Category: Regulations

Public Unions Are “Designed for Inefficiency”

(p. A13) Mr. [Philip] Howard, a lawyer and writer, first noticed how unions stymie governance during his public service in New York as a member of a neighborhood zoning board and chairman of the Municipal Art Society. “I kept wondering why my friends who had responsible jobs in government couldn’t do what they thought was right,” he recalls. That might be speeding up a land-use review for a construction project or approving repairs on a school building.

“I’d have discussions with them about what made sense in a particular situation, and they would say, ‘I wish I could, but I can’t.’ ” Any careful or profitable plans were quickly blown up by union rules, such as limits on workers’ hours and duties.

This week the New York transit union gave an example for the ages. It blocked the subway system’s plan to sync its schedule to new ridership norms, with fewer trains on slow days and lightly traveled routes and more trains on busy ones. The change would have saved $1.5 million a year, benefited riders and preserved workers’ paid hours. But an arbitrator shelved it Tuesday because the union couldn’t bear the “variations in start and end times.”

“They’re not just inefficient,” Mr. Howard says of the unions. “They’re designed for inefficiency.”

“They’re designed to require a new work crew to come cut a tree limb because the people fixing the rails don’t have authority to remove a tree limb. They’re designed to prevent supervisors from observing teachers, except under very controlled circumstances. They’re designed to prevent the principal from giving extra training to a teacher. They’re designed to prevent a supervisor in an agency from going and talking to a worker and soliciting ideas about how to make things work better.”

Mr. Howard, 74, keeps listing examples until I jump in to stop him. They’re fresh in his mind because these schemes are the target of his new book, “Not Accountable: Rethinking the Constitutionality of Public Employee Unions.”

For the full interview, see:

Mene Ukueberuwa, interviewer. “THE WEEKEND INTERVIEW; Public Unions vs. the People.” The Wall Street Journal (Saturday, March 4, 2023): A13.

(Note: bracketed name added.)

(Note: the online version of the interview has the date March 23, 2023, and has the same title as the print version. In both versions, the word “designed” is in italics.)

Philip Howard’s book mentioned above is:

Howard, Philip K. Not Accountable: Rethinking the Constitutionality of Public Employee Unions. Garden City, NY: Rodin Books, 2023.

Government Environmental Agency Accuses Itself of Bulldozing Habitat of “Threatened” Barred Owl and “Endangered” Redshouldered Hawk

(p. A18) A New Jersey state agency is accusing itself of violating its own regulations, saying it destroyed land that is home to rare owls and hawks while creating habitat for another type of bird.

At issue in the unusual bureaucratic conflict is the clearing of about 20 acres of swampy forest in a state-owned wildlife preserve in the southern part of the state as part of a project to improve conditions for the American woodcock, a common, plump shorebird prized by hunters.

The state’s Department of Environmental Protection paid private contractors $200,000 for the job, which involved the removal of trees and the bulldozing of stumps, according to public documents obtained by the nonprofit New Jersey Conservation Foundation.

But clearing the forest, in the Glassboro Wildlife Management Area in Clayton, destroyed habitat for the barred owl, which is threatened in New Jersey, and the red-shouldered hawk, which is endangered, according to a notice of violation issued to one arm of the environmental agency by another on April 6 [2023].

“It’s just depressing, really,” Joe Arsenault, a plant ecologist and environmental consultant who lives nearby and has studied the area for 25 years, said of the project’s outcome. “The site had exquisite, mature growth. It had ancient trees. Today it’s like driving through a parking lot.”

. . .

The forest will slowly regrow, Mr. Arsenault said, adding that his surveys of the land had also uncovered evidence of early settlement by Native American tribes that could date to the earliest humans to settle in New Jersey. With the land upturned, the site’s archaeological record is lost forever.

“It’s a gut punch,” he said. “It is the epitome of poor decisions and poorly spent money.”

