Reflections  

Tourist trap — In the city of San Diego, hoteliers have successfully found a way to create their own $30 million slush fund without a vote of the public.

In the wake of the devastating wildfires in Southern California in 2003, public safety proponents sought to increase the transient occupancy tax twice in 2004, with high-profile ballot measures in March and November. The industry spent thousands of dollars to campaign against the efforts, stating that the tourism market was so sensitive to changes in room rates that the tax hike would turn away major conventions and thousands of summer tourists. After having successfully thwarted these government grabs on economic pretenses, they began to quietly develop plans for a "Tourism Marketing District," a benefit assessment district that charges a 2% gross room revenue tax on lodges with 70 or more rooms to fund "marketing programs to increase tourism and promote the City of San Diego." Unlike the transient tax, which would have been allocated to the city's general fund, this tax is kept in the hands of major motel and hotel owners to spend as they please. Approved by the mayor and the city council, the hoteliers have begun collecting their new slush fund this year, with estimated revenues at $30.4 million this fiscal year, rising to $37 million by fiscal year 2013.

In the meantime, city taxpayers will still continue to pick up a $4.3 million subsidy for the downtown Convention Center to provide "competitive" below-cost rental rates to major conferences and trade shows, as well as $8.8 million a year for the costs of the hotel industry's business association. — Vince Vasquez

The dismal campaign — Before the Indiana-North Carolina primaries, Hillary Clinton was expected to win Indiana by 5% and lose North Carolina to Barack Obama by only about 8%. But on Sunday before the election, Hillary made the mistake of offending a group of people who she thought were irrelevant.

You know the rest: Hillary barely won 1% more votes than Obama in Indiana and lost North Carolina by more than 14%. What seemingly innocuous group did Hillary offend? Economists! On ABC's Sunday morning show, George Stephanopoulos asked, in reference to her gas-tax holiday plan, "can you name an economist who thinks this makes sense?"

"I'll tell you what, I'm not going to put my lot in with economists," Hillary answered. "If we had a president who used all of the tools of the presidency, we would design it in such a way where it would be implemented effectively."

Apparently, economics is not one of the tools of the presidency, or at least of a Clinton presidency. Hillary proposed to "make the oil companies pay the gas tax." Yet most Americans know enough economics to realize that the oil companies would simply pass that cost onto consumers, thus saving people nothing. Or, seeing their profits decline, that the companies will invest less in future energy supplies, thus making oil prices rise even more.

H.L. Mencken famously said that "no one ever went broke underestimating the intelligence of the American people." But it is possible, just possible, that Hillary lost because she underestimates the intelligence of American voters. Maybe she should have pandered to economists. — Randal O'Toole

Antitrust but verify — Supporting free markets does not mean supporting the political and financial agendas of big business. Years ago, Joseph Schumpeter made the case that Fortune 500 executives are as bureaucratic and welfare-hungry as the worst statist hacks. For these reasons, some libertarians support antitrust law as a check against big business manipulations of market forces.

Other libertarians — Milton Friedman and Richard Posner come to mind — have rejected antitrust law as a tool that corporate interests game and manipulate to their advantage.

The on-again/off-again acquisition of internet search pioneer Yahoo! by software monolith Microsoft could be the next test of how well (if at all) antitrust law helps markets stay free.

At press time, the acquisition was on hold; Microsoft had walked away from the negotiations. But many of the smartest people in Silicon Valley and Seattle and New York predict that the deal will be done, eventually. They say that Yahoo! will try to find some other big deal to boost its flagging stock price . . .

but will eventually crawl back to Microsoft.

Any discussion of technology and antitrust invariably touches on Microsoft's own history with statist prosecutors. This history includes the decade-long legal trainwreck known as United States v. Microsoft. The case was a consolidation of various civil actions filed against Microsoft by the Justice Department and its equivalent agencies in 20 states; it alleged that Microsoft abused monopoly power in its handling of operating system sales and internet browser sales.

Government lawyers claimed that computer software was different than other kinds of consumer products and should be regulated more closely because, once a person commits to buying a particular operating system, he has to spend a lot of time and money to get out. They claimed that Microsoft abused its strong position in the operating system market to force people to "migrate" to "bundled" products they didn't necessarily want. They also claimed that Microsoft used the same tools to freeze other software companies out of the marketplace.

Microsoft countered that bundling Windows and Internet Explorer was the result of innovation and competition and that consumers benefited from essentially getting Internet Explorer for free. But Microsoft's senior managers didn't help themselves with the arrogant and uncooperative manner they displayed. The trial court judge would later write that Microsoft executives

proved, time and time again, to be inaccurate, misleading, evasive, and transparently false. . . . Microsoft is a company with an institutional disdain for both the truth and for rules of law that lesser entities must respect. It is also a company whose senior management is not averse to offering specious testimony to support spurious defenses to claims of its wrongdoing.

