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Recent Policy Studies
Natural Resources, Energy, Environment, & ScienceBy Ronald Bailey, Reason FoundationReason, 02/20/2013
In his State of the Union speech, President Barack Obama warned that Americans must take steps now to cut “our emissions of the dangerous carbon pollution that threatens our planet.” To justify these efforts, he appealed to the “overwhelming judgment of science,” pointing chiefly to recent weather extremes in the United States as evidence for the urgency of action. Skeptics “can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence,” Obama announced, but the president clearly does not. “Heat waves, droughts, wildfires, floods—all are now more frequent and more intense.” Is he right? This article takes a closer look at those trends the president cites. After that, it assesses what Obama wants to implement as a response.
Budget & TaxationBy Eileen Norcross, Mercatus CenterTestimony, 02/20/2013
As Montana considers how to best stabilize its pension systems and provide the state’s public workers with sustainable and reliable retirement benefits, the first step toward this goal should be a market-valuation of the plan’s pension liabilities. Only then can lawmakers decide how to best steward workers’ and taxpayers’ resources and structure retirement benefits for its employees.
Crime, Justice & the LawBy Ted Frank, Manhattan InstituteLegal Policy Brief, 02/20/2013
On February 27, 2013, the Supreme Court will hold oral arguments in American Express Co. v. Italian Colors Restaurant. Like the Court’s 2011 decision in AT&T Mobility v. Concepcion, Italian Colors involves the intersection of two mechanisms for resolving legal disputes not easily handled by high-cost individually filed lawsuits: arbitration and class action litigation.
Budget & TaxationBy Richard A. Epstein, Hoover InstitutionDefining Ideas, 02/20/2013
“Incomes Flat in Recovery, But Not for the 1%” reports Annie Lawrey of the New York Times. Relying on a recent report prepared by the well-known economist Professor Emmanuel Saez, who is the director for the Center of Equitable Growth at Berkeley, Lawrey reports that the income of the top 1 percent has increased by 11.2 percent, while the overall income of the rest of the population has decreased slightly by 0.4 percent. Instead of deploring the gains of the 1%, we should collectively be pleased by increases in income at the top, so long as they were not caused by taking, whether through taxation or regulation, from individuals at the bottom. Unfortunately, Lawrey and Saez are in favor of taxation and regulation that would make both the 1% and 99% poorer.
Economic GrowthBy Victor Davis Hanson, Hoover InstitutionDefining Ideas, 02/20/2013
There are reasons for pessimism about the world in general and America in particular, which is more divided politically than at any period since the turbulent 1960s—torn apart by fresh arguments over the Second Amendment, the debt, the federalization of health care, and proposed amnesty for illegal aliens. Still, the general despair does not mean that there are not reasons for optimism, especially when we compare our lot with that of other countries. The United States still enjoys the most robust demography of the major Western industrial nations. Its Constitution ensures a political stability not found elsewhere. But more importantly, recent revolutionary trends in the United States have either gone unnoticed or been taken largely for granted. Yet these underappreciated developments offer hope for an American renaissance unlike any in our recent memory—mostly despite, rather than because of, the federal government that currently borrows nearly $.40 for each dollar it spends.
Budget & TaxationBy Steve Conover, American Enterprise InstituteThe American, 02/20/2013
The debt ceiling law as it stands today places a fixed-dollar limit on the level of federal debt. It originated a century ago as a reasonable limit on borrowing for specific (micro) programs, but gradually morphed into an absurd limit on the entire (macro) budget. For decades it has been a self-imposed financial weapon of mass destruction, and its only effect so far has been to enable political opponents of the party holding the White House to grandstand for the cameras. As is typical for Buffett, his remedy is simple and elegant: we should gauge our “ability to handle” the debt by considering it in relation to the size of the economy; i.e., by paying attention to the debt-to-GDP ratio instead of the current fixed-dollar limit.
Budget & TaxationBy Jagadeesh Gokhale, Cato InstituteWhite Paper, 02/20/2013
This paper updates earlier calculations of generational accounts and fiscal and generational imbalance measures based on the Congressional Budget Office’s (CBO) March 2012 Budget Outlook Update. It finds that the fiscal imbalance embedded in the federal government’s current law (Baseline) policies amounts to 5.4 percent of the present value of future U.S. gross domestic product (GDP), or 11.7 percent of the present value of future payrolls. However, given past precedents, federal current-law policies are unlikely to be implemented.
