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Saturday, October 11, 2003 :::

Rights and Reason: Barriers to Health Insurance

National Review's senior editor, Ramesh Ponnuru, speaks favorably of Missouri Sen. Jim Talent's proposal for expanding consumer health insurance options:

Senator Jim Talent, a Republican from Missouri, thinks he can put a dent in the problem. When he was in the House, he championed a measure to let small businesses pool together to offer health insurance to their workers. It passed the House with bipartisan support, but stalled in the Senate. Talent's first speech in the Senate, to which he was elected last year, was devoted to breaking the logjam.

Talent says that his "association health care" bill is the only free-market measure to increase access to health insurance that stands a chance of passage in this Congress. The idea is simple. Federal law lets large employers get health insurance for their workers without having to comply with state regulatory mandates. So if Nevada has decided that all insurance plans have to cover chiropractors' visits and hair transplants, big businesses can still provide different packages of health benefits. Talent's bill would let small-business trade associations offer insurance for their members on the same basis. That's why it's officially titled the "Small Business Health Fairness Act."

Talent's bill is supported by conservatives such as Rep. Ernie Fletcher, moderates such as Senators John McCain and Olympia Snowe, and liberals such as Rep. Nydia Velazquez. It is also supported by President Bush. Its most enthusiastic supporters, however, are in the small-business lobby. "This is the number one concrete problem confronting small business today and therefore entrepreneurship in general," says Talent. Small businesses lose employees because they can't offer decent insurance coverage. The bill is a top priority for the National Federation of Independent Business.

The bill is opposed by Blue Cross/Blue Shield, which fears it would lose its strong position in the small-business market. (At one point, Blue Cross even ran a sweepstakes offering people who wrote form letters opposing the bill the chance to win $300 and a free trip for four to Washington, D.C.) The National Association of Insurance Commissioners is against the bill, since state insurance regulators would lose business, too. The National Governors Association and the National Association of Attorneys General is also opposed, since they are duty bound to oppose all things right and good. Ted Kennedy has threatened a filibuster.

I'm willing to consider the merits of Talent's proposal. Certainly the elimination of arbitrary political barriers (imposed by the state insurance cartels) is a good thing in principle and practice. But if we're going to allow business to band together to obtain insurance, why not also allow physicians to band together without fear of antitrust prosecution? It's not a free market if one side has a government-sponsored advantage over the other.

One reason the Talent bill will get more attention than efforts to exempt physicians from antitrust, however, is the relative position of the lobbyists involved. Small business advocates will no doubt fight honorably for their right to try a new business model for offering insurance. The American Medical Association, on the other hand, continues to demonstrate moral cowardice in the face of the Federal Trade Commission and Antitrust Division in confronting the ongoing assault on physician rights. The AMA has backed off its earlier position of endorsing a strong antitrust exemption, and now favors merely reducing the standard of antitrust law applied to physicians from "per se" to "rule of reason". In practice this will do nothing to stop the FTC and DOJ. In principle it means the physicians have waived any notion that they have the right to act in their economic self-interest. There is no such thing as accepting some antitrust regulation; either you hand your rights over to government lawyers, or you don't. One cannot compromise with organized thugs.

::: posted by Skip Oliva at 12:35 PM | link | donate |

The War: Islamic Nations Tell U.S. to Quit Iraq, Support Syria

This AP report reveals yet again how addled the Islamic world has become:

Muslim nations demanded "eviction of all foreign forces from Iraq" as they began a summit in Malaysia on Saturday, with only Turkey defending plans to deploy its troops alongside the U.S.-led alliance.

They also voiced support for Syria after an Israeli air raid last weekend stoked fears of escalating conflict in the Middle East as Damascus warned it had the right of self-defense.

Abdelouahed Belkeziz, Secretary-General of the 57-member Organization of the Islamic Conference (OIC), said occupying forces should quickly withdraw from Iraq to give the United Nations a chance to reconstruct the country.

"Foremost of these is the eviction of foreign forces from Iraq, allowing the United Nations to administer Iraqi affairs," Belkeziz said in his opening address. . .

. . .Belkeziz, a Moroccan, said the summit should address concerns arising from terrorism, globalization and "campaigns against Islam, Muslims and human rights."

He also condemned Israel for what he said was failing to live up to peace process commitments and said the OIC supported the Palestinian and Iraqi peoples and Iranian and Syrian governments against "aggression."

Pity the poor Palestinians, Iraqis, Iranians and Syrians, the innocent targets of such aggression. Yet the AP story only shows the tip of the iceberg--the real one liner is at the OIC website, where Belkeziz is quoted as follows:

It was the period when the second intifadha erupted; the period witnessed the occurrence of the September 11 events, with its global consequences; in it war was waged against terrorism; Afghanistan was invaded; Iraq occupied; and the campaign against Islam, the Islamic culture and its adherents gained momentum.

This is an interesting slip. Belkeziz equates the war on terrorism with what he calls "the campaign against Islam." It makes me wonder though, if Belkeziz refuses to put distance between the September 11th conspirators and rank and file adherent�s of the �religion of peace�, why should we?

::: posted by Nicholas Provenzo at 12:34 PM | link | donate |

Rights and Reason: The Perils of Centrism

California's recall election was great theater, but if you like an ideological lesson from your politics, consider the recent provincial elections in Ontario. The once-popular Progressive Conservatives were tossed in favor of a pro-tax increase, pro-social spending Liberal Party. Mike Harris, the Conservative leader elected by voters in 1995, served two successful terms on a platform of tax cuts, lower spending, and deregulation dubbed the "Common Sense Revolution," a local variant of the 1994 Republican "Contract with America."

Harris' successor, Ernie Eves, turned his back on Harris' agenda and embraced "pragmatic centrism". The Cato Institute's Patrick Basham describes how Eves' attempt at centrism only forced the voters to choose a more radical government:

Premier Eves explicitly ran away from what had worked for the Conservatives, both as an electoral and a governing strategy. Eves's deputy premier proclaimed, "The Common Sense Revolution is over." Eves, the pragmatist, postponed tax cuts, cancelled Harris's plan to deregulate the province's electricity market, and sought to appease the leftist teachers' unions. If enacted, the Conservatives' campaign platform would have widened the (once again) large provincial deficit.

