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Walter Olson Commentary, analysis, insight from the Foundation for Economic Education https://fee.org/feed?author=walter-olson 2019-05-25T21:16:57-04:00 Walter Olson https://fee.org/people/walter-olson/ firstname.lastname@example.com FEE.org Feeds by DavidV https://fee.org/articles/antitrust-myths-and-the-fall-of-sears/ Antitrust Myths and the Fall of Sears The retailer Sears has gone broke, a reminder that business dominance is not forever. 2018-10-17T15:00:16-04:00 2018-10-17T15:00:16-04:00 Walter Olson https://fee.org/people/walter-olson/
Sears Roebuck & Co. became the most fabled retailer in American history as the pioneer of catalog merchandising, an innovation that revolutionized small-town life. Its then-visionary management followed up with stand-alone stores that long served as landmarks in their communities, developing brands and business lines notable in their own right such as Craftsman, Kenmore, Discover Card, and Allstate Insurance, most of which are now independent.

In the first half of the 20th century, a whole generation of antitrust and competition laws attempted to restrain the rise of chain stores with their perceived advantages in negotiating with suppliers. "One of the dumbest laws," as Cato senior fellow Doug Bandow has called it, was the Robinson-Patman Act, amending the Clayton Antitrust Act in 1936, which (employing vague, opaque language) criminalized many arrangements in which chain stores like Sears obtained quantity discounts from manufacturers.

"The next time you hear somebody say that the dominance of Amazon can never end, think about Sears. It can—and it probably will."

Per one reference work, Robinson-Patman was meant to respond to "the growth of chain stores such as A&P and Sears, Roebuck[sic]," in service of the interests of independent retailers and wholesalers. "The United States Wholesale Grocers Association drafted the original bill," notes another source.

None of which succeeded in holding back the logic of marketplace competition: under the Reagan administration's leadership of the U.S. Department of Justice's Antitrust Division, Robinson-Patman fell into disuse and the discount revolution gathered force. This morning, following a long decline, Sears filed for bankruptcy. (A&P, once demonized as a business juggernaut destined to swallow up grocery retailing, went out of business in 2015 after closing its remaining stores.)

In a column worth reading through, Joe Nocera at Bloomberg draws a lesson for policymakers about capitalism's ferment of creative destruction. "The next time you hear somebody say that the dominance of Walmart or Amazon or Facebook can never end, think about Sears. It can—and it probably will."

This article is reprinted under Creative Commons from Cato At Liberty.
 https://fee.org/articles/would-warren-want-trump-to-have-the-power-to-revoke-amazon-or-facebooks-charter/ Would Warren Want Trump to Have the Power to Revoke Amazon or Facebook's Charter? When politicians make calls to have government control over something, like corporate charters, they don't always seem to understand that that power could also be wielded by people they don't agree with. 2018-08-28T11:00:46-04:00 2018-08-28T11:00:46-04:00 Walter Olson https://fee.org/people/walter-olson/
Sen. Elizabeth Warren's proposal for drastic changes to corporate governance, which I wrote about in this space last week, continues to draw thoughtful responses from commentators. Colleague Ryan Bourne notes that one study "found that German firms were 27 percent less valuable to their shareholders" because of the workers-on-boards co-determination laws Warren would have us emulate. Moreover, the value given up was not merely transferred to the firms' workforces but was in part dissipated through inefficiency.

Writing on the Left these days often romanticizes the idea that business charters should be revocable by some central authority.

At National Review, Samuel Hammond discusses how co-determination undermines the overall dynamism of a national economy (for example, by discouraging the transfer of capital to risky, high-value new enterprises) and also notes some of the problems with making "stakeholder" value a subject of fiduciary duty for investors.

Now NYU law professor and Cato adjunct scholar Richard A. Epstein, a leading libertarian voice on law, tackles the Warren plan in a piece for the Hoover Institution's Defining Ideas series. Epstein's piece is worth reading in its entirety for his analysis of (among other topics) the "stakeholder" mystique, the efficiency-friendly role of share buybacks and executive incentive stock, and the constitutional infirmities of the overall Warren scheme (citing the unconstitutional-conditions doctrine), as well as his warning that large-scale capital flight from the U.S. could ensue if investors mistrust the whims of a new federal charter regulator.

In the passage I want to highlight, however, Epstein makes a point often overlooked in other critiques. Writing on the popular and populist Left these days often romanticizes the idea that business charters should be revocable by some central authority for misconduct ("corporate death penalty"), although it is often not spelled out whether the assets of a giant bank or oil or pharmaceutical company hit by scandal should be taken into the public sector by some sort of confiscatory state authority, allowed to revert to shareholders, or perhaps transferred to a successor entity that would maintain the same brands and facilities and headquarters as before (leaving the question of what exactly is being accomplished by charter revocation). Epstein takes the broad historical view:

…Warren wholly misunderstands the historical role and constitutional position of corporate charters. The last thing that any country needs for economic growth is a situation in which government officials decide which firms receive charters subject to what conditions. Does she really think that some public bureaucrat should have the power to refuse to issue Apple a corporate charter unless it puts community members or union members on its board, makes gifts to the Sierra Club, or adopts minimum minority hiring set-asides? And what should be done when thousands of firms balk at these conditions? Can they go to court, or does the federal board run the corporation directly?

Lest anyone forget, the great 19th-century corporate reform was the passage of general incorporation laws that allowed any group of individuals to form a corporation, with its attendant benefit of limited liability, so long as they met certain minimum conditions relating to their capital contributions, their ability to sue and be sued, and their board structures. The new legal regime ushered in sustained economic expansion by knocking out the political favoritism that had previously given some businesses corporate charters that gave them a huge edge over direct competitors denied similar authorization. It would be unsurpassed folly to re-open the doors to these abuses today.

Indeed, a key point about general incorporation laws was that they were egalitarian: you could launch an incorporated venture even if you were obscure, new in town, or out of favor with political influentials. Supporters of plans like Warren's should be asked whether they really want some combination of political actors—very possibly appointees of Donald Trump or another President like him—to gain power to revoke Google's or Amazon's or Facebook's charter to continue doing business unless the management agrees to cut a deal, perhaps involving private understandings with officialdom, to stave off such a penalty.

Reprinted from Cato at Liberty.
 https://fee.org/articles/elizabeth-warrens-big-power-grab/ Elizabeth Warren's Big Power Grab Not only has it failed every time it's been tried, it's also most likely unconstitutional. 2018-08-18T12:42:06-04:00 2018-08-18T12:42:06-04:00 Walter Olson https://fee.org/people/walter-olson/
Sen. Elizabeth Warren of Massachusetts has introduced legislation that would radically overhaul corporate governance in America, requiring that the largest (over $1 billion) companies obtain revocable charters from the federal government to do business, instituting rules reminiscent of German-style co-determination under which workers would be entitled to at least 40 percent representation on boards of directors, placing directors under a fiduciary obligation to serve "stakeholders" as opposed to owners as currently, prohibiting political expenditures by corporations unless approved by at least 75 percent of directors and shareholders, and restricting directors and officers from reselling incentive stock within five years.

It's Been Tried. It Didn't Work.

"Let's be clear, none of these are new ideas," writes leading corporate governance expert Stephen Bainbridge of UCLA. "They are either academic utopian schemes or failed European governance models. There are very good reasons none of these dusty relics of eons of progressive corporate thought have made it into law." His series of posts picking it apart in detail begins here.

The alternatives, European or otherwise, simply do not have as good a track record of supporting a dynamic economy.

Our friend James Copland of the Manhattan Institute points out that Sen. Warren's proposal would pull down three main pillars of U.S. corporate governance: shareholder primacy, director independence, and charter federalism. Each has long been a subject of extensive research and debate, and the alternatives, European or otherwise, simply do not have as good a track record of supporting a dynamic economy that generates world-beating enterprises across a wide range of business sectors (as opposed to, say, the kind of specialty manufacturing at which Germany does well). Worker board representation, in particular, shapes incentives in ways that discourage important forms of risk-taking and reallocation of capital across sectors.

All of which helps explain why few startups would willingly accept Warren-style rules in drafting their by-laws. But there's a big additional problem in applying the rules, as Warren would, to existing companies that have already been capitalized under different assumptions: it would in effect confiscate at a stroke a large share of stockholder value, transferring it to some combination of worker and "community" interests.

Government Expropriation by Any Other Name...

This gigantic expropriation, of course, might be a Pyrrhic victory for many workers and retirees whose 401(k) values would take a huge hit in exchange for new rights of uncertain value to install board members. Already, some early enthusiasts for the Warren plan are treating the collapse of shareholder value as a feature rather than a bug, arguing that it would reduce wealth inequality.

