Posts tagged ‘Regulation of Commerce’

06/04/2012

Regulating Commerce: What Can We Do?

The Supreme Court will soon be deciding if all or part of the 2010 federal health care act went too far under the Congressional power to regulate interstate commerce. The question is to what extent does the “commerce clause” give Congress the power to regulate?

Art. I, Sec 8 (3) of the Constitution provides: “Congress shall have power…to regulate commerce…among the several states.” The first significant “commerce clause” case involved a challenge to a state law in Gibbons v Ogden (1824), where Chief Justice Marshall held Congress has the power to regulate every aspect of commercial intercourse, including every transaction not wholly carried out within the boundaries of a single state.

During the nation’s first 100 years, despite a federal power to regulate commerce, Congress passed no significant law in that regard, and instead most legislation was at the state level. Congress first used the “commerce clause” in 1887 to create the Interstate Commerce Commission (ICC) to regulate the railroads. Three years later, they added the Sherman Antitrust Act (1890).

An activist conservative Supreme Court however went right to work limiting any federal expansion of the power to regulate commerce. They held in 1895, while Congress could control railroads and common carriers, manufacturing conducted wholly within the confines of a single state, was outside their reach. In Hammer v Dagenhart (1918), Congress tried to eliminate child labor by establishing a minimum work age, but a conservative Court held the act exceeded their constitutional powers, because manufacturing was outside the reach of the “commerce clause.”

The interpretation of the “commerce clause” changed significantly during the Great Depression, when a new Court held in NLRB v Jones & Laughlin Steel 301 U.S. (1937), Congress could regulate manufacturing, even if it is based within one state. The Court abandoned the old distinction that kept manufacturing beyond the reach of federal regulation. The new test was any activity “affecting” interstate commerce could be subjected to regulation. In a challenge to the 1938 Fair Labor Standards Act, which regulated wages and hours, a progressive court in U.S. v Darby (1941), finally overruled the old 1918 Hammer decision above.

In Wickard v Filburn 317 U.S. (1942), the Court upheld the power of the federal government to regulate local farmers, who never did any business outside their state, on the grounds their production nevertheless affected aggregate national supplies and prices. In Heart of Atlanta Motel v U.S. 379 U.S. (1964), a local motel in Georgia that discriminated against blacks was subjected to the federal Civil Rights Act of 1964, because they accepted guests from out-of-state, and therefore engaged in interstate commerce.

The question now is whether the Supreme Court will limit the national power to regulate health care providers, businesses that provide health insurance to workers, as well as the powerful health insurance industry. Will they exclude the “individual mandate” from the reach of the commerce clause? The answer is there are five conservative votes on a 9-member Supreme Court, and though we have no crystal ball, at least 4 or 5 of them will vote to overturn at least part of the new law.

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09/17/2011

Cable TV Failed To Show Football Game

One would think Charter Communications, the Cable TV monopoly in Madison, would have carried the football game on Sat. Sep. 17 between the 7th ranked University of Wisconsin Badgers and Northern Illinois, but the game was not on any of the 50 Basic Service stations, the 56 on Expanded Service, or any of the 54 on Digital View Plus, even though we subscribers give Charter plenty of money each month to provide good service.

So what was on Cable at 2:30 p.m. instead? Their lineup included seven football games, including none we wanted to watch: 1) Versus carried Texas Tech and New Mexico; 2) Fox showed Colorado St. v Colorado; 3) ESPN went with Texas and UCLA; 4) CBS broadcast Tennessee v Florida; 5) NBC had Notre Dame and Michigan St.; 6) ABC announced Nebraska and Washington; and 7) the Big Ten Network chose Minnesota and Miami of Ohio. If I had purchased cable’s Sports View package, and spent even more money, Northwestern v Army was on CBS Sport Network, and Virginia v North Carolina was on ESPNU.

Why does Cable TV do this? When will they ever learn that our interest in a local football team, does not translate into a general desire to watch whatever game they decide to give us. Like the vast majority in Wisconsin, I turned the TV off, and had to watch the Badger game on my laptop through an online stream of ESPN-3. When will advertisers learn the vast majority of people watching most games, are just fans of the two teams on the field.

Although the cable monopoly promotes itself as a wonderful carrier by advertising over 100 stations to choose from, the number of channels makes no difference, if they show only filler programming no one wants to watch. Cable TV could be so much better if the people of Wisconsin huddled up, went on offense, put Cable on defense, and pressured them to change their lineup. We should be able to stop them from calling all the plays. We should be able to move the ball in the direction we want it to go, by collectively forcing them to show us the games we want to watch.