In this vein, Eves returned Ontario to "Red Toryism" as a governing philosophy. The Red Tories, who dominated Canada's conservative politics until a decade ago, are really just social democrats with a traditionalist bent. Most Canadian Red Tories make liberal Republicans appear to be paragons of libertarian virtue.

Powerful Red Tories in the Conservative party pined for the good ol' days of the "Big Blue Machine," the moniker given to the cabal of party strategists who kept left-leaning Premier Bill Davis in office between 1971 and 1985. The Big Blue Machine's winning strategy stressed accommodation with the social democratic policy agenda. Being in power for these Conservatives wasn't about articulating conservative policy choices; it was about being in power. Period.

Critically, the Harris government demonstrated not only that appeasement on taxes and spending was antithetical to good public policy but also that it was no longer good politics. Ontario voters reflected their pragmatism by voting for the Common Sense Revolution twice.

Eves abandoned this winning formula. Stunningly, the new Conservative premier deliberately chose a "Liberal Lite" posture when the Ontario electorate had the option of voting for the "real thing" in the form of Dalton McGuinty, the relatively telegenic, youthful Liberal leader.

Basham correctly describes the post-election Ontario Conservatives as "visionless and powerless," and suggests President Bush should take a lesson from this Northern debacle. If the White House persists in embracing a lite version of the Democratic domestic policy agenda, it will open itself up to defeat in 2004. After all, if Bush promises the people partial government financing of prescription drugs, then why not embrace a Democratic nominee who will support full government financing? If the mission of government is not to protect individual rights, but to encourage "service to others" (a tenet of Bush's "compassionate conservatism"), than why not support a Democrat who will make such service compulsory?

True, President Bush has embraced tax cuts in a way most centrist Republicans have not, but without advocating meaningful reductions in spending--to say nothing of creating new programs--this policy merely advances the Democratic charge that Bush is fiscally reckless. Bush's administration also supports numerous forms of costly regulation, such as steel tariffs and antitrust enforcement, that do far more harm to the economy than tax cuts alone will cure. If this administration is serious about reelection, it needs to offer a positive agenda that is not a faded copy of their opponents' platform.

::: posted by Skip Oliva at 12:21 PM | link | donate |

Rights and Reason: Filling the Gap

The Washington Times editorial board suggests President Bush declare the lack of homework in our nation's schools a federal priority. The Times seizes on various studies noting the relative lack of homework compared to schools in other countries to be a sign of educational rot:

Homework, or the lack of it, undoubtedly represents a major reason why U.S. students perform so poorly compared to students in other countries. The 1995 Third International Mathematics and Science Survey asked students in their final year of secondary school how much time they spent studying and doing homework each day. Among the 20 nations, U.S. students ranked near the bottom, tied for the next-to-last position, Brookings reported, with students in France, Italy, Russia and South Africa "spending at least twice as much time on homework as American students." Not surprisingly, the performance of U.S. high school seniors ranked 16th in general science, 19th in math and dead last in physics.

Following a precedent established by then-Vice President George H.W. Bush in 1988, every presidential candidate tells the electorate that he wants to be "the education president." In 1996, this page lowered the bar, begging for a candidate to step forward promising to be "the homework president." We repeat that exhortation today:

Truth be told, America doesn't need an "education president." But it could use a "homework president." Who will promise to use the bully pulpit as long and as often as it takes to eliminate the homework gap?

The Times cites a lot of data demonstrating the comparative lack of homework; what it does not offer is an explanation for why more homework will improve students' education. Most schools keep students in class eight hours a day. If the schools can't make efficient use of that time, what will two or three additional hours of homework accomplish? The homework issue, it seems to me, is the conservative version of teacher unions demanding more money; both arguments rely exclusively on input factors without examining its connection to the quality of output.

And the notion that President Bush, or any president, should use his "bully pulpit" to arbitrarily demand more homework is facially irrational. It implicitly encourages the sort of top-down thinking that got American schools in the mess they're in now.

::: posted by Skip Oliva at 12:02 PM | link | donate |

Antitrust News: NBC Universal On the Clock

The FTC has wrested jurisdiction from the Justice Department over GE's purchase of Vivendi Universal's entertainment assets. The FTC handled the original Vivendi-Universal merger in 2000, and under the informal agreement between the antitrust agencies, the FTC was permitted to retain its jurisdiction over this succeeding deal.

It's a sign of congressional malfeasance that the antitrust laws do not clearly and unambiguously delineate what mergers and industries are to be reviewed by which agency. It's left to the DOJ and FTC to work it out among themselves. Normally this is done at the staff level but the occasional major case--like the AOL-Time Warner deal, which went to the FTC--has to be decided by the agency heads.

In GE's case, early reports suggest the deal will sail through without major difficulty. Merging NBC with the Universal movie assets will make the company more competitive with the other broadcast networks, all of which are part of larger network-studio conglomerates. Then again, GW Vice Chairman Robert Wright has been an outspoken proponent of the FCC's media deregulation, and GE's acquisition of Hispanic Broadcasting Corp. produced a vehement (and racist) political backlash. Many members of Congress felt the Justice Department and the FCC let GE off the hook on the Hispanic Broadcasting deal; it's not outside the realm of possibility for the FTC to seek favor with its congressional masters by throwing some roadblocks in the Universal deal.

::: posted by Skip Oliva at 11:50 AM | link | donate |

Antitrust News: Political Review Requested

The reason the FTC isn't subject to substantial congressional oversight is that the agency is an able-and-willing tool of congressmen who want to mount political attacks on potentially unpopular business deals. Case in point:

Caremark RX Inc. said U.S. antitrust enforcers had requested more information about its proposed $5.6 billion takeover of AdvancePCS, signaling that the two will get government scrutiny.