It would test the restraints the U.S. Constitution places on the taking of property without compensation.

Whether or not it would accomplish that, it would test the restraints the U.S. Constitution places on the taking of property without compensation. Alas, the courts have been inconsistent about the extent to which they will recognize as takings, and provide a remedy for, legislative enactments that strip away much of the value of financial instruments or other property rights without expropriating fully 100 percent of their value. Cato over the years has been very much part of that legal debate, arguing for a strong interpretation of the Fifth Amendment's language: "nor shall private property be taken for public use, without just compensation."

Confiscatory proposals like Warren's make it more important than ever that we be prepared to defend this element of liberty in the courts.

Reprinted from Cato at Liberty.
 https://fee.org/articles/rip-richard-pipes-the-great-scholar-of-private-property/ RIP Richard Pipes, the Great Scholar of Private Property Richard Pipes, brilliant scholar and advocate of private property, has passed away at age 94. 2018-05-22T14:00:36-04:00 2018-05-22T14:00:36-04:00 Walter Olson https://fee.org/people/walter-olson/
Richard Pipes, the great Harvard historian, has died at 94. Best known for his clear-eyed work on Russia and its Bolshevik Revolution, a topic on which so many thinkers over the past century have fallen short, Pipes also wrote a terrific 1999 book on private property as a cornerstone of civilization, Property and Freedom: The Story of How through the Centuries Private Ownership Has Promoted Liberty and the Rule of Law. It's a favorite on Cato reading lists, including Tom Palmer's on principles of liberty and Ian Vásquez's on economic development. I reviewed it favorably at the time for the Wall Street Journal and noted its wide historical sweep, including Pipes's account of the many schools and movements since Plato that have taken a stance hostile to rights of private possession. These include not only communists, syndicalists, and the like, but some romantic nationalists and even cultural anthropologists who, for a time, claimed (wrongly) that primitive peoples dispensed with ideas of mine and thine.

Pipes always had his eye on the real-world consequences of these views for nations and their development. As I wrote, summarizing his argument:

The fork in the road between Britain and Russia, it would seem, came on the issue of whether the ruler could be said to own everything in the country. In England, this idea was challenged and then rejected with the revolutionary consequence that the king had no more right to trespass on an Englishman's freehold than anyone else did. Nor (eventually) could he exact financial penalties from his subjects—or do much of anything else, such as take away life and liberty—without due process of law. The idea that rights were something prior to government soon made England the most property-oriented country on earth.

By contrast, in unhappy Russia, the czars' claim to own everything carried only too much weight. The members of the Russian nobility often found themselves acting as collectors-of-tribute on highly revocable allotments. Serfdom persisted because the obligations of nominal landowners to the crown were too onerous to be met any other way. Whole categories of economic endeavor, such as coach inns and flour mills, were decreed to be the property of the royal family. When Lenin sought to ensure submission to the authority of his Soviets by ordering the pulping of old title deeds, he was acting in the tradition of the worst czars."

He was equally cogent when he stepped back for reflections of a more philosophical nature, as when he invoked David Hume on redistribution:

Render men's possessions ever so equal, men's different degrees of art, care and industry will immediately break that equality. Or if you check those virtues, you reduce society to the most extreme indigence; and, instead of preventing want and beggary in a few, render it unavoidable to the whole community."

Whole review here. Ira Stoll rounds up several resources on Pipes's work including his archive of writings at Commentary, where he reviewed such works as Hernando de Soto's The Mystery of Capital, Tom Bethell's The Noblest Triumph: Property and Prosperity Through the Ages, and Eric Hobsbawm's memoirs, being appropriately scathing about the last of these. A great mind and a great scholar, who chose for his life's work subjects that could hardly be more important for humanity's future.

Reprinted from Cato at Liberty.
 https://fee.org/articles/why-californias-lawsuit-industry-wants-you-to-think-coffee-causes-cancer/ Why California's Lawsuit Industry Wants You to Think Coffee Causes Cancer Prop 65 is a financial shakedown in the name of health and safety. 2018-04-01T10:00:27-04:00 2018-04-01T10:00:27-04:00 Walter Olson https://fee.org/people/walter-olson/
A judge in Los Angeles ruled Wednesday that Starbuck's, Peet's, and many other retailers face potentially massive liability under California law for not warning consumers that naturally occurring substances in roasted coffee beans can cause cancer, at least in lab animals. Absurd? Outrageous? Yes. But the scorn and outrage should be directed not at the judge but at the law whose terms he was required to enforce—Proposition 65, adopted by state voters through the initiative process in 1986—as well as the lawyer-swayed California political system that still, more than 30 years later, is unwilling to address the measure's gross flaws.

Almost everyone agrees that the over-proliferation of warnings makes it less likely that consumers will pay attention to real concerns.

Acrylamide is a naturally occurring substance formed when many foods are browned or otherwise subjected to high heat, including in many cases grilled burgers, fried chicken, bread, almonds, and potato chips. Like many other constituents of everyday life, it appears to cause cancer in some animals at high dosages. And that brings it under the terms of Prop 65, which has already led to a proliferation of warnings on and around thousands of common goods and services in California, from office furniture to hotel corridors to garages (car exhaust).

Almost everyone agrees by now that the over-proliferation of warnings makes it less likely that consumers will pay attention to those few warnings that actually flag notable risks. Although on paper the law provides exemptions for some risks that are not "significant" or are balanced by benefits, these have been hard for defendants to use in practice, and the coffee vendors were not saved by the argument that java overall provides (scientifically uncertain) net health benefits, which may even perhaps include net anti-cancer benefits, that outweigh the (also scientifically uncertain) risks.

What happens next? As the Post reports, "In addition to the warning signs likely to result from the lawsuit, the Council for Education and Research on Toxics, which brought the lawsuit, has asked for fines as much as $2,500 for every person exposed to the chemical since 2002, potentially opening the door to massive settlements." And the financial shakedown value here is far from incidental; it's the very motor that keeps the law going. Way back in 2001—yes, Overlawyered has been covering this for nearly 20 years—I noted the idealistic-sounding CERT, then involved in a suit against Starbucks over minute amounts of the Chinese herb ma huang in chai tea, and its lawyer Raphael Metzger:

While CERT is previously unknown, the same is not true of attorney Metzger, based in Long Beach, who runs a large "toxic-tort" practice whose website is publicizing the Starbucks action… "The constitutional right of Californians to pursue and obtain safety could be an untapped source of riches that plaintiffs' attorneys should consider on behalf of their clients and the public," Metzger wrote a while back in the San Francisco Daily Journal regarding the prospect of tort claims based on the California Constitution's "inalienable rights" provision.

The financial shakedown occurring because of Prop 65 is far from incidental; it's the very motor that keeps the law going.

Metzger is involved in CERT's current coffee litigation as well. Meanwhile, the California political system, which listens carefully to the small industry of nonprofits and attorneys that make a living by filing suits, has been unwilling to do more than nibble around the browned edges of Prop 65's famous irrationalities. The warnings of potentially chaotic results like today's—like Prop 65 warnings in general—have gone ignored. Overlawyered has covered in detail both Prop 65 in general (including its use against scented candles, matches, brass knobs, light bulbs, playground sand, and billiard cue chalk) and acrylamide in particular.

Reprinted from Cato.
 https://fee.org/articles/if-your-wine-gets-more-expensive-this-will-be-why/ If Your Wine Gets More Expensive, This Will Be Why Regulations against interstate alcohol commerce are clearly about protectionism, not public safety. 2017-10-30T10:30:01-04:00 2017-10-30T10:30:01-04:00 Walter Olson https://fee.org/people/walter-olson/
Eric Asimov at the New York Times has an excellent, detailed, and highly discouraging look at the reversal of one of the favorable trends for freedom of commerce in recent years, the greater ease of interstate wine shipment. Excerpt:

In the last year or so, carriers like United Parcel Service and FedEx have told retailers that they will no longer accept out-of-state shipments of alcoholic beverages unless they are bound for one of 14 states (along with Washington, D.C.) that explicitly permit such interstate commerce….

Strictly speaking, it was probably never entirely legal in New York or in many other states to have wine shipped in from out-of-state retailers. Yet, these laws requiring a license for interstate wine shipments seemed vague and were rarely enforced….

But now, states — urged on by wine and spirits wholesalers who oppose any sort of interstate alcohol commerce that bypasses them — have stepped up enforcement efforts. Retailers say that the carriers began sending out letters to them a year ago saying they would no longer handle their shipments.