Budget & TaxationBy Andrew T. Young, Cato InstitutePolicy Analysis, 02/20/2013
While no one seriously debates the long-run costs associated with exploding public debt, the evidence suggesting significant short-run benefits of stimulus spending is weak. Studies suggesting that stimulus spending is effective assume that current economic activity does not affect fiscal policy. This assumption is questionable and, most important, the studies’ results are very sensitive to it. Alternatively, studies using a narrative approach based on historical and contemporary accounts of U.S. military buildups to identify government spending shocks find that the short-run effects of stimulus spending are small. These latter studies are grounded in historical reality and are thus more compelling.
Economic and Political ThoughtBy Jonathan Rauch, American Enterprise InstituteThe American, 02/20/2013
Why is there a National Cotton Council but no National Anti-Cotton Council? In 1965, a young University of Maryland economist named Mancur Olson (the first name is pronounced “mansir”) formulated a crucial part of the answer in his book The Logic of Collective Action. To organize a group is costly for the organizer in money, time, and energy. Constituencies with narrow, focused interests can surmount that problem more easily than can constituencies with broad, diffuse interests, because the broader group will have more of a problem with free riders: people who sit back and let others do the hard work of organizing while expecting eventually to partake of the booty. “In short,” wrote Olson, “the larger the group, the less it will further its common interests.” This article discusses whether Olson was right or wrong and whether this problem has increased or decreased with the increase of new technology.
Budget & TaxationBy Amity Shlaes, American Enterprise InstituteThe American, 02/20/2013
It is hard for modern economists to concede that that recipe, the policy recipe for the early 1920s advocated by Coolidge and Harding, yielded growth on a scale to which we can aspire today. As early as the 1930s, Coolidge’s reputation and way of thinking began their decline. Collectives and not individuals became fashionable. Sensing such shifts, Coolidge at the end of his life spoke anxiously about the “importance of the obvious.” Perseverance, property rights, contracts, civility to one’s opponents, silence, smaller government, trust, certainty, restraint, respect for faith, federalism, economy, and thrift: these Coolidge ideals intrigue us today as well. After all, many citizens today do feel cursed by debt, their own or their government’s. Knowing the details of his life may well help Americans now turn a curse to a blessing or, at the very least, find the heart to continue their own persevering.
Regulation & DeregulationBy Roger Bate, American Enterprise InstituteHealth Policy Outlook, 02/19/2013
According to the US Food and Drug Administration (FDA), pharmaceutical companies in developing countries are increasingly falsifying data about the quality of their medicines. Moreover, a 2010 Pew survey shows that 54 percent of Americans distrust Indian drugs, and 70 percent distrust Chinese drugs. Although the FDA has stringent rules requiring generic-drug manufacturers to prove that their products work as well as the originals, many overseas manufacturers fail to ensure quality control after receiving approval from the FDA. Indian producers in particular strive to reduce costs by substituting cheaper ingredients or skimping on good manufacturing practice, and often patients and well-informed pharmacists alike will overlook the flaws. As Indian products are increasingly imported to the United States, quality concerns will rise. One possible solution is to enact sanctions against companies that fail to provide quality products.
Budget & TaxationBy Christopher J. Conover, American Enterprise InstituteArticle, 02/19/2013
The president's aggressive State of the Union message (as expected) amplified what some had called the most full-throated defense of liberalism since FDR. It's certainly not news that the president heavily prefers entitlement spending over defense spending. But in light of his proposed reductions in defense spending and sharp increase in health spending under Obamacare, I was curious to see just how much he's tipping the scales in favor of health spending relative to his predecessors. To answer this question, Christopher Conover grabbed the most recent available numbers from the Office of Management and Budget.
International Trade/FinanceBy Walter Lohman, Derek Scissors, The Heritage FoundationIssue Brief, 02/19/2013
The U.S. should worry a little less about short-term trade policy problems—there are plenty of those already—and more about long-term gains. With sustained free-market reforms, India offers a source of huge long-term economic gain. One step in a corresponding long-term approach to maximize this gain would be to invite India into the Asia–Pacific Economic Cooperation (APEC) forum.
