Category Archives: regulation

Another Government Mandate

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Last December, the Director of the Labor Department’s Office of Federal Contract Compliance Programs, Patricia Shiu, proposed, in all seriousness, a regulation requiring companies, apparently with 50 or more employees, to adopt a 7% hiring quota for disabled job applicants or be debarred from doing business with the federal government.  Note that this isn’t 7% of the total number of employees—Ms Shiu is a better micromanager than that.  This is a quota of 7% in each separate job category: “one or more jobs with similar content, wages rates, and opportunities.”

Moreover, Shiu’s rule attempts to require companies to encourage all job applicants to label themselves as “disabled” prior to being hired—apparently without any screening of applications or applicants for accuracy of the claim—and to require companies to engage in an ongoing compliance regime: companies must encourage all employees “to label themselves disabled after being hired, and once a year thereafter,” again apparently without any regard for the accuracy of such self-labeling.  Additionally, the rule would require each company to document, in detail, for each applicant not hired, why that applicant was not hired.  I wonder whether “Because I already hired someone for the position” would be acceptable.  On top of this, each company would be required annually to (re)justify and to  (re)document “the physical and mental job qualifications for [every] job opening…and to provide an explanation as to why each requirement is related to the job to which it corresponds” and to prove each requirement to be “consistent with business necessity.”

Labor’s estimate of the cost of compliance is cynically understated by two orders of magnitude: they claim a cost of just $81 million for roughly 200,000 companies to comply—a cynical $400 per company.  HR Policy estimates the true cost (not counting productivity costs, which are much harder to estimate) to be in the region of $1.8 billion—a more realistic $9,000 per company.  Of course, not included in Labor’s estimate is the cost of hiring all those bureaucrats into Ms Shiu’s burgeoning empire to monitor compliance.  Nor is the cost of all the lawyers companies will have to retain to defend themselves against all the litigation such a rule is going to encourage.

What constitutes an eligible disability?  Reading, concentrating, thinking, communicating, and interaction with others all are on the list.  I have to wonder at the productivity costs of having to have folks on the payroll specifically to read instructions to employees who can’t read; to do so repeatedly to employees that can’t concentrate long enough to absorb the instructions; to monitor employees who can’t concentrate long enough to complete the job assigned; to guide employees who can’t think clearly enough to understand the instructions they’ve just read or had read to them, or to figure out a task when no monitor is readily available; who can’t explain the trouble they’re having to their peers or supervisors; or who don’t get along with their peers or supervisors.

Oh, and hypocrisy notice: the Federal government itself has only 5% disabled on its payrolls—and the Labor Department’s percentage of disabled employees has decreased every year since President Obama took office, despite Obama’s sharp increase in Labor hiring.

There went the “opportunities.”  Why would a company hire at all in such an environment?  Sounds like a good reason to decline to do business with the Federal government.

Government and Due Process

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Senator Barbara Boxer (D, CA) and Senate Majority Leader Harry Reid (D, UT) want to bar American citizens from leaving the country solely on the basis of the say so one of the collections of President Obama’s decried “unelected officials”—this time the bureaucrats of the IRS.

Boxer’s Senate Bill 1813, “Moving Ahead for Progress in the 21st Century Act” (MAP-21), is “AN ACT To reauthorize Federal-aid highway and highway safety construction programs, and for other purposes.”  Reid tacked on to this his amendment, which reads in part (it’s in Section 40304 of this 1,700 page bill):

If the Secretary [of the Treasury] receives certification by the Commissioner of Internal Revenue that any individual has a seriously delinquent tax debt in an amount in excess of $50,000, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport….

Hmm….

The Editor of the Congressional Quarterly publication’s Senate Watch, Niels Lesniewski, insists that such a thing has legal precedent:

Existing law says that passports may not be reviewed for applicants owing child support in excess of $2,500.  So I think supporters would say: “You can’t get a passport if you don’t pay child support, but you can get a passport if you don’t pay taxes?”

But this is a red herring.  The deadbeat parent has been found in open court to be guilty of the arrearage.  An IRS filing of notice, which is all Reid’s amendment requires, is not even an accusation of tax evasion, as Constitutional Lawyer Angel Reyes points out, much less an actual conviction for tax evasion.  Reyes expanded on the point:

It takes away your right to enter or exit the country based upon a non-judicial IRS determination that you owe taxes.  It’s a scary thought that our congressional representatives want to give the IRS the power to detain US citizens over taxes, which could very well be in dispute.