Asimov notes that the cost of restraints on commerce falls most heavily on those who live far from high-end markets:

For consumers who live in states stocked with fine-wine retailers, like New York, the restrictions are an inconvenience. For consumers in states with few retail options, they are disastrous. It's hard enough outside major metropolitan areas to find wines from small producers. The crackdown makes it that much harder.

Unfortunately, alcohol wholesalers are among the most powerful of state-level lobbies, and intent on keeping a system that serves their interests. They invoke far-fetched health and safety rationales, claiming that restraints on interstate shipment are "all that protects the wine and spirits business from descending into chaos. The Supreme Court did not buy the argument in 2005, and to me, their economic interest seems a far more likely motivation than public health," writes Asimov.

The Supreme Court's constitutional pronouncements in this area, alas, provide only spotty and indirect protection for consumers' rights to do business with willing providers, concentrating instead on improper protectionism directed by states against other states. Ilya Shapiro analyzed the case law in this 2011 post and related podcast. Brandon Arnold, then Cato's director of government affairs, wrote about a 2010 attempt by wholesalers to get their way through federal legislation. And while state-by-state liberalization efforts are underway in many state capitals, they are routinely stymied by the well-entrenched wholesaler lobby. For more background reading, the California-centric Wine Institute has this FAQ.

Reprinted from Cato at Liberty
 https://fee.org/articles/meals-on-wheels-outrage-is-based-on-a-lie/ Meals on Wheels Outrage Is Based on a Lie Funding has not been cut for Meals on Wheels 2017-04-02T11:00:05-04:00 2017-04-02T11:00:05-04:00 Walter Olson https://fee.org/people/walter-olson/
It made for great copy – irresistibly clickable and compulsively shareable. "Trump's Budget Would Kill a Program That Feeds 2.4 Million Senior Citizens," blared Time Magazine's headline. "Trump Proposed Budget Eliminates Funds for Meals on Wheels," claimed The Hill, in a piece that got 26,000 shares.

Cuts have not been announced.

But it was false. And it wouldn't have taken long for reporters to find and provide some needed context to the relationship between federal block grant programs, specifically Community Development Block Grants (CDBG), and the popular Meals on Wheels program.

Funding Has Not Been Cut

From Thursday's conversation in the press, it was easy to assume that block grant programs – CDBG and similar block grants for community services and social services – are the main source of federal funding for Meals on Wheels. Not so.

Instead, as the national Meals on Wheels site explains, the major source of federal funding for the programs, accounting for 35 percent of overall local budgets, comes through the Sixties-era Older Americans Act. (Local programs also obtain support from state and county governments, private donors, and so on.)

According to the website, cuts have not been announced in Older Americans Act funding, although the group fears that they may lie ahead.

So where do the federal block grant programs come in? Well, they give states and localities a lot of discretion on where to allocate the money, one option is to add money to supplement Meals on Wheels funding. Some do use it for that purpose.

But as Scott Shackford makes clear in his new piece for Reason, that isn't what CDBG is mostly about. CDBG funds regularly go into pork-barrel and business-subsidy schemes with a cronyish flavor. That's why the program has been a prime target for budget-cutters for decades, in administration after administration.

It's important to the CDBG program's political durability that its grantees wind up sprinkling a bit of extra money on popular programs mostly funded by other means. That way, defenders can argue that the block grants "fund programs like Meals on Wheels."

That's what happened in the press this week.

Outrage Over Nothing

Social media burned with indignant posts, unaware that no cuts had been announced in the main program that funds Meals on Wheels.

The New York Times got things rolling by reporting that the new budget proposes "the complete elimination of the $3 billion Community Development Block Grant program, which funds popular programs like Meals on Wheels, housing assistance and other community assistance efforts."

CNN's Jake Tapper then boiled it down to a tweet: "On chopping block: $3 billion Community Development Block Grant program, which funds programs like Meals on Wheels."

Meals on Wheels' own national website, meanwhile, quotes its CEO and president Ellie Hollander being appropriately cautious and conditional: "We don't know the exact impact yet," she said. Big cuts "would be a devastating blow." According to the website, "details on our network's primary source of funding, the Older Americans Act, which has supported senior nutrition programs for 45 years, have not yet been released."

Most of the major press coverage Thursday had nothing at all to say about the OAA, which would only have complicated the shock headlines. And social media burned all day with indignant posts that seemed unaware that no cuts had been announced as of yet in the main program that funds Meals on Wheels.

One reason was the press conference at which budget director Mick Mulvaney faced a host of questions about the new budget release, with Peter Alexander of NBC News pressing him especially hard on the aren't-you-trying-to-cut-things-like-Meals-on-Wheels angle.

Mulvaney repeatedly tried to switch the conversation over to the shortcomings of the wider CDBG program and did not bring up the point about OAA funding at all. Amid further awkward exchanges, Mulvaney spoke about how social programs had often not been shown to have benefits.

After they hear a fuller explanation, they might decide that they trust news reports a little less.

A charitable reading of his intended point was that activities funded by block grants in general often lack any proof of positive effect; a less charitable reading was that he was trying to single out Meals on Wheels in particular as an endeavor of no proven use to anyone. (A middle ground, I suppose, would have been to call his office for a clarification.) No prizes for guessing which direction the press, from MSNBC to New York Magazine, chose to take for its headlines.

Eroding Trustworthiness

For many editors, "administration wants to zero out Meals on Wheels" made good, emotionally satisfying copy – too good to check. But around the country, in coming days, thousands of persons touched by the program are likely to ask their visiting community member or supervisor whether it's really true that they're going to do away with the Meals on Wheels program, the way the man on TV or the lady on Facebook said. And after they hear a fuller explanation, they might decide that they trust news reports a little less.

Reprinted from the Cato Institute.
 https://fee.org/articles/humiliate-the-children-of-non-voters-a-special-video-message-from-progressives/ Humiliate the Children of Non-Voters: A Special Video Message from Progressives This video, "Playground" makes quite an impression. It shows a scene of schoolyard bullying but takes the side of the jeering, taunting mob – in the name of voting. 2016-10-27T10:30:00-04:00 2016-10-27T10:30:00-04:00 Walter Olson https://fee.org/people/walter-olson/

This video, "Playground" [YouTube, Facebook] makes quite an impression. It shows a scene of schoolyard bullying but takes the side of the jeering, taunting mob – in the name of voting. It is one of a series of 30 second videos put out by a group calling itself Civic Innovation Works, encouraging a vote in the general election on November 8 and seemingly intended as public service announcements. The others in the series appear to be similar in message, but lacking in this one's outrageousness (although one does present a fantasy about publicly shaming a non-voter).

On the off chance that Civic Innovation Works was someone's idea of an elaborate parody I looked them up. I found that Fenton, the well-known progressive/"social change" public relations agency, takes credit for one of the other videos in the series.

So it would look as if they are on the level. It is almost as if they were trying with "Playground" to convince viewers that electoral politics makes people worse.

Reprinted from Cato.

 https://fee.org/articles/how-the-fda-and-other-agencies-shape-what-you-hear-about-them/ How the FDA - and Other Agencies - Shape What You Hear about Them Scientific newsmakers like the FDA directly manipulate reporters so they can control the narrative on breaking stories. The result is biased, half-true reporting by force. 2016-09-28T12:15:35-04:00 2016-09-28T12:15:35-04:00 Walter Olson https://fee.org/people/walter-olson/
An important investigation by Charles Seife in Scientific American looks at how scientific newsmakers – in this case the U.S. Food and Drug Administration (FDA) – use "close-hold embargoes" to manipulate news coverage on breaking stories. Embargoes in themselves are a common enough practice in journalism; the special feature of a "close-hold" embargo is that it conditions a reporter's access to a forthcoming story on not seeking comment from outside, that is to say independent or adversary, sources.

The FDA "cultivates a coterie of journalists whom it keeps in line with threats."The result of this kind of embargo, critics say, is to turn reporters into stenographers by ensuring that no expert, outside perspective contrary to the newsmaker's makes it into the crucial first round of coverage. And the FDA uses the technique to go further, according to Seife: it "cultivates a coterie of journalists whom it keeps in line with threats." In fact, it even "deceives" disfavored major news organizations like Fox News "with half-truths to handicap them in their pursuit of a story."

The FDA has used this means of forestalling informed critical reaction on major, controversial regulations such as the recent "deeming" rule governing e-cigarettes and vaping. It also used the same technique in unveiling a major public health ad campaign – taking measures, as you might put it, to shape opinion about its shaping of opinion. An FDA official even upbraided a New York Times reporter who, unlike her colleagues, noted the close-hold embargo in her report. The agency resented its news-shaping methods becoming public.

The whole article is a case study in how government-as-newsmaker – and by no means just the Food and Drug Administration – can get the coverage it wants.

