Tag: California

Prop 19, Employment at Will, and Social Peace

Writing at CNN, my colleague Jeffrey Miron puts his finger on one reason for the disappointing defeat of California’s Prop 19:

Prop 19 failed also because it overreached. One feature attempted to protect the “rights” of employees who get fired or disciplined for using marijuana, including a provision that employers could only discipline marijuana use that “actually impairs job performance.” That is a much higher bar than required by current policy.

Like so many other developments in employment law in recent years, this would have chipped away at the basic principle of employment at will, which holds that in the absence of a contract specifying otherwise, either party to an employment relation may end that relation at any time for any reason or for no reason at all.

It was no doubt inevitable that the proposition would fare poorly among self-identified conservatives and older voters. But the “users’ rights” provisions were enough to raise doubts even among liberty-minded thinkers like David Henderson, who predicted that by signaling hostility toward freedom of association, such provisions would “make the drug-legalization hill even steeper.”

Marijuana of course remains illegal under federal law, which means that its consumption would at one and the same time have been 1) protected under employment-discrimination rules, and 2) illegal and subject to prison sentences. If this paradox seems vaguely familiar, maybe it’s because not that many years ago – before the Supreme Court’s 2003 decision in Lawrence v. Texas – there were localities where consenting homosexual conduct was simultaneously protected under one set of laws, and unlawful under another. Indeed, there were more than a few advocacy groups that worked to promote the new controls over employer decisionmaking and yet never troubled themselves to work for repeal of the still-on-the-books anti-gay prohibitions. If the goal is to achieve social peace, however, rather than wage constant culture war on each other, you’d think the “leave people alone” message would hold more appeal than the “fall in line or you’ll hear from our lawyers” message.

Jeffrey Miron surmises, no doubt rightly, that the problem of undislodgeable tenured stoners in the workplace would be more the exception than the rule. Yet it’s worth noting that the issue has already arisen in various lawsuits in which workers with a doctor’s note recommending marijuana use have contested firings. Lawyers have also eagerly cobbled together suits over related issues, as with this class action noted less than two years ago at my other website, Overlawyered:

Starbucks’s job application asked prospective baristas if they’d been convicted of a crime in the past seven years and added for “CALIFORNIA APPLICANTS ONLY”, at the end, that minor marijuana possession convictions more than two years old didn’t have to be disclosed, in accord with a state law along those lines. Entrepreneurial lawyers then tried to steam-press $26 million or so out of the coffee chain on the following theory: that the clarification was placed too far down the application after the original question; that Starbucks had therefore violated the California Labor Code; and that each and every Starbucks job applicant in California since June 2004, perhaps 135,000 persons, was owed $200 in statutory damages regardless of whether they had suffered any harm. Per John Sullivan of the Civil Justice Association of California, the lawyers also took the position that “it didn’t matter that two of the three job applicants who signed on as named plaintiffs testified in court that they read the entire application and knew they didn’t have to mention a marijuana conviction (which neither had anyway!)” The court refused to certify the class and made the following observations (courtesy CJAC blog):

* “There are better ways to filter out impermissible questions on job applications than allowing ‘lawyer bounty hunter’ lawsuits brought on behalf of tens of thousands of unaffected job applicants. Plaintiffs’ strained efforts to use the marijuana reform legislation to recover millions of dollars from Starbucks gives a bizarre new dimension to the every day expressions ‘coffee joint’ and ‘coffee pot.’”… “The civil justice system is not well-served by turning Starbucks into a Daddy Warbucks.”

Ilya Somin at Volokh Conspiracy notes that “the case against the War on Drugs and other ‘morals’ regulations is very similar to the standard conservative critique of economic regulation.” But if a much-needed rollback of morals regulation is made the excuse for an expansion of economic regulation, there may be grounds to wonder whether the goal is truly freedom at all.

