Topic: Regulatory Studies

Privatize the FAA

Bloomberg is reporting more bad news for the nation’s air traffic control system, which is run by the Federal Aviation Administration. The FAA is $500 million overbudget and six years behind schedule on a $2.1 billion technology upgrade project.

The FAA has a long history of mismanaged technology projects, and so the latest screw-ups are nothing new. Yet the nation needs high-tech advances in air traffic control more than ever to ease our increasingly congested airspaces.

There is a better way to run air traffic control—a private sector way, as Canada has been demonstrating. In 1996, Canada converted its government air traffic control system to a private nonprofit corporation. Nav Canada has been a smashing success, providing an excellent model for possible U.S. reforms.

A December 24 story in the Financial Post describes how Nav Canada is a world leader in efficiency, safety, and technology under private management. “A once troubled government asset, the country’s civil air traffic controller was privatized 14 years ago and is now a shining example of how to create a global technology leader out of a hulking government bureaucracy.” It really is an impressive story of pro-market reform.  

Canada’s system recently won an award from the International Air Transport Association. The IATA said that “Nav Canada is a global leader in the efficient implementation and reliable delivery of air traffic control procedures and technologies.”

We should have that type of efficient air traffic control system in this country. Privatizing the FAA should be a high priority for the next Congress.

See here for a discussion on privatizing air traffic control.

Recommended Reading

Assorted media clips worth catching up with over the holiday:

  • You’ve probably seen the ongoing scandal about how local officials used the southern California city of Bell to enrich themselves at taxpayer expense. A Los Angeles Times investigation finds that the city was milking small tradespeople too: “Legal experts point to a lack of due process and judicial oversight in hundreds of ‘civil compromises,’ in which plumbers, carpet cleaners and bottle-gatherers paid up to $1,000 for alleged code violations.”
  • “To get the check, you’ve got to medicate the child”: a horrifying Boston Globe series exposes how the incentives created by the federal SSI dependent disability program result in the overdiagnosis of disability among school-age kids. The result can be lifelong dependency, especially when grown kids realize that entering the labor force would make their families worse off by losing the “disability money.” [first, second, third parts, more]
  • A U.S. Congressman ousted by Ohio voters in last month’s election is suing a PAC that campaigned against him, saying its unfair ads deprived him of his “livelihood” [Cincinnati Enquirer, Politico]
  • The supposedly poisoned town of Hinkley, Calif., made famous by the Julia Roberts vehicle Erin Brockovich, turns out to have cancer rates a bit below the average, a new epidemiological study finds [more];
  • Aside from the morality aspects, there are really good reasons not to steal a meerkat (via).

Are Republicans to the Right of Pat Robertson?

On his “700 Club” program this week, Christian Coalition founder Pat Robertson endorsed the decriminalization of marijuana. He says, “We’ve got to take a look at what we’re considering crimes. I’m not exactly for the use of drugs, don’t get me wrong, but I just believe that criminalizing marijuana, criminalizing the possession of a few ounces of pot, that kinda thing it’s just, it’s costing us a fortune and it’s ruining young people. Young people go into prisons, they go in as youths and come out as hardened criminals. That’s not a good thing.” Check out the video:

Robertson’s comments come a few days after other conservatives, including Ed Meese and Gov. Rick Perry, have joined to encourage new conservative thinking about who should go to jail. Now far be it from me to recommend any policy on the grounds that it’s endorsed by Pat Robertson. But I do have this question for Republican members of Congress: Do you really want to be to the right of Pat Robertson on the issue of marijuana prohibition?

Related: For an interesting look at how socially and economically conservative different Republican presidential candidates are, check out this graphic by Ben Adler at Newsweek. There’s actually some surprising consistency. Mike Huckabee is the least libertarian candidate on economic issues, and exceeded only by Rick Santorum in his un-libertarianism on social issues. Gary Johnson and Ron Paul are most libertarian on both economic and social issues.

Independent Agencies Test Tea Party Mettle

Is there something special about December? Perhaps it’s the spirit of giving that had the Federal Communications Commission voting yesterday to regulate Internet service. At the beginning of the month—December 1st—the Federal Trade Commission issued a report signaling its willingness to regulate online businesses.

No, it’s not the fact that it’s December. It’s the fact that it’s after November.

November—that’s the month when we had the mid-term election. The FCC and FTC appear to have held off coming out with their regulatory proposals ahead of the elections because the Obama administration couldn’t afford any more evidence that it heavily favors government control of the economy and society.

There was already plenty of evidence out there, of course, but the election is past now, and the administration has taken its lumps. It’s an open question whether there will be a second Obama term, so the heads of the FCC and FTC are swinging into action. They’ll get done what they can now, during the period between elections when the public pays less attention.

And that is a challenge to the Tea Party movement, which would be acting predictably if it lost interest in politics and public policy during the long year or more before the next election cycle gets into full swing. Politicians know—and the heads of independent agencies are no less political than anyone else—that the public loses focus after elections. That’s the time for agencies to quietly move the agenda—during the week before Christmas, for example.