Economic and Political Thought
Constitutional Conservatives in the Progressive Era: Elihu Root, William Howard Taft, and Henry Cabot Lodge, Sr.By Johnathan O’Neill, The Heritage FoundationMakers of American Political Thought, 02/19/2013
Elihu Root (1845-1937), William Howard Taft (1857-1930), and Henry Cabot Lodge, Sr. (1850-1924) were leading members of the Republican Party during the Progressive era of the early 20th century. They strove to preserve the core tenets of American constitutionalism from the largest ambitions of Progressivism. In this sense they were not so much makers of American political thought as champions and defenders of the nation's principles amid the Progressive zeal to abandon them. Their efforts, though admittedly imperfect, were the initial roots of the American conservative movement.
National SecurityBy Kim R. Holmes, et al., The Heritage FoundationHeritage Lecture, 02/19/2013
The Anti-Ballistic Missile Treaty of 1972 prohibited the United States and the Soviet Union from testing or deploying national missile defense systems. Three months after 9/11, President George W. Bush gave notice to Russia of the U.S. intent to withdraw from the treaty. Ballistic missile technology was proliferating at an alarming rate, and Washington did not want to leave Americans vulnerable to such attacks. Without being bound by the treaty, engineers and scientists could finally innovate, and they have achieved significant advances in land- and sea-based defenses in the interim. On June 13, 2012, The Heritage Foundation invited nine national security experts to reflect on the circumstances that led to the U.S. withdrawal from the treaty a decade earlier.
Information TechnologyBy Paul Rosenzweig, David Inserra, The Heritage FoundationIssue Brief, 02/14/2013
In his State of the Union address, President Obama announced that he had signed an executive order (EO) on cybersecurity. The order uses a standard-setting approach to improve cybersecurity. However, such a model will only impose costs, encourage compliance over security, keep the U.S. tied to past threats, and threaten innovation. While the EO does take some positive steps in the area of information sharing, these steps are hamstrung by the EO’s inability to provide critical incentives such as liability protection. As a result, this order could result in few modest changes, or it could result in substantial negative effects.
Budget & TaxationBy J.D. Foster, The Heritage FoundationIssue Brief, 02/14/2013
Steady, sustained deficit reduction would not hamper the recovery and may well provide modest near-term support for growth by whittling away at the debilitating uncertainty restraining growth. President Obama and Congress should work toward cutting spending in 2013 as part of a credible plan to balance the budget in 10 years in full confidence that the economy would benefit thereby.
LaborBy Richard A. Epstein, Hoover InstitutionDefining Ideas, 02/14/2013
This past Wednesday, thousands of families have been dislocated by the decision of Local 1181 of the Amalgamated Transit Union to initiate a school bus strike. Some 8,800 drivers and matrons, whose incomes average about $35,000 per year, went on strike, shutting down about 70 percent of the City’s 7,700 school bus routes. The dispute centers on New York Mayor Michael Bloomberg’s effort to introduce a system of competitive bids that would allow the City to find some lower-price providers. In short, the solution to the current problem is not for both sides to return to the bargaining table. Short-term fixes will not undo the long-term structural mistakes. The correct solution is to shut that bargaining table down and give the City the power to negotiate with the unions with the same degree of freedom that private employers have.
Budget & TaxationBy Richard A. Epstein, Hoover InstitutionDefining Ideas, 02/14/2013
The latest fiscal cliff has led the President and Congress on a manic quest to find new sources of revenue for a federal government that is congenitally unable to live within its means. That extra revenue can come in only two ways. We can raise tax rates, clamp down on tax deductions, or do some combination of the two. Also, the president’s redistributive effort to limit charitable tax deductions will hurt the poor—and everyone else.
