Apollo 11: A Rare Federal Success

NASA’s Apollo 11 blasted off 50 years ago today sending astronauts to land on the moon and return safely to earth. The mission was planned rapidly and executed almost flawlessly. The Saturn V rocket was the most powerful engine ever built. The computers available at the time were primitive, yet everything about the timing of burns and entry angles had to be precise. Neil Armstrong, Buzz Aldrin, and Michael Collins were unbelievably brave. It was a stunning achievement. An American triumph.

If the mission were pursued today, the president would be tweeting undignified comments and hogging the spotlight. The launch would be years behind schedule and the computers would jam like during the Obamacare launch. Environmental lawsuits would shut down the launchpad. Labor regulations would slow astronaut training. NASA executives would be indicted for graft. Federal budget squabbling would close the federal government and mission control, leaving the astronauts to find their own way home from the moon. It would be a mess.

Policymakers these days keep on dreaming of big spending projects for the government. But Washington is running trillion-dollar deficits and is far more dysfunctional than in 1969. I discuss the structural reasons why the government fails so much in this study.

The federal government has suffered from corruption, cost overruns, pork barrel spending, and nasty partisan battles since the beginning. But the problems have grown worse because the government has grown far too huge to manage and oversee properly. The federal government’s budget is 100 times larger than the budget of the average state government. As Milton Friedman said, “because government is doing so many things it ought not to be doing, it performs the functions it ought to be performing badly.”

The 1969 moonshot remains awe-inspiring, as the new Apollo 11 movie captures. But looking ahead, we would get more out of the government if it did less. We would be better off letting entrepreneurs take the lead both in space exploration and in the many challenges we face here on earth.

We Need A Way Back To Multilateralism In Trade

As trade restrictions mount and as major trading countries remain mired in commercial impasse, an approaching global gathering in Central Asia next summer could prove to be the climax to the current battle between continued multilateral cooperation and increased unilateral confrontation in trade.

The World Trade Organization, with its commitment to international cooperation, has been struggling with the headwinds of unilateralism and protectionism. If a way back to multilateralism in trade is not soon found, the entire trading system may unravel, with grievous economic consequences for all the world.

So far, the developed countries of the world have been unable to counter the current trend toward the ultimately self-defeating insularities of economic nationalism. Thus, it may be left to the developing countries to play a decisive role in turning the tide. At this point, most developing countries understand – perhaps better than some of the developed countries – the considerable economic and geopolitical stakes they share in supporting the existing global trade regime.

While the rest of the world has been struggling to save the multilateral trading system overseen by the WTO, many of the developing countries that comprise most of the 164 members have just now started to benefit fully from their participation in the rules-based WTO system. The lower barriers to trade and the added links to global supply chains provided by membership in the multilateral trading system are helping further growth and feed prosperity by freeing and facilitating trade throughout the developing world.

One among numerous examples is Kazakhstan, which has grown rapidly through trade in the four years since it became a WTO member in 2015, and which has been chosen to host what could be a fateful WTO ministerial conference in its capital of Nur-Sultan in June of 2020. It can be argued that Kazakhstan and other developing countries that are just now climbing the economic ladder toward prosperity have the most at stake in saving a multilateral trading system that provides mutual market access under the rule of law. In the rules-based WTO, all countries are equal no matter the size of their economies or the extent of their trade. In the WTO, there is the rule of law instead of the rule of power. For developing countries, above all others, it would be ill-advised to undermine the international rule of law in trade.

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Will Congress Finally X-Out the “X” Waiver?

Members of Congress are growing more appreciative of the benefits of Medication Assisted Treatment in addressing the overdose crisis. Two bills presently under consideration—one in the Senate and one in the House—are the latest evidence of that awareness. 

Medication Assisted Treatment for opioid use disorder is one of the most widely-accepted and least controversial of the tools in the harm reduction tool box. The strategy involves placing the patient on an orally-administered opioid that binds with enough opioid receptors to prevent painful withdrawal symptoms while, at the same time, not producing cognitive impairment or euphoria. The approach has been around since the 1960s and has greatly reduced overdose deaths as well as the spread of deadly infections from dirty needles.