So it’s not the spirit of giving—it’s the spirit of hiding—that has these independent agencies moving forward right now. It’s up to the public, if it cares about liberty and constitutionally limited government, to muster energy and outrage at the latest moves to put the society under the yoke of the ruling class. Both the FCC and the FTC lack the power to do what they want to do, but Congress will only rein them in if Congress senses that these are important issues to their active and aware constituents.

The FCC Should Not Regulate the Internet

The FCC moves forward with a proposal to regulate Internet service today. It’s a bad idea.

The one thing that pleases me about the ongoing debate over Internet regulation is the durability of Tim Lee’s November, 2008 Cato Policy Analysis, “The Durable Internet: Preserving Network Neutrality without Regulation.” My introduction of it is a good synopsis.

The arguments against government regulation in the name of “net neutrality” have not changed: A good engineering principle is not made better if dogmatized and given to lawyers and bureaucrats to enforce as law. The FCC and its regulatory regime are almost sure to be captured by major ISPs and turned to their benefit, used to suppress competition and blunt innovation.

A premise of net neutrality regulation—and much other regulation—is that consumers can’t be relied on to defend their own interests. Taking that premise, which I don’t, it follows that regulators must step in. But that syllogism skips over an additional premise: that regulators can do a better job.

The Istituto Bruno Leoni (Italy) recently published a terrific paper by Slavisa Tasic (a former Cato intern) that applies the insights of behavioral economics to regulators. Academics have typically used behavioral economics to illustrate the fallibility of market actors, but Tasic turns the tables. The paper is called “Are Regulators Rational?”, and it examines the cognitive biases that are likely to produce flawed decision-making on the part of regulators.

Yes, it’s tit-for-tat to the attack on markets implicit in behavioral economics, but it’s a sound and fair paper that opens new insights onto regulation. This is a good time to do that. Too many take it as an article of faith that the FCC will do better than consumers at protecting consumers’ interests.

This is also a good time to remember that the FCC is our national censor. The U.S. government’s censorious reaction to l’affaire WikiLeaks should serve as counsel to people who would subject Internet service providers to even greater federal regulation. Regulated ISPs will be more compliant with government speech controls.

It’s a point worth emphasizing: Regulated ISPs will be more compliant with government speech controls.

For these reasons, in addition to the ones that have come before, federal regulation of the Internet is a bad idea.

Consumer Group Sues McDonald’s Over Happy Meals

The Center for Science in the Public Interest (CSPI), which has long agitated for wider government intervention in food and nutritional matters, has filed a lawsuit charging that McDonald’s is violating California consumer laws by marketing Happy Meals with toys. It wants to force the burger chain either to drop the toy, or to replace the meals’ food components with something more whole-grain-and-vegetable-y. The New York Daily News invited me to have my say on the controversy, and I did. I pointed out that the lawsuit seemed to be aimed at an end run around the reality of individual choice:

No one forced [named plaintiff Monet] Parham to take her daughters to McDonald’s, buy them that particular menu item, and sit by as they ate every last French fry in the bag (if they did).

No, she’s suing because when she said no, her kids became disagreeable and “pouted” – for which she wants class action status. If she gets it, McDonald’s isn’t the only company that should worry. Other kids pout because parents won’t get them 800-piece Lego sets, Madame Alexander dolls and Disney World vacations. Are those companies going to be liable too?

The center’s [CSPI’s] longtime shtick is to complain that businesses like McDonald’s, rather than our own choices, are to blame for rising obesity. So let’s take Happy Meals as an example. When you buy one, you get a string of choices. Milk or soda? (Is that really a hard choice for a parent worried about nutrition?) You can swap out the fattening French fries for “apple dippers” with caramel sauce and plenty of kid appeal. But your choices do not end there. If you think the scoop of fries is too big for a kid serving, you can tell the kid to share it with the grownup on hand, namely you. (You’re the grownup. You make the rules.) You can even, shocking as this sounds, toss the surplus French fries into the disposal bin.

…[I]t’s unlikely that even California courts will approve this suit. But in the mean time, the Center for Science in the Public Interest will fatten off the publicity, unattractively.

You can read the whole thing here. As I’ve noted at my website Overlawyered, the case is one element in a wider campaign that includes newly enacted bans on Happy Meals in San Francisco and nearby Marin County. In June, California blogger Bruce Nye predicted that CSPI would try to build on a 1983 California Supreme Court precedent, Committee on Children’s Television, Inc. v. General Foods Corp., that invites suits over advertising to kids that is purportedly “predatory,” but that they’d run into trouble proving (as the law has required since California voters passed Prop 64 in 2004) that its client, Ms. Parham, is “a person who has suffered injury in fact and has lost money or property” owing to the advertising. Even under California law, having to say “no” to one’s kids is not a legal injury.