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This is the world John Banzhaf wants to create. The only question is, will you let him?
::: posted by Skip Oliva
at 10:40 AM | link
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Friday, December 12, 2003 :::
Capitalism and the Law: Who's the real Christmas Grinch?
Businessmen get blamed for everything. Consider the following AP story:
Some bonus.
Hourly workers at Tower Automotive received $15 gift cards redeemable at Meijer grocery-retail stores before Thanksgiving. Then the automotive supplier decided the cards were "same as cash" gifts subject to federal and state income taxes totaling 36.75 percent.
That means the "gift" will take $5.51 out of the workers' next paychecks, the Traverse City Record-Eagle reported Friday.
"It's got a lot of people ticked off," said Donald McKee of Kingsley, a welding technician who's worked almost 13 years at the plant in Grand Traverse County's Garfield Township. "This is the lowest they've gone yet to give us something and then take it back."
A Tower manager who didn't want to be named told the newspaper the situation was "very unfortunate." Tighter accounting standards in the wake of Enron and other corporate scandals have prompted more scrutiny of employee benefits, including minor payouts like the gift card, he said.
United Auto Workers Local 5110, which represents about 300 hourly workers, has filed a contract grievance over the matter. Some workers also have returned the gift cards rather than pay the tax, Tower said.
Is there some new law out there that says when a company gives an employee money in the form of a year-end bonus, that money is exempt from taxation? Under the tax code, a payment like a gift certificate is taxed at its fair market value, which in this case, was $15.00. Just what was Tower Automotive supposed to do? Defy the Internal Revenue Service? Break the corporate accountability laws that promise businessmen criminal penalties if any part of a financial statement is false? Last I checked, there’s no exemption in the law for under the table gifts.
Yet notice how sniveling and whiny the report reveals Tower Automotive’s workers to be. And the leaders of United Auto Workers Local 5110 aren’t far behind them. What do they expect? That their contract grievance is going to hold because their employer had the audacity to follow the law?
What a bunch of idiots. If I ran Tower Automotive, I’d take the cards back and tell my employees to send a thank you letter to Congress.
::: posted by Nicholas Provenzo
at 3:45 PM | link
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Crime and Punishment: An insane definition of insanity
I’ve been casually following the trial of sniper suspect Lee Boyd Malvo. I came across the following in an AP report of the trial:
Lee Boyd Malvo was legally insane during last year's sniper spree because of intense indoctrination by sniper mastermind John Allen Muhammad, a defense psychiatrist testified Wednesday at Malvo's trial.
"Lee was unable to distinguish between right and wrong and was unable to resist the impulse" to commit the killings, said Neil Blumberg, who examined Malvo 20 times in jail. "From day one, I thought he met the legal criteria for insanity."
Psychiatrist Diane Schetky, who twice interviewed Malvo, also testified that the 18-year-old Malvo, 17 at the time of the killings, was unable to tell right from wrong.
Defense mental health experts have said Malvo was taught by Muhammad that right and wrong are artificial concepts and that the winner in a war determines who is right. Muhammad likened the sniper attacks to a war against the United States government, which he said oppresses blacks.
"He basically became a soldier in Muhammad's war against America," Blumberg said. "He was one with (Muhammad). He became absolutely convinced that what he was doing was a righteous cause."
Said Schetky: "He was merged with Mr. Muhammad. He was acting as his proxy. They were one and the same. He was like a puppet in his hands."
[ . . .]
Schetky diagnosed Malvo with a dissociative disorder, a mental illness that she said distorted Malvo's perception of reality, a result of indoctrination by Muhammad.
Blumberg said Malvo still has the disorder, citing as evidence the defendant's constant doodling during a trial in which he could be sentenced to die.
Believing that right and wrong are artificial concepts? Disassociation instead of integration? Constant doodling? Half of academia and all of France would be insane by that standard.
Not all are in agreement with such a standard though. Dr. Michael J. Hurd, a Washington DC-based psychotherapist and author says Malvo’s defense is nonsense.
There is no such thing as a psychological disorder which leads people to become so loyal that they're willing to kill. It's conjecture and excuse-making taken to a nearly incomprehensible extreme. Did it ever occur to the defense psychiatrist that Malvo's loyalty was not to Muhammad but to his own irrational, twisted code of values?
Exactly. Insanity means not being mentally responsible for one’s actions as a result of mental disease or defect. Nowhere has it been shown that Malvo suffers from any physical disease or defect. What Malvo suffers from is the consequences of his own wicked choices, including his choice to associate with John Mohammad. Yet Dr. Hurd’s voice is a lonely one. Too few of his profession are rushing to condemn Malvo’s defense as outrageous.