Budget & TaxationBy Richard A. Epstein, Hoover InstitutionDefining Ideas, 02/14/2013
The golfer Phil Mickelson, who often has his name in the sports pages for his athletic feats, has recently grabbed the headlines for an unconventional reason—he has politely protested California’s new maximum tax rate of 13.3 percent. For Mickelson, who pulls down $45 million per year, that tax generates about $6 million in added revenues for a cash-hungry California; he can then deduct 40 percent of that $6 million in California taxes from his federal income tax. That tax two-step leaves him about $3.6 million short. A three-fold program is thus in order. First, progressive taxation should be abandoned in favor of a flat income or consumption tax. Second, there should be strict limitations on the ability of states to impose onerous restrictions on land use development. Finally, the exit right (moving to another state) offers a simple, low-cost way to supply partial protection against excessive taxes and regulation for current residents.
Foreign Policy/International AffairsBy Joel Rayburn, Hoover InstitutionDefining Ideas, 02/14/2013
In the days of the Ottoman Empire, British diplomats referred to the Arabic-speaking territories of the empire as “Turkish Arabia.” It was these Arabic-speaking lands that Britain and France, in the aftermath of the First World War, divided into the modern Arab states we know today: Syria, Iraq, Jordan, and Lebanon. Those arbitrary colonial boundaries have endured for the better part of a century, but the people within them have never fully acknowledged the legitimacy of the lines that British and French officials drew for them.
Budget & TaxationBy Charles Blahous, Hoover InstitutionDefining Ideas, 02/14/2013
The worthy goal of expanding health insurance coverage was one of the motivations for passing the Affordable Care Act (ACA). The ACA however lacks sufficient savings provisions to finance such a coverage expansion without severely worsening the fiscal outlook. A fiscally responsible coverage expansion will continue to elude us unless state and federal lawmakers do everything yet possible to reduce the projected cost of the ACA’s provisions before they become fully effective in 2014.
Economic and Political ThoughtBy James Huffman, Hoover InstitutionDefining Ideas, 02/14/2013
As appealing and self-evident as it seemed at the time, one person/one vote was too simple to be right for a vast and diverse republic. Sooner or later, the Electoral College will probably give way to a national popular vote for president. But rural America was set on a path of inexorable decline a half century ago when the Supreme Court rejected the plea of rural communities for representation as communities in our extended republic.
EducationBy Erwin H. Epstein, Hoover InstitutionHoover Digest, 02/14/2013
The area of research that most focuses on how schooling affects national security, economic development, wars, revolutions, and peace is comparative education, a field that applies the theories and methods of history and the social sciences to understanding international issues of education. Though having strong roots in the nineteenth century, comparative education grew up in the twentieth, guided in good measure by two of the field’s giants: Isaac L. Kandel (1881-1965) and William W. Brickman (1913–1986). The Hoover Institution Archives houses the main collections of documents from both of these influential scholars.
ImmigrationBy Gary S. Becker, Hoover InstitutionHoover Digest, 02/14/2013
Many arbitrary rules are used to limit the number of immigrants, leading to excess demand to immigrate. When companies have excess demand for their products (for example, when fewer cars are offered for sale than people want to buy), companies raise the price they charge. Conversely, as in recent years, amid a greater supply than demand, the car companies have lowered their prices, offering zero percent financing and cash discounts. This is how markets operate. Think of immigration as a market. Based on the market concept, the price to immigrate to many rich countries is too low (zero usually), so governments should try to find a price that equilibrates the desired number of immigrants and the number who want to enter. Doing this, countries will get more of the type of immigrant they hope to attract—and keep.
Health CareBy Hadley Heath, Independent Women's ForumPolicy Focus, 02/14/2013
One important component of the Affordable Care Act (ObamaCare) is the creation of statewide “exchanges” or organizations that will oversee the sale and purchase of health insurance, mainly for people outside of the employer-sponsored insurance market. However, the exchanges are not the solution to our existing health care problems, and in fact are simply another step in the bad direction of further complicating and constricting our health system. Real reform would mean giving states – and individuals – more freedom to make their own choices.
Budget & TaxationBy Emily Wismer, Independent Women's ForumPolicy Focus, 02/14/2013
A growing economy is the real key to increasing tax revenue. Throughout history when tax rates go down, tax revenues tend to increase as people become more productive, the economy grows, and the tax base expands. Tax reform should focus on broadening the tax base by eliminating distortionary deductions and reducing penalties on behavior we want to encourage, such as working and investing. Yet tax reform alone will not close our deficit or right our economy. The key to deficit reduction is to cut spending, and reform our nation's financially unsound entitlement program so they can be there for those who need them in the future.
