From Edward Snowden to Sgt. Sean Murphy

by Timothy Lutts
The Law and Crowd Behavior 

In Boston yesterday, Sgt. Sean Murphy, who leaked the bloody photos of Boston Marathon bomber Dzhokhar Tsarnaev to counter the glamorized image on the cover of Rolling Stone magazine, was placed on restricted duty.

Sean Murphy

What Murphy did was clearly illegal; in fact, the U.S. attorney’s office has called the release of the photos “completely unacceptable.” Murphy has already served a one-day, unpaid suspension and he’s in the midst of another five-day unpaid suspension. After that, he’ll be on desk duty until an internal investigation is complete.

But Murphy is being treated like a hero, and the release of the photos is being treated as almost a necessary evil in the fight against terrorism.

That bothers me, and here’s why.

First, Murphy illegally appropriated his employer’s property and used it to counter the legal actions of a tax-paying American company. And Murphy’s employer is not just any old company; it’s the Massachusetts State Police, whose mission is to uphold the law. Murphy did the opposite. He abused his position.

Granted, Murphy leaked the photos because he had a strong personal conviction that the terrorist should not be glamorized. And luckily for him, there’s widespread support for what he did, not only from other law enforcement people, but also from the public at large; police and firefighters are among the most respected of professionals, and Dzhokhar Tsarnaev is without a doubt guilty and deserving of a very harsh sentence.

But it’s pretty certain that Tsarnaev is going to get justice anyway; we don’t need Murphy breaking the law to get the proper outcome.

Second, and this applies to the bigger picture, the war against terrorism appears to be evolving into an “us-versus-them” battle, where the dynamics of group behavior overrule individual rational thought. I wrote about this in reference to the wave of “Boston Strong” sentiment that ignored the incompetence and the overreaction of the FBI in its pursuit of the bombers. And that groupthink is clearly alive and well today, as Bostonians lionize the lawbreaking lawman. As a mob, they don’t care about individual rights, due process or privacy; they just want to beat the bad guy. And as in any group, the bigger the mob, the more justified they feel in their actions.

When such groupthink is focused on sports teams, as it is with the Red Sox vs. Yankees rivalry, it’s fairly (but not totally) harmless. But when it enters the domain of law and order, and the passion of the crowd drowns out the rational thought of the individual, we risk trading away our individual rights as the crowd pursues swift justice. And that’s not a good trade.

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Meanwhile, there’s Edward Snowden, who left the U.S. on May 20 and has spent his days since working to preserve his personal freedom while sheltering first in Hong Kong and then in Moscow.

Edward SnowdenLike Murphy, Snowden broke the law by appropriating his employer’s property and distributing it publicly. And like Murphy, Snowden had a strong personal conviction that he was doing the right thing. In short, he thought the American people should know how much data the NSA was amassing without their consent and that there should be a public discussion on the issue.

But unlike Murphy, Snowden was acting against the brotherhood of lawmen. So while Murphy has been supported by his fellow lawmen—and there are many thousands of them—Snowden has been supported only by the far less vocal community of people who value privacy and freedom above the force of law. And the conversation that Snowden hoped to start? It’s barely got off the ground.

 

Curious Massachusetts Regulations

by Timothy Lutts

Last month my oldest daughter got married to a wonderful guy, and after the ceremony, my wife and I hosted a reception in our backyard.

fireworksThere was food, drink and dancing, and everybody had a great time. Plus, after it got dark, a bit after nine o’clock, we lit off fireworks. Luckily, the cops didn’t come. If they had, I’d assumed they’d just issue a warning; after all, we were on private property and not hurting anyone. And I’ve done this private fireworks thing several times before, and haven’t gotten in trouble yet.

But I shouldn’t even have to worry about breaking the law, and here’s why. In 46 states in this country, owning and using fireworks is just as legal for adults as driving a car and drinking alcohol, two behaviors that are far more dangerous.

The four exceptions are New York, New Jersey, Delaware and Massachusetts.

Maine used to belong to that group, but legalized sales began on Jan. 1, 2012. Now, everyone in Maine who used to drive to New Hampshire to buy fireworks can buy closer to home, which not only means more Maine jobs but also more tax revenue—much more than expected!

