ‘for’ a charitable purpose.” 198 Ill. 2d, at 360, 763 N. E. 2d, at 298 (citing Munson, 467 U.S., at 967, n. 16). But the gravamen of the fraud action in this case is not high costs or fees, it is particular representations made with intent to mislead. If, for example, a charity conducted an advertising or awareness campaign that advanced charitable purposes in conjunction with its fundraising activity, its representation that donated funds were going to “charitable purposes” would not be misleading, much less intentionally so. Similarly, charitable organizations that engage primarily in advocacy or information dissemination could get and spend money for their activities without risking a fraud charge. See Schaumburg, 444 U.S., at 636—637; Munson, 467 U.S., at 963; Riley, 487 U.S., at 798—799.

The Illinois Attorney General here has not suggested that a charity must desist from using donations for information dissemination, advocacy, the promotion of public awareness, the production of advertising material, the development or enlargement of the charity’s contributor base, and the like. Rather, she has alleged that Telemarketers attracted donations by misleading potential donors into believing that a substantial portion of their contributions would fund specific programs or services, knowing full well that was not the case. See supra, at 4—5, 15. Such representations remain false or misleading, however legitimate the other purposes for which the funds are in fact used.

We do not agree with Telemarketers that the Illinois Attorney General’s fraud action is simply an end run around Riley’s holding that fundraisers may not be required, in every telephone solicitation, to state the percentage of receipts the fundraiser would retain. See Brief for Respondents 14—19. It is one thing to compel every fundraiser to disclose its fee arrangements at the start of a telephone conversation, quite another to take fee arrangements into account in assessing whether particular affirmative representations designedly deceive the public.


My only concern is that this decision may embolden other state attorneys general (arguably the group of politicians most hostile to individual rights in America) to initiate sham fraud cases against telemarketers and other direct marketing professionals. As we’ve seen from the Federal Trade Commission’s imposition of the Do Not Call list, direct marketers have become the new cash cow for regulators eager to leach off someone. At the same time, however, the Court today did it’s job by properly ruling on the case before it. And possibly with an eye towards my concerns, Justice Antonin Scalia (joined by Justice Clarence Thomas) issued a short concurring opinion which further clarifies the Court’s narrow ruling:

The question presented by the petition for certiorari in this case read as follows: “Whether the First Amendment categorically prohibits a State from pursuing a fraud action against a professional fundraiser who represents that donations will be used for charitable purposes but in fact keeps the vast majority (in this case 85 percent) of all funds donated.” Pet. for Cert. i. I join the Court’s opinion because I think it clear from the opinion that if the only representation made by the fundraiser were the one set forth in the question presented (“that donations will be used for charitable purposes”), and if the only evidence of alleged failure to comply with that representation were the evidence set forth in the question presented (that the fundraiser “keeps the vast majority (in this case 85 percent) of all funds donated”), the answer to the question would be yes.

It is the teaching of Riley v. National Federation of Blind of N. C., Inc., 487 U.S. 781, 793 (1988), and Secretary of State of Md. v. Joseph H. Munson Co., 467 U.S. 947, 966 (1984), that since there is such wide disparity in the legitimate expenses borne by charities, it is not possible to establish a maximum percentage that is reasonable. It also follows from that premise that there can in general be no reasonable expectation on the part of donors as to what fraction of the gross proceeds goes to expenses. When that proposition is combined with the unquestionable fact that one who is promised, without further specification, that his charitable contribution will go to a particular cause must reasonably understand that it will go there after the deduction of legitimate expenses, the conclusion must be that the promise is not broken (and hence fraud is not committed) by the mere fact that expenses are very high. Today’s judgment, however, rests upon a “solid core” of misrepresentations, ante at 16, that go well beyond mere commitment of the collected funds to the charitable purpose.

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Free minds and... free operating systems? 

:: Posted by Skip at 1:20 PM

A German city government decided to abandon Microsoft and embrace Linux:

[Schwaebisch Hall] is the first city in the world to do that, say local officials, who note the switch will save money, improve security and end dependence on one supplier.

Such companies as Deutsche Telekom and 7-Eleven, as well as government agencies in Germany, France, the United States and other countries, are relying increasingly on open-source software for heavy data lifting, mostly on servers that do Internet and database work.

But Schwaebisch Hall's decision to adopt the software for everything represents a breakthrough, said SuSE, Germany's leading Linux distributor, which swung the deal to make the switch.

SuSE credits the move to its user-friendly Linux desktop products, which make it palatable to the average computer user who wants only to deal with a graphical Windows-like interface.

"This is the first customer that has said, 'This is the platform that our future is going to be taking shape with,' " said Stefan Werden, a senior SuSE sales engineer.


I take no position on the city’s decision, but there was one quote that struck me as odd. The head of Schwaebisch Hall’s local college implied there were “higher principles” at play in the Linux switch:

"As a democratic society, we should not support monopolies," he said, adding a gentle dig, "Freedom of choice — it's the American way, isn't it?"


Um, if you’re freely able to switch from Windows to Linux, then Microsoft can’t be a monopoly, since that requires, well, a monopoly. Nor does it follow that “democratic” principles require one to shun a successful company merely for being successful. And isn’t it a bedrock of “democratic” societies like Germany to have the state monopolize large sectors of the economy?

If you want to switch to Linux for cost reasons, more power to you. But don’t argue that an operating system reflects a nation’s political or moral values. If that’s the terms of the debate, I’ll side with capitalists like Microsoft 100 times out of 100.

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'The SARS will surely be conquered by our government under the leadership of the Communist Party of China' 

:: Posted by Nicholas Provenzo at 1:12 PM

I wager the communist fist of rage will be rather inneffective against viruses.

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CMS After-Action Report 

:: Posted by Nicholas Provenzo at 11:49 AM

My weekend at the Colorado Medical Society's "Physicians are Not Criminals" conference in Vail was outstanding. I finally was able to meet face to face with many of the physicians and IPA's CAC has defended in its FTC comment letters for the past year, and I think my speech motivated the doctors to finally start defending their rights with the full vigor they deserve.