This first appeared at Cato Institute.
 https://fee.org/articles/special-interests-may-kill-free-online-courses/ Special Interests May Kill Free Online Courses The Berkeley case proves that there is nothing that is so beneficial that government won't try to ruin it. 2016-09-20T10:45:09-04:00 2016-09-20T10:45:09-04:00 Walter Olson https://fee.org/people/walter-olson/

On September 13, the University of California at Berkeley announced that it may have to take down online lecture and course content that it has offered free to the public:

Despite the absence of clear regulatory guidance, we have attempted to maximize the accessibility of free, online content that we have made available to the public. Nevertheless, the Department of Justice has recently asserted that the University is in violation of the Americans with Disabilities Act because, in its view, not all of the free course and lecture content UC Berkeley makes available on certain online platforms is fully accessible to individuals with hearing, visual, or manual disabilities.

That Berkeley is not just imagining these legal dangers is illustrated by this clip from Tamar Lewin of the New York Times from February of last year: "Harvard and M.I.T. Are Sued Over Lack of Closed Captions."

When extreme positions are too politically unpalatable for DoJ to endorse directly, it supports private rights groups in their demands.

I've been warning about this, to no apparent avail, for a long time. In a July post in this space, I noted the tag-team alliance of the U.S. Department of Justice, disabled-rights groups, and fee-seeking private lawyers in gearing up web-accessibility doctrine: when extreme positions are too politically unpalatable for DoJ to endorse directly, it supports private rights groups in their demands, and when a demand is too unpopular or impractical even for the rights groups, there's nothing to stop the freelance lawyers from taking it up.

Neither political party when in office has been willing to challenge the ADA, so there is every reason to believe this will continue. If you appreciate high-level course content from leading universities, but are not a paying enrolled student, you'd better enjoy it now while you can.

A version of this article was first published by Cato.

 https://fee.org/articles/trumps-threat-to-judge-is-what-authoritarianism-looks-like/ Trump's Threat to Judge Is What Authoritarianism Looks Like Donald J. Trump v. Rule of Law 2016-05-30T09:30:00-04:00 2016-05-30T09:30:00-04:00 Walter Olson https://fee.org/people/walter-olson/
Last night, before a convention center filled with his followers in San Diego, presidential candidate Donald Trump chose to launch a lengthy diatribe against the local federal judge hearing the case against his Trump University. Trump said Judge Gonzalo Curiel, of the Southern District of California, should recuse himself, but cited no reasons for why other than that he had been appointed by Obama and had repeatedly ruled against Trump's lawyers.

In his rambling remarks, Trump also referred to Judge Curiel as "Mexican": the jurist, previously the chief federal prosecutor for drug cases in southern California, was born in Indiana. Stoking by repetition, as his crowd of thousands booed, Trump called the federal judge "a hater of Donald Trump, a hater. He's a hater," and said he should be placed under investigation by the court system. I wonder whether anyone will be shocked if the judge requests personal protection for himself and his family as the trial proceeds.

Obama's 2010 State of the Union remarks railing at the Justices of the Supreme Court in their presence regarding Citizens United were bad.This is far worse: the case is still in progress, Trump is a party, and the attack is on a single judge who will now find his task of ensuring a fair trial complicated. Trump, who speaks regularly around the country, chose to unleash the diatribe in the locality where the judge and others who will participate in the case, such as jurors, work and live.

Law professor Josh Blackman, active in the Federalist Society, writes as follows:

His jaw-dropping comments reflect an utter ignorance about what judges do, and amounts to a dangerous attacks on the fairness of our court system. Whatever negligible good will he built up by nominating a list of solid potential nominees to the Supreme Court was squandered with this scurrilous attack. Those who defended his selection process should immediately rebuke him for these baseless insults….

I am speechless. Absolutely, and totally speechless. I was highly critical of President Obama's attacks on the Court. I cringe to think what will happen when the Supreme Court rules against [Trump].

This might be a good time to catch up, if you haven't, on the legal saga of Trump University, which I've been following for more than a year (when I first looked into it as part of my research into the work of New York Attorney General Eric Schneiderman). Some coverage: Jillian Kay Melchior/NRO last July, Emma Brown/Washington Post last September, Ian Tuttle/NRO in February, Roger Parloff/Fortune, Joe Mullin and Jonathan Kaminsky/ArsTechnica. In the San Diego proceedings, one law firm ranged against Trump is Robbins Geller, descendant of convicted class-actioneer Bill Lerach's Lerach Coughlin, and the subject of some less than flattering coverage in these columns over the years.

This post first appeared at Overlawyered.
 https://fee.org/articles/trump-isnt-the-first-to-threaten-newspapers/ Trump Isn't the First Politician to Threaten Newspapers The President Has Many Knives at His or Her Disposal 2016-05-20T11:00:00-04:00 2016-05-20T11:00:00-04:00 Walter Olson https://fee.org/people/walter-olson/
Donald Trump isn't happy with the Washington Post, which has steadfastly opposed his presidential campaign on its editorial pages and now has assigned a reporter team to write a book about him. And he has repeatedly responded in Trump fashion: by threatening the business interests of the newspaper and its owner Jeff Bezos.

Trump cited the Post by name in his February comments about how he wants to "open up" libel law so that "when the Washington Post… writes a hit piece, we can sue them and win money instead of having no chance of winning because they're totally protected." And he said then of Amazon, of which Bezos is CEO, "If I become president, oh do they have problems. They're going to have such problems."

He has claimed for months that Bezos was using the newspaper as either itself a tax dodge or as a tool of influence to prevent Amazon from having to pay "fair taxes," a theory hard to square with the institutional arrangements involved (Bezos owns the Post separately from his Amazon stake; the Post editors credibly deny that Bezos has interfered, and as it happens Amazon itself supports the idea of an internet sales tax.)

More recently Trump has opened up a second front, arguing last week on the Sean Hannity show that Bezos employs the paper "as a political instrument to try and stop antitrust," and implying that he, Trump, would hit Amazon with antitrust charges.

As you might expect, many critics are crying foul. "He's basically giving us a preview of how he will abuse his power as president. … He is clearly trying to intimidate Bezos and in turn The Washington Post from running negative stories about him," writes Boston Globe columnist Michael A. Cohen.

"Mr. Trump knows U.S. political culture well enough to know that gleefully, uninhibitedly threatening to use government's law-enforcement powers to attack news reporters and political opponents just isn't done. Maybe he thinks he can get away with it," writes Wall Street Journal columnist Holman Jenkins.

But as I wrote four years ago, if you think blatant use of the machinery of government to punish newspaper owners or interfere in papers' management somehow happens only in other countries, think again:

[Since-convicted Illinois Gov. Rod] Blagojevich, Harris and others are also alleged [in the federal indictment] to have withheld state assistance to the Tribune Company in connection with the sale of Wrigley Field. The statement says this was done to induce the firing of Chicago Tribune editorial board members who were critical of Blagojevich.

And in 1987, at the secret behest of the late Sen. Edward Kennedy (D-MA), Sen. Ernest Hollings (D-SC) inserted a legislative rider aimed at preventing Rupert Murdoch from simultaneously owning broadcast and newspaper properties in Boston and New York. The idea was to force him to sell the Boston Herald, the most persistent editorial voice criticizing Kennedy in his home state.

More recently, when the Tribune Company encountered financial difficulties and explored the sale of several large papers, city councils in more than one city passed resolutions opposing the sale to politically "bad" prospective owners; powerful Congressional figure Henry Waxman (D-CA) could not resist the urge to meddle as well in management issues affecting his hometown paper, the L.A. Times.

This all goes back much farther, of course. Historian David Beito, writing about the FDR-Truman era, cites a long series of federal investigations of and retaliations against the distributors of pro-liberty books and pamphlets, including the proposal of Indiana Democratic Senator and New Dealer Sherman Minton (D-Ind.) to make it "a crime to publish anything as a fact anything known to be false," a downright Trumpian idea that Minton let drop after an outcry.

It is thoroughly appalling – but, alas, it is not new.

Cross-posted from Overlawyered.
 https://fee.org/articles/environmental-inquisition-targets-think-tank-for-climate-denial/ Environmental Inquisition Targets Think Tank for "Climate Denial" The Criminalization of Wrongthink 2016-04-08T14:00:00-04:00 2016-04-08T14:00:00-04:00 Walter Olson https://fee.org/people/walter-olson/
The campaign to attach legal consequences to supposed "climate denial" has now crossed a fateful line:

The Competitive Enterprise Institute (CEI) today denounced a subpoena from Attorney General Claude E. Walker of the U.S. Virgin Islands that attempts to unearth a decade of the organization's materials and work on climate change policy.