The cornerstone of capitalism is the recognition that the individual human mind is efficacious and must be left unshackled and protected from force if the individual is to prosper. In the Malvo case, the psychiatric profession is attempting to raise a criminal’s evil choice to use force to the level of a disease. In the process, it is working to undercut the very foundation of our free society.
I expect Malvo will be convicted and punished for his crimes. Nevertheless we should take pause to consider why the ridiculous arguments of his defense were ever offered in the first place.
::: posted by Nicholas Provenzo
at 1:01 PM | link
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Thursday, December 11, 2003 :::
Rights & Reason: Death by Living Wage
A New Mexico state court has rejected an antitrust challenge to the city of Santa Fe’s decision to force certain business owners to pay employees a $10.50 minimum wage—a “living wage,” according to supporters. Various business groups, including New Mexicans for Free Enterprise, challenged the ban as an affront to businessmen’s rights. We all know how much courts love those arguments. The antitrust argument—the city was price-fixing by requiring the wage—struck me as particularly innovative. But the judge granted Santa Fe summary judgment on that point.
All was not lost, however. The businessmen’s case will still go to trial to decide whether the law violates the equal protection provisions of New Mexico’s constitution. The judge is concerned that the law may unfairly discriminate against certain business owners, since the “living wage” only applies to businesses with more than 25 nonunion employees, and other businesses may obtain a waiver from city officials, a sure sign that political favoritism will enter into the process.
Santa Fe was represented by lawyers from New York University’s Brennan Center for Justice, a leftist academic group. That should tell you everything you need to know about this case. But just in case you need more direct evidence, consider this statement from one of the Brennan Center lawyers: “The (New Mexico) Legislature specifically granted the city the power to enact the legislation it did. New Mexico gives enormous power to its municipalities. There's no question a living-wage ordinance promotes the health and general welfare of the people of Santa Fe.”
This statement should given even moderate Democrats pause. It says, without qualification, that any law tied to “health and general welfare,” no matter how impractical or repugnant to individual rights, should be treated as axiomatic by the courts. Not only must we have a “living wage ordinance,” we must not be able to question its objective truth or wisdom. If you accept this lawyer’s premise, you’ve effectively abolished the right to think for yourself. After all, what right does any individual have to question a policy that promotes “health and general welfare?”
Those of us who believe in reason and individual rights, however, can easily determine this statement is based on fraudulent premises. For one thing, whatever powers the State of New Mexico grants to its municipalities, those powers must derive in the first instance from the people. There is no divine right of bureaucrats. Granted, New Mexico already imposes a statewide minimum wage, but this practice is unconstitutional. The government may not impose conditions on private contractual relationships; it certainly has no valid authority to fix prices in private commerce.
Furthermore, there is no “living wage.” In theory, the living wage is the minimum amount of money a person must earn to support his family above the poverty line. But each individual has distinct economic needs. One person’s living wage is another person’s second job. Two centuries of economic experiences teaches us that fixing price levels does not stabilize demand or individual economic needs. Quite the opposite: Price controls reek havoc on the economy by destroying the natural connection between supply and demand. The living wage creates more economic uncertainty, not an egalitarian utopia.
::: posted by Skip Oliva
at 9:06 PM | link
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Wednesday, December 10, 2003 :::
Sports: Diversity Patrol
The Atlanta Falcons fired head coach Dan Reeves today. No surprise there. The question now becomes, how committed is Falcons owner Arthur Blank to “diversity”? Coincidentally, yesterday the NFL issued “a set of interviewing guidelines” designed to “assist clubs in implementing the NFL policy on equal employment and diversity.” Blank serves on the NFL’s Committee on Workplace Diversity—along with five other white, male owners—which drafted the guidelines. Now Blank will have to comply with its requirements.
And there are many requirements. The basic goal of the policy is to get more African-American candidates interviewed, and hopefully hired, for head coaching positions. There are currently three black head coaches in the NFL: Cincinnati’s Marvin Lewis, Indianapolis’ Tony Dungy, and the New York Jets’ Herman Edwards. The NFL’s lawyers are afraid that’s not enough. Civil rights agitators have been knocking on the league’s door in recent years (spurred on by sympathetic media commentators) demanding more, ahem, affirmative action on the lack of black coaches. Last year the league implemented its current policy, which failed the moment Detroit Lions general manager Matt Millen hired the coach he long sought, Steve Mariucci. Millen tried to jump through the league’s diversity hoops by calling in black candidates, but none of them would interview for a position that was already filled. The NFL fined Millen $200,000 to teach him a lesson. What that lesson was still escapes me.
