From the Archives: Policy analyst James Gattuso discusses problems with Net Neutrality – Part II

Policy analyst James Gattuso discusses problems with Net Neutrality – Part II
January 24, 2011 12:15 AM MST

In a January 11 interview with the Charlottesville Libertarian Examiner, James Gattuso – who is a senior research fellow in regulatory studies at the Heritage Foundation in Washington, where he focuses on communication policy – spoke about the Federal Communications Commission’s recent ruling on so-called “Net Neutrality.”

Gattuso argued that the new rules were at odds with efficient economic operation of the Internet and also that they were based on “flawed” claims of legal authority by the FCC.

He also predicted that Congress will take action to reverse the FCC's ruling.


Congressional Review Act
One avenue will be the Congressional Review Act, which was passed in 1996 and allows Congress to overrule executive branch regulations.

Another possibility, Gattuso said, is “standalone legislation to reverse the FCC’s decision and strip them of authority to act in the future.”

This could face a hurdle, however, because Net Neutrality rules have “been a priority item for president Obama and he can veto any such standalone bill.”

He suggested that a “much more potentially winning strategy is going to be the funding approach, where they will put on an appropriations rider prohibiting the FCC from using any funds to enforce this rule.”


Threat to the First Amendment

James Gattuso (c) 2011 Rick Sincere

Finally, Gattuso expressed his concerns that the FCC’s new rules could have negative implications for freedom of expression now protected by the First Amendment.

“The rules as written by the FCC ban ‘unreasonable discrimination,’” he said. “They use the word ‘reasonable’ quite a bit in the rules, which ultimately means the FCC will have discretion to decide how content can be treated on the web, what can be given priority, and what must be given priority.”

This means, he added, that “whenever a company has a plan for treating one group of content different from another or even treating it the same as another, the FCC can say ‘yes’ or ‘no.’”

That will put the FCC “inevitably into the business of deciding what speech is valuable, what speech is important, and which speech is favored.”

That, Gattuso concluded ominously, is “a dangerous path.”

Publisher's note: This article was originally published on Examiner.com on January 24, 2011. The Examiner.com publishing platform was discontinued July 1, 2016, and its web site went dark on or about July 10, 2016.  I am republishing this piece in an effort to preserve it and all my other contributions to Examiner.com since April 6, 2010. It is reposted here without most of the internal links that were in the original.

From the Archives: Policy analyst James Gattuso discusses the problems with Net Neutrality – Part I

Policy analyst James Gattuso discusses the problems with Net Neutrality – Part I
January 24, 2011 12:03 AM MST

When the Federal Communications Commission issued rules regarding Net Neutrality in December 2010, it set off a debate about the value and legitimacy of those regulations.

Earlier this month, the Charlottesville Libertarian Examiner had an opportunity to interview James Gattuso, senior research fellow in regulatory policy at the Heritage Foundation in Washington. Gattuso had addressed a group of Virginia political activists in Richmond about the FCC’s new rules.

Gattuso summarized his remarks by saying that “the FCC last month adopted rules to regulate the Internet. They’re vague rules but, I think, very detrimental rules to society and the economy.”


‘Vague notion of fairness’

The argument for these rules, he said, “is essentially a vague notion of fairness,” which posits that “ISPs -- companies like Verizon and Comcast, which provide Internet service to individuals and businesses -- should treat all traffic the same, with no differentiation between how the speed or quality with which they’re delivered.”

This, he went on, is a “tempting idea but ultimately flawed.”

It is flawed “because for practical purposes there’s always been and needs to always be differentiation” in services regardless of what kind of business is under discussion.

Moreover, Gattuso said, “the idea of premium services and discount services is inherent to a marketplace. I can’t think of a single industry that does not use premiums and discounts. It’s an economic tool that’s beneficial to consumers.”

Premiums and discounts, he continued, are “necessary to the success of the Internet itself.”

No legal authority

Gattuso also argued that the FCC lacks the legal authority to issue Net Neutrality regulations.

James Gattuso (c) 2011 Rick Sincere

The FCC gets its authority from the Communications Act of 1934 and many subsequent amendments, he said. This law “gives the FCC authority over broadcasting. It gives the FCC authority over the telephone system, but it does not give authority anywhere in the text [for] regulating the Internet.”

To get around this lack of legal authority, Gattuso noted, “the FCC has argued in the past that it has what is known as ‘ancillary jurisdiction,’ which means if they regulate something that is similar to the Internet, they can regulate the Internet itself.”

The problem with this position, however is that the claim “was thrown out in a case in federal court last April, without much ceremony. It was not taken seriously by the court, nor should it have been,” said Gattuso.

However, he added, “with this December decision, the FCC is coming back again with a very similar argument, this time based upon a particular section [of the code] that was meant to be deregulatory.”

In that section, “Congress instructed the FCC to act to encourage development of advanced Internet services. This was a provision that was meant to instruct the FCC to deregulate, to reduce barriers, to advance Internet services if they are not being deployed.”

What the FCC is claiming now is that this deregulatory provision of communications law is “in fact a new grant of authority that they did not otherwise have, mandating them to regulate.”

This, Gattuso concluded, is “a complete reversal of what Congress intended and, ultimately, also legally flawed.”

