Topic: Regulatory Studies

Free Trade Begins at Home

When pundits discuss “free trade,” most people think of international trade, eliminating tariffs, import quotas, and the like. That’s because the Constitution’s Commerce Clause – the one Congress has been using and abusing for decades – grants the government the power to “make regular” trade between the several states.  For example, Oklahoma can’t ban imports of beef from coming across the Red River and New York can’t have a different licensing regime for long-haul tracks entering from New Jersey rather than Pennsylvania.

While this commerce- (and liberty-) enhancing feature of our federal system has required a Supreme Court reminder for traditional wine retailers in recent years, Americans have generally taken for granted that buying and selling products between American jurisdictions is perfectly normal.

It may surprise you to learn, then, that in Lake Elmo, Minnesota, proprietors of a 40-year-old family farm that yields flowers, pumpkins and Christmas trees, are facing fines and 90-day jail sentences for attempting to sell their products in that town.  The reason?  Part of their farm lies outside city limits, and in Lake Elmo it’s illegal for farmers to sell products – even from their own land – unless they were grown within the city.  You can view a short video about their story here:

Thankfully, our friends at the Institute for Justice are stepping up to defend these folks for making a living by engaging in domestic free trade.  This blatant protectionism is harmful and foolish when practiced with foreign trading partners, and is all the more repugnant when practiced against one’s own neighbors who provide the community with valuable goods and services.  That these law-abiding entrepreneurs face potential jail time for the crime of “selling produce across city lines” is anathema to the Constitution.

You can read Cato’s work on agricultural free trade here

Calling in the World Court against the Gun Trade

Just before the holiday I sent off to Encounter Books the manuscript of my next book, tentatively titled Schools for Misrule: Law Schools and an Overlawyered America. One of the themes the book explores is how, after years of arguing that courts should read the U.S. Constitution as requiring the adoption of the liberal policy agenda of the moment (welfare rights, free health care, or whatever), cutting-edge law school thinking now promotes the idea that international human rights law requires the adoption of that same agenda. Thus the U.S. Supreme Court ruled in San Antonio v. Rodriguez (1973) and Milliken v. Bradley (1974) that the U.S. Constitution does not mandate (respectively) “Robin Hood” school finance redistribution and school busing across district lines; now it’s argued that both decisions need to be revisited and overturned as contrary to (ever-evolving) conceptions of international human rights. Similarly, there are said to be internationally recognized rights to government-provided housing, day care, and even (at least in Europe) tourism.

These notions are at odds with longstanding ideas of sovereignty and national independence, as held by (among many others) the Founders of this Republic. That they could also pose more direct dangers to individual liberty is suggested by a news item that drew only passing attention a few weeks ago: Chicago Mayor and long-time anti-gun advocate Richard Daley convened an assembly on global issues at which (per the Chicago Sun-Times) he “convinced more than a dozen of his counterparts from around the world to approve a resolution urging ‘redress against the gun industry through the courts of the world’ in The Hague.” According to another local news report, Daley “said American gun manufacturers should be held responsible in the World Court, since American-made guns are used in violent crime elsewhere in the world.” Philadelphia Mayor Michael Nutter and the mayor of Mexico City were among those endorsing the idea. David Kopel at Volokh Conspiracy has much more on the conditions that would have to be met for the World Court to assert jurisdiction.

Chicago and its mayor were in the Second Amendment spotlight most recently with the McDonald case, in which the U.S. Supreme Court struck down the city’s ultra-strict anti-gun ordinance as in violation of the Bill of Rights. But the real antecedent of Daley’s latest idea was the late-Nineties litigation ginned up by anti-gun advocates and trial lawyers on behalf of three dozen cities and counties, which mostly fared poorly in court, yet still, through sheer cost-infliction, very nearly achieved its goal of off-the-statute-books gun control through litigation). That litigation campaign was decisively rejected and stopped in its tracks by Congress in the Protection of Lawful Commerce in Arms Act, signed by then-President George W. Bush in 2005. In other words, Daley is seeking an international end run around both the Bill of Rights and the democratically expressed will of the American people. Aren’t Chicago voters tired of this yet?

Study: Competition Saves Lives in Britain’s NHS

This interesting NBER study just came across the transom:

The effect of competition on the quality of health care remains a contested issue.  Most empirical estimates rely on inference from non experimental data. In contrast, this paper exploits a pro-competitive policy reform to provide estimates of the impact of competition on hospital outcomes. The English government introduced a policy in 2006 to promote competition between hospitals. Patients were given choice of location for hospital care and provided information on the quality and timeliness of care. Prices, previously negotiated between buyer and seller, were set centrally under a DRG type system…

Our results constitute some of the first evidence on the impacts of a market-based reform in the health care sector. We find strong evidence that under a regulated price regime that hospitals engage in quality competition and that the 2006 NHS reforms were successful. Within two years of implementation the NHS reforms resulted in significant improvements in mortality and reductions in length-of-stay without changes in total expenditure or increases in expenditure per patient. Our back of the envelope estimates suggest that the immediate net benefit of this policy is around £227 million. While this is small compared to the annual cost of the NHS of £100 billion, we have only calculated the value from decreases in death rates. Allowing for improvements in other less well measured aspects of quality will increase the benefit, as will any further falls in market concentration which may occur as the policy continues in operation. If the UK were to pursue policies that lead to deconcentration of hospital markets, the gains could be substantially larger.

