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Saturday, September 27, 2003 ::: Perhaps I've been unfair in treating the sports media's position on Maurice Clarett as monolithic. The Washington Post's Michael Wilbon thinks Clarett's case is full of holes. Wilbon even provides an answer to the charge that the NFL's three-year rule is not explicitly incorporated into the Collective Bargaining Agreement: As far as this nonsense that the draft eligibility rule isn't really part of the current agreement as has been reported in some places, [former NFL assistant general counsel David] Cornwell points out that the NFL and NFL Players Association wrote the rule into the constitution and by-laws in 1988 (allowing Barry Sanders to enter after his third year instead of four full years). Why wasn't it in the CBA originally? Because there was no CBA at the time. The league was coming off its 1987 work stoppage. But Paragraph 1 of the CBA adopts the constitution and by-laws, including the draft eligibility rule.I'm not sure what Wilbon means by "Paragraph 1", but Article III, Section 1 of the CBA says the following: This Agreement represents the complete understanding of the parties on all subjects covered herein, and there will be no change in the terms and conditions of this Agreement without mutual consent. Except as otherwise provided * * * the NFLPA and the Management Council waive all rights to bargain with one another concerning any subject covered or not covered in this Agreement for the duration of this Agreement, including the provisions of the NFL Constitution and Bylaws; provided, however, that if any proposed change in the NFL Constitution and Bylaws during the term of this Agreement could significantly affect the terms and conditions of employment of NFL players, then the Management Council will give the NFLPA notice of and negotiate the proposed change in good faith.The three-year rule was written into the NFL constitution and bylaws in 1988; the CBA was adopted in 1993, amended in 1996, and reaffirmed in 1998. The union explicitly waived their right to negotiate the three-year rule, which by extension means the rule is the proper subject of labor negotiations, and thus immune from antitrust scrutiny as a matter of federal law. If the NFL wanted to amend or abolish the rule, for instance, the union would then have the right under Article III to negotiate said changes with the league. But what about Clarett, who is not currently a member of the NFL Players Association? Why should he be bound by a CBA he never agreed to. That's been a common argument of Clarett supporters, but it fails as a matter of labor policy. The CBA's preamble clearly applies the contract to all current and future NFL players. Clarett has no right under law to negotiate his own labor agreement. That is, after all, the entire point of collective bargaining. Technical questions of law aside, Wilbon also defends the validity of the three-year rule on policy grounds, and questions why the NFL should bend over backwards to accomodate Clarett's impatience: The NFL and NFLPA also found through a ton of research that players who earn their college degrees fare much better and have much longer careers than players who don't. In other words, the NFL is like most industries. An apprenticeship helps. "It's a way more mental game than people think," [Washington Redskins linebacker LaVar] Arrington said. "I wouldn't have come out [of Penn State] as a sophomore because there's still too much education involved in the game, to become a better player. I mean, Ohio State is a great program. . . .It should tell you something when a linebacker makes more sense than most antitrust lawyers and media pundits. ::: posted by Skip Oliva
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Rights and Reason: Prioritizing Rights This will be my last post on Do Not Call for awhile, at least until the Tenth Circuit decides what to do. The FTC has appealed and asked the district court in Denver to stay its decision and allow the registry to take effect while the appeals are pending. I found this paragraph from the FTC's brief in support of the stay motion quite fascinating: There will be irreparable harm if a stay is not granted. Already, consumers have registered more than 50 million telephone numbers onto the registry. By doing this, millions of consumers have indicated that they find unwanted telemarketing calls to be abusive and they want them stopped. Again, as this Court noted, �protecting the well-being, tranquility, and privacy of the home is of the highest order in a free and civilized society.� Order at 20. The Rule�s registry provisions that protect consumers were scheduled to take effect on October 1,The FTC's argument would have more credibility with me if the agency didn't spent the majority of its resources violating the fundamental rights of Americans. While the FTC considers "privacy of the home" sacrosanct in this context, the Commission thinks nothing of stripping the nation's physicians of their right to contract, forbidding private associations from expressing ethical opinions, or taking the property of private companies to serve an undefined "public interest". Yet when it comes to thwarting telemarketers, the agency will spare no expense (or rhetoric) in defense of individual liberties. ::: posted by Skip Oliva
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Friday, September 26, 2003 ::: The Culture: Defining Divinity Ann Coulter offer this insight on religion: "There is no surer proof of Christ's divinity than that he is still so hated some 2,000 years after his death." By that standard, Hitler will become a mainstream deity in about 1,942 years. Except among the French. ::: posted by Skip Oliva
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Sports: Every Rule Has an Exception Eric McErlain, who runs the Unofficial Official Blog of the Maurice Clarett case (with this site running a close second), points to Dave Anderson's New York Times story on one player that got around the NFL's three-year rule in 1991. Well, sort of: But two years before that 1993 agreement was signed, Eric Swann, a 300-pound defensive lineman who had been out of high school in Lillington, N.C., for only two years, was drafted by the Arizona Cardinals with the sixth pick in the first round of the 1991 draft.McErlain argues that Swann's case demonstrates why the three-year rule is inherently arbitrary, and that a "player's right to try" and make it in the NFL, regardless of age, should be protected. The issue, though, is whether the government should force the NFL to afford Maurice Clarett that "right". As I've said all along, everyone seems concerned about Clarett's rights, yet the NFL's rights as a business owner are simply disregarded. Another thing to consider: Much of the anti-NFL position in the press stems from the view that college football provides a free minor league to the NFL, and that this is inherently unfair. You won't