Quotulatiousness

November 28, 2017

Evergreen headline – “FCC bureaucrats don’t know what they’re talking about”

Filed under: Government, Liberty, Media, USA — Tags: , , , , — Nicholas @ 03:00

Nick Gillespie on the heightening panic over the FCC’s reversal of the controversial Net Neutrality rules:

Current Federal Communications Commission (FCC) Chairman Ajit Pai memorably told Reason that “net neutrality” rules were “a solution that won’t work to a problem that doesn’t exist.”

Yet in 2015, despite a blessed lack of throttling of specific traffic streams, blocking of websites, and other feared behavior by internet service providers (ISPs) and mobile carriers, the FCC issued net neutrality rules that gave the federal government the right to punish business practices under Title II regulations designed for the old state-enabled Bell telephone monopoly.

Now that Pai, who became chairman earlier this year, has announced an FCC vote to repeal the Obama-era regulations, he is being pilloried by progressives, liberals, Democrats, and web giants ranging from Google to Netflix to Amazon to Facebook, often in the name of protecting an “open internet” that would let little companies and startups flourish like in the good old days before Google, Netflix, Amazon, and Facebook dominated everything. Even the Electronic Frontier Foundation (EFF), which back in 2009 called FCC attempts to claim jurisdiction over the internet a “Trojan Horse” for government control, is squarely against the repeal.

[…]

Yet the panic over the repeal of net neutrality is misguided for any number of reasons.

First and foremost, the repeal simply returns the internet back to pre-2015 rules where there were absolutely no systematic issues related to throttling and blocking of sites (and no, ISPs weren’t to blame for Netflix quality issues in 2013). As Pai stressed in an exclusive interview with Reason last week, one major impact of net neutrality regs was a historic decline in investment in internet infrastructure, which would ultimately make things worse for all users. Why bother building out more capacity if there’s a strong likelihood that the government will effectively nationalize your pipes? Despite fears, the fact is that in the run-up to government regulation, both the average speed and number of internet connections (especially mobile) continued to climb and the percentage of Americans without “advanced telecommunications capability” dropped from 20 percent to 10 percent between 2012 and 2014, according to the FCC (see table 7 in full report). Nobody likes paying for the internet or for cell service, but the fact is that services have been getting better and options have been growing for most people.

Second, as Reason contributor Thomas W. Hazlett, a former chief economist for the FCC, writes in The New York Daily News, even FCC bureaucrats don’t know what they’re talking about.

Hazlett notes that in a recent debate former FCC Chairman Tom Wheeler, who implemented the 2015 net neutrality rules after explicit lobbying by President Obama, said the rise of AOL to dominance during the late 1990s proved the need for the sort of government regulation he imposed. But “AOL’s foray only became possible when regulators in the 1980s peeled back ‘Title II’ mandates, the very regulations that Wheeler’s FCC imposed on broadband providers in 2015,” writes Hazlett. “AOL’s experiment started small and grew huge, discovering progressively better ways to serve consumers. Wheeler’s chosen example of innovation demonstrates how dangerous it is to impose one particular platform, freezing business models in place.”

September 24, 2017

Rolling back the regulation tide

Filed under: Bureaucracy, Business, Government, USA — Tags: , , — Nicholas @ 03:00

Megan McArdle on the Trump administration’s attempt to rein-in the regulation machine of the US federal government and its many, many agencies:

One of the first things Trump did as president was to sign an executive order requiring that two regulations be rolled back for every new one that was promulgated. As a longtime advocate of rolling back regulatory complexity, I found a lot to like in this rule. Unless strenuous effort is made to regularly prune them back, regulations have a tendency to blindly grow until they have wrapped the economy so tight that nothing can breathe, much less thrive. Trump’s executive order forces us to do some very necessary maintenance.

Unfortunately, it’s a rather crude instrument for the job. It’s possible that nothing more nuanced would actually work; nuance and flexibility, alas, give regulators quite a bit of discretion to put off an annoying chore. Just the same, we should recognize the dangers of cutting with such a dull knife.

In agencies that are dealing with a genuinely new and disruptive force — one for which innovators need regulatory clarity before they can bring a product to market — such a strict regulatory requirement faces them with an unpalatable dilemma. Every new regulation that is vitally necessary means finding two regulations that aren’t. But each of those dusty old rules was created for a reason. Some of those reasons were bad; in some cases the rule never worked as intended; and in others the rule later became obsolete. But that does not describe all of our regulations. And imagine the brutal publicity that will ensue if someone dies or gets hurt in an accident that could plausibly have been prevented by a rescinded rule.