Retirement/Social SecurityBy Charles Blahous, e21: Economic Policies for the 21st CenturyCommentary, 02/14/2013
Many federal policy makers are aware that the Social Security program faces a substantial financing shortfall requiring correction. This would involve either increasing program taxes or slowing the growth of benefits – most likely both, given the size to which the shortfall has already grown in addition to the fact that neither party enjoys sufficient political power to impose its preferred solution on the other. Social Security tax increases and benefit growth restraints are both politically unattractive; but at least one or the other is necessary to balance the program’s books if we intend to maintain Social Security as a self-financing program.
Monetary Policy/Financial RegulationBy George Selgin, Cato InstituteCato Journal, 02/14/2013
Should the euro begin to disintegrate, the occasion, for all the disruption and damage it must cause, will at least renew the prospect for implementing the Hayekian alternative. That, to be sure, is a rather meager bit of silver by which to line a very large, dark cloud. Yet the ability to choose freely among competing currencies remains Europeans’ best hope for a monetary regime that is both stable and sustainable.
Crime, Justice & the LawBy Carlos Pestana Barros, Ari Francisco de Araujo Jr., Joao Ricardo Faria, Cato InstituteCato Journal, 02/14/2013
This article analyzes conflicts in Brazil involving landless peasants and the violence that frequently results from their invasion and occupation of privately owned rural land for the period 2000–08. Land ownership in Brazil is overwhelmingly and historically characterized by large, family-owned estates. The unequal and inequitable allocation of land together with weak institutions, weak markets, and low asset endowment may make land reform a low priority. In the absence of effective land reforms, these factors may lead to the occupation of land by the landless poor peasants by violent means. In such an environment, land-related conflicts are common and have been previously analyzed in several studies, with a particular focus on Africa and Latin America.
Budget & TaxationBy Melissa Yeoh, Dean Stansel, Cato InstituteCato Journal, 02/14/2013
This article provides the first examination of the relationship between public expenditures and labor productivity that focuses on municipalities, rather than states or nations. We use data for 1880–1920, a period of rapid industrialization in which there were both high levels of public infrastructure spending and rapid growth of productivity. We use a simple Cobb-Douglas production function to model labor productivity in the manufacturing sector, letting total factor productivity depend on “productive” public expenditure by city governments—that is, on public spending that may raise the productivity of labor and encourage human capital accumulation.
Monetary Policy/Financial RegulationBy Adrian Urbaczka, Roland Vaubel, Cato InstituteCato Journal, 02/14/2013
For a long time, the International Monetary Fund has been criticized for subsidizing its credits. According to Walter Bagehot (1873), a lender of last resort ought to “lend freely but at a penalty.” Otherwise moral hazard results. Bakker and Schrijvers (2000) and the Saxton Report (2002) have presented estimates of the subsidy element in IMF lending. In this article, we present an improved and updated calculation. We also present evidence on another criticism of IMF policy: that it fails to enforce compliance with policy conditions. The IMF claims that it cancels its programs if debtor governments do not honor their policy commitments. We show that cancellations due to noncompliance tend to be followed by new programs very soon.
Economic GrowthBy R.W. Hafer, Cato InstituteCato Journal, 02/14/2013
This article arises from two related research programs. One examines the relationship between financial development and economic growth. The basic conclusion from this work is that countries that experience greater financial development also experience faster rates of economic growth and higher levels of income per capita. The other line of research investigates the institutional sources of economic growth. In addition to physical and human capital, researchers have considered a number of institutional factors as diverse as colonial background and religious preferences.
EducationBy Joanne Jacobs, American Enterprise InstitutePolicy Brief, 02/14/2013
This policy brief is the second in a series of in-depth case studies exploring how top-performing charter schools have incorporated civic learning in their school curriculum and school culture.
Economic and Political ThoughtBy Amy A. Kass, Leon R. Kass, American Enterprise InstituteHistorical Notes, 02/14/2013
This book discusses the origins and traditions of George Washington’s Birthday Holiday. It also provides a short biography as well as what made George Washington great. It concludes with an assessment of Washington and why he should be remembered.
