Category: Regulations

Firms Moving from Silicon Valley to Texas

(p. A3) SAN FRANCISCO–California’s economy is adding jobs far faster than affordable places to live, forcing some employers to leave the state as they expand.
. . .
Karen Holian, 44 years old, joined the startup Lottery.com when it was founded here in 2015. Though a San Francisco native, Ms. Holian, a marketing manager, was excited when the company last year moved to Austin, Texas, because she could finally plan to buy a home.
“In San Francisco, that never seemed like a possibility,” she said. A mother of two, she is for now renting a four-bedroom house for $2,000 a month, a third of what a comparable place costs in her hometown.
Lottery.com CEO Tony DiMatteo said that as the company grew, he found it difficult to persuade current and prospective employees to move to the area. “We can give them a much better bang for their buck if we’re not in San Francisco,” he said.
. . .
Carl Guardino, chief executive of the Silicon Valley Leadership Group, said CEOs tell him “that any new job that doesn’t absolutely need to be in the Bay Area is located outside of the Bay Area.” The public-policy advisory group counts some 360 companies, including Silicon Valley’s largest, as members.
. . .
Texas has drawn more companies leaving California over the past decade than any other state, according to research by Joe Vranich, a relocation consultant who encourages businesses to leave California.
Housing costs are “a major selling point for us,” said Mike Rosa, senior vice president of economic development for the Dallas Regional Chamber. “It’s a factor in just about every [relocation] search we see.”

For the full story, see:
Nour Malas. “Firms Quit California Over Costs.” The Wall Street Journal (Tuesday, March 20, 2019): A3.
(Note: ellipses, and bracketed year, added; bracketed word, in original.)
(Note: the online version of the story has the date March 19, 2019, and has the title “California Has the Jobs but Not Enough Homes.” The sentence quoting Karen Holian appeared in the online, but not the print, version.)

Boghossian May Be Punished for Exposing the “Faulty Epistemology” of Grievance Studies

(p. A15) A massive academic hoax has taken a surprising twist. Peter Boghossian, an assistant professor of philosophy, faces disciplinary action at Oregon’s Portland State University. The accusations against him raise constitutional questions about federal regulation of academic research. They also implicitly acknowledge that the prank had a serious point.
Mr. Boghossian–along with two confederates, neither of whom has an academic affiliation–set out to expose shoddy scholarship in what they call “grievance studies.” They concocted 20 pseudonymous “academic papers,” complete with fake data, and submitted them to leading peer-reviewed scholarly journals in fields like “queer studies” and “fat studies.” The Journal’s Jillian Melchior discovered the deception last summer and broke the story in October, by which time seven of the phony papers had been accepted for publication and four published.
“It had to be done,” Mr. Boghossian tells me. “We saw what was happening in these fields, and we were horrified at the faulty epistemology that these people were using to credential themselves and teach others.” The effort drew praise from some well-known public intellectuals, including Richard Dawkins, Jordan Peterson and Steven Pinker.
. . .
A hastily formed university committee recommended that Mr. Boghossian be investigated for “research misconduct”–that is, purposely fabricating data. That case would seem to be open and shut, but the investigation has stalled.
More serious are the sanctions against Mr. Boghossian announced Dec. 21 on behalf of Portland State’s Institutional Review Board for conducting research on “human subjects” without submitting his research protocol to the IRB for review as required by the federal National Research Act of 1974. The “human subjects” in question were the editors and peer-reviewers of the duped journals. Portland State ordered Mr. Boghossian to undergo “human subjects research training,” and its letter warns that “further actions may be required,” with no elaboration.
. . .
Philip Hamburger, a law professor at Columbia, argues that the National Research Act and the HHS’s regulations violate the First Amendment, infringing on scholars’ freedom of expression. Mr. Hamburger has likened IRB vetting procedures to the Star Chamber’s licensing of publications that prevailed in 17th-century England–which the Constitution’s drafters were eager not to replicate. “Licensing . . . prohibits generally, and then selectively permits what otherwise is forbidden,” Mr. Hamburger wrote in 2007.

For the full commentary, see:
Charlotte Allen. “A Hoax and Its ‘Human Subjects’; An Institutional Review Board disciplines an academic prankster. But is it constitutional?” The Wall Street Journal (Tuesday, Jan. 29, 2019): A15.
(Note: ellipses between paragraphs, added; ellipsis internal to last paragraph, in original.)
(Note: the online version of the commentary has the date Jan. 28, 2019.)