It's hard to describe the feeling one gets when you meet a woman like Marcia Brauchler, an intense and uncompromising 31 year-old woman with a newborn child and who earns less than $30,000 helping doctors negotiate their fees with insurance companies, or Dr. Andy Fine, a quietly serious doctor who loves practicing medicine in Colorado, but wonderers how much longer he can afford to do so under the weight of all the regulations he faces. The government has named both a coercive threat to "consumers" in antitrust actions. These people are wholly innocent--and more that that--they are heroes. I say the government has become a coercive threat to them. The thought of it makes me sick, and that's a feeling I'm going to keep with me until these victims get the protection they deserve.

Two antitrust enforcers were also in attendance at the conference. Assistant Director Jeff Brennan from the FTC's Bureau of Competition was there, as well as Mark Toby, the Texas antitrust section chief. Brennan came right out and said it—his mandate is to protect "consumers." During the Q&A, I asked him the following question:

"You said in your speech that "competition" was the "bedrock of our economy." Why didn't you say that the principle of individual rights was the bedrock of our economy?

It seems that you hold a consumer has a right to his interest (i.e. low healthcare prices) but none of the doctors here have a right to their interest (i.e. all the remuneration the market will bear).

Why does a consumer have a right to the unearned (that which he is unwilling to pay for), but a doctor has no right to what he earns (that which others freely pay him?)"
Assistant Director Jeff Brennan was unable to answer my question. He simply re-iterated that competition was foundational, but did not articulate why. I might as well have been speaking to him in a foreign language.

This is why, despite all the advice doctors have been receiving, they can not hope to comply with antitrust, or hope to negotiate a better bargain with antitrust enforcers. Antitrust enforcers to not recognize their right to the wealth they freely earn. Antitrust enforcers label simple business practices as criminal and relegate the pursuit of one's happiness to an economic ghetto. The doctors are slowly coming to realize that this needs to be fought.

So as Skip mentioned earlier, I was pleased that the line from my speech that got the best reaction was, "Millions for defense, but not one cent in tribute." I'm not sure, but a think I even got an "amen."

I will transcribe my speech for the web later today, and I'll post the link as soon as I can.

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The Price of personal responsibility 

:: Posted by Skip at 3:35 AM

First Larry Eustachy, now Mike Price. The University of Alabama fired Price as head football coach, just five months after hiring him away from Washington State University. Price’s transgression was misbehaving while representing Alabama at a golf tournament. The married coach not only spent hundreds of dollars tipping an “exotic dancer” at a local “men’s club,” but also invited another strange woman back to his room, where she proceeded to run up $1,000 in room service while Price played golf. There’s probably more the public hasn’t been told, but Alabama officials saw enough to dismiss Price before he even coached a game. In retrospect, Price is probably berating himself for never actually signing his contract. That probably means he won’t be getting much of a severance package, even for five loyal months of service.

If you’re looking for a theme to connect the downfalls of Messrs. Eustachy and Price, the Washington Post’s Sally Jenkins seems to have found it:

A coach doesn't have to be a paragon, but what's he doing with a "Natty" Light in his hand, drinking with kids who will be "worshipping the porcelain god" or "talking to Ralph on the big white telephone" by the end of the night? The undergrad sensibility is irreverent in students, but in a head coach it's darker. Here's why. I asked a college-age acquaintance of mine, a smart-aleck Georgetown guy, who he would rather have as head coach: [Georgetown head coach] Craig Esherick or Larry Eustachy? He said, "Eustachy in a heartbeat. All Esherick does is graduate players. All Eustachy does is win games and hook up with hotties."

You see the problem. And here is a fact: One of Eustachy's players was arrested for being facedown drunk on a sidewalk and another for drunk driving.

The coaching profession should take notice: Grown-ups are running this country again. Whether you like the fact or not, people such as Donald Rumsfeld and Dick Cheney are in charge, responsibility is the new chic and there is extremely low public tolerance for overserved boyish high jinks from people who are paid to be leaders. At least some of the outrage at Eustachy is a result of the fact that he is the highest-paid state employee in Iowa, with a salary of $1.1 million, while Price was offered a seven-year, $10 million contract at Alabama. One of the expectations attached to that money is that a leader will make hard decisions and stand up to accept the credit or blame for the outcome.


One other note before closing this topic out. The debate over Price’s replacement at Alabama has taken on a racial tone, at least in the eyes of some media outlets. For instance, ESPN.com offered this profile of potential candidate Sylvester Groom, who played at Alabama for legendary coach Bear Bryant:

Croom, who has been an NFL assistant for 16 years, including the last two as the Green Bay Packers' running backs coach, was an All-American center for Bear Bryant in the mid-1970s. A Tuscaloosa native, Croom was an assistant coach at Alabama for 10 seasons (1977-86), including the Tide's 1978-79 back-to-back national-title teams. In fact, Croom won the "Commitment to Excellence" award, an honor coaches hand out every spring. A return to the Bryant roots might not be a bad thing. More important, Croom would be the first African-American head coach in the Southeastern Conference, and hiring him would prove Alabama is thinking forward, not living in the past.


Why is it “more important” that he’s black? I understand the symbolism of having a black head coach in a conference whose members once represented the most racially discriminatory schools in the country, but at the same time it’s unfair and irrational to judge Croom—or any other candidate—as possessing merit based simply on race? Nor would hiring Croom show that Alabama is “thinking forward,” not that that phrase means anything. After all, Price had no ties to Alabama’s past, yet Croom does. Shouldn’t that make Croom a less-worthy candidate than a black coach without Alabama ties? Of course not.

Just this week, Sports Illustrated published their list of the 101 “most influential minorities” in sports. Number six on the list was Notre Dame football coach Tyrone Willingham. The magazine argues: “[Willingham’s] success as Notre Dame’s first African-American coach could embolden other schools to hire a black football coach.” Huh? So the reason we don’t have more black college football coaches is because the nation’s athletic directors were waiting to see what one Catholic college in Indiana would do? Notre Dame may have a mythical past, but it’s no longer the standard-bearer in college football. That aside, it’s irrational to presume the success of Willingham will have any influence on the hiring decisions of other schools. First of all, Willingham was a successful coach at Stanford before coming to Notre Dame, yet that didn’t influence any school to hire (or not hire) a black coach. Second, the use of the word “embolden” implies college officials are actually afraid of hiring black coaches. Why would that be? Are they afraid of racist reactions on their campuses? That’s doubtful. Finally, if college administrators really are racist, as some would say, wouldn’t Willingham’s success produce a backlash that would hurt potential black coaches, rather than help them? During the segregation era, truly racist college leaders resented stories of black athletic successes, and it only emboldened these degenerates into redoubling their segregationist efforts.