In fact, while the state’s experts had estimated that fireworks stores would generate about $120,000 a year in sales taxes, in reality they generated $380,000 (for the 12-month period ending May 31.)

I see no reason Massachusetts shouldn’t be next. Until then, I’ll keep picking up my fireworks while I’m in New Hampshire.

BEWARE THE MICROWAVES!

Moving on, I noticed this most curious Bill in the Massachusetts Senate recently, aimed at removing from society the great risks from that scourge known as the microwave oven.

Bill S.113

SECTION 1.  Notwithstanding any general or special law to the contrary, the office of consumer affairs and business regulations shall establish minimum safety requirements for all microwave ovens sold and operated in the commonwealth including but not limited to the following:

(i) a microwave oven must not be large enough to be able to fit an infant child or small animal into;

(ii) a microwave oven must not operate at more than 500 watts;

(iii) all microwave ovens sold in the commonwealth must be equipped with a motion sensor in the oven designed to detect a living person or animal and immediately turn off the cooking mechanism;

(iv) all microwave ovens sold in the commonwealth must pass a drop test to ensure no leakage of radiation;

(v) all microwave ovens in the commonwealth must be registered and equipped with a locking device;

(vi) any microwave oven purchased on the internet to be operated in the commonwealth must conform to Massachusetts regulations;

(vii) no microwave oven may be sold at a yard sale or flea market;

(viii) only one microwave oven permitted per residence;

(ix) any residence equipped with an oven is prohibited from possessing a microwave oven;

(x) anyone under the age of 18 is prohibited from operating a microwave oven;

(xi) all microwave ovens sold in the commonwealth must only be done so by a licensed dealer; and

(xii) a buyer of a microwave oven must sign a document at time of sale affirming they know and understand the requirements herein.

That’s it. No explanation of WHY such strict regulations are deemed necessary, and no explanation of the possible effects of these regulations.

So I dug a little, eventually emailing Senator John Keenan (a Democrat) of Quincy, who filed the bill (though not exactly), and asking for an explanation.

Here is the reply from his able aide, Alejandro Alves.

“Timothy,

The bill you ask about was filed by request, on behalf of Mr. Donald Kusser, a citizen residing in Quincy and a constituent in the Senator’s district.

In Massachusetts, every citizen has a right to propose legislation and have their elected representatives consider their proposal.  This is commonly referred to as the “Right of free petition” and is a feature of government unique to Massachusetts.  A bill is presented and labeled “By Request” when the elected member neither favors nor opposes the bill, but agrees to present an idea on behalf of a constituent.

The bill relative to microwave ovens originated in this manner.  Mr. Kusser approached the office with a clearly formed policy idea, and with a bill which he himself had prepared.  The question of microwave safety has not been a focus of legislative research in this office.  As such, I do not have much to offer in terms of “back story” to the proposal.  The matter is now in the hands of the committee members to whom the bill has been assigned.  They will research the matter as needed, and report on the bill accordingly.

If you have any further questions on this process, please let me know.

Best,

Alejandro Alves

Office of State Senator John F. Keenan”

Obviously (to me), this bill deserves to die in committee, after they have a good laugh, especially over the regulation that would prohibit a home with an oven from possessing a microwave oven. And I’m wondering why Senator Keenan allowed himself to be a conduit for this bill. I’ll bet he owns a microwave oven, and I’ll bet he wouldn’t want to give it up!

As to Donald Kusser, he’s not a very visible guy, but what does stand out is his long-time advocacy for gun rights. Knowing that, it’s clear that this farce of a microwave bill is designed to parallel gun control regulations and in the process illuminate their foolishness (in his opinion) as well.

Well, I had a good laugh, and I hope you did, too. But considering the cost/benefit ratio of microwave ovens versus the cost/benefit ratio of guns, I think it’s a lousy parallel.

