Overbooking and Passenger Compensation after the United Fiasco

In the aftermath of the April 9 incident in which police dragged a passenger from a United plane, New Jersey Governor Chris Christie has “asked the Trump administration to stop overbooking until we set rules how the airlines can conduct themselves.”

For the sake of airline passengers, let’s hope the federal government does not take Christie’s request seriously. Continue reading “Overbooking and Passenger Compensation after the United Fiasco”

The United Debacle, Government Interference, and Contract Ambiguity

A shocking April 9 video shows Chicago Aviation Security Officers violently dragging a screaming and bloodied passenger off of a United Airlines (subcontracted) flight to make room for United crew. United CEO Oscar Munoz said the man, David Dao, was “re-accommodated”—a Newspeak term widely ridiculed and condemned. As of the evening of April 11, Dao remained hospitalized for his injuries. By the end of that day Untied stock had fallen by over a billion dollars.

Why did this happen? The three main problems are overreaction by the parties involved, government interference in the airline industry, and ambiguities in United’s terms of service. Let’s take those issues in turn. Continue reading “The United Debacle, Government Interference, and Contract Ambiguity”

Krannawitter’s Elegant Solution to Regulatory Overreach

Thomas Krannawitter has a straight-forward but far-reaching proposal for reforming America’s regulatory state: Turn every federal regulatory agency into an advisory group, with the power to advise congress but not pass or enforce regulations.

Thomas Krannawitter
Thomas Krannawitter has a straight-forward but far-reaching proposal for reforming America’s overreaching regulatory state: Turn every federal regulatory agency into an advisory group, with the power to advise Congress but not pass or enforce regulations.

Krannawitter, formerly a professor at Hillsdale College and Colorado Christian University, presented his idea, and the reasons behind it, September 14 at Liberty on the Rocks, Flatirons. He is also working on a book on the topic.

Krannawitter began with a brief history of American governance. The Constitution, he said, is based on “wide, deep, mutual civic trust”—that is, trust in our fellow citizens as they pursue their own rights-respecting affairs—and deep distrust of those who wield government power. Hence, government officials, according to the Founders, should be bound by the “chains of the Constitution.”

By contrast, the regulatory state that arose early in the Twentieth Century was based on the notion that unelected, “scientific” regulators should act unchecked to chain the citizenry. Now government “regulates every aspect of human life conceivable,” Krannawitter said.

Next Krannawitter explained why, in his view, the regulatory state is unconstitutional. The Constitution vests legislative power solely in Congress, he explained, and it does not authorize Congress to delegate that power to any other entity. Although widely rejected today, his view is consistent with the original understanding of the Constitution. As legal scholar Rob Natelson writes in The Original Constitution, the Constitution “did not authorize Congress to delegate its functions to administrative agencies or to anyone else.”

But, as Krannawitter admitted, today many people simply don’t take the Constitution seriously. (I’d say that most people care about aspects of the Constitution but interpret it very loosely to fit their policy goals.) So it is crucially important to emphasize to the American people the practical case for reining in the regulatory state, he suggested.

Krannawitter made a convincing case given the short time he had to make it. (I expect his book will go into much greater detail.) Here I’ll highlight some of his main points:

  • Regulations act on the presumption of guilt. The regulated must continually prove to the regulators that they are in compliance with the regulations, or else they are treated as guilty of violating them.
  • Regulatory agencies overturn the separation of powers, incorporating legislative, executive, and even judicial powers in a single body.
  • Regulations tend to entrench the status quo and cut off innovative approaches to solving problems.
  • Whereas tort law partners responsibility with property rights, regulations often act to shield the regulated from responsibility—because they can give the excuse that they were in “regulatory compliance.”
  • Regulatory agencies tend to emphasize problems that they can “fix” so they can expand their budgets. “They’re not rewarded for success, they’re rewarded for failure,” Krannawitter said.
  • Unlike private business owners, who have a stake in the success or failure of their businesses, regulators have little or no personal stake in the consequences of their actions.

Krannawitter made a few missteps in his presentation. For example, he claimed that “regulations never drive prices down.” Usually regulations act to drive up prices, but not always. Anyway, whether regulations tend to drive prices up or down is peripheral to the question of whether regulations are appropriate. The proper purpose of government is to protect people’s rights, not to enforce or “encourage” (by force) bureaucratically approved price levels.

On the whole, though, Krannawitter did a fine job presenting an enormously complex topic in its essentials. Although his proposal for fixing the problem is politically impossible given the current class of Congressional “leaders,” and although it would not be a panacea even if passed, it is well worth promoting if only to encourage discussion about the many, deep problems of America’s regulatory state. Turn regulatory agencies into advisory committees. It’s a start.

How Shipping Regs Hamper International Free Trade

Image: Grolltech
Image: Grolltech

Recently an acquaintance of mine described to me his job. From what I can tell, his job is to help people fill out bureaucratic paperwork for shipping goods to and from Canada (and I think other nations). I was shocked by this: Don’t we have free trade with Canada?

Practically speaking, we don’t have free trade with any other nation; we have heavily regulated trade. Recently a friend of mine, Robert Anthony Peters, came to Denver to attend a freight conference; he helps run a shipping company in Arizona. He posted some remarks to Facebook about what he learned (republished here with permission; note that I have not independently verified his claims):

Main take away from the Freight Workshop: the US federal government has an even longer reach than most people realize. Export law verges on insanity. Its reach is further geographically and temporally than most would think. Did you know that if you send an email through your company server that is based in another country, it falls under export law? Did you know that if you sent an email to a foreign national in the US, it falls under export law? Did you know that if you shipped something outside the US, you are liable for its end use? That means, if you sent shoes to someone in Poland and for whatever reason, they were transmitted to Iran, you can be held liable for that. On top of this, every freight shipment that leaves the US must be intricately documented for every item for both US census purposes and foreign customs (yes, foreign governments are by and large even worse!) For example, you would have to record something like, adult male t shirt cotton polyester blend made in Mexico valued at $10. Imagine moving your house to another country and doing this for EVERY item! Of course, some may share my feelings that this is none of anyone’s business what you and another party may exchange. But there is a far greater, far more global issue at play.

