The 9th Circuit strikes again…. via LA Times (here):

SAN FRANCISCO — A sharply divided federal appeals court in California on Monday exposed Wal-Mart Stores Inc. to billions of dollars in legal damages when it ruled a massive class action lawsuit alleging gender discrimination over pay for female workers can go to trial….

Now I don’t claim to be a lawyer and haven’t even played one on tv, but part of the dissent seems obvious to me:

…Judge Sandra Ikuta wrote a blistering dissent, joined by four of her colleagues.

“No court has ever certified a class like this one, until now. And with good reason,” Ikuta wrote. “In this case, six women who have worked in thirteen of Wal-Mart’s 3,400 stores seek to represent every woman who has worked in those stores over the course of the last decade — a class estimated in 2001 to include more than 1.5 million women.”…

Maybe they like being overturned (here from 2007)?

…The 9th Circuit also has a long-running streak as the most overturned, which went unbroken this year. The Supreme Court reviewed 22 cases from the 9th Circuit last term, and it reversed or vacated 19 times….

Via WSJ, The Big Brown Union Bailout

If you can’t beat ‘em, have Congress hobble ‘em. That’s the motto of some in corporate America, and Exhibit A might be United Parcel Service’s campaign to get Washington to impose its labor woes on rival Federal Express. This would be one more union bailout at the expense of business competition and economic efficiency….

This is a continuation of this administration’s policies to pay off unions at the expense of others (DA posts here).

Via Reason.com, GM’s Phony Bailout Payback

Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy….  So when Whitacre publishes a column with the headline, “The GM Bailout: Paid Back in Full,” most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case….

I say if you want to buy American, buy Ford – no bailout money and still going strong.

& cool science news via e!Science (here):

…In a study published as an Advance Online Publication in the journal Nature Nanotechnology on Sunday, physicists at Ohio University and the University of Hamburg in Germany present the first images of spin in action….

DA has several posts on the reasons behind the economic collapse as well as financial reform itself.  &, as is usual, the government is using the “crisis” as a power grab.

@ MarketWatch (here):

…The comprehensive bill is an attempt fix holes in the regulatory system that helped lead to the Great Recession….

At this point, Republicans are blocking a Senate vote:

…Among the sticking points are provisions that would give regulators the authority to guarantee debts of large financial institutions, provisions that would give the Federal Reserve authority to lend money to banks in an emergency, and a proposal to deal with failing systemically important companies by setting up a “burial insurance” fund….

Now I’m no fan of the Republicans and understand full well some of their opposition is about politics and not the actual bill, but I’m pleased with this block. First, guaranteeing debts of larger financial institutions does the exact opposite of the administration’s consistently stated goal – end too big too fail. @ MarketWatch (here):

NEW YORK (MarketWatch) — The U.S. must pass legislation to reform the financial system , in particular to make sure that no bank operates on the assumption that it will be bailed out by taxpayers, Lawrence Summers, the director of the National Economic Council and President Barack Obama’s top economic adviser, said Sunday.

“We must end too big to fail,” he said on Face the Nation. “There is no one associated with the White House who believes “too big to fail” is acceptable, or that it’s acceptable for financial institutions to rely on a bailout.”…

@ Daily Finance (here):

Too big to fail? This isn’t a designation that the Obama administration wants to exist any more….

& the President himself via YouTube (here). Insuring potential debts for very large institutions which might fail, is insuring too big to fail continues.  In this particular case, the logic is obvious and inescapable.  If an institution becomes very large, then the government designates them as whatever, which in turn tells the investing public that that institution is backed by the federal government. This will not only give larger banks an advantage (would you rather invest in a business you know won’t be allowed to fail or one that you know will be allowed to fail?), making it more difficult for smaller banks to compete, but actually incents banks to become big enough to get the designation itself. But why stop there? @ MarketWatch (here):

…The legislation would set up a new agency to protect consumers from lending abuses. It would also give the government the authority to wind down big financial institutions, and expand oversight of the derivatives market….

Soooooo… the government, which continued to support Fannie and Freddie after being told by numerous groups the risk they posed, the government which regulated ratings agencies who gave triple-A bond ratings to MBSs, the government who’s economic predictions have failed again and again needs yet another agency from which to fail?  Maybe it’s just me, but I thought the justice system was supposed to protect consumers… But that’s simply not enough power either.  They also need more control over the derivatives market.  You know, the market which had nothing to do with the economic crisis.  They also plan to more heavily regulate pay-day loan companies.  Not sure what they had to do with the crisis either… I think Alan Reynolds @ Cato stated it very well (here):

The Obama administration thinks it has discovered the perfect formula to cram legislation through in a hurry:  Demonize some prominent firm within an industry you plan to redesign, and then pass a law that has nothing to do with the accusation against the demonized firm.  They did this with health insurance and now they’re trying it with finance.

However it’s said and whatever is said, this legislation will do the opposite of its theoretical intent.  It will not protect anyone, but  hurt all consumers.  By adding more and more layers of of regulations, the barriers to entry are increased for everyone, hurting competition, and raising prices for the end consumer.