 

Eight Stupid Rules that are a Drag on the U.S. Economy

by Timothy Lutts

I originally wrote this list of eight stupid rules in September 2012, and the good news is that there has been some progress since then. The Federal government looks like it will finally make progress on immigration reform, and numerous states keep making progress on marijuana. (April 2013)

toomanylawyers#1. The American Rule 
Americans litigate far more often than the residents of other countries. In fact, the share of our economy spent on litigation is at least twice that of Germany, France, England and Northern Ireland, respectively. Why? Because our system of risks and rewards is screwed up. In every other country in the world, the loser pays at least part of the other party’s legal fees; this rule not only inhibits the filing of nuisance suits with little merit, it helps encourage law-abiding behavior. In the U.S., however, the American Rule encourages the filing of nuisance suits that clog the court system, rewarding above all the lawyers. That’s one reason the U.S. has more lawyers per capita than any other country; there’s a lawyer for every 265 Americans. And because the people who “run” the country in Washington are generally lawyers, there’s little incentive to change.

#2 The Continuing Federal Prohibition of Marijuana
Nearly a century ago, we learned that prohibiting the production, trade and consumption of goods that the public wanted diverted public money to a vast criminal black market that supplied that want—and gave us the likes of Al Capone, Machine Gun Kelly and Dutch Schultz (real name Arthur Flegenheimer). Today we have the same situation with marijuana. Polls show that 56% of Americans support legalizing and regulating cannabis (the tax revenue would be substantial) and 80% support medical marijuana. Yet an estimated $30 billion a year continues to go to law enforcement to fight the drug war, in the process perpetuating lawlessness on both sides of our Mexican border.

#3 The U.S. Postal Service Monopoly
Thanks to the Internet, the U.S. Postal Service has become a slow-motion train wreck. In response, the U.S.P.S. is cutting costs—by reducing service to its customers!—but doing nothing to address the main problem. And Congress just kicks the can down the road. The radical solution is to free the U.S.P.S. from its outdated mission and to allow free-market competition so we all get better service.

#4 Taxi Medallions
The conceit that city fathers know best how many cabs is the right number ignores the wisdom of the free market and perpetuates a market that makes medallions so expensive only professional companies can afford them … which raises costs for customers.

#5 Liquor Licenses
Ditto.

#6 Immigration Laws
Forget about the problems at the Mexican border. Ignore the Miami/Cuba issue. The real tragedy of our immigration laws is that we continue to force visitors who graduate from our excellent colleges to return to their home countries! This brain drain—particularly in math and science—weakens American competitiveness while strengthening other countries. Even Bill Gates couldn’t get Washington to act, though signs are that change will be achieved eventually.

#7 Ethanol and CAFE laws
The requirement that ethanol be added to gasoline has made corn—and everything made from corn—more expensive, while contributing to the global food crisis. And the labyrinthine Corporate Average Fuel Economy (CAFE) requirements have us forced us to drive smaller, lighter, less safe cars or trucks and SUVs (which remain exempt) rather than giving us the choice of keeping safer heavy cars and driving less. If these laws were repealed, and replaced by a simple national gas tax, we’d have cleaner air, cheaper food and more choices!

#8 The Farm Bill
Born as a helping hand for struggling small farmers, it now rewards the largest professional agricultural companies like Butterball, Tyson, Sunkist, Cargill and Monsanto. It encourages the production of junk food—through subsidies for sugar, corn and high-fructose corn syrup—thus contributing to the epidemic of obesity and diabetes in the U.S. And it includes the Supplemental Nutrition Assistance Program (formerly known as food stamps), which is a nice idea but poorly implemented; I recently stood in line behind a woman who used hers to buy a jug of wine. (It was made by Gallo, one of those large agricultural companies that know how to play the game in Washington.)

Now here’s a question for you.

Which of these eight “Stupid Rules” bothers you the most?

Which do you disagree on?

Net Neutrality

GUEST POST

by Chloe Lutts

This article on Net Neutrality was written by my daughter Chloe Lutts in August 2010. As a child of the digital age, she summarized the issue far better than I did when I once tackled the subject, and her conclusions remain relevant today. (April 2013)

net neutrality, Internet routing paths

An Opte Project visualization of routing paths through a portion of the Internet

Keeping the Internet equally accessible to all, especially small content producers, is key to ensuring tomorrow’s inventors and entrepreneurs have the same opportunity to succeed as their predecessors. To me, that means passing a law to protect net neutrality, the principle that all Internet traffic should be treated equally, regardless of content or origin.

