California Keeps Lawyers Occupied as Common Sense Falls by the Wayside

Here are two California stories that caught my eye this weekend. This first appeared in Reason magazine.

San Francisco Bill Would Let People Sue Grocery Stores for Closing Too Quickly

A proposed ordinance would empower people to sue supermarkets that close without giving the city six months' advance notice.

* * *  

Now, here is my question: Will a bill like this incentivize ANY businessperson to start a grocery store in San Francisco? The intentions may be good (to take care of the community's food necessities during the six months they prepare for alternative grocery supplies) but the long term effect will be to create the opposite effect. No new grocery store will move into that neighborhood because it's too high risk. 

There are already too many regulators and regulations in California. I remember reading a story a number of year back in which someone wanted to start an albacore business. They had to get approvals from nearly 50 agencies before they even opened. After opening they were fined $25,000 because they had not obtained approval from yet another agency that they had never even heard of. 

The story in Reason noted that grocery store executives had been warning that layers of process (red tape) would make it less likely that grocery stores would even do business there in the first place.

As I've noted repeatedly, incentives matter. Make it easy to do business and you get more businesses (and jobs). The harder you make it to do business, the fewer entrepreneurs and risk takers you'll have in your town, city or state. 

Read the full account here at Reason.

ON THE ENERGY FRONT

In January, Joe Biden and the Department of Energy coughed up $1.1 billion to keep Diablo Canyon running. This move came after Governor Gavin Newsom of California put his foot down, saying the plant, originally slated to shut down in 2025, had to stay open to prevent blackouts.

In response, California environmentalists are now throwing a fit and suing to shut down the very same Diablo Canyon reactor, the state’s final nuclear power plant. This plant produces about 9% of California's juice. 

Meanwhile, lawmakers are running feasibility studies to see if they can get buy-in for next-gen nuclear reactors. They know Californians won't be thrilled if they don't keep the lights on. It's not a given.      

You can read a more complete account at The Center Square: California enviros sue to close last nuclear plant providing 9% of state's power 

  

One of the Downsides of Our Contemporary Culture

This is a story from Stocktwits, a daily email newsletter that gives a recap of what's happening in the market, etc. In addition to summarizing the day's Wall Street activities, they pass along stories and do in-depth breakdowns of specific companies that seem to be flying to the moon or heading into the swamp.

At the end of each newsletter they have a "Bullets From The Day" section of one paragraph summaries of various events. Yesterday's Bullets were as follows:

 Hertz to buy up to 175,000 EVs from General Motors.

 Apple App Store announces international price hikes.

 Two veteran sports execs launch Velocity Capital Management.

 Judge denies bid to stop UnitedHealth’s acquisition plan.

And finally, this one, today's lead Bullet:

Cancer victims urge the court to end the J&J bankruptcy roadblock. People suing Johnson & Johnson over its talc products urged an appeals court on Monday to revive their claims, saying it should not be allowed to use a bankrupt subsidiary to block lawsuits alleging the products cause cancer. The company spun off its subsidiary in October, assigned its talc liabilities to it, and then placed it into bankruptcy. The commonly used restructuring strategy paused about 38,000 lawsuits J&J was facing and sent the victims into a state of perpetual litigation

* * * *

If the talc issue is legit, it's shameful that J&J can skirt responsibility like that. Then again, the tobacco industry hasn't been put out of business even though that link to cancer is self-evident. The government likes the tax revenue generated by tobacco addicts. 

And if the talc issue is not legit, it's sad the extremes to which companies must go to defend themselves from endless litigation about nearly everything.

I'm curious how much money is spent on attorneys that could have been spent on research and development to make companies stronger as they launch into the future. Then again, I can hear people saying that the money spent on lawyers would probably just end up in the pockets of CEOs and their ilk. 

I dunno. It seems like the whole country is wrapped up in legal red tape. Has it always been this way? 

Well, I know that Daniel Boone was frustrated with all the red tape people were tangled in right from the start of this nation. The Kentucky pioneer was a land surveyor. He helped settlers identify their lands and get title deeds. For reasons I am unsure of, many of these would get challenged and the people would lose their land. Over time, to make things right he gave away all the land he personally owned, disgusted with the lawyers and the legal system.

By 1800 the U.S. was only on its second presidency and Boone, 66 at the time, was so fed up he left the country he bailed. He went West across the Mississippi to land owned by France. At last, he could live free. 