But returning to Alabama: On paper, Sylvester Groom looks like a solid candidate, and I suspect Alabama will give him consideration. But Alabama must conduct a search to find the best coach for their program, and not try to pander to the (largely white) sports media and their racial fantasies. Unless of course Alabama is actually thinking: “Well if Notre Dame can hire a black coach...” If that’s the case, we’re all doomed.

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A pirate, a Frenchman, and an FTC lawyer walk into a bar... 

:: Posted by Skip at 2:50 AM

In his speech to the Colordao Medical Society yesterday, Nick Provenzo invoked the historical cry, "millons for defense, but not one cent for tribute!" This led to a disagreement between the two of us over the slogan's origin. Nick claimed it originated with the American war against the Barbary pirates under Thomas Jefferson's administration, while I claimed it was a retort to the French during the XYZ affair. Turns out we were both right, according to Dr. Rand Fishbein of Johns Hopkins University:

As America soon learned, a policy of accommodation only encouraged the brigands of the Barbary Coast to seize more ships and to take more captives. Far from providing safe passage to American and other foreign vessels, the North African rulers remained active accomplices to the crime of piracy, taking protection money while at the same time permitting the banditry to continue.

Things were to change, however, with the election of Thomas Jefferson. In addition to his reputation as an author, scholar and principal architect of the Declaration of Independence, Jefferson also was an outspoken opponent of the practice of tribute. He saw it not only as an affront to the nation’s dignity, but also as an ineffectual response to an abhorrent practice. He argued that ultimately the policy of appeasement would fail because, in conveying weakness, it also encouraged further treachery. He was right.

Jefferson’s response to renewed attacks on American shipping was swift and uncompromising. He dispatched a squadron of three frigates and one sloop to the region. They were ordered to observe the deteriorating situation and provide whatever escort was needed to ensure the safety of American merchant vessels. By the time the frigates arrived, Yusuf Karamanli, the Bey of Tripoli, had declared war on the United States.

For the next two years the U.S. Navy conducted running operations against the Barbary pirates, attacking their corsairs and bombarding the coastal forts that sheltered them. The battle cry, “millions for defense, but not one cent for tribute” (a slogan first used during the XYZ affair of 1798), resonated with a public tired of being held hostage to bandits and oriental potentates.


The XYZ affair involved French efforts to obtain bribes from American diplomats in exchange for negotiating a treaty to stop the seizure of U.S. ships by French privateers. When word got out about the French extortion, American passions were inflamed. Legend has Charles Pinckney, the U.S. minister to France, proclaiming "millions for defense, but not one cent for tribute." This is probably apocraphyl, as Pinckney's actual exclamation was “No, no, not a sixpence." Still, the "millions for defense" line became a popular one in the early 1800s, and it was quickly applied to the Barbary pirate situation. Either way, the message is still an important one: never compromise with those who threaten your rights. That applies to pirates, the French, and the Federal Trade Commission (whom Nick was speaking about when he revived the line yesterday.)

Still, this doesn't answer the question of who actually said the line first...

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:: Sunday, May 04, 2003 ::

I love (Greater) New York 

:: Posted by Skip at 11:04 PM

There's always been political tension between New York City and New York State over money. The city produces it, while the state spends it. City leaders are forced to grovel before Albany just to recover what city residents pay in state taxes for local services. It's an annoying argument that never shows signs of being resolved. But a group of New York City councilmembers think they have a solution—secession:

City Councilman Peter F. Vallone Jr. has introduced a bill to explore the city's secession from the state. He says it offers the city a way to become less dependent on a state that takes $3.5 billion more each year from taxpayers than it returns.

The quixotic notion got a hearing before a City Council committee yesterday. Several speakers addressed Mr. Vallone's bill, which would create a commission that would examine secession and decide whether to hold a referendum on the matter.

"Every day Albany gives us another reason to just go our way," Mr. Vallone said. The latest example, he said, is the budget being drafted in Albany, which he called "another sham."

"They're giving us the ability to increase taxes on New York City residents at a time when we already pay too much in taxes."


Nobody's holding their breath for this idea, yet it does have its merits. An independent New York City—dubbed "Greater New York" in Vallone's bill—would likely enjoy greater governmental efficiency. But whether this translates into lower taxes and a greater protection of individual rights (remember those?) remains to be seen. Given the New York City's government current inability to avoid micromanaging the lives of its citizens, I'm far from convinced that Greater New York would be all that greater. Paul Blair, for instance, points out that the city's complaints about being exploited by the state have a certain irony:

Here again, the left is arguing on our terms. If people keep thinking like that, sooner or later they will reach the conclusion that the government shouldn't be used to sacrifice anybody to anybody else.


Then there's the political nightmare a serious secession movement would bring. Dividing a state in two isn't as easy as it sounds. First city voters would have to pass a referendum. Then there would be a commission to study the question and hold hearings. Next the Commission would propose a state constitution and submit it to the voters. If that's approved, then the New York State legislature would have to adopt legislation permitting the city to "disengage and separate" from New York. Then Congress would have to admit the new state. Then of course there's the technical matter of actually separating the two states. Just drawing the new border with chalk could take years, especially if the job is given to union contractors!

Keep in mind, even if every New York City resident votes for secession, the rest of the state retains veto power. Article IV of the Constitution commands "no new states shall be formed or erected within the jurisdiction of any other state" without the consent of the affected state's legislature. The only exception to this rule was West Virginia, which was admitted under constitutionally dubious circumstances in 1863. West Virginia of course was originally part of Virginia. After Virginia seceded, a number of western Virginia counties opposed to that secession formed their own government, which claimed authority over all Virginia. After everyone realized the Civil War was going to take awhile, President Lincoln and the Radical Republican Congress (not to be confused with today's Extremist Republican Congress) finally decided to acknowledge political reality and admit West Virginia as a separate state.

There are two other cases of states being formed from existing states. The first was Vermont, which following its acquisition by Britain in the 1760s found itself constantly claimed in the name of New York and New Hampshire. The Revolutionary War didn't settle the problem, and Vermont actually managed to obtain its independence for awhile, functioning as an independent republic until becoming the 14th state.