Caremark, which would become the No. 2 pharmacy-benefit manager behind Medco Health Solutions Inc. if the transaction is concluded, said in a joint statement with AdvancePCS that the companies had received a request for additional information from the Federal Trade Commission.

The FTC had until yesterday to seek more information and open a full investigation or to let the transaction proceed. Caremark said Wednesday that Florida and other states also were reviewing the transaction. Seven Democratic members of Congress urged the FTC to investigate.

''This proposed merger will consolidate two of the nation's four largest publicly traded'' pharmacy-benefit managers, the lawmakers, led by Sen. Mark Pryor, D-Ark., and U.S. Rep. Henry Waxman, D-Calif., said in a letter to FTC Chairman Timothy Muris. ''Effective FTC oversight is critical to ensuring a competitive pharmaceutical market,'' the lawmakers wrote.

Now if you're the FTC, do you ignore the pleas of influential congressional Democrats that have a say in your budget, or do you accept the invitation to exercise arbitrary political power over a private merger?

::: posted by Skip Oliva at 11:43 AM | link | donate |

Friday, October 10, 2003 :::

Rights and Reason: Smokin' Babies

Montgomery County, Maryland, has joined the ranks of local governments banning smoking in restaurants and bars. I won�t repeat the familiar (and correct) arguments against this violation of private property rights. Instead, I�ll offer this idea: Let�s ban infants and toddlers from bars and restaurants. Personally, I�m far more sensitive to excessive noise than the smell of cigarette smoke. We can all agree that a crying baby or toddler can make any restaurant experience unpleasant. Therefore, banning such people from restaurants is in the �public interest� and a proper subject for government regulation.

The anti-smoking advocates will say there�s a difference between smoking and crying babies: the former constitutes a �public health� issue that the latter does not. This difference, however, is one of pretext, not substance. The idea that smoking in restaurants is a public health question is a recent invention. We�ve known the health effects of cigarette smoking for decades, yet health authorities stood by and let the practice flourish in the nation�s eating and drinking establishments. I�m surprise some enterprising tort lawyer (paging John Banzhaf) hasn�t thought to sue local governments that haven�t banned smoking in restaurants. After all, those jurisdictions are practically accomplices to mass murder!

Restaurant smoking bans are not about public health, but �quality of life,� a euphemism popularized by former New York mayor Rudolph Giuliani�s crackdown on property rights under the pretext of �public interest.� Giuliani�s administration used regulation to stifle or ban numerous businesses deemed undesirable to the city�s elite. This model has been successfully emulated in other jurisdictions, and it opened the door for the widespread smoking bans implemented by local governments, notably in New York, over the past few years. Some people find smoking in restaurants annoying, ergo it should be banned for all. On that same note, some people prefer to enjoy a good meal without a colicky baby at the next table wailing; �quality of life� demands such infants (and their parents) be shunned to protect the public�s health.

Of course my idea is ridiculous. But when you abandon the protection of private property rights as the basis of government, you invite this sort of nonsense.

::: posted by Skip Oliva at 10:36 PM | link | donate |

Antitrust News: "The ACC can run but it cannot hide"

A Connecticut Superior Court judge has dismissed the Atlantic Coast Conference from state Attorney General Richard Blumenthal's vengeance lawsuit against the University of Miami for leaving the Big East Conference. Judge Samuel Sferrazza correctly rejected Blumenthal's efforts to assert jurisdiction over the North Carolina-based ACC in a Connecticut state court. Blumenthal and company argued the ACC's business dealings with ESPN, which is heaquartered in Bristol, Conn., provided the basis for state jurisdiction. Under this reasoning, just about any entity engage in sports programming would be liable under Connecticut law and subject to the whims of General Blumenthal. Thankfully Judge Sferrazza declined to impose an activist redefinition of standing on the ACC.

This doesn't mean the overall litigation is over. The University of Miami remains a defendant, owing to their direct dealings with the University of Connecticut as members of the Big East. And Blumenthal could easily refile his lawsuit against the ACC in a federal district court. This means Connecticut taxpayers--who already footed millions to subsidize UConn's foolish efforts to upgrade their football program to Division I-A--must subsidize Blumenthal's attempt to punish Miami for exercising its express contractual right to change conferences.

Never one to mince words, Blumenthal said "[t]he ACC can run but it cannot hide" from his litigation. This is a childish statement coming from an elected official. The ACC didn't kill anyone or hurt any Connecticut taxpayer. The ACC did what any other conference in its circumstance would have done--and more importantly, what it is entitled to do under NCAA rules and the "common law" of collegiate sports.

::: posted by Skip Oliva at 6:32 PM | link | donate |

Rights and Reason: Freedom in Education

The Cato Institute has published a new Policy Analysis by Marie Gryphon and Emily A. Meyer on the history of educational freedom in America. This is from the executive summary:

America has two strong, yet conflicting, educational traditions. One is our tradition of educational freedom, and the other is a strong, though shorter, tradition of state-controlled schooling.

In the wake of the Supreme Court's historic decision in Zelman v. Simmons-Harris upholding school choice programs, more and more families are questioning whether state control over educational decisions is really best. Decades of public school failure in our inner cities have contributed to the recent increase in sentiment against standard state solutions to social problems, and the success of school choice programs in Milwaukee and elsewhere has challenged the conventional wisdom that families with low incomes cannot or will not make good choices for their own children.

In this paper we examine the American tradition of educational freedom, following its ebb and flow at various points in our history. America's ethos of educational freedom has always been strong, tied to our values of pluralism, tolerance, and free inquiry. But our legacy of freedom has suffered repeated assaults by individuals and groups who wish to use state control over schooling to homogenize American culture.

We then examine recent victories for educational freedom, such as the historic Supreme Court decision upholding school choice and the introduction of new school choice programs around the country. Finally, we outline the most critical additional freedoms that parents and families need in the areas of school choice, private school freedom, homeschooling, and religious neutrality.