08/02/2011

Cable TV Could Be So Much Better

When I was young, the TV set was known as a “black and white,” because nothing was broadcast in color, until 1964. “Rabbit ears” sat on top of it, so we could receive of one of the three VHF Milwaukee stations. We could also get one UHF channel, but the picture quality was grey and fuzzy, and frankly not very good.

The three networks, ABC, CBS, and NBC, had regular programs that allowed us to plan our TV viewing. The Green Bay Packers always kicked off their weekly game on Sunday, at Noon. The Johnny Carson Show started at 10:30 p.m. Most prime time entertainment comedies ran new episodes in their usual weekly half hour slots, the entire season from Sep. through May.

The major networks also carried a certain amount of educational programming. 60 Minutes first aired in 1968. The Sunday morning lineup included Face the Nation (CBS) and Meet the Press (NBC). In those days, networks adhered to quality standards. Facts were distinguished from opinion. People needed credentials to appear before national audiences. They behaved while on TV. No one shouted down, cut off, or interrupted other guests. The best part about TV in the day was that it was free.

Cable TV gradually replaced the old-style of broadcasting. While it made TV reception better, particularly in rural areas where there had been no broadcast signals, the quality of programming went down, despite additional stations, since most new ones carried nothing worth watching, and competition weakened the networks.

On the plus side, ABC, CBS and NBC remained on the air. Although PBS is still shown, they are routinely threatened with extinction by Congress. I like it when cable offers the BBC, because American networks are weak as to international news. The Weather Channel comes in handy in a storm. CSPAN is a plus when Congress is debating something important. The History Channel occasionally has a good story, and Discovery once in a while carries solid science. The Travel Channel is sometimes educational. MSNBC was needed to counterbalance Fox, the Republican network, and to replace CNN, which inconsistently jumped from serious news, to frivolous stuff.

But cable could be so much better, if consumers were allowed to pick a minimum basic lineup of 12 stations, for $1 per channel. I would select PBS, BBC, MSNBC, NBC, CBS, ABC, CNN, the Weather Channel, C-Span, C-Span-2, ESPN and the Big Ten Network. After purchasing a basic 12-pack, consumers could then select additional stations, again for $1 each. I would add History, Travel and Discovery, bringing my total to $15. I might also add a few movie channels, depending what they carried, for $1 sums.

We currently subsidize many stations not worth watching with our monthly payments. By allowing consumers to choose, we could remove most of the junk from cable, as several stations would find themselves without enough viewers. Why should I be forced to subsidize Fox, the Republican political network? Does anyone really watch religious programming? Degenerate entertainment like the hideous Jerry Springer Show, where people swear and throw chairs would die. How many Sci-Fi ax murderers do we need? Dumb Hollywood-types, like Paris Hilton, Ozzie Osborn, and the Kardashians, who have never done anything to deserve TV attention, would come to an end.

Viewers are smarter than cable companies assume, and most would turn to quality programs. We should let consumers choose their cable shows via their pocketbooks and improve TV viewing.

07/22/2011

Airline Travel Changed Over The Years

I had to fly out West for a wedding this week, and it reminded me of how commercial flying has changed significantly, since 2001 when the 911 security measures were implemented, and the late 1970s, when the airline industry was deregulated.

40 years ago, only a handful of large carriers, like United and American, monopolized the air. Now, many companies make flying competitive, a change for the good.

In the past, flights were booked through local travel agents. Now, everyone buys online. No longer do we see passengers running through airports, 10 minutes before departure, scrambling around at the last second to get onboard. Those days are gone. Today, we go through the dreaded airport security. You know the drill. Take off your shoes. Empty your pockets. The laptop goes in a separate bin. Be prepared for a body scan, or maybe a pat down. So much for the friendly skies; say hello to the airport security rent-a-cops.

In the old days, bags were checked and sent into the cargo hold, as only a few stuffy businessmen carried briefcases on board. Now, everyone packs light. Almost no one pays extra to check a bag.

Before deregulation, planes would often leave half full. Today, every seat is taken, as the airlines enlist volunteers to stay behind, because they overbooked. It’s crowded, but much more efficient.

Travel seemed to be much more of a celebration 40 years ago. It seemed like there was always at least one party in flight. People drank alcohol more often, probably because airlines gave it away to create a festive atmosphere. Now, we quietly sit and watch TV.

