Category Archives: regulation

An Influence on Bank Lending

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Professor Alan Blinder, of Princeton University, has another laugher in The Wall Street Journal.  This time he wants the Fed to “encourage” private bank lending—in an environment where the intended market is vary chary of taking on debt, new or additional—but without “without interfering in private credit-allocation decisions.”

His idea is stimulated by a scheme (in both the British and American English senses) of the Bank of England’s, itself generated out of the premise that UK banks aren’t lending enough to suit the government suits.  Essentially, Blinder wants to ape the BoE scheme of giving private lenders preferential rates on central bank lending according to how much lending the private lenders are doing.

Hmm….

First, Blinder operates from a false premise.  It’s impossible for government to “encourage” without “interfering in private decisions.”  The whole point of government encouragement to execute exactly that interference.  To claim that compliance is voluntary and so not interference is disingenuous sophistry.  Banks are out to make money for their owners, just as any business must—its fiduciary duty drives it to—make money for its owners.  The offer of a goodie for doing what government wants is no less a cudgel than providing a penalty for not doing.

Second, Blinder gives his game away in the penultimate paragraph of his piece:

Last, but certainly not least, there is the crucial question of what types of bank lending to subsidize.

Of course, the sole purpose of a subsidy is to drive the recipient to a government-desired behavior.  The whole point of government encouragement to execute exactly that interference.

He Built This

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…and it’s not pretty.  The costs of Obamacare are starting to come home to roost, now that its various mandates are starting to take effect.  Gerri Willis has a listing; this is a brief summary.

The requirement that lets grown adultschildren stay on mummy and popsy’s health insurance policy until they’re 26 will cost $3,400 per grown adultchild per year.  But there’s an additional cost: employers are beginning to not include such policies at all in their benefits package; they’re too expensive.  There’s yet another cost: colleges where Buffy or Junior might go—and might have gotten coverage as students—are beginning to drop the policies: they’re too expensive.

But wait.  There’s still the little 26-year-old tyke’s pre-existing condition that’s required to be covered.  Except that coverage still is hard to find.  Willis writes

Insurers in 20 states have given up offering child-only insurance plans.

Those child-only plans matter because that’s all that’s left after those other policies have been withdrawn from the market.  RTWT.

There’s more, though.  Medical equipment manufacturers are being forced to cancel plans for medical equipment manufacturing in the US.  Cook Medical, the US’ largest privately held maker of medical devices, with annual revenue of more than $1.8 billion and employment of around 4,000 people in the Bloomington, IN, area and 10,000 worldwide, is an example.

Cook says it will have to cancel plans to build an additional five manufacturing plants, each employing 300 people when those plants were scheduled to open.  The medical device tax that’s another important part of Obamacare, will cost Cook Medical $20 million this year alone—that’s the price of one of those additional manufacturing plants.

It gets worse—or better, if you like the Obamacare move.  Follow the Fox News link to the larger article and video at Indianapolis Business Journal.  Executive Vice President of Strategic Business Units at Cook Medical, Pete Yonkman, described one of those unintended consequences that are so monstrous and so ubiquitous in Obama’s centerpiece.  With this medical device tax, Cook can’t economically bring a new technology to patients and hospitals in the US; Cook instead is looking to Asia.  Moreover, as this technology is developed in Asia, that’s where the expertise will be developed.  As a consequence of that, that’s where the engineering, and then manufacturing, jobs will appear:

It’s important to have that [engineering and scientific expertise] around your manufacturing base[.]

And this: Yonkman noted that

One of the fastest growing areas in our company every year is always our regulatory team having to deal with the increased burden coming from…increased regulation….

A medical device manufacturer’ fastest growing area has nothing to do with its device manufacturing or sales.

And finally this: Obamacare’s medical device tax is a 2.3% tax on medical devices; however, the impact is greater than just this immediate 2.3%.  Yonkman said the impact on actual earnings is another 15%.

He’ll stop that from being built.

A Bit More on Free Speech

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Indiana University Southeast has a rather appalling view of the First Amendment.  One aspect of it, as Maegan Vazquez notes in a recent Fox News article is

One stipulation in the code requires that students may only “express opinions” within a free speech zone….

Yet, according to the Indiana University system’s overarching code,

In accordance with the state and federal Constitution and university policy, the university recognizes the rights of all students to engage in discussion, to express thoughts and opinions, and to assemble, speak, write, publish or invite speakers on any subject without university interference or fear of university disciplinary action.