In Part II of this interview, James Gattuso talks about what the congressional response might be, and whether Net Neutrality is a threat to freedom of expression.


Publisher's note: This article was originally published on Examiner.com on January 24, 2011. The Examiner.com publishing platform was discontinued July 1, 2016, and its web site went dark on or about July 10, 2016.  I am republishing this piece in an effort to preserve it and all my other contributions to Examiner.com since April 6, 2010. It is reposted here without most of the internal links that were in the original.

Guest Post: 5 Laws That Could Send Santa to Federal Prison

by David Rosenthal

While most people know Jolly Old Saint Nick as a friendly figure, he too is not immune from the perils of administrative overreach and overcriminalization.

To get you in the Christmas spirit, here is a list of some of the potential crimes and violations of federal law Saint Nick as he prepares to take flight for 2016.

1. The Reindeer Act

Many have tried finding Santa’s workshop—without success—but children have long mailed letters to the Santa Claus House located at 101 St. Nicholas Drive in North Pole, Alaska. This office location is the first source of trouble for Father Christmas. Under the Reindeer Act, signed into law by President Franklin D. Roosevelt in 1937, only Alaska Natives are allowed to own reindeer in Alaska.

While Santa has been operating out of the North Pole for many years, only Eskimos, Indians, and Aleuts inhabiting Alaska at the time the United States purchased the land from Russia are considered natives under the act, and Saint Nicholas is from the Greek village Patara in modern-day Turkey. Luckily for Santa, he might be able to avoid the $5,000 fine for violating this provision of the Code of Federal Regulations, but only if he applies for and is granted a special use permit to possess reindeers as a non-native.

2. The Lacey Act
Even if Santa gets around the Reindeer Act, he may face civil and criminal penalties under the Lacey Act if his purchase, sale, possession, or use of reindeer—or any other flora or fauna— violates any state or federal law or the law of any foreign nation, no matter what language or code that foreign law is written in.

Just as some unwitting Americans have been convicted of offenses such as the “importation of Caribbean spiny lobsters from Honduras” in violation of Honduran packaging laws, Santa could be committing a crime each time he crosses borders to deliver flora or fauna.

3. Flying Without a License
Despite Santa’s many years of experience, there is no Mr. Claus listed in the Federal Aviation Administration’s pilot certificates database. If Santa is piloting his sleigh without an airman’s certificate, he is in violation of 49 U.S.C. § 46317.

Any pilot who operates an aircraft without a proper license is guilty of a federal crime punishable by three years in prison (the sleigh would almost certainly be deemed an aircraft under 49 U.S.C. § 40102(a)(6)). And that is only for Santa’s role as a pilot. If his sleigh is not deemed airworthy, Santa will be in violation of 14 C.F.R. § 91.7 and subject to additional civil penalties by the FAA.

If Santa’s sleigh is approved, he then must post “within” the “aircraft” a copy of the registration, airworthiness certificate, and other official documents, to be displayed “at the cabin or cockpit entrance so that it is legible to passengers or crew,” per 14 C.F.R. § 91.203(b); the sleigh’s baggage compartment must be installed subject to Subsection C with a copy of FAA Form 337 authorizing such installation maintained on board the sleigh; and all fuel venting and exhaust emissions must meet additional requirements.

Hopefully Santa has a good compliance team.

4. False Statements
Any white lie that falls within the jurisdiction of the U.S. government could be a federal crime. As Heritage scholars have written elsewhere, there is one general federal statute for false statements that “should be broad enough to reach any fib or whopper that the federal government could have a good reason to prosecute.”

But there are dozens more specific criminal statutes that punish false statements regarding such minutiae as fluid milk products. If Santa parks his sleigh on federal land and encounters a park ranger while coming down the chimney, he’d better not tell a fib about what he’s up to or he could end up in big trouble. (He would also be violating another federal law if he parks his sleigh in a way that inconveniences another person on federal land, but I digress.)

Supreme Court Justice Ruth Bader Ginsburg once observed that, under federal false statement statutes, “the prospect remains that an overzealous prosecutor or investigator—aware that a person has committed some suspicious acts, but unable to make a criminal case—will create a crime by surprising the suspect, asking about those acts, and receiving a false denial.”

Here, once Santa gets off the ground, his real legal trouble is only just beginning. A government agent need only ask Santa if he committed burglary, trespass, or larceny, or ask him, “Are you really Santa Claus?” In that case, Santa really would need a Miracle on 34th Street to stay out of the slammer for lying.

5. IRS Tax Gift
Even if Santa evades capture during his Christmas Eve flight, he then must deal with Uncle Sam upon his return to the North Pole. Under IRS gift tax rules, the giver of gifts above a certain threshold is taxed at a rate up to 40 percent of the value of the gift. While individuals are allowed to make gifts up to $14,000 per recipient without encountering any tax consequences—most toy trucks and dolls would probably fit under this exemption—gifts above the limit must be reported on IRS Form 709.

As such, each time Santa drops off a shiny new BMW for mom or dad, he will be on the hook for an even bigger tax bill on April 15. Willful failure to file a gift tax return can land Santa in prison for up to one year under 26 U.S.C. § 7203. Let no good deed go unpunished.

The List Goes On
While those are just a few examples of how Santa may be held criminally and civilly liable for violating U.S. law, there are several other ways in which he operates in legal gray areas.