In the day, flight attendants, known as stewardesses, were young pretty females, forced to adhere to weight restrictions. Now, Hugh Heffner’s playboy days are over. Gay men now serve the drinks.

Although deregulation pushed ticket prices down, it also destroyed the food service. You might get coffee now, or a soft drink, but descent food? Forget about it. On a Soviet Aeroflot flight in 1983, as I boarded in Moscow, they gave me a bag lunch, and I remember thinking that was bad. Now, I am not so sure.

07/21/2011

Constitution Does Not Require Capitalism

The leftist American revolutionaries who drafted our Constitution created a political form of government. They did not adopt an economic system, or write a capitalist manifesto. In fact, the words free market and capitalism do not appear anywhere in it.

The political system they conceived replaced the dictatorial rule of a monarch, with elected representation under a republican form of government. They granted Congress the power to write laws, but no where did they adopt or require capitalism; nor did they outlaw socialism. On the contrary, they expressly delegated to Congress the power to provide for the general welfare.

Although our liberal ancestors fought a revolution against unfair taxes imposed by the English crown, they in turn expressly delegated to their own Congress the power to “lay and collect taxes.” Thus, they were not opposed to taxes; they were only against those levied without representation from overseas.

Although the founders objected to laws and regulations written far away in London, they expressly gave their own Congress the power to regulate commerce between the states, and with foreign nations. They were not against regulation; they were only opposed to it when it originated, without their input, in England.

Although many of the American revolutionaries were wealthy landowners, they did not bar Congress from taking property. They only banned seizures that were “without due process of law.” In fact, the Constitution expressly allows the taking of private property for public use, provided “just compensation” is paid.

We often hear misguided right-wing politicians talk about the U.S. Constitution, as if they understood it. Some like Michelle Bachmann even confuse the Declaration of Independence, written in 1776, with the Constitution, adopted 11 years later, in 1787.

Under the U.S. Constitution, the Congress is free to impose taxes, regulate businesses engaged in interstate commerce, and to seize private property, if they have a public purpose. Our lawmakers expressly have the power to provide for the general welfare. The line between more or less socialism and capitalism is up to the Congress; as the Constitution does not mandate one or the other.

07/20/2011

Drug Companies Need To Be Regulated

The prices for prescription drugs in America are completely out-of-control to a point where the federal government must step in and regulate. Although Congressional Republicans will certainly oppose any intervention, the public needs to understand the issue, so they can elect Democrats, who may impose controls.

As a diabetic, I must inject insulin twice a day. The product I use is Novolog, manufactured by Novo Nordisk of Denmark. Its main competitor is Humalog, by Eli Lily Co. of Indianapolis, Indiana.

Because affordable health insurance is unavailable for me, I must pay cash for one of these medications. The problem is drug prices have been galloping upward, far greater than the rate of inflation, for some time now, and without reason.

When I was living in the Netherlands in 2007, a single bottle of Novolog cost 25 Euro, which translated to $33.00. In 2008, after returning to Wisconsin, the identical vile of insulin cost $91.77, almost three times the regulated Dutch price.

When I moved to St. Petersburg, Florida, in 2009, I shopped for the cheapest insulin, and started buying Novolog at a Walgreen’s, where it was $104.28 per bottle. It stayed at that price for a year.

In April 2010, the price increased to $109.99 per bottle, but that lasted only a few months. By Oct. 2010, the cost of the little insulin bottle had jumped to $121.99.

Three quarters of a year later, in July 2011, at a Walgreen’s back in Wisconsin, the price climbed once again to $132.99. I now pay $100 more per bottle than I did just five years ago.

Unfortunately, Eli Lilly and Novo Nordisk have a virtual monopoly as they control the world’s supply of insulin. Consumers have no choice, but to pay their unreasonable prices.

It’s not as if the drug companies need money. Eli Lilly grossed 23 billion in revenues in 2010, and realized over 5 billion dollars in profits.  Meanwhile, the profits at Novo Nordisk jumped 34% from 10.77 billion Kroner in 2009 to 14.4 billion Kroner in 2010.

As the greedy and selfish drug company personnel reward themselves at corporate outings with outrageously lavish paychecks and bonuses, someone should tell them their drug prices are unconscionable, and it is immoral to make billions off the backs of those who need their drugs, just to stay alive.

On the assumption the pharmaceutical companies could care less about the immorality of their abusive and obscene prices, the government needs to step in and take control by regulating them.