get any disagreement from me there. But one reason--a big reason, if you ask me--that the NFL doesn't develop its own minor league is the same antitrust laws folks consider Maurice Clarett's liberator. The reason baseball has such a successful minor league system is because that system is expressly exempt from the antitrust laws. Without that exemption, Major League Baseball would have little incentive to maintain a proprietary minor league. The minor leagues are the last vestige of the old "reserve clause". The original reserve clause basically assigned a player's rights in perpetuity to the first Major League team that acquired them. There was no free agency under this system. The rise of the player's union put an end to that nonsense. But what remains is the ability of clubs to sign players--many just out of high school--and assign them to affiliated minor league clubs. This creates value that justifies the Major League teams substantial investment in supporting their lower affiliates. This, in turn, allows the minor leagues to survive, and in many markets thrive. Hockey has a similar system. Why it's never been challenged under U.S. antitrust laws I couldn't say; most likely the cross-border nature of hockey's minor leagues--Canada's unlikely to challenge the system under its antitrust laws for cultural reasons--makes it a non-issue. Football and basketball, however, are U.S.-based sports with no antitrust exemption. Thus, they are legally restrained from emulating baseball's successful model. If the antitrust laws were repealed, and the NBA and NFL were free to operate their own minor leagues, situations like Clarett's would quickly become a thing of the past. Players in those sports could bypass the corrupt amateurism of the NCAA and try their hand in truly developmental professional leagues. Yet you're unlikely to hear much call for antitrust repeal among the sports media elite. ::: posted by Skip Oliva
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Rights and Reason: Do Not Call Battle Rages On Only eight House members voted against yesterday's congressional decision to grant the FTC explicit authority to implement the national Do Not Call registry. A number of reactionary bloggers posted the phone numbers of the eight members�along with the Oklahoma judge that issued the ruling prompting the congressional action�demanding the people harass said members for failing to adhere to mob rule. National Review Online's Jonathan Adler was a rare voice of reason in the rush to demonize the dissenters: Rather than harass those who voted against creating a federal "do not call" list, I'm inclined to recognize these members of Congress as profiles in courage for recognizing that this sort of thing is simply not a proper responsibility of the federal government. There are voluntary, albeit imperfect, private do not call list, as well as numerous services and technologies that can block unsolicited calls. It is rare for a member of Congress to stand up and say a popular initiative is beyond the scope of federal power. On such rare occasions, we should applaud those who stand on such principle.Shortly after Congress essentially mooted the Oklahoma judge's ruling, another U.S. district judge sitting in Denver ruled the Do Not Call registry unconstitutional under the First Amendment. I have not yet reviewed the full text of the judge's opinion, but the gist of it as I understand it is that becaue the FTC requires commercial telemarketers, but not charitable or political telemarketers, to adhere to the registry, the FTC is unconstitutionally favoring one category of speech over another. Because the "governmental interest" here is supposed to be protecting privacy, there is no basis for distinguishing commercial and noncommercial speech. An unsolicited caller taking a poll violates the listener's privacy just as much as a caller selling consumer products. This point appears lost on Congress and the FTC's somewhat hysterical backers. Equally lost is the fact that Congress previously gave the FCC explicit authority to create the Do Not Call registry, and that when they properly decided not to exercise that authority, the FTC simply did it on its own without authorization. I guess this is what you'd call "competing governments" theory in practice. ::: posted by Skip Oliva
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Antitrust News: Reliance on Microsoft Called 'Risk' to U.S. Security The Computer & Communications Industry Association, the same people who have built careers out of hating Microsoft, now claim that Microsoft software is a national security risk �As fast as the world's computing infrastructure is growing, vulnerability to attack is growing faster still,� said Dan Geer [the principal author of CCIA�s paper]. �Microsoft�s attempts to tightly integrate myriad applications with its operating system have significantly contributed to excessive complexity and vulnerability. This deterioration of security compounds when nearly all computers rely on a single operating system subject to the same vulnerabilities the world over.�Black forgot to add that his members will be happy to sell you an alternative product. And in case you thought that this was useful information presented by people who wanted you to think it over and act on your own good judgment, note Black�s use of the words �threaten� and �monopoly.� Fee, fi, fo, fum, do I smell a legal remedy? Of course, none of this is a problem, since Microsoft has put antitrust behind them�the same way a thief in the night is behind you when you turn your back to him. UPDATE: Jonathan Krim of the Washington Post reports that Dan Geer was fired by his employer AtStakeInc., a computer security firm that does business with Microsoft, for his contribution to the CCCCIA report. It seems Microsoft is not completely asleep to the implications of CCIA's paper. ::: posted by Nicholas Provenzo
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Politics: The GOP's Mexican Standoff But then again, there is some substance to Schwarzenegger after all. The actor-turned candidate had this to say in a Wall Street Journal op-ed on Wednesday: I have often said that the two people who have most profoundly impacted my thinking on economics are Milton Friedman and Adam Smith. At Christmas I sometimes annoy some of my more liberal Hollywood friends by sending them a gift of Mr. Friedman's classic economic primer, "Free to Choose." What I learned from Messrs. Friedman and Smith is a lesson that every political leader should never forget: that when the heavy fist of government becomes too overbearing and intrusive, it stifles the unlimited wealth creation process of a free people operating under a free enterprise system.That�s pretty good stuff. The money line is this one though: California does not have a taxing problem, it has a spending problem.A spending problem indeed. This is a Mexican standoff, par excellence. ::: posted by Nicholas Provenzo