For the full story, see:

Christopher Maag. “Plan to Create Habitat Destroys Tract of Forest.” The New York Times (Saturday, April 15, 2023): A18.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the story has the same date as the print version, and has the title “New Jersey Environmental Agency Accuses Itself of Harming Bird Habitats.”)


Sam Bankman-Fried’s Brother Gabe Helped Send Misappropriated Funds to Dems, and Then Got “The Rock Star Treatment” From Biden White House

(p. B1) The group, Guarding Against Pandemics, raised more than $22 million in its first full year in 2021, turning it into an overnight lobbying force in Washington. The group’s founder, Gabe Bankman-Fried, a former legislative assistant, started getting the rock star treatment: two White House meetings with senior staff and invitations to speak on panels with government officials.

But almost all the money raised by Guarding Against Pandemics appears to have come from Gabe Bankman-Fried’s brother, whom federal prosecutors have accused of misappropriating billions of dollars from customers of his crypto exchange, FTX. The collapse of FTX prompted federal authorities to investigate allegations (p. B6) that sweeping fraud drove the exchange into bankruptcy in November [2023], as well as potential campaign finance law violations by both brothers.

Federal prosecutors in Manhattan have charged Sam Bankman-Fried, 31, with orchestrating a scheme to evade limits on corporate political donations. Prosecutors have said he recruited FTX executives and others to serve as proxies for the crypto exchange and make tens of millions of dollars in illegal political donations using customer money.

The authorities are investigating whether Gabe Bankman-Fried, 28, and some of his colleagues were part of the same so-called straw donor scheme, five people familiar with the matter said, speaking on the condition of anonymity. And they are trying to determine whether he knew some of the funds that his organization received had been misappropriated from customers.

Last month, a top FTX executive, Nishad Singh, pleaded guilty to using company money to make millions of dollars in straw donations to Democratic campaigns and committees.

. . .

The Bankman-Fried brothers relied on a small set of political consultants to guide their spending, applying the principles of effective altruism, the philanthropic movement that has a large following in the tech industry. A top adviser to both brothers was Michael Sadowsky, a committed effective altruist who had worked with the younger Mr. Bankman-Fried at the data firm Civis Analytics.

. . .

With a $25 million cash infusion from Sam Bankman-Fried, Mr. Sadowsky’s PAC became an instant force in Democratic politics. His group supported dozens of progressive candidates and got widespread attention when it spent more than $11 million on an unsuccessful House primary candidate in Oregon, an astonishing sum for such a race.

. . .

Two other key figures in the Bankman-Frieds’ political network had ties to prominent Democrats: Jenna Narayanan, a former political adviser to the billionaire investor Tom Steyer, and Sean McElwee, the founder of Data for Progress, a progressive think tank.

For the full story, see:

Matthew Goldstein, David Yaffe-Bellany and Lora Kelley. “Fraternal Turn to FTX Inquiry.” The New York Times (Friday, March 24, 2023): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the story has the same date as the print version, and has the title “The Younger Brother Caught in the Middle of the FTX Investigation.”)

Insurance Companies Leave California Due to Over-Regulation

(p. A13) The recent floods and wildfire season have also have saddled insurance companies with as much as $1.5 billion in losses. Insurance markets could weather these blows, but California’s government-controlled insurance system won’t let them. Thus, insurers are pulling out of the state or reducing their underwriting, leaving many homeowners dependent on the bare-bones insurer of last resort: the state-created (though insurer-funded) Fair Access to Insurance Requirements Plan. As Jerry Theodorou, an R Street Institute insurance expert, observed in the Orange County Register, the number of FAIR Plan policies has increased 240% since 2017.

Car insurers are backing away, too, Mr. Theodorou notes, as losses increased 25% in one year, while premiums rose only 4.5%. That statistic offers insight into the problem. In 1988 California voters approved a ballot measure backed by tort lawyers that turned the insurance commissioner into a rate-setting czar.

. . .

This regulatory environment explains why California insurers can’t charge rates that reflect their actual risks. It also shows why there’s so little competition in the state’s insurance industry. Over the long run, competition keeps rates low. Insurance commissioners can certainly hold premiums down by edict, but the result is a contracting market. Homeowners then have little choice but to buy inadequate policies in a government-run marketplace.