Prop. 19 Roundup

Here’s some recent commentary on California’s Prop. 19 ballot initiative:

  • Today, New York Times columnist Nicholas Kristof makes the case against the war on cannabis.  Although there is no mention of Cato, Kristoff mentions the work of our senior fellow, Jeff Miron, and links to our report on the Budgetary Impact of Ending Drug Prohibition.  Kristoff also mentions Portugal’s drug decriminalization policies and links to a Time Magazine article that highlights the Cato report on that subject by Glenn Greenwald.
  • Nick Gillespie and Matt Welch make the case that Prop. 19 is the most important item before the voters in this election cycle.  Even more important than whether Barbara Boxer can continue her work in the Senate?  Yes, read the whole thing.  Dan Mitchell has additional thoughts here.
  • George Soros is in the news for helping the Prop. 19 effort with a one million dollar contribution.  He explained his reasons for supporting Prop. 19 in a Wall Street Journal op-ed.

For additional Cato scholarship on drug policy, go here.

Regulator, Leave Those Kids Alone

“These kids today and their violent [blank]….” This refrain has been around for as long as there have been kids – and elders to shake their fists at them. In the 19th century, dime novels and “penny dreadfuls” were blamed for social ills and juvenile delinquency. In the 1950s, for example, psychologist Fredric Wertham’s attack on comic books – in his bluntly titled book Seduction of the Innocent – so ignited the national ire that Congress held hearings on the cartoon menace. In response, the comic book industry voluntarily adopted a ratings system. Similarly, backlash against the movie industry and the music industry (e.g., Tipper Gore’s attack on gangsta rap) caused those respective industries to also adopt voluntary ratings systems.

The videogame industry also adopted an effective and responsive ratings system after congressional hearings in the early ’90s. Thinking this ratings system ineffective, however, California passed a violent videogame law, which prohibits minors from purchasing games that are deemed “deviant,” “patently offensive,” and lacking in artistic or literary merit. The gaming industry challenged the California law and the Ninth Circuit struck it down on First Amendment grounds.

California now seeks to overturn the lower court’s ruling by arguing that violent videogames deserve an exemption from First Amendment protection. Cato’s brief supports the videogame manufacturers and highlights not only the oft-repeated and oft-overblown stories of the “seduction of the innocent,” but the less-repeated stories of the effectiveness and preferability of industry self-regulation.

We show that not only does self-regulation avoid touchy First Amendment issues but that entertainment industries take self-regulation very seriously. Moreover, evidence from the Federal Trade Commission shows that the existing videogame ratings system works more effectively than any other regulatory method. Adding a level of governmental control, even if were constitutional, would be counterproductive.

The case of Schwarzenegger v. Entertainment Merchants Association will be argued November 2 (coincidentally election day).

On Tonight’s John Stossel Show (FBN)

I’m a guest on tonight’s John Stossel program on the Fox Business Network, on the subject of the consequences of the twenty-year-old Americans with Disabilities Act (ADA). The show was shot live to tape yesterday in New York and was fascinating throughout; even those who think they know this subject well will learn a lot. I’m also quoted in John’s latest syndicated column on the same issue.

Among the highlights of the taping: a disabled-rights lobbyist defended several extreme applications of the law, including the notion that it might be appropriate to force networks to hire someone who suffers from stuttering as on-air television talent. We also shed some light on the state of California’s up-to-$4,000-a-violation bounty system for freelancers who identify ADA violations in Main Street businesses, and the case for at least requiring complainants to give business owners notice and an opportunity to fix an ADA violation before suing. (The disabled-rights lobby has managed to stifle that proposal in Congress for years.) Also mentioned: the suit against the Chipotle restaurant chain recently covered in this space.

Other recent coverage of the ADA here and here.

Guess Who’s Behind the New Fire-Sprinkler Mandates

California just adopted effective next year a requirement that all new one- and two-family dwellings include indoor sprinkler systems. Other states are debating similar mandates, spurred by changes to national building code standards. Earlier legal mandates have required the inclusion of smoke alarms and carbon monoxide alarms, but the cost of those devices is relatively minor, whereas full-blown sprinkler systems add measurably to the cost of a new home, as well as posing challenges in such areas as maintenance, aesthetics, and risk of property damage through accidental activation.

It will surprise not a single reader of these columns, I suspect, to learn that the fire sprinkler industry has been a major force in pushing the new mandate. As for the opposition, home builders have managed to mount a bit of resistance – New Jersey, for example, saw the current depressed state of the residential construction business as reason to postpone its mandate for a year. But the builders are pretty much on their own in the fight, since future buyers of new homes are a group with no organized political presence whatsoever.