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Politics: The GOP's Mexican Standoff Arthur Silber lays out a persuasive case for Tom McClintock over that other GOP candidate for governor. ::: posted by Skip Oliva
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Thursday, September 25, 2003 ::: Rights and Reason: Texas University Shuts Down Bake Sale You would think that a college as large as Southern Methodist University would protect its student's right to make a point. The AP reports no: Southern Methodist University shut down a bake sale Wednesday in which cookies were offered for sale at different prices, depending on the buyer's race or gender.By using race as a proxy. Nice try. If the students were black and sold blacks cookies at 3/5th the price they charged whites, so as to remind students of the three-fifths compromise, I wonder if Southern Methodist would have shut them down. ::: posted by Nicholas Provenzo
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The Courts: Flamingo Arguments Scheduled Oral arguments in United States Postal Service v. Flamingo Industries Ltd. will be held at the Supreme Court on Monday, December 1, at 10 a.m. CAC filed a brief in support of neither party but supporting the Ninth Circuit's decision to hold USPS amenable to suit under the antitrust laws. ::: posted by Skip Oliva
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Rights and Reason: Recall vs. Republicanism Ashland University professor John Lewis offers a valid critique of California's recall mechanism: Under republican government, the citizens select official representatives, for defined terms, with specific powers. The officials then administer the government. The people may not demand the removal of an elected official unless his actions are manifestly illegal. This is so even if the majority favors the recall. The requirements of the constitution elevate the rule of law over the short-term desires of the people.In Nike v. Kasky, CAC argued that California's "private attorney general" law, which gives every citizen in the state standing to sue any business for unfair competition without having to allege personal injury, violated the federal Constitution's requirement that every state maintain a "republican form of government". Dr. Lewis' criticism falls within that same argument. If the government is to serve as a monopoly on the use of force, the power to use that monopoly must be constrained under clearly stated procedures. Direct democracy, however, operates without effective constraints, and encourages mob rule over the rule of law. Some have compared the California recall experiment to parliamentary democracy, such as that of Canada or Britain. But that's not a valid comparison. In a parliamentary republic, power is vested in a parliament, which in turn appoints senior government officials from its own ranks. While there is a maximum term a parliament can remain in office without an election, five years, early elections can be called. But such early elections are either called by the government itself, or following a vote of no-confidence by parliament--in essence, a self-imposed recall. It's not a perfect system by any means. I've never cared for the idea of governments calling "snap elections" to take advantage of current political advantages. Yet this is still not the same thing as what's transpiring in California. For one thing, even a sudden parliamentary election takes place according to the same rules as any regular general election. Each party nominates candidates, the leaders hold debates, and elections are held within a fixed period. The California law completely obliterates the regular election order, instead permitting just about anyone to run without regard to traditional party organizations. I've never heard of a parliamentary contest with 135 candidates. Electing a unitary executive outside regular election cycles is also far different than electing a new parliament on short notice. A British or Canadian prime minister only takes office if his supporters win a majority of parliamentary seats. The next California governor, in contrast, could take control with less than one-third of the total ballots cast. This makes it substantially more likely a governor beholden only to a particular, narrow interest group will exercise power. The very mechanism that makes such narrow victories impossible in a parliamentary system, however, is completely missing from the California process. ::: posted by Skip Oliva
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Rights and Reason: Maybe if They Gave the Profits to the Football Players... In the wake of the University of Michigan affirmative action case, conservative activists have been staging race-preference "bake sales" on campuses, charging different prices based on the customer's parentage. It's a cute joke, even if it lacks subtlety. Southern Methodist University, a private college in Texas, shut down one such bake sale on their campus due to, cough, "safety concerns". For those of us who follow college sports, SMU is known for being the first (and I believe only) NCAA Division I school to receive the "death penalty" for corruption in their athletic department. SMU's football program was shut down completely for a year and the school has never fully recovered. This really has no direct correlation to the bake sale incident, but I find it funny SMU would react quickly to it while sitting on their hands for years while its football players received illegal payoffs. ::: posted by Skip Oliva
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Politics: And What Issues Would Those Be? Gen. Henry Shelton, former chairman of the Joint Chiefs of Staff, offers this fascinating remark about Gen. Wesley Clark's departure as NATO Supreme Commander: I've known Wes for a long time. I will tell you the reason he came out of Europe early had to do with integrity and character issues, things that are very near and dear to my heart. I'm not going to say whether I'm a Republican or a Democrat. I'll just say Wes won't get my vote.I hope Gen. Shelton plans to elaborate on this, because it sounds, um, kind of important. ::: posted by Skip Oliva