This is the latest effort in an intimidation campaign to criminalize speech and research on the climate debate, led by New York Attorney General Eric Schneiderman and former Vice President Al Gore. ...

The subpoena requests a decade's worth of communications, emails, statements, drafts, and other documents regarding CEI's work on climate change and energy policy, including private donor information. It demands that CEI produce these materials from 20 years ago, from 1997-2007, by April 30, 2016.

CEI General Counsel Sam Kazman said the group "will vigorously fight to quash this subpoena. It is an affront to our First Amendment rights of free speech and association." More coverage of the subpoena at the Washington Times and Daily Caller.

A few observations:

If the forces behind this show-us-your-papers subpoena succeed in punishing (or simply inflicting prolonged legal harassment on) groups conducting supposedly wrongful advocacy, there's every reason to think they will come after other advocacy groups later. Like yours.

This article in the Observer details the current push to expand the probe of climate advocacy, which first enlisted New York AG Eric Schneiderman and then California's Kamala Harris — into a broader coalition of AGs, with Massachusetts and the Virgin Islands just having signed on. More than a dozen others, such as Maryland Attorney General Brian Frosh, seem to be signaling support but have not formally jumped in. More here: Peggy Little, Federalist Society.

CEI people, many of them longtime friends, have been active critics of the Schneiderman effort, with Hans Bader, a senior attorney there, highly critical just a week ago.

In these working groups of attorneys general, legal efforts are commonly parceled out among the states in a deliberate and strategic way, with particular tasks being assigned to AGs who have comparative advantage in some respect (such as an unusually favorable state law to work with, or superior staff expertise or media access).
Why would one of the most politically sensitive tasks of all — opening up a legal attack against CEI, a long-established nonprofit well known in Washington and in libertarian and conservative ideological circles — be assigned to the AG from a tiny and remote jurisdiction? Is it that a subpoena coming from the Virgin Islands is logistically inconvenient to fight in some way, or that local counsel capable of standing up to this AG are scarce on the ground there, or that a politician in the Caribbean is less exposed to political backlash from CEI's friends and fans than one in a major media center? Or what?

I recommend checking out the new Free Speech and Science Project, which intends to fight back against criminalization of advocacy by, among other things, organizing legal defense and seeking to hold officials accountable for misusing the law to attack advocacy.

This is happening at a time of multiple, vigorous, sustained legal attacks on what had been accepted freedoms of advocacy and association. As I note in a new piece at Cato, Sen. Elizabeth Warren has just demanded that the Securities and Exchange Commission investigate several large corporations that have criticized her pet plan to impose fiduciary legal duties on retirement advisors, supposedly on the ground that it is a securities law violation for them to be conveying to investors a less alarmed view of the regulations' effect than they do in making their case to the Labor Department. This is not particularly compelling as securities law, but it's great as a way to chill speech by publicly held businesses.

Cross-posted from Overlawyered.
 https://fee.org/articles/the-frogs-who-wanted-a-king/ The Frogs Who Wanted a King Aesop's Fable for Election Year 2016-03-09T14:46:12-05:00 2016-03-09T14:46:12-05:00 Walter Olson https://fee.org/people/walter-olson/
Always a fable worth bearing in mind in a presidential election year:

* * *

THE FROGS, grieved at having no established Ruler, sent ambassadors to Jupiter entreating for a King. Perceiving their simplicity, he cast down a huge log into the lake.

The Frogs were terrified at the splash occasioned by its fall and hid themselves in the depths of the pool. But as soon as they realized that the huge log was motionless, they swam again to the top of the water, dismissed their fears, climbed up, and began squatting on it in contempt.

After some time they began to think themselves ill-treated in the appointment of so inert a Ruler, and sent a second deputation to Jupiter to pray that he would set over them another sovereign. He then gave them an Eel to govern them. When the Frogs discovered his easy good nature, they sent yet a third time to Jupiter to beg him to choose for them still another King.

Jupiter, displeased with all their complaints, sent a Heron, who preyed upon the Frogs day by day till there were none left to croak upon the lake.

– Aesop, in the 1867 translation of George Fyler Townsend

Illustration by Walter Crane, Baby's Own Aesop, 1887. Note the motto that Crane appends: DON'T HAVE KINGS.

Cross-posted from Cato @ Liberty.

 https://fee.org/articles/4-more-crushing-defeats-for-obama-administration-power-grabs/ 4 More Crushing Defeats for the Obama Administration Regulatory power grabs have not gone unchecked 2016-02-25T17:21:17-05:00 2016-02-25T17:21:17-05:00 Walter Olson https://fee.org/people/walter-olson/
Why are independent, strong-minded courts so important to a free society? One reason is that they — and often only they — are the ones who can stop government agencies from trampling on the rights of the citizens.

Consider, for example, the Obama administration's present aggressive campaign to push the bounds of federal employment and labor law far beyond anything Congress has been willing to pass. As I've noted before, judges have repeatedly found these administration power plays to overstep the law. See, for example, posts here (Equal Employment Opportunity Commission suffers epic Sixth Circuit loss in EEOC v. Kaplan), here (Breyer and liberal Supreme Court majority, even while siding with plaintiff in underlying case, smack around EEOC "guidance" ploy); see also here (many more examples, at Overlawyered).

Now here are four more examples from recent months.

1) The US Department of Labor sued oil field contractor Gate Guard demanding it reclassify some independent contract workers as employees. As our friends at the Washington Legal Foundation recount, Judge Edith Jones ruled on behalf of a Fifth Circuit appeals panel that Gate Guard was entitled to fees under an unusual "bad faith" provision (footnotes omitted here and below):

It is often better to acknowledge an obvious mistake than defend it. When the government acknowledges mistakes, it preserves public trust and confidence. It can start to repair the damage done by erroneously, indeed vindictively, attempting to sanction an innocent business.

Rather than acknowledge its mistakes, however, the government here chose to defend the indefensible in an indefensible manner. As a result, we impose attorneys' fees in favor of Gate Guard as a sanction for the government's bad faith.

At nearly every turn, this Department of Labor investigation and prosecution violated the department's internal procedures and ethical litigation practices. Even after the DOL discovered that its lead investigator conducted an investigation for which he was not trained, concluded Gate Guard was violating the Fair Labor Standards Act based on just three interviews, destroyed evidence, ambushed a low-level employee for an interview without counsel, and demanded a grossly inflated multi-million dollar penalty, the government pressed on. In litigation, the government opposed routine case administration motions, refused to produce relevant information, and stone-walled the deposition of its lead investigator.

2) We commented one year ago on the amazing case of EEOC v. Freeman Cos., in which the Fourth Circuit found that the federal commission had relied on "pervasive errors and utterly unreliable analysis" in its attempt to go after a Maryland employer's policies on criminal background checks of employees.

The appeals court sent the case back for further proceedings to district judge Roger Titus, who had previously shredded the EEOC's proffered expert evidence as "laughable" and "mind-boggling." Then the EEOC — feeling that perhaps its luck was due to turn — resisted an award of attorneys' fees to the defendant. As Alison Somin recounts for the Federalist Society, this was a sure loser bet. Somin quotes the resulting order in which Judge Titus wrote:

World-renowned poker expert Kenny Rogers once sagely advised, "You've got to know when to hold 'em. Know when to fold 'em. Know when to walk away." In the Title VII context, the plaintiff who wishes to avoid paying a defendant's attorneys' fees must fold 'em once its case becomes so groundless that continuing to litigate is unreasonable, i.e. once it is clear it cannot have a winning hand.

In this case, once Defendant Freeman revealed the inexplicably shoddy work of the EEOC's expert witness in its motion to exclude that expert, it was obvious Freeman held a royal flush, while the EEOC held nothing. Yet, instead of folding, the EEOC went all in and defended its expert through extensive briefing in this Court and on appeal. Like the unwise gambler, it did so at its peril. Because the EEOC insisted on playing a hand it could not win, it is liable for Freeman's reasonable attorneys' fees."

3) That wasn't the only bad news for the EEOC's legal team recently. A Wisconsin federal judge in EEOC v. Flambeau has rejected the commission's notion that employers violate the Americans with Disabilities Act when they ask employees to take medical exams as part of so-called wellness programs in their health insurance coverage (discussion, Littler and Proskauer; background here and here).

4) And in another widely watched case, the Seventh Circuit in EEOC v. CVS Pharmacy (via Jon Hyman) has rejected the commission's position that employers violate the law when they proffer widely used garden-variety exit agreements to departing workers (on the theory that the language is not sufficiently encouraging of later legal action, which supposedly constitutes "retaliation").