For the full commentary, see:

Steven Greenhut. “Insurance Companies Are Quietly Fleeing California.” The Wall Street Journal (Saturday, March 18, 2023): A13.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date March 17, 2023, and has the same title as the print version.)

The “Affordable” Care Act Gives Huge Drug Subsidies to Rich, Urban “Nonprofit” Hospitals

(p. A1) A decades-old federal program that offered big drug discounts to a small number of hospitals to help low-income patients now benefits some of the most successful nonprofit health systems in the U.S.

Under the program, hospitals buy drugs at reduced prices and sell them to patients and their insurers for much more, often at facilities in affluent communities.

One participant is the Cleveland Clinic’s flagship hospital, which reported $1.35 billion in net income last year. The hospital doesn’t admit enough Medicaid and low-income Medicare patients to qualify for low-cost drugs under the program’s original requirements. But a quirk in federal law allowed the hospital to qualify as a “rural referral center,” despite its location near the center of Cleveland.

Despite the benefits, the program hasn’t resulted in new drug discounts for low-income Cleveland Clinic patients, nor has it caused the hospital to increase the financial assistance it offers to those who can’t afford care. (p. A10) The charity care the main hospital writes off represents less than 2% of its patient revenue, according to a Wall Street Journal analysis of hospital Medicare filings.

. . .

The hospital’s $1.35 billion net income figure for 2021, she said, includes investment returns.

Cleveland Clinic’s adoption of the drug-discount program at its main hospital in April 2020 produced about $136 million in savings on drugs that year, the spokeswoman said.

The federal drug-discount program, known as 340B after the statutory provision that created it, requires pharmaceutical companies to sell drugs to participating hospitals at reduced prices. The program has grown rapidly in recent years. It now includes about 2,600 nonprofit and government hospitals, which spent at least $38 billion on discounted drugs last year, according to the Health Resources and Services Administration, the federal agency known as HRSA that oversees the program.

What the hospitals do with their valuable discounts isn’t always clear.

The program doesn’t require participating hospitals to pass on drug discounts to patients, insurers or Medicare. There is no rule limiting how much they can charge for the drugs. They don’t have to report how much they make from such sales, nor do they have to spend any profits to benefit low-income patients.

. . .

The 2010 Affordable Care Act brought a big expansion of 340B, adding new categories including critical access hospitals, which are small, typically rural facilities, and rural referral centers, which are supposed to be rural hospitals that treat a large volume of patients, including many complicated cases.

Under the federal definition of rural referral centers, hospitals that aren’t in rural locations could still qualify if they meet other criteria—minimally, having at least 275 beds. There is no requirement to serve rural patients.

. . .

“We were trying to help rural hospitals,” said Robert Kocher, an Obama White House health adviser involved in crafting the ACA who is now at venture-capital firm Venrock. “It would not be our intention to have a medical center in Cleveland, Boston or Chicago be included.”

For the full story, see:

Anna Wilde Mathews, Paul Overberg, Joseph Walker and Tom McGinty. “Drug Discounts Aimed at Needy Boost Hospitals.” The Wall Street Journal (Wednesday, Dec. 21, 2022): A1 & A10.

(Note: ellipses added.)

(Note: the online version of the story has the date December 20, 2022, and has the title “Many Hospitals Get Big Drug Discounts. That Doesn’t Mean Markdowns for Patients.”)

Extreme Weather Can Bring Enough Water to Recharge California’s Aquifers

(p. A15) After a long, dry summer, winter has brought the gift of water to California, via a series of atmospheric river storms. Unfortunately, as these sprawling rivers in the sky have met developed areas covered with concrete and rivers locked in by levees, they have brought destruction: floods, mudslides, washed-out roads, blackouts, uprooted trees and at least six deaths.

But California doesn’t have to passively suffer through the whiplash of drought and floods. To reduce risk from both, it can return some of its land to water, working with natural systems.