The other example—and the only case of peaceful intrastate secession—was Maine. Originally part of Massachusetts, Maine residents continually longed for their own state government. After five referendums, Maine voters finally petitioned the legislature for the right to secede. Massachusetts acquiesced, and Maine was permitted to draft a constitution for Congress' consideration. As it turned out, Congress was more than happy to admit Maine as part of the 1820 Missouri Compromise, under which Missouri was admitted a slave state, while Maine was admitted as a free state, thus maintaining the fragile balance of power within the union.

Presumably, such balancing won't be a problem should Greater New York face admission. After all, the non-city part of New York is staunchly Republican, while the five boroughs are staunchly Democrat. Politically, they'd cancel each other out.

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Colorado's voucher scheme 

:: Posted by Skip at 6:43 PM

Colorado made news last month when they became the first state to adopt a school “voucher” program in the wake of the Supreme Court’s decision to uphold the general constitutionality of such programs. Upon initial examination, however, Colorado’s “Opportunity Contract Pilot Program” isn’t necessarily a great leap forward in dismantling the government-school monopoly. Indeed, several features of the bill may provide an opening for greater regulation of private schools without benefiting the majority of students.

Granted, the Colorado bill expressly establishes a “pilot” program, which implies it’s experimental in nature. But right off the bat, the bill takes a questionable action in limiting its scope to a relative handful of students. In the legislature’s statement of intent, the bill declares:

Meeting the educational needs of high-poverty, low-achieving children in our state’s highest-poverty public schools is of the greatest importance to the future welfare of Colorado.


Consequently, the only students eligible for vouchers are those poor enough to qualify for the federal school lunch program and who have failed at least one state assessment exam. In the case of K-3 students, the school itself must have received a failing or “unsatisfactory” grade from the state.

It would have been far better if the legislature expressed their concern for the individual rights of all students, rather than harping sympathy on the poor, stupid kids. After all, there are many students who are fully capable of learning, but find themselves unable to achieve in the stagnant educational setting of a government school. Still, they may be motivated enough to pass the state exams, so this bill decides they’re not worth any more effort. So long as everyone is getting at least a mediocre education, the state feels morally vindicated.

Another problem with the bill is that it works through the school districts. The districts must volunteer to join the pilot program (itself an admission the district isn’t doing its job.) Following that, the districts exercise administrative control over whether private schools are eligible to accept voucher students. Now the law does set forth criteria the district must follow in accepting a school, but even here I can see some potential problems. For example, the bill forbids any private school in the pilot program from “teaching hatred of another person or group.” Granted, we don’t want state funds supporting the Klan, but I can easily see a school board manipulating the definition of “teaching hatred” to deny certain parochial schools voucher eligibility. If a parent judges a school worthy of educating his or her child, that decision should not be subject to second-guessing by local bureaucrats.

A private school that is turned down by the school district may appeal to the state itself. This makes me wonder why the state just doesn’t assume complete responsibility for certifying schools, and cut the districts out altogether. The districts created the failed system in the first place, so it stands to reason they shouldn’t be included as part of the solution.

Even after a private school is deemed voucher-worthy, however, the state remains involved through the almighty assessment tests. Schools in the pilot program must administer state-approved tests to all voucher students, and the state has the right to decide whether those students’ achievements are adequate, once again providing an unjust government barrier between student, school, and parent.

As a final insult, voucher program participation is capped by percentage. This means that no more than 4% of a school district’s students may use vouchers at any given time. Those students who are eligible are awarded slots based essentially on a lottery system, thus leaving their educational rights to mere chance.

To recap, Colorado devised a program that (1) discriminates against students based on economic status, (2) increases regulation of private schools , and (3) imposes an artificial limit on the number of students who may attempt to escape failing schools. In the end, it would have probably been better if the Colorado legislature did nothing; at least then they couldn’t tout their fake accomplishment of implementing a voucher program.

If Colorado really wanted to try something bold (and principled), it would have dispensed with the “pilot program” nonsense, and permitted every parent in the state a full tax credit to send their child to the school of their choice. Note I’m saying a tax credit, not a tax deduction. This means the full value of a child’s tuition would be taken directly from the parents’ tax payment. Given that schools are entirely a creature of taxpayer financing, this is more than fair. In the case of poor families, the state would actually pay the tuition directly to the chosen school in lieu of the credit. This would prove to be a far less costly alternative than today’s failed system, and it would benefit far more children than Colorado’s convoluted voucher scheme.

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Once a monopolist, always a monopolist 

:: Posted by Skip at 1:15 PM

Last Sunday, 60 Minutes aired a profile of New York City Schools Chancellor Joel Klein. You may remember Klein from such antitrust cases as "Microsoft: the Silent Killer," and "Breaking the Glass Trust Monopoly." As head of the DOJ's antitrust division under Bill Clinton, Klein was a merciless anti-capitalism, always confidant in the ability of antitrust lawyers to run the economy over the objections of actual businessmen. Yet now that he's running the New York City schools—arguably the nation's largest and worst-run monopoly after the Postal Service—Klein seems to have experienced a conversion to the wonders of business thinking.
Lesley Stahl reports:

STAHL: The mayor is at heart a businessman. He's running the city, and the schools, much like his old corporation, even moving out of his private office at City Hall and into an open bullpen like the one he used at Bloomberg News. He's ordered Klein and his people to work the same way and to adopt his business battle cry: no frills; be efficient and eliminate duplication.

Mr. KLEIN: Think of these 40 districts we're talking about. They're all buying their own books. You think they're getting bulk purchasing rates on that? We can save real money here, and we need it for our kids.


Just a few years earlier, Klein considered Microsoft's efficiency to be evidence of illegal activity. Indeed, the antitrust lawyer's mantra is that competition is a primary value, and efficiency is only good when one company doesn't get too good at it. Then again, competition isn't a problem for Klein, since it's essentially impossible to compete with the New York City schools. Unlike Microsoft, Klein has the ability to force parents to enroll their children in public schools (via truancy laws.) And for all the talk of running the schools like a business, they're not. A business survives when it makes profits by persuading customers to purchase its goods. The government schools survive by simply taking what they want. Klein doesn't seem to appreciate that difference, which shows that ideologically he's the same now as he was at the Antitrust Division. In the end, Klein doesn't trust in people's ability to run their own lives (and economy) without his Divinely imparted wisdom.

