The Lincoln Park Raid

The Harris family had lived in Lincoln Park, Chicago since 1970. Since then, it had become a wealthy neighborhood, but they had stayed put, despite offers of over a million dollars for their dilapidated home. The owner is now 77. His son Michael lived there, who had a history of burglary and shoplifting, and other relatives too, with cleaner records. Then they were raided by the police. Here are some excerpts from the news story (but read the whole thing):

No meth was found inside the Harris home. The police did arrest two family members on animal-related misdemeanors, and took away four dogs. But they found no evidence of the crimes some neighbors had suspected, the kind that typically call for 40 officers. No drugs. No guns. No dogfighting. The 40 officers on the scene — from the Chicago Police Department Animal Crimes Unit, two SWAT teams and the Cook County Sheriff's Department — left....

As the smoke cleared, a building inspector arrived. The Harrises knew that their house was rundown. In a neighborhood of new mansions, it stood out, with its bedraggled American flag, the window fan, the brown wooden steps that sloped straight to the sidewalk. But they had never been issued a building code violation. Now the inspector wrote down dozens of infractions, and made another list for an adjacent home where two of the Harris daughters live. Bad wiring, clogged gutters, torn siding, broken plaster, rotting window sashes, unsanitary living conditions. An emergency order to vacate was issued....

From the beginning, friends and relations were in and out of the Harris house on Sheffield. Mr. Harris masterminded the community garden. Friends sat out front talking, drinking and playing checkers, customs the family maintained through the decades, sometimes to the consternation of new neighbors who conducted their social lives in the privacy of back patios and decks....

After the raid, a news release about it appeared on the 18th District CAPS website. The release, noting that citizens had complained of animal cruelty and "gang/drug sales," concluded with the statement: "This is an excellent example of the police and citizens working together." What the release did not note, however, was that no one was charged with "gang/drug" sales. It did not note that Michael Harris was arrested only for the largely unknown misdemeanor of being a felon in possession of non-neutered dogs. After he got out of jail, he collected money from neighbors to have one of the dogs, Kiki, spayed and returned to the family. Meanwhile, the case against one of the Harrises' grandsons, Andrew, 21, remains in court. According to the misdemeanor charges, his two pit bulls were malnourished and maltreated. According to the family, they were fed and watered daily and never used to fight.

Building codes are a response to asymmetric information. Animal cruelty laws can be seen a a response to externalities--- that some people feel disutility if other people mistreat animals. What does the Harris story tell of the dangers of regulation?

A Tax Software Merger

In "U.S. Sues to Stop H&R Block Deal for Rival,", the WSJ says:

The Department of Justice filed a civil antitrust lawsuit on Monday to stop the biggest U.S. tax preparer, H&R Block Inc. from buying the maker of a rival, do-it-yourself tax preparation product called TaxAct....
The top three companies in the field account for 90% of the sales of online tax programs and do-it-yourself tax-filing computer software.

The proposed purchase "would combine the second- and third-largest providers in that market and essentially create a duopoly," the department alleged in a complaint filed in a Washington, D.C., federal court. H&R Block had agreed to buy 2nd Story Software, or 2SS, in a transaction valued at $287.5 million in October.

TaxAct has served as "a maverick in the market," prompting its two rivals to lower prices by introducing such innovations as offering free filing of federal tax returns on the Internet in 2005, the Justice department said. The department's complaint cites internal H&R Block emails that it said show Block wanted to buy the TaxAct maker to "regain control of industry pricing and avoid further price erosion."
... The department cited an internal H&R Block email saying that "the other possible strategic consideration is that Intuit and HRB together would have 84% of the digital market and we both obviously have great incentive to keep this channel profitable."

Will blocking this merger encourage further entry into the industry?

One thing I wonder is why the US government does not itself give away or sell tax preparation software. Is there a good reason for it not to?

A Successful Lobbying Campaign--- The Connecticut Education Reform Bill Watered Down

The second biggest teacher's union is the AFT, the American Federation of Teachers (the biggest is the National Education Association, made up of state unions such as the CEA, Connecticut Education Association). They put a powerpoint presentation, "How Connecticut Diffused The Parent Trigger" on their website (in pdf) explaining in detail how they gutted a bill that would have given parents more power over poorly-performing schools. Rather than kill it, they purposely kept it alive but made it empty of meaning.

This is standard stuff, and a good case study for how a business can affect legislation, but the webpage "The AFT’s Real Feelings about Parent Power" criticized it, and it didn't look good that prominent on the slide "What Helped Us" was "Absence of charter school and parent groups
from the table". As I said in class, though, that's central to politics--- if you're unorganized or rationally ignorant, your surplus is weighted less heavily or not at all in politics.

Should Judges Be Appointed, Elected, or Chosen by a Nonpartisan Commission?

"Missouri: Trial-Lawyer Heaven" at National Review's Bench Memos blog says:

Late last week Missouri’s judicial-nominating commission selected the three nominees from which Gov. Jay Nixon must choose the state’s next supreme-court justice. ...
Three of the commission’s seven members have extremely strong ties to the state’s trial lawyers, and the chairman, Chief Justice Richard Teitelman, is on the board of the Soros-funded American Judicature Society. So it shouldn’t surprise anyone that the commission came through with a trial lawyer’s wish-list.

The Missouri Plan was designed to produce precisely this sort of result. The progressive legal reformers who came up with the idea saw it as the surest way of placing control over judicial selection in the hands of “experts,” left-leaning bar apparatchiks. ... It does so by allowing a commission, usually lawyer-dominated, to make the judicial nominations. Not surprisingly, this structure benefits the special-interest group that dominates the state bar: trial lawyers. Textbook agency-capture.