One way to do this is by making use of unique geologic features called paleo valleys. These buried canyons carved into the state’s Central Valley were formed by Ice Age rivers that flowed down the western flank of the Sierra Nevada and were later filled in with coarse sand and gravel from glacial melt.

. . .

There is enough unmanaged surface water from rain and snow statewide to resupply Central Valley aquifers, making more water available to farmers, urban dwellers and the environment. Even with climate change, the state will most likely have enough water for recharge in the future in part because of more extreme weather, according to a 2021 study.

For the full commentary, see:

Erica Gies. “California Should Capture Its Floodwaters.” The New York Times (Monday, January 9, 2023): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Jan. 7, 2023, and has the title “California Could Capture Its Destructive Floodwaters to Fight Drought.”)

The 2021 study mentioned above is:

He, Xiaogang, Benjamin P. Bryant, Tara Moran, Katharine J. Mach, Zhongwang Wei, and David L. Freyberg. “Climate-Informed Hydrologic Modeling and Policy Typology to Guide Managed Aquifer Recharge.” Science Advances 7, no. 17 (April 21, 2021), doi:10.1126/sciadv.abe6025.

“Singapore’s Bill Gates” Thought Innovation Should Not Require Government Permission

(p. A9) In the late 1990s, before Singapore was known as a global center of digital innovation, Sim Wong Hoo had a theory about what was holding his country back.

Mr. Sim, who went on to become the city-state’s first tech billionaire, called it the “No U-Turn Syndrome,” or NUTS. In the U.S., he said, cars could turn around anywhere unless a sign told them not to. But in Singapore, drivers wouldn’t dare if it wasn’t expressly allowed. The “no rule, no do” mentality kept Singaporeans from thinking outside the box, he said.

So he wrote some new rules. Mr. Sim was raised in a poor household by illiterate parents before founding a startup that revolutionized computer audio and inspired a generation of Asian entrepreneurs. Many admirers still call him

. . .

Born in Singapore in 1955, when it was still under British rule, Mr. Sim grew up in a village in an area now called Bukit Panjang with 10 siblings. Their father died when he was young, and his mother struggled to support their large family by selling whatever seasonal fruits grew on the unkempt 1-acre farm she leased for about $15 a year. When not in school, the young Mr. Sim helped her sell eggs at a local market for about 1 cent apiece.

In his 1999 book, “Chaotic Thoughts From the Old Millennium,” Mr. Sim described himself as a weird child who made his own toys and board games because he couldn’t afford to buy them.

For the full obituary, see:

Feliz Solomon. “Singaporean Inspired Asian Tech Innovators.” The Wall Street Journal (Saturday, Jan. 14, 2023): A9.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date January 13, 2023, and has the title “Sim Wong Hoo, Creator of Sound Blaster, Inspired Asian Tech Innovators.”)

Mr. Sim’s book mentioned above is:

Sim, Wong Hoo. Chaotic Thoughts from the Old Millennium. Singapore: Creative O., 1999.

Government Contractor UNOS Is 15 Times More Likely to Lose or Damage Transplant Organs as Private Airlines Are to Lose or Damage Luggage

(p. A24) Where Tonya lives in California, the wait for a kidney from a deceased donor is up to 10 years. Tonya, like many on dialysis to treat kidney failure, knows the odds of her surviving the wait are slim; the median survival time for patients on dialysis is five years.

. . .

Everyday Americans are doing their part, signing up to be organ donors, but the organizations in charge of organ recovery (known as organ procurement organizations, or O.P.O.s) have been plagued with inefficiencies and abuses, and the contractor that runs the national system — the United Network for Organ Sharing (UNOS) — has been failing to oversee them.

The organ procurement system is made up of 56 organizations, each with a monopoly in its jurisdiction. When someone dies and can donate an organ, O.P.O.s are supposed to go to the hospital, talk to the person’s family and manage the process of transporting donated organs to those in need, but all too often they have failed to show up — literally.

. . .