Recent victories for educational freedom are encouraging but only a beginning. School choice is legal, but it is not widespread, and opponents of educational freedom are threatening to smother existing private schools in a morass of new regulations, which would dictate everything from curriculum to staffing.

Supporters of educational freedom must not win legal battles while losing the public policy war. An educational freedom agenda including choice for all families, religious neutrality, freedom for private schools, and protection for homeschooling families will ensure that educational freedom provides real benefits to families who are harmed by current policies.

Recently there has been a division in the home education movement over the political agenda of the Home School Legal Defense Association, the evangelical Christian group that has emerged as the leading lobbyist for home education issues. HSLDA is backing a congressional bill called the Home School Non-Discrimination Act (HONDA) that is opposed by many other home educators. HONDA would give homeschoolers access to certain federal funds and tax breaks, as well prevent colleges from denying admission on the basis of homeschooled status. HONDA opponents argue there is no need for this legislation, and that the bill would actually open the door for federal regulation of homeschooling. For example, the bill contains a congressional finding that home education "has proven to be an effective means for young people to achieve success on standardized tests and to learn valuable socialization skills." This could easily lead teacher unions and Department of Education bureaucrats to argue for mandatory testing and curriculum regulation of homeschools.

HSLDA could be falling into the trap Cato warns of: Winning trivial battles while surrendering on the larger policy issues. It doesn't help any when HSLDA's leader, Michael Farris, is seen promoting non-home education issues, such as his recent testimony calling for a constitutional amendment to ban gay marraiges. The educational establishment remains dismissive of homeschooling because of the well-known affiliation between home educators and evangelical Christianity. Ultimately, the home education movement must fully embrace individual rights as the basis of their cause; to do any less will squander the moral (and policy) high ground.

::: posted by Skip Oliva at 5:25 PM | link | donate |

Rights and Reason: Compulsory Service in Illinois

Slavery was justified in antebellum America on economic grounds: Without slaves, Southern states argued, the region's agrarian economy would not survive. The notion of sacrificing human beings for the economic needs of others was discredited of course, due in large part to Illinois native Abraham Lincoln. Now the Land of Lincoln wants to revive involuntary servitude--and not just for blacks:

Illinois high school students could be required to perform volunteer work in their communities in order to graduate and devote more class time to physical education under ideas floated Thursday by Gov. Blagojevich.

The governor said both concepts -- hatched by him and wife Patti in the last week -- are preliminary but are designed to steer young people away from watching too much television and improve both their bodies and minds.

The ideas were presented in tandem with a more formalized plan that Blagojevich intends to present to the General Assembly next spring that would require 50 hours of community service for high-achieving students who qualify for state-funded $1,000 scholarships.

"I think it's important for all kids to recognize they have a responsibility to their communities," the governor said following a breakfast gathering in Springfield devoted to civic activism.

"To the extent you can keep kids focused on things that are productive -- whether it's their homework, their studies, working in a job or serving their community -- that's a healthy, productive, good use of time," he said. "That is much better than too much time in front of the television."

If a community service graduation requirement were added to the state curriculum, Illinois would join Maryland as the only states with such a standard. Maryland now requires 75 hours of community service to graduate high school, the governor said.

This is classic state paternalism. The governor reasons that all children, left to pursue their individual interests, will become antisocial, television watching parasites. He does not allow for the possibility that schoolchildren are pursuing their rational self-interests, be it a talent for music, playing a sport, participating in scientific research, and so forth. Instead, the governor brazenly declares the existence of a social "problem" and imposes a one-size-fits-all solution that, not coincidentally, provides the state with a captive work force to attend to political pet projects.

The governor's proposal did not occur without some context. Chicago's public schools require 40 hours of "mandatory volunteerism." A spokesman for the city schools gushed about the students' forced productivity: "We have kids who restore wetlands, build gardens and work with the homeless, housing, the environment, race relations and violence prevention. It's really exciting stuff." If Southern slaveholders of the 1840s had press spokesmen, no doubt they would have gushed about the increased cotton yield, record exports to Europe, and high standard of living resulting from the work of "volunteer" African workers.

Not surprisingly, the local teacher unions support the governor's proposal--assuming, of course, that the program comes with more taxpayer dollars:

Anne Davis, president of the Illinois Education Association, said the governor's ideas have merit and pledged backing from the state's largest teachers union. But she voiced concerns about whether cash-strapped local school districts could deal with the new requirements without more funding from the state.

"They seem laudable, but certainly the resources would need to be there to make it happen," Davis said.

The more control schools have over the lives of students, the more control teacher unions will have over the schools. The governor, being a Democrat, is well aware of this. It is in the interest of everyone in the establishment to ensure students are not given the ability to think or act in their own self-interest; if they did, there would be a sudden realization that government schools are an enemy of individual rights, and thus of America's founding principles. That's precisely the sort of message one cannot learn in an environment that holds "mandatory volunteerism" up as a heroic ideal.

(Thanks to Daryl Cobranchi for bringing this story to my attention.)

::: posted by Skip Oliva at 5:04 PM | link | donate |

Antitrust News: Easterbrook vs. Reason

The New Republic's Gregg Easterbook is a notorious anti-capitalist when it comes to professional sports. For years he's used his popular Tuesday Morning Quarterback column to rail against the NFL's "monopoly" over their own broadcast rights:

And, as Tuesday Morning Quarterback may possibly have mentioned, the solution to the problem of local affiliates airing woofer games -- NFL Sunday Ticket, which allows viewers to pay $209 per season to watch any contest -- continues to be available strictly on a monopoly basis to subscribers of DirecTV, the satellite service. Only about 10 percent of American households subscribe to DirecTV; many millions of American households cannot receive the DirecTV signal for technical reasons, regardless of willingness to pay. (TMQ keeps a running count: Of those people I personally know who have tried to subscribe to DirecTV, three have been able to get the signal and eight found it impossible to sign up, including yours truly.) Bad pairings air on free TV; the best games are often shown only via a monopoly service that 90 percent of Americans can't or don't get.

