August 2013

August 22, 2013 4:34PM

“Hire Slow, Fire Fast”

I’ve often pointed out that the modern trend in America toward loading more and more legal risks and obligations onto employers tends to have the presumably unintended effect of creating a disincentive to employ people, especially when there is any hint that an employment relationship, even if productive otherwise, might take on elements of conflict. 

Don’t just take my word for it. Here’s an item I’ve been meaning to note for a while from the excellent lawyer‐​blogger Eric B. Meyer of Dilworth Paxson in Philadelphia, who represents employers. It’s no longer brand new but has lost none of its relevance: 

In the world of Human Resources, “hire slow, fire fast” generally holds true to avoid just about any lawsuit.

Meyer goes on to describe the case of a nursing assistant at a New Jersey senior living center who was written up for absenteeism, rules violations, and insubordination, and put on a series of supposedly final warnings and a “last chance” agreement.

Which is to say, the employer did not follow the maxim of “fire fast.” HR folks can probably guess what happened next: the worker filed a request under the Family and Medical Leave Act (FMLA), a federal law that 1) requires the employer to hold open a vacant job for an absentee under various circumstances and 2) lays out a minefield of ways the employer can incur liability if it then can be construed as having “discouraged” the request or “retaliated” against it. Much of the gamesmanship of employment law develops from doctrines like retaliation: an underlying claim of discriminatory treatment may be hopelessly weak, but retaliation will succeed in keeping the suit going. (When the Supreme Court very slightly narrowed liability for retaliation in this summer’s case of University of Texas Southwestern v. Nassar, the peals of anguish from the legal Left went on for weeks.) In this case the New Jersey senior center stepped on one of the mines: it proceeded to fire the worker based on a last‐​straw‐​on‐​the‐​camel further offense that others testified would normally not count as a firing matter by itself. 

If you’re an employer in some region or industry where employees seldom sue, you may be able to offer lenient discipline policies with multiple chances in hopes of breaking the bad habits of an otherwise wanted employee. States like California and Massachusetts, which have laid out drastic legal consequences for employers whose workers do not get full lunch breaks, are also the states where you are likeliest to find seemingly draconian employer policies of firing or disciplining workers caught doing even a tiny bit of work over lunch. 

Most experienced HR people I’ve met seem to find it easy to grasp the legal logic of “Hire Slow, Fire Fast.” Why is it so hard for elected lawmakers to grasp?

August 22, 2013 1:16PM

U.S. Policies Deter Inward and Encourage Outward Business Investment

This morning, Cato published a new study of mine titled, “Reversing Worrisome Trends: How to Attract and Retain Investment in a Competitive Global Economy.” The thrust of the paper is that, despite still being the world’s premiere destination for foreign direct investment, the U.S. share of the global stock of direct investment fell from 39% in 1999 to 17% today.

This downward trend is attributable to two broad factors. First, developing economies – many of which have achieved greater political stability, sustained economic growth, improved infrastructure and higher‐​quality worker skill sets – are now viable options for pulling in the kinds of FDI that was once untenable in those locales. Second, a deteriorating business and investment climate in the United States – owing to burgeoning, burdensome, and uncertain regulations; an antiquated, punitive corporate tax system; incoherent immigration, energy, and trade policies; a wayward tort system; cronyism and perceptions thereof; and other perverse incentives and disincentives of policy have pushed investment away.

The first trend should be welcomed and embraced; the second must be reversed. From the study:

Unlike ever before, the world’s producers have a wealth of options when it comes to where and how they organize product development, production, assembly, distribution, and other functions on the continuum from product conception to consumption. As businesses look to the most productive combinations of labor and capital, to the most efficient production processes, and to the best ways of getting products and services to market, perceptions about the business environment can be determinative. In a global economy, “offshoring” is an inevitable consequence of competition. And policy improvement should be the broad, beneficial result.