Tonya asked the government to hold these organizations accountable, and naïvely, we thought it would be that simple. Our efforts would surely get Tonya a kidney.

She did everything she could to push for change, everything that our government asks of concerned citizens: She wrote an opinion essay; appeared in a government video; wrote letters to members of the Biden administration, including the Centers for Medicare and Medicaid Services (C.M.S.) administrator Chiquita Brooks-LaSure and the head of the Health Resources and Services Administration, Carole Johnson; worked with members of Congress, including Representative Katie Porter; and even testified before the House Oversight Subcommittee on Economic and Consumer Policy in May 2021.

There she told the committee she would die without the federal government’s urgent action. A year and a half later, on Dec. 30, 2022, Tonya died of complications from kidney failure.

. . .

After the video Tonya and I made, in 2020 the Trump administration finalized a rule bringing accountability to the forefront, and the Biden administration has inherited it. This is a good start: The new rule changes the metrics by which O.P.O.s are evaluated and requires that they face decertification for failure to perform. But the rule would not replace a single failing organ contractor until 2026, which is not acceptable.

. . .

To make matters worse, in the Biden administration’s 2023 budget, the C.M.S. requested flexibility to recertify failing O.P.O.s so they can keep their contracts even after 2026. If we allow failing O.P.O.s to keep operating, then we essentially nullify the reform we’ve worked so hard for and ensure further delays and more deaths.

. . .

When the Senate Finance Committee finally began investigating, it found that UNOS has systematically failed to provide oversight. At the committee hearing, doctors and transplant professionals testified that they have been afraid to criticize UNOS publicly, for fear it will retaliate against their patients. Also at the hearing, Senators Elizabeth Warren, Charles Grassley and Rob Portman called out another mind-boggling fact: From 2014 to 2019, UNOS was 15 times as likely to lose or damage an organ in transit as an airline is a passenger’s luggage.

For the full commentary, see:

Kendall Ciesemier. “She Feared the Organ Donation System Would Kill Her. It Did..” The New York Times (Wednesday, February 1, 2023): A24.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Jan. 28, 2023, and has the title “Tonya Ingram Feared the Organ Donation System Would Kill Her. It Did.”)

Mary Grimaldi Died of Measles a Few Days Before the Government Approved the Vaccine That Would Have Saved Her

(p. A15) Members of my own family have . . . chosen not to vaccinate their children against measles, even as my mother laments that the measles vaccine didn’t arrive in time for Sissy, as Maura was known in our family. She recently told me that she wishes she had found a way to enroll Sissy in the measles-vaccine trial, which involved 50,000 children over several years in the early 1960s.

. . .

Until the vaccine, the only way to gain immunity to measles was to contract the disease. Sissy was exposed as an infant when my brothers caught it, but the case wasn’t severe enough to give her immunity. “She’ll have to get the shot when it’s available,” the family pediatrician, Dr. George Herman, told my mother.

Why did it take so long for that to happen? Culturing the virus from the blood serum of young David Edmondston, and then weakening or “attenuating” it enough for a vaccine, was no easy feat. “The hardest vaccine to make is a live, attenuated vaccine,” said Dr. Offit. He would know: It took him and fellow virologists 26 years to develop a safe and effective vaccine against rotavirus, which can cause potentially fatal diarrhea in infants. “It is all trial and error. Nine years is fast,” Dr. Offit said.

It wasn’t fast enough for Sissy.

. . .

The Kansas City Times ran a short obituary. The paper asked my parents if they wanted to report the cause of death, and my mother said yes, “so that other parents would know to get the vaccine when it was available.”

A few pages away was an article headlined “O.K. on Measles Vaccine; Two Forms Released by Government and Surgeon General Predicts a Sharp Drop in the Disease Next Season.” “This is one of our most significant advances toward decreasing or eliminating one of our most serious childhood diseases,” said U.S. Surgeon General Luther Terry. An editorial in the paper on the vaccine news concluded, “The disease and its sometimes tragic consequences are on the way out with other ancient plagues.”