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Sports: Breaking Down the System My colleague Eric McErlain offers his usual valuable insight, here on the larger issues in the Maurice Clarett case: But what I cannot get over, is the singular fact that athletes in many other sports regularly turn professional before their 18th birthdays. Here in North America, we've been conditioned to simply shrug when we see teenage girls become instant millionaires after stepping of the balance beam, ice rink, or tennis court.The NCAA's philosophy of "amateurism" is obscene and irrational on every level. It's not that amateurism per se--playing a sport for enjoyment of the game without compensation--is bad. When practiced voluntarily, it is usually a virtue. But when amateur status is forced upon an entire class of athletes by institutions that actively seek financial profit for themselves, that is a moral wrong. Ohio State does not run its football program as a charity but as a revenue-producing arm of a larger corporate entity. The funds generated by football finance other athletic and university programs. Yet a key component of that revenue's producers, the athletes, are told they are wrong to seek full compensation for their efforts. In the eyes of the higher education elite, it is moral for a school to use football revenues to finance insolvent women's sports teams, but immoral to give football players even a modest monthly stipend. This is altruism at its classic worst. We must also note that Ohio State, and many other NCAA schools, are government-run institutions. This makes the NCAA's moral corruption a matter of legitimate public concern. If I were a state legislator or governor, I would do everything in my power to prevent taxpayer-supported institutions from belonging to the NCAA or any other organization that promotes amateurism as a moral ideal. To condone the NCAA's behavior under color of government authority is no different from accepting the Mafia as a legitimate form of business organization. ::: posted by Skip Oliva
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Antitrust News: FTC Strikes Washington State The Bush administration's war on physicians moves to Yakima, Washington, with news of the latest surrender: A group of surgeons in Yakima, Washington, has settled Federal Trade Commission charges that it increased the cost of health care for consumers in Yakima by jointly fixing prices in contract negotiations with insurers in violation of federal laws. The proposed consent order with Surgical Specialists of Yakima, P.L.L.C. (SSY) and two of its members � Cascade Surgical Partners, Inc., P.S. (CSP) and Yakima Surgical Associates, Inc., P.S. (YSA) � is designed to remedy SSY�s allegedly anticompetitive collective-bargaining practices. According to the FTC, such conduct is detrimental to consumers in the Yakima, Washington, area and has resulted in higher prices for services SSY�s doctors provide.The targeting of these small specialist groups may produce a backlash unexamined by FTC lawyers. Specialists, after all, face a far greater struggle to obtan market-level compensation for their valuable work, and in markets where managed care plans use the force of antitrust to impose their prices, these specialists can simply quit the market altogether. Yesterday I spoke to a healthcare management consultant in one major metropolitan area, and she told me of a hospital that lost all of its orthopaedic specialists because because the doctors practicing there felt under siege from the dominant HMO. Because the specialists realized any effort to negotiate prices would result in an antitrust prosecution, they simply left the market and went to work in other cities. The FTC has never publicly acknowledged this possibility; after all, the agency is fixated on short-term price levels to the detriment of all other factors. But given the FTC's institutional hostility towards the economic rights of physicians, we might someday see the agency attempt to force physicians to stay in unprofitable markets, lest they violate the "right" of consumers to receive specialty care. ::: posted by Skip Oliva
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Rights and Reason: General Clark's Redistribution Plan The Associated Press reports freshly minted Democratic presidential candidate Wesley Clark has a plan to help the economy by, you guessed it, having the government play economic God: Delivering a 20-minute policy speech at a park along [New York's] East River, Mr. Clark said he would take the money that Mr. Bush gave the wealthy in tax cuts and create three funds: for homeland security, business tax incentives and relief for state governments.Clark's plan is obviously nothing more than a wealth transfer from producers to consumers, a staple of any Democratic economic plan. Contrary to this report, the tax cuts passed by Congress did not "give" the "wealthy" anything that wasn't taken from them by the government in the first place. Nor is it clear why Clark thinks $20 billion in "tax incentives" couldn't easily be replaced by simply cutting business taxes an additional $20 billion and off-setting them with federal spending cuts--another thing that appears to be missing from Clark's plan. The fact that Clark is a former four-star general says a lot about his economic plan. The military is not designed to be a free-market organization, nor should it be. But the top-down decisionmaking of the Army is not appropriate for governing the private-sector economy, nor does it do much to protect individual rights generally. I would also suggest that Clark's experience as a top-level general is poor ideological preparation for the presidency in that high-ranking generals are more politician then they are pure soldier. By this, I mean the main component of a senior general's (or admiral's) job is fighting for allocation of resources within the insular, non-market world of the Pentagon. Military leaders are, in this sense, just another Washington interest group fighting for more money. I say this not to denigrate the military, or even to say the Army is the equivalent of, say, the National Education Association; what I am saying is that rational ideology requires objectivity, and that's hard to attain when your life's work is contained in an organization that consumes economic resources without producing them. I would no more favor a career general for the presidency than I would a lifelong union leader. You're just asking for narrow, concrete-bound leadership that way. On a final note, Clark's proposed $40 billion to fund state governments "struggling under federal tax cuts" is obscene. As we've seen with many states, notably California, states are struggling because their own high taxes and anti-business regulation are reducing wealth creation. California Gov. Gray Davis recently signed union-backed legislation requiring most private employers to provide costly health insurance benefits to employees. If Clark is serious about promoting job creation, he should be calling out states that pass laws of that variety, rather than handing them a federal welfare check to encourage future bad behavior. ::: posted by Skip Oliva
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The War: More Weapons-Grade Uranium Found in Iran This report by George Jahn of the AP: U.N. atomic experts have found traces of weapons-grade uranium at a second site in Iran, diplomats said Thursday. The development heightened international concerns about the nature of Tehran's nuclear activities.Or what? If Iran�s raving jihadists are allowed to develop nuclear weapons, its going to be all but impossible to contain them. The UN is hardly the institution able to face down Iran's nuclear menace. This is why President Bush's speech before the UN this week was a failure. Rather then prattle on about the slave trade, which presents no security threat to the US, Bush should have focused solely on nuclear preemption, if even address the UN at all. ::: posted by Nicholas Provenzo
