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News and stories from the campaign to reclaim individual responsibility and liberate Americans from bureaucracy and legal fear.

Blog — Government

Non-Compete Clauses for Camp Counselors

By James R. Maxeiner

Massachusetts Governor Deval Patrick has proposed a ban on non-compete clauses in employment contracts. In Massachusetts, employers have been imposing these clauses not just on senior management and technical experts, but increasingly on lower level employees such as teenage camp counselors and hair-stylists. The clauses prevent workers from taking new jobs--even though employees are sometimes not even aware that they have entered into such an agreement.

The Governor’s proposal implicates three Common Good themes: (1) consistent laws; (2) litigation costs; and (3) laws that don’t micromanage, but facilitate individual responsibility.

Most states deal with employment non-compete clauses using what is called the "rule of reason." Whether a clause is reasonable or not is determined based on precedent, balancing employee interest with employer interest--how the employee’s competition might hurt a legitimate interest of the former employer.

Not all states permit employee non-compete agreements. California prohibits them.

Why? California doesn’t want to keep people from working. If people are unemployed, the state may have to pay them unemployment compensation or welfare.

Backers say that non-compete clauses allow businesses to invest in employees without having to worry that they are training potential competitors. Employees don’t have worry, because the law allows only reasonable restraints. It seems sometimes non-compete agreements make sense and other times they do not. Governor Patrick has suggested the ban might be limited to the technology industry. What should Massachusetts do?

  1. Consistent laws. No matter what Massachusetts does, the United States will still have a patchwork of laws governing employee non-compete clauses. Today, many jobs, especially in high tech, know no geographic boundaries. Which law governs: a strict California prohibition, a lax Texas or Florida law, or a law somewhere in between? A national solution is needed.
  2. Litigation costs. The rule of reason is a rough-and-ready rule that may work well enough in theory, but is burdened in real life by a dysfunctional litigation system. There is little that prevents an unreasonable employer from imposing an unreasonable non-compete clause and then threatening to sue a departing employee. Since there is no shifting of litigation costs, even the employee who wins, loses.
  3. Party responsibility. The rule of reason, at least where an employer is unreasonable, requires that a court decide whether the employer has a legitimate interest. Is there a way to make sure that an employer does not act illegitimately without requiring court intervention? As it is now, the employer has little risk in including a non-compete clause in an employment contract. Buried in fine type, many employees may not even be aware of it. How might the law promote legitimate agreements (knowingly entered into) and discourage illegitimate ones (inadvertently agreed to)? The law could require that a non-compete clause be separately agreed to. That would make sure that the employee knew about it. The law could require that the employer pay the employee half or more of the employee’s salary during the period of non-competition. That would make sure in most cases that the employer has a legitimate interest. It would also provide a measure of equity to the employee.

A national rule for non-compete clauses, subject to loser-pays application, requiring payment during the period of non-competition is no fiction.  It is already the law elsewhere. Law can be reasonable.

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“All Eggs Shall Be Cooked”

It doesn't take a Le Cordon Bleu chef to know you ought to cook eggs before serving them, especially in a nursing home. Yet that rule is part of a countless list of regulations governing Kansas nursing homes--rules so detailed and specific that workers are forced to devote most of their time to compliance, rather than actually improving the level of care.

This is just one of many examples of regulatory absurdity discussed in The Rule of Nobody, and it's one that caught the attention of Free-Range Kids founder Lenore Skenazy in an article for the Huffington Post:

This kind of ridiculous regulating pops up in pretty much every public sector. In fact, in my neighborhood, RIGHT NOW, workers outside the apartment building next door are tearing down the beautiful, wrought iron fence that has been there for 60+ years, because the city finally noticed (and cared) that it is 7 inches higher than allowed by local law.

What happens when we pile on laws like this that are excruciatingly precise, but don't make life any better for anyone?

A better approach? Write laws and regulations that set principles and goals, and give people the flexibility to achieve those goals efficiently and sensibly.

Read the rest of Lenore's piece here.

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Laws Should Have Expiration Dates

The message of The Rule of Nobody--that the accumulation of law and regulation over decades has made government impossible to run--is spreading. On Monday, the Boston Globe's Jeff Jacoby wrote that laws, like credit cards, should have expiration dates:

In the real world, things don’t last forever. The carton of milk in your refrigerator has an expiration date. So does the credit card in your wallet. Cars need periodic tune-ups. Medical prescriptions have to be reauthorized.