For instance, how does Santa compensate all of his elves who are working around the clock to finish making toys before the big day? If they are not receiving proper overtime pay in a safe work environment, Santa will be in violation of numerous provisions of the Fair Labor Standards Act. Finally, given the size of his operation, Santa must be complying with the Affordable Care Act’s employer mandate.

If Santa cannot even stay in line with every single government rule and regulation, how is the average American supposed to keep up? Attorney Harvey Silverglate argues that the average American unwittingly commits three felonies a day due to vague laws and governmental overreach.

The American people—and Mr. Claus—deserve better. Heritage scholars have identified a comprehensive strategy to combat the problem of overcriminalization, which threatens liberty by using the criminal law and penalties to attempt to solve every problem in society and compel compliance with regulatory schemes.

Merry Christmas to all, and to all a good night.

Reprinted from The Daily Signal.


David Rosenthal is a visiting legal fellow in the Edwin Meese III Center for Legal and Judicial Studies at The Heritage Foundation.

This work is licensed under a Creative Commons Attribution 4.0 International License.
This article was originally published on FEE.org. Read the original article.

From the Archives: Economist Adam Smith looks at the 'Bootleggers & Baptists' phenomenon

Publisher's note: This article was originally published on Examiner.com on October 14, 2014. The Examiner.com publishing platform was discontinued July 1, 2016, and its web site was scheduled to go dark on or about July 10, 2016.  I am republishing this piece in an effort to preserve it and all my other contributions to Examiner.com since April 6, 2010. It is reposted here without most of the internal links that were in the original.

Economist Adam Smith looks at the 'Bootleggers & Baptists' phenomenon

Just over three decades ago, economist Bruce Yandle, then working for the Federal Trade Commission, published an article in the journal Regulation headlined “Bootleggers & Baptists: The Education of a Regulatory Economist,” which noted how groups presumably at odds with each other often collaborate, wittingly or unwittingly.

In 1999, in another piece for Regulation, Yandle described more fully the phenomenon after an additional 16 years of observation:

“Durable social regulation,” he said, “evolves when it is demanded by both of two distinctly different groups.” Those groups are the “Baptists,” a shorthand term for those who make a moral or ethical case for legislation or regulations, and the “bootleggers,” a term that applies to economic interests who benefit financially from legislation or regulations. (A synonym for “bootlegger” might be “rent-seeker.”)

“'Baptists' point to the moral high ground and give vital and vocal endorsement of laudable public benefits promised by a desired regulation,” wrote Yandle, while “'Bootleggers' are much less visible but no less vital. Bootleggers, who expect to profit from the very regulatory restrictions desired by Baptists … are simply in it for the money.”

What Yandle did was to apply public-choice economic theory to regulatory politics and, in the process, create a colorful concept that has been cited thousands of times since 1983 in attempts to explain how government makes rules.

Fast-forward to 2014, when Yandle, now a retired dean at Clemson University, has collaborated with his grandson, economist Adam Smith of Johnson & Wales University, on an updated look at the Baptist/bootlegger dynamic. Their new book is called Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics. The two authors spoke about it at a forum hosted by the Cato Institute in Washington on October 9.

'Aligned interests'
After the forum, the Charlottesville Libertarian Examiner asked co-author Adam Smith a few questions about the book and his research.

Smith explained that the term “bootleggers and Baptists” originated during alcohol Prohibition in the 1920s, when “you had bootleggers and Baptists with aligned interests” even if they did not realize it.

Baptists, he explained, proclaimed “Down with legalized distribution of alcohol!” because they saw drinking as morally detrimental. Bootleggers, too, proclaimed “Down with legalized distribution of alcohol!” because Prohibition raised the price of illegal liquor and fed more profits to the bootleggers.

“It was a boon to the bootleggers,” Smith explained, “and the Baptists were kind of oblivious to that situation.”

Broadening the concept to include other kinds of regulations, Smith said, “what we see today in our modern political economy [are] many, many manifestations of the same kinds of strange bedfellows.”

More and more, he said, “we're seeing that those bedfellows are recognizing one another and coming together to form even more powerful would-be bootlegger/Baptist coalitions.”

There is also a noteworthy relationship between “bootleggers and Baptists” and “crony capitalism,” when government grants preferential treatment to certain, well-connected businesses.

Smith said that, in the book “we call it 'bootlegger/Baptist' capitalism instead of crony capitalism.”

He added that “what I hope the book shows is that cronyism is more than just a bootlegger. That's the only thing that's usually recognized: There's just some special interest group.”

Yet, he explained, “a special interest group cannot move forward without moral cover, or at least can't get much out of the political domain without the Baptist” providing a beneficent reason for legislation, “and so we have to call attention the bad work Baptists are doing in creating opportunities for cronyism.”

Avenues for research
Both Smith and Yandle acknowledge that their book, while expanding upon the original thesis Yandle put forth in 1983, opens up new opportunities for further research by other economists and social scientists.

“There's obviously a lot of empirical work to be done,” Smith explained.

He pointed to “all these social regulations that people aren't looking at in terms of econometric work in the same way that they are [looking at] economic regulations, because we just don't think of it that way. We don't think of environmental policies and health-and-safety standards as giving money to anybody.”