Small Spanish Firms Less Likely to Hire with Higher Minimum Wage

(p. B1) MADRID — As Spain grapples with a turbulent political crisis, one of Europe’s last Socialist governments may soon fall amid the rise of a new nationalism in the country. But whatever the outcome, Prime Minister Pedro Sánchez is leaving behind a signature legacy: a record increase in the minimum wage.
The 22 percent rise that took effect in January, to 1,050 euros (about $1,200) a month, is the largest in Spain in 40 years. Yet the move has ignited a debate over whether requiring employers to pay more of a living wage is a social watershed, or a risky attempt at economic engineering.
. . .
(p. B4) Over 95 percent of businesses in Spain are small and medium-size firms, many of which operate with thin margins, according to Celia Ferrero, the vice president of the National Federation of Self-Employed Workers.
“You won’t find people disputing that higher wages are needed,” said Ms. Ferrero, whose organization represents many smaller businesses. “The question is whether firms can afford it. Higher wages and social security taxes simply make it more expensive for employers to hire or maintain staffers.”
“It’s not that they don’t want to pay; they literally can’t,” she added.
Lucio Montero, the owner of General Events, which makes booths and backdrops for firms displaying wares at big conventions, employs eight workers on the outskirts of Madrid. He pays each €1,400 a month.
The higher minimum wage and increased social security charges will put upward pressure on his labor bill and already thin margins, he said. It is a cost that he can ill afford.
“I would need to think twice about hiring more people,” said Mr. Montero, walking around his tiny, sawdust-covered factory floor.

For the full story, see:
Liz Alderman. “Spain’s Minimum Wage Has Surged. So Has Debate.” The New York Times (Friday, March 8, 2019): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 7, 2019, and has the title “Spain’s Minimum Wage Just Jumped. The Debate Is Continuing.”)

Central Planning Elitism Leads to Rule by the Corrupt or the Incompetent

(p. A23) . . . the underlying faith of the Green New Deal is a faith in the guiding wisdom of the political elite. The authors of the Green New Deal assume that technocratic planners can master the movements of 328 million Americans and design a transportation system so that “air travel stops becoming necessary.” (This is from people who couldn’t even organize the successful release of their own background document.)
They assume that congressional leaders have the ability to direct what in effect would be gigantic energy firms and gigantic investment houses without giving sweetheart deals to vested interests, without getting corrupted by this newfound power, without letting the whole thing get swallowed up by incompetence. (This is a Congress that can’t pass a budget.)
. . .
The impulse to create a highly centralized superstate recurs throughout American history. There were people writing such grand master plans in the 1880s, the 1910s, the 1930s. They never work out. As Richard Weaver once put it, the problem with the next generation is that it hasn’t read the minutes of the last meeting.

For the full commentary, see:
Brooks, David. “How the Left Embraced Elitism; The progressives’ Green New Deal centralizes power.” The New York Times (Tuesday, Feb. 12, 2019): A23.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Feb. 11, 2019.)

In a “Terribly Regulated” Germany “People Look for Their Little Spaces of Freedom”

(p. A1) BERLIN — It seemed like a no-brainer: Lower Germany’s embarrassingly high carbon emissions at no cost, and save some lives in the process.
But when a government-appointed commission in January [2019] dared to float the idea of a speed limit on the autobahn, the country’s storied highway network, it almost caused rioting.
. . .
(p. A10) Call it Germany’s Wild West: The autobahn is the one place in a highly regulated society where no rule is the rule — and that place is sacred.
. . .
Germany is woefully behind on meeting its 2020 climate goals, so the government appointed a group of experts to find ways to lower emissions in the transport sector. Cars account for 11 percent of total emissions, and their share is rising.
A highway speed limit of 120 kilometers an hour, or 75 miles per hour, could cover a fifth of the gap to reach the 2020 goals for the transport sector, environmental experts say.
“Of all the individual measures, it is the one that would be the most impactful — and it costs nothing,” said Dorothee Saar, of Deutsche Umwelthilfe, a nonprofit environmental organization that has lobbied for a speed limit.
. . .
Once, during the oil crisis in 1973, a German transport minister took his chances and imposed a speed limit. Road deaths stood at over 20,000 a year at the time (six times today’s level) and with oil prices skyrocketing, Lauritz Lauritzen thought Germans might reasonably see the benefits of saving some lives and some money on gas, too.
The speed limit lasted four months, and Mr. Lauritzen not much longer.
The experiment gave birth to the “Freie Fahrt für freie Bürger!” campaign — or “Freedom to drive for free citizens!” — the car lobby’s most powerful slogan to this day, and one used by political parties and car companies alike, a sort of unwritten second amendment.
“It’s all about freedom,” said John C. Kornblum, a former United States ambassador to Germany, who first arrived here in the 1960s, and has been living (and driving) here on and off ever since.
. . .
“Germany is terribly regulated, for reasons which have to do with the past, with a fear of uncertainty, a fear of being overwhelmed,” Mr. Kornblum said. “But then people look for their little spaces of freedom and the autobahn is one of them.”
And speeding isn’t the only freedom the autobahn offers.
Driving naked in Germany is legal, too. But if you get out of the car nude, you face a $45 fine.