An even larger problem is that the “two for one” rule doesn’t really tell us about the relative quality of the regulations involved. An agency could satisfy that executive order by issuing a terrible, stupid, costly regulation that forced power companies to rip out their windmills, as long as it repealed two sensible and necessary regulations that (for now) prevent factories from dumping toxic waste into our watersheds.

Reducing regulatory complexity is an important goal, but it cannot be our only goal. We ought to strive for less regulation, yes, but also for good regulation, and for regulation that gives companies enough clarity to innovate and build their businesses. Unfortunately, while the Trump administration has proven enthusiastic about the first goal, we’ve seen much less talk about the others. And given how long it has taken for Trump to staff all the agencies he oversees, we haven’t really had the personnel to deliver on things like better regulation, even if doing so were the Trump administration’s main priority.

May 20, 2017

Net Neutrality Nixed: Why John Oliver is Wrong

Filed under: Humour, Law, Liberty, Technology — Tags: , , , — Nicholas @ 05:00

Published on 19 May 2017

Progressives are freaking out now that the Federal Communications Commission (FCC) is beginning the repeal of Net Neutrality regulations, which give the government the right to regulate Internet Service Providers (ISPs).
—————-
The main arguments in favor of Net Neutrality are really arguments guarding against hypotheticals: that ISPs could otherwise block and censor content (they never have) or that they’ll run their operations like shakedowns, requiring content providers to pay up or slow their traffic to molasses. The main documented instance of an ISP favoring one content provider over others wasn’t sinister collusion. Metro PCS offered unlimited YouTube in a budget data plan but not unlimited Hulu and Netflix, because YouTube had a compression system that could be adapted to the carrier’s low-bandwidth network. In a different context, critics might have applauded Metro PCS, since bought by T-Mobile, for bringing more options to lower-income customers.

Net Neutrality is a proxy battle over what type of internet we want to have — one characterized by technocratic regulations or one based on innovation and emergent order. Progessives are generally suspicious of complex systems existing without powerful regulators present and accounted for. Small-government folks are repulsed by bureaucrats in general, and think the internet will fair better in a state of benign neglect. The FCC has come down on the side of an organic internet, instead of treating the internet more like a public utility.

We don’t know how the internet is going to evolve over time, but neither do the government administrators trying to rein it in. But given the record of free-market innovation vs. government-regulated services, the odds are with market forces and entrepreneurs.

Written and performed by Andrew Heaton, with writing assistance from Sarah Rose Siskind and David Fried.

Edited by Austin Bragg and Siskind.

Produced by Meredith and Austin Bragg.

Theme Song: Frozen by Surfer Blood.

May 10, 2017

Raging Bitch, Good Shit, and Flying Dog Beer’s Fight for Free Speech

Filed under: Business, Law, Liberty, USA — Tags: , , , , — Nicholas @ 16:21

Published on 10 May 2017

“I’ve lived my life as a pro free enterprise person,” explains Flying Dog Brewery CEO Jim Caruso. “Not pro business. Pro free enterprise, pro consumer choice, artisanal manufacturing.”

A central player in America’s craft beer revolution, Caruso is dedicated to creating something special both inside and outside the bottle. Famed artist Ralph Steadman, best known for his iconic illustrations for work by Hunter S. Thompson, creates all of Flying Dog’s labels. It was Steadman who spontaneously wrote on his first commissioned label “good beer, no shit.” And it was this label that kicked of Flying Dog’s first — but not last — fight with government censors.

Caruso sat down with Reason’s Nick Gillespie to talk about his run-ins with the state, why he is a libertarian, and the how his values keep him happy.

“I’m a happy person. And I attribute that to living as an individual, taking self responsibility, self reliance, but connected to society. It’s not a lone ranger sort of thing.”

Cameras by Meredith Bragg, Todd Krainin, and Mark McDaniel. Edited by Bragg.

April 29, 2017

100 Days of Trump: Three Best and Worst Moments of Presidency So Far

Filed under: Liberty, Politics, USA — Tags: , , , , , — Nicholas @ 04:00

Published on 28 Apr 2017

Reason presents the three worst—and the three best—achievements of President Trump’s first 100 days.
____________________________________________

Third Worst Moment: Replace and Repeal FAIL.