Natural Resources, Energy, Environment, & ScienceBy Robert Mendelsohn, Nicholas Z Muller, American Enterprise InstituteBook, 02/14/2013
America has struggled to strike the proper balance between environmental stewardship and economic well-being when regulating air pollution. Economics Professors Nicholas Muller and Robert Mendelsohn suggest a path-breaking solution to this conundrum: an original and efficient regulatory model that they contend would lead to both clearer air and millions in industry savings.
Foreign Policy/International AffairsBy Sasha Gordon, American Enterprise InstituteReport, 02/14/2013
The trend in Yemen over the past two years has been to rely increasingly on local groups to govern outlying areas of the country, particularly as poor security has eroded Sana’a’s ability to govern its peripheries. The formation of tribal committees comprised of local fighters is part of this trend, and it too is likely to become more prevalent. Looking into the future, the unavoidable question is: can the central government rely on Yemeni tribal structure, in the form of local militias, to protect the vulnerable areas outside the capital? Judging from the experience of the past year, the answer is no. Rather, the trend is moving in the opposite direction – toward devolving security across Yemen’s peripheries.
Economic GrowthBy Nicholas Eberstadt, Hans Groth, Judy Twigg, American Enterprise InstituteReport, 02/14/2013
This essay is based on interviews over the past two years with a variety of subject-matter experts in Russia and on extensive background conversations with US and European professionals currently working with Russian colleagues in these areas. It explores the parameters of international partnership with Russia in areas involving human capital. Is there still a compelling logic driving such international collaboration with Russia, given its increasingly hostile political climate? Do Russia’s own challenges affect its potential contribution to international collaboration? Is it possible, through collaboration, to help Russia address its human capital crisis? How could we construct politically viable partnerships that move beyond the outdated (and perhaps never appropriate) US-Russia assistance paradigm of the 1990s? And, finally, even beyond overarching political considerations, does it make sense to ask these questions, given that Russia has ample resources to tackle these problems?
National SecurityBy Thomas Donnelly, Phillip Lohaus, American Enterprise InstituteReport, 02/14/2013
This paper will present a series of arguments for increased and sustained funding for the F-35 Lightning II Joint Strike Fighter. Beyond question, the program is the key index of weapons modernization for US forces for at least the coming decade, so much so that it will also be a reliable indicator of America’s commitment to maintain global military preeminence. There are many positive reasons why this is so—the sheer size of the F-35 fleet would make it the centerpiece of any large-scale conventional air campaign; its reconnaissance and strike capabilities and ability to act as a “node” in a larger “network” of joint systems make it much more than a stealthy tactical aircraft; and its durability and ease of maintenance will create a capacity for large-scale, “everyday” stealth.
Monetary Policy/Financial Regulation
Bad History, Worse Policy: How a False Narrative about the Financial Crisis Led to the Dodd-Frank ActBy Peter J. Wallison, American Enterprise InstituteBook, 02/14/2013
In his new book, Bad History, Worse Policy: How a False Narrative about the Financial Crisis Led to the Dodd-Frank Act, Peter Wallison argues that the Dodd-Frank Act—the Obama administration’s sweeping financial regulation law—will suppress economic growth for years to come. Based on his essays on financial services issues published between 2004 and 2012, Wallison shows that the act was based on a false and ideologically motivated narrative about the financial crisis.
Budget & TaxationBy Nicole Gelinas, Manhattan InstituteCity Journal, 02/14/2013
Despite Governor Cuomo’s attempts to wring as much money as he can from Washington for storm repair and prevention, federal funding won’t be enough to indemnify New York fully against future hurricanes. It follows that Cuomo—along with Mayor Bloomberg and his would-be successors—must ask themselves: How much is protecting New Yorkers from storm surges worth? Is it worth getting a handle on New York’s public-employee costs, so that local and state governments, spending less money on union contracts, can spend more on infrastructure? Is it worth investigating why MTA capital projects cost so much and take so long? That leads to the real lesson to draw from the superstorm. Sandy and its aftermath weren’t departures from workaday concerns. They were simply another manifestation—a deadly one—of the problems that plague New York every day.