For the full story, see:
Katrin Bennhold. “Autobahn Speed Limits? Voting With Lead Feet.” The New York Times (Monday, Feb. 4, 2019): A1 & A10.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the story has the date Feb. 3, 2019, and has the title “‘GERMANY DISPATCH; Impose a Speed Limit on the Autobahn? Not So Fast, Many Germans Say.”)

Tariffs Evaded by Misclassification and Transshipment

(p. A1) One day in June [2018] , seven months after the U.S. imposed stiff tariffs on plywood from China, a wood importer in Oregon got a call from a supplier asking if he would like to get some Chinese plywood tariff-free.
How would that work, asked importer David Visse. The products carry an identification code that is checked by U.S. Customs agents.
“Don’t worry about it,” Mr. Visse says the supplier told him. The plywood would be stripped of its Chinese markings, and “we’ll ship it under some other code.”
Every product imported into the U.S. carries a 10-digit designation called an HTS code, of which there are 18,927 in all. Like a taxonomic version of Noah’s Ark, the code provides a common language to bridge disparate markets and identify products in all their variety.
In a world of increasing tariffs, the code has another function: evading those levies. The business of code-fudging is expanding in step with tariff increases, undermining U.S. efforts to shield American business from foreign competition, according to importers, customs officials, trade attorneys and shipping brokers.
As trade conflict grows between the two largest economies, these professionals say, code misclassification is starting to compete (p. A10) with transshipment–the rerouting of goods through third countries–as a way to duck tariffs.

For the full story, see:
Chuin-Wei Yap. “Trade Fight Spurs Tariff Dodges, With 18,927 Options.” The Wall Street Journal (Tuesday, Oct. 9, 2018): A1 & A10.
(Note: bracketed year added.)
(Note: the online version of the story has the date Oct. 8, 2018, and has the title “The U.S.-China Trade Battle Spawns a New Era of Tariff Dodges.”)

Bureaucratic FDA Delays Approvals for Fear “We’ll Be Toast”

(p. A21) Oct. 30 [2018] marks the 36th anniversary of the FDA’s approval of human insulin synthesized in genetically engineered bacteria, the first product made with “gene splicing” techniques. As the head of the FDA’s evaluation team, I had a front-row seat.
. . .
My team and I were ready to recommend approval after four months’ review. But when I took the packet to my supervisor, he said, “Four months? No way! If anything goes wrong with this product down the road, people will say we rushed it, and we’ll be toast.” That’s the bureaucratic mind-set. I don’t know how long he would have delayed it, but when he went on vacation a month later, I took the packet to his boss, the division director, who signed off.
That anecdote is an example of Milton Friedman’s observation that to understand the motivation of an individual or organization, you need to “follow the self-interest.” A large part of regulators’ self-interest lies in staying out of trouble. One way to do that, my supervisor understood, is not to approve in record time products that might experience unanticipated problems.

For the full commentary, see:
Miller, Henry I. “Follow the FDA’s Self-Interest; While approving a new form of insulin, I saw how regulators protect themselves.” The Wall Street Journal (Monday, Oct. 29, 2018: A21.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the commentary has the date Oct. 28, 2018.)

“Artificial Barriers to Housing Production”

(p. A3) America’s housing shortage is more wide-ranging than cloistered coastal markets, stretching from pricey locales such as California and Massachusetts to more surprising places, such as Arizona and Utah.
Some 22 states and the District of Columbia have built too little housing to keep up with economic growth in the 15 years since 2000, resulting in a total shortage of 7.3 million units, according to research to be released Monday by an advocacy group for loosening building regulations.
California bears half of the blame for the shortage: The state built 3.4 million too few units to keep up with job, population and income growth.
. . .
“The artificial barriers to housing production aren’t constrained just to California,” said Mike Kingsella, executive director of the Up For Growth National Coalition. “As we dug into the numbers behind this, at a local market level, we’re seeing a pronounced affordability challenge in places like even Arizona.”
Arizona and Utah are among the states that have built too little housing in the 15-year period, according to the report.

For the full story, see:
Laura Kusisto. “Shortages in Housing Are Widespread.” The Wall Street Journal (Tuesday, April 17, 2018): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date April 16, 2018, and has the title “Homebuilding Isn’t Keeping Up With Growth, Development Group Says.”)