Along with his pledge to build a wall on the southern border and deport illegal immigrants en masse, Trump’s campaign was all about ramming through the “Repeal and Replace Obamacare Act,” which would have cut red tape, gotten rid of the individual mandate, and created a true marketplace for medical insurance. Instead, thanks to the president’s own lack of savvy and GOP dithering, it didn’t even get a proper vote in Congress.

Third Best Moment: The nomination and confirmation of Neil Gorsuch.

The nomination of an intellectually powerful and highly respected jurist to replace the late Antonin Scalia on the Supreme Court demonstrated that President Trump isn’t the flake that many critics figured him to be. Neil Gorsuch might not be libertarian, but he is, in the estimation of Georgetown Law’s Randy Barnett, a serious thinker who believes that government power is and should be limited.

Second Worst Moment: The Country That Bombs Together.

The one action for which President Trump has received bipartisan praise was the bombing of a Syrian government air base to protest the alleged use of chemical weapons by the Assad regime. Even opposition leaders such as Nancy Pelosi and Chuck Schumer signed on to a starkly humanitarian intervention that served no greater purpose than rallying voters here in America.

Second Best Moment: Deregulatory appointees at the FDA, FCC, and EPA.

There’s no question that Trump has picked some terrible cabinet members—Attorney General Jeff Sessions has openly talked about ramping up the war on pot in states where it’s legal, for instance. He also defends asset-forfeiture abuse and has hinted at reviving federal porn prosecutions, too. But picks such as Ajit Pai at the Federal Communications Commission, Scott Gottlieb at the Food and Drug Administration, and Scott Pruitt at the Environmental Protection Agency are serious deregulators who are already starting to prune back regulations that accomplish little but cost taxpayers and innovators lots of time, money, and resources.

Worst Moment: Muslim Travel Ban.

The president has issued two executive decrees calling for a moratorium on travel from several majority-Muslim countries and the suspension of America’s refugee program. Both have been stayed by federal courts and it remains unclear if one will ever become the law of the land. Regardless it’s anti-American to effectively establish a religious test for travelers and migrants here—and it also undermines attempts to reach out to the vast majority of Muslims who are the primary targets of Islamic fundamentalism.

Best Moment: He’s Getting Real.

Every new president enters office thinking they can direct the course of human history via his pen or, in the case of Trump, his Twitter feed. For all his bluster and lack of self-awareness, he’s also learning that the world is more complicated than he reckoned. He’s pushed back deadines for all sorts of projects, from funding for his stupid and useless immigration wall to a timeline for tax reform, which shows that he is living in the real world at least. To the extent he realizes that his best path forward is in cutting economic regulations rather than vilifying immigrants, renegotiating trade deals, and starting new wars, he’ll not only be a better president—he’ll create a better America too.

Written by Nick Gillespie. Produced by Paul Detrick and Alexis Garcia.

April 11, 2017

The return of Jane Galt

Filed under: Economics, Politics, USA — Tags: , , , , , — Nicholas @ 05:00

Megan McArdle, who used to blog as “Jane Galt”, did an Ask Me Anything on Reddit:

I’m Megan McArdle, a columnist for Bloomberg View, covering business, economics, public policy and the latest in kitchen gadgets. Ask me anything!

[…]

[–]LegalInspiration 5 points 6 hours ago*

In the short, medium, and long terms, generally speaking, would you say the US as a political and civil society is screwed? If so, how screwed would you say it is? If that’s too argumentative, maybe a more polite way to phrase it is: Do you see the gradual disruption of national unity post WWII as something that will cycle within a set of sustainable boundaries, or will the trend continue long term to the point where the US is no longer sustainable as a coherent and singular entity?

    [–]janegalt[S] 4 points 5 hours ago

    A couple of decades ago, I toyed with the idea of writing a novel where the US broke up into two countries: Liberalstan and Fundamentalistalia. Back then I thought it was a metaphor; now I’m less sure. The country feels more divided than it has in my lifetime, or that of my parents. It may be the worst it’s been since the Palmer Raids; maybe the worst since the Civil War.