Instead, he said, people “think of those as in the public interest. In other words, the Baptists have succeeded in convincing us of that fact but that's just not true. There are a lot of groups that benefit from that legislation and we need to put them under the microscope. We have to put those regulations under the microscope in the same way that we do economic regulations.”

Smith added that “this is a useful framework for recognizing groups” that may have self-serving (but hidden) economic interests in promoting new regulations.

“Never count a good bootlegger down,” he quipped.

“A lot of times when we can't see the bootlegger, it doesn't mean they're not there," Smith explained. "Seeing the Baptists can call attention to the fact that maybe there's a bootlegger standing in the shadows” during a debate about imposing new rules or restrictions on human action.

Bootleggers & Baptists by Adam Smith and Bruce Yandle was published by the Cato Institute on September 7, 2014.

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Original URL:  http://www.examiner.com/article/economist-adam-smith-looks-at-the-bootleggers-baptists-phenomenon

'Bootleggers and Baptists': An Interview with Adam Smith

Over on Book Reviews by Rick Sincere is a recent interview with economist Adam Smith of Johnson & Wales University.

Smith is the coauthor, with his grandfather Bruce Yandle, of Bootleggers & Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics, which was published by the Cato Institute in September.

The two authors gave a presentation about their book at Cato in October. Afterward, I spoke to Smith about the book and its title. Here is an excerpt:

Smith explained that the term “bootleggers and Baptists” originated during alcohol Prohibition in the 1920s, when “you had bootleggers and Baptists with aligned interests” even if they did not realize it.

Baptists, he explained, proclaimed “Down with legalized distribution of alcohol!” because they saw drinking as morally detrimental. Bootleggers, too, proclaimed “Down with legalized distribution of alcohol!” because Prohibition raised the price of illegal liquor and fed more profits to the bootleggers.

“It was a boon to the bootleggers,” Smith explained, “and the Baptists were kind of oblivious to that situation.”

Broadening the concept to include other kinds of regulations, Smith said, “what we see today in our modern political economy [are] many, many manifestations of the same kinds of strange bedfellows.”

More and more, he said, “we're seeing that those bedfellows are recognizing one another and coming together to form even more powerful would-be bootlegger/Baptist coalitions.”

There is also a relationship between “bootleggers and Baptists” and “crony capitalism,” when government grants preferential treatment to certain, well-connected businesses.

Smith said that, in the book “we call it 'bootlegger/Baptist' capitalism instead of crony capitalism.”

Read the whole thing here.

TV and Human Fertility

In an article on Governor Arnold Schwarzenegger's plan to ban the sale of big-screen television sets in California (apparently he hasn't heard that Californians with cars can drive to Nevada, Oregon, or Mexico to go appliance shopping), the Daily Mail includes this paragraph:

Televisions account for about 10 per cent of residential energy use in California, the state with the highest population in the U.S., driven largely by the surge in sales of large flat screens.

So California's population growth is due to the sale of big screen TVs? What is it that people are watching there?

Does China have a two-plasma-TV-set-per-family policy?

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Definitely Not a Libertarian

I visited C-VILLE, a Charlottesville weekly newspaper, in my previous post, and I find myself in its pages again.

Speaking about a new law that took effect this month (prohibiting texting on cell phones while driving), a spokesman for AAA says:

“certainly any law is better than no law.”

You'll never hear that statement slip through the lips of a libertarian.

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Call for Philip Morris!

I hope that, when I write about tobacco issues, people understand that I am a lifelong non-smoker. Perhaps, because I grew up in a smoking household (both of my parents were smokers), I have an unusual tolerance for those who use tobacco products in my presence. My libertarian instincts, however, play a major role in my belief that the government should not increase its regulations over tobacco sale and use and leave it to individuals to decide whether to partake and leave it to private businesses whether to allow tobacco smoking on their property.

It seems that my instincts are also held by a majority of Americans, who believe the government has overreached in turning over regulation of tobacco to the Food & Drug Administration and virtually prohibiting the advertising of tobacco products. (Is it any surprise that this new regime was supported by the largest tobacco producer, Philip Morris, since control of its market share will now be secure against encroachments by smaller players in the industry?)

According to UPI, a Gallup Poll shows that a majority of Americans say they disapprove of the new laws -- signed today by President Barack Obama in a Rose Garden ceremony -- that expand regulations over tobacco:

By 52 percent to 46 percent, more respondents said they don't like the idea of government having greater authority over tobacco products, a Gallup Poll released Monday indicated. Congress last week passed such a measure last week. [sic]

The poll indicated 69 percent of smokers said they disapproved, while 28 percent said they favored the broader government oversight. Views among non-smokers were closer, with 50 percent indicating approval and 48 percent indicating disapproval, the poll said.

CQ Politics summarized the results of the poll, which was conducted last week, like this:

The strongest opposition - 60 percent to 36 percent - comes from those with a high school education or less. College graduates favor the legislation by 56 percent to 43 percent.

Republicans oppose the move by 62 percent to 37 percent and independents by 51 percent to 46 percent, while Democrats favor it 54 percent to 45 percent.

Only 17 percent of those surveyed would support a smoking ban.