So the lawyers went back to the drawing board and drew up a step-by-step guide to diverse interviewing practices. There are ten specific guidelines—maybe Roy Moore will display them in a two-ton monument—that break the hiring process down in excruciating detail. Here are two highlights:
First, prior to beginning the interview process, a club should prepare a job description that clearly and fully defines the role of its head coach and the qualities it is looking for in its head coach. Such basic questions as the extent of authority, reporting relationships to the owner and other club executives, responsibility for player personnel and salary cap management, and supervisory duties relating to other club staff need to and should be addressed before interviews begin. As the interviewing process proceeds, it may be appropriate to modify the job description.
* * * * *
Third, as part of the search process, clubs should make certain that they identify a deep and diverse -- by many different criteria -- pool of head coaching candidates. As part of this effort, clubs should be sure that they are knowledgeable about potential minority candidates for the head coaching vacancy both within and outside their own organization. The League Office can provide this information, and consideration should normally be given at the outset to using the League as a resource for helping to identify qualified minority and nonminority candidates.
The first requirement sounds like it was written by a first-year MBA student with no practical work experience. Do they expect NFL owners to put out a “help wanted” ad for head coaches? If you ask most owners what they expect from a coach, they’ll answer “win more games than you lose.”
The third requirement takes diversity as an anti-concept to a new plateau. First, it’s ridiculously pejorative to divide people into “minority and nonminority” classifications. It makes black coaches sound like they’re an endangered species that needs protecting from ravenous wolves. Just using such language gives your overall initiative the appearance of being a sham. Second, what precisely are the “many different criteria” teams are supposed to use in assembling a candidate pool? Couldn’t that conflict with the first requirement’s call for an explicit job description? For example, Washington Redskins owner Dan Snyder hired Steve Spurrier for a very specific set of reasons: Spurrier was an established name, he ran a particular offense that appealed to Snyder, and he didn’t ask for too much personnel authority. Snyder did not go out and interview candidates that fit the opposite profile, because he knew what he wanted. This means Snyder isn’t committed enough to diversity, right? Wrong. When he fired Norv Turner in 2000, Snyder offered the interim coaching job to two black candidates, one of whom declined. And today the Redskins have two black coordinators serving under Spurrier. Snyder gets called a lot of names, but racist isn’t one of them.
The “many different criteria” guideline is classic lawyer-speak: it sounds ominous, but is impossible to define in practice. It is the exact opposite of a well-thought out concept, which means it can only be assessed on a case-by-case basis, precisely what the lawyers intended.
Having said all this, I don’t want people to take the NFL’s action too seriously. This isn’t like the University of Michigan case, which involved taxpayer supported universities allegedly dedicated to education. For all the pomp and lawyering, the NFL’s policy applies to the hiring of 32 positions in a nation of 250 million people. This is not an issue anyone should be storming the barricades over.
Still, I am curious why the number of black head coaches isn’t higher. The first thing I’d like to know is what percentage of all football coaches—high school, college, and professional—are black. We already know the percentage of coaches that are black is lower than the percentage of players that are black. But overall, how many blacks go into coaching in the first place? I’ve never seen that question answered. Is it possible blacks simply aren’t as interested in coaching as whites? Many if not most coaches never play beyond the collegiate level. What happens to black college players who graduate but don’t go to the NFL? If someone knows of any data on these issues, please let me know.
The real scandal, if one exists, is the noticeable lack of black head coaches in Division I-A college football. There’s currently four or five, I can’t remember which, black coaches out of about 116 programs. That really makes you think, especially given the ferocity with which most major colleges defend general affirmative action programs. For example, the last time I checked, the University of Michigan had a white dude coaching their football team; yet when it comes to undergraduate admissions, the school insisted on strict racial quotas.
Another theme that the NFL’s policy tries to address is the notion, popularized by the media, that black coaches are waiting too long before getting their first head coaching job. This point was hammered home when Marvin Lewis was hired by the Bengals; after serving as Baltimore’s defensive coordinator during that team’s 2000 Super Bowl season, commenters spent three years bemoaning the lack of a head coaching offer.
But did Lewis wait that much longer than other coaches? Using the NFL Record and Fact Book, I calculated the number of years each of NFL’s 31 active head coaches (I excluded the fired Reeves and his interim successor) took to go from their first assistant coaching job to their first NFL head coaching job. The mean was 17 years. Lewis took 22 years. That would seem to support the media’s argument. But the league’s other two black coaches took less than 17 years: Tony Dungy took 14 years, Herman Edwards only 12. And some successful white coaches took as long or longer than Lewis to get their shots: Mike Martz took 27 years to arrive as coach of the Rams, which he led to a Super Bowl; Brian Billick needed 22 years to get the head coaching job in Baltimore, the same number of years as his former assistant Lewis.