    That said, to quote Adam Smith, “There’s a lot of ruin in a nation”. I think we have plenty of room to turn it around. But I think to do so, we need to think creatively about a kinder, gentler nationalism. Not the kind that says “Whee, let’s invade other countries”, but the kind that emphasizes love of country and the things we have in common–not the love we’ll grudgingly dole out after the nation has perfected itself, nor the things we’ll have in common after all those wretches in the other half of the country see the light and/or die. But love of each other right now, despite our many flaws.

    Every country needs a certain amount of myth making, and a certain amount of irrational pride in itself to hold it together. That’s particularly true for America, which can’t derive a national identity from, well, not being America. I think a lot of people imagined that tearing down all the myth making, and disparaging that irrational love of country, would turn us into good global citizens. Only it turns out that the opposite of nationalism isn’t globalism; it’s tribalism. And the tribes are gearing up to make war on each other in a way that the US hasn’t seen for a long time.

[…]

[–]TJIC1 4 points 6 hours ago

You are libertarian – but a “pragmatic” one who suggests / acknowledges that gov is necessarily going to end up in pretty much every corner of everything, and that the space of reasonable policy debate is small changes at the margin. This seems to suggest that we will never repeal FDR innovations like ignoring the 9th and 10th amendment, changing commerce clause to read “Federal gov can do whatever it wants”, etc. What’s the best we can hope for for liberty? What we have today – a modern welfare state where USG consumes 30% of economy and regulates everything from toilet flushing to proper woods to make a guitar fretboard from?

…or a welfare state where USG consumes 50% of the economy?

…or 90%?

[–]janegalt[S] 5 points 5 hours ago*

    The gap between real and ideal for libertarians is certainly wide, and I am less hopeful than I was twenty years ago that we’ll ever close it. I hate the “read whatever the government wants to do into the Constitution” jurisprudence that was required to enable the New Deal, and the fact that judges have appointed themselves to replace poets as the unacknowledged legislators of the world.

    At some point as a commentator you have to decide whether to advocate for first best or eighth best policy. I’ve generally decided to advocate for what I think is politically realistic, rather than what I think is ideal. I think you need both kinds though–the compromisers need the hardline idealists to provide a sort of compass point, and the idealists need the compromisers to provide the actual movement in the right direction.

    That said, this last election was very bad for libertarian ideas, representing a rejection of both our ideas about social policy, and those about political economy. I think libertarians have a lot of hard work ahead thinking about where we can realistically make advances in the next decade or so. I wish I knew the answer to that. My best guess is: the middle class entitlement state is not going to be rolled back. There may be some room for progress on America’s incredibly inefficient regulatory state, which would be a great boon for both economic liberty, and growth. I think the GOP will try to do tax cuts, but will fail to accomplish anything significant, for much the same reasons that their health care bill failed: there’s no money, and no public appetite for a tax cut that mainly benefits the affluent-to-rich (as it will have to, because at this point, the middle class and below don’t pay significant income taxes).

    That said, we should also remember the progress that has been made on the liberty front. In 1944, FDR had the head of Montgomery Ward arrested for thwarting his war planning board; in 1952 Truman nationalized the steel mills. That stuff doesn’t happen any more, and a lot of the worst New Deal regulations have gone away. Police practices are way better than they were before Miranda and other decisions made sure that defendants knew their rights (I’m not saying they’re perfect, but they’re definitely better). And if you’re a minority or a woman, all sorts of legal discrimination has been erased over the last fifty years. Those are major victories for libertarians, and we shouldn’t think that there’s some golden age we’re falling away from. We’ve lost a few, but we’ve won a few too.

January 25, 2017

The “right to repair” gets a boost in three states

Filed under: Business, Law, USA — Tags: , , , , , — Nicholas @ 02:00

Cory Doctorow reports on a hopeful sign that we might be able to get rid of one of the more pernicious aspects of the DMCA rules:

Section 1201 of the 1998 Digital Millennium Copyright Act makes it both a crime and a civil offense to tamper with software locks that control access to copyrighted works — more commonly known as “Digital Rights Management” or DRM. As the number of products with software in them has exploded, the manufacturers of these products have figured out that they can force their customers to use their own property in ways that benefit the company’s shareholders, not the products’ owners — all they have to do is design those products so that using them in other ways requires breaking some DRM.

