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Saturday, March 31, 2007



I think the thoughts that Walter E. Williams has are brilliant, must be way I read him a lot.

This article has to deal with the role the Supreme Court has in making laws. In particular, the role lobbyists play in our government. Williams essentially boils down the role of congress to a football team, and of course (as he does in all of his articles it seems), economics.

His conclusion of the role the Supreme Court now plays fits perfectly with our recent discussions involving FDR and how he stacked the court. Professor Eubanks discussion of jurisprudence also comes into play. If we had a Court which held previous decisions true and did not "flip flop" on decisions, then stacking the court would not be an issue. Then, if Congress wanted to impose a law that favored a group (such as farmers (see "Economics & Government" blog) or sugar beet farmers), they would have to add an amendment to the Constitution. Thus, putting earmarks in budget bills favoring one group over another, might stop. Of course, what then would our Congressmen and women do all day?

Tuesday, March 27, 2007


Should price floors always be illegal?

A retailer in Texas ( Kay's Kloset) was selling products from Leegin Creative Leather Products in their store. To maintain competitive pricing with other larger retailers they discounted the products 20%. Leegin demanded that they and other retailers offering the discount prices put the prices back up or leegin would no longer ship them products. All of the retailers but Kay's Kloset raised the prices. Leegin, as promised discontinued sending them products. Kay's Kloset lost half of their business. The lower court ruled in favor of Kay's Kloset and awarded them $3.6 million. Kay's Kloset was suing for price fixing. Leegin holds that the prices were pro-competitive because they fostered competition with other brands. The Bush administration holds that it is inappropriate to automatically prohibit price floor agreements when they are not necessarily anti competitive. The case is now before the supreme court.

There are several things that I take issue with in this case. First lets look at the seller buyer relationship. Leegin was unhappy with the market for their products. They seem to feel that their products are worth more. The retailers seemed to disagree. Once the retailers have bought the goods they are theirs and should be allowed to resell them as they see fit. If the manufacturer wants the goods to sell for more they should make their selling prices higher forcing the prices that they want to be charged. After the retailer has possession of the goods I do not believe that the seller should hare anything further to do with the transaction. Furthermore, The retailer opted not to charge the higher prices and so no longer received shipments. Certainly, a manufacturer has the right to their goods and who they sell them to. The retailer opted not to fit into that criteria they have no right to compensation. If the prices that the seller wanted to charge were too high then people would not have bought them and the seller would lose money and change its prices. All indications of this case seem to suggest that the market should be allowed to correct itself.

Now we need to consider if the government is correcting a market failure? Price floors and price ceilings seem to go along with monopoly power. Is the regulation of this particular price floor within the scope of governments power? It does not seem to me that the manufacturer is trying to create a monopoly. If their claims are true and they are just trying to stay competitive in the market then there are substitutes for their goods. Entry into the leather market is not particularly difficult. the retailer claims to have lost half its business so it would seem that perhaps the prices asked for are in fact the market prices. No other retailers had a problem charging the higher prices. Perhaps I am mistaken but it seems to me that there is no cause here for government intervention. The actors made market choices and they should be allowed to play out. I cannot see that this price floor is of the kind referenced in the Sherman Anti Trust Act. People may chose to buy other leather products.

Monday, March 26, 2007


Is a DVR Recording Copyright Infringement?

Cablevision developed a new way to use DVR systems by providing remote storage instead of hard drive storage on the system itself, one storage unit per person. This remote storage would allow for easy access and probably more storage space than current DVR systems. The problem is that the pseudo-monopolized market, which includes studios and cable networks, believe that this DVR storage is causing infringement issues. To try and downplay the havoc being created by the studios and cable networks, Cablevision is going out of its way to prove that they are not infringing on current copyright laws. Cablevision is using the Supreme Courts decision in 1984 regarding VCR's, that the VCR recordings were legal media. This new system is no different than current DVR's like TiVo that record media and store it on the hard drives, only these hard drives are remote. The studios and cable networks disagree, and state that the process allows the recording to be re-played for free and without approval for those transmissions, referring to them as video-on-demand services. They are still fighting for revenues lost to other competition such as Netflix, Podcast, etc. that is downloadable by consumers and can be replayed after paying only once, not several times.

This has rent-seeking written all over it! The studios and cable networks had a monopoly in this market for years and it has been crumbling because of new technology. So they are fighting this DVR market, Podcast, satellite television, downloadable movies and Internet movie rentals. This is causing a limitation to competition. Because of rent-seeking the Government could intervene and cause this new technology to withdraw, or push license or fees on it so much that it may not survive. It goes against Mancur Olson's economic prosperity system and causes an inefficient economy.