One thing that seems to help potential head coaches rise to the top faster is extensive pro playing experience. Herm Edwards’ short 12-year rise was likely facilitated by his nine-year career. Mike Tice got the Minnesota job after just six years of coaching, but he also had 14 years of playing experience. In the NBA, far more coaches were pro players, which might explain why there are more black coaches. But most football head coaches didn’t have a pro playing career. Once again, this raises an interesting question: Do black football players want to coach?
Finally, I have to laugh when thinking about Arthur Blank following his own diversity policy. Before buying the Falcons, Blank made his fortune as a co-founder of Home Depot. Is this a man who needs to be lectured on hiring the best people regardless of race?
::: posted by Skip Oliva
at 5:31 PM | link
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Rights & Reason: Campaign "Reform" Upheld
This morning the Supreme Court ruled in McConnell v. FEC, the consolidated challenges to the Bipartisan Campaign Reform Act. By a 5-4 vote, the Court upheld most of the challenged provisions, notably the “soft money” ban. Two provisions were invalidated: one banning minors from making political contributions, and the other banned political parties from making expenditures to candidates they actually nominated.
Plenty of people will analyze the Court’s 298 page ruling (including a 19 page summary) to death, and I’m happy to leave that task to them. This case has never interested me. Yes, BCRA is a wretched violation of the First Amendment, the Court’s ruling to the contrary notwithstanding. But history has taught us that every time a government tries to regulate its citizens’ rights away, those committed to preserving individual rights will find a way around it. The Alien and Sedition Acts failed. Prohibition failed. The draft fell. Campaign finance reform too will pass.
I’m not even upset with the Court for its decision. Justice O’Connor joined the “liberal” voting bloc of the Court to swing the case, hardly a surprise. Remember, O’Connor is the most partisan of the justices, meaning she’s most likely to side with the wishes of a Republican administration. In this case, President Bush defended the law, which effectively locked up O’Connor’s vote. Also remember it was Bush who signed the BCRA despite declaring it unconstitutional during the 2000 campaign. George W. Bush alone bears the responsibility for putting BCRA into law.
::: posted by Skip Oliva
at 1:31 PM | link
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It is a fact of life that perception is often more important than reality. This is especially so in politics, where people can be dogged by impressions even when they are completely untrue. A classic example is the notion that former Vice President Dan Quayle is stupid, a view still widely held that I know to be false, having worked with him dating back to his days in the Senate. Nevertheless, once this idea took root, it became impossible to dislodge. Everything Mr. Quayle did was interpreted through this prism, magnifying any mistake he made, no matter how small.
I believe President Bush is in danger of creating a perception about himself that may prove equally hard to eradicate if it is allowed to continue. That is the view he is "Nixonian," having an approach toward politics and policy paralleling that of Richard Nixon. It is characterized by a willingness to subordinate everything to one's re-election — to say and do anything to advance this goal, with no concern whatsoever for the long-term consequences.
* * * * *
This is very dangerous for President Bush. Nixon is one of the few presidents in history reviled almost equally by left and right. The former will never forgive him for Watergate and bringing down Alger Hiss. The latter remains disgusted by Nixon's wage and price controls, his creation of the Environmental Protection Agency and other regulatory agencies, and his overtures to the Soviet Union and Red China.
On the other hand, President Bush exhibits no signs of the rampant paranoia that helped bring Nixon down. And when it comes to overall philosophy, President Bush may actually prove more dangerous than Nixon. This president advocates “compassionate conservatism,” a concrete-bound altruist muddle that mixes the worst of leftism and neo-conservatism. Nixon was just nuts. He was an obsessive-compulsive politician constantly seeking public adulation. The turning point for Nixon came when he lost the presidency in 1960 (under questionable circumstances) to John Kennedy. After that, Nixon became consumed with both avenging his defeat and becoming more popular than the Kennedys.
(One sees Nixon’s political personality revived in the form of Al Gore; his endorsement of Howard Dean—a candidate that bears little resemblance to the Clinton-Gore campaigns—suggests the former vice president is consumed with avenging what he considers a tainted defeat.)