Who's a free-market advocate supposed to root for here?

In November 1999, the trial court ruled against Microsoft, concluding that its dominance of the operating system market constituted a monopoly and that Microsoft had taken actions to prevent competition in violation of the federal Sherman Antitrust Act. After considering various options, its suggested remedy was that Microsoft be broken into two separate units, one to produce operating systems and the other to produce software applications.

The verdict and suggested remedies were overturned on appeal. The case was sent back for retrial. Then George W. Bush was elected president and his Justice Department decided not to pursue the case. It settled the case on terms generally favorable to Microsoft.

Andrew Chin, a law professor at the University of North Carolina who assisted in drafting the trial court's original ruling, has written that the settlement gave Microsoft "a special antitrust immunity to license Windows and other 'platform software' under contractual terms that destroy freedom of competition." And Chin isn't alone in his opinion.

Milton Friedman warned that the antitrust case against Microsoft foreshadowed increasing government regulation of the tech industry. In early 1999, he told a group of technology executives:

When I started in this business, as a believer in competition, I was a great supporter of antitrust laws; I thought enforcing them was one of the few desirable things that the government could do to promote more competition. . . . I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didn't have them at all. . . .

[Y]ou will rue the day when you called in the government. From now on the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation.

If Yahoo! crawls back to Microsoft, watch out for increases in government antitrust activity and regulations. And the claims that "software is different" and needs to be managed more closely by the feds will be echoing around the Beltway. — Jim Walsh

Father knows best? — Christopher Hitchens, in a Slate.com column, has pointed out that Reverend Jeremiah Wright is not Sen. Barack Obama's only spiritual mentor. The senator told the Chicago Sun-Times that another spiritual mentor is Father Michael Pfleger.

Pfleger, a very liberal, politically-active priest in Chicago's Southside, is known, among other things, for leading a crowd of people to "Chuck's Gun Shop" and announcing that the owner-manager was destroying the people of the neighborhood and needed to be "snuffed out." (Later, representatives for Pfleger explained that the good father was not aware that to "snuff out" was a synonym for kill.)

I'm thinking Sen. Obama is about ready to issue a press release clarifying that he is actually an atheist. Probably less flak that way. — Ross Levatter

Getting hosed — Does the state violate a prisoner's rights if prison employees force-feed him by shoving a tube up his nose? In April the Washington Supreme Court said it did not. All the justices accepted force-feeding except Justice Richard Sanders, the court's lone libertarian.

The State of Washington has no law authorizing the force-feeding of prisoners. Its Department of Corrections employees did it to a prisoner near Spokane in 2004 after the prisoner had refused to eat for several weeks and said he intended to die.

The state's constitution, ratified in 1889, says: "No person shall be disturbed in his private affairs, or his home invaded, without authority of law." That means, Sanders wrote, that the question is in two parts. First, does putting a tube up someone's nose disturb him in his private affairs?

Yes.

Second, is there a law that says the Department of Corrections can do this with a prisoner?

No, he said. There isn't.

Then they can't.

That was too simplistic for the court's majority, which ruled that the answer should be reached after a balancing test. The court had to balance the prisoner's interest in his bodily integrity and the state's interest in preventing him from killing himself and thereby disrupting his orderly incarceration. And the state's interests, the court ruled, "outweighed" the prisoner's interest.

So there is really two parts to the Washington state constitution. There is a part that is legible and a part that is hidden. If you read the two together, in this case, here is what it says.

"No person shall be disturbed in his private affairs, or his home invaded, without authority of law or an assertion of public need." — Bruce Ramsey

Dime for your time? — According to a recent AP article, drivers are slowing down to conserve gas. Actually, only two drivers in the article are slowing down, to save gas on their annual trip to Florida. The author suggests the rest of us should follow suit. This may be the first salvo in an attempt to get the 55 mph federal speed limit reinstated.

The article states that slowing a car from 70 to 60 miles per hour will give you a 2 to 3% gain in efficiency. That paltry benefit is precisely the reason Americans refuse to slow down. It is simple economics; if gas costs $3.33 a gallon, a 3% savings amounts to around a dime a gallon. If your car burns gas at a rate of three gallons an hour, the 30 cents you save by driving 10 mph slower will take ten minutes out of your life. Very few people in America are willing to sell their time for three cents a minute.