The capacity of the United States to continue to be a magnet for both foreign and domestic investment is largely a function of its advantages, many of which are shaped by public policy. Considerations of taxes, regulations, trade openness, access to skilled workers, infrastructure, energy policy, and dozens of other policy matters factor into decisions about whether, where, and how much to invest. It should be of major concern that inward FDI has been erratic and relatively downward trending in recent years, but why that is the case should not be a mystery. U.S. scores on a variety of renowned business surveys and investment indices measuring policy and perceptions of policy suggest that the U.S. business environment is becoming increasingly less hospitable.

Although some policymakers recognize the need for reform, others seem to be impervious to the investment‐​repelling effects of some of the laws and regulations they create. Some see the shale gas and oil booms as more than sufficient for overcoming policy shortcomings and attracting the necessary investment. The most naive consider “American” companies to be tethered to the U.S. economy and obligated to invest and hire in the United States, regardless of the quality of the business and policy environments. They fail to appreciate that increasingly transnational U.S.-based businesses are not obligated to invest, produce, or hire in the United States.

It is the responsibility of policymakers, however, to create an environment that is more attractive to prospective investors. Current laws, regulations, and other conditions affecting the U.S. business environment are conspiring to deter inward investment and to encourage companies to offshore operations that could otherwise be performed competitively in the United States.

A proper accounting of these policies, followed by implementation of reforms to remedy shortcomings, will be necessary if the United States is going to compete effectively for the investment required to fuel economic growth and higher living standards.

Details, charts, and analysis, and citations are all included here.

August 22, 2013 11:00AM

IPCC Chooses Option No. 3

Global Science Report is a weekly feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

The U.N.’s Intergovernmental  Panel on Climate Change (IPCC) is nearing the final stages of its Fifth Assessment Report (AR5)—the latest, greatest version of its assessment of the science of climate change. Information is leaking out, with some regularity, as to what the final report will contain (why it is secretive in the first place is beyond us).

A few weeks ago, The Economist reported on some of the information from the new IPCC report that was leaked. The key piece of information concerned the IPCC’s assessment of the equilibrium climate sensitivity—how much the earth’s average surface temperature increases as a result of a doubling of the atmospheric carbon dioxide concentration. As we have been reporting, the research now dominating the scientific literature indicates that the equilibrium climate sensitivity is around 2.0°C.  This value is about 40% lower than the average climate sensitivity value of the climate models used by the IPCC to make their future projections of climate change, including among other projections, those for temperature and sea level rise.  The Economist suggested that the IPCC was going to lower their assessed value for the equilibrium climate change based on the mountain of evidence from the literature, but gave no indication whether the IPCC was also going to, accordingly, lower all the projections made throughout their report.

In a Cato@Liberty article last month, we pointed out that the IPCC had three options as to how to proceed.  Quoting ourselves:

The IPCC has three options:

1. Round-file the entire AR5 as it now stands and start again.

2. Release the current AR5 with a statement that indicates that all the climate change and impacts described within are likely overestimated by around 50%, or

3. Do nothing and mislead policymakers and the rest of the world.

We’re betting on door number 3.

In its article earlier this week reporting on its own acquired leaked information from the IPCC AR5 report, the New York Times basically proved us right.

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August 22, 2013 10:25AM

Obama to Control the Price of Ivy?

Superabundant federal student aid has done a huge amount to get us into our bankrupting college mess. To get us out, today President Obama will propose, essentially, "soft" price controls. But they will likely leave the root problem intact while, if anything, adding new kinds of woe.

On his college bus tour, President Obama will propose that Washington start publishing ratings of schools based on such measures as average tuition, graduation rates, debt and earnings of graduates, and the percentage of a college's students who are low-income. The ratings would also "compare colleges with similar missions." Ultimately, the president will propose that the availability of aid be partly conditioned on the new ratings.

