A Challenge to Virginia’s Very Bad Happy Hour Regulations

I lived in Northern Virginia for pert near ten years. Shortly after moving there, I learned from Scott Bullock at the Institute for Justice that Virginia had a particularly bad set of rules governing alcohol.

Every bar owner, for example, is required to pay the full list retail price for booze. No case discounts. No promotional benefits for buying this versus that. Oh, and all of that alcohol has to be purchased at the same state-owned stores where the rest of us get our booze.

But it didn’t stop there. Bar owners also are prohibited from alerting potential customers to information about drink specials. That is, bars aren’t allowed to tell passersby about the actual benefits of their own happy hours.

Austin Bragg and I produced a short video detailing this issue in 2009.

Now, thank goodness, the Pacific Legal Foundation and Chef Geoff are challenging these rules. The restrictions are obviously unconstitutional, but commercial speech just hasn’t received the protection it deserves.

The Virginia rules strictly circumscribe the acceptable terminology for advertising happy hours. The firm’s case notes say, “While the state allows happy hour specials, it bans advertising happy hour prices, as well as the use of any terms other than ‘happy hour’ or ‘drink specials.’ Also, while restaurants may offer half-priced drinks, it’s illegal to call these specials ‘two-for-one.'”

This is an overdue and welcome challenge.

Trade War Intensifies

In my humble opinion, this is the winning argument for free trade. Imports are, as often as not, inputs into other manufacturing. These intermediate goods, if you care about employment in domestic industries that need these products, should be sourced as competitively as possible. Enterprising reporters should note which local businesses make extensive use of these inputs and find out what they think.

The tariffs that POTUS wants to impose on steel and aluminum will make products made by Americans that make extensive use of steel and aluminum more expensive.

Public Pensions: Risk Finds A Way

What’s missing from almost all discussions about pension reform is the idea that every time the market goes down, taxpayers are on the hook. Unfortunately, given the current structure of state pensions, that outcome is unavoidable and likely to be repeated.

The case for keeping public pensions in their current form hinges on, among other things, the idea that a portfolio weighted heavily in stocks provides something of a “free lunch” to taxpayers and it makes some sense. Taxpayers pay a relatively small amount into pension funds for each government worker, the market will very likely go up over that worker’s career, and taxpayers don’t have to pay the difference between their contribution and the benefits paid to the worker.

But there ain’t no such thing as a free lunch.

What has happened in Kentucky and other states is this: Lawmakers watched as markets boomed in the 1990s and chose to pare back contributions in order to fund more immediate spending desires. Lawmakers also found small ways to boost benefits for public workers because, after all, look at all the money in that fund! When markets tanked, as they inevitably sometimes do, taxpayers suddenly found themselves in the position of responsibility for the gap. The money that should have gone to maintain pension funding levels had already been spent elsewhere.

This kind of grasshopper thinking might not be much of a problem if that retirement plan were owned and funded by the same single individual. If you choose not to contribute to your own retirement fund, that’s your choice and I wish you the best of luck. No one else should be on the hook for your shortsightedness. But that’s very different from how public pensions operate. In short, the pensioners must be paid as a matter of contractual obligation.

Commentators and would-be reformers are almost entirely focused on getting that funding back to the exclusion of changing the system. The problem is that this time, decades later, the costs can be absorbed by precisely two groups: taxpayers and pensioners.

The Wall Street Journal notes that public pensions are still heavily weighted in stocks, and at least one of the biggest funds in Kentucky is more heavily into stocks than most pension funds.

The $19.9 billion Teachers’ Retirement System of Kentucky now has 62% of its assets in equities, close to the 64% it had in 2007. It sold $303 million in stocks Jan. 19-20 to rebalance its portfolio following gains. From Feb. 6-8, as U.S. markets plunged, the fund bought another $103.5 million of stocks.

“We are definitely a long-term investor and look to volatility as an investing opportunity,” said Beau Barnes, the system’s deputy executive secretary and general counsel.

Lawmakers are giving precious little attention to the idea that getting taxpayers out of the public employee retirement business should be the overriding goal.

A Gift for the Man Who Has Everything

Suggested Christmas gifts for the man who has everything?

Your suggestion should meet the following criteria …

1. He’ll own no more stuff after you give him the gift.
2. His life will be better.

I’ll start with a few:

Re-season all of his cast iron cookware.
Have all of his knives professionally sharpened.
Take him on a depraved weekend bender.
Replace expired items in his bug-out bag.
Watch his kid(s) for a day/night/weekend/week/month/childhood.

Your suggestions?

Update: My friend Sharon sends along a few others …

Change oil in his car?
Invite priest to make weekly visits toward saving his soul?
Install new batteries in his smoke detectors (toward saving his body)?
Visit his family in his place (toward saving his sanity)?
Tickets to Stones concert (reminding him that he, too, will get old and wrinkly and that he can’t always get what he wants, but sometimes he just might get what he needs).