And we should keep in mind that Nixon’s disastrous politics got him re-elected in 1972 by an overwhelming margin over a radical Democrat. Many have already drawn the Dean-McGovern parallel. But that too may miss the point. Dean is far better organized than McGovern ever was, and he will have far greater command of the Democratic Party when he takes the nomination next summer in Boston. McGovern was a candidate born of chaos; Dean, whatever his policy faults, is arguably the best organized candidate ever heading into the primary season. That doesn’t mean Dean will win the presidency; it just means he won’t be casually dismissed as a fringe lunatic. President Bush, on the other hand, is starting to lose control of his base. When that happened to his father eleven years ago, it was pretty much game over by the conventions.
The only saving grace for Bush is that he won’t face a primary challenge as his father did from Pat Buchanan. The only two postwar presidents to lose re-election—George H.W. Bush and Jimmy Carter—were irrevocably weakened by strong early primary challengers. A third president, Lyndon Johnson, pulled out of a re-election race when a number of strong challengers entered the field. Bush’s clear path to re-nomination gives him a strong incumbency advantage heading into 2004, and that may be enough to secure reelection. But the question remains, how much philosophical and economic damage will the president do on his path to reelection? The Medicare bill was the largest political attack on free market philosophy since Bill Clinton pushed through his tax increase in 1993. I shudder to think what Bush has in mind for a second term encore.
::: posted by Skip Oliva
at 1:16 PM | link
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Tuesday, December 09, 2003 :::
Rights & Reason: Got Taxpayer Money?
Institute for Justice is taking on government-mandated advertising. For those of you who don't know, the government routinely requires various agricultural producers to chip in for generic industry ads designed to boost interest in the product. Radley Balko explains:
So all of those "Got Milk?" ads you've seen aren't the result of milk producers getting together voluntarily to launch an ad campaign, they're the result of a federal mandate requiring every dairy producer to pay up, whether they want to or not.
IJ is representing a small dairy farm that wishes not to associate itself with its Big Dairy competitors.
I think there's another interesting angle to this story, too. The federal government is simultaneously requiring diary producers fund ad campaigns for milk, while cozying up to nanny-state organizations that criticize Big Dairy for promoting an unhealthy product in those very campaigns.
When the day comes that John Banzhaf finally launches his class action suit against Big Dairy or Big Pork, then, will he be able to name as co-defendant every dairy producer who was compelled by law to support the ad campaigns?
There's another connection that needs to be made: Banzhaf's lawsuits are predicated on the view that unhealthy habits, of any kind, injure society because of the extensive network of government spending on healthcare. In other words, if people eat too much and get heart disease, the public picks up the tab via Medicare, Medicaid, or indirectly through other healthcare subsidies. The simple answer is to get the government out of health care spending. But that's obviously too simple an answer for a "public interest" terrorist (er, lawyer) like Banzhaf.
Like the forced advertising requirement, forced taxpayer spending on health care imposes unnecessary costs on the marketplace, while creating a whole host of contradictions that never seem to get resolved.
::: posted by Skip Oliva
at 11:40 PM | link
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Sports: BCS Musings
My media patron, Steve Czaban, said last night on his national radio show that the BCS serves three purposes: to make a lot of money for the BCS conference schools, to prevent the creation of a playoff tournament, and to exclude non-BCS schools from sharing in the wealth. Czaban's view echoes that of most media commentators, whose reactions to this past weekend's Oklahoma-USC-LSU fiasco range from morally indignant to apoplectic. Like these folks, I agree the BCS is a dumb system that should be scrapped for the sake of all parties involved. However, I disagree with Czaban that the BCS schools are trying to sabotage the creation of a playoff tournament.
The major stumbling block to a playoff is not the BCS, but the NCAA. Keep in mind the NCAA is actually three different organizations: Division I, Division II, and Division III. Each division has its own board of directors and essentially maintains its own rules. Under current Division I rules, a school in Division I-A can only play in one "postseason" game. That's why the BCS hasn't created even a mini-playoff among just the major schools. Sure, the NCAA rule can be amended, but that's a complicated process that involves input from many interest groups. And if the rule is changed and a playoff allowed, NCAA leaders are going to want control over that tournament. Right now, the bowls are run by local host committees in association with the conferences. Neither of these groups are eager to hand the NCAA office in Indianapolis greater control.
BCS critics point to the success of the NCAA basketball tournament as evidence a playoff would improve college football. While the tournament is great viewing, it also comes with a terrible price. The NCAA controls the pot of money from the tournament, and so long as that's the case, the players will never see a dime, because the NCAA leadership remains steadfastly committee to "amateurism," an anti-capitalist, anti-individual rights philosophy. An NCAA-run football playoff would produce exactly the same problem. And what concerns me more about football is that subjecting top players to three or four more weeks of games (on top of the 12 or 13 regular season games most all schools play) substantially increases the risk of injuries that threaten a player's NFL draft status. In effect, the NCAA would be exploiting the players for short-term gain while risking destruction of their long-term financial health. This is hardly the message colleges and universities should be sending.