Imagine what these agencies and others would be getting away with were our judiciary someday reduced to a spirit of subservience to the executive branch of government.

This post first appeared at Cato @ Liberty.
 https://fee.org/articles/new-yorks-speech-chilling-global-warming-witch-hunt/ New York's Chilling Global Warming Witch Hunt The probe is meant to punish protected speech 2016-02-10T13:22:50-05:00 2016-02-10T13:22:50-05:00 Walter Olson https://fee.org/people/walter-olson/

New York Attorney General Eric Schneiderman is pursuing an investigation of the Exxon Corporation in part for making donations to think tanks and associations like the American Enterprise Institute and American Legislative Exchange Council, which mostly work on issues unrelated to the environment but have also published some views flayed by opponents as "climate change denial."

Assuming the First Amendment protects a right to engage in scholarship, advocacy, and other forms of supposed denial, it is by no means clear that information about such donations would yield a viable prosecution. Which means, notes Hans Bader of the Competitive Enterprise Institute, that the New York probe raises an issue of constitutional dimensions not just at some point down the road, but right now:

A prolonged investigation in response to someone's speech can violate the First Amendment even when it never leads to a fine. For example, a federal appeals court ruled in White v. Lee, 227 F.3d 1214 (9th Cir. 2000) that lengthy, speech-chilling civil rights investigations by government officials can violate the First Amendment even when they are eventually dropped without imposing any fine or disciplinary action.

It found this principle was so plain and obvious that it denied individual civil rights officials qualified immunity for investigating citizens for speaking out against a housing project for people protected by the Fair Housing Act.

In another case, in which a company had been sued seeking damages over its participation in trade-association-related speech, a federal appeals court found that the pendency of the lawsuit all by itself caused enough of a burden on the firm's speech rights that the court used its mandamus power to order the trial judge to dismiss the claims, a remarkable step.

Moreover, Bader writes, a string of federal precedents indicate that the constitutional rights Schneiderman is trampling here are not just Exxon's but those of the organizations it gave to, which have a right to challenge his action whether or not the oil company chooses to do so:

These groups themselves can sue Schneiderman under the First Amendment, if Schneiderman's pressure causes them to lose donations they would otherwise receive. Government officials cannot pressure a private party to take adverse action against a speaker.

Meanwhile, writing at Liberty and Law, Prof. Philip Hamburger of Columbia Law School takes a different tack: the subpoenas imperil due process and separation of powers because they issue at the whim of Schneiderman's office.

Earlier ideas of constitutional government "traditionally left government no power to demand testimony, papers, or other information, except under the authority of a judge or a legislative committee." In more recent years executive subpoena power has proliferated; so has the parallel power of lawyers in private litigation to demand discovery, but the latter at least in theory goes on under judicial supervision that can check some of its abuse and invasiveness.

Extrajudicial subpoenas by AG offices are particularly dangerous, Hamburger argues, because of their crossover civil/criminal potential: the targets do not enjoy a high level of procedural protection when "attorneys general claim to be acting merely in a civil rather than a criminal capacity," yet the same offices can and do threaten criminal charges. Especially dangerous is New York's Martin Act, a charter for general invasion of the private papers of anyone and anything with a connection to New York financial transactions.

An attorney general's concern about fraud or the "public interest" is no justification for allowing him to rifle through private papers.

When he thereby extracts the basis for a criminal prosecution, he evades the grand jury process. When he thereby lays the groundwork for a civil enforcement proceeding, he evades the due process of law, for there ordinarily is no discovery for a plaintiff until he commences a civil action.

Even worse, when a prosecutor uses a subpoena to get a remunerative settlement, it is akin to extortion — this being the most complete end run around the courts.

Previously on the probe here and here (and earlier here and here), and on the New York attorney general's office here and here.

Cross-posted from Overlawyered.

 https://fee.org/articles/cdcs-patronizing-paternalistic-warning-to-pre-pregnant-women/ CDC's Paternalistic Finger Wagging to All "Pre-Pregnant" Women No surprise that the CDC is run by Bloomberg's former "health czar" 2016-02-09T11:11:06-05:00 2016-02-09T11:11:06-05:00 Walter Olson https://fee.org/people/walter-olson/
With the passage of the Twenty-first Amendment in 1933, the United States enacted Repeal and abandoned its failed experiment with Prohibition. And that settled that, right? At least until this week:

Women of childbearing age should avoid alcohol unless they're using contraception, federal health officials said Tuesday, in a move to reduce the number of babies born with fetal alcohol syndrome.

"Alcohol can permanently harm a developing baby before a woman knows she is pregnant," said Anne Schuchat, principal deputy director of the Centers for Disease Control and Prevention. "About half of all pregnancies in the United States are unplanned, and even if planned, most women won't know they are pregnant for the first month or so, when they might still be drinking.

And more (emphasis added):

Further, the report states that because half of all pregnancies in the United States are unplanned, it's risky for women to drink any amount at any time during which she may intentionally or unintentionally become pregnant.

Early reactions often involved shock ("incredibly condescending," wrote the Washington Post's Alexandra Petri) and bewilderment at the seeming creation of a new class of women who were not to be trusted with making their own choices, namely the "pre-pregnant."

Rebecca Kukla, a professor at the Kennedy Institute of Ethics, took issue with the dictate even as regards women who definitely are pregnant:

"We don't tell pregnant women not to drive cars, even though we are much more certain that there's a nonzero risk to their fetuses from each car ride than from each drink," she said. "The ideal of zero risk is both impossible to meet and completely paralyzing to try to meet."

Kukla argues that such guidelines are also excessively punishing. "The idea that the pleasures and routines that make up women's days are mere luxuries that are not worth any risk whatsoever is patronizing and sexist," she said. "And it would also turn their lives into complete hell if really taken to [its] conclusions."

And yet I would have expected no less from a CDC headed by Thomas Frieden, formerly Mayor Michael Bloomberg's public health czar in New York City. Under Frieden, an arch-enemy of salt, sugar, and guns, the CDC to the detriment of its focus on communicable disease has involved itself in topics from playground safety to suburban housing sprawl; has boldly employed federal tax dollars toward lobbying for changes in law; has set itself against all evidence that e-cigarettes ("vaping") can serve as vital harm reduction for persons who would otherwise smoke; and much, much more.

Beverage consumption for adult women, as for men, is best governed by a course of prudence and moderation. The best course of prudence and moderation for the federal CDC would be a future without Bloomberg-ism.

A version of this post first appeared at Cato.org.
 https://fee.org/articles/student-demands-conformity-thought-police-show-trials/ Student Demands: Conformity, Thought Police, Show Trials Some demands have merit, some threaten education 2015-11-30T08:30:00-05:00 2015-11-30T08:30:00-05:00 Walter Olson https://fee.org/people/walter-olson/

Of the demands being made by protesters in the current wave of unrest on American campuses, some no doubt are well grounded and worth considering. Some of them, on the other hand, challenge academic freedom head on.

Some would take control of curriculum and hiring out of the hands of faculty. Some would enforce conformity of thought. Some would attack the rights of dissenters. Some would merely gut the seriousness of the university.

Last night I did a long series of tweets drawing on a website which sympathetically compiles demands from campus protests — TheDemands.org — and noting some of the more troublesome instances:

From Dartmouth: "All professors will be required to be trained in not only cultural competency but also the importance of social justice in their day-to-day work."

From Wesleyan: "An anonymous student reporting system for cases of bias, including microaggressions, perpetrated by faculty and staff."

From the University of North Carolina at Chapel Hill: "White professors must be discouraged from leading and teaching departments about demographics and societies colonized, massacred, or enslaved under white supremacy."

From Guilford College: "We suggest that every week a faculty member come forward and publicly admit their participation in racism inside the classroom via a letter to the editor" in the college paper.

My series drew and continues to draw a strong reaction. Now I've Storified the tweets as a single narrative, including some of the responses. Read it here.

Cross-posted from Overlawyered.

 https://fee.org/articles/governments-are-the-worst-violators-of-pollution-laws/ Governments Are the Worst Polluters And, of course, face little or no punishment 2015-11-19T08:30:00-05:00 2015-11-19T08:30:00-05:00 Walter Olson https://fee.org/people/walter-olson/

It's a familiar libertarian insight that regulation often holds government itself to lower standards than it does private actors.

Pension funds for public employees are mostly immune from the federal solvency and funding requirements that apply to their private counterparts; Federal Trade Commission rules against false advertising by profit-seeking companies do not restrain false advertising by government actors on the same topics; the FTC can fine companies massively for data breaches even as the federal government itself suffers gigantic losses of sensitive data to foreign actors with few career consequences for many of those who had dozed; anticompetitive practices that are per se illegal under antitrust law become legal when states do them, and so forth and so on.

Now David Konisky of Indiana University and Manuel Teodoro of Texas A&M, in a study published by the American Journal of Political Science entitled "When Governments Regulate Governments," have pulled together some data:

Our empirical subjects are public and private entities' compliance with the U.S. Clean Air Act and Safe Drinking Water Act.

We find that, compared with private firms, governments violate these laws significantly more frequently and are less likely to be penalized for violations.

More from an Indiana press release, via Tyler Cowen:

For the study, Konisky and Teodoro examined records from 2000 to 2011 for power plants and hospitals regulated under the Clean Air Act and from 2010 to 2013 for water utilities regulated under the Safe Drinking Water Act. The study included over 3,000 power plants, over 1,000 hospitals and over 4,200 water utilities — some privately owned and others owned by public agencies.

* For power plants and hospitals, public facilities were on average 9 percent more likely to be out of compliance with Clean Air Act regulations and 20 percent more likely to have committed high-priority violations.

* For water utilities, public facilities had on average 14 percent more Safe Drinking Water Act health violations and were 29 percent more likely to commit monitoring violations.

* Public power plants and hospitals that violated the Clean Air Act were 1 percent less likely than private-sector violators to receive a punitive sanction and 20 percent less likely to be fined.

*Public water utilities that violated Safe Drinking Water Act standards were 3 percent less likely than investor-owned utilities to receive formal enforcement actions.

[After speculating that public operators may find it harder to raise funds promptly for needed facilities improvements:] Public entities also face lower costs for violating the regulations, the authors argue. There is evidence from other studies that they are able to delay or avoid paying fines when penalties are assessed. And officials with regulatory agencies may be sympathetic to violations by public entities, because they understand the difficulty of securing resources in the public sector.

Application of the principle to state-owned industry outside the United States can be left as an exercise for the reader.

This post first appeared at Overlawyered.

 https://fee.org/articles/trial-lawyers-via-the-new-york-times-launch-attack-on-private-arbitration/ Trial Lawyers (Via the New York Times) Attack Arbitration The article ignores basic market principles 2015-11-03T08:30:00-05:00 2015-11-03T08:30:00-05:00 Walter Olson https://fee.org/people/walter-olson/
Back in 2002, Stephen Ware wrote a policy analysis for Cato entitled "Arbitration Under Assault: Trial Lawyers Lead the Charge."

That assault — endorsed by the New York Times in a two-part series that is getting some attention — depends crucially on both an attack on freedom of contract and a refusal to take seriously what consumers vote for with their marketplace choices.

As has come to be widely acknowledged in recent years, most class action litigation over consumer financial claims goes on for the benefit of lawyers. It produces scanty benefits for customers but does drive up the costs of providing common services, which is passed along in the form of higher fees and rates.

Given a chance, as a result, almost every company will seek to draft "fine print" substituting low-cost, relatively fast arbitration for forms of litigation whose transactional cost greatly exceeds the value to customers of eventual relief given. Even where there is strong competition in a market (among affluent credit card users, for example), it is exceedingly rare for consumers to switch accounts because one provider shunts claims into arbitration while another invites class action litigation.

What does this signify about consumer preferences? Consumers willingly switch all the time from one airline loyalty card to another in quest of better miles-and-points rewards, baggage allowances, pre-boarding policies, and so forth — but not to avoid arbitration policies.

Why not? To the experts the Times prefers to speak to — and as the U.S. Chamber of Commerce points out, every single judge and law professor the Times spoke to was hostile to arbitration, which is hardly true of the universe of all distinguished law professors and judges — it must be inattention or false consciousness; consumers don't realize that they've giving up terribly valuable rights.

The other possibility is that consumers rationally place little before-the-fact value on a future benefit that is expensive to provide and mostly pays off for the lawyers who — as Daniel Fisher points out — mostly manage to stay in the background of the Times piece.

I've got more on the story at Overlawyered this morning, where I've been covering the Litigation Lobby's war on arbitration since I launched the site in 1999. Other Cato legal scholars have agreed with a Supreme Court majority (but not with the Times) that the role of the government is ordinarily to enforce — not substitute its judgment for — clearly worded private contracts generating terms announced and known to the parties.

And I'll give the last word for the moment to blogger Coyote, writing about a recent California anti-arbitration bill so extreme that even liberal Gov. Jerry Brown saw fit to veto it: "Here is how you should think about this proposed law: Attorneys are the taxi cartels, and arbitration is Uber. And the incumbents want their competitor banned."

This post first appeared at Cato @ Liberty.
 https://fee.org/articles/making-assault-on-police-a-hate-crime-is-a-terrible-idea/ Making Assault on Police a "Hate Crime" Is a Terrible Idea Hate crime laws are always a mistake 2015-10-20T11:00:00-04:00 2015-10-20T11:00:00-04:00 Walter Olson https://fee.org/people/walter-olson/
The town of Red Wing, Minnesota, has passed a resolution urging that assaults on police be made a hate crime, a position urged for some years by the Fraternal Order of Police (FOP) union. How bad an idea is this?

A very bad one indeed, I argue in an op-ed for the Minneapolis Star-Tribune:

Critics argue that [existing hate-crime] laws in effect play favorites, departing from the spirit of equal protection under law that aims at treating all victims of personal assault as equally important.

Because they seem to put an official public seal on a narrative of oppression, such laws are also lobbied for in me-too fashion by other groups that rightly or wrongly see themselves as oppressed.

Not only are lethal assaults on police declining, I note, but the vast majority of them do not arise from any supposed prejudice or animus against cops, nor do such crimes go neglected and unprosecuted.

Besides, most states already allow sentence enhancements on other grounds for crimes against police:

What would [such a change in law] symbolize? The merely absurd proposition that police in the U.S. today are an oppressed minority group?

Or the downright dangerous proposition that the law should step in to chastise and rectify the attitudes of a public that may not be as supportive of police wishes and demands as cop advocates would like?

Read the whole thing.

Incidentally, the town council voted last week to let its Human Rights Commission review the resolution, a possible step toward reconsidering it. Some earlier Cato commentary on hate-crime laws here, here, here, and here.

This post first appeared at Overlawyered.
 https://fee.org/articles/bernie-was-right-and-hillary-wrong-on-gun-lawsuit-bill/ Bernie Was Right, and Hillary Wrong, on Gun-Lawsuit Bill Gun makers shouldn't be liable for users' misuse 2015-10-14T08:30:00-04:00 2015-10-14T08:30:00-04:00 Walter Olson https://fee.org/people/walter-olson/
It came up again at last night's Democratic debate, so it's worth repeating: Bernie Sanders and more than 60 other Democrats in Congress were right to support the 2005 Protection of Lawful Commerce in Arms Act (PLCAA), and Hillary Clinton was wrong to oppose it.

Congress had both good practical reason and Constitutional authority to enact PLCAA. Its purpose and effect was to call a halt to the campaign (backed by the administration of Bill Clinton, Hillary's husband) to launch financially ruinous litigation against firearms makers and dealers — most of them thinly capitalized firms unable to withstand massive legal bills — and apply the resulting leverage to extract promises of gun control without the bother of seeking approval for those measures from a then-skeptical U.S. Congress.

It was a campaign rightly decried as undemocratic even by such figures of the Left as former cabinet secretary Robert Reich. It was also a travesty of legal ethics, employing litigation as a pure weapon; thus then-HUD secretary Andrew Cuomo warned gunmakers that unless they cooperated they'd suffer "death by a thousand cuts", while then-New York Attorney General Eliot Spitzer reportedly warned Glock: "If you do not sign, your bankruptcy lawyers will be knocking at your door."

It is not the place of the U.S. Congress to rectify every ill of litigation that may arise in state courts, but the Constitution specifically contemplates that federal lawmakers will oversee the doings of state courts when those courts assert power over transactions and residents of other states.

Thus Article IV, Section 1 grants Congress the power "by general Laws [to] prescribe the …Effect" of state law in other states. These powers are peculiarly relevant when employed to safeguard a Constitutionally specified right that is (purposely) put in jeopardy by tactical abuse of interstate lawsuits.

Despite the claims of some opponents, Congress's formula for resolving litigation amounted in essence to restoring, not overturning, the traditional common-law bounds of gun liability. It left open a few exceptions for instances where liability might have been found with some warrant in the older common law, as when a gun explodes or is knowingly sold to a person intent on harm.

Otherwise, it codifies the same common-law rule that Cuomo, Clinton et al were hoping to get the courts to abandon: if an otherwise lawful firearm has performed as it was designed and intended to do, its maker and seller are not liable for its misuse.

I've written more about PLCAA and its critics here and here.

This post first appeared at Overlawyered.
 https://fee.org/articles/take-a-valium-and-call-me-in-the-morning-from-jail/ Take a Valium and Call Me in the Morning. From Jail. The war on drugs run amok 2015-09-29T08:30:00-04:00 2015-09-29T08:30:00-04:00 Walter Olson https://fee.org/people/walter-olson/
During pregnancy "occasional, small doses of diazepam (the generic name for Valium) are considered safe," writes Nina Martin in a new ProPublica investigation.

But one morning a few weeks later, when [Casey] Shehi was back at her job in a nursing home and the baby was with a sitter, investigators from the Etowah County [Alabama] Sheriff's Office showed up at the front desk with a warrant.

She had been charged with "knowingly, recklessly, or intentionally" causing her baby to be exposed to controlled substances in the womb — a felony punishable in her case by up to 10 years in prison. The investigators led her to an unmarked car, handcuffed her and took her to jail.

Read the whole thing here to learn what happened next. "Shehi had run afoul of Alabama's `chemical endangerment of a child' statute, the country's toughest criminal law on prenatal drug use."

It provides for imprisonment of up to ten years in cases where the developing baby has suffered no ill effects from an exposure, as in this case. More than 1,800 women have been arrested under its terms since its passage in 2006.

In the 2001 case of Ferguson v. City of Charleston, the Supreme Court ruled 6-3 that a joint state hospital-police program in Charleston, D.C., infringed the Fourth Amendment rights of pregnant women by subjecting them to drug screening without their knowledge or consent and relaying the results to authorities for prosecution.

My colleague Tim Lynch wrote about that case here. You can explore Cato's decades of research on the Drug War and its consequences for liberty here.

Versions of this post appeared at Overlawyered and Cato.org.
 https://fee.org/articles/obama-administration-declares-war-on-franchisors-and-subcontractors/ Obama Administration Declares War on Franchisors and Subcontractors The NLRB is changing the rules of the labor market 2015-09-02T09:40:21-04:00 2015-09-02T09:40:21-04:00 Walter Olson https://fee.org/people/walter-olson/
In a series of unilateral moves, the Obama administration has been introducing an entirely new regime of labor law without benefit of legislation, upending decades' worth of precedent so as to herd as many workers into unions as possible.

The newest, yesterday, from the National Labor Relations Board, is also probably the most drastic yet: in a case against waste hauler Browning-Ferris Industries, the Board declared that from now on, franchisors and companies that employ subcontractors and temporary staffing agencies will often be treated as if they were really direct employers of those other firms' workforces: they will be held liable for alleged labor law violations at the other workplaces, and will be under legal compulsion to bargain with unions deemed to represent their staff.

The new test, one of "industrial realities," will ask whether the remote company has the power, even the potential power, to significantly influence working conditions or wages at the subcontractor or franchisee; a previous test sought to determine whether the remote company exercised " 'direct and immediate impact' on the worker's terms and conditions — say, if that second company is involved in hiring and determining pay levels."

This is a really big deal; as our friend Iain Murray puts it at CEI, it has the potential to "set back the clock 40 years, to an era of corporate giants when few people had the option of being their own bosses while pursuing innovative employment arrangements."

A tech start-up currently contracts out for janitorial, cafeteria, and landscaping services. It will now be at legal risk should its hired contractors be later found to have violated labor law in some way, as by improperly resisting unionization. If it wants to avoid this danger of vicarious liability, it may have to fire the outside firms and directly hire workers of its own.

A national fast-food chain currently employs only headquarters staff, with franchisees employing all the staff at local restaurants. Union organizers can now insist that it bargain centrally with local organizers, at risk for alleged infractions by the franchisees. To escape, it can either try to replace its franchise model with company-owned outlets — so that it can directly control compliance — or at least try to exert more control over franchisees, twisting their arms to recognize unions or requiring that an agent of the franchiser be on site at all times to monitor labor law compliance.

Writes management-side labor lawyer Jon Hyman:

If staffing agencies and franchisors are now equal under the National Labor Relations Act with their customers and franchisees, then we will see the end of staffing agencies and franchises as viable business models.

Moreover, do not think for a second that this expansion of joint-employer liability will stop at the NLRB. The Department of Labor recently announced that it is exploring a similar expansion of liability for OSHA violations. And the EEOC is similarly exploring the issue for discrimination liability.

And Beth Milito, senior legal counsel at the National Federation of Independent Business, quoted at The Hill: "It will make it much harder for self-employed subcontractors to get jobs."

What will happen to the thriving white-van culture of small skilled contractors that now provides upward mobility to so many tradespeople? Trade it in for a company van, start punching someone's clock, and just forget about building a business of your own.

What do advocates of these changes intend to accomplish by destroying the economics of business relationships under which millions of Americans are presently employed? For many, the aim is to force much more of the economy into the mold of large-payroll, unionized employers, a system for which the 1950s are often (wrongly) idealized.

One wonders whether many of the smart New Economy people who bought into the Obama administration's promises really knew what they were buying.

This post first appeared at Cato.org.
 https://fee.org/articles/drug-warriors-are-putting-a-bounty-on-the-heads-of-anyone-in-the-legal-pot-industry/ Drug Warriors Are "Putting a Bounty on the Heads" of Anyone in the Legal Pot Industry RICO empowers wannabe authoritarians 2015-08-16T00:00:00-04:00 2015-08-16T00:00:00-04:00 Walter Olson https://fee.org/people/walter-olson/
I've been warning for years of the dangers of the federal Racketeering Influenced and Corrupt Organizations (RICO) law, and how it gives prosecutors and enterprising private lawyers leverage to target above-board businesses in search of punishment or profit.

Since the law's passage in 1970, RICO has seldom been used against violent organized crime. Instead, it has been aimed at a wide array of white-collar defendants, as William Anderson noted in Regulation six years ago, and especially at unpopular industries like gun and cigarette makers, as Cato's Bob Levy noted in 2000.

The latest fillip is Sen. Sheldon Whitehouse's proposal to aim racketeering charges against groups that promote wrongful thinking on climate change.

The civil side of the statute ("civil RICO"), which can be used in private litigation, is especially susceptible to tactical use by private lawyers who know that the vagueness of the law, the high cost of response, the triple-damages provisions, and the racketeering stigma especially are useful in forcing adversaries to the bargaining table.

The more those adversaries value respectability, the more powerful the leverage.

Now comes word that a Washington, D.C.-based tough-on-crime group calling itself the Safe Streets Alliance has filed suit seeking, in its words, "to hold those involved with Colorado's recreational marijuana industry liable under federal racketeering statute and to have Colorado marijuana business licenses held invalid."

Its press release is at least honest enough to acknowledge that the targets include "the citizens of Colorado" for what it believes was their faulty decision to enact Amendment 64 in 2012.

In one case SSA, representing a local Holiday Inn franchisee that didn't care to have a medical marijuana shop near its business, succeeded in forcing owner Jerry Olson out of business. A key tactic in the suit — one quite familiar to those of us who follow hardball civil litigation in general — was to name as racketeering co-defendants a variety of risk-averse, often respectable businesses that had in some way done business with the main target. Thus AP reports:

Just last week, a bonding company in Des Moines, Iowa, paid $50,000 to get out of the lawsuit.

"We are out of the business of bonding marijuana businesses in Colorado and elsewhere until this is settled politically," said Therese Wielage, spokeswoman for Merchants Bonding Company Mutual.

Thus does the litigation accomplish its goal whether or not it ultimately prevails before a judge:

"This lawsuit is meant more to have a chilling effect on others than it is to benefit the plaintiffs," said Adam Wolf, Olson's lawyer.

SSA lawyer Brian Barnes of Cooper & Kirk doesn't seem to contradict that:

"We're putting a bounty on the heads of anyone doing business with the marijuana industry," Barnes said.

I'm occasionally asked why I bother to worry about the legal woes of unpopular industries whose goods I don't even care to consume.

A different way to look at the question is that almost anyone's line of business — whether it be soft drinks or accounting or putting up visitors in one's home or charitable non-profit work or electioneering or employing entry-level workers at minimum wage — is one public-vilification campaign, or one round of lawsuits, away from becoming an unpopular industry.

This post first appeared at Cato.org.


text:
2nd Haematology Update for Teenage & Young Adults through to 30 is a full day's programme which will cover topics such as
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Attendees will also gain knowledge and updates on the introduction of CAR T cell therapy and other novel agents used in acute leukaemia. There will also be debates on whether CAR-T therapy will replace allograft and a parallel medical and nursing session with presented cases.
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