Let's be clear: The price of college is almost certainly far higher than it should be, fueled largely by federal aid that essentially tells colleges "charge whatever you want -- we'll give students the money." That's a major reason that average, inflation-adjusted prices have more than doubled in the last 30 years. And it is good that the president, and many others, are essentially acknowledging the inflationary reality of aid. But will price controls help or hurt?

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August 21, 2013 4:19PM

U.S. Gun Laws as a Scapegoat for Mexico’s Drug Violence

Officials, pundits, and gun control activists on both sides of the U.S.-Mexico border habitually argue that allegedly lax gun laws in the United States bear heavy responsibility for the drug‐​related violence in Mexico. As I write over at the National Interest Online, the latest example of that reasoning is a new study from the Council on Foreign Relations arguing that the “flow of high‐​powered weaponry from the United States exacerbates the soaring rates” of such violence.

It is hardly a new argument. Former Secretary of State Hillary Clinton repeatedly embraced the Mexican government’s view that permissive U.S. gun laws were a major contributor to bloodletting in Mexico. In summit meetings with both the current Mexican president and his predecessor, President Obama has adopted a similar position. But that is merely a convenient scapegoat for the horrific violence in our southern neighbor. The underlying reason for Mexico’s agony is not the easy availability of guns, but the enormous profitability of the illegal drug trade and the various pathologies that it spawns, including violence and pervasive corruption.

Indeed, the argument that supposedly lax U.S. gun laws are a major reason for Mexico’s drug violence is a red herring. That’s not to say that the cartels don’t get some of their weaponry from gun shops, flea markets, pawn shops, and gun shows in the United States, as gun control zealots charge. They do, but they also get them from numerous other sources. As I note in chapter 9 of The Fire Next Door, my latest book on the international drug war, the cartels obtain weapons from the international black market, the armories of Central American countries the U.S. helped fill during the fight against communist insurgents during the 1980s, and even Mexico’s own military depots.

The principal reason the drug gangs can obtain all the firepower they want is that they have vast financial resources at their disposal. Mexico’s share of the annual $300 billion to $350 billion global trade in illegal drugs is estimated to be at least $35 billion, and perhaps as much as $60 billion. The U.S.-led prohibition strategy is largely responsible for that perverse situation. Banning marijuana, cocaine, and other drugs today does not work any better than the prohibition of alcohol did in the 1920s and early 1930s. In both cases, it merely inflated profits and guaranteed that the trade would be dominated by violent criminals.

If we really want to help Mexico curb the carnage that has claimed more than 80,000 lives over the past 6 ½ years, the United States needs to adopt a strategy that de‐​funds the drug cartels. That means ending prohibition, not pursuing the quixotic goal of tougher gun laws.

August 21, 2013 9:59AM

SPLC: If You Can’t Help Every Child, You Can’t Help Any Child

Most people know the story of the boy who was rescuing sea stars that had washed up on a beach by throwing them back into the ocean. When a man scoffed to the boy that his efforts didn’t make a difference since he couldn’t save all of them, the boy tossed another sea star back into the ocean and replied, “It made a difference to that one.” The little‐​known ending to the story is that the boy was sued by the Southern Poverty Law Center for violating the Constitution’s Equal Protection clause.

Sadly, this is only a slight exaggeration. Earlier this week, the Southern Poverty Law Center filed a federal lawsuit contending that Alabama’s new scholarship tax credit program violates the Equal Protection clause and harms the low‐​income students attending failing public schools whom the law is intended to help:

[SPLC] President Richard Cohen said the new Alabama Accountability Act will take millions away from public schools and will make the failing schools worse than they are now. He said the law was promoted by Republican Gov. Robert Bentley as giving students a way out of failing schools. 

“It’s a lie. Our clients do not have a way out of the failing schools that they are in,” he said.

The Montgomery‐​based law center sued on the opening day of classes for most public schools in Alabama. The suit focuses on a part of the law that allows families with children in Alabama’s 78 failing public schools to move them to a non‐​failing public school or to a private school that participates in the program. They can get a state tax credit of about $3,500 annually to help cover private school costs.