Raising fuel taxes is one method proposed for conserving gas. Since time is money, you can imagine how much gas is going to have to cost before people decide that the money saved by driving slowly is worth their wasted time. My speculation is that gas would have to be around $10 per gallon, so that the cost of speed is at least ten cents a minute — the amount a minimum wage worker earns. — Tim Slagle

Free Susan LeFevre! — On April 24, U.S. marshals arrested Marie Walsh, a resident of San Diego's Carmel Valley, on a Michigan escape warrant. It seems Ms. Walsh is one Susan LeFevre, a fugitive for no less than 32 years. The facts of her case are as follows.

In 1974, when she was 19 years old, Walsh-LeFevre was convicted of heroin possession and sentenced to 10—20 years in prison. According to Ms. Walsh's account, she became involved with drugs after her high school sweetheart died in Vietnam. Her parents, strict Catholics, encouraged her to plead guilty, to save the family embarrassment. She did so, expecting to get probation. Instead, a judge sent her to the Detroit House of Corrections. In 1976, she managed to escape, eluding authorities until her capture in California.

Ms. Walsh, now 53, has been married for 23 years, raising three children with her husband, Alan Walsh. She has lived a typical upper-middle class life without causing society any problems. Now back in jail, she told an AP reporter, "I hope there's some mercy."

I hope so, too. I have a lot of compassion for Marie Walsh. But more than compassion, I feel anger. Anger at the judge for sentencing a kid to so much hard time. Anger at the government for wasting taxpayer money pursuing this woman, more than 30 years after her crime was committed. Anger at a society that allows the government to crush an individual over a matter that should be none of government's business to begin with.

According to one news report, the authorities believe that Ms. Walsh-LeFevre knew Detroit's heroin kingpins, and that she was making thousands of dollars a week as a dealer. I have to suspect that they are exaggerating to justify their harsh treatment of the lady. But even if the accusation is true, the salient fact is that government ought not to be in the business of suppressing private behavior, including drug use.

Departing from the law is a slippery slope, no doubt about it. But even more slippery is the slope that our liberties have been sliding down the past hundred or so years. Government should not be regulating private behavior by consenting adults, whether it involves drugs, sex, or anything else. Its authoritarian impulses must be curbed. In the words of Alexander Hamilton (no, not Thomas Jefferson — in fact, Hamilton was referring to an assault by Jefferson on the freedom of the press), we ought to "resist, resist, resist until we hurl the demagogues and tyrants from their imaginary thrones."

Indeed. The main reason to be politically active today is to fight against the politicians, judges, and cops who want to turn us all into cookie-cutter versions of their concept of the "good citizen." — Jon Harrison

An offer he couldn't refuse — The more information that emerges about just how Obama won the support of the Teamsters a few months ago, the more it looks like a parody of a "Godfather" movie.

We knew from the early reports that, in exchange for Jimmy Hoffa Jr.'s support, Obama agreed to oppose all new free trade agreements. That just confirmed what we all knew: viz., that the Democrats have been moving to the far Left on protectionism. Both Obama and Clinton have opposed the free trade agreements with Colombia and South Korea that are currently awaiting congressional approval, and have bashed NAFTA shamelessly.

But a recent investigative report in The Wall Street Journal by Brody Mullins and Kris Maher (May 5) reveals a hidden, sordid underside to Obama's Teamster deal, and it stinks like last week's frutti di mare. Obama has agreed in private — if elected — to stop federal oversight of the Teamsters for mob infiltration.

The background here is important. For many decades, as you know, organized crime has intermittently penetrated organized labor. But no penetration has been deeper than with the Teamsters, especially under the elder Hoffa (may he rest in pieces, under whatever concrete structure he lies). For years, the Teamster pension fund has been a giant mobster ATM, funding development of Las Vegas and other resorts, from which the Mob benefitted far more than did the workers. Truckdrivers' sweat financed a lot of illicit activities.

To control that corruption, the Justice Department set up an independent review panel in 1992. Even Bill Clinton, arguably the most corrupt president, didn't try to pull the rug out from under the Justice oversight panel.

The Teamsters of course claim that they've cleaned up their act. And since their political action committee has donated $25 million to Democrats over the last 18 years, they have a lot of clout. So they may get their way.

But given that the Teamsters have had connections with organized crime since their inception nearly a hundred years ago, that the types of businesses they have unionized (such as transportation companies) are very useful to organized crime, and that the sheer volume of assets they command can greatly empower organized crime, it would be utterly irresponsible to stop Justice Department oversight anytime soon.

Obama seems to have struck a deal with the Devil, and a dirty one at that. This is rather odd behavior for a Messiah. — Gary Jason

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