Thursday, March 01, 2007


High Court tests limits of student speach rights

As the Olympic torched passed through Juneau, Alaska, in 2002, a high school senior Joseph Frederick along with some friends unveiled a banner which read "Bong Hits 4 Jesus" as an attempt to get on TV. The principal of the school (Deborah Morse) tore down the banner and suspended Frederick for 10 days saying that because the word "bong" was a reference to marijuana, the sign violated the school's anti-drug policy. On March 19th the U.S. Supreme Court will hear the arguments in Morse V. Frederick. Similar school policies, many inspired by Colorado's Columbine incident, have banned students from wearing clothing or posting signs that focus on drugs, guns or incendiary topics such as homosexuality, abortion and religion.

In a similar case in 1969 three Iowa students who wore black armbands to school to protest the Vietnam War were suspend and went to court saying their first amendment rights had been violated. The Supreme court ruled in favor of the teenagers, saying, " it can hardly be argued that either students or teachers shed their constitutional rights to freedom of speech or expression at the schoolhouse gate."

When the U.S. Court of Appeals for the 9th circuit ruled in favor of Frederick last year in the Juneau case it cited the "Newsom decision" saying, "our sister circuits have similarly held that student speech that is neither plainly offensive nor school-sponsored can be prohibited only where the school district demonstrated a risk of substantial disruption."

I believe the Court of Appeals was correct and just because we enter a school building we do not loose our Constitutional rights. I would hope the supreme courts finds in favor of Frederick, because if we give up our first amendments rights in school, whats next?


O'Malley Endorses State Ban On Smoking

In Maryland, the state government is attempting to pass a law that would ban smoking in public establishments. Most people would agree that this law is not only beneficial to non-smoking customers, but also to the businesses that have allowed smoking in the past. Obviously, non-smokers would no longer have to suffer foggy smoke clouds that most bars and many restaurants have become accustomed to, and business owners are likely to see a boost in overall sales since non-smokers will no longer be avoiding their establishment due to smokey conditions.

Some have said that non-smoking laws will lose businesses money because the smokers wont want to go to the establishments their accustomed to if they cant smoke inside. A bogus argument i think. Smokers aren't going to boycott public establishments all together because of a minor inconvenience. Colorado passed the same law not to long ago. The restaurant that I bar tend for saw an obvious increase in sales. Our smoker regulars still came in just as frequently as they had before except they were smoking outside. And new customers also came in clearly stating that they had come in because they didn't have to worry about the smoke anymore.

While this law may infringe on the liberty of some people, its better for society as a whole to adopt this. Not only will public establishments make more money through higher sales, but people will be able to enjoy cleaner places to go blow all their money. And as we know, the more money that people spend, the more money businesses make, the better the economy becomes.


Supreme Court denies Writ of Habeas Corpus and Constitutional rights.

Mathew Musladin was denied the petition of habeas corpus by the Supreme Court earlier this month. He was convicted for the murder of Tom Struder in the case of Carey v. Musladin. Musladin thought he was denied a fair trial because family members of Struder wore buttons bearing the victims picture. He had asked the judge to have the family remove their buttons, but the judge would not comply. According to the article (link attached); One could argue, on the one hand , that when jurors observe the grief and solidarity of a victim's family members- evident in the buttons they wear- each day of the trial, the jurors are likely to feel obligated to do something to acknowledge and ameliorate the grief (Colb, 1).

The Supreme Court stood by the judge. It felt that the actions of the family were not within the control of the court system. The only way to effectively petition the court for writ of habeas corpus is to prove state action. The state action doctrine says that a person must be acting on behalf of the government to compel bias towards a defendant. As the families were not under the employ of the state, their actions did not violate Musladin's constitutional rights. This distinction, however, should not carry much force in the context of a trial... A judge controls a courtroom, so once a defendant has specifically asked the judge to order that some display be stopped, the judge's refusal to grant the defendant's request qualifies as state action (Colb, 2).

The Supreme Court failed to protect Mathew Musladin's Constitutional rights. It could be argued that his right to due process of law was violated under the fourteenth and possibly fifth amendments. One may not speak out of turn in court, as this could lead to a contempt charge. The same follows for the actions and attire of the courtroom audience. The Judge could have made the family remove the buttons. Once the judge opts to act in any way which effects the court, the state has intervened. State intervention is almost implied when a person stands trial. If a person such as Musladin must face punishment by the state, the state must have the responsibility to make sure that punishment is meted appropriately.

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