Kinsley on Citizens United

This is a well-considered analogy from Michael Kinsley, one I wish more people would consider when they cry foul when (some) corporations decide to spend money advancing their preferred ideas or candidates:

The analogy I like (as did the Supreme Court in its ruling) is to a newspaper. Suppose Citizens United were reversed and President Trump decided one day that he was sick of The New York Times. So he proposes a law setting a ceiling on the amount any individual or organization can spend putting out a newspaper. Constitutional? I hope not. But it’s hard to see the difference in principle between this and a law limiting the amount a corporation or union may spend promoting a political candidate.

I recently chatted with Kentucky Congressman John Yarmuth about his proposal to remove First Amendment protections for many public discussions of federal candidates. He wasn’t particularly convincing in presenting an argument on behalf of an amendment that would strip away the constitutional protections for media outlets to discuss candidates openly while simultaneously asking that I trust Congress to delicately reanimate the corpse of the McCain-Feingold campaign finance rules prohibiting corporations (but not Trusted Media Outlets) from having their say. I have a hard time thinking that Congress, given the opportunity, would craft a proper balance between the interests of Democratic Government and the rights of individuals to band together and say whatever they think needs to be heard.

Listen here:

RIP Lowell Reese

Lowell Reese was a journalist who cared deeply about the rules that governed the game. His decades in journalism, his sharp mind, and his kind heart all contributed to his engaged, deep, often meticulous data-driven reporting on politics and policy.

More than that, Lowell Reese was a helpful, generous friend to anyone who wanted to understand practical politics on a deeper level. He gave me important information that drove my studies into Kentucky’s pension system, for which I wrote more than a little bit. In the process of writing on this subject, there weren’t many people to talk to, and Lowell Reese was absolutely invaluable as I tried to understand the ground-level realities of the incentives that drive Kentucky’s pension plans.

I came to know Lowell well while working for the Bluegrass Institute, directing the group’s KentuckyVotes.org platform to track lawmakers’ daily activities in Frankfort.

It’s fun to remember how energizing Lowell was to me, Chris Derry, and Jim Waters as we worked to get the project off the ground and bring that all-important daily rundown of lawmakers’ votes to the public for free. His enthusiasm for the project played out through introductions to helpful lawmakers, helpful staff at the Legislative Research Commission and the various people who had either pull or knowledge to help us move the project forward. I can never thank him enough for so gleefully giving me access to his network.

When I moved to Frankfort to run the project throughout the legislative session and write for Kentucky Gazette, Lowell revealed himself to be a great friend, as well. Always interested in what I knew and freely giving of what he knew, we held occasional meetings in the maddeningly beautiful office behind his home. It was, I recall, the perfect perch for an independent journalist: a life’s work on the walls and a relaxed, engaged journalist behind the desk.

The big issue toward the end of Lowell’s life was pension transparency. You’d be forgiven for thinking this meant he was concerned only about abuses perpetrated by Wall Street profiteers on the poor, defenseless managers of billion-dollar pension funds. Private equity’s appeal to pension managers is a big problem, to be sure, and Lowell was concerned about it, but for him this was at most half of the problem associated with a lack of transparency in pension finance.

Lowell was also intensely concerned with the manner in which individual public sector workers could make relatively minor adjustments in their working lives to trigger massive pension payouts. He made various estimates of how a little-known bill, HB 299, passed in 2005, would allow some Kentucky lawmakers to make a few key moves with respect to their employment and pensions to increase their lifetime wealth by a million dollars or more.

It’s a bigger issue than just lawmakers, of course, and the kind of data detailing the size of pension payouts and and various decisions that balloon pensions is also still shrouded in mystery. But thanks in no small part to Lowell Reese, that issue is on the table like never before.

Only since Kentucky Gazette published his obituary have I learned that Lowell was apparently an active Republican campaigner. Personality driven politics were rarely a part of our discussions. What made Lowell interesting to me was his own interest in the consequences of ideas and appropriateness of rules.

Here’s more from Kentucky Gazette and more from Jim Waters, and some more precise details of his later projects with the Bluegrass Institute.

Frank Zappa, Conservative

Here’s a remarkably clear description of the entrepreneur’s role from Frank Zappa. In short, the risks are big, the rewards are uncertain and the personnel should be focused on the mission or they should leave.

In the late 1980s, I recall Zappa appearing on “Crossfire” to discuss the problems associated with attempts to limit or punish artists who use off-color language or produce work that deals with off-color themes. At one point in the discussion, he defiantly calls himself a “conservative.” Given this description of what an entrepreneur actually does, I now more fully understand what he meant.

This should be required listening for anyone (*cough* Republicans *cough*) who claim to admire those who take big financial risks in pursuit of big rewards.