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The Pledge heads back to court 

:: Posted by Skip at 1:49 AM

Earlier this week Solicitor General Ted Olson filed a petition with the U.S. Supreme Court seeking reversal of the Ninth Circuit’s now-infamous Pledge of Allegiance ruling. The appeal, captioned United States v. Newdow, asks the Court to consider whether the words “under God” in the Pledge violate the First Amendment’s Establishment Clause, and additionally whether Michael Newdow had standing to challenge the Pledge in the first place.

The standing issue is actually more fascinating than the Pledge question. Newdow sued the federal government and his daughter’s public school district, arguing that the “under God” words were facially unconstitutional, and that the school’s policy requiring the Pledge’s recital violated his daughter’s First Amendment rights. The problem, at least according to the Solicitor General, is that Newdow does not have legal custody of his daughter. Newdow never married the child’s mother, and a California custody order granted the mother “sole” custody, although Newdow retains limited parental rights, including the ability to “consult” on “substantial” decisions regarding the daughter’s education.

In the Ninth Circuit, the mother unsuccessfully sought to intervene, arguing neither she nor her daughter contest the Pledge’s constitutionality (indeed, a recent news report indicates the daughter continues to recite the Pledge at school voluntarily.) The Solicitor General considers the mother’s position dispositive towards Newdow’s standing:

Where, as here, the two parents disagree on an educational practice, the decision of the custodial parent controls and Newdow has no right to overturn it. If, as the non-custodial parent, Newdow believes the mother’s educational decisions are causing harm to the child, the proper remedy is for him to resort to family court and seek a modification of the custody agreement. He cannot use federal litigation to circumvent that state-law process or to modify state-law custody judgment.


On the other hand, Newdow is alleging an ongoing violation of his daughter’s constitutional rights. This in and of itself may constitute a substantial enough interest to justify the father’s standing. But it’s far from clear. For one thing, if a noncustodial parent can assert standing on a child’s behalf, then what’s to prevent a more distant relative from doing so in future cases. Standing cannot be diluted to the point where individuals are permitted to use children as plaintiffs of convenience. The Court needs to carefully consider Newdow’s standing here, although the disposition of this question need not prevent adjudication of the underlying Pledge claim. If nothing else, Newdow should possess standing to challenge the constitutionality of the wording of the Pledge itself, if not its recitation in the public schools. At the same time, Newdow’s claim to sue on his daughter’s behalf should probably be overruled.

On the Pledge issue, the Ninth Circuit was basically correct, although the reasoning is incomplete. The addition of “under God” does violate the Establishment Clause. The Solicitor General’s protests to the contrary are wholly unconvincing. The government’s central argument is that the acknowledgment of God is historical, rather than religious:

[I]n concluding that the Pledge results in unconstitutional coercion, the court of appeals failed to come to grips with this Court’s repeated recognition that the Establishment Clause permits such historic, ubiquitous, and ceremonial acknowledgments of our Nation’s religious character and heritage. Such references are not reasonably and objectively understood as coercing individuals into silent assent to any particular religious doctrine. Rather, the Pledge is“ consistent with the proposition that government may not communicate an endorsement of religious belief,” County of Allegheny, 492U. S. at 602- 603, because the ceremonial reference to God acknowledges the undeniable historical facts that the Nation was founded by individuals who believed in God, that the Constitution’s protection of individual rights and autonomy reflects those religious convictions, and that the Nation continues as a matter of demographic and cultural fact to be a predominantly“ religious people whose institutions presuppose a Supreme Being.”


This is, at best, distortion. Whether the nation’s Founders were religious—and that’s a debatable premise with regard to many of them—has no bearing on the constitutionality of placing the words “under God” in a Pledge adopted in 1942. The Solicitor General compounds his error by making hyperbolic claims such as: “Unless the Establishment Clause compels courts to root out every reference to religion in public life...” This is not the point. There are numerous contexts where religion may be referred to in governmental contexts. The Establishment Clause speaks only to actions which advance religion to the exclusion of other beliefs. If the government seeks to acknowledge the role of religion in American history, it may do so through simply teaching religious history. Putting “under God” in the Pledge, however, does nothing more than endorse religious belief in a contemporary setting without providing genuine historical context or understanding.

And this leads to the incomplete nature of the Ninth Circuit’s ruling. While that court limited its review to the “under God” terms—and indeed, that’s all Newdow challenged—requiring school children to recite the Pledge itself violates the First Amendment. This is because the Pledge amounts to compelled speech, not necessarily because it advances religion. The Pledge is a “loyalty oath,” and the government cannot require such oaths of any citizen, including children. The state’s goal in requiring the Pledge as a “daily patriotic exercise” is insufficient. There is no state interest in instilling “patriotism” in students. Patriotism is a reflection of one’s pride in country, and that is a fundamentally individual decision that cannot be produced on command by state officials.

Since the Solicitor General’s challenge is limited to the “under God” question, however, it would be improper for the Supreme Court to consider the Pledge’s constitutionality at this time. It would be sufficient for the Court to affirm the Ninth Circuit on “under God,” while also untangling the complications arising from the standing problem.

Finally, the Solicitor General’s petition makes an unusual request for the Court to “consider summary reversal” of the Ninth Circuit. This means the Court would reverse the lower court’s decision without oral argument or normal briefing procedures. Given the Court’s previous rulings upholding the Pledge, I can understand why the Solicitor General feels summary reversal may be justified here. But I would actually suggest the Court take an even more unconventional approach, and grant the petition, summarily reverse on the standing issue only, and remand to the Ninth Circuit for further proceedings. This would likely result in Newdow’s suit being dismissed, while leaving the Ninth Circuit’s core ruling on the Pledge intact.

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:: Saturday, May 03, 2003 ::

Liberating physicians from antitrust 

:: Posted by Skip at 4:26 PM

Texas Congressman Ron Paul has introduced legislation to exempt physicians from the antitrust laws, thus freeing them to form associations to voluntarily negotiate with health plans. You can get complete information about the Paul bill at CAC’s H.R. 1247 Legislative Action Center.

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UMiami update 

:: Posted by Skip at 4:21 PM

Donna Shalala backed down under pressure over the Advocates for Conservative Thought debacle:

Several articles have appeared in the media today regarding the University of Miami's Committee on Student Organizations (COSO) and its decision to deny a student group recognition as an official student club. Such recognition is important because it allows student organizations access to funding, space, and other benefits through student activity fees.