These results suggest that competition is an important mechanism for enhancing the quality of care patients receive. Monopoly power is directly harmful to patients, in the worst way possible - it substantially increases their risk of death. The adoption of pro-market policies in European countries, as well as policies directed at increasing or maintaining competition such as antitrust enforcement, appear to have an important role to play in the functioning of the health sector and assuring patients’ well being.

The study is, “Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service,” by Martin Gaynor (Carnegie-Mellon University), Rodrigo Moreno-Serra (Imperial College Business School), and Carol Propper (University of Bristol).

The Calorie Police

What can I say about San Francisco’s ban on vending machines for sugared soft drinks on city property?

I could say that a twelve ounce can of Coca-Cola has fewer calories than twelve ounces of whole milk, because it does – 140 to 216.

I could say that you’ll be even fatter if you substitute whole milk for Coke, ounce for ounce, because you will be.

I could say that the extra nutrients in milk don’t do anything to make it less fattening, because they don’t.

I could say that 12 ounces of soy milk has 198 calories, which is still well above Coke’s 140.

I could even say that switching to skim milk doesn’t help you all that much – if you do the math, you’ll find that there are 124.5 calories in 12oz of skim milk, compared, again, to 140 for Coke.

I could also point out that a tall Starbucks Frappuccino – also 12 ounces, and not covered by the ban – has 190 calories, largely from sugar and fat.

I could ask: Does anyone ever order a plain Frappuccino? A tall mocha Frappuccino has 220 calories.

Finally, I could point out that banning vending-machine drinks while leaving Starbucks untouched is a pretty rank example of class privilege at work – my indulgences are sophisticated and upper-class, while yours are vulgar and prole.

And, I imagine I hardly need to make the case that this ban is the thin end of a wedge, and that comprehensive regulation of sugar, fat, and salt is on the way.

But really, it’s a lot simpler than that. What I should say is that your body is yours. Liberals themselves would tell you just the same in many other contexts. It’s yours to do with as you see fit. It’s yours to use, and it’s yours to use up, as Dan Savage once put it. (Can bans on risky sex be far behind?)

Part of being free is being free to make bad choices, to take risks, and to bear the consequences. Part of being free is that you, personally, may decide what you eat or drink. It’s a liberty so elementary that our founders never even imagined that it would need protection, but today, it does. (These same founders also rioted when the British taxed their tea. Which I’m sure Parliament only did for their own good anyway.)

To be sure, there are many costs associated with socialized health care, and some of the choices we make will certainly raise those costs. That’s one big reason why the nanny state is suddenly in the food business. But if we absolutely must have socialized health care – a point I don’t for a moment concede – then I’d prefer to pay a little bit extra and keep all my other liberties, thanks.

Active Government, Passive Economy

Today, Politico Arena asks a second question:

What does Obama need to do on jobs?

My response:

What does Obama need to do on jobs? Asked about that in his Arena interview today, Rep. Rob Andrews (D-N.J.) answers, “The best thing we could do is encourage banks to lend money.” Encourage them? Banks don’t need to be encouraged: if they can make money by lending it, they will. But that’s just the problem. The regulatory climate under Obama is so uncertain that capital isn’t moving. Andrews adds that “we need to stimulate,” as if we hadn’t already massively stimulated with little to show but massive debt.  And he says that “the Wall Street reform bill will help.” Apparently he hasn’t read Stanford economist John B. Taylor’s analysis in yesterday’s Wall Street Journal, which concludes: “People may be waking up to the fact that the bill does not do what its supporters claim. It does not prevent future financial crises. Rather, it makes them more likely and in the meantime impedes economic growth.”

EPA on Guard against Spills

Well, at least of the dairy kind:

New Environmental Protection Agency regulations treat spilled milk like oil, requiring farmers to build extra storage tanks and form emergency spill plans….

The EPA regulations state that “milk typically contains a percentage of animal fat, which is a non-petroleum oil. Thus, containers storing milk are subject to the Oil Spill Prevention, Control and Countermeasure Program rule when they meet the applicability criteria.”

Peter Daining of the Holland Sentinel (Holland, MI) has a report, including predictions that smaller dairy producers could be driven out of business by the cost of the containment rules.

A Life-Saving Approach to Transplantable Organs

Raymond Raad, physician and coauthor of the Cato study, “Bending the Productivity Curve: Why America Leads the World in Medical Innovation,” has an oped at the Daily Caller arguing that the United States could save thousands of lives per year by allowing individuals (or insurance companies, or the government) to pay people who agree to give their organs to patients who need them.

Raad cites the experience of Iran, which has eliminated its waiting list for transplantable organs. (The United States has 83,000 people waiting for kidneys alone. Forty percent will die waiting, and those who do receive a kidney die sooner because their health deteriorates while waiting.) He also cites the three main criticisms of compensating donors/sellers – “One, the prospect of payment can be so tempting that it blinds donors to the risks involved; second, it may lead only poor people to donate; third, it may turn altruistic donors away” – and shows that recent polling data contradicts all three.

Raad concludes:

Since this is the best data we have, and with 5,000 people expected to die this year on the waiting list, we owe ourselves at least a geographically limited experiment in monetary incentives for kidneys.

For more on how eliminating this government-imposed price controls would save lives, read Arthur Matas’ Cato study, “A Gift of Life Deserves Compensation: How to Increase Living Kidney Donation with Realistic Incentives,” and Healthy Competition: What’s Holding Back Health Care, and How to Free It.