The conversion of companies’ commercial preferences into legally enforceable rights has been especially devastating to the repair sector, a huge slice of the US economy, as much as 4% of GDP, composed mostly of small mom-n-pop storefront operations that create jobs right in local communities, because repair is a local business. No one wants to send their car, or even their phone, to China or India for servicing.

[…]

Three states are considering “Right to Repair” bills that would override the DMCA’s provisions, making it legal to break DRM to effect repairs, ending the bizarre situation where cat litter boxes are given the same copyright protection as the DVD of Sleeping Beauty. Grassroots campaigns in Nebraska, Minnesota, and New York prompted the introduction of these bills and there’s more on the way. EFF and the Right to Repair coalition are pushing for national legislation too, in the form of the Unlocking Technology Act.

November 17, 2016

Deregulation’s return

Filed under: Business, Economics, Government, USA — Tags: , , , , — Nicholas @ 02:00

I rarely say nice things about Jimmy Carter’s term as president, but he should get more credit for the deregulation that happened under his administration — the lifting of restrictive and obsolete rules over things like railroads, long-distance trucking, and (most important to drinkers) enabling the rebirth of craft brewing — many of the economic benefits were later attributed to Reagan, but Carter did the heavy lifting on several important issues. It’s a hopeful sign that S.A. Miller says Congress and the Senate may be in a deregulatory mode after Trump’s inauguration:

Sen. Rand Paul said Wednesday that he expects a flurry of repeals of Present Obama’s regulations by the next Congress and President-elect Donald Trump.

“You’re gong to find that we are going to repeal a half dozen or more regulations in the first week of Congress, and I’m excited about it because I think the regulations have been killing our jobs and making us less competitive with the world,” the Kentucky Republican said on MSNBC’s Morning Joe program.

Mr. Trump, whose surprise win over Democrat Hillary Clinton sent shock waves across the Washington political establishment, pledged on the campaign trail to tackle over-regulation by the Obama administration.

The federal government has imposed more than 600 major regulations costing Americans roughly $740 billion since Mr. Obama took office in 2009.

Mr. Paul said he viewed many of the regulations under Mr. Obama to be unconstitutional because they were issued without Congress’ approval.

June 26, 2016

The Micklethwait Alpha

Filed under: Business, Government, Liberty — Tags: , — Nicholas @ 02:00

Published on 3 Feb 2013

Brian Micklethwait describes a hypothesis of his regarding the overall effects of state intervention as compared to market liberalisations.

This topic is discussed in greater depth here: http://libertarianhome.co.uk/2013/02/…

(Linked yesterday, but too good not to get its own posting.)

May 31, 2016

Trump is [gasp! shock! horror!] right about California’s water problems

Filed under: Economics, USA — Tags: , , , — Nicholas @ 03:00

Anyone who reads the blog knows I’m not a Trump fan, so it might seem a bit odd that I’m in full agreement with Tim Worstall that Trump is actually right about fixing California’s chronic water shortages:

Much amusement around and about the place as Donald Trump tells California that there is no drought and that when he’s President then there will be plenty of water for everyone. The amusement being that of course, how could anyone spout such nonsense, everyone knows that California’s had a drought for years now!?! Except, of course, that Trump is actually correct here. There is no existential shortage of water in the state, not at all. What there is is misallocation of water and that misallocation is because water is incorrectly priced there. The solution therefore is to get the pricing right: then the allocation will be. We also know something more about this: it doesn’t matter what the current or original allocations are. Getting the price right will solve the problem.

[…]

The answer is, as any passing economist would tell you, that water has to be priced and priced properly. Those activities that do not cover the cost of water will not be done. That frees up water to do the things that add more value than the cost of the water. And that’s it, that’s all that needs to be done. Yes, it will mean radical changes in farming practices for some people: almost certainly a reallocation of water away from alfalfa, rice and almonds over to higher value added crops like vegetables and other fruits. More importantly, water pricing that actually bites will free up vast amounts of water for both industry and domestic use.

Changing the price system will mean that people stop doing the things which are worth less to do than the value of the water needed to do them. Thus, by definition, there’s enough water to do everything that people want to do with the amount of water that is available. It’s a cute system, it works really well. So, obviously, that is what should be done. Whoever owns water rights now (and I’m aware that water rights out West can be a nightmare) should be allowed to sell it to whoever at whatever price anyone offers. That’s all we need do.

