Archives: 04/2013

Laws Entrench Liquor Wholesalers At Drinking Public’s Expense

As part of their regulation of alcohol sales, an estimated 33 states maintain so-called At Rest laws, which require that bottles spend time in an in-state warehouse before being sold to consumers. The laws limit competition, drive up prices to consumers, and make it harder to special-order less common labels. Now, as the New York Post revealed in a Sunday exclusive, New York may join the list following generous donations to Gotham politicians from an in-state wholesaler. State Sen. Jeff Klein (D-Bronx) alone got $33,000 from Empire Merchants LLC.

David Waldenberg, of BNP Distributing Co., said 180 small-and medium-sized New York distributors will hurt by the measure.

Those businesses have offices in New York that employ hundreds of people, he said, but use New Jersey storage facilities.

If their warehousing costs go up, these businesses will die and jobs will ultimately be lost, he said.

“The price of wine — it’ll go up $7 or $8 a bottle,” warned wine connoisseur and writer Jesse Nash. “The consumer is going to get nailed.”

In an (alas) still-relevant 1985 article (PDF) in Cato’s Regulation magazine, Federal Trade Commission attorney David Spiegel analyzed how anti-competitive state liquor laws exploit consumers. [adapted and expanded from Overlawyered]

Update: Tom Wark at (via Michelle Minton, CEI) believes the New York bill as of this point is “going nowhere” following a vigorous campaign against it by small wholesalers who would be hurt by its provisions.

Spinning the News

A headline in Roll Call, the newspaper and website that has been “the source for news on Capitol Hill since 1955,” over an article by long-time journalist and editor David Hawkings, reads

D.C. Could Take Lessons From Hartford on Gun Control Deal

What’s the lesson? That when legislators buckle down and work hard, they can pass “the strongest gun control law in the nation.”

This reflects two articles of faith that seem to be devoutly held by mainstream journalists:

1. Passing laws is good. Passing more laws is better. The purpose of a legislative body is to pass laws.

2. Gun control is good.

On the first point, just consider the large number of stories, especially this past December and January, on “the least productive Congress in history.” The assumption is that “productivity” for Congress is passing laws—laws that in most cases will raise taxes, raise spending, increase regulation, and/or intrude the federal government into more aspects of our lives. 

As for gun control, the enthusiasm of the national media for such measures is pretty obvious. I was struck by NPR’s hourly news roundup last week, which began: 

More than 100 days after the shootings in Newtown, Connnecticut, that killed a total of 28 people including 20 elementary school students, Congress has still not passed new gun registration legislation.

“What are they waiting for?” the news anchor implies. I suppose the news report could have begun:

Just five years after the Supreme Court ruled that the Second Amendment protects the individual’s right to bear arms, members of Congress are seeking to pass gun control legislation.

But I’m not holding my breath. It’s just a reminder that the language used even in straight news stories can frame the issue in the minds of readers and listeners.

Why Do Environmentalists Oppose Free Trade in Solar Panels?

Groups concerned about the environment have long been skeptical of trade liberalization. From what I understand, they view pollution and the depletion of natural resources as the inevitable consequences of unregulated economic growth. But what if that growth is driven by trade in environmentally friendly products? Is trade still bad then? Apparently so.

The United States has attracted negative attention from a number of environmentalists by bringing a formal challenge at the World Trade Organization against Indian trade barriers on solar panels. India provides subsidies to developers of solar power plants only if they purchase solar cells from Indian manufacturers. This is called a “local-content requirement” and such schemes are generally illegal under WTO rules. 

It seems to me that these groups should be skeptical of the Indian program and supportive of the U.S. challenge. Making it more difficult to use imported solar cells just makes it more difficult to build solar power plants. The policy benefits the domestic manufacturers of these solar panels, but it burdens the purchasers. The burden is there even if the plants purchase domestic panels, because the now-less-accessible foreign panels were presumably a better value. 

If the Sierra Club and Greenpeace want people to buy more solar panels, then open markets for those panels is the best policy. The only reason I can see why they would oppose free trade in solar panels is because they want every country in the world to promote “green jobs” as part of an environmentally conscious industrial policy. If that is their prefered policy then these groups should probably advocate for transparent restrictions like tariffs and quotas instead of local-content requirements. But the fact is that industrial policy and protectionism are just as bad for solar panels as they are for steel or clothing or sugar. Industrial policy promotes rent-seeking and entrenches inefficiencies. If you truly love solar panels, then you must set them free.