What the IUS’ code says on the matter is this:

  • Persons wishing to express their opinions, distribute materials or assemble on campus in accordance with the state and federal constitution in relation to their right to free speech, must submit an Application to Schedule Facilities form. … This Application should be submitted at least five (5) days prior to the event. Approval must be granted before an event can take place.

and

  • … The free speech area on campus is customarily in the McCullough Plaza. However, other locations which do not disrupt functions of the university may be identified by the Director of Campus Life in consultation with University Police.
  • … Materials may not be posted on campus other than the designated kiosk in the Commons.

Notice that.  IUS presumes to demand an academic week’s advance notice before an expression of opinion—a demonstration, a protest—can be conducted.  To be sure those wishing to express an opinion can appeal the decision, but only to an IUS agency—they’re forced to ask the university to overrule itself.

The university, in a statement to Fox News actually said the following with a straight face:

[The guidelines] were intended to provide some guidance on the issue so that those wishing to gather and express an opinion could do so without endangering people or property.  The guidelines also were intended to protect the rights of all students to have unfettered access to educational activities on campus (in other words, the exercise of free speech rights should not result in blocking access to buildings or disrupting classes or campus events).

Here is the university cynically ignoring the myriad of state and Federal law that already governs “endangering people or property.”  Instead, IUS wishes to engage in prior restraint: restrict legitimate activity on the idle speculation that nefarious results might—might—ensue.

Here, too, is the university cynically ignoring the fact that no small part of free political speech—that 1st Amendment bit that’s part of that confusing, older than 100 years scrap of paper that isn’t binding on anybody, anyway—is attention-getting disruptions.  They’re also ignoring that such disruptions contribute to the credibility—or its lack—of the protest message.  By insisting on controlling for themselves political speech, they’re also insisting that their non-protesting students are too stupid to draw their own conclusions about the message of the protest (which makes me wonder on what all those students are spending their college money, to be getting such shoddy teaching in critical thinking).

Associate Professor of Political Science and Dean of the School of Social Sciences at IUS, Joseph Wert, says with equal seriousness,

We have to regulate other groups who come from off campus. Some come and preach a lot of hate. We just can’t have them wandering around campus with bullhorns over here….  Governments have the right to restrict the time and place of these things….  If they were regulating content–I’d have a problem with that[.]

Let me see if I understand this.  In order to control the behavior of those with no affiliation with the university who enter the campus from outside, the good Professor actually thinks it’s necessary to regulate the speech of university students.  Never mind that the university—like all colleges and universities—have the authority to restrict access by outsiders, and to restrict the behaviors of those outsiders allowed onto campus, without at all touching student activity.

Then there’s this: when the university restricts the time and location of speech, it is perforce, regulating its content—by permitting it to be spoken at all, or not, except at a time and place of university choosing.

In the end, what we have is a university restricting even individual peaceful expressions of opinion to a specific location of the university’s choosing, at a time of its choosing.  Even simple flyers expressing free opinions are permissible only in a designated location—too small to accommodate everyone’s flyers.   Everywhere else on campus, it’s not legal under IUS’ Code to express a differing opinion.  Not at all.  Not anywhere.   Never mind that this is a direct contradiction of the Indiana University system’s governing Code.

As the Senior Vice President of the Foundation for Individual Rights in Education, Robert Shibley, put it,

[The University is] teaching [college students] that they’re not equipped to live in a free society.

Federal Arrogance

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Jennifer Valentino-Devries reported on a case involving the recently expanded US Patriot Act in a recent Wall Street Journal.  In this case, an unnamed telecom company, a recipient of an FBI National Security Letter, is objecting to the letter and the demands in it, which are, in essence, to turn over to the FBI whatever the latter demanded, based on…well, because FBI inquiring minds want to know.

The Patriot Act has a lot of good things in it, but it grants a dangerous level of power to the government, also.  NSLs, for instance, don’t require a judge’s prior approval, as a search warrant does.  In fact, the company’s representative who physically receives the NSL is “legally” barred from even acknowledging the letter’s existence except to company lawyers.  The FBI’s secret demand is good enough; we’re to take their word for it.  Here, just to confirm the danger of such star chamber power, the FBI’s response to the telecom’s protest was to instruct its victim to sit down, shut up, and deliver the goods.  Or else.