The Sunday Ticket part seems like total lunacy until you take into account that DirecTV is in the process of being sold to Rupert Murdoch, who thrives on establishing media cartels. Murdoch is paying the league about $400 million a year to maintain this particular monopoly. So the NFL gets many dineros, and Murdoch adds a monopoly to his portfolio. But with all the talk of Congress being opposed to media consolidation, TMQ continues to wonder why Congress doesn't investigate the DirecTV monopoly over Sunday Ticket. The primary effect of the NFL's deal with the DirecTV devil is, after all, to shaft American taxpayers whose tax monies make NFL stadiums and profits possible.

Easterbrook believes the NFL's broadcast rights are not private property, but rather a public good that should be subject to government regulation. His argument lacks moral authority and internal consistency. Currently the NFL licenses its broadcast rights to four entities--DirecTV, Fox television, ABC-ESPN, and CBS. The latter three run games on free television. CBS and Fox each air local games in their particular market, and alternate the Sunday afternoon "national" game. ABC airs the Monday night game nationally and sister network ESPN airs the Sunday night game on basic cable. DirecTV airs all of the Sunday telecasts--essentially a collection of the Fox and CBS local broadcasts. It is this last arrangement Easterbrook has deemed a "monopoly."

Even among antitrust wonks, it's difficult to argue a company can monopolize the sale of its own product. If you sell to one customer, by definition you're not selling that item to another potential customer. That's not monopolization--that's voluntary trade. If the NFL wanted to, it could license all of its over-the-air broadcast rights to one network rather than three. In fact, the NFL spreads its television rights out better than its competitors: Major League Baseball has only two outlets (Fox and ESPN); the NBA has two (ESPN and Turner); and the NHL just one (ESPN). Now, the other leagues allow local teams to sell their own broadcast rights, while the NFL does not, but that only proves the NFL is better at meeting a consumer demand. All NFL games are broadcast on national television. That's what makes the product so attractive to broadcasters and their advertisers.

Easterbrook bases his call for regulation solely on the fact that many NFL teams received the support of local governments in constructing stadiums. This is like adopting John Banzhaf's argument that the courts should impose tort liability on fast food companies because their products contribute higher public health costs; Easterbrook is using a red herring to mask the fact he wants regulation to accommodate his personal agenda. Don't get me wrong. I oppose any government financing of private stadiums. But as a capitalist, I will not argue the answer to some government intervention is total government control. Easterbrook, not being a capitalist, argues it the other way: the presence of government money justifies the abolition of private property rights. Never mind the fact no local government was forced to pony-up millions for stadiums. In some cities, government funding was approved by referendum. Is Easterbrook now saying the public isn't responsible for its own bad judgment?

Alternatively, Easterbrook seems to be arguing for an expansion of the "essential facilities" doctrine. This is an antitrust rule that permits the government to regulate (or outright control) a private-sector operation that has become "essential" to the public. For example, the Supreme Court has held the Associated Press is an essential facility because newspapers rely on its wire service; therefore the AP may not exclude any newspaper that wishes to join. Similarly, if the NFL is deemed "essential" to the public, the government may regulate the sale of the league's broadcast rights in the "public interest." Or in this case, in Gregg Easterbrook's interest. It's all much the same thing really.

Furthermore, Easterbrook's "monopoly" claim regarding DirecTV ignores another important fact, pointed out by my colleague Eric McErlain, that DirecTV itself is not a monopoly, but rather an emerging competitor with local cable systems--which themselves are largely heavily regulated government monopolies. Easterbrook harps on the relatively low coverage of DirecTV's system; but the same could have been said for cable just 20 years ago. Would Easterbrook have opposed the NFL's decision in the late 1980s to put a marquee game each week on ESPN? After all, ESPN was not universally available at the time, thus constituting a "monopoly" in Easterbrook's mind. (McErlain also points out most sports bars have DirecTV, enabling any willing fan to find a game to his liking by patronizing such an establishment; McErlain forgets the first rule of antitrust is "the customer is always right, even if that means stealing from the producer".)

Finally, Easterbrook's hatred of Rupert Murdoch seems to be clouding what little judgment he has left. Exactly where has Murdoch established a "media cartel"? Fox Television remains America's third- or fourth-rated network, depending on how you keep score; Fox News Channel is #1 in a highly competitive cable news market; Murdoch's British network faces an uphill fight against the taxpayer-financed BBC; and Fox Sports controls the national rights to just two of the four major sports (and only one-third of the NFL package at that.) The fact that DirecTV holds exclusive rights to the NFL's satellite broadcast rights doesn't mean that much in the grand scheme of things. In fact, such exclusivity is necessary precisely because the satellite technology is relatively new and lacks the institutional support enjoyed by cable and broadcast television.

Back in the early 1960s, the only television source for NFL games was CBS. Not until the NFL's merger with the AFL did the multi-network system emerge (the AFL's rights were held by NBC; ABC's Monday Night Football started in the 1970s.) Contrary to the belief of antitrust advocates, competition is not a prerequisite for a free-market economy. Competition often comes only after an initial producer can demonstrate profitability.

::: posted by Skip Oliva at 3:42 PM | link | donate |

Rights and Reason: The Fat Wars, cont'd

Did John Banzhaf lie to Congress? Tech Central Station's Sandy Szwarc exposes numerous contradictions in the George Washington University law professor's public statements regarding his attacks on fast food companies.

One fact the TCS story mentions, and which doesn't get enough attention, is that Banzhaf requires students in one of his classes to file a lawsuit as part of their class requirements. One such lawsuit was filed against McDonald's, a favoritze Banzhaf target. The fact that GWU Law School permits this to occur under the facade of academics is shameful. Banzhaf should not be rewarded with a prominent faculty position for clogging the system with meritless "public interest" lawsuits; he should be fired and disbarred.

::: posted by Skip Oliva at 9:31 AM | link | donate |

The Culture: The George Bush Award goes to Teddy Kennedy

Jennifer Harper of the Washington Times reports that Sen. Edward Kennedy is being honored with the George Bush award.