Kopel on Obama’s ‘Common Sense’ Gun Controls

Dave Kopel has a new piece over at NRO.  Here’s an eye-catching excerpt:

Public-opinion polls about “universal background checks” for gun sales show widespread support. While President Obama and Mayor Bloomberg talk about “gun sales,” the actual legislation moving through Congress aims to regulate far more than sales. It would turn almost every gun owner into a felon. The trick is that the language under consideration applies not only to sales but also to “transfers,” which are defined to include innocent activities such as letting your spouse borrow your gun for a few hours.


Awaiting Obama’s Latest Budget Proposal

For this libertarian policy analyst, the annual release of the president’s budget proposal is like the day after your team loses the Super Bowl: everyone’s talking about it, but you’d rather curl up in bed with a fifth of Old Grand-Dad.

Alas, it’s that time of year—albeit a couple months late. The budget won’t be released until next week, but some of the details have leaked out to the press. As Dan Mitchell notes, the Washington Post is “predictably regurgitating” the White House’s spin that the president’s latest budget will be an olive branch of sorts to Republicans.


The president will apparently propose modest measures to slow the growth in entitlement spending in exchange for more tax increases. That would raise hopes for what the Beltway class likes to refer to as the “grand bargain,” but for those of us who are looking for considerably less government in our lives it would hardly be cause for enthusiasm.

Nor are any of the other ideas being reported:

  • Sequestration would be replaced with an alternative deficit reduction package. Expect for that to be higher taxes combined with a promise to cut spending somehow, some day in the future.
  • Funding for a new pre-kindergarten program—because (not much of a) Head Start apparently isn’t enough.
  • Funding for some initiative to map the human brain. (I would advise against using a politician’s for the model.)

I’m guessing there will be a package of proposed rinky-dink spending cuts—a now-annual tradition started by the previous big spender in the White House. But, of course, overall spending would continue to grow and the government would still remain involved in every facet of our lives.

Government Can’t Condition Federal Contracts on Giving Up Constitutional Rights

Under the United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act, the government requires groups receiving federal funding for overseas HIV/AIDS programs to adopt policies explicitly opposing prostitution. Several nonprofit organizations receiving federal funds claim that this “policy requirement” violates their First Amendment rights.

The groups don’t seek to advocate for prostitution (or its legalization), but would rather not speak on the issue at all. Successful efforts to fight AIDS often involve working cooperatively with marginalized groups, so adopting a policy statement that explicitly renounces prostitution could frustrate outreach efforts to disseminate public health information. The government, however, requires funding recipients to espouse such an anti-prostitution policy even when they spend private funds.

The district court ruled in the nonprofit groups’ favor, holding that the policy requirement violates the First Amendment. The U.S. Court of Appeals for the Second Circuit affirmed, concluding that the government may not condition the receipt of public funds on giving up First Amendment rights. Indeed, were the government’s position accepted, it would eviscerate the “unconstitutional conditions” doctrine, which the Court has long recognized to prevent the conditioning of generally available federal benefits on the waiver of fundamental rights.

This week, Cato filed an amicus brief arguing that the policy requirement significantly burdens political speech, the constitutional protection of which lies at the very heart of the First Amendment. The Supreme Court has made clear that Congress may not condition participation in federal programs on speech limitations that are outside the scope of the program being funded: the Court has never given Congress carte blanche to give federal contractors Hobson’s Choices, whether relating to the freedom of speech or other constitutional rights. It should thus continue to adhere to the principle that Congress’s power to condition funding is limited to ensuring that its funds are used to properly implement the program that Congress wishes to fund, not to compel private organizations to adopt express “policies” that don’t relate to the use of those federal funds.

The Supreme Court will hear oral argument in Agency for International Development v. Alliance for Open Society International on April 22.

A Bait-and-Switch Budget Plan?

Are we about to see a new kinder-and-gentler President Obama? Has the tax-and-spend president of the past four years been replaced by a fiscal moderate? That’s certainly the spin we’re getting from the White House about the president’s new budget. Let’s look at this theme, predictably regurgitated in a Washington Post report.

President Obama will release a budget next week that proposes significant cuts to Medicare and Social Security and fewer tax hikes than in the past, a conciliatory approach… [T]he document will incorporate the compromise offer Obama made to House Speaker John A. Boehner (R-Ohio) last December in the discussions over the “fiscal cliff”—which included $1.8 trillion in deficit reduction through spending cuts and tax increases. …[U]nlike the Republican budget that passed the House last month, Obama’s budget does not balance within 10 years.

Since America’s fiscal challenge is the overall burden of government spending, I’m not overly worried about the fact that Obama’s budget doesn’t get to balance. But I am curious whether he truly is proposing a “conciliatory” budget. Are the tax hikes smaller? Are the supposed spending cuts larger? Actually, there are no genuine spending cuts, since the president’s budget is based on dishonest baseline budgeting. At best, we’re simply talking about slowing the growth of government.