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FTC News: Do Not Call Backers Rally Many people are unhappy with Judge Lee West's ruling that the FTC exceeded its authority in creating the Do Not Call registry. A number of Internet sites have posted the phone numbers for Judge West's chambers in an effort to encourage telemarketing-like harassment of the good judge. On one level this is silly, but it also reveals a very disturbing theme. I've read more than one comment, from a number of nominally conservative and libertarian folks, suggesting that Judge West's ruling should be overturned because...well, just because they really, really hate telemarketing and want a Do Not Call registry. The fact that Judge West persuasively argued the FTC had no authority to implement such a program is seen as a trivial detail, a judicial obstacle thwarting the people's demands. ::: posted by Skip Oliva
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Wednesday, September 24, 2003 ::: Weyerhaeuser, International Paper, and Georgia-Pacific settled a class action lawsuit brought by disgruntled consumers of cardboard. Weyerhaeuser, which is currently fighinting a multi-million dollar verdict in another antitrust suit brought by its competitors, will take a $15 million charge to cover its share of the settlement. Weyerhaeuser's general counsel maintains that the settled class action case was "without merit," but that it was "in the interests of our shareholders given the complexity, time and cost of litigation, and uncertainty of court proceedings." ::: posted by Skip Oliva
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FTC News: Do Not Call Struck Down (For Now) Yesterday U.S. District Judge Lee West, sitting in Oklahoma City, ruled the FTC exceeded its authority in creating the national "Do Not Call" registry without express congressional authorization. This is probably not a long-term defeat for the Commission, since the ruling could be reversed on appeal to the U.S. Court of Appeals for the Tenth Circuit, and failing that Congress will likely give the express authorization Judge West found to be lacking. ::: posted by Skip Oliva
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Antitrust News: Univision Battle May Continue TheDeal.com has this report: Activists are poised to ask a federal appeals court to overturn a Federal Communications Commission order allowing Univision Communications Inc. to buy Hispanic Broadcasting Corp.NHPI spent months running overtly racist ads encouraging the FCC and other political leaders to stop the Univision-Hispanic Broadcasting merger on political, not legal, grounds. A number of NHPI's ads argued that Univision executives should be punished for their political beliefs, including allegedly supporting California Proposition 187 several years ago (which cut off state welfare funds to illegal immigrants). NHPI, which is led by a Democratic New York State legislator, also pressed Hispanic Democrats in the House to complain that Univision's news programming was too biased in favor of Republicans. The amazing thing is that "activist groups" are allowed to appeal FCC decisions like this in the first place. A private transaction between two businesses should not be the subject of a third-party lawsuit. But since broadcast licenses are still considered "public property", the courts are forced to entertain these political actions. ::: posted by Skip Oliva
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Antitrust News: Beware the FTC Jeff Brennan, the FTC's chief inquisitor on healthcare, has threatened a new physician network in San Francisco with prosecution unless they follow the Commission's antitrust regulations that forbid doctors from acting in their economic self-interest. Here's the key paragraph in Brennan's letter to the proposed group, Bay Area Preferred Physicians (BAPP): BAPP will be authorized to contract with any payer on behalf of physicians whose minimum payment requirements are at or below the payer's offer. The BAPP messenger also will notify those physicians whose minimum payment demand exceeds the offer that they have one opportunity to "opt in" to a contract containing the payer's offer. This notice will not reveal the number or percentage of BAPP physicians whose payment levels met or were below the payer's offer. BAPP also might provide objective information to its members to help them understand the contract terms. You have represented that BAPP and its messenger will not recommend that the physicians accept or reject an offer, opine on the appropriateness of price or other competitive terms, present contract information that suggests an opinion on whether the physicians should accept a particular contract term, or otherwise attempt to facilitate any coordination among the physicians on such terms.This is a naked restraint of free speech. It is also a deliberate effort by the FTC to sabotage the ability of physicians to negotiate higher prices with managed care programs. If physicians cannot talk to one another about their negotiations with an HMO, the result will be low contracts for everyone. Brennan's letter literally makes it a criminal act for two doctors to have lunch and talk about a proposed HMO contract. And in the end, BAPP can do everything they told the FTC they would and still find themselves in violation of the antitrust laws. Since the FTC has unilateral and arbitrary authority to decide what conduct is legal, they can simply decide BAPP's mere existence is too big a risk to the financial interests to HMOs. I strongly suspect BAPP won't survive when all is said and done. ::: posted by Skip Oliva
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Rights and Reason: History Repeats Itself Bruce Bartlett explains why any accomodation of John Banzhaf and his terrorist lawyer colleagues is suicide: Unfortunately, the tobacco companies seem to have learned nothing from their experience with anti-smoking zealots and are actually opening the door to lawsuits against their food divisions. They don't seem to understand that their enemies are not driven by genuine concerns about health or even by greed, but by ideology. They bring a religious fervor to their efforts that combine a Marxist hatred of capitalism with extraordinary naivete about human nature, mixed together with a tort liability system that is eager to award large damages based on the flimsiest of evidence.There are two explanations for this type of corporate behavior. One is that executives believe that they can gain profits in the short-term even if they risk long-term defeat; the other is that the executives actually believe they're guilty of what they're opponents accuse them of. Neither option is particularly comforting to those of us who advocate capitalism as a moral way of life. But on the bright side, most Americans are not ready to cross the line of destroying food companies over the "obesity epidemic" just yet. And the food industry is mounting a campaign, through it's lobbying arm at the Center for Consumer Freedom, to discredit Banzhaf and company. But we must keep pressuring the food companies to expand their fight and not be content simply to fight their persecutors to a draw in the legal arena. Nothing short of total defeat of Banzhaf and his can suffice. UPDATE: Overlawyered.com cites Banzhaf spinning his loss in the recent McDonald's lawsuit by arguing "it takes time for legal theories to coalesce in a way that forces major societal change." Note the word "forces". Banzhaf has no interest in rationally persuading people of his theories; he intends to use force--primarily the deliberate abuse of the court system--against all Americans who disagree with him. ::: posted by Skip Oliva