One has to wonder whether those 17 percent also favor the death and destruction that inevitably would follow tobacco Prohibition. Organized crime is already involved in tobacco smuggling for the purpose of avoiding taxes. A ban would provide new opportunities for drug cartels and enrich mobsters and corrupt police officers around the world.

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Americans for Prosperity Dinner in Richmond

On February 10, the grassroots activist group Americans for Prosperity held a full day of briefings, rallies, and lobbying at the state capitol in Richmond.

The day was capped with a gala dinner featuring former Governor (and Senator) George F. Allen as its keynote speaker. Members and friends of AFP also heard from Delegates Ben Cline and Brenda Pogge, former Delegate (and AFP-Virginia chairman) Paul Harris, Americans for Prosperity national president Tim Phillips, and former Circuit City CEO Richard Sharp. The theme of the dinner was "Defending the American Dream."

I captured most of the pre- and post-dinner speeches on video. Some segments are a bit shaky because the staff at the Richmond Marriott continued to serve dinner courses during the early speeches. (This, I guess, was the organizers' way to keep everything running on time, accommodating the many activists who arrived in Richmond early in the morning on buses from all corners of the state and who wanted to get back home at a reasonable hour.)

Here are Delegate Brenda Pogge's opening remarks. She is introduced by Ben Marchi (as are most of the other speakers).

Delegate Ben Cline was the next to take the stage. His remarks included news about what was happening in the General Assembly, including the news that his bill calling for better budget transparency had passed the House of Delegates and was on its way to the state Senate.

Pogge and Cline were followed by Tim Phillips, the national president of Americans for Prosperity, whose home is in Virginia even if his office is in Washington, D.C. Phillips took aim at Capitol Hill in D.C. and spoke about AFP's nostimulus.com efforts. He specifically mentioned the 305,000 signatures on a "stop the stimulus" petition that had been gathered on that web site in about 25 days. (Between Friday and Tuesday, the number of signatures grew from 69,000 to 305,000. The number must be even higher by now.)

The leaders of AFP -- Marchi, Pogge, Cline, and Phillips -- then took time to recognize Suzanne Curran as "Volunteer of the Year." Curran accepted the award and encouraged AFP's other 13,000 members in Virginia to "keep up the work."

After dinner, the lights were dimmed and a short video about George Allen's years as governor was shown. (It appeared to have been prepared for use during Allen's 2000 campaign for the U.S. Senate against incumbent Chuck Robb.) Then Rick Sharp gave some introductory comments and Governor Allen -- with all the energy of a politician in full-campaign mode -- delivered his stump speech.

Allen's remarks are divided into four parts.

Part I includes Sharp's introduction, as well as Governor Allen's acknowledgment of many friends and supporters (the "A-Team") in the audience:

Part II continues Allen's remarks, beginning with a Ronald Reagan quotation, "If not us, who? If not now, when?":

Part III includes Allen's comments on the state of the U.S. economy:

In Part IV, Governor Allen concludes his remarks, with an emphasis on the importance of energy:

(It is in this segment that Allen answers the question, What are Americans addicted to?)

Finally, AFP-Virginia Chairman Paul Harris, who once held the same seat in the House of Delegates that had previously been held by George Allen and Thomas Jefferson, rose to present former Senator Allen with -- what else? -- the 2009 Thomas Jefferson Award from Americans for Prosperity. Before presenting the award, Harris asked former First Lady of Virginia Susan Allen to join them on stage.

The dinner ended shortly before 10:00 p.m. and several hundred local, grassroots political activists went home happy but tired from a long day of participating in the political process.




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The Nanny State Creeps On

Last November, I posted a terrifically entertaining and informative video from Reason.tv about anti-smoking ordinances around the country.

The focus of the video was of several California communities and I never guessed that the nanny-state approach to smoking would ever become law in Virginia.

Call me naive. It turns out that, in a policy reversal, Speaker of the House Bill Howell has announced a "compromise" that will ban smoking in virtually all restaurants in the Commonwealth. (I am trying to figure out how a blanket ban is a "compromise" of any sort, since a "compromise" implies that each side in a disputed policy debate gives something up in return for something given up by the other. It appears here that the only side giving something up was the free-market side. The nannies gave up nothing.)

A real compromise would have respected the rights of property owners by giving them a choice in the matter. For instance, a law could have been drafted to require restaurateurs to post signs in VERY LARGE TYPE at the entrance to their establishments, stating whether it was a "Smoking Allowed" or "Smoking Prohibited" facility.

We know from experience in other states that when restaurant smoking bans are put in place, restaurants lose business. Smokers decide that, rather than going out for a meal and a few drinks, they will buy a six-pack or a fifth of vodka, some easy-to-cook food, and stay home to eat and drink. (Pizza delivery restaurants are not adversely affected by smoking bans.)

For example, a study by two economists from the University of North Texas in Denton, Terry L. Clower and Bernard L. Weinstein, found that in the year after the city of Dallas imposed a smoking ban on restaurants within its jurisdiction:

...the Dallas smoking ban ordinance

• Contributed to a decline in alcohol sales in the City of Dallas
• Negatively impacted revenue at many restaurants in Dallas
• Caused at least four restaurant closings
• Appears to be changing the business models used by hospitality business owners in Dallas.