So my position is this: No playoff until we dismantle the NCAA and replace it with an organization that will pay the players. Until then, I'd be content to revert to the pre-BCS bowl system, where the games maintained strong regional and conference affiliations.
::: posted by Skip Oliva
at 1:51 PM | link
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Politics: Budget Derailment
This news brief in the Metro section of today's Washington Times caught my eye:
Prosecutors in the Washington Teachers' Union case said they are mired in evidence and have asked attorneys for the four defendants to waive their rights to a "speedy trial."
The problem is the government has 50 boxes of documents that could be introduced at trial, but federal prosecutors say they cannot pay to have much of the evidence photocopied because Congress has not approved the Justice Department's fiscal 2004 budget.
The federal government's 2004 fiscal year began on October 1, more than two months ago. So why doesn't the DOJ have its budget yet? In the federal budget process, Congress divides the government's appropriations into thirteen separate bills (each overseen by a separate subcommittee of each chamber's appropriations committee.) Thus far, Congress has only passed six: Defense, Energy & Water, Homeland Security, Interior, legislative branch, and military construction. Every other agency has been operating under a series of "continuing resolutions," which temporarily continue funding at levels from the previous fiscal year. There have already been six continuing resolutions; the most recent will keep everything open until January 31, 2004, nearly one-third of the way into the fiscal year.
Because of this backlog, the seven remaining appropriations bills have been smacked together into one giant "omnibus" appropriations bill. This one piece of legislation will spend about $375 billion on various programs. The House passed the omnibus yesterday 242-176. The Senate won't vote until January, however, because Democrats want more time to study and debate the measure.
I won't criticize the Democrats for this delay. Omnibus bills are notorious for including all sorts of riders and special projects designed to win votes. Frankly, we're better off under a continuing resolution, since that keeps spending levels lower than what the omnibus bill provides. Still, it's disturbing to think the DOJ can't fund a criminal prosecution—a basic function of government—because Congress can't pass a budget on time.
The outrageous thing is that with Congress and the White House in Republican hands, the budget process still broke down. The blame for this, in my view, rests squarely with the majority leaders in both chambers: Tom DeLay in the House and Bill Frist in the Senate. Both are first-year majority leaders, which may explain part of the problem. The first job of the leaders is running the schedule. Both men spent most of the year focused on placating the White House's demand for a prescription drug benefit and a pork-laden energy bill. The result was this end-of-the-year breakdown on appropriations. Frist in particular has done a lousy job, given his inability to move the President's judicial nominations through the Senate.
::: posted by Skip Oliva
at 1:38 PM | link
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Monday, December 08, 2003 :::
Politics: Does Medicare Cover Context Dropping?
Cesar Conda, until recently Vice President Cheney’s top domestic policy aide, is going to bat for his old White House bosses by defending the Medicare bill. Like most Bush apologists, Conda insists we’re not seeing the virtue in a $400 billion expansion of a failed government program:
Conservatives have long had an uneasy relationship with health policy. Outside of their efforts to defeat "Hillary-care" and other Democratic initiatives to socialize our health-care system, the conservative movement rarely addresses health-care policy — a failure that has resulted in the issue being virtually monopolized by liberal Democrats in the eyes of both the media and voters.
The Medicare bill is not a perfect statement of conservative philosophy, to be sure. The cost is huge. But it does contain some good, meaningful, conservative policy reforms.
Conservatives will finally have an alternative to liberal arguments that the only way to cover the uninsured is by government fiat. This bill dramatically expands Medical Savings Accounts, now renamed Health Savings Accounts (HSAs). These accounts are owned and funded by individuals, just like IRAs, and are used to pay nearly any medical expense — all in tax-free dollars.
* * * * *
By definition, conservatives believe a market is preferable to a monopoly — and for the first time, a government entitlement program is losing its monopoly. While the legislation rejected the broad idea of all-out competition pushed by House GOP conservatives, it does provide for limited competition starting in 2010. Conservatives would be wise to support and protect this reform, because you can be sure liberals will try to kill it before it is even born.
Conda’s playing with smoke and mirrors. Yes, the Medicare bill does provide for expansion of HSAs, but it’s not as “dramatic” as he wants us to believe. As for “limited competition,” the political reality is that competition is not forthcoming in most markets. In fact, many Republican legislators conditioned their votes for the Medicare bill on receiving assurances that their districts and states would be exempt from “limited” competition six years from now.
