Category Archives: regulation

Presidents and a “Nation of Laws”

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President Barack Obama says, in the wake of the Zimmerman acquittal, that “we are a nation of laws.”  He says this against a backdrop of having chosen to selectively enforce (i.e., not enforce at all) immigration law is it applies to certain groups of illegal aliens, of having chosen to selectively enforce (i.e., not enforce at all) critical portions of his Obamacare law, having chosen not to pursue legal cases against those pleading out to voter intimidation, and so on.  In truth, he’s not alone in this—most American Presidents have chosen not to enforce this or that law, or this or that portion of a law.  This is done because a given President thinks it’s a bad law, it’s bad public policy to enforce it at this time, it’s bad politics to enforce it at this time, it’s….

This selective enforcement comes despite what Art II, Section 3, says about the President’s duty vis-à-vis Federal law:

…he shall take Care that the Laws be faithfully executed….

There isn’t a caveat here, nor any wiggle room: the President must enforce Federal law.  Period.

What’s a President to do, then, when confronted with a law he (lately) believes illegitimate, or no longer useful, or…?  One way is found in the way some unions (especially police and traffic controllers) occasionally object to a bad contract or bad contract clause: strict, no exceptions enforcement of traffic law or aircraft separation in the two cases suggested.

Especially when confronted with a recalcitrant Congress, what better way to point up the absurdity of a bad law than to strictly enforce it?  Civil disobedience points up such absurdities through the protestors’ deliberate, noisy disobedience of a law and suffering the consequences, with those consequences emphasizing the absurdities.  Presidents have no option for civil disobedience; however, they can achieve the same emphasis, as police and air traffic controllers have demonstrated, by moving in the opposite direction.

Government Favoritism

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…city government style.

The Washington, DC, Council of the District of Columbia has voted to impose a minimum wage of $12.50 on all retailers in the District that do $1 billion or more in annual corporate sales.  That’s corporate sales, not just the sales that occur within the District.

Oh, and unionized corporations are excused from the minimum wage hike; they still get to pay the original minimum wage of $8.25.

The law was sold as filling a need to pay a livable wage to the good citizens of DC.  But union shops are specifically excused from having to pay a livable wage?

How does any of that work, exactly?

Wal-Mart Stores, Inc, the target of this law, has three Walmart stores under construction in DC, with plans for building three more.  They’ve said the new wage requirement throws into a cocked hat their economic analysis of their expansion, and they’ve canceled the three new stores and are exploring how to stop construction on the other three.  In the face of such a blatantly uneven law, they’ve had no choice.

And DC won’t get the 1,800 jobs those six stores were going to bring to six blighted neighborhoods.

A Measure of Responsibility

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The House plans to take steps to curb the power of federal agencies and impose more checks on them in response to recent scandals emanating from the Internal Revenue Service.

Here are the bills the House plans to introduce before the August recess next month—and hopefully pass and send up to the Senate for passage in September after the recess.  The several bills would

  • bar [the IRS] from implementing and enforcing Obamacare
  • make it legal for citizens to make recordings of any conversation they have with a federal enforcement official
  • necessitate[] the approval of the leadership of the agency for conferences held by government officials
  • [give] Congress…final approval of any regulations that would seriously impact the economy
  • mandate the creation of a customer service system at agencies
  • let agencies place “senior career officials on investigative leave, with or without pay, when they are under investigation for serious abuses.”

Will the Democrats in the Senate support this, or will they block the bills, favoring, instead, continued (Democrat) Executive Branch abuses?  Will the House actually pass this legislation, or is this just a Republican version of Obamatalk?

We’ll see in a bit.

Macroprudential Tools for Economic Flow Control

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Central banks, including the Fed, are trying to narrowly target their manipulation of national economies by using new tools to manipulate economic incentives in particular sectors.

The point of the new tools is to protect the entire financial system and economy, so economists refer to them as macroprudential.  That distinguishes them from microprudential, which describes traditional oversight to assure safety and soundness of individual banks.

However,

The whole idea makes some economists uneasy.
…
The techniques have ignited a debate among central bankers, bank regulators and academics over whether they can do what proponents promise.

Some see “macroprudential” as a euphemism for the largely discredited practice of governments deciding where capital should flow.

They should be uneasy; that’s exactly the effect, whether it’s intentional or not.  Too expensive to put money into this industry, investors and businesses say.  We’ll put our money in that industry, instead.

And create a bubble there instead of here.  Or we’ll put our money into that country instead of this one, they say.

And the net result is to drive inflation in that country instead of this one.  Or, more likely and more insidiously, strengthen an existing tendency toward a bubble or toward inflation, possibly pushing that tendency past a threshold.

But the US government, at least, more broadly than the Fed had already been engaged in macroprudential tools for economic flow control: the Community Reinvestment Act, which was used to pressure banks into making more home loans to poorer credit rated borrowers than the banks thought prudent; tax policy for social engineering, which among other things gives preferential treatment to loans for this purpose but not for that purpose; and so on.  This has gotten even more so since the Panic of 2008: stimulus spending, special loans for particular industries, selective law enforcement where this impacts the economy, etc.

We already know, from all that empirically derived evidence, that targeting this or that sector of the economy not only does not work positively, it exacerbates the economy’s corrections (recessions) when those do (inevitably) occur.

The Fed had at one time a mandate to control price level (inflation) while pushing toward full employment.  It needs to stick to its knitting.  Sure, those are broad-brush goals, but our economy is too complex for any force other than the invisible hand of a free market to control.

Obamacare Fail. Again.

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President Barack Obama has admitted that another critical aspect of his Obamacare is a dismal failure.  This time he’s

delaying a requirement that verifies the income levels of those seeking taxpayer subsidies until after the 2014 midterm elections.

Instead, the new insurance marketplaces operated by states and the District of Columbia will take the consumer’s word that they qualify for the subsidies[.]

And

Timothy Jost, a law professor at Washington and Lee University in Lexington, VA, and a consumer advocate, said it’s not unprecedented for the government to use the honor system, and compared it to reporting cash tips to the Internal Revenue Service.

It’s also like the 21%-25% of Earned Income Tax Credits that go to people who aren’t eligible (according to Treasury’s Inspector General) because their eligibility is self-verified, too.

Or rather than an admission of failure, is this just another administration excuse for lax pay outs of monies that aren’t deserved, even under the law?  As the Wall Street Journal puts it,

[A]nyone can receive subsidies tied to income without judging the income they declare against the income data the Internal Revenue Service collects.

Of course, a third alternative also includes none of this as abject failure.  These cynical (say I) delays simply are for building the dependency of Americans on government largesse, trapping us into voting for the Progressive party.