We have net neutrality now—Internet traffic isn’t sped up or slowed down, or blocked, based on what it is or where it came from. If you own a small business, your website loads at the same speed as your larger competitors’. This has allowed small and non-profit websites to stay competitive with those backed by giant companies, even as the Internet matured. And it has allowed for the rise of user-driven sites like Wikipedia and CouchSurfing, not to mention millions of blogs. However, net neutrality is not protected by law, and any one of the companies that control Internet traffic could abandon it at any time.

A recent “policy proposal” put forward by Google and Verizon is the first step toward an Internet where all traffic is not created equal. Though their proposal would only change things for mobile Internet service at this time, it confirms that the Internet’s gatekeepers are thinking about these issues, and that the time to act is now. The gatekeepers I refer to are Internet Service Providers, or ISPs, of which Verizon is one of the largest. ISPs are the companies that own the Internet cables coming into your house.

When you type a web address into your computer, or click on a link on a website, that request gets sent through your ISP’s cables, to the provider of the content you have requested, and the content gets sent back through the cables to your computer. Right now, that content travels through those cables at the same speed regardless of where it is coming from. Content from Amazon.com will travel through the cables at the same speed as content from your sister’s blog. However, ISPs currently have the very real option of treating some content differently from others.

One possibility is that ISPs could strike deals with content providers, like Google, to give their content preferential treatment, by delivering it faster than other content. That might not seem so bad: Verizon giving YouTube videos priority over other content probably wouldn’t affect how quickly you could load other sites, even if Verizon is your ISP. It would make YouTube videos load a little faster. However, that almost certainly would not be the end of it.

What happens when Vimeo, a YouTube competitor, realizes that YouTube’s videos are loading faster than its own? If they’re smart, they’re going to strike a similar agreement with Verizon and other ISPs, to give their own content the same preferential treatment as YouTube’s.  So now there’s two companies’ content being given preferential treatment, but other sites probably still load at just about the same speed.

Until 500 other companies come along, and say, hey, maybe we can get an edge on our competition by making our sites load faster. At this point, there are essentially two tiers of Internet traffic: There’s content from big companies, with lots of money, who can pay ISPs for preferential treatment. And then there’s content from individuals, like you, and non-corporate or non-profit entities, like Wikipedia and The Pirate Bay and universities, and just plain small websites that don’t have the money to pay ISPs for top-tier service.

This would be a tragedy, not just for users of those small and non-profit sites, but for everyone who ever had a dream of starting his own business on the Internet. As the founders of Google have said themselves, net neutrality is key to ensuring that the next two kids in a garage with an idea have their own chance at success.

Furthermore, prioritizing content from certain companies isn’t the only thing ISPs could do once they abandon net neutrality. They could also slow down or block some content entirely. That could be for pay, as with prioritizing YouTube content. For example, CNN.com could pay Verizon to speed up its content, and delay content from NBC.com. Or it could be for the ISP’s own benefit—Comcast, one of the largest ISPs, has a division called Comcast Interactive Media. Comcast Interactive Media owns movie ticket site Fandango.com, a social network called Plaxo, and a TV streaming site called FanCast.com that is similar to Hulu.

Comcast could easily deliver content from its own sites—Plaxo and Fandango and FanCast—faster than content from others. But the company could just as easily throttle, or even block, traffic from competing sites, like Hulu. Or, Comcast could just charge users extra for access to competing sites, while including its own sites in base-rate services. Not a member of Plaxo? How does an extra $10 a month for access to Facebook, MySpace and Linked In—let’s call it the “Social Networking” package—sound?

Finally, though profit incentives are the most likely reason for ISPs to take such steps, they might not be the only ones. Ideologically-motivated discrimination would be just as easy. If the New York Times publishes a story critical of Comcast, the ISP could easily block access to the story or slow down traffic to the site. An ISP with conservative management could just as easily block NYTimes.com altogether, or a liberal one could block Fox News.

The obvious argument against ISPs taking such steps is that they’d lose their customers. And that would certainly be true in some places. But in many other places, people have no or little choice of ISP. My last two apartments were served by Time Warner alone, and only in the last year have I had a choice: between Verizon and Time Warner. But many entire cities are served by a single ISP. And introducing competition isn’t easy, when it means installing new Internet cables under streets and in buildings.