One of the oldest and most well-known examples of MAT uses the synthetic opioid methadone, which is classified by the Drug Enforcement Administration as Schedule II (known medical use with a high potential for abuse or dependence). A more recent form of MAT uses the Schedule III opioid buprenorphine. Schedule III drugs have less potential for dependence or abuse than those in Schedule II. Like methadone, buprenorphine is permitted to be prescribed for the treatment of pain, but not for MAT without obtaining DEA permission.

As I have written here, federal policy regarding methadone MAT makes no sense. Health care practitioners have been permitted to prescribe methadone in oral or non-oral forms to treat pain for decades. Yet they are not permitted to prescribe methadone for opioid withdrawal management or for MAT for opioid use disorder outside of a DEA-licensed and regulated methadone clinic. These clinics must also obtain state licenses. Patients are required to take the methadone in front of a member of the clinic staff. 

These regulatory requirements have been great obstacles to providers wishing to establish methadone clinics, and even greater obstacles to patients seeking methadone MAT for their disorder. It also places onerous burdens on patients suffering from opioid use disorder who want treatment. The requirement to take the medication in the presence of clinic staff each day demands a certain amount of scheduling discipline that many addicts have difficulty achieving. It also implies that addicted patients cannot be trusted with an outpatient supply to take as directed —which is a further blow to the already shattered self-esteem that helps perpetuate substance use disorder. And patients living in remote areas underserved by methadone clinics are unrealistically expected to travel long distances each day to take their methadone in the presence of clinic staff. This problem can be alleviated by allowing health care practitioners who can already prescribe methadone for other reasons to prescribe it to outpatients for withdrawal management and MAT, as has been the case in Canada, the UK, Australia and other countries for decades.

Buprenorphine, on the other hand, may be prescribed on an outpatient basis for MAT. Research has been inconclusive with respect to the relative effectiveness of methadone versus buprenorphine for MAT. Most clinicians believe there is no one-size-fits-all answer. Depending upon the patient and the circumstances, one drug might work better than the other. In recent years buprenorphine has been combined with the overdose antidote naloxone in an oral form, commonly known by the brand name Suboxone. When taken orally, naloxone is inactive. If buprenorphine/naloxone is crushed and injected, the naloxone counteracts the buprenorphine, preventing the user from achieving any “high.” But most users of non-prescribed diverted Suboxone report they are self-medicating to avoid opioid withdrawal, and that the Schedule III buprenorphine is a poor substitute for the “high” they get from heroin and other more powerful opioids.

A major force behind the black market for buprenorphine is the fact that there is an acute shortage of practitioners to whom people with substance use disorder can go for buprenorphine MAT. Again, this is because of onerous federal restrictions. Under the Drug Addiction Treatment Act of 2000, practitioners wishing to treat substance use disorder with buprenorphine are required to obtain an “X waiver.” Providers must take an 8-hour course in order to have the ”X” added to their DEA narcotics prescribing license. There are also strict limits on how many patients a practitioner can treat at any given time, as well as restrictions on nurse practitioners or physician assistants wishing to obtain the X waiver. These have combined to create an acute lack of buprenorphine MAT providers. According to the Substance Abuse and Mental Health Services Administration, less than 7 percent of practitioners have jumped through the hoops and obtained X waivers. The shortage is particularly severe in rural areas. Nationally, only 1 in 9 patients with opioid use disorder are able to obtain buprenorphine MAT.

For this reason, health care practitioners interested in treating opioid use disorder, as well as other harm reduction advocates, have called for ending the requirement of an X waiver to use buprenorphine for MAT. In France roughly one-fifth of general practitioners treat people with substance use disorder in their offices without any further licensing or education requirements. It has contributed to a dramatic reduction in France’s overdose death rate.