May 30, 2016

The greatest German philanthropist you’ve never heard of

Filed under: Economics, Europe — Tags: , — Nicholas @ 02:00

At the Cobden Centre, Alasdair Macleod explains how the sensible reforms of one man rescued the West German economy from rationing, inflation, and deprivation:

Anyone who favours regulation needs to explain away Germany’s post-war success. Her economy had been destroyed, firstly by the Nazi war machine, and then by Allied bombing. We easily forget the state of ruin the country was in, with people in the towns and cities actually starving in the post-war aftermath. The joint British and American military solution was to extend and intensify war-time rationing and throw Marshall aid at the problem.

Then a man called Ludwig Erhard was appointed director of economics by the Bizonal Economic Council, in effect he became finance minister. He decided, against British and American misgivings, as well as opposition from the newly-recreated Social Democrats, to do away with price controls and rationing, which he did in 1948. These moves followed his currency reform that June, which contracted the money supply by about 90%. He also slashed income tax from 85% to 18% on annual incomes over Dm2,500 (US$595 equivalent).

Economists of the Austrian school would comprehend and recommend this strategy, but it goes wholly against the bureaucratic grain. General Lucius Clay, who was the military governor of the US Zone, and to whom Erhard reported, is said to have asked him, “Herr Erhard, my advisers tell me what you have done is a terrible mistake. What do you say to that?”

Erhard replied, “Herr General, pay no attention to them! My advisers tell me the same thing.”

About the same time, a US Colonel confronted Erhard: “How dare you relax our rationing system, when there is a widespread food shortage?”

Erhard replied, “I have not relaxed rationing, I have abolished it. Henceforth the only rationing ticket the people will need will be the deutschemarks. And they will work hard to get those deutschemarks, just wait and see.”

The US Colonel did not have to wait long. According to contemporary accounts, within days of Erhard’s currency reform, shops filled with goods as people realised the money they sold them for would retain its value. People no longer needed to forage for the basics in life, so absenteeism from work halved, and industrial output rose more than 50% in the second half of 1948 alone.

Erhard had spent the war years studying free-market economics, and planning how to structure Germany’s economy for the post-war years. It goes without saying that his free-market approach made him a long-standing and widely recognised opponent of Nazi socialism, a fact that enhanced his credibility with the military authorities tasked with repairing the German economy. He became an early member of the Mont Pelarin Society, a grouping of free-market economists inclined towards the Austrian School, founded in 1947, and whose first President was Hayek.

Erhard simply understood that ending all price regulation, introducing sound money and slashing the burden of taxation, were the basics required to revive the economy, and that the state must resist the temptation to intervene and had to reduce its role in the economy. He remained a highly successful finance minister for fourteen years, before succeeding Adenauer as Chancellor in 1963.

Erhard not only allowed unfettered free markets to rapidly turn Germany around from economic devastation, but being publicly credited with this success he presided over the economy long enough to ensure that bureaucratic meddling was kept at bay subsequently. His legacy served Germany well, despite the generally destructive actions of his successors.

The contrast with Britain’s economic performance was stark, where rationing was not finally lifted until 1954, and her post-war socialist, anti-market government was nationalising key industries. The contrast between Germany’s revival and Britain’s decline could not have been more marked.

September 25, 2015

Reducing income inequality

Filed under: Bureaucracy, Business, Economics, USA — Tags: , , , , — Nicholas @ 02:00

Tim Worstall in Forbes:

There’s a fascinating and very long essay over in National Affairs about how we might cut income inequality. And, contrary to what any number of Democratic candidates for office will tell you, the answer isn’t to impose ever more regulation upon the economy. Rather, it’s to strip away some of the regulation that allows certain favoured income groups to make excessive incomes. Excessive here defined as greater than the economic value they add to the lives of the rest of us, something they achieve by carving out economic rents for themselves. I would, myself, go rather further than the writer, Steven Teves, and start using Mancur Olson’s analysis, that this is what democratic (note, democratic, not Democratic) politics always devolves down into, a carving up of the public sphere to favour certain interest groups. But even this milder version gives us more than just hints about what we should be doing:

    At the same time, however, we have seen an explosion in regulations that shower benefits on the very top of the income distribution. Economists call these “rents,” which we can define for simplicity’s sake as legal barriers to entry or other market distortions created by the state that create excess profits for market incumbents.