Crime, Justice & the LawBy Kirk C. Jenkins, Washington Legal FoundationLegal Opinion Letter, 02/14/2013
Iskanian involves a collision between Concepcion and a pre-Concepcion decision of the California Supreme Court, Gentry v. Superior Court. In Concepcion, the U.S. Supreme Court held that the Federal Arbitration Act (FAA) preempted California’sDiscover Bank rule, which held that arbitration clauses barring class arbitration were unconscionable. In Gentry, decided four years before Concepcion and squarely based on Discover Bank, the California Supreme Court instructed lower courts to invalidate arbitration agreements barring class arbitration whenever—based on a four-factor test—the court concluded that individual actions would offer only random and fragmentary enforcement of the wage-and-hour provisions of the California Labor Code. Depending on the Supreme Court’s ultimate decision, Iskanian could represent a thawing of the California courts’ hostility to the U.S. Supreme Court’s pro-arbitration decision in AT&T Mobility LLC v. Concepcion, as Evan M. Tager and Kevin S. Ranlett wrote in a WLFLegal Opinion Letter last year—or an unfortunate doubling-down on that hostility.
Crime, Justice & the LawBy Victor E. Schwartz, Phil Goldberg, Cary Silverman, Washington Legal FoundationLegal Opinion Letter, 02/14/2013
Can a product manufacturer be subject to liability for a competitor’s product? American tort law has always said, “No.” It does not matter if the products are identical. Companies are not to be their competitors’ keepers. Nor are they to be insurers of their competitor’s products. Nevertheless, last month, the Supreme Court of Alabama overturned this fundamental of tort law. It held that a manufacturer of a brand-name prescription drug can be subject to liability even when a plaintiff alleges that he or she was harmed by a generic drug made by the brand-name manufacturer’s competitor.
Crime, Justice & the LawBy Beth Z. Shaw, Washington Legal FoundationLegal Opinion Letter, 02/14/2013
There are two questions presented in the CLS en banc order. First, what test should the court adopt to determine whether a computer-implemented invention is a patent ineligible "abstract idea"; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea? Second, in assessing patent eligibility under 35 U.S.C. sec. 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for sec. 101 purposes?
EducationBy The Friedman Foundation, Friedman Foundation for Educational ChoiceSchool Choice Issues, 02/14/2013
“The ABCs of School Choice” is the most comprehensive guide to every private school choice program in America, showcasing the voucher, tax-credit scholarship, education savings accounts, and individual tax credit/deduction programs currently operating in 21 states and Washington, D.C. “The ABCs of School Choice” provides policymakers, advocates, researchers, and reporters data on each program’s funding levels, eligibility rates, and participation numbers. The 2013 edition also features personal stories of the students, parents, and schools that benefit from school choice along with “Friedman Feedback” on ways states can expand each program to eventually fund all children, a vision first established by the late Milton Friedman.
Economic GrowthBy Nicholas Bloom, Fraser InstituteFraser Alert, 02/14/2013
Policy conflict and fiscal cri sis in the United States and Europe have spurred concerns about policy uncertainty and its economic effects. Many policymakers, business people, and the media suggest that the political crisis in Washing- ton is leading firms and consumers to postpone hiring and spending decisions, stalling the recovery from the 2007-2009 recession. This essay seeks to investigate this assertion by answering three questions. First, is economic policy uncertainty high in the US and Canada? Second, if so, is this damaging the economy? Finally, what are the prospects for future policy stability and economic growth?
LaborBy Raymond J. LaJeunesse, Federalist SocietyEngage, 02/14/2013
After the 2008 election of President Barack Obama and Democrat majorities in both houses of Congress, labor organizations were confident that the “Employee Free Choice Act” (EFCA)—popularly called the “Card-Check Bill”—would be enacted. EFCA would have made union organizing easier, by among other things, requiring employers to recognize unions without a secret-ballot election supervised by the National Labor Relations Board (NLRB or Board) if a union obtained signatures on union-authorization cards or a petition of a majority of the employees in an appropriate bargaining unit. However, despite President Obama’s support for EFCA, for a number of reasons organized labor was unable to overcome a threatened Senate filibuster in 2009 and 2010, and EFCA became a “dead letter” when Republicans took the House and made significant gains in the Senate in the 2010 elections. This paper analyzes union organizing and the NLRB under the Obama Administration.