What really galls me, though, is how Conda ignores a major problem with current health policy—the continued antitrust persecution of physicians. If doctors were free to jointly contract with HMOs and other payers, some semblance of free market order would return to health care. Repealing the 1993 FTC-DOJ policy banning physicians from joint contracting (in essence, a ban on making money) would do more to help “competition” and consumers than anything in the current Medicare bill.
And Conda knows about the physician antitrust problem. How do I know? Because I briefed him on the issue personally several months ago when he was still at the White House. A mutual colleague arranged the meeting so I could brief Conda on recent antitrust activity. I spent a good deal of my briefing on the physician antitrust issue. I have no idea if he ever followed up on our conversation before he left the White House, but his one-note defense of the Medicare bill indicates that he probably never gave my concerns serious attention. That’s a shame, because if Conda had spoken up within the White House, the FTC might have been reined in a bit. Now we have an aggressive FTC hell-bent on bankrupting the nation’s physicians, and a President with his head in the sand on the true consequences of his own Medicare bill.
::: posted by Skip Oliva
at 11:04 PM | link
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WASHINGTON, D.C. — Hendrikus van Westenbrugge, a former co-Managing Director of JO Tankers B.V., based in Spijkenisse, the Netherlands, was charged in Philadelphia today with participating in an international cartel to allocate customers, rig bids and fix prices on parcel tanker affreightment contracts for shipments of specialty liquids to and from the United States and elsewhere, the Justice Department announced.
Van Westenbrugge has agreed to plead guilty and cooperate with the ongoing investigation. In addition, van Westenbrugge, a Dutch citizen, has agreed to serve three months incarceration and pay a fine of $75,000. The plea agreement and recommended sentence are subject to court approval. "This case demonstrates our ongoing commitment to prosecute high-ranking executives who participate in international cartels that victimize American businesses," said R. Hewitt Pate, Assistant Attorney General in charge of the Department's Antitrust Division.
Parcel tanker shipping is the transportation of bulk chemicals, edible oils, acids and other specialty liquids by compartmentalized deep sea vessels. The temperature and other specifications of the compartments in the vessels can be regulated according to the specific requirements of the type of liquid being transported. A contract of affreightment provides for the transportation of bulk liquids from one port to another and typically covers multiple shipments during a certain period.
According to the charges, van Westenbrugge joined the ongoing parcel tanker shipping conspiracy as early as January 2001 and participated until at least as late as November 2002. The criminal case charges that van Westenbrugge and his co-conspirators:
engaged in discussions concerning customers and prices of parcel tanker shipping of products to and from the United States and elsewhere;
agreed not to compete for one another's customers either by not submitting prices or bids to certain customers, or by submitting intentionally high prices or bids to certain customers; and
discussed and exchanged prices submitted to certain customers so as to not undercut one another's prices.
As a result, the Department said consumers in the market for international parcel tanker shipping services paid non-competitive and higher prices for parcel tanker shipping.
Notice that two of the DOJ's three charges involve simple acts of speech. The other charge, agreeing not to compete, involves the most basic of individual economic rights—the right not to engage in trade. Obviously, the DOJ begs to differ. They argue that speech is illegal when it relates to illegal activity and that no person may enter into a contract that "restrains trade." But these arguments miss the point. To say speech is illegal when it relates to a criminal activity is circular; under that reasoning, any act of speech may be banned (that is, subject to prior restraint) because it may lead to actions disfavored by the government. But more to the point, the speech at issue here involves discussions of prices and customers. It might involve defrauding customers—and if that is the case, the private tort system is the proper forum for resolving the issue—but there is no act of force warranting the government's intervention. At no point, according to these allegations, did the defendants conspire to deny any customer his legal rights.
Once again, the DOJ will protest, saying customers were denied their right to "competitive" prices. But that is not a right. First of all, how does one determine "competitive" prices? In a free market, prices are objectively determined by the agreements made by buyers and sellers. If a group of sellers (or a group of buyers, for that matter) join together to insist on a particular price level, then so be it. The resulting price still reflects market principles. The DOJ, in contrast, seeks to prevent sellers from exercising any control over pricing; accordingly, the government initiates antitrust prosecution whenever a buyer complains that he's paying more than he'd care to. By prosecuting the sellers, the DOJ replaces the free market with a government-run system where sellers have economic rights only at the government's discretion.
When you establish a "right" to a particular price backed by government order, you have a price control. The DOJ would never call it that, but that's what it is.