Fortunately, members of Congress seem to be getting the message. Senators Lisa Murkowski (R-AK) and Maggie Hassan (D-NH) have introduced a bill that would eliminate “the separate scheduling requirement for dispensing narcotics in Schedules III, IV, and V for maintenance or detoxification treatment.” In the House, Representative Paul Tonko (D-NY) introduced HR 2482 in May which does the same. HR 2482 has 75 co-sponsors, 15 of whom are Republicans.

It should be a lot easier for providers to help the many patients seeking help from their disorder but are are unable to find it. This legislation should help. Congress should also look at reforming laws surrounding methadone, so it can be prescribed in practitioners offices as well. But first things first.

 

 

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Of Libras and Zebras: What Are the True Financial Risks of the Facebook-Led Digital Currency? (Part II: Monopoly Risk)

Policymakers, in America and around the world, have for the most part responded to the announcement of Libra with skepticism, fear, and not a little bit of loathing. In my last post, I argued that Libra’s association with Facebook and misleading references to it as a cryptocurrency led to an overreaction on the part of the policy elite. Like budding zoologists who think of zebras rather than horses when they hear hoofbeats, government officials are focusing on the memorable (crisis, monopoly, fraud) rather than the probable (an improved payments system) consequences of this innovation.

My previous post showed that warnings about the systemic risk that Libra presents are overblown. In this post, I explore another concern policymakers have expressed about the Facebook-led digital currency project. That is the risk that Libra-based providers, or even Facebook alone, will be able to monopolize payments through the Libra Association. I hope to show that public officials may be letting their imagination run wild, as they have with regard to systemic risk. In fact, Libra appears more likely to increase competition and choice in payments. Such an outcome is not a best-case scenario, but rather what one might expect based on the experience of payment card networks.

Washington Post: Illogic on Gas Taxes

A recent Washington Post editorial addressed highway funding and gas taxes. The piece noted that gas taxes went up in 13 states in July and that “31 of the 50 states have raised or reformed their motor fuel taxes during the past decade.”

From these state policy actions, the Post deduced that the federal government should raise its own gas tax. But that makes no sense. The recent gas tax increases show that the states are already addressing their highway funding needs. The chart below, based on API data, shows that while the federal gas tax rate has been stable in recent years the average state rate has risen substantially.

The states have powerful revenue sources to fund their highways and other infrastructure, including gas taxes, income taxes, sales taxes, and borrowing. They can pursue privatization and public-private partnerships to draw private funds into infrastructure. And they can re-direct gas tax revenues currently used for other purposes back to highway use.

State governments own the nation’s highways, including the entire Interstate system, and they can best judge how much money is needed for construction and maintenance. The federal government is a bureaucratic and pork-barrel middleman that has no magic source of free funds. We should let the states fill up their own highway funding tanks.

Saving Cities from Bad Federal Policies

Since 1992, federal taxpayers have helped fund construction of urban rail transit lines through a program called New Starts. This program is due to expire in 2020, and today the Highways and Transit Subcommittee of the House Transportation and Infrastructure Committee will hold a hearing on whether or not to renew it.

No doubt most of the witnesses at the hearing will be transit agency officials bragging about how their expensive projects have created jobs and generated economic development. But a close look at the projects built with this fund reveals that New Starts has done more damage to American cities than any other federal program since the urban renewal projects of the 1950s. Here are eight reasons why Congress should not renew the program.

1. New Starts encourages cities to waste money. The more expensive the project, the more money New Starts provides, so transit agencies plan increasingly expensive projects to get “their share” of the money. As a result, average light-rail construction costs have exploded from under $17 million per mile (in today’s dollars) in 1981 to more than $220 million a mile today.

2. New Starts encourages cities to build obsolete technologies. There are good reasons why more than a thousand American cities replaced their rail transit lines with buses between 1920 and 1970: buses cost less and can do more than trains. A train can hold more people than a bus, but for safety reasons a rail line can only move a few trains per hour. A busway can move hundreds of buses and twice as many people per hour as any light-rail line. As one recent report concluded, “there are currently no cases in the US where LRT [light-rail transit] should be favored over BRT [bus-rapid transit].”