06/27/2011

Regulation Of Phones Was Not Bad

When my Verizon phone bill came to a higher than usual sum this month, I had to question it, since I rarely call anyone. As I examined it, I noticed I was charged extra for going over my 500 minutes. After a couple calls to Verizon, certain overcharges were reversed, but the episode reminded me of how things used to be.

In the old days, each geographic area had just one Telephone Company, which was granted a monopoly, but was regulated by the government. The system worked fairly well, as land line reception was good, monthly bills for local calls were a set sum, and the only added charges were for itemized long distance calls.

We did not pay for each and every local call. Users made as many of them as they wanted, no matter how many minutes were consumed. Now, the meter is constantly running as to local calls.

Back then, we were billed only for the long distance calls we placed to someone else. Now, we are charged every time someone calls us, locally or from a long distance, whether or not we want to talk to the caller. Even if the call is unsolicited, we get billed.

We are also subjected to other charges. This month, my bill once again had “messaging” charges, despite previously notifying Verizon on three separate occasions not to allow any texting. Since the phone company is unregulated, these abuses continue.

In the old days, the phone company would install phones and take them back when service ended. Now, consumers are forced to buy them. As the phone company continually upgrades equipment, they convince consumers to spend hundreds on the latest gadgets (most of which are not needed), while they reap huge profits.

The rate of inflation as to phone service and equipment over the past few decades has galloped in relation to other expenses. Since there are now only a few phone companies, there is little effective competition, and there continues to be a need for regulation.

While cell phones have been a major technological advance in terms of flexibility over the traditional land lines, the decline in federal regulation over phone companies has hurt consumers. It would be refreshing to hear politicians promote regulation again.

06/02/2011

Farm Subsidies: Created For A Reason

With current budget deficits and a growing national debt, some have asked whether we should eliminate U.S. farm subsidies, but a better question is: Why were they created in the first place?

The agricultural free market collapsed in the Great Depression, and could not recover on its own, because the farm economy stubbornly defied normal supply and demand curves. Agriculture was not like other economic sectors, because everyone needed to eat, and food demand remained constant. Since food demand never changed, the only variable that affected price was supply.

The supply problem, which continues today, is the production of more food than farmers can sell. U.S. farming is so efficient it creates an oversupply, which in turn pushes prices down, often below the cost of production. Although U.S. farmers were making enough food in the 1930s to feed the world, in the free market, they were unable to earn a living wage. They responded to low prices, by redoubling their efforts, and producing even more, with a hope of selling more, but this additional supply caused prices to drop even further, and took the entire farm sector to the brink.

The issue in 1934 was how to ensure a sustainable price for food, given the reality that supply routinely exceeded demand. Liberals argued for controls on agricultural supply, and subsidized minimum prices, to guarantee economic stability. The New Deal Democrats proceeded to make radical changes, as they replaced the capitalist free market system with a controlled economy. It was like creating a farm minimum wage. Once the government set the price for food, surpluses in supply became irrelevant.

The question now is whether the U.S. should once again adopt the capitalist agricultural free market that failed so miserably in the Great Depression. If there is one thing we sometimes learn from history, is that we don’t learn from history. If agriculture goes back to the unregulated free market that ushered in the Great Depression, it is reasonable to predict the system will fail again.

Terminating subsidies will return agriculture, a valuable necessity, to the chaos of free market forces. Excessive supply in relation to demand will cause prices to bottom out again. This will in turn trigger bankruptcies, and the ultimate loss of the farm sector.

While consumers may gain in the short run, once the domestic farm sector is out-of-business, the U.S. will become dependent on foreign producers, imported food supplies from abroad, and prices set in a global market place, well beyond our control.

A controlled economy using supply management and subsidized price controls is not an evil. We should think twice before we end the supply and price controls that have met our needs since 1934.

04/29/2011

U.S. Health Ins.–Pass A $100 Bill

The problem with the American health insurance system is that big insurance companies, big hospitals, and big government, all surrounded a great big conference table, exchanged big smiles and handshakes, and then agreed upon big premiums, big hospital bills, and big bailouts, but no one invited the forgotten little man, or has asked him what he thought.

I realize I am late to the table, but as that little man, I wasn’t invited. In any event, let me digress from the big plan, by interjecting a little idea. Let me start by saying: all of the big boys, with their big ideas, are wrong. The system needs to start with the little man. It must work from the bottom up, not the top down.

The first question in crafting an affordable health care system is: What can the little man afford? By comparison, auto insurance for me runs about $1,200 per year, or $100 per month. While it is much more expensive than it needs to be, it is affordable. It covers liability of $100,000 per person, and $300,000 per occurrence.