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Antitrust News: Climbing the Mountain On Tuesday afternoon, I filed a motion with the U.S. district court overseeing the Justice Department "settlement" with the now-defunct Mountain Health Care (MHC). The motion asked for permission to add me as a party to the case so I can appeal part of the district judge's order signing off on the settlement. That part deals with whether the DOJ disclosed all of the documents they were legally required to. For more than six months now, I've argued to the court that the DOJ intentionally withheld material information about MHC's operations and activities. At every turn, the DOJ has resisted calls to release even basic information about their investigation of MHC--an investigation that led to a coerced "settlement" that forced MHC to dissolve before the court even had an opportunity to examine the government's case. ::: posted by Skip Oliva
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Tuesday, September 23, 2003 ::: Rights and Reason: Adelstein Defends Diversity After several months of political wrangling, the Federal Communications Commission voted 3-2 to approve Univision Communications' $3.1 billion purchase of Hispanic Broadcasting Corporation, a merger that stregnthens the nation's largest Spanish-language media company. Jonathan Adelstein, a Democrat, was one of the two FCC commissioners to vote against permitting the deal. His rationalization, not surprisingly, is rooted in the Democratic Party's main recurring theme--diversity: Adelstein said the "FCC is turning a deaf ear to millions of Spanish-speaking Americans."How exactly does a group obtain a "right" to diversity? In the absence of private property owners to develop commercial television stations, there would be no "perspectives" at all over the airwaves. What would Adelstein do if there was only one Spanish-language media company to begin with? Or what about the various language groups that don't have any broadcast stations dedicated to their interests? Should the FTC force the networks to develop "Russian-language" or "French-language" formats to satisfy the "right" to diverse programming? Adelstein's view also assumes, as most anti-business regulation does, that consumers are incapable of making their demands known to the marketplace in the absence of government intervention. If Spanish-speaking Americans are dissatisfied with their media choices, they will act accordingly within the market, and if a large company like Univision doesn't satisfy consumer demand, those consumers will seek other alternatives, even if that means looking for entertainment and information outside the limited spectrum of broadcast television and radio--say through cable and satellite television and, um, that Internet thing. ::: posted by Skip Oliva
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Antitrust News: Clarett Complains Too Much The money line, literally and figuratively, from Maurice Clarett's federal complaint against the NFL comes in paragraph 31: Had Clarett been eligible for the 2003 [NFL] Draft, it is almost certain he would have been selected in the beginning of the First Round and would have agreed to a contract and signing bonus worth millions of dollars.Even by antitrust standards, this is a huge assumption. Clarett is seeking triple damages to compensate his alleged losses in not being a high first-round pick in last April's draft. There's no objective way to prove such a claim. It's possible an NFL owner might argue "I wanted to take Clarett with the #3 pick, but I knew he wasn't eligible," but somehow I doubt that's going to happen. Mel Kiper, Jr., the best-known analyst of the NFL Draft, says Clarett is "no better than a second-round pick at this point." Clarett hasn't even played one full year of college football, as he was injured for part of the 2002 season. Len Pasquarelli, who covers the NFL for ESPN, cites numerous NFL scouts as projecting Clarett as a second- or third-round pick. This is not a trivial difference from a financial standpoint, and Clarett knows this, which is why the complaint insists he's a guaranteed first-round pick, despite the lack of supporting evidence. Under the current system, which permits college juniors to leave one year early for the NFL, 10 of the 32 first round picks this year were eligible underclassmen. Of those 10 only one plays running back, Clarett's position, and that was Miami's Willis McGahee. Overall, only 23% of the college juniors that declared for the draft were taken in the first round, and 34% weren't taken in any of the draft's seven rounds. This hardly spells a guaranteed multi-million dollar contract for a freshman running back with less than a dozen games to his credit. Here's one problem I see: Suppose the court permits Clarett to enter the 2004 Draft, and he's not taken until the third round. Will he then go back to Court and argue the owners are "colluding" against him because, in his mind, he should have been a first round pick? And to take that hypothetical one step further, will future underclassmen who enter the draft and don't get picked as high as they want seek antitrust relief? As things stand now, these would be ridiculous scenarios. Underclassmen get shafted all the time in the NBA Draft and there are no antitrust complaints. But if Clarett is allowed to recover damages from the NFL under his "I was definitely a first-round pick" theory, all bets could be off. And incidentally, Clarett's complaint omits any mention of the fact he was kicked off the Ohio State team, or that he's currently facing criminal charges in Ohio over filing a false insurance claim. ::: posted by Skip Oliva