Justice O’Connor and her allies in various Soros-funded groups have been campaigning across the country on the argument that the Missouri Plan is a non-political method for selecting judges. ... They argue that, unlike the federal model or contested elections, the Missouri Plan removes partisanship and money from the equation and forces “merit” ahead of philosophical considerations.

As the Wall Street Journal documented (see here and here), former Republican governor Matt Blunt was repeatedly sent lists of trial lawyers and Democrats. And Professor Brian Fitzpatrick’s empirical study of the Missouri Plan nominees demonstrates that it would probably be impossible to tilt judicial nominations further to the left without actually having the Democratic party itself pick the judges.

"The Dog Ate My Homework" Bill

In "A Late Addition Worth $214 Million: Amendment to the Patent Reform Bill Last Week Would Benefit Powerful Law Firm, Drug Company," Roll Call magazine writes about what is known in the blogosphere as the "The Dog Ate My Homework" bill:

The House might have sworn off earmarks, but that didn’t stop the chamber from essentially passing one last week that would allow a single drug company to avoid generic competition while saving a powerful law firm from paying out $214 million in a malpractice suit.

The amendment, authored by Rep. John Conyers (D-Mich.) and added to the patent reform bill Thursday, would have a direct benefit for the Medicines Co. by essentially ensuring it retains control of the patent for Angiomax, a blood-thinning medication and MDCO’s flagship product.

The provision would also be a financial boon to WilmerHale, which since February has had a malpractice settlement with MDCO hanging over its head that would require the firm to pay $214 million to the drug company — $115 million out of its own pocket and $99 million from malpractice insurance — if a generic drug is introduced before June 15, 2015.

Here's how the saga started:

At issue is MDCO’s 2000 application to maintain its patent over Angiomax. Following approval of the sale of the drug by the Food and Drug Administration in December 2000, the company had 60 days to file for a patent extension, which under the law would have precluded the sale of generic versions of the drug until 2014.

WilmerHale attorneys handling the application for MDCO technically filed the extension 61 days after the approval, and because the Patent and Trademark Office does not have authority to give applicants wiggle room in filing, the application was denied, meaning generics would hit shelves in 2010, costing MDCO an estimated $500 million to $1 billion in profits.

Here's the business strategy:

To regain control of the patent, MDCO opened up a three-pronged offensive. It filed suit against the PTO, arguing that because the FDA used a different interpretation to calculate the 60-day permit trigger, its 61-day filing time actually fell within the PTO’s definition.

MDCO also began malpractice proceedings against WilmerHale over its handling of the patent extension, while both MDCO and WilmerHale launched an aggressive effort to pass legislation overturning the extension rejection.

Over the next several years, MDCO and WilmerHale spent millions of dollars lobbying Congress, and several ultimately unsuccessful efforts to pass the legislation were attempted.

The amendment was sponsored by the Detroiter who I think is the longest-serving current member of the House, John Conyers:

In a floor statement before Thursday’s vote, Conyers, the Judiciary Committee’s top Democrat, called the language a “bipartisan amendment” that would make a “technical — but important — revision” to federal patent law.

“It addresses confusion regarding the calculation of the filing period for patent term extension applications,” Conyers said, adding that, “By eliminating confusion regarding the deadline for patent term extension applications, this amendment provides the certainty necessary to encourage costly investments in lifesaving medical research.”

For reference (you don't have to read it): Medicines v. Kappos, 731 F.Supp.2d 470 (2010).

The Canadian Government Wheat Monopoly

Canada Is Taking Aim at Its Wheat Monopoly says the WSJ:

The Canadian Wheat Board is poised to lose its monopoly grip on the country's wheat sales. Canada's Conservative Party captured a parliamentary majority this past spring, and newly elected government officials took that as a mandate to end the wheat board's reign.

The ripple effects from eliminating—or even weakening—the board's power would be widespread. Wheat prices, which already have experienced extreme highs and lows over the past three years, could become more volatile, some analysts say....

Farmers who favor the board, including its current chairman Allen Oberg, contend the benefits far outweigh the cross-border price differences that can emerge. By controlling the whole crop, the board has considerable power in global commodity markets to ensure Canadian farmers get the best price. Farmers also get an up-front payment that is backed by the government, and the board doesn't aim for a profit, so more money goes back to farmers than under an open-market system....

The board basically sells the grains and then divides the returns among the wheat and barley growers in western Canada.

So farmers get the average price over the course of a year, never capturing the top of the market, but also never selling at annual lows.

The board has added other pricing options over the years, including allowing farmers to sell their crop up-front for a fixed price.

The estimated return for a Canadian farmer in the board's traditional sales program is estimated at $7.19 to $7.48 a bushel for the spring wheat coming out of the fields now. That compares with Wednesday's U.S. cash price of $8.85 a bushel, according to MGEX.

The wheat board cautions against trying to compare the price Canadian farmers are expected to receive against current market prices in the U.S., saying the timing, location and system of sales are all different.

Judicial Fundraising

Indiana Barrister says

On September 15, supporters of Marion County Superior Court Judge Becky Pierson-Treacy are hosting a fundrasier here in Indianapolis. No biggie, right? Well instead of a flat donation request, they’ve allowed for different levels of donating.

* $150 gets you a “Sustained”
* $250 gets you “Affirmed”
* $500 gets you “So Ordered”
* $1000 gets you “Favorable Ruling”

and, in another post,

Apparently Marion County Superior Court Judge Becky Pierson-Treacy is telling fellow judges and lawyers that she and husband Marion County Democratic Chairman Ed Treacy were just joking when they put out their fundraiser invitation that suggested a $1000 contribution will get you a “favorable ruling”....

A number of lawyers who dabble in politics have asked why she even needed to raise money in the first place as judges in Marion County are slated and usually win.

The free market at work?