Government should operate on the same assumption. Every law should expire automatically after a fixed period of time — say, 12 or 15 years — unless lawmakers expressly vote to reauthorize it. Likewise every legislatively created agency and program. Members of Congress and state legislatures should be required to revisit their handiwork on a regular basis, reviewing it for relevance, efficacy, and soundness, and allowing measures that have outlived their usefulness to lapse.

Philip Howard has proposed a 28th Amendment to do just that:

Amendment XXVIII: No statute or regulation requiring expenditure of public or private resources (other than to oversee legal compliance or enforcement), shall be in force for longer than fifteen years. Congress may reenact such a law only after finding that it continues to serve the public interest and does not unnecessarily conflict or interfere with other priorities. Before making its determinations, Congress shall consider recommendations by an independent commission on whether and how to amend any such statute or program. At any time, Congress by majority vote of each house shall have the power to invalidate any regulation promulgated under a statutory delegation, without presentment to the President.

Read Jacoby's article here.

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Recommended Reading: Sen. Angus King’s Testimony on Regulatory Reform

The national debate around regulation is too often restricted to one dimension: Is it over-reaching or overly lax?

In truth, the broad problem with regulation at all levels of government has less to do with its content than its method. As a rule, U.S. regulations are increasingly minute, narrow, and numerous. One consequence of this approach is that regulatory approval often balloons to absurd proportions, leading to hopelessly delayed projects and enormous expense for no good reason. We've seen this time and again with environmental review for infrastructure projects. Projects with minimal or negligible environmental impact can be caught up in years of investigation, reporting, and litigation, stifling progress and making long-term planning very difficult.

Fortunately, this issue is finally getting some attention in Congress. Senator Angus King (I-ME) recently summed up the idea in testimony at a hearing with the Senate Committee on Homeland Security and Government Affairs:

Regulation is an essential function of our government and is critical to protecting the things our society values, like the environment, public health, and safety. However, I am opposed to senseless regulation--those rules that do not serve a greater public purpose and are burdensome or impede our ability to compete with the rest of the world.

King told the Subcommittee on the Efficiency and Effectiveness of Federal Programs and the Federal Workforce that our current regulatory permitting process is hopelessly protracted and inefficient. Fixing the process is imperative for the sake of American infrastructure and the economy--and, as King says, it doesn't have to come at the expense of environmental protection:

It bears mentioning that tough standards and a timely process need not be at odds with one another. When I was governor of Maine, I used to say that I wanted Maine to have the toughest environmental standards in the country coupled with the country’s most predictable, user-friendly process. A project’s desirability should be based upon its merits, and its viability should not be determined by its opponents’ ability to delay the regulatory process.

The answer is not to weaken regulatory protection, but to clarify and simplify the process. Doing so would promote construction that is both responsible and timely, and it would increase our ability to repair our failing national infrastructure. King's solution:

Can we find a way to permit major projects at a cost that is not extraordinarily prohibitive and within a reasonable time frame without trampling on the legitimate rights of the people impacted? I believe we can. One of the first steps we could take is to address the issue of serial permitting--i.e., the phenomenon of uncoordinated and successive permitting approvals for a single project. When I was governor of Maine, we addressed this problem by creating a system of "one-stop regulatory shopping," which put the responsibility of issuing the final permit within one agency and required all the other agencies to coordinate and consult with the lead agency.

I believe a similar process could work at the federal level, and two members of this subcommittee, Senator Portman and Senator McCaskill, have introduced a bill that takes this very approach. The bill--S. 1397, the Federal Permitting Improvement Act of 2013--would institute some important changes to federal permitting procedures, and I am proud to announce my co-sponsorship of the bill today.

You can read Senator King's full testimony here. Common Good's issue brief on infrastructure and environmental review is here.

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John Micklethwait & Philip K. Howard on Commissions

The Economist's editor-in-chief, John Micklethwait, recently joined Philip Howard for a discussion around their two recent books: Micklethwait's The Fourth Revolution and Howard's The Rule of Nobody. Watch an excerpt of their conversation here:

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Recommended Reading: “Up With Authority” by Victor Lee Austin

by Benjamin Miller

Philip Howard’s new book, The Rule of Nobody, reveals the consequences of entrusting governance to broken bureaucracies and accumulated, often outdated law. A concern that often arises in this discussion is with granting officials authority to use their judgment. An individual can make a bad call, the thinking goes, in contrast to the security of a systematic, (ostensibly) impartial legal and regulatory system.

It’s a concern worth considering. In The Rule of Nobody, Philip argues that if you simply look at the real, scandalous consequences of the heavily bureaucratic approach we’ve accepted (from exploding budgets to banned lemonade stands), it’s clear real people are needed to exercise judgment and instill common sense. There’s a positive angle as well: individuals with the authority to use good judgment can take pride in their work and strive to solve problems from the federal level down to individual communities.