Unfortunately, in 1803 Thomas Jefferson made a deal with France, which we know now as the Louisiana Purchase. It stretched from New Orleans to Minnesota, North Dakota and Montana, more than a half billion acres, all for the sum of $18 million. For us this is just a history datapoint, maybe the correct answer to a question on a quiz. But for Daniel Boone, and the sons who joined him in his exodus, this was a serious bummer. He was back in the "civilized" world, with all its legal entanglements.

The point is, we have way too much red tape, too many rules and regulations, hurdles to jump, walls to bust through. And it's stifling our economy.

Map Illustration Credit: William Morris, CC BY-SA 4.0 via Wikimedia Commons

Born Feet First

I was born feet first. First-born son of four boys. You don’t meet many people born feet first any more… it’s considered too dangerous. If they can’t get you to do a U-turn they do a C-section.

For Christmas I received Steve Martin’s autobiography, Born Standing Up, a really good book which I wholeheartedly recommend. I was not born standing up, however. Just feet first. Not enough muscle tone in my legs, so when I hit the floor I just crumpled.

I am sure you’ve noticed that we live in an intensely risk averse culture. They don’t let us do ANYTHING dangerous any more. Ever notice that? Kids have to ride bikes with helmets on. Seatbelts are mandatory. Somehow we survived our childhoods without seatbelts or airbags. We played tackle football without pads almost every single day for years with only one broken bone that I know of, and I wasn’t even there for that one. But today, it is amazing what they will not let kids do.

There are schools where sack races are outlawed because insurance premiums are too high. Kids can’t give each other piggy back rides on the playground. Oranges and watermelons have beeneliminated in some schools because kids might choke on the seeds. (“Let them eat chocolate!" And of course they have pop machines.) And there are places where kids can’t make paper airplanes because some boys will throw them too hard.

Now when I was a kid, my brother and I knew how to have real paper airplane wars. We made paper airplanes with pins sticking out the nose of the plane. We each made a small paper plane air force, then played a variation of dodge ball in the family room. (Do not try this at home!) Yes, my mother did freak and we only did that once. I guess it never occurred to us that you could put an eye out. Instead of passing laws against paper airplanes, let teachers have the power to discipline the kids who get out of hand. That, unfortunately, is too complicated.

It’s hard to say which is the bigger culprit for this epidemic of safety and risk aversion, whether it’s lawyer or politicians. Two examples will suffice to show the problem. The first involves lawyers.

Sears made lawnmowers that were not easy to start. You had to yank a cord and sometimes, due to a wide variety of factors it took a little work to get that sucker started in the spring. Well, guy dies of a heart attack and the lawyers make a case that Sears is at fault because the lawn mowers are too hard to start. They fix the problem by making a push button electric start so the mower is no longer hard to start. In fact, it is so easy to start that they end up with a couple instances of kids getting digits removed. The lawyers have a field day with this and get millions more from the company.

Sears has solved this problem, however. We just bought a new mower. It comes with a technician who starts it for you. Nice little guy. We keep him in the garage with the cat. We’ve also trained him to feed the goose and duck when he lets them out in the morning.

It’s easy to see how the lawyers have contributed to the problem. But politicians also have a long history of helping turning common sense into nonsense by passing laws to protect us from ourselves. The following will illustrate. And the pattern is one that politicians maintain even to this day.

In 1901 there were only 2 automobiles in Kansas. As chance would have it, they both happened to be in the same town at the same time and entered the same intersection from different angles. There was a deadly accident.

Kansas politicians had an emergency session and followed up with a law that you must stop your car after every mile and fire a flare into the air, to let other vehicles know you are coming.

You can picture the scene. Kansas, early 1902. Cop car is hiding behind bushes. Sees car go buy without stopping to light flares for a while. The vehicle is speeding (22 miles per hour) and being steered erratically. The cop pulls him over and walks up to the driver’s side. It’s a middle aged couple and the wife starts pleading. “Officer, please, whatever we’re being stopped for, my husband didn’t know what he was doing. He’s too inebriated to be behind a wheel.”

“That’s OK, m’am. Drunk driving is not against the law yet in these parts. Mister, are you aware that you drove over two miles without firing a flare? I’m going to have to write you a citation.”

When politicians put a law like that on the books, it makes you wonder just how long it stayed that way before they realized how silly it was. My guess is that many of these laws are still on the books. And now we know what happened to the American Dream.