Let us take one very simple example of such rents. The earnings of those who possess taxi medallions in cities where there’s an insufficient number issued. Until very recently one such medallion, allowing one single cab to operate on the streets of NYC 24/7, had a capital value of $1 million. That led to a rent, a pure economic rent, of $40,000 a year to allow one cab river to use that medallion for 12 hours of the day. and, obviously, another $40,000 to allow another to use it for another 12 hours a day.

That is purely a rent: and one created by New York City not issuing enough medallions to cover the demand for cab services. Uber has of course exploded into this market and the success of that company, along with its many competitors, shows how pervasive the creation of such rents by limiting taxi numbers has been in cities around the world. That is an obvious and very clear creation of a rent purely through bureaucratic action.

[…]

Deregulating the economy will remove many of those rents. This will reduce income inequality. So, why aren’t those who rail against income inequality shouting for deregulation? Good question and the only proper answers become increasingly cynical. Unions exist for the purpose of creating rents for their members. So, given the union participation in the Democratic Party we’re not going to see calls for deregulation from that side. And different groups, those car dealers perhaps, the doctors, have their hooks into the Republican Party too.

My own answer is that it needs to be done in the same manner that Reagan treated the tax code. Not that I’m particularly stating that Reagan’s tax changes were quite as wondrous as some now think they were, only that it all had to be approached on a Big Bang basis. Everything had to be on the table at the same time so that while there were indeed those who would defend their little corner the over riding interest of all was that all such little corners got eradicated. With this rent creation, given that so much of it is at State level, that won’t really work. Except for one idea that I’ve floated before.

September 18, 2015

Beer? In Ontario grocery stores? It’s more likely than you think

Filed under: Business, Cancon, Government — Tags: , , — Nicholas @ 02:00

Ben’s Beer Blog scores an exclusive interview with Tom Barlow, President and CEO of the Canadian Federation of Independent Grocers on the topic of liberalizing Ontario’s Prohibition-era market access rules for beer:

Some details about beer in grocery stores

  • We will likely see beer on grocery store shelves in the next 18 months
  • The province still hasn’t decided how to auction off licenses to sell beer in a way that is fair to small grocers
  • At least one grocery store chain has stated they’d like to sell “100% craft beer.”
  • If you have fears that bigger brewers are going to be able to buy shelf space, continue to be scared of that very real possibility
  • Brewers will be allowed to do direct-to-store delivery

A transcript of my chat with Tom Barlow, President and CEO of CFIG, edited slightly for length

Ben Johnson: Thanks for chatting with me Tom. It’s been pretty quiet in terms of the announcement about exactly how we’re going to get beer in grocery stores. So can you tell me a little about the process for becoming eligible to sell beer in your stores? Speculation has been pretty rampant that we’d only see bigger chains getting the privilege, so it’s interesting to hear that independent grocers are at the table.

Tom Barlow: Yeah, I’ll share what I can. The regs will be coming out soon, and the people that have been in discussions are under a non-disclosure but what I can tell you is that the original conversation was that it would be just large chains, then the government through consultations with [CFIG] and regions decided that it should be open to “grocery” under the North American definition of what grocery is, namely that they carry fresh produce, fresh meat, and that kind of thing. I don’t know if they’ve settled on a size — there was some discussion that there would be a minimum size — but for all intents and purposes it would be “grocery” and it would be wide open. The discussion we’ve had so far is that there would be so many licenses to start and they’d step it out, then get comfortable, then release some more, and then release some more. The number that was floated was around 450 licenses. That is, 450 retailers are going to have the opportunity to sell beer.

BJ: I’m assuming it’s a bidding process for getting the license and that’s the part you can’t talk about?

TB: They’re still working through the mechanism, but are looking at a biding process. I think we made our point that privately held — vs. publicly held — the access to cash is different, so there needs to be a plan made so all the licenses don’t all get swallowed up by —

BJ: Galen Weston?

TB: — Yeah, exactly. We were a little frustrated at first but after numerous conversations they’ve heard our position, and I think it’s the same with the corporate chains, is that they should have just opened it up to “grocery” from the start. If you’re going to go grocery, go grocery. This contest for picking winners and losers is a slippery slope to be going down.

January 22, 2015

Rumours of privatization in Ontario’s liquor control monopoly?