Victor Lee Austin is a priest (and a personal friend), and his book Up With Authority concerns, in part, church hierarchy and doctrine. But Austin’s project—as suggested by the book's subtitle, "Why we need authority to flourish as human beings"—at its heart concerns this positive side of authority as it appears, or should appear, across not only religious communities, but also society and politics.

It’s unhealthy, Austin argues, to see authority as a necessary evil—an unavoidable cost of maintaining order that ought to be minimized. Rather, authority enables us as individuals and groups to do things that would otherwise be impossible. Consider a symphony orchestra:

Decisions must be made about phrasings, about tempo, about volume and blend of various instruments. On each of these questions there are many wrong answers, but there is also seldom just one right answer. So decisions must be made. And they must be made amongst alternatives which have equal reason. So someone, an authority, in this case the conductor, has to determine how the music will be played. And the musicians must accept the conductor’s determinations and play as she directs, or else there will be no music.

Does a musician lose his freedom when he plays as his conductor directs? …Without the authority of a conductor, that symphony never could be heard.

Now of course a conductor will sometimes make a bad decision. A conductor might even at times exhibit malice or bias, and there must be avenues of recourse for musicians who are unjustly treated. But these risks don’t mean that an orchestra would be better off without a conductor.

Teachers, regulators, and business owners may also make bad decisions from time to time. For decades we've tried to minimize such mistakes by writing increasingly specific laws and regulations. Thus over time we've severely constrained the ability of people in positions of authority to exercise discretion. But the antidote to bad decisions isn't to prevent decisions from being made at all.

As Austin puts it: "[T]he reality of evil in the form of fallible authority is not an argument against authority." Yes, people in positions of authority will sometimes make mistakes, errors in judgment, even willful wrongs. But that doesn't mean we would be better off without people—even fallible people—in positions of authority. We entrust individuals with authority not because they are perfect but because we believe they can make necessary decisions.

Up With Authority is available on Amazon and elsewhere.

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What Broke Washington

This weekend the Washington Post published an op-ed by Philip K. Howard which presents a case for combating government dysfunction. The diagnosis:

I think we have it backward. Polarization is mainly a symptom, not the cause, of paralysis. Democracy has become powerless. Politicians who are impotent have no way to compete except by pointing fingers.

The main culprit, ironically, is law. Generations of lawmakers and regulators have written so much law, in such detail, that officials are barred from acting sensibly. Like sediment in the harbor, law has piled up until it is almost impossible—indeed, illegal—for officials to make choices needed for government to get where it needs to go.

And the solution?

Human responsibility should be restored as the operating philosophy for democracy. Only real people, not bureaucratic rules, can make adjustments to balance a budget, or be fair, or change priorities. Democracy cannot function unless identifiable people can make public choices and be accountable for the results.

Read the full piece here.

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A Bridge Too Far: The President Visits the Tappan Zee Bridge

by James R. Maxeiner

At 16,014 feet long, the Tappan Zee Bridge that crosses the Hudson River at Tarrytown is the longest bridge in New York and among the fifty longest bridges in the United States. Although only sixty years old, the bridge has long been in need of replacement. President Obama’s May 14 visit to the Bridge gives us hope for infrastructure approval reform in America even as it reminds us of how far the United States has to go and of how long we must bear the costs of our failures to coordinate approvals.

President Obama touted that through his personal intervention, approval of the replacement bridge had been fast-tracked and that the time required for approval had been cut to one-and-one-half years from the “normal” three to five years (or, he might have added, from the not uncommon decade or longer required for some infrastructure projects, such as the Bayonne Bridge). Fast-tracking does not mean slipshod review; it does mean coordinating and reducing required approvals.

The President announced plans to apply the same strategy to eleven other major infrastructure projects. But that’s not good enough. We need coordinated approval to be the norm for all projects. Three to five years should be the exception, not the rule. Moreover, we need a strategy that coordinates infrastructure projects, period. Why?

NPR this week reported why the Tappan Zee Bridge is so long—crossing the Hudson at one of the river’s widest points. Why not at a narrower point? Because where the river narrows, the bridge—and its lucrative tolls—would have fallen within the jurisdiction of the Port Authority of New York & New Jersey. Governor Thomas Dewey wanted those tolls instead to raise revenue for highway construction. So the bridge was built, at great expense, at one of the widest points on the Hudson. And this political decision from sixty years ago predetermined where the new bridge is today being built: where the old bridge is, at the river’s widest point.