The Committee on Student Organizations is enforcing a rule that was developed years ago by others. I think it is perfectly acceptable for Committee on Student Organizations to develop recommendations or standards for the formation of student organizations on campus. But the purpose and content of those organizations absolutely should not be subject to review.

On the surface, Committee on Student Organizations' policy may sound logical and defensible, given limited resources and space, but the end result is that the policy protects existing organizations and makes it challenging for new organizations to be formed.

I have asked Committee on Student Organizations to implement a new policy that is consistent with the principles of free speech, academic freedom, and competition.

In addition, I have asked them to convene a meeting immediately to review the application for the Advocates for Conservative Thought.

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And another thing... 

:: Posted by Skip at 4:12 PM

In almost every court, there are prescribed page (or word) limits on the length of briefs and other filings made by litigants. In light of the 1,625 ruling in the campaign finance case, perhaps the judiciary should consider limits on their own opinions. At least something reasonable, like no more than 1,000 pages per case.

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Judicial train wreck 

:: Posted by Skip at 4:09 PM

Yesterday a three-judge federal court issued a ruling in the numerous challenges to the Bipartisan Campaign Reform Act (BCRA), popularly known as McCain-Feingold. I’d discuss the decision, except that I’m still not sure what was actually decided. The court’s “opinion” is a mess, stemming a combined 1,625 pages and featuring separate writings from each of the three judges. Judging by the size alone, and without having read a single page, I can safely label this case a travesty. In a nation that requires juries to render unanimous verdicts in even the most routine of criminal cases, we are somehow unable to find three life-tenured federal judges who can agree on a single opinion in a major constitutional case? While I understand the complexity of the law at issue, the court’s voluminous production here is a mockery of common law and judicial review.

As to the merits of the case, I express no great interest. Both sides of the political argument hold reasonable views. BCRA supporters argue politics is corrupted by money, while opponents emphasize free speech triumphs over any such concern. These views are justifiable, but ultimately both miss the mark. The campaign finance system is a problem, but not because the system is causing corruption. The corruption of American government stems from a breakdown in ideological principles, not the fact that interest groups are raising soft money for political parties. John McCain, BCRA’s chief architect, is himself one of the most corrupt members of the United States Senate. In recent years, he’s championed numerous causes promoting the government’s violation of individual rights. Indeed, “campaign finance reform” is merely the latest assault on the Constitution perpetuated by Senator McCain. His corruption has nothing to do with the campaign finance laws, and everything to do with lusting after power.

On the other hand, I simply can’t get that upset over the campaign finance issue. Ultimately, the Supreme Court will strike down the blatantly unconstitutional parts of BCRA, and whatever remains will be ineffective. If there’s one constant in American politics, it’s that smart operatives can get around any dumb, ill-conceived restriction. The BCRA is nothing more than a case of politicians regulating other politicians. At best, it’s a fools’ errand. And, frankly, this whole fiasco may yield a positive benefit: Once people realize that campaign finance laws won’t “improve” the government, people may just stop looking for scapegoats, and start addressing the underlying ideological problems with the modern welfare state.

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Expanding the war on physicians 

:: Posted by Skip at 1:00 AM

Nick Provenzo arrived in Vail, Colorado earlier this evening (after an arduous journey) and is ready to wow the folks at the Colorado Medical Society this weekend. Tomorrow the CMS conference will feature Jeffrey Brennan, the Federal Trade Commission’s chief health care prosecutor, who will present a talk called “We’re the FTC and we’re here to help.” No, seriously, he is.

Actually, it seems Brennan took care of some business before heading off to Vail himself. This morning the FTC announced that they decided to “help” a New Mexico physician group by putting a (proverbial) gun to their head and forcing them to sign a consent order. Carlsbad Physician Association, Inc., and seven individuals named separately agreed to never, never again try and assert themselves in the marketplace. Brennan and his thugs accused CPA of collectively bargaining with insurance companies. Or, as the FTC complaint describes the situation:

Since its inception, CPA has operated solely to exert the collective bargaining power of its members. It engages in no activities or functions other than health plan contracting. Further, in connection with health plan contracting, its members do not engage in any cooperative activities to benefit consumers.

Respondents have succeeded in forcing numerous health plans to raise fees paid to CPA members, and thereby raised the cost of medical care in the Carlsbad area. As a result of the challenged actions of respondents, CPA members receive the highest fees for physician services in New Mexico. By orchestrating agreements among CPA members to deal only on collectively determined terms, together with actual or threatened refusals to deal with health plans that would not meet those terms, respondents have violated Section 5 of the FTC Act.


It’s hard to overemphasize the problem here: The FTC wants us to believe that every other professional in this country is entitled to collectively bargain, yet somehow doctors may only exist as serfs beholden to their HMO masters. Not only that, the FTC also wants you to believe that it’s illegal for doctors to want to earn more money for their services! There’s no law which actually says this, but the FTC has taken it upon themselves to deal with the nation’s rising health care costs. Of course, the FTC is supposed to be in the business of law enforcement, not policy making, but such distinctions are irrelevant when you have unrestricted power and a taxpayer-funded budget.

The most noxious argument in the FTC’s complaint is their charge that physicians broke the law by refusing to deal with health plans individually. In other words, a physician who voluntarily decides to negotiate through a physician group is a criminal simply for exercising his right of free association, a right specifically enumerated in the First Amendment. Indeed, the FTC seems to implicitly understand the importance of the First Amendment. That’s why one of the consent order’s terms prevent the CPA physicians from even exchanging contract information among themselves. That’s right: the basic act of speech is unprotected against antitrust enforcement. And if speech isn’t protected, free association sure is hell isn’t.

In a odd way, however, today’s FTC decision may be useful. No doubt Nick will use this travesty of justice in New Mexico to impress upon the Colorado physicians the importance of waging a vigorous counter-attack against the FTC and all those who seek to destroy the medical profession via antitrust.

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:: Friday, May 02, 2003 ::

The "voucher wars" come to Washington 

:: Posted by Skip at 12:46 PM

D.C. Mayor Anthony Williams now backs the Bush administration's plan to introduce limited "vouchers" into the District's government school system. The proposal would establish a pilot program in D.C. permitting parents to obtain vouchers for their choice of public or private school. The mayor's endorsement, however, does not represent a united view. Many D.C. officials prefer to keep the city's children as hostages of the teacher cartel:

"Public tax dollars should not go to sending children to private institutions that do not endure the same amount of scrutiny regarding their education measures as the [public] school system," D.C. Council member Adrian Fenty, Ward 4 Democrat, said in a written statement.