Filed under: Bureaucracy, Cancon, Government, Law, Wine — Tags: , , , — Nicholas @ 09:57

In the latest issue of Michael Pinkus Wine Review, Michael talks about the hints and portents (dealing with the Ontario government requires a certain amount of Kremlinological observation skills) that a tiny measure of privatization may be coming:

There’s a rumour in the wind that a certain amount of privatization is coming to Ontario (wouldn’t that be nice), but I wouldn’t get my hopes up about it just yet – no time line has been given and I am sure that ‘more study’ is necessary … and of course, if track record is any indication, this government will find some way to either screw it up or make it such a complicated piece of legislation that it’ll take years to get through all the red tape behind it. I once heard Jerry Agar, of NewsTalk 1010 fame, say (and I’m paraphrasing here) ‘if you want something screwed up get government involved’; he’s a proponent of the private sector because they can do it more efficiently than government if only ‘the man’ would just get outta the way … I would have to agree with him here. So far the government has made a mess of our liquor system that even repressed, despotic and 3rd world countries have better access to alcohol then we do.

Sadly, I believe it might be too little too late for some of Ontario wineries who have suffered this long, but might not be around to see the light at the end of the tunnel (if and/or when it comes). Yes, this might be the end of the line for a number of our precious wineries and we only have ourselves to blame for their demise. They have been as vocal as any sector, crying for help, not necessarily a hand out (which the grape growers seem to get) as much as a hand up – basically they’ve been pleading with each government: “please give us access to (our own) market (at the very least) and we’ll show you what we can do”, all to no avail.

Why the pessimistic attitude? Let’s look at the facts. It takes some rather deep pockets to own a winery in Ontario, that or a good credit rating, because money is the number one thing required to open the doors. But making it is more of an uphill battles then in any other business I this province. Post-1993, when the majority of the wineries around today opened their doors, your cellar door is the only place you can sell your wine – sure you could tap into the LCBO and the restaurant market, but that’s it. And although recent federal regulations have been lifted regarding the selling and especially shipping of wine across the country, many provinces have yet to enact their own legislation governing the practice, hence leaving the entire topic, not to mention hundreds of wineries, in limbo, unable to tap the rest of the country as a market for fear of breaking the law. With so few avenues to sell home-grown wine the government has basically handcuffed the industry – let alone the number of asinine rules that govern the industry from within (more on that next time) – it has all been put in place it would seem, so that wineries are destined to fail; that they remain open is a testament to their resolve and passion.

January 3, 2015

Last year, “a Kentucky judge did something no federal judge has done since 1932”

Filed under: Business, Law, Liberty, USA — Tags: , , , , , — Nicholas @ 11:44

It’s been a very long time since a federal judge in Kentucky anywhere in the United States has struck down a “certificate of necessity” (CON) regulation:

Mighty oaks from little acorns grow, so last year’s most encouraging development in governance might have occurred in February in a U.S. district court in Frankfort, Ky. There, a judge did something no federal judge has done since 1932. By striking down a “certificate of necessity” (CON) regulation, he struck a blow for liberty and against crony capitalism.

Although Raleigh Bruner’s Wildcat Moving company in Lexington is named in celebration of the local religion — University of Kentucky basketball — this did not immunize him from the opposition of companies with which he wished to compete. In 2012, he formed the company, hoping to operate statewide. Kentucky, however, like some other states, requires movers to obtain a CON. Kentucky’s statute says such certificates shall be issued if the applicant is “fit, willing and able properly to perform” moving services — and if he can demonstrate that existing moving services are “inadequate,” and that the proposed service “is or will be required by the present or future public convenience and necessity.”

Applicants must notify their prospective competitors, who can and often do file protests. This frequently requires applicants to hire lawyers for the hearings. There they bear the burden of proving current inadequacies and future necessities. And they usually lose. From 2007 to 2012, 39 Kentucky applications for CONs drew 114 protests — none from the general public, all from moving companies. Only three of the 39 persevered through the hearing gantlet; all three were denied CONs.

Bruner sued, arguing three things: that the CON process violates the Constitution’s equal protection clause because it is a “competitors’ veto” that favors existing companies over prospective rivals; that the statute’s requirements (“inadequate,” “convenience,” “necessity”) are unconstitutionally vague; and that the process violates the 14th Amendment’s protections of Americans’ “privileges or immunities,” including the right to earn a living.

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