For the full essay, see:

James V. Grimaldi. “My Family and the Measles Vaccine.” The Wall Street Journals (Saturday, March 25, 2023): A15.

(Note: ellipses added.)

(Note: the online version of the essay has the March 23, 2023, and has the same title as the print version.)

Regulators Are Bad at Monitoring Unhealthy Banks

(p. A26) Silicon Valley Bank’s failure looks a bit like an S.&L. crisis in miniature. Like its 1980s counterparts, S.V.B. grew extremely rapidly, had many assets parked in fixed, long-term bonds, and was done in when inflation caused the Fed to raise interest rates, raising the cost of keeping deposits.

Like the S.&L.s, Silicon Valley Bank was heavily concentrated. It catered to start-ups for whom an S.V.B. account was a matter of status. One tech savant who had recently changed jobs (aren’t they always switching jobs?) told me that in his experience, roughly two thirds of start-ups banked with S.V.B. (the bank claimed that nearly half the country’s venture capital-backed technology and life science companies were customers).

. . .

The regulators clearly failed to monitor S.V.B.’s unhealthy mismatch of assets and liabilities.

. . .

Once you take risk out of a part of a bank’s operations, it is hard to let market principles govern the rest.

. . .

In past bank failures, uninsured depositors did not lose all — 10 to 15 percent was typical. And in this episode, there wasn’t any systemically bad asset à la mortgages in 2008. Given that the risk was contained, and that the Federal Reserve provides liquidity to banks facing runs (and provided emergency liquidity this week), allowing uninsured depositors of banks that fail to suffer a haircut might have been healthier for the system in the long run.

For the full commentary, see:

Roger Lowenstein. “The Bank Rescues Just Changed Capitalism.” The New York Times (Thursday, March 16, 2023): A26.

(Note: ellipses added.)

(Note: the online version of the commentary has the date March 15, 2023, and has the title “The Silicon Valley Bank Rescue Just Changed Capitalism.”)

Tighter Zoning Laws Resulted in More Racial Segregation

(p. A22) Across the New York City suburbs, a thicket of local zoning laws thwarts the building of all but the most expensive single-family homes.

In some parts of Scarsdale, in Westchester County, new homes must be built on lots of at least two acres. In most parts of the village of Muttontown, on Long Island, new homes must be at least 2,000 square feet. The Town of Oyster Bay, also on Long Island, requires that some guest apartments, known as accessory dwelling units, be occupied only by family members or domestic servants.

These zoning laws are among the most restrictive in the country. They severely limit the state’s housing supply, making the entire region less affordable. And they are rooted in Jim Crow.

For much of the 20th century, towns surrounding New York City used a stomach-churning mix of racial covenants and restrictive zoning laws to shut out Black Americans and others considered undesirable from thriving suburbs. The federal government supported this system in myriad ways, including by denying government backing for mortgage loans in Black neighborhoods, a practice known as redlining, which hardened segregation and sharply restricted the ability of Black Americans to secure mortgages and buy homes. After World War II, the government greatly expanded its role in residential segregation by backing large suburban developments across the United States like Levittown, on Long Island, on the condition that they exclude Black buyers.

The Fair Housing Act of 1968 made racial discrimination in housing illegal. But communities were still allowed to enact and maintain zoning laws that had the same effect. By this time, prices had risen, and the generous postwar federal subsidies that made it possible for white Americans to buy suburban homes — but which had largely been denied to Black Americans — were no longer available. Even if a suburb might no longer be allowed to overtly ban Black families, limiting development to large and expensive homes could achieve a similar goal.

As a result, the tighter zoning laws became associated nationally with increased racial segregation, as well as a diminished housing supply.

For the full commentary, see:

Mara Gay. “To Cut New York Housing Costs, Ease Suburbs’ Zoning Laws.” The New York Times (Thursday, Feb. 23, 2023): A22.

(Note: the online version of the commentary has the date February 21, 2023, and has the title “The Era of Shutting Others Out of New York’s Suburbs Is Ending.”)