Worn Down by Growing Regulations, American Entrepreneurs Leave China

(p. A1) SHANGHAI–Fifteen years ago in California, a tall technology geek named Steve Mushero started writing a book that predicted the American dream might soon “be found only in China.” Before long, Mr. Mushero moved himself to Shanghai and launched a firm that Amazon.com Inc. and Alibaba Group Holding Ltd. certified as a partner to serve the world’s biggest internet market.
These days, the tech pioneer has hit a wall. He’s heading back to Silicon Valley where he sees deeper demand for his know-how in cloud computing. “The future’s not here,” said the 52-year-old.
For years, American entrepreneurs saw a place in which they would start tech businesses, build restaurant chains and manage factories, making potentially vast sums in an exciting, newly dynamic economy. Many mastered Mandarin, hired and trained thousands in China, bought houses, met their spouses and raised bilingual children.
Now disillusion has set in, fed by soaring costs, creeping taxation, tightening political control and capricious regulation that makes it ever tougher to maneuver the market and fend off new domestic competitors. All these signal to expat business owners their best days were in the past.
The Trump administration is making a hard-nosed challenge to China using trade tariffs, in-(p. A12)vestment controls and prosecution of technology thieves, and many in American business are cheering, if silently, having soured on the market after years of trying.
. . .
From Silicon Valley in 2003, Mr. Mushero felt China’s rumblings and started writing his book, “Off-Shoring the Middle Class.” He saw U.S. companies save money by shifting accounting, X-ray evaluations and other technical jobs overseas. China, he thought, was becoming globalization’s “one-stop-shop” for manufacturing, basic tech work and advanced research.
He predicted a broad shift to China of not only factory work, but U.S. white collar jobs, too.
. . .
At a Starbucks in mid-2008, he sketched out “a napkin business plan” for a new company called ChinaNetCloud (Shanghai) Co. with Mr. Eron. China was overtaking the U.S. as the biggest internet market, and the partners would trail-blaze into cloud services by managing the online operations of local businesses.
. . .
Tougher regulations and competition deterred foreign players. China’s reputation for technology theft kept many out of the market, which reduced the number of Mr. Mushero’s potential clients. In 2013, the American Chamber of Commerce said only 10% of its members trusted data security enough to consider cloud services in China.
Walt Disney Co. tapped ChinaNetCloud to manage the computers hosting some interactive games in 2012, including one based on its hit movie “Frozen.” Mr. Mushero looked forward to more work with the U.S. entertainment giant, but Disney scrubbed the gaming push in mid-2014. Disney declined to comment. Online gaming in China is dominated by big domestic tech companies; it is derided by regulators as chaotic and harmful and hit regularly with new rules.
. . .
On a recent drizzly afternoon, flanked by framed commendations from Amazon and Microsoft for his firm’s achievements in China, Mr. Mushero said that after New Year’s he will head back to California, where he sees burgeoning demand for corporate online services, to market the company’s cloud-management tools.

For the full story, see:
James T. Areddy. “American Entrepreneurs in China Are Heading Home, Disillusioned.” The Wall Street Journal (Saturday, Dec. 8, 2018): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the story has the date Dec. 7, 2018, and has the title “American Entrepreneurs Who Flocked to China Are Heading Home, Disillusioned.”)

Kansas City Government Pours Bleach on Food for the Homeless

(p. A17) KANSAS CITY, Mo. — They unfurled colorful blankets on a grassy slope, and unloaded steaming trays of corn dogs, baked beans and vegetable beef soup. Every week for the past three years, the volunteers have gone to a park just outside downtown Kansas City with home-cooked meals for the homeless. They call it a picnic with friends.
But on a cloudy afternoon earlier this month, an inspector from the Kansas City Health Department showed up and called it something else: an illegal food establishment.
She ordered most of the food put into black garbage bags, bundled them on the grass and, in a move that stunned the gathered group, doused the pile with bleach.
Allen Andrews, who has been living on the streets for the past year, said he watched silently as the bleach was poured, thinking back to when he had a home. He remembered how he had sometimes poured bleach on trash he put out for collection, to deter rodents from getting into it.
“They treat us like animals,” Mr. Andrews, 46, said.

For the full story, see:
John Eligon. “‘Where Feeding the Needy Requires Both a Heart and a Permit.” The New York Times (Thursday, Nov. 22, 2018): A17.
(Note: the online version of the story has the date Nov. 21, 2018, and has the title “You Want to Feed the Hungry? Lovely. Let’s See Your Permit.” The online version says that the article appeared on p. A13 of the New York edition. It appeared on p. A17 of the National edition that I subscribe to.)