The lawsuit was filed on behalf of eight plaintiffs who say that they can’t afford to go to private schools and that the non‐​failing public schools are not accessible. The lawsuit raises equal protection issues.

One of the eight plaintiffs, Mariah Russaw, said she couldn’t afford the transportation costs even if her 12‐​year‐​old grandson, J.R., could leave Barbour County Junior High School in Clayton. All junior highs in the Barbour County school system are on the failing list. The nearest non‐​failing public school is 19 miles away in Pike County. The nearest private school is about 30 miles away, but it is not participating in the program.

The 62‐​year‐​old grandmother said it wouldn’t matter if the private school were participating. “I cannot afford to transport him to another school,” she said.

In short, SPLC argues that if the law can’t rescue every child from a failing school, then it shouldn’t be allowed to rescue any child. Not only would this line of reasoning hobble almost every government effort to incrementally address any problem, but the argument also rests on a misunderstanding of the status quo and the law’s likely impact.

The SPLC lawsuit claims that the law “creates two classes of students assigned to failing schools – those who can escape because of their parents’ income or where they live and those, like the Plaintiffs here, who cannot.” In fact, those two classes of students already exist. In our existing education system, low‐​income families are trapped in failing schools while wealthier families can afford either to live in districts with better public schools or to send their children to private school. The scholarship tax credit program is too limited to solve all the existing inequities, but it moves more students out of the first category and into the second. In other words, by expanding opportunities to low‐​income families, it makes an already unequal education system more equal.

Moreover, there is no evidence the program does harm to students who remain in public schools. The SPLC claims that the failing public schools are “likely to deteriorate further as their funding is continually diminished” as a result of students fleeing from those schools. But a mere assertion that harm is “likely” doesn’t cut it. Had the SPLC consulted the research literature instead of their fevered imaginations, they would have discovered that 22 of 23 studies of school choice programs found that they have positive impact on public school performance. The last study found no visible impact.

In other words, the increased choice and competition help both the students who participate in the program and those students who remain in their assigned public schools. Striking down the program would thus make matters worse for the litigants and other families like them, not better. Expanding the program would improve outcomes even further. If the SPLC is truly motivated by a desire to help low‐​income families, it should drop its lawsuit and join the effort to expand educational options. There are lots of sea stars left on the beach and they could use a hand.

August 20, 2013 3:38PM

Current Wisdom: Greenland’s Disastrous SLR Is SOL

The Current Wisdom is a series of monthly articles in which Patrick J. Michaels, director of the Center for the Study of Science, reviews interesting items on global warming in the scientific literature that may not have received the media attention that they deserved, or have been misinterpreted in the popular press.

Could President Obama have picked a worse time to announce his Climate Action Plan?

Global warming has been stuck in neutral for more than a decade and a half, scientists are increasingly suggesting that future climate change projections are overblown, and now, arguably the greatest threat from global warming—a large and rapid sea level rise (SLR)—has been shown overly lurid (SOL; what did you think I meant?).

You hardly need an “action plan” when there is so little “action” worth responding to.

As I frequently discuss the lack of warming and the decreases in the estimates of future climate change, I’ll focus here on new scientific findings concerning the potential for future sea level rise, interspersing a little travelogue.

Projections of a large sea-level rise this century depend on rapid ice loss from Greenland and/or Antarctica. Yes, as ocean waters warm, they expand, but this expansion-induced rise is pretty well constrained and limited to being about 6 inches plus or minus a couple of inches by century’s end. And the contribution from melting glaciers/ice in other parts of the world (not counting Greenland and Antarctica) is even smaller, maybe 2-4 inches. So that adds up to about 8-12 inches of sea level rise by the year 2100—not much different than that which has already occurred over the past century. This is hardly catastrophic.

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