Category Archives: Economics

In Praise of Judicial Activism

Posted on August 14, 2012 | Comments Off on In Praise of Judicial Activism

Judicial activism is a dirty word in politics. It shouldn’t be. Over at The American Spectator, David Deerson and I try to rehabilitate a term that has been sorely missing from a passive judiciary. Judges shouldn’t legislate from the bench, of course. But nor should they let the other branches’ excesses stand:

No matter which party is in power, Congress and the White House often overstep their constitutional authority. From the political speech restrictions in McCain-Feingold to the Washington, D.C., handgun ban, examples of the Supreme Court striking down unconstitutional legislation are not hard to find. That is the kind of judicial activism we need more of.

Of course, we’re not that optimistic about this changing anytime soon:

No president would nominate a judge who might nullify his administration’s signature achievements. No senator would vote to confirm a judge who might strike down an important bill that she wrote. There is a selection bias favoring judges who will defer to the political branches of government. As Georgetown University law professor Randy Barnett told The Wall Street Journal, “If I want to bet actual money, I’ll always bet the court upholds anything Congress does.”

Read the whole thing here.

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Posted in Law, Public Choice

Regulation of the Day 226: Hot Dog Carts

Posted on August 10, 2012 | Comments Off on Regulation of the Day 226: Hot Dog Carts


Nathan Duszynski is 13 years old and lives in Holland, Michigan. His stepfather has multiple sclerosis. His mother has epilepsy. Neither is able to work.

To help out with his family’s expenses, Nathan started mowing lawns and soon saved up the $1,200 or so that he needed to buy a hot dog cart. That way he could make even more money.

The owner of a local sporting goods store was even kind enough to allow Nathan to set up shop in his store’s parking lot. But regulators shut Nathan down ten minutes after opening up shop for the first time. He had yet to sell his first hot dog. Turns out that food carts are illegal in Holland unless they’re connected to a brick-and-mortar restaurant.

Seeing as many cities across the country have unaffiliated food carts and no evidence of consumer harm, there can only be one explanation for Holland’s hot dog cart ban: rent-seeking. Restaurants don’t want to deal with the competition, so they convinced the government to do their dirty work for them.

Because of this rent-seeking, Nathan and his family are now homeless.

Our friends at the Mackinac Center have spoken with the family:

“Nate and I are now in a shelter,” Lynette Johnson said. “Doug can’t stay with us because he takes prescription narcotics to deal with his pain and the shelter does not allow him with those kinds of drugs.”

She said the situation has been stressful on the family. Lynette is afraid to be away from her husband in case she has a seizure.

Nathan has still been working hard. He’s selling hot dogs at private events, which is legal. But according to a local paper, it’s still difficult:

The cart is the only solid income the family can rely on, said Lynette. But the business is in jeopardy due to the family’s financial situation…

The reason, she said, is that each event requires a new health department permit, and the cost varies between West Michigan municipalities. The last event, a private wedding reception on Friday, cost about $200 for the permit.

Coupled with food and supply cost, they barely broke even, she said.

Nathan now has a web site for Nathan’s Hot Dog Hut, where you can make a donation via PayPal. Nathan writes, “If you believe in free enterprise and can help with the costs of my fight with City Hall and the losses we have sustained so far please donate what you can to help us and those others in similar situations by clicking the button below.”

Here’s hoping Nathan wins his fight. Everyone has the right to make an honest living — even if their competitors would rather they didn’t.

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Posted in Public Choice, regulation, Regulation of the Day

The Case for a Repeal Amendment

Posted on August 10, 2012 | Comments Off on The Case for a Repeal Amendment

Nobel-winning economist James Buchanan distinguishes between two kinds of analysis: pre-constitutional and post-constitutional. Pre-constitutional analysis focuses on the rules of the game; post-constitutional analysis focuses on how people behave under those rules once they’re in place. The current rules of America’s political game result in 3,500-plus new regulations every year, trillion-dollar deficits, and other major problems.

The solution isn’t to put different people in charge. The status quo’s incentive structures guarantee that the results will stay about the same, no matter who is in power. Instead, real reform can only happen at the institutional level. Change the rules of the political game in a way that gives politicians an incentive to keep their worst impulses in check. If you want different results, you need different rules.

Over at Real Clear Policy, my colleague David Deerson and do a bit of pre-constitutional analysis on one rule change that could do a lot of good:

[A]dd a repeal amendment to the U.S. Constitution, one that would allow two-thirds of state legislatures to repeal any federal law or regulation they see fit. A repeal amendment would enhance federalism and make democracy more meaningful to citizens by bringing it closer to them.

When most people think of the government’s separation of powers, they think of the three branches of the federal government—executive, judiciary, and legislative. In a federalist system such as ours, the separation of powers between the federal government itself and the states is just as important.

Read the whole thing here.

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Posted in Economics, Public Choice, Publications

There Is Nothing Left to Cut

Posted on August 8, 2012 | Comments Off on There Is Nothing Left to Cut


The federal government has a Davy Crockett Resource Advisory Committee.