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Antitrust News: Clarett Sues NFL While not a surprise, this is still disappointing: Suspended Ohio State tailback Maurice Clarett sued the NFL on Tuesday, asking a judge to throw out a league rule preventing players from entering the draft until they have been out of high school three years.The first word of this report requires emphasis--"suspended". The only reason Maurice Clarett is going to court now is because he intentionally violated NCAA rules and got himself thrown off the Ohio State team. Yes, the NCAA promotes the immoral, anti-capitalist philosophy of "amateurism", and many of the association's rules are ill-conceived. But Clarett knew what he was getting into when he signed up. It was his choices that got him in trouble, and now he's seeking to deflect that blame onto the NFL, an innocent third party. Many, if not most, sports media commentators will talk about Clarett's "right" to seek employment; few, if any, will speak of the NFL's right to decide its own rules in pursuit of the league's self-interest. ::: posted by Skip Oliva
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Antitrust News: FTC Finds Limits on Power Problematic In antitrust there's something known as the "state action doctrine." This doctrine, like most antitrust rules, a creation of the Supreme Court, says that a state government can ignore the federal antitrust laws and "replace competition" with a state regulatory regime. The reason for this doctrine is that the courts concluded that the antitrust laws were not applicable to state governments. Federal antitrust authorities, not surprisingly, don't like this doctrine, since it restricts their ability to go after private businesses that obtain protection from states. In a staff report released today, the Federal Trade Commission�s State Action Task Force concludes that the scope of the antitrust state action doctrine has expanded dramatically since first articulated by the Supreme Court in 1943. The doctrine has become unmoored from its original objectives, the report concludes, and is frequently invoked to protect private commercial efforts with no relation to state policy. Accordingly, the �Report of the State Action Task Force� recommends a number of specific clarifications of the doctrine, including more rigorous application of the �clear articulation� and �active supervision� requirements.Translation: An FTC-appointed task force decided the FTC doesn't have enough control over the economy. The argument that antitrust exemptions "must be construed narrowly" is particularly telling. You will never hear the FTC argue that their authority should be construed narrowly, or for that matter, that the FTC should even be bound by any objective law. ::: posted by Skip Oliva
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The War: Airman at Guantanamo Charged With Spying This report in from Matt Kelly of the AP: An Air Force translator at the U.S. prison camp for suspected terrorists has been charged with espionage and aiding the enemy, a military spokesman said Tuesday.Two members of the American Armed forces are accused of espionage? In support of al-Qaida and the Taliban? These allegations are simply stunning. So what if both are practitioners of the Islamic faith. They are both Americans who grew up with the benefit of a secular and free culture. If these charges are true, I would like to understand exactly what thought process turned these men against their freedom. And then I would like to see them hang. ::: posted by Nicholas Provenzo
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Capitalism & the Law: Resturant Scoffs Law Professor Blaine Hardenof the Washington Post reports that a Seattle resturant is sticking it to John Banzhaf, GW Professor of Public Interest Law. In an attempt to make a law professor in the other Washington look silly, a popular restaurant here is requiring customers to sign a liability waiver before they eat a fat-by-design dessert called The Bulge.Too funny. ::: posted by Nicholas Provenzo
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Foreign Policy: Iranian Nuclear Program It's been a few days since our last call for a military strike on Iran's nuclear capabilities before Iran becomes the North Korea of the Middle East. NRO's Michael Ledeen argued last week that the Iranian people's time is up, and that it is time for US military action against the Teheran government. ::: posted by John Bragg
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The Culture: They should have quit while they were ahead Andrew Sullivan took a cheap swipe at Rhodes Scholars when discussing Wesley Clark at his blog yesterday: To my mind, the most important thing about Clark is that he was a Rhodes Scholar. Almost to a man and woman, they are mega-losers, curriculum-vitae fetishists, with huge ambition and no concept of what to do with it.That's the kind of worthless hyperbole that most people dismiss out of hand--unless of course you are a mega-loser Rhodes Scholar. At the Volokh Conspiracy, they have three of them guest bloging today. Two of them have seen fit to respond to Sullivan. Mega-loser, er, Rhodes Scholar Josh Chafetz provides exhaustive linked analyses of every complementary thing Andrew Sullivan has said about his Rhodes Scholar peers, as well as a list of Rhodes Scholars and their stations in life, just to show how much "diversity" exists in Rhodes Scholar ranks. Mega-loser, er Rhodes Scholar II David Adesnik then writes for about 1,200 words on the "intense religiosity" (among other virtues) of his class of Rhodes Scholars. �While I have not had in-depth discussions with all of my fellow scholars, I sense that their awareness of a greater force above them places the significance of their resume in proper perspective.� I suppose some may find it reassuring that Rhodes Scholars are �diverse� and some are humbled by constructs that no honest intellectual ought to believe in, but I do not. Yet as one in the ranks of today�s elected, Adesnik nevertheless struggles with it. Speaking of some conservatives' view that �equality is the hand-maiden of mediocrity,� Adesnik writes: [W]hy (other than having such a large population) has the US been able to produce constantly such outstanding inviduals (sic) in all of these categories? Because the meritocratic order taps the vast potential inhrent (sic) in that great unwashed mass once consigned to irrelevance by the old aristocracies.Not really. Perhaps freedom might have something to do with it. Freedom does not mean rule by those with merit. It means the rule of reason. So as far as the Rhodes Scholars go, perhaps if William Jefferson Clinton, the scholars' most prominent member hadn�t attempted to overthrow the definition of a verb of being during a sexual harassment deposition, it would be easier to respect the intellectual integrity of the Rhodes Scholars. While the crimes of the one do not reflect on the many, the fact of the matter is Rhodes Scholars are allegedly the best products of today�s educational orthodoxy. In my field (political philosophy), the sooner that orthodoxy is overthrown and replaced, the better. ::: posted by Nicholas Provenzo