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The Economics of Legal Marijuana

by Timothy Lutts

I originally wrote this in October 2009. Many U.S. states have come a long way since then but even more have done nothing. And the Federal government, sadly, remains deaf to the desires of its citizens, even though 52% of Americans now favor legalizing marijuana and 72% believe that government efforts to enforce marijuana laws cost more than they are worth. (April 2013)

On Saturday, Sunday and Monday, one week ago, here’s what happened.

On Saturday, the New York Times ran a story on the drug wars in Mexico, describing how the power of the criminal gangs often outweighs the power of the law enforcers.

It’s a big problem, and the violence has increased since President Felipe Calderon launched an army-led assault on the cartels soon after taking office in late 2006.  More than 14,000 people have died in drug-related violence in Mexico since.

Cannabis sativa, economics of legal marijuanaThe Mexican gangs, of course, are just trying to make a living by serving the demands of a market … in this case the market for marijuana and other illegal drugs in the U.S.

Recognizing this, the U.S. attempts to help.  It’s currently giving $1.4 billion to Mexico to provide training and equipment to security forces.  And last week it conducted a massive sting operation that netted more than 300 arrests in 19 states.  But none of the arrested were upper-echelon figures, and U.S. Attorney General Eric Holder admits the gangs are too entrenched within the political and economic fabric of Mexico for the arrests to deal a deathblow to the gangs.

On Sunday, the Boston Globe noted that it was the 78th anniversary of Al Capone’s conviction on tax evasion charges, for which he received an 11-year federal prison sentence.

Alphonse Gabriel Capone, of course, became rich by satisfying the public’s thirst for alcohol during Prohibition, the 14-year period in which the sale of alcohol was illegal in the U.S.

While meeting the demands of this market, Capone, like the Mexican drug cartels, became very powerful, stymied law enforcement, and killed people.  Today, we generally recognize the folly of prohibiting the sale of alcohol during that period.  Even though one-third of Americans choose not to drink today, we know that instead of trying to outlaw it, it’s better to regulate it and tax it.  Today, the U.S. government collects more than $9 billion per year from alcohol taxes; individual states collect even more.

Then on Monday, President Barack Obama instructed federal attorneys that they should no longer prosecute marijuana users in the 14 states that allow it for medical reasons, but should defer to state laws instead.

Can you connect the dots?

The plain truth is that the War on Drugs (a term first used by President Richard Nixon in 1969) has been a failure.  In fact, the term is no longer used by the Obama administration, which prefers treatment to incarceration.

Yet the U.S. (federal and states) will spend about $47 billion this year on drug enforcement, clogging our court systems and overcrowding our prisons, in many cases dooming young men to a life in the underclass.

In fact, the United States has a higher proportion of its population incarcerated than any other country in the world … and roughly 25% of our inmates are in there for drug offenses, usually possession.

So who benefits from this War on Drugs?

Organized crime, certainly.  According to the United Nations, drug trafficking is a $400 billion per year industry, equaling 8% of the world’s trade.

Also benefiting are arms manufacturers, the law enforcement industry, the prison industry and the legal industry.

And I don’t think we’re getting a good value for our $47 billion.  In fact, I think our efforts may be counterproductive, and that we should explore a more sensible route, the same one we use for alcohol and tobacco.

In short, legalize it, regulate it and tax it.

Legalization would quickly shrink that $47 billion annual cost of law enforcement to a small fraction of its present level.  In its place, we’d have federal quality control inspectors to keep tabs on the legal producers (thus reducing poisonings and overdoses).  Entrepreneurs would spring up out of the woodwork to become producers, and with the increased supply prices would fall to more reasonable levels.  Profits would drop.  And organized crime would soon be out of the business.

We’d have a more efficient legal system, and a more efficient prison system.  And we’d have a ready supply of legal marijuana for medicinal purposes (two-thirds of Americans are in favor of medical marijuana now).

And then we’d be able to tax it!  Every state in the country now taxes alcohol and cigarettes, and I think marijuana should be no different.  And how much would we collect from those taxes?