The Massachusetts Democrat has been selected to receive the 2003 George Bush Award for Excellence in Public Service on Nov. 7, directly from the hands of former President George H.W. Bush himself.

Mr. Kennedy will be the first American to receive the award, which has gone to former Soviet leader Mikhail Gorbachev and former German Chancellor Helmut Kohl in recent years.

The senator has been lauded as a man who "consistently and courageously fought for his principles ... his commitment to excellence in public policy and his devotion to public service serve as an inspiration to all Americans."

There may be a small timing problem, however.

"The decision to make this award was made before Mr. Kennedy made his remarks," said a source familiar with the situation.

Over the past two weeks, Mr. Kennedy has offered strident and vitriolic criticism of President Bush � son of the former president who will share that Texas stage and offer Mr. Kennedy a hearty handshake, a $20,000 prize and a sparkling crystal trophy.

Among other things, Mr. Kennedy challenged the legitimacy of the war in Iraq, claiming it was "made up in Texas," and that "the administration is muddling through day-by-day." He called the recent report about weapons of mass destruction in Iraq "an insult to our troops."

But such untimely political fisticuffs won't mar the ceremonies, both camps reported yesterday.

Bush Presidential Foundation spokesman Penrod Thornton said the event will go forward as planned, and that Mr. Kennedy is indeed the "appropriate" winner. On Saturday, Mr. Thornton told the (College Station) Eagle that the award hinges upon "personalities and contributions of the individuals, and it didn't have anything to do with politics."

Forget Iraq for a moment. This is totally fitting. Teddy Kennedy has had his hands in almost every expansion of state power that has come out of the Senate since he was first elected: HMO�s. Minimum wage laws. The Americans with Disabilities Act. . . I could go on for hours. Throw in Mary Jo Kopechne for good measure.

If we are defined by our heroes, one has to wonder what kind of man George H.W. really is to feel the need to honor Teddy Kennedy with his namesake award. Not one who cares about principles, it would seem.

::: posted by Nicholas Provenzo at 5:07 AM | link | donate |

Thursday, October 09, 2003 :::

The Courts: Confirming Mediocrity

With all the trouble Senate Democrats have given qualified judicial nominees like Priscilla Owen and Miguel Estrada, I'll be quite disappointed if Chuck Schumer & Co. doesn't oppose Pennsylvania Attorney General D. Michael Fisher's nomination to the U.S. Court of Appeals for the Third Circuit. Like most state AGs these days, Fisher is a two-bit political hack who has shown himself to be anti-business and anti-property rights. Fisher got CAC's attention last year when--in the midst of his failed run for governor--he abused the powers of his office to stop a planned sale of the Hershey chocolate company. Fisher pandered to the fears of Hershey workers over the economic effects of the sale, and he went to court under the facade of his duty to regulate charities (Hershey's majority owner is a charitable trust). It was a galling display by a Republican leader.

Why President Bush feels the need to reward this man with a lifetime judicial appointment is beyond me. I'm sure there are plenty of qualified lawyers in-and-around the Third Circuit who could serve with distinction.

::: posted by Skip Oliva at 10:13 AM | link | donate |

Wednesday, October 08, 2003 :::

Antitrust News: The Oracle Battle Looms

Tom Taulli discusses the implications of the looming antitrust war over Oracle-PeopleSoft at the Motley Fool:

Last week, a USAToday.com story indicated that the Justice Department is soliciting statements from customers of Oracle and PeopleSoft. The implication, obviously, is that the department might attempt to block the deal.

Before jumping into the fray yourself, keep in mind that antitrust confounds even highly paid, ridiculously specialized experts. It doesn't help that there's little new to go on. Mergers & Acquisitions (M&A) activity has been almost non-existent in recent years, and regulators simply haven't had the opportunity to indicate their views on antitrust.

This will change, and the Oracle case is likely to have considerable impact -- especially as relates to the technology sector.

Ultimately, this particular case comes down to defining the relevant market. PeopleSoft will argue that the combination leaves only two main companies for ERP (enterprise resource planning) software. If there is any unanimity in antitrust, it is that three-to-two mergers almost always get blocked.

Oracle, on the other hand, claims that ERP is a fiction. Instead, the company believes that there are many submarkets within the enterprise software market and companies have many applications to choose from.

But expect regulators to pull a surprise and consider novel theories, such as incumbency. ERP installations are expensive and time-consuming, and switching providers is a headache. It will be temping for dominant companies to exert power over customers (if past behavior is any predictor, Larry Ellison might give in to this temptation).

Bottom line, this deal is extremely complex (it gets even worse if you look at state antitrust actions, as well as those from the European Union). But whatever the courts decide, it will have a significant impact on future M&A in big tech. That's the real story here.

If Oracle gets a free ride, expect more combinations across the board. If not, the outcome could throw cold water on deal activity for years to come.

The lack of M&A activity also explains why the FTC and DOJ have turned their attention to seemingly trivial conduct cases, such as their prosecutions of "price-fixing" physicians and private ethical codes. In the absence of substantial M&A activity, the antitrust agencies need something to justify their continued existence; reducing the size of the agencies is obviously never an option for any government bureaucracy (only for private firms that must generate profits to survive).

Susan Creighton, the FTC's chief antitrust regulator, made her name expanding antitrust's reach into the tech industry. In the past year she's pushed prosecutions to undo two relatively insignificant tech mergers in markets far smaller than Oracle's. Both the FTC and DOJ are filled with pro-antitrust Republicans raised in the shadow of the Microsoft case. I expect an aggressive push to stop the Oracle-PeopleSoft deal, and for that matter any major tech merger attempted in the next few years. The Bush administration has made a conscious decision to use antitrust in place of overt regulation to micromanage the tech sector. If they push too far, however, the result will likely be a prolonged tech stagnation which will hurt overall economic growth. But don't expect the higher-ups in the White House to figure that out before it's too late.