3. Rail transit often increases congestion. Light rail, streetcars, and even new commuter-rail lines often add more to congestion by running in streets or at grade crossings than the few cars they take off the road. The traffic analysis for Maryland’s Purple Line, for example, found that it would significantly increase delays experienced by DC-area travelers.

4. New Starts forces transit agencies to go heavily in debt. New Starts pays only half of construction costs, and transit agencies often borrow heavily to pay the other half. This leaves them economically fragile so that, to avoid going into default in an economic downturn, they are forced to make heavy cuts in transit service.

Whichever Way You Slice It, Courts Have Made a Mess in Applying the ADA to Websites

An old judicial divide over the meaning of “place of public accommodation” in Title III of the Americans with Disabilities Act—which deals with access to private businesses—has in recent years produced inconsistent rulings regarding access to virtual platforms such as websites and smartphone applications. Some federal courts read the text to apply narrowly to physical places like doctor’s offices, while others read it broadly to include non-physical “places” like insurance policies. Before the internet, it wasn’t hard to see which side had the better textual argument. But in an age of omnipresent e-commerce, what was once as simple as a pepperoni pie has since become a fully loaded Chicago deep-dish.

While no court has ruled that virtual platforms are entirely beyond Title III’s ambit, some have limited it to the websites of brick-and-mortar establishments like restaurants and department stores, provided those websites share a commercial “nexus” to discrete physical locations. Others would extend it to website-only businesses (think Netflix). In short, there is no central Title III definition to guide courts on how to fit websites and apps into an analytical framework devised in the analog age. And the Department of Justice (DOJ) has only muddied the waters, offering prevaricating, non-binding guidance, in lieu of long-promised rules and regulations, the latest proposals for which were quietly withdrawn in 2017.

Congress intended the ADA to reshape the cultural and architectural landscape of American society to make it more welcoming to disabled people by compelling businesses to construct ramps, include braille signage, and provide countless other aids to ensure that the disabled have equal access to goods and services. But the ADA doesn’t define “access” with precision. It certainly doesn’t advise businesses on what they must do to avoid Title III liability. It does, however, list the types of “places of public accommodation” to which it applies, places that are alike only in their physicality (e.g., a concert hall and a barber shop).

That brings us to Guillermo Robles, a blind man who sued Domino’s Pizza, alleging that the company’s website doesn’t allow him to order pizza online. The federal district court ruled that, while Title III did apply to websites and apps, the absence of a formal rule meant businesses didn’t have sufficient notice of how to comply. The U.S. Court of Appeals for the Ninth Circuit reversed, holding that existing DOJ guidance is sufficient. Domino’s has asked the Supreme Court to review that ruling and Cato has filed an amicus brief supporting that request.

Courts that define website-only businesses as “places” of public accommodation in themselves have gone a bridge too far. So too have those courts that define the “nexus” between a website and a physical location so broadly as to require every page of a commercial website—even those pages that don’t involve access to a physical location—to have a Title III-compliant interface. And since DOJ remains largely in an advisory role, courts have invented their own compliance criteria, or adopted as binding certain guidelines offered by international standard-setters—even though many businesses have warned of the significant expense these approaches entail.

The compliance costs of this regulatory morass are too great for the Supreme Court to ignore. The confusion emanating from a rudderless bench and a reticent DOJ has opened the floodgates of litigation, driven largely by a plaintiffs’ bar more interested in attorneys’ fees than improving their clients’ lives. By one count, the number of Title III lawsuits rose from 7,663 in 2017 to 10,163 in 2018—a more than 30% increase. Without the Court’s intervention, the costs of this “regulation by litigation” will continue to rise, like so much dough in a wood-fired pizza oven. Although the facts of each case vary, the recent onslaught of claims target businesses both big and small. Today, its Domino’s Pizza or Netflix. Tomorrow, it’s a local contractor with far-more limited resources. The ADA was never meant to be a business-killer, so courts shouldn’t make it into one unless Congress so specifies in no uncertain terms.