I propose a $100 Health Insurance Premium Act. The “$100 Bill,” as it would be known, would apply to all. A young single person would pay $100 per month for health insurance. A family of three would pay $300, and a family of four, $400, and so on.

By universally locking in the premium, all of the doubts and fears of the unknown cost of the health system would fade, and public approval would grow. Without galloping premiums, confidence would be restored. Employers would know their health care costs.

The next step would be for health insurance companies to collect the premiums and to calculate 20% off the top for all of their expenses, to be regulated and approved of by the government.

The third step would be for the government to mandate the coverage that must be provided, under all health policies, using 80% of the premiums collected. Minimum coverage would start at the bottom and work up, focusing on the most common or frequent health care needs, like semi-annual check-ups, sprained ankles, child birth, and so on. The mandatory coverage would stop at the point where 80% of the premiums are exhausted, since that is all we as a society can afford.

The “$100 Bill” would insure the greatest amount of good for the greatest number of people. Our objective as a society should be to provide health insurance to as many Americans as possible.

While some may fear that brain-dead persons in vegetative states will be unplugged from their life support systems, after time, they will stop being plugged-in, and the issue will become academic.

The nation cannot continue Cadillac health coverage, based on the price of a Chevy. We are going to have to end our long test drive with the Cadillac, and return to the days when Americans saw the USA in their Chevrolets.

04/28/2011

Dutch Health Care: A U.S. Model

After teaching one night class at the University of Wisconsin-LaCrosse for 8 years between 1995 and 2003, I looked into turning my part-time contract into a full-time position, so I could have health insurance. Although the pay for teaching 3 to 4 classes per semester, as a non-tenured lecturer, was not great, the insurance was attractive, since it was absolutely unaffordable at my self-employed day job.

As luck would have it, a tenured professor resigned in 2003, and a position opened. So, I ceased to be self-employed, and started lecturing full-time. 15 months later, while finishing my last class of the day, I noticed a severe pain across my chest and into my arms, as I was having my first heart attack. At the hospital in Wisconsin, 2 stents were inserted to open my vessels. Luckily, the university’s health care paid all of the charges in the amount of $44,523. I was fortunate to have dodged a bullet with insurance.

After the search committee at Wisconsin finally found a new Phd, I moved to the Netherlands to participate in a one-year program at Utrecht University. To live there, I was required by law to have health insurance. So, in 2006, I purchased a Dutch plan for an annual premium of 445 Euro, the equivalent of $567. No questions were asked about pre-existing conditions or prior care.

Five months after arriving in the Netherlands, I had a second heart attack in Dec. 2006. The Dutch care was different, in that it was better. Unlike Wisconsin, where I laid there for what seemed to be an eternity, before permission from the insurance carrier was obtained to keep me alive, the Dutch doctors went right to work, as they knew everyone in their country was covered. They didn’t have to waste any time asking about coverage.

A cardiologist inserted two stents in my heart, and opened up my arteries, including one that had been 100% blocked, but written off in Wisconsin, because the American doctors thought it was too hard to get to. I was copied in on the Dutch ambulance, hospital and doctor bills, and they totaled 7,024 Euro, which translated to $8,920.00. My care in Holland was only one-fifth the cost of the identical care in Wisconsin, but in some ways much better. I was very fortunate to have had my second heart attack on their soil.

I learned several lessons from having virtually identical heart procedures in Wisconsin in Dec. 2004, and in Holland in Dec. 2006: 1) Dutch health insurance premiums are significantly lower and affordable; 2) Dutch insurance asked no questions about pre-existing conditions or care; 3) Dutch doctors got to work immediately, without wasting any time trying to find out if I was covered, since everyone is covered; 4) Dutch charges for the identical treatment of inserting two stents in my heart was only one-fifth the U.S. costs; 5) Dutch follow-up care was superb, as I never waited very long at all to see a doctor; 6) Dutch care, all things considered, was better than what I received in the U.S.

Politically, the lessons are: 1) Don’t listen to right-wing nut jobs, who try to convince Americans that European health care is somehow sub-standard, since it is not; 2) If the Dutch can cover everyone with pre-existing conditions, then so can we. 3) If the Dutch can run their health insurance companies, while charging much lower premiums, so can we; 4) If the Dutch can operate their hospitals on one-fifth the billings and costs, then so can we. We in the U.S. should consider the Dutch health care model.