Fenty's statement ignores reality. D.C. schools have the highest per-pupil spending rate in the nation, yet performance is among the worst. Furthermore, the amount of "scrutiny" given the government schools is suspect. Accountability has never been a first principle of D.C. govermnent officials, who spend more time whining about their lack of tax revenue than they do lowering the burdens on businesses and economic development.

Not surprisingly, the teacher cartel (i.e. unions) are livid about even the thought of vouchers:

"It is disingenuous at best and duplicitous at worst to siphon money from the District's public schools to finance vouchers for private school education when there is already a proposal to cut $100 million from the city's school budget," said Sandra Feldman, president of the American Federation of Teachers, the parent organization of the Washington Teachers Union.

"If voucher advocates really want to help students and strengthen D.C. schools, they should stand with the citizens and teachers of Washington, D.C., who oppose private school vouchers and support the use of effective educational programs and strategies," Miss Feldman said in a statement.


Feldman has no credibility to make her arguments. For one thing, the AFT has actively opposed numerous measures that would put the interests of students ahead of the union. Consider merit pay. It's a simple proposition—pay the better teachers more money without regard to seniority. This principle is applied in almost every business in America, yet its antithetical to government school administration, because the AFT will only support seniority-based pay systems. But if we're supposed to put the students first, shouldn't we ensure that only the best teachers are out there?

And who exactly opposes vouchers outside the union? Are we really supposed to believe that any parent—at least any rational parent—would intentionally deny themselves greater choice and control over the child's education?

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Civil vs. common law 

:: Posted by Skip at 12:31 PM

Cato's Richard Rahn has a superb column in today's Washington Times on the conflict between common law and civil law in the United States. Rahn provides the type of intellectual depth and context that's missing from much of the current political debate over "judicial activism" and legal reform:

America has been blessed with the English common law system, or customary law based largely on precedent and statutes in effect in England under James I in 1603. Many of the former English Colonies adopted the common law system. Continental Europe, on the other-hand, and many other countries adopted a civil law system based on detailed written codes.

The civil law system traces its origins to the ancient Roman law system. The most famous of these civil law systems is the "Code Napoleon" of 1804, which serves as the basis for modern French law.

It is widely recognized that the "rule of law" is necessary for a civil and prosperous society. But in order to have a "rule of law," people need to know what the law is and for the laws to be considered reasonable. The Ten Commandments are an example of this principle. Most everyone could memorize 10 rules, but no person can know 10,000 or 100,000 rules. The beauty of the traditional common law system was there were relatively few rules, and the subsequent development of the law was based on the commonly understood first principles. Thou shall not murder, steal, etc.

Unfortunately, in recent decades we have had an explosion in detailed rulemaking that has drifted far from the common law. For instance, 30 percent of all federal criminal laws have been passed since 1970. Before 1950, most Americans could pretty well know whether an action they might undertake would violate the law. That has now changed.


In my specialty, antitrust, the problem of civil law is on full display. I'm always amazed that there are literally hundreds of otherwise law-abiding businesses that somehow manage to violate the antitrust "laws" despite retaining highly competent (and highly paid) legal counsel to advise them on antitrust matters. If antitrust law was objective and concise—that is to say, if it was understandable by the commoner—you wouldn't see the plethora of merger reveiews and FTC consent orders you see today. Indeed, the FTC would probably be out of the antitrust business altogether, since no rational business would deliberately incur the agency's wrath.

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Talkin' baseball... 

:: Posted by Skip at 12:24 PM

Sen. Chuck Schumer, New York Democrat, took some time from his busy schedule (i.e., obstructing judicial nominees and regulating spam) to lobby Major League Baseball Commissioner Bud Selig to give Puerto Rico the Montreal Expos:

Dear Mr. Selig.

I am writing today in support of Puerto Rico getting its own permanent Major League Baseball team.

The strong ticket sales and exuberant crowd reaction to the four-game Mets-Expos series that ended Monday shows that Puerto Rico could support its own Major League Baseball team. Even for those of us who could only watch the games on television, the intensity of the fans at Hiram Bithorn Stadium came through loud and clear.

Over 65,000 tickets we sold to people who were eager to see a Canadian team play a team from New York. The crowd went wild for players from both sides, which bodes very well for the future of a team in Puerto Rico. As you know, baseball teams typically take years to build fan loyalty and ticket sales. Crowds coming out to see their favorite players on visiting teams will boost ticket sales in the crucial first years in the Puerto Rican market.

The experiment of playing big league games in Puerto Rico succeeded beyond anyone's expectations, and Major League Baseball now should give very serious consideration to giving Puerto Rico a team of its own.

Sincerely,
Charles E. Schumer
United States Senator


If you're wondering why Chuck cares about this, keep in mind Election Day 2004 is fast approaching, and Schumer is looking to cover his re-election bases. New York has a large Puerto Rican community, and Schumer seems to think putting the Expos in San Juan will make his constituents happy. Not that this makes much sense. After all, Puerto Ricans living in New York who follow baseball are likely Mets or Yankees fans. More importantly, Schumer's economic analysis is wanting. The recently played Expos games in San Juan took place in an 18,000 seat minor league stadium. That's hardly a fair test of Major League potential. Plus you have the fact that there are two U.S. cities—Washington and Portland—which are much further along in the bidding process for the Expos than San Juan.

Schumer's San Juan-lobbying is particularly problematic for Major League Baseball given that other members of Congress have for years threatened to retaliate against baseball if they didn't put a team in Washington. Commissioner Selig must now decide which group of politicians to alienate in the process of making what is, and should be, purely a business decision. Granted, Schumer was simply currying political favor and is unlikely to act should baseball not relocate the Expos to San Juan, but that's not the point. Schumer had no business opening his mouth (in an official capacity anyway) on a private business decision of no relevance to his state.

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Off to Vail! 

:: Posted by Nicholas Provenzo at 8:50 AM

I'm off to the Colorado Medical Society's "Physicians are Not Criminals" weekend seminar at Vail, Colorado, where I will address the physicians on Sunday about how CAC can help them defend their rights against antitrust attack. Jeff Brennan from the Federal Trade Commission will also be there to give an address titled "We are Borg, Resistance is Futile." Oops, No, that's not it. It's "We're the FTC and We're Here to Help You."