Our Bill of Rights’ 3rd, 4th, 5th, 6th, and 7th Amendments each carry very a strongly implied right to due process, and the 14th Amendment makes that right explicit.  But, then, as the Progressive opinionist, Ezra Klein, has already pronounced, the Constitution isn’t binding on anyone.

This is a bad amendment, and one marvels at the cynicism of the Progressive Senators in attaching such a wholly irrelevant amendment to what is, at bottom, an attempt at a jobs bill.  If they really believed in the legitimacy of this concept, they’d put it into a separate bill of its own and bring it to the floor for open debate.

One marvels further, though, at the margin of passage: this bill passed out of the Senate on a 74-22 vote.  There are entirely too many RINOs in the Senate.

Our Government at Work

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This time, it’s Homeland Security, and its move to confuse and then steal from, an American family, that is hard at work.  The present case involves a couple and their two-year-old daughter traveling from George Bush International Airport in Houston, TX, to Addis Ababa, Ethiopia, the wife’s city of birth and a cash-and-carry city, where they planned to stay for two months visiting her family.  At the airport, TSA agents confiscated every dollar the family had on them because they were confused both about what constituted “currency” in the agents’ eyes and were uncertain about the amount of money they had on them and in their luggage.

Their case wound up in Federal District Court for the Southern District of Texas; here are some excerpts from District Judge Lynn N. Hughes’ ruling [emphasis mine]:

The government presented no evidence—none—that the Joneses intended to evade the reporting requirements.  Kyle told Hernandez that he did not know the amount of money he was carrying.  Saying “I do not know” is not a deliberate failure to report.  After Hernandez insisted on an answer, Kyle said that he would have to guess.  Guessing is not a material omission or a misstatement of fact—certainly not one the government can use to steal the money.

and

These public servants sought to earn credit with their agency by collecting money.  Some of it is returned to the agency—like justices of the peace whose pay is derived directly from the fines they impose. They focused on bureaucratic imperatives—not their duties to the public and law.

and

A lack of leadership at the agency allowed this.  Its mission statement—which none of the officers could recall at the trial—is to serve the American public with vigilance, integrity, and professionalism.  They displayed none of these.  The agency says that integrity is its cornerstone; that its officers are guided by the highest ethical and moral principles.  A gang of armed security officers bullied this family—a family who cooperated with the officers to their detriment.  Our homeland will not be secure by these rascals.

While Mr and Mrs Jones, the parents in this traveling family, might be derided for not knowing how much money they had with them, this is neither illegal, evidence of illegality, nor actionable under any other guise of interest to Homeland Security.  Nevertheless, on being pressed to fill out (legitimately required) forms declaring the amount of money the Jones were taking out of the US based solely on their guess, their money then had been seized in its entirety, without allowing the Jones to correct their error.  It’s also important to note that the amount stolenseized was over $31,000 and that the recommended penalty for an actual evasion of this type is a forfeiture of $500-$5,000.

Judge Hughes ordered the Jones’ full $31,131, the amount seized, returned to them and she awarded the Jones court costs and legal fees.  I would have added to that the $1,500 the Jones were required to pay for a new airline ticket, this assault having forced them to miss their scheduled flight; the cost of the hotel room they were forced to get while waiting for that next-day flight; and the value of their time consumed by this wholly unnecessary delay.

The complete opinion is short and to the point, and it can be found here.

Note, though, that despite my (and others’) pontificating on this, it’s not Homeland Security’s fault.  After all, as DHL Secretary Janet Napolitano said in another case,

Look, everybody has a role to play. … And if people don’t want to play that role, if they want to travel by some other means, of course that’s their right. This is the United States….

A Bill Under the Commerce Clause

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Some view the Constitution’s Commerce Clause as granting to the Congress expansive powers of Federal control of intrastate activities, individual activities, and even the thoughts of private citizens.  A supine Supreme Court has supported this view.  Wickard v Filburn, for instance, agrees that Congress can regulate privately carried out agricultural activities, and NLRB v Jones & Laughlin extends that to manufacturing activity that occurs wholly within a state—an activity that prior to Jones & Laughlin was considered separate and distinct from any commerce-related process.  With these rulings in mind, a Federal District judge, Gladys Kessler, has even held that this Commerce Clause control extends into the private thoughts of individual citizens (Mead v Holder).