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Monday, September 22, 2003 ::: FTC News: Hurricane victims beware! You can't make this up: The Federal Trade Commission has issued a Consumer Alert, �After a Disaster: Repairing Your Home,� that warns consumers of potential �home repair rip-off artists� who may overcharge, perform shoddy work, or skip town without finishing the job. After a natural disaster, the demand for qualified contractors usually exceeds the supply. Because many legitimate companies are booked for months, frustrated consumers may not take the necessary precautions when hiring contractors.It's nice to see the FTC possesses a rudimentary understanding of supply-and-demand. Among the FTC's helpful tips to consumers: "Take your time before signing a contract. Get a written estimate that includes all oral promises made, but make sure to ask if there is a charge for an estimate. Do not automatically choose the lowest bidder. Obtain a copy of the final contract." Good advice. The FTC should follow it when they're prosecuting physicians and other businesses; the FTC gets very upset when producers refuse to offer the lowest price demanded by a consumer. Beyond the superficial hypocrisy, however, the FTC's "consumer alert" is a fairly patronizing document that assumes consumers are blithering idiots who can't act in their own best interests without a government lawyer telling them what to look out for. Consider this gem: "Ask friends, family, or insurance agents for recommendations" of contractors. It's hard to imagine anyone who wouldn't think of this advice until going to the FTC's website and reading that. ::: posted by Skip Oliva
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Antitrust News: What are the DOJ's priorities? The Wall Street Journal has been reporting that the Justice Department has more than 70 grand juries convened throughout the United States to investigate price fixing and other criminal antitrust violations. At a time when the nation is engaged in an ongoing war against terrorist organizations and the economy is recovering from a prolonged downturn, the Justice Department is running around looking to charge businessmen with criminal price fixing in industries such as glass and industrial chemicals. This is on top of the DOJ's massive civil antitrust enforcement regime that wins more than 90% of its cases by settlement. ::: posted by Skip Oliva
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Rights and Reason: 'Why Anti-sweatshop Campaigners Should be Pro-logo' Steve Hilton at brandchanel.com says branded merchandise will uplift the world. (Brandchannel.com is managed by Interbrand, one of the world's largest branding agencies). If you are an intelligent, thoughtful person who cares about the developing world, there are two possible opinions for you to hold about brands and sweatshops.Maybe the real problem is appealing to liberal sensibilities in the first place. The anti-globalization activists want workers to earn an income with no connection to the value that they actually produce. But just who then will produce the wealth that will go to the indigents of the world? What incentive will they have to produce this wealth? And by what right will this wealth be taken from its producers in the first place? The anti-globalization activists say it is unfair that the third world does not enjoy the material benefits of the industrialized west. Yet they forget that these benefits were produced in the first place by businessmen and women who were left free to create the very markets that now supposedly exploit the third world. The anti-globalization activists are not just attacking corporations and brands--they are attacking capitalism and the capitalist principle that one has a right to only what he earns, or what is freely bestowed upon him by others. Yet every social system that places the interests of others before the individual�s self-interest stagnates and suffers. Hilton overstates the impact of brands in lifting the poor from their poverty and misses the debate that really impacts the value of brands in the marketplace. Commercial brands are a product of freedom and economic success--they are not its cause. After all, collectivism went though great lengths to brand itself with posters, parades, and smooth-talking spokesmen, only to fail because of its moral bankruptcy. Commercial brands only have value because of the property they represent and the selfish interests that created them is protected. It is the fundamental protection of individual rights that most of the third world finds itself wanting--a condition the anti-capitalist activists seek to make worse. Every third-world �sweatshop� employee earns what he produces and for the first time in perhaps generations is in control of his economic destiny. Defend people�s freedom to pursue their rightful ambitions and they will--even the impoverished people of the third world. ::: posted by Nicholas Provenzo
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Rights and Reason: The Club for Neanderthals Andrew Sullivan blogs on some alleged Republican bigotry: The Club for Growth is a fiscally conservative organization with links to all sorts of Republicans. Its president, Stephen Moore, is not a homophobe, by all accounts. But like many tolerant conservatives, he has to work and cooperate with people who cannot abide homosexuals and will not tolerate them in any positions of authority. So he fires a gay man in charge of a state chapter, after complaints from "pro-family" (i.e. anti-gay) groups and leaders. This isn't a huge story in and of itself. But I think it does show how hard it is for any openly gay person to work or cooperate with much of the Republican apparatus. If you're closeted, you can rise to the very, very top. If you're honest and principled, you're finished. These people insist they're not prejudiced. They just support people who are.If this story is true, it's a shame, but we shouldn't be surprised. The "fiscally conservative" movement has never been a sufficient alternative to the bible-beaters. One ought to say, as a first principle and as a means of identifying themselves, that they are for reason and individual rights. After all, the first question in forming a moral and just society is not how much money the government should spend. I wonder when Andrew Sullivan is going to figure that one out. ::: posted by Nicholas Provenzo
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Rights and Reason: Sen. Clinton Bashes Bush Administration This from the AP: New York Sen. Hillary Clinton said the Bush administration is trying to impose a "radical right-wing agenda" on the United States and is attempting to dismantle social programs such as Medicare and Social Security.Undo the New Deal and the Great Society? Heh. As a member of the radical right-wing, I can assure Sen. Clinton that President Bush is not doing much to impose my agenda. ::: posted by Nicholas Provenzo
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