Needless to say, I expect an interesting weekend. I'll blog about how it went when I get back.

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:: Thursday, May 01, 2003 ::

The Stamp Act Crisis: The First Defense of Freedom in America 

:: Posted by Nicholas Provenzo at 10:57 PM

In a speech given before the Ashland Colloquium, University of Kentucky Ph.D student J. Patrick Mullins says the American Revolution was, in essence, the American people’s defense of their right not to be deprived of their property without their consent. The Stamp Act Crisis was the first battle in that defense.

Mullins' speech examining the causes of the Stamp Act Crisis is now available at the Center for the Advancement of Capitalism's website at: www.capitalimcenter.org.

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Any why do they even care? 

:: Posted by Nicholas Provenzo at 6:26 PM

When does a University president refuse to stand up for intellectual freedom on campus? When that president is non other than Donna Shalala, former Clinton Cabinet member. According to the Sarasota Herald-Tribune, four University of Miami conservatives claim the student government is blocking them from starting a club and say the college's president, Donna Shalala, has refused to intervene.

The students say they were told by student leaders that since the university already has a College Republicans chapter, there was no need for another conservative group. Shalala, who was Clinton's Health and Human Services secretary, has ignored a letter asking for help, the four women and their supporters say.

They call the decision discriminatory, because along with a Democratic club, the school has several groups that they say represent liberal beliefs and causes, such as Amnesty International and Students for a Free Tibet.
It seems to me that the University thinks that left of center students have many different nuances to their ideas, while right of center students are but one homogeneous blob (and I’d wager $5 they call that blob “ultra-right wing.”)

How typical. I think that the largest, most comprehensive private research university in the southeastern United States with a reputation for academic excellence should have room for more than just one right of center student group, if that's what students want.

Google Search Disclosure: My uncle is a professor at the School of Education at the University of Miami. I have not spoken with him about this or any other university policy.

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When is Don Luskin going to replace Paul Krugman at the New York Times? 

:: Posted by Nicholas Provenzo at 3:44 PM

Don sure has my vote. He's been totally demolishing Krugman's case against the Bush tax cuts.

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Who keeps Latino culture down? We do, we do. 

:: Posted by Nicholas Provenzo at 12:24 PM

In a full page open letter to Karl Rove published in yesterday's Washington Times, New York State Senator Efrain Gonzalez, Jr., chairman of the National Hispanic Policy Institute claims that if the Federal Communications Commission approves Clear Channel's acquisition of Univision, non-Latinos will come to control Latino culture. The letter reads in part:
Dear Karl:

As staunch supporters of President Bush, we have been heartened by your public statements about reaching out to the Hispanic-American community. Coming from the chief White House Advisor on political affairs, your words raise the hopes of every American of Hispanic heritage.

The question is, do your statements reflect a true concern by the Bush Administration for the interests of our community or are they only political rhetoric?

. . .The issue before the FCC is whether to NON-Hispanic media giants - Clear Channel and Univision - will be allowed to dominate and control the nation's Spanish language radio market, and, in turn, Latino culture.

Clear Channel, as you know, is owned by Lowry Mays, the Texas-based media tycoon who boasts openly of his influence in the Bush White House. Univision is owned by Jerry Perenchio, the California media czar, who like Mays, is a heavy contributor to Republican campaigns.

Fact: Neither Clear Channel nor Univision lists a single Hispanic among its top corporate executives or board members. What is even more disturbing to the Hispanic-American community is that the owner of Univision is the same Jerry Perenchio who openly campaigned on behalf of California's anti-Hispanic Proposition 187 during the Pete Wilson years.

Fact: A poll taken by Opiniones Latinas shows that an overwhelming majority (87%) of Hispanic-Americans belive that Spanish-speaking radio stations owned by Latinos are better able to understand and respond to the needs of Hispanic listeners.

Yet if the Clear Channel-Univision alliance is approved, independent Hispanic station owners across the country will face a future of being either devoured or crushed by a NON-Hispanic media monopoly[. . .]
This letter has to be a new low. Gonzalez is demanding that the government deny a legitimate business merger on strictly racial grounds. He calls Jerry Perenchio, a businessman who earned his position by hard work and intelligence a "czar." He claims that it is impossible for non-Latinos to grasp the interests and culture of those they would seek to have as radio listeners. If that were true, wouldn't it spell the end to the Clear Channel-Univision alliance, as radio listeners flocked to media that better represented their tastes?

That Gonzalez does this all so openly and defiantly makes his demand all the more obnoxious. The White House ought to answer this letter with a resounding "no." It is one thing to seek new members for the Republican Party among neglected groups. It is another thing altogether to accommodate extortion demands such as this.

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Recording Industry Targets Kazaa Users  

:: Posted by Nicholas Provenzo at 9:57 AM

File sharing technology has made the theft of intellectual property all but routine, especially on America's college campuses. Now, the recording industry is using that same technology to send a warning to those who steal music online. According to the AP:
The recording industry has tapped into two Internet file-swapping services and is flashing messages to music traders warning them they're breaking the law.

"COPYRIGHT INFRINGEMENT WARNING," the message reads. "When you break the law, you risk legal penalties. There is a simple way to avoid that risk: DON'T STEAL MUSIC."

At the same time, the industry is collecting the user names of people suspected of illegally offering copyright material with the file-sharing services Kazaa and Grokster, but it doesn't intend to pursue legal action, said Recording Industry Association of America (news - web sites) President Cary Sherman.

Sherman, who announced the effort Tuesday, called it "educational" and said "there's no enforcement connected to this."

Kazaa owner Sharman Networks likened the RIAA campaign to spam meant to confuse users. Grokster Ltd. President Wayne Rosso called it "a death rattle."

"It doesn't bother us, because we are very anti-copyright infringement anyway," Rosso said. "They think they're harassing us. No. What they're doing is declaring war on our users."
Hey Mr. Roscoe, that's users who wantonly steal as if it was a matter of right. And isn't it a little bit ironic that you would condemn as spam a message sent in response to outright theft? If this is a war, who fired the first shot?

I think that the case for intellectual property has to be brought to our college campuses. Basically, a whole generation of Americans is acting as if it had the right to anything and everything as long as it exists in binary code. The information age is their age--if they choose to pirate it away, they will only stand to lose long term.

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