The Constitution/Civil Liberties
The America Invents Act May Be Constitutionally Infirm if It Repeals the Bar Against Patenting After Secret Commercial UseBy Ron Katznelson, Federalist SocietyEngage, 02/14/2013
The America Invents Act (AIA) is perhaps the most sweeping and consequential patent legislation since 1870. It contains a provision that will become effective on March 16, 2013, but its constitutional implications have yet to be discussed. This paper analyzes the constitutionality of the new conditions for patentability set forth in the recently passed AIA.
LaborBy Amelia W. Koch, Jennifer McNamara, Laura Carlisle, Federalist SocietyEngage, 02/14/2013
The ability of employees to proceed collectively under the Fair Labor Standards Act (FLSA) is a well-settled right. So, too, is the employer’s right to negotiate for arbitration of employment disputes. A judicial clash between these two principles has emerged with class/collective action waivers in the employment context. This article addresses the current split in the federal courts over the legality of class/collective action waivers in employment agreements and analyzes the historical development of the competing rights to collective action and arbitration in hopes of anticipating the direction federal courts will take going forward. Though the Supreme Court has not weighed in on the debate, at least one case sitting on its doorstep could provide an opportunity to examine the tension between its twin commitments to collective actions and arbitration.
Regulation & DeregulationBy Robert T. Miller, Federalist SocietyEngage, 02/14/2013
This article examines two recent cases in the Delaware Court of Chancery addressing the Revlon duties of directors when the company’s financial advisor has a conflict of interest related to the proposed business combination transaction.
The Constitution/Civil LibertiesBy Gail Heriot, Alison Somin, Federalist SocietyEngage, 02/14/2013
A brief look at the Thirteenth Amendment might suggest that it has rather limited application in today’s world. And today there has been a growing movement in both academia and the halls of Congress to use the Thirteenth Amendment’s Section 2 to address a variety of social ills thought to be in some way traceable back to slavery. This movement has had its greatest recent success with the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act (HCPA). In passing that law, Congress relied solely on its Section 2 constitutional authority for its ban on crimes motivated by race and color. In this essay, we discuss some issues presented by a broad conception of Section 2. We also survey the literature calling for legislation based on a broad conception of Section 2 and briefly note that conception’s potential to be a double-edged sword.
LaborBy Hans Bader, Federalist SocietyEngage, 02/14/2013
This article discusses the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., as well as two subsequent pieces of legislation, the Lilly Ledbetter Fair Pay Act of 2009 and the Paycheck Fairness Act. The examples given in this article are at odds with the assumption of many supporters of the Paycheck Fairness Act and the Ledbetter Act that pay disparities are simply the result of gender bias or sexism.
Natural Resources, Energy, Environment, & ScienceBy Richard A. Samp, Cory L. Andrews, Federalist SocietyEngage, 02/14/2013
This paper analyzes the FDA’s “Park Doctrine” for prosecutions against corporate officials under the Federal Food, Drug, and Cosmetic Act.
Health CareBy Don King, Timothy S. Jost, Federalist SocietyEngage, 02/14/2013
The essay is divided into four sections. Section I briefly describes the effects that policies enacted prior to the Affordable Care Act (ACA) (pre-ACA) have had on health care prices and expenditures. Section II summarizes the likely effects that major ACA provisions will have on prices and expenditures. Section III outlines an approach to health care reform that would lead to greater individual ownership of health care funds and increase each person’s options for health insurance and medical care. Section IV describes how these latter reforms may be more effective than comprehensive insurance at increasing access to care for low-income, high-risk, and older Americans.
Budget & TaxationBy Robert M. Costrell, Jeffery Dean, Education NextEducation Next, 02/14/2013
In this study, we examine the Bureau of Labor Statistics data to compare the costs to districts for teacher health insurance with similar costs to private-sector employers. We find that insurance costs for teachers are 26 percent higher than they are for private-sector professionals, and this is partly explained by greater unionization in the public sector. We also examine data newly available from Wisconsin to quantify the impact of that state’s recent change in collective bargaining law: we find a reduction in district costs of 13 to 19 percent, the result of lower-cost policies and higher teacher contributions.