The findings also track the trend experienced in Carrollton, Texas where a government imposed smoking ban led to a decline in alcohol sales and a loss of restaurant development and tax dollars in the city.

Clower and Weinstein note that, after the smoking ban was imposed:

Comparing 2003 to 2002, year over year sales of alcoholic beverage at eating and drinking establishments in Dallas fell $11.8 million – almost three times the decrease in sales between 2001 and 2002.

Later in their study, the economists add:

...restaurant owners have seen alcoholic beverage sales decline anywhere from 9 percent to over 50 percent since the Dallas smoking ban went into effect. Owners and managers of these establishments report mixed results in food sales, with one restaurant indicating no impact on food sales while others claim as much as a 25 percent loss in food sales. No responding restaurant indicated they had gained revenues since the smoking ban’s inception.

Regardless of whether restaurants lose sales as a result of smoking bans, they surely bear a regulatory burden that can be monetized. (A regulation is a form of taxation.)

University of Missouri law professor Thomas Lambert wrote in the Washington Post in 2006, based on a longer article he published in the scholarly journal, Regulation:

The case for smoking bans thus fails. Contrary to ban advocates' claims, the costs of smoking's externalities are ultimately borne by the owners of smoking-allowed establishments who, as a group, have incentives to efficiently accommodate smokers and nonsmokers. Efforts to shape people's preferences regarding smoking run into individual choice issues and may be counterproductive. Scientific evidence on the risk of ETS may be overstated and never addresses the important point that some people are willing to take that risk.

A better approach would be a hands-off policy permitting business owners to set their own smoking policies. Motivated by the pursuit of profits, the owners would have the proper incentive to maximize social welfare. The market would be far more likely than government regulation to accommodate the various preferences of nonsmokers and smokers alike.

Let the market decide. That, Speaker Howell, is the conservative (and the morally correct) solution. If you want us to vote for Republicans in November, you shouldn't be imposing policies that are bred by liberal Democrats.

Old/New Ideas for Transportation

I was digging through an unlabeled file box the other day, not knowing what I might find, when I uncovered an article I wrote more than thirteen years ago for the now-defunct Arlington Journal. Written in response to a previous article, my piece was identified as "Second Opinion" and headlined: "End the government monopoly on mass transit service."

Since transportation issues are as salient today as they were in 1995, I thought it might be worthwhile to post the text of the article here and solicit comments from readers. Do you think any of these ideas are worth pursuing today? Free-market solutions, I believe, deserve to be given a chance when government-centered programs fail to deliver all they promise.

Here is what I wrote back then, which (IMHO) remains fresh today:

End the government monopoly on mass transit service
Richard E. Sincere, Jr.
(The Arlington Journal, Friday, April 21, 1995)

Some local government officials are moving in the right direction as they discuss the future of Metrobus service (“N.Va. systems threaten Transit giant,” April 11[, 1995]), but most seem too wary to step toward creativity and market-based decision making.

These local government officials deserve credit for their willingness to consider privatization of Metrobus routes as a means to make the system more cost-effective. Unfortunately, it seems that to them “privatization” is still limited to a county- or city-owned bus system to replace Metro or -- at best -- a government-granted monopoly to a private company within single jurisdictions.

Why not consider more and varied alternatives that, when used together, will have the ultimate effect of reducing costs, improving efficiency, increasing mass-transit use age, and alleviating pollution:

Here are some examples:

* Legalize Jitney service. Jitneys are vehicles smaller than buses, such as vans, that operate independently (like taxis) but on a predetermined route (like buses). The operators set their own fares, which they can base on distance traveled or on other face ton. Different jitneys can compete for the same passengers along the same routes, or a fleet of jitneys can divide up territory. Jitneys could operate within and across jurisdictions, feeding into Metrorail or connecting Tysons Corner to Silver Spring.

* Restore the Potomac’s status as a highway. The cities of Washington and Alexandria lie where they are because the Potomac River was once a major transporter of goods and people. A water-taxi service between Old Town Alexandria and Georgetown, with stops at the Washington Marina and in Arlington, could make the Potomac again a significant people mover.

* Turn Interstates 66 and 395 into toll roads, with tolls based on the number of passengers. For instance, instead of the dreaded high-occupancy vehicle lanes, we could charge vehicles a toll based on a sliding scale, such as $2 for lone drivers, $1.50 for two-passenger cars, $1 for three passengers, 75 cents for four passengers, and no charge for more than four. Such a scheme would persuade some people to take Metrorail, some to take the bus, some to car pool, and some to bear the economic price of the toll, depending on their preferences.

* End the government mass transit monopoly. These three examples only touch the surface of creative, market-based solutions that are there for us to consider and to use. The best way to encourage more use of mass transit, however, is to make more types of mass transit available, and to give commuters and travelers more choices than they have today. Allowing private services to compete with Metro on the same routes will be a good first step.

After all, we would never think it proper to grant Giant a monopoly in Fairfax County and Safeway a monopoly in Arlington County, and not let them compete against each other or against 7-Eleven. If consumers can pick a grocery store, why not let them pick a type of mass transit? And why not let entrepreneurs give them what they want?

• Richard E. Sincere Jr. of Arlington chairs the Libertarian Party of Virginia.