Governor Dewey’s political decision reminds us that while laws can anticipate the future, they cannot do so perfectly, and need to be updated periodically. In 1921 New York,  New Jersey, and federal laws created the Port Authority to facilitate cooperation between the two states, but they did not fully anticipate the growth of the New York City area over the next thirty years. In 1956, regional highway infrastructure cooperation became national policy when Congress created the Interstate Highway System. But the "bridge too far" had been finished the year before, too late to be moved.

President Obama’a visit reminds us that we should not wait another sixty years for a general coordination of infrastructure approvals.

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Press Release: President Obama’s Plan To Streamline Infrastructure Reviews

NEW YORK, May 15, 2014 /PRNewswire/ -- Common Good, the nonpartisan government reform coalition that has been championing reform of the nation's infrastructure review process, today praised President Obama's newly announced effort to streamline the infrastructure permitting process but said it will "carefully watch the details of the White House plan" as it develops.

Philip K. Howard, Founder and Chair of Common Good, said that the organization supports major elements of the President's plan, such as synchronizing agency reviews, shortening decision making times, allowing the public to track the status of permitting reviews, and creating an interagency infrastructure permitting authority to find ways to streamline the process.

"The President's plan embraces many ideas that Common Good has been actively promoting," Howard said. "It's a big step forward. But the devil, as always, is in the details. We want to make sure special interests don't hijack the plan to protect a failed status quo. We need real reform, not window-dressing."

A nationwide survey of U.S. voters conducted by the nonpartisan Clarus Research Group and commissioned by Common Good last November found that a majority of voters (61%) believe it would be possible to cut the amount of time it takes to do environmental reviews of infrastructure projects without harming the environment. A majority of every partisan group – Democrats (52%), Republicans (72%), and independents (59%) – agreed.

"Modern infrastructure is essential to America's way of life and a growing economy, and so are strong environmental protections. But when government can't even rebuild an unsafe bridge without years of unnecessary delay, something is terribly wrong," said Howard. "The system must be changed."

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Good Government vs Less Government

Howard's Daily by Philip K. Howard

“The problem with Howard’s ideas is that they rest on the naive fiction that there can be such a thing as ‘good government.’ In fact, the best we can hope for is less government.” So ends the critical review by Logan Albright of my new book The Rule of Nobody for the Von Mises Institute.     

Just get rid of government wherever possible. That’s the simple narrative that appeals to many conservatives. Government is indeed filled with obsolete programs, such as New Deal farm subsidies. It also smothers freedom with many overbearing regulations. Shutting down children’s lemonade stands for want of a vendor’s license, for example, is absurd. Moreover, it is hard to find any government program that isn’t broken in large part. The Social Security disability program, for example, is rife with abuse. Social Security itself, perhaps the most efficient social program, is on the road to insolvency. 

But the orthodoxy of smaller government doesn’t deal with the failures of what remains. Moreover, government has gotten ever bigger, even under Republican presidents, as the country confronted new challenges such as terrorism. Most citizens probably would vote for government oversight for clean restaurants, caring nursing homes, and airworthy planes.  

Instead of wholesale attacks on government, philosopher Roger Scruton argues in a thoughtful essay in the new issue of First Things ("The Good of Government"), conservatives should be more discriminating about where government is needed to enhance the culture of a free society. 

The important question—addressed by neither conservatives nor liberals—is why government works so badly. Environmental review shouldn’t take a decade. Starting a small business shouldn’t require permits from a dozen different agencies. Principals ought to be able to terminate ineffective teachers.   

Government is organized to fail, I argue in my new book, because nobody in modern government is free to make sensible choices. No one can say, "Oh there’s no need for kids to have a vendor’s license for a lemonade stand." The president lacks the authority to expedite rebuilding projects. The teacher can’t dismiss a disruptive student without risking a drawn-out legal proceeding. Everyone is shackled to detailed rulebooks. Government is run not by accountable officials, but by humans who are told to act like legal robots. Law has become central planning. It is hardly surprising that every encounter with government is an exercise in frustration when nobody—not the regulator, not the citizen—is free to adapt to the circumstances.  

A certain conservative orthodoxy, ironically, joins with liberals in demanding a central planning vision for public choices. Better legal shackles than a public official running amok. What if the official is a tyrant? That’s why the Nobel laureate Friedrich Hayek concluded in his early writings that "government in all its actions…[should be] bound by rules announced and fixed beforehand."

There are many flaws in this assumption that detailed law