Every regulation serves to reduce the amount of exchange that occurs. All compliance comes at a cost of time and money. The amount of paperwork that is generated and the number of people that are used in the process to identify, process, assess, and clear is myriad. All of this serves to create more difficulty and greater expense and will reduce the amount of trade that goes on. Even for Keynesians, there are implications, as less money will circulate. If free market economics is right about anything at all, it is that trade and exchange make all parties better off. We need more exchange, not less. That is why these regulations and the tariffs that accompany them are making us all poorer then we could be, yet another man-made tragedy from which the world suffers.

Venezuela Shocker: Price Controls Cause Shortages

Image: Wikimedia Commons
Image: Wikimedia Commons

You mean that government cannot arbitrarily lower the prices on food and household items without disrupting the supply of those items? Who would have thought it? No one except every real economist who’s ever lived. But since when have socialists been concerned with such things as economic realities?

Not only has Venezuela imposed price controls, it now seeks to “cure” shortages by cracking down on shoppers. “Venezuela’s food shortage is so bad the country is mandating that people scan their fingerprints at grocery stores in order to keep people from buying too much of a single item,” Fox News reports.

The Guardian offers some background: “In 2008, when there was another serious wave of food scarcity, most people blamed shop owners for hoarding food as a mechanism to exert pressure on the government’s price controls, a measure that former president Hugo Chávez adopted as part of his self-styled socialist revolution.” (Nicolás Maduro is the current president.) Of course, price controls spawned a black market where common items go for exorbitant prices.

Today’s left continues to pretend that they can strip away people’s economic liberties without harming their civil liberties. The fact that Venezuela now wants to fingerprint grocery shoppers to counter the “hoarding” caused by price controls is merely the latest reminder that economic liberties are civil liberties.

Denver’s “Affordable Housing” Mandates Made Housing More Expensive

Image: Complete Colorado
Image: Complete Colorado

As Randal O’Toole writes for Complete Colorado, Denver’s so-called “affordable housing” ordinance has made housing in Denver less affordable for most people. As O’Toole explains, when the city forces developers to sell some of their residential units for below the cost of production, developers have to make up the funds by charging others more. And people who buy the “affordable” units are saddled with absurd restrictions, so they’re not really such a good deal. I suspect that the ordinance also results in a net loss of development, as it’s less attractive to do business in a city whose politicians and bureaucrats are openly hostile to your efforts to earn a profit.

Hickenlooper: Bloomberg “One of the Greatest Mayors” in History

Image: Wikimedia Commons
Image: Wikimedia Commons

Is it any wonder that Colorado Democrats are taking marching orders from Michael Bloomberg? Colorado Governor John Hickenlooper write a “fawning letter” to Bloomberg and called him “one of the greatest mayors, not just in New York, but in the history of the United States.” See Todd Shepherd’s report for Complete Colorado for details. Bloomberg is one of the nation’s most prominent nannyists who advocates gun bans, restrictions on soda, and more. Of course, Bloomberg’s replacement, Bill de Blasio, is a far greater enemy of liberty.

Boulder County Puts “Little Liz” Out of Work

Image: Wikimedia Commons
Image: Wikimedia Commons

Boulder County bureaucrat Carrie Haverfield thinks there’s an “ick factor” to carnival goers having their photos taken with “Little Liz,” “a 29-inch-tall woman from Haiti,” so the county shut down the sideshow, the Longmont Times-Call reports (hat tip to Complete Colorado). As fair coordinator Laura Boldt told the paper, the move puts Liz “out of work and unable to pay any medical or living expenses for those three days.” Apparently Boulder hates little people and wants them to be poor. But why is this even a political issue? “The county owns the fairgrounds,” the Times-Call notes. How about we get government out of the entertainment business? (Although obviously Boulder bureaucrats would make excellent clowns.)

The Government’s Insane War on Small Magnets

Image: Ari Armstrong
Image: Ari Armstrong

To follow up on the story, “Zen Magnets Stands Up to Abusive Government Agency“: Shihan Qu of Zen Magnets issued a statement yesterday on why he’s standing up to the abusive, rights-violating Consumer Product Safety Commission. Qu points out (among other things): “There are products that may be reasonably expected [to sometimes] cause harm, even if used responsibly. Alcohol, tobacco, trampolines, skateboards, ATVs, skis, snowboards. Things with warnings that say ‘Using this is inherently dangerous.’ And then there are products that are only dangerous if misused. This is the category that every other product falls under, including magnet spheres. Anything can cause harm if misused.” But the CPSC is arbitrarily persecuting the makers of magnets, because it can.

Is Homeland Security Enforcing Emissions Standards?

Image: Wikimedia Commons
Image: Wikimedia Commons

The story is so bizarre I have a hard time believing it’s true: A North Carolina couple reports the Department of Homeland Security seized their imported, $60,000 Land Rover because it might not have complied with emissions standards for imported cars, as Steve Ohnesorge reports for WBTV (hat tip to Heritage). According to the report, some sellers of import cars doctor the VIN numbers to make them appear older; emissions standards vary by the car’s age. Is the story true? If it is, why is Homeland Security enforcing emissions standards? Come to think of it, why do we even have emissions standards? Regardless, wasn’t there a more graceful way for the government to handle the alleged problem? Sheesh!