::: posted by Skip Oliva at 4:00 PM | link | donate |

Politics: Recalling the Numbers

At the start of the California recall, I was concerned that the replacement governor, if any, would lack an electoral mandate. Looks like I had nothing to worry about. With 99.4% of the votes counted, Arnold Schwarzenegger received 3,639,302 votes. In contrast, Governor Davis was re-elected last November with 3,533,490 votes. Lt. Gov. Cruz Bustamante received just over 2.4 million votes in the recall, marking a net Democratic loss of over 1.1 million votes.

::: posted by Skip Oliva at 1:32 PM | link | donate |

Rights and Reason: Post-Recall Fever

While I share the concerns of many over the use of a recall process to remove a sitting governor, Gray Davis had to be recalled in the end. As I explained in this Initium yesterday, the governor's decision to sign legislation forcing almost all the state's businesses to finance health insurance for their employees was an attack that could not be justified. At a time when California's government cannot finance its own operations and where the private-sector is recovering from a recession, the health care mandate demonstrated Davis was unfit to live in a free society, much less govern one. Whatever one thinks of the governor-elect, at a minimum we are likely to see a moratorium on any additional anti-business mandates.

Had Davis been retained last night, there is no doubt in my mind the Democratic governor and his union allies would have used the victory to exact retribution on businesses for their support of the recall. California's unions, notably their government-worker unions, are led by some of the sickest, anti-capitalist bastards in the nation. While I would not expect a new governor to reverse all of the California's problems in one term, it is essential to clearly identify the public sector unions as the major political barrier to genuine free-market reform in the state.

::: posted by Skip Oliva at 10:31 AM | link | donate |

The Courts: Game On!

I promised to refrain from further Do Not Call comments until the U.S. Courts of Appeals for the Tenth Circuit had something to say. Now the Court has said something, issuing a stay that allows the FTC to put the registry into effect.

I have no great objection to the stay, even though I do not believe any irreperable harm would result by delaying enforcement of the registry until the Court of Appeals decides the merits. The stay almost certainly means the court will overturn the Denver district court's ruling that the registry violates the First Amendment. In a perverse sense, this is what should happen. The district court found the FTC unfairly singled-out commercial telemarketers while exempting religious and political telemarketers. This makes it sound like the FTC is playing favorites. But nothing could be further from the truth. If the FTC thought it could get away with subjecting all telemarketers to the DNC registry, it would have. The Commission traditionally views their jurisdiction and power as unlimited. But in this case, Supreme Court precedents clearly segregate "commercial" and "non-commercial" speech into separate constitutional categories. The FTC chose not to risk serious challenge to the Do Not Call registry by playing along with the Court's categorization. Accordingly, I would not expect the Tenth Circuit to punish the FTC for doing what the judiciary essentially instructed it to do.

CAC has long advocated abandoning the judicial commercial speech doctrine, but the Do Not Call case is not the proper forum for addressing that issue.

::: posted by Skip Oliva at 10:20 AM | link | donate |

Tuesday, October 07, 2003 :::

The Courts: Let's Get Ready to Rumble

The Supreme Court opens for oral arguments today. At 11 a.m. the justices will hear the original jurisdiction case of Virginia v. Maryland. The neighboring states are arguing over who controls the Potomac River. I'm taking Virginia and the three points.

::: posted by Skip Oliva at 12:54 AM | link | donate |

Politics: Recall Day is Here

October 2003 will either be remembered for Arnold's election as governor or the possible Cubs-Red Sox World Series. I suspect the former is more likely (sorry Bostonians, I doubt you'll get past the hated Yankees). With the California recall election hours away, I thought I'd offer an observation on where Gray Davis went wrong, politically speaking.

Back during my George Washington University days, there was a controversial election for Student Association president. I won't recount the details, but suffice to say the eventual winner's legitimacy was not accepted by many on campus (myself included). Things quickly progressed from bad to worse, and by the fall semester members of the Student Senate circulated a petition to commence impeachment proceedings, something that had only been done once before in the Student Association's history.

The impeachment trial was quite a spectacle. It didn't begin until arounf 10 p.m., and the Senate's verdict was announced just after 7:30 a.m. the next morning. The president was charged with eight impeachment articles, but was only found guilty of one--a vague catch-all charge alleging "gross negligence in performance of his duties and responsibilities". I forgot what that was supposed to mean despite the fact I was part of the team that drafted the impeachment articles.

Anyhow, the impeached president could have survived had it not been for a couple critical mistakes he made after the impeachment effort was launched. First, he sent an e-mail to the student body announcing his decision to dissolve the Student Association and form a new interim student government that would be free of "selfish politics". That was classic, but ineffective. The second mistake was using Student Association funds to hold a thinly veiled anti-impeachment rally two day before the trial. That made everyone mad. Finally, the president's testimony at the trial was rather shallow and unconvincing. This was the most forgivable error, however, because he didn't take the stand until 2 a.m. in the morning.

Here's the moral of the story: It's not what you do before you get into trouble, but what you do after that usually decides your fate. Had our intrepid Student Association president laid low and made a few token gestures to his opponents, the impeachment would have fizzled rather quickly. Even with all his errors, he came within a couple votes of beating the rap. Instead he reacted with moral indignation and portrayed himself as the wronged party. That only infuriated and emboldened his enemies further.

Similarly, Gray Davis could have squelched this recall before it got to this point. A little humility and some willingness to consider policies other than raising taxes and paying off unions would have gone a long way. Instead, Davis dug in his heels and acted like everyone else was crazy for questioning his lousy job performance. He tried to make himself a victim. People hate when prissy white-boy politicians do that. Except for Bill Clinton. Then again, Clinton did get impeached, something only two other presidents faced.

::: posted by Skip Oliva at 12:38 AM | link | donate |

Monday, October 06, 2003 :::

The Courts: First Monday is Here

Today is the traditional opening of the Supreme Court's new Term. Normally there would be oral arguments, but because of the Jewish holiday, the justices will defer the first arguments until tomorrow. The Court did release an 83-page orders list, however, disposing of several hundred petitions made during the summer recess. CAC was tracking three pending petitions for possible amicus briefs. Of the three, two were denied outright, and a third lives on for now.