Real estate blogger Christopher Fountain writes that he’s “never heard of a home buyer voluntarily ordering this equipment when building a house, so it sounds to me like one more instance of people who know better dictating to those who don’t.” Exactly. A South Carolina paper quotes a state official as saying if buyers feel priced out of the new home market by the cost of the mandate, they have other ways to save money “such as choosing less expensive flooring or countertops, or not installing yard sprinklers”. Easy to make someone else’s budget decisions for them, isn’t it? And shouldn’t the “affordable housing” community be taking more of an interest?

Moody’s Caves In to Political Pressure on Municipal Bonds

Moody’s has announced that it will change its methods for rating debt issued by state and local governments.  Politicians have argued that its current ratings ignore the historically low default rate of municipal bonds, resulting in higher interest rates being paid on muni debt, or so argue the politicians.

First this argument ignores that the market determines the cost of borrowing, not the rating.  And while ratings are considered by market participants, one can easily find similarly rated bonds that trade at different yields.

Second, while ratings should give some weight to historical performance, far more weight should be given to expected future performance.  Regardless of how say California-issued debt has performed in the past, does anyone doubt that California, or many other municipalities, are in fiscal straights right now?

Last and not least, politicians have no business telling rating agencies how to handle different types of investments.  We’ve been down this road before with Fannie Mae and Freddie Mac.  During drafting of GSE reform bills in the past, politicians put constant pressure on the rating agencies to maintain Fannie and Freddie’s AAA status.

The gaming over muni ratings illustrates all the more why we need to end the rating agencies govt created monopoly.  As long as govt has imposed a system protecting the rating agencies from market pressures, those agencies will bend to the will of politicians in order to protect that status.  As Fannie and Freddie have demonstrated, it ends up being the taxpayers and the investors who ultimately pay for this political meddling.

Ray LaHood as Santa Claus

U.S. News & World Report’s columnist Paul Bedard reports that Transportation secretary Ray LaHood told him that it’s fun playing Santa Claus to states and cities around the nation.

So let’s take a look at some recent examples of DOT gift-giving with federal taxpayers’ money:

  • DOT’s Federal Highway Administration helped restore an old brewery in Petosi, Wisconsin with a $450,000 gift. That should make taxpayers want to drink.
  • Dolgeville, New York intends to use DOT stimulus money to repair sidewalks even though the village acknowledges that the new sidewalks will have to be torn up and replaced again due to impending water and sewage line upgrades. Keynes would be particularly proud of this one. Last year the city received a $1 million gift from DOT for the “installation of period street lights, trees, accent pavers, street furniture and sidewalk improvements” on the city’s Main Street.
  • The Michigan Department of Transportation plans on spending $5 million in federal DOT money on a bunch of projects that are of unquestionable national importance: cobblestone streets in Grand Rapids; exhibits at the Detroit Science Center; rehabilitating the historic Quincy and Torch Lake Railroad Engine House in the Upper Peninsula; a bridge for bicyclists and pedestrians over the Clinton River in Utica and bike racks at several locations in Wayne, Oakland, and Macomb counties.

These projects might be worthwhile, but they should be paid for by the local interests who can best judge their worth.

In his 1932 book, Congress as Santa Claus, constitutional scholar Charles Warren offered a prescient warning on the dangers of federal subsidization of state and local affairs:

The continuance of this practice of shifting to the National Government responsibility for payment for matters which formerly were dealt with by individual initiative, by community cooperation, by voluntary organizations, or by local or State governments – the continuance of this practice of making drafts on the National Treasury to carry out purposes not within the enumerated or implied powers of the National Government will inevitably have two results.

So far as these Government donations consist of direct appropriations for private or local interests, they will deaden and finally destroy the eagerness or willingness of State Governments and local communities to pay for their own needs. So far as they take the shape of the so-called Federal Aid laws for local projects to be matched by local appropriations, they will have ‘a tendency to induce excessive expenditures by State and municipal governments, with top-heavy bond issues and oppressive local taxation.’

I doubt in Warren’s worst nightmares could he have envisioned the examples of DOT spending above, let alone the existence of a $90 billion federal Department of Transportation.