I have long been of the belief that our President is not stupid.  He’s always seemed very smart, especially with respect to Constitutional law.

For instance, in 2001, he stated correctly, that the Constitution is a charter which guarantees negative liberties.  For some this might seem obvious, but I doubt most of our current politicians understand what he meant and what is meant by the statement itself.

Now Mr. Obama’s policies belie the notion that he agrees the Constitution should be a defender of only negative liberties, but I think it was an instructive quote on his understanding of the fundamental principles which made America what it is.

Irregardless, over the time of his presidency, I’ve seen more clues to insecurity and lack of basic focus through the administration’s constant attempts to attack various news outlets and pundits directly, as well as the President’s comments without teleprompters.

& Last week was little exception.  @ Newsweek Blogs, Mr. Obama, when being asked about the new SCOTUS nominee stated (here):

“I don’t have litmus tests around any of these issues, but I will say that I want somebody who is going to be interpreting our Constitution in a way that takes into account individual rights, and that includes women’s rights, and that is going to be something that is very important to me.”

With all due respect to the President and anyone who agrees with this statement, but logically individual rights are mutually exclusive to “women’s” rights.

By definition, an individual right would be one that can be held and exercised by any individual, whereas any collective right, such as women’s rights, is the exact opposite; a right held by that group.

Maybe this is overly pedantic, but words have meanings & regardless of what “ism” might or might not be practiced by this administration, collectivist thought is the enemy as it serves as the basis for most of the world’s failed political philosophies.

As Calvin Coolidge stated:

“Liberty  is not collective, it is personal. All liberty is individual liberty.”

Over @ HBR Blogs, Jeff Goldsmith asks the following question: Has the U.S. Health Technology Sector Run Out of Gas?.  Looking historically, he notes the amazing progress since the 1970s, but a decline in that growth since 2000:

…Technological innovation — in pharmaceuticals, biotechnology, medical devices including imaging, and enterprise IT — exploded in the thirty year period 1970 to 2000…

…Then about a decade ago, the US medical technology sector entered a prolonged innovation drought. In pharmaceuticals, new drug introductions declined by almost two thirds, while drugs patented in the latter part of the boom period lost protection, this despite a near tripling in R+D outlays. (New drug introductions rebounded modestly in 2008 and 2009, but still haven’t regained their 2004 levels)….

He goes further to note that this dip in activity wasn’t just about new drugs:

…The drought wasn’t confined to pharmaceuticals and biotechnology. Imaging, a dazzling success story for three decades, has seemingly run out of gas. Imaging equipment sales collapsed precipitously in the US, by roughly 40%…

…Enterprise clinical information technology seems to have hit a similar flat spot. The major commercial IT platforms for hospitals and health systems are more than a decade old.

& all of that makes complete sense based upon what we know about the last couple of decades.

Since the mid-1990s (well really, since the 1960′s), we have increased regulation on the medical industry on a constant basis.  From minor changes in who qualifies, to new regulations such as HIPA, to very large new regulatory pressures such as the Medicare Prescription Drug Benefit, resulting in an explosive growth in government expenditures of health care:

There have also been additional pressures.  Increases in financial and IT regulations through SOX and other legislation have increased companies’ weariness to put themselves at risk and increased costs of doing business.

These pressures in increasing the costs of doing business, combined with the federal government expenditures crowding out private spending, has resulted in higher costs for businesses and therefore consumers as well.  The new heath care and financial overhaul bills will continue this pressure.

The big cost however is what the author notes:  the lack on innovation.  When the government seeks to consistently erect new and more costly barriers to entry, competition will naturally decline.  The correlation to that behavior is that costs will grow more rapidly as we know competition in the long-term generates downward pressure on prices.

As we see now – prices are increasing, availability is decreasing, as the government decreases the availability of future competition in industries the government tightly controls such as health care.  Conversely with those industries with fewer barriers to entry have downward pressure on prices, such as cell phone or internet providers.

While I consider this failure of centralized control as a major factor, Mr. Goldsmith posits three contributing factors, risk aversion from management, size and increasing bureaucracy, and the fact that we are losing out globally for scientific talent:

1. Firms that used to be run by scientists and engineers are now run by attorneys and marketing executives….
2. Their ability to foster innovation has succumbed to a bureaucratic management culture….
3. Bright young foreign science and technology graduates are returning to India or China instead of staying here and creating new products or companies….

While I agree with all of these things, I think reasons 1 & 3 can be combined easily to a more basic point about government interference and centralized control.  Indeed they are symptoms of the problem and not necessarily the disease.

Having said that, I think it’s also important to note that reason number 2 exists due to the same thinking reasons 1 & 3 do – the belief that centralized control is a nominal good (DA post on business trends here).

The author seems remiss in not making the connection, even if he did eloquently, maybe unwittingly, stumble across it when writing about global competition:

…If they have more freedom to innovate in their home countries, that’s where they’ll go….

For as long as we continue to discuss symptoms and not the actual disease, we will continue to miss the point.