The two cases denied review were Infineon Technologies v. Rambus, Inc. and George Washington University v. District of Columbia. The Infineon case is part of an ongoing dispute between Rambus, a California-based developer of computer technology, and several industry competitors who claim they were essentially duped them into adopting Rambus' proprietary technology as an industry standard. A trial jury ruled against Rambus on some claims, but the U.S. Court of Appeals for the Federal Circuit--which has nationwide jurisdiction over intellectual property appeals--vindicated Rambus as a matter of law. The anti-Rambus faction, represented by Ken Starr, enjoyed backing from numerous amici, including several state attorneys general, but the Court apparently found nothing in the Federal Circuit's decision worthy of review.

This is not the end of Rambus' legal troubles, however. For over a year now, the Federal Trade Commission has prosecuted an administrative case against Rambus for violating the antitrust laws. The FTC's claims are based on the same exact facts the failed Infineon case was, but the FTC is never one to yield to the authority of more competent tribunals. If anything, FTC staff has made a big deal of its Rambus case, using it as a platform to attack various ideas antithetical to the FTC's worldview--things such as intellectual property rights, due process, and separation of powers. Rambus' opponents have been openly colluding with FTC staff in pursuing the Rambus case, and while the company stands a good chance of prevailing in the long-run, it will be several more years before the matter is concluded.

The George Washington case, like Rambus, involves a long-running dispute between competing private interests. Like all universities in Washington, GW is required to submit an overall development plan to the District's zoning authorities every ten years. In the most recent review, the District decided to impose an arbitrary cap on the number of full-time students GW could enroll. GW filed a federal suit to overturn this restriction, arguing numerous violations of the school's due process rights. The District of Columbia Circuit ruled for the city. While GW had a strong argument, I thought, its presentation was weak.

I attended the oral arguments at the D.C. Circuit, and GW counsel Deborah Baum presented arguments that made no sense at all. For example, she contended an enrollment cap violated GW's First Amendment right to "academic freedom," a claim she also presented in GW's petition to the Supreme Court. That's one of the stupidest things I've ever heard. Academic freedom only applies to the content of subject matter taught by a university, not to the number or even composition of the student body. While I agree GW's property rights were trampled on by D.C., that has little to do with the First Amendment.

The third case we've been keeping an eye on is 3M v. LePage's, an appeal of the Third Circuit's decision to uphold a $68 million judgment against 3M, the nation's largest transparent tape producer. LePage's, a competing tape company, claimed 3M used its pricing policies to squeeze LePage's out of a particular sub-market of transparent tape. Despite the fact LePage's still dominated the sub-market in question--and the fact 3M did not resort to "below-cost" pricing, a typical antitrust violation--a jury awarded damages to LePage's. A divided three-judge panel of the Third Circuit initially reversed in favor of 3M, but the full 11-judge court later reinstated the judgment.

The Supreme Court did not dispose of 3M's petition for review today. Instead, the justices asked Solicitor General Ted Olson to file a brief expressing the federal government's view of the case. This is a wise move. The Third Circuit's decision hinges on how broadly section 2 of the Sherman Act should be read to restrict a dominant firm's pricing policies. If the original Third Circuit panel's view is accepted, firms like 3M will enjoy greater protection of their economic rights in the marketplace. A narrower reading might also limit the scope of government antitrust prosecutions. Given the current administration's obsession with stamping out "price-fixing" in business, I'm surprised the Justice Department didn't voluntarily submit a brief to the Court on this case.

Having said that, the Court's invitation is not a totally positive sign. The Solicitor General is likely to heed the Antitrust Division's wishes and seek to uphold the Third Circuit's decision, which means the Government will likely reccomend not addressing 3M's petition at this time. Still, I'll be positive for now and wait to see exactly what the Solicitor General says.

::: posted by Skip Oliva at 1:43 PM | link | donate |

The War: "Restraint" in the war against Islamic Militants

I'm shaking my head at this AP report:

The Bush administration is calling for restraint in the Middle East following Israel's strike against Syria while labeling the Damascus government a supporter of terrorists.

The administration did not criticize Israel for Sunday's attack, which Israel said was directed at a training camp for Islamic Jihad, the group claiming responsibility for a suicide bombing that caused heavy casualties Saturday in Israel.

But the State Department declared that Syria "must cease harboring terrorists and make a clean break from those responsible for planning and directing terrorist action from Syrian soil."

Arab leaders warned that a "circle of violence" could surround the region after Israeli warplanes attacked deep inside Syria for the first time in three decades.

The U.N. Security Council called an emergency meeting Sunday to discuss Syria's complaint to Secretary-General Kofi Annan about the strikes near Damascus.

President Bush telephoned Israeli Prime Minister Ariel Sharon to offer condolences and condemnation for the Haifa bombing that killed 19 people.

The two agreed on a need to continue fighting terrorism and "on the need to avoid heightened tension in the region at this time," said Ken Lesius, a White House spokesman.

Administration officials said Israel had not informed Washington in advance of its retaliatory strike nor indicated whether it intended any move against Palestinian leader Yasser Arafat to remove him from his West Bank headquarters.

The State Department has listed Syria as a state sponsor of terrorism since the list's inception some 30 years ago. It contends Syria offers sanctuary and political protection to groups such as Hezbollah, Hamas and Islamic Jihad--all considered terror organizations by the United States.

The United States is urging Israel and Syria "to avoid actions that could lead to an escalation of tension," said Joann Moore, a State Department spokeswoman.

Why is the US calling for Israel to avoid actions that could lead to an escalation of tension? There doesn�t need to be �restraint� in the war against terrorism--there needs to be righteous anger and the willingness to act. Murderous and tyrannical enemies who are morally committed to destruction don�t deserve a pass--they deserve martyrdom.

::: posted by Nicholas Provenzo at 11:12 AM | link | donate |

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