A 2008 study by Harvard economist Jeffrey A. Miron estimated that legalizing drugs would inject $76.8 billion a year into the U.S. economy–$44.1 billion from law enforcement savings, and at least $32.7 billion in tax revenue ($6.7 billion from marijuana, $22.5 billion from cocaine and heroin, the remainder from other drugs).  I’m not ready to argue for legalizing those harder drugs, but I do think a country as deep in debt as ours should stop giving money away on unproductive projects and start looking for positive cash flows.

Leading the way already is our country’s lifestyle pioneer, California.  This past July, 80% of Oakland, California voters chose to impose a tax of 1.8% on medical marijuana sales, which could bring the cash-strapped city nearly $300,000 next year.

And California Assemblyman Tom Ammiano, a Democrat from San Francisco, introduced legislation that if approved by the California Legislature, would put pot on the same legal footing as alcohol–legalizing its sale and having the state tax it.  Ammiano called it “simply nonsensical” to keep marijuana, the state’s top cash crop, unregulated and untaxed in light of the state’s massive financial problems.

The value of California’s marijuana crop is estimated at $14 billion annually. That’s almost twice the combined value of vegetables and grapes, the state’s second and third most-valuable crops.  Ammiano estimated passage of his pot legalization proposal could generate more than $1.3 billion for state coffers.

Finally, turning to our neighbor Canada, I found this:

“In a recent study for the Fraser Institute, Economist Stephen T. Easton attempted to calculate how much tax revenue the Canadian government could gain by legalizing marijuana.

The study estimates that the average price of 0.5 grams (a unit) of marijuana was $8.60 on the street, while its cost of production was only $1.70. In a free market, a $6.90 profit for a unit of marijuana would not last for long. Entrepreneurs noticing the great profits to be made in the marijuana market would start their own growing operations, increasing the supply of marijuana on the street, which would cause the street price of the drug to fall to a level much closer to the cost of production. Of course, this doesn’t happen because the product is illegal; the prospect of jail time deters many entrepreneurs and the occasional drug bust ensures that the supply stays relatively low. We can consider much of this $6.90 per unit of marijuana profit a risk premium for participating in the underground economy. Unfortunately, this risk premium is making a lot of criminals, many of them with ties to organized crime, very wealthy.

Stephen T. Easton argues that if marijuana were legalized, we could transfer these excess profits caused by the risk premium from these growing operations to the government:

“If we substitute a tax on marijuana cigarettes equal to the difference between the local production cost and the street price people currently pay–that is, transfer the revenue from the current producers and marketers (many of whom work with organized crime) to the government, leaving all other marketing and transportation issues aside we would have revenue of (say) $7 per [unit]. If you could collect on every cigarette and ignore the transportation, marketing, and advertising costs, this comes to over $2 billion on Canadian sales and substantially more from an export tax, and you forego the costs of enforcement and deploy your policing assets elsewhere.”

One interesting thing to note from such a scheme is that the street price of marijuana stays exactly the same, so the quantity demanded should remain the same, as the price is unchanged. However, it’s quite likely that the demand for marijuana would change from legalization. We saw that there was a risk in selling marijuana, but since drug laws often target both the buyer and the seller, there is also a risk (albeit smaller) to the consumer interested in buying marijuana. Legalization would eliminate this risk, causing the demand to rise. This is a mixed bag from a public policy standpoint: Increased marijuana use can have ill effects on the health of the population but the increased sales bring in more revenue for the government. However, if legalized, governments can control how much marijuana is consumed by increasing or decreasing the taxes on the product. There is a limit to this, however, as setting taxes too high will cause marijuana growers to sell on the black market to avoid excessive taxation.

When considering legalizing marijuana, there are many economic, health, and social issues we must analyze. One economic study will not be the basis of Canada’s public policy decisions, but Easton’s research does conclusively show that there are economic benefits in the legalization of marijuana. With governments scrambling to find new sources of revenue to pay for important social objectives such as health care and education expect to see the idea raised in Parliament sooner rather than later.”

Economically, I think legalization and taxation is a no-brainer.  The less easily defeated arguments come from people who argue that all drug use is bad (the old Puritan argument that drove Prohibition) or that marijuana is a stepping-stone drug.  In any event, Obama’s directive to stop prosecuting marijuana users in states that approve medical marijuana use is one small step on the road that should ultimately lead to legalization and taxation.  I have no doubt that it’s a very long road.  But the journey has begun.

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