George McGovern Now Makes Sense

Those Massachusetts voters who once smugly pasted a bumper sticker on their cars saying "Don't Blame Me, I Voted for McGovern" may have second thoughts once they see the former South Dakota senator's opinion piece in today's Wall Street Journal.

And conservatives may have their own second thoughts when they see that their bête noire of extreme left-liberalism is taking issue with the prevalence of paternalism in public policy today. McGovern -- hold your breath, conservatives, this may be hard to believe -- actually takes issue with the left's conventional wisdom on subprime mortgages, health insurance availability, and payday lending.

McGovern's WSJ article, headlined "Freedom Means Responsibility," argues:

Under the guise of protecting us from ourselves, the right and the left are becoming ever more aggressive in regulating behavior. Much paternalist scrutiny has recently centered on personal economics, including calls to regulate subprime mortgages.

Here is what he says about the mortgage situation, warning that the legislative cures now under consideration may be worse than the disease:

With liberalized credit rules, many people with limited income could access a mortgage and choose, for the first time, if they wanted to own a home. And most of those who chose to do so are hanging on to their mortgages. According to the national delinquency survey released yesterday, the vast majority of subprime, adjustable-rate mortgages are in good condition,their holders neither delinquent nor in default.

There's no question, however, that delinquency and default rates are far too high. But some of this is due to bad investment decisions by real-estate speculators. These losses are not unlike the risks taken every day in the stock market.

The real question for policy makers is how to protect those worthy borrowers who are struggling, without throwing out a system that works fine for the majority of its users (all of whom have freely chosen to use it). If the tub is more baby than bathwater, we should think twice about dumping everything out.

On health care, McGovern suggests that we need to liberalize -- in the sense of making markets more open -- health insurance regulations, in order to give consumers more choices and reduce the need for government intervention in the health-care market:

Health-care paternalism creates another problem that's rarely mentioned: Many people can't afford the gold-plated health plans that are the only options available in their states.

Buying health insurance on the Internet and across state lines, where less expensive plans may be available, is prohibited by many state insurance commissions. Despite being able to buy car or home insurance with a mouse click, some state governments require their approved plans for purchase or none at all. It's as if states dictated that you had to buy a Mercedes or no car at all.

McGovern also points out that payday lenders -- recently the target of anti-market legislation in the Virginia General Assembly -- may, despite the high interest rates they charge, be beneficial to poor and working-class people who need a temporary loan to pay their utility bills or make their monthly rent payment before penalties kick in:

With payday lending, people in need of immediate money can borrow against their future paychecks, allowing emergency purchases or bill payments they could not otherwise make. The service comes at the cost of a significant fee -- usually $15 for every $100 borrowed for two weeks. But the cost seems reasonable when all your other options, such as bounced checks or skipped credit-card payments, are obviously more expensive and play havoc with your credit rating.

Anguished at the fact that payday lending isn't perfect, some people would outlaw the service entirely, or cap fees at such low levels that no lender will provide the service. Anyone who's familiar with the law of unintended consequences should be able to guess what happens next.

Researchers from the Federal Reserve Bank of New York went one step further and laid the data out: Payday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy. Net result: After a lending ban, the consumer has the same amount of debt but fewer ways to manage it.

Senator McGovern ends his article with a couple of paragraphs that could have been lifted from Milton Friedman or Friedrich Hayek. He sounds downright libertarian:

Why do we think we are helping adult consumers by taking away their options? We don't take away cars because we don't like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don't operate mindlessly in trying to smooth out every theoretical wrinkle in life.

The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

Who would think that 35 years on, George McGovern, writing in the Wall Street Journal, turns out to be more of an economic liberal (in the proper, non-pejorative, unconfused sense of the term) than Richard Nixon?

Seasonal Silliness

Seeing the editorial pages of the Washington Times and Washington Post in agreement is a rare thing. Even rarer is to see an editorial on the same day, in the same location on the page, in each newspaper making the same point.

The issue in question was the decision by bureaucrats in Fairfax County, Virginia, to require that individuals and churches who feed the homeless must have health-department-approved, commercial-quality kitchens, or else be subject to civil penalties. The reasoning, apparently, was that it is better for people to go hungry than to risk food poisoning (as if the alternative, dumpster diving, is e coli-free).

Here's how the Washington Times put it in its December 1 editorial (titled "C'mon, Fairfax County"):

What's really happening here is the bureaucratization of charity. County officials have spotted inconsistent application of a law -- and they can't stand it. They see that churches and grandmas are allowed to donate below the regulatory radar, whereas others are not. So, per small minds and hobgoblins and all that, the Gradgrinds in Fairfax want the same rules to apply to everyone.

That's logically consistent, but unfriendly to spontaneous charity and common sense. The goal of homeless shelters continues to be a simple one: Feeding people who need to be fed. Let's not let the perfect be the enemy of the good.

Meanwhile, at the OP (that's what Timesers and old Washington Star scribes call the Washington Post, "the Other Paper"), news has reached the editorial writers that Fairfax has already reconsidered. The editorial ("Food Folly," also on December 1) said:

WHEN FAIRFAX officials tried to put the kibosh on donations of home-cooked food to homeless shelters, they didn't figure they would get egg on their faces. Thankfully, though, common sense prevailed, and a worthwhile program to help the homeless will be allowed to continue....

The policy was overturned when Gerald E. Connolly (D), chairman of the Board of Supervisors, recognized its absurdity. No doubt he did not relish that Fairfax had become a national laughingstock....

We have no doubt that the zealous officials in this case were well-intentioned. But it is worrisome that they didn't realize that the very thing they said they were protecting -- the public health -- was undermined by their actions....

Halfway across the country, in Chicago, city officials reached a supremely silly decision: Prohibiting the marketing of the new movie called "The Nativity Story" from the annual Christkindlmarket (that's "Christ child market" in German). The purported reason? Promoting a film with a religious theme is "too commercial" for a public space filled with vendors hawking trinkets, gifts, food, and Christmas decorations.

Here's what the Chicago Tribune editorial page had to say, calling the action "a clumsy attempt at political correctness":

The city refused to allow film clips from "The Nativity Story," a movie that depicts the biblical story of Mary, Joseph and the birth of Jesus. The filmmaker also was dropped as an event sponsor. Officials say the movie is too commercial.

Too commercial? In a downtown market where capitalism is in full throttle? That's like saying the Nativity display itself (and there is one, by the way, in the plaza) is too religious.

Veronica Resa, spokeswoman for the office of special events, told the Tribune earlier this week: "This particular incident is about a movie studio aggressively marketing a movie and trying to sell tickets to that movie."

Jim Law, the city's executive director of special events, initially called this a sensitivity issue for festival-goers. He said that showing scenes from the movie would be "insensitive to the many people of different faiths." That's people of different faiths who knowingly and willingly attend a traditional Christmas festival that includes carolers and a "holiday" tree, as well as an Islamic crescent and a Jewish menorah.

There are still 22 shopping days 'til Christmas. Stay tuned for more seasonal silliness. It's bound to happen.

Rubbing Manassas the Wrong Way

The Metro section of Monday's Washington Post offers an illustration of how zoning laws and other business regulations can be used by government to disfavor certain individuals and groups because of characteristics unrelated to merit. In this case, the disfavored individual is gay and black, but he could just as easily be a Republican in a heavily Democratic community (or vice versa) or a Catholic living among Rome-as-Whore-of-Babylon Bible thumpers, or a Jew almost anywhere.

The article, by reporter Nick Miroff, begins:

In the past three years, the Manassas City Council has received two applications for home-based massage therapy businesses, and members have approved both. Then Howard Daniel, who is gay, applied.

The backlash against Daniel's request began last month when nearly two dozen people, many of them members of a local church, spoke in opposition to it at a public hearing. When it came time for the city to decide on Daniel's application the next week, council members balked and voted instead to consider changing the city's zoning laws.

The council's decisions to approve two applications and deny one cannot all be based on merit. After all, as WRC-TV reports,

Howard Daniel is a former Marine Corps reservist who is also a certified massage therapist. He wants to open the business in his home, but almost two-dozen Manassas residents have spoken out against his application.

Daniel already offers his massage therapy services at the local hospital and in the homes of clients.

Neither can the denial stem from opposition of Daniel's neighbors, which would be a legitimate reason to deny an application for any home-based business, even an accountant or a dog groomer. A WRC reporter interviewed some of the neighbors:

Most of Daniel's neighbors seem supportive of his business plan, News4's I.J. Hudson reported.

"If anybody was going to have a service like that here, I think he'd be one of the people who would uphold the integrity of the neighborhood very well," Paul Thomas said.

Daniel's neighbor, Don Quick, said people in the neighborhood are fine with the home practice and that the complaints are coming from people from other parts of town.

It's not difficult to understand that opposition to Daniel's business application is based on raw bigotry. One of his supportive neighbors, according to the Post, found an anti-gay slogan written on his car. It is particularly suspicious that Daniel's supporters come from his own street, while opponents come from other parts of the city and are, in fact, strangers to Daniel and his nearest neighbors.

Council member Jackson Miller, who is running for a vacant seat in the House of Delegates in a special election on November 7, finds himself between a rock and a hard place. Miller, a Republican, had voted to approve the applications of the two other home-based massage therapists, which any pro-free enterprise legislator would be expected to do. But to approve Daniel's application risks offending the anti-gay voters who will make up a significant fraction of his base of supporters. He doesn't want to drive away voters by appearing "soft" on homosexuality, no matter what level of personal tolerance and integrity he possesses.

The fact that the Manassas city council is considering a change to its zoning laws rather than permit a gay man to operate a home-based business reminds me of what happened a few years ago, when the federal Equal Access Act, which was written to assure that religious clubs were treated equally by government school officials and allowed to hold meetings on campus and recruit members, was invoked to permit gay-straight alliances (GSAs) the same access.

In response, a number of school districts around the country simply eliminated all extra-curricular activities (except sports, of course) rather than give gay students a chance to assemble and speak at school.

I don't want to lose sight of my larger point, however.

That is, we should be alert to the fact that zoning ordinances, eminent domain powers, business licensing, and other local regulatory authorities can be used to persecute and punish individuals based on their political beliefs and activities, their religion and sexual orientation, or merely because they are disliked personally by certain public officials.

These powers should be circumscribed as much as possible to prevent their misuse and abuse, and citizens should be watchdogs against cases like Howard Daniel's in Manassas.