The line of reasoning for this startling evolution can be summarized in Chief Justice Charles Evans Hughes’ majority opinion in Jones & Laughlin: activities that are intrastate in character (which rather tautologically includes those individual activities) are regulable under the Commerce Clause when they bear a “close and substantial relation to interstate commerce.”

Agriculture is such an intrastate activity when the processes of field preparation, sewing, growing, and harvesting are considered separately, and separately from any subsequent process of bringing that harvest to market.  Likewise, manufacturing is such an intrastate activity when the processes of gathering equipment and locally procured supplies, the assembly of those supplies into finished product, and their in-plant inspection are considered separately, and separately from any subsequent process of bringing those finished products to market.  However, since Wickard and Jones & Laughlin hold such activities to bear a “close and substantial relation to interstate commerce,” it is reasonable to hold that any activity that impacts those processes of agriculture and manufacturing also bear a “close and substantial relation to interstate commerce.”  Such activities here plainly include union strikes and boycotts.

Accordingly, I propose a simple, one-page bill (no 2,000+ pages for me) that bans union strikes and boycotts, citing the Commerce Clause as the constitutional authority for such a ban.

It would be interesting to hear the Commerce Clause objections to such a bill.  What rationalizations might be offered?

The Fed’s Change of Subject

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Richard W. Fisher and Harvey Rosenblum, President and CEO and  Executive Vice President and Director of Research, respectively, of the Federal Reserve Bank of Dallas, wrote in Wednesday’s WSJ op-ed pages,

The phrase “too big to fail” is misleading. It really means too complex to manage. Not just for top bank executives, but too complex as well for creditors and shareholders to exert market discipline. And too big and complex for bank supervisors to exert regulatory discipline when internal management discipline and market discipline are lacking.

This is a cynically Alinsky-esque change of subject.  “Too big to fail” and “too complex to manage” are entirely separate concepts.  While there is some overlap—size does contribute to complexity—”too big to fail” is a purely political concept created to justify increased government interference in the private management of private enterprises.  “Too complex to manage” is at once a management and an economic concept.  It’s the managers who cannot keep up with the complexities of their enterprise (or, in fact they can; government has nothing legitimate to say here), and it is a free market economy that will demonstrate and react to the overcomplexification in a wholly appropriate manner: the truly too complex, and so poorly managed, enterprises will fail.

The proof of the political purpose of “too big to fail” is in that phrase “too big and complex for bank supervisors to exert regulatory discipline.”  But they add to that proof:

TBTF is a misnomer in another way. The phrase creates the impression that these banks cannot fail. … Suffice it to say, institutions holding one-third of U.S. banking system assets did essentially fail in 2008-09….  They were quasi-nationalized—bailed out….

Oh, and

…TBTF banks…contributed to reducing the impact of the Federal Reserve’s accommodative monetary policy.

The typical Progressive meme: it’s not my fault; it’s that other guy’s fault.  Never mind that the Fed’s “accommodative monetary policy” not only was, and is, not necessary, the inflation threat the Fed is creating with this policy is enormously and increasingly dangerous.

They also write, dismissively, that while principles (e.g., of “market capitalism”) count, economic performance also counts.  They use that superpositioning to justify government pressure to break up enterprises that the Fed (not the free market) considers too big.  In doing so, they ignore the fact that it is free market principles that maximize the capacity for performance.  They ignore the fact that while concentration can cause severe dislocation when the concentrated entities fail, the bankruptcy system of our particular free market system works very well.  That bankruptcy system has a habit of breaking up too complex, and/or “too big” enterprises that have failed—Merrill Lynch comes to mind, which was reduced in size and acquired by another enterprise; as does Lehman Brothers, which was allowed to disappear altogether and its assets sold to a multiplicity of other enterprises; and AIG, which is undergoing breakup and shrinkage today.  And the bankruptcy produces results far faster than can the government—just look at how many of our nationalized banks, and car companies, still have significant government ownership positions.

Government has to run things.  The free market system has to be centrally managed.  Our existing bankruptcy system has to be bypassed.  All this because government Knows Better.  A free market can’t be allowed to make its own decisions; that’s too messy for our antiseptic Progressive patróns.  And too far beyond their control.