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Posted in regulation, Spending

Milton Friedman Turns 100

Posted on July 31, 2012 | Comments Off on Milton Friedman Turns 100


If he were still alive, Milton Friedman would be celebrating his 100th birthday today. I saw him speak a couple times, and even met him once. I was fresh out of college and reading Capitalism and Freedom at the time. He and his wife and co-author Rose were kind enough to sign my copy.

Friedman earned a reputation as a demanding professor, and he deserved it. But he and Rose were both very kind in person. Despite the vast gulf between their accomplishments and mine, they listened carefully to what I had to say and took me seriously. And it was clear they weren’t just doing it to be nice. That’s just how they were. They treated everyone that way.

That basic kindness animated the Friedmans’ political philosophy, as well as how they argued for it. Their critics who haven’t bothered with the ideological Turing test argue that the Friedmans were stooges of the rhetorical one percent; it was actually the bottom one percent that was their main concern.

Even a quick look at the data show that where economies are relatively free, the people are rich. The further a country moves away from free markets, the poorer its people tend to be. When the empirical data are that overwhelming, advocates for the global poor have no choice but to argue for economic and political freedom. It was for them that the Friedmans argued for economic and political freedom, and against the draft and drug prohibition.

In the two-minute clip from an interview with Phil Donahue below (click here if the embed doesn’t work), Friedman makes that point clearly and eloquently. But note that he also does it with a smile, and with humor. Milton Friedman’s ideological friends and foes alike have much to learn from his substance as well as his style. It’s a shame he’s not around to teach us in person, but he left behind an extensive body of work that, for a second-best option, will do quite nicely.

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Posted in Economics, Great Thinkers

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Politics in a Nutshell

Posted on July 27, 2012 | Comments Off on Politics in a Nutshell

Peter Boettke describes Gordon Tullock’s public choice approach on p. 134 of his new book, Living Economics:

Politics is about concentrating benefits on well-organized and well-informed interest groups, and dispersing costs on the unorganized and ill-informed masses.

That’s precisely why non-political solutions to social problems are desirable wherever possible. When the universal human impulses of self-interest, rationality, and maximizing utility find themselves in an institutional environment like Congress or City Hall, corruption and special privilege are the results almost every time.

Markets respect no special interest. This is why failing companies swarm to Washington; government exists to cater to them.

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Posted in Economics, Public Choice

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CEI Podcast for July 24, 2012: Unfunded Mandate Reform

Posted on July 24, 2012 | Comments Off on CEI Podcast for July 24, 2012: Unfunded Mandate Reform


Have a listen here.

Unfunded mandates are a way for Congress to increase government’s size and scope without increasing the deficit. Of course, this just means that state governments and the private sector are footing the bill instead. Research Associate David Deerson explains why past efforts to rein in unfunded mandates failed, and why new legislation that Congress is set to vote on this week could help.

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Posted in CEI Podcast, Economics, Public Choice, Spending

Time to Reform Unfunded Mandates

Posted on July 23, 2012 | Comments Off on Time to Reform Unfunded Mandates

When deficits are high, Congress has even more incentive than usual to indulge in unfunded mandates. That way it can deliver the spending programs and other government goodies that voters like, and without adding to the deficit. Of course, this is because states and the private sector bear the burden instead.

Congress passed an Unfunded Mandate Reform Act back in 1995, but it is mostly toothless, and needs to be strengthened. Fortunately, help may be on the way, as Wayne Crews and I explain in today’s Washington Times:

During the last week of July and just before August recess, the House is likely to vote on H.R. 4078, a package of reforms called the Regulatory Freeze for Jobs Act of 2012.

Title IV of the package is H.R. 373, the Unfunded Mandates Information and Transparency Act of 2011, a bipartisan bill long championed by Rep. Virginia Foxx, North Carolina Republican. It would close some of UMRA’s loopholes. The biggest fix is that it would force independent agencies to comply with UMRA.

Another reform is that the Office of Management and Budget would no longer review the rules. That task would move to OMB’s Office of Information and Regulatory Affairs, which specializes, albeit imperfectly, in cost estimates. That office likely is better suited to the job, given a long history of being tasked with regulatory review responsibility, but it doesn’t have much veto power.

Read the whole piece here. Our colleague David Deerson has also blogged about unfunded mandate reform here and here.

 

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Posted in Economics, Political Animals, Spending

The Nirvana Fallacy Explained in One Picture

Posted on July 13, 2012 | Comments Off on The Nirvana Fallacy Explained in One Picture


Art Carden strikes again. Original image here.

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Posted in Economics, General Foolishness

Innovation Is Cool

Posted on July 13, 2012 | Comments Off on Innovation Is Cool

A small food company in Canada has grown an apple that doesn’t turn brown after being sliced.

Not everyone thinks it’s a great idea. A representative for incumbent apple growers told The New York Times, “We don’t think it’s in the best interest of the apple industry of the United States to have that product in the marketplace at this time.”

This translates roughly to, “We think consumers will prefer this product to ours, and will hurt our bottom line. Therefore regulators should keep these things off the market for us.”

I’d rather consumers decide on the non-browning apple’s merits, thank you.

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Posted in Innovation, Public Choice