Cases like this demonstrate the necessity of repealing the Supreme Court's "commercial speech doctrine," which segregates "commercial" and "noncommercial" speech, assigning the former class lesser First Amendment protection. The result is a policy of treating commercial speech as inherently suspect, and the mere exchange of information a criminal act.
::: posted by Skip Oliva
at 9:23 PM | link
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Rights & Reason: The Blind Guiding the Blind
The Federal Trade Commission issued the following media advisory today: "The Federal Trade Commission will host a press conference Tuesday December 9, 2003 to unveil new media guidance for weight loss advertising claims."
Translation: the FTC will tell weight loss advertisers what they can and can't say; any deviation from the FTC's position will result in immediate prosecution. The antitrust assault on the First Amendment continues.
::: posted by Skip Oliva
at 9:08 PM | link
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With all the hysteria (some of it well founded) over the Patriot Act’s potential for curtailing civil liberties, I would hope the folks protesting that law take note of a more powerful threat to individual rights—antitrust:
A coalition of California telecommunications companies has asked the state attorney general to investigate whether some of the nation's largest phone companies violated antitrust law when they secretly discussed plans to build a war chest to lobby against government regulation.
In a letter to Attorney General Bill Lockyer, the coalition alleges that plans discussed at the October meeting "will harm competition in the state's telecommunications market and cost California consumers and businesses hundreds of millions of dollars per year.''
The letter was sent by the California Association of Competitive Telecommunications Companies (Caltel). It represents companies such as AT&T and Sprint that compete with local phone carriers, including SBC Communications and Verizon Communications. Several smaller telecom firms are also members.
The meeting of executives from SBC, BellSouth, Verizon and other companies took place last month in Washington, D.C. The executives asked their equipment suppliers to contribute to a multimillion-dollar war chest that would help "end government regulation of competition,'' says a memo that laid the groundwork for the meeting.
It should be axiomatic that lobbying the government is free speech, not illegal activity. But antitrust already is used to curtail free speech: Physicians cannot discuss HMO contracts with each other; newspapers are prosecuted for not presenting a diversity of views; media companies are punished for trying to reach too large an audience. While traditional antitrust doctrine still frowns upon prosecuting businesses for joint lobbying activities, all it takes is one or two enterprising state attorneys general to cross that threshold. Look for more than one or two to take action here. The phone company is too popular a target.
::: posted by Skip Oliva
at 7:30 PM | link
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Supply & Demand: Vaccinating the Marketplace
Today’s Wall Street Journal offers an explanation for this year’s shortage in flue vaccines—anticompetitive conduct by the government:
The report by the [Institute of Medicine], an arm of the National Academy of Sciences, noted that there has been a steady erosion in the number of vaccine producers over the past three decades. In the 1970s, there were 25 vaccine makers; today—because of slim profit margins and legislative and liability issues—there are just five. With such a small number of producers, shortages can develop quickly as a result of manufacturing problems or a bad guess on the expected demand.
* * * * *
For makers of all types of vaccines, the Institute of Medicine’s report traced the decline in manufacturers’ interest to the fact that the U.S. government—predominantly through the Vaccines for Children program run by the CDC—buys slightly more than 50% of the vaccines in the U.S. and keeps prices low.
The CDC program “negotiates” discounted vaccine prices with manufacturers, then the CDC makes that price level available to states to provide free vaccinations to uninsured children. This sounds like a perfect program if you’re a leftist or a “compassionate” conservative, but ultimately the system is designed to fail. For one thing, as the Journal points out, vaccines lack a solid distribution network. The government’s purchasing dominance makes it impossible for a thriving private market to develop, and vaccine manufacturers are consequently unable to respond to regional shifts in demand; this means some areas are left without vaccines during critical periods.
A second problem is that most vaccination costs are borne by health care providers, especially doctors and clinics. I spoke to a health care manager last year who told me physicians in her network lost money for each vaccination, since the insurance companies deliberately reimbursed physicians below cost. Of course, the doctors could get together and confront the insurers, but then they would be subject to antitrust prosecution by the FTC.
(Incidentally, note the name of the CDC’s program—“Vaccines for Children.” The name is intended to preempt any debate over the program’s objectives or function; after all, what pragmatist politician wants to be seen attacking “Vaccines for Children”).
All of this should give Bush administration apologists pause when they tout the recently passed Medicare bill. The President essentially wants to run the entire pharmaceutical market the way the CDC runs the vaccine market. It doesn’t matter whether it’s the CDC or government-subsidized HMOs doing the purchasing; when you introduce the element of coercion into the market, the market will cease to function properly. You wreck the very supply-and-demand mechanism that’s essential to the market’s survival.
::: posted by Skip Oliva
at 4:46 PM | link
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