The US Department of Justice fired back with a serious accusation. It filed a civil complaint claiming that the company, by not handing over its files, was interfering “with the United States’ sovereign interests” in national security.

As far as I’m concerned, this is grounds for dismissing the Government’s claim and its letter with prejudice.  It is never out of order to defend one’s rights.

Leaving that aside, though—the FBI’s case, nor its NSL, have not been dismissed out of hand—the opposing positions are starkly apposite:

[T]he company is arguing, among other things, that the gag orders associated with most of these letters improperly restrain speech without a judge’s authorization.

On the other hand,

The FBI says it must maintain the secrecy of national security letters to avoid tipping off potential terrorists.

This gives the game away.  DoJ has said in its filings

The object of the nondisclosure provision is not to censor private speech[.]

This is just a cynical red herring: the 1st Amendment isn’t there to protect private speech.  It’s there to protect public, political speech.

Finally, Stephen Vladeck, a professor at American University Washington College of Law and an expert on terrorism law says about this case

It raises a question Congress has been trying to answer: How do you protect the First Amendment rights of an NSL recipient at the same time as you protect the government’s interest in secrecy?

The 1st Amendment rights to free speech and to petition the Government for a redress of grievances are specifically intended to allow the sovereign people, individually or collectively, to rein in an overreaching government.  The government’s interest in secrecy plainly is subordinate to those sovereign rights—which it is the government’s duty to defend, not its duty to attack those who insist on them.

Motives Followup

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I wrote about motives a bit ago.  Here’s a followup on that.  From Fox News comes two items of interest.

First, the Department of Agriculture has been even more actively pushing its food stamps onto the non-needy than I had earlier written.  The Obama administration is trying harder and harder to pull Americans into government dependency, this time with a series of advertisements—paid for with your tax dollars—aimed at getting even those who don’t need food stamps to avail themselves of the “benefit.”  These advertisements are in the form of a 10-part miniseries called “Hope Park.”

The target of these vignettes is Diana, whose husband works (!) and who doesn’t think she needs the food stamps, as she notes in the 4th vignette:

I don’t need help from anyone.  My husband makes enough to take care of us.

By the last episode, though, Diana has been hooked, and she’s singing the praises of the stamps she didn’t need—but now needs badly.

As Senator Jeff Sessions (R, AL) describes this program,

It has become increasingly clear that, in recent years, the mission of the food stamp program has been converted from targeted assistance for those in need into an aggressive drive to expand enrollment regardless of need. … Read as a whole, USDA’s activities suggest that the program administrators take personal offense when people who technically qualify for their largesse decline to accept—and see it as an obstacle to overcome.

The other item of interest is this.

The Department of Health and Human Services has chosen to waive the work requirement that is part of the eligibility requirement for the Federal Temporary Assistance for Needy Families program, and it carefully has done so without fanfare.  The directive through which HHS does this can be read here, and a copy can be read here.

Governor and Republican Presidential Candidate (presumably) Mitt Romney correctly noted

[T]he linkage of work and welfare is essential to prevent welfare from becoming a way of life.

But as Congressman Jim Jordan (R, OH) said,

President Obama just tore up a basic foundation of the welfare contract….

It’s true enough that the directive insists that

Waiver requests must include an evaluation plan.  …the preferred evaluation approach is a random assignment methodology, unless the Secretary determines that an alternative approach is more appropriate….

and

The Secretary will not approve a waiver for an initiative that appears substantially likely to reduce access to assistance or employment for needy families.

But notice carefully.  What constitutes adequate evaluation by the states is carefully left unspecified, except that if HHS Secretary Kathleen Sebelius decides she doesn’t like a state’s evaluation methodology, she’s free to substitute her own, whose criteria also are carefully left unspecified.  Moreover, “substantially unlikely” to reduce access also is left to the unspecified whims of the Secretary.

There’s more in that last phrase, too.  “[A]ppears substantially likely to reduce access to assistance or employment” clearly means that access to assistance is to be maintained independently of access to employment.  The directive doesn’t require access to assistance and employment.

Without a work requirement as an eligibility criterion for TANF assistance, though, there is only eligibility for TANF dependency.

Again, I ask: what are we to make of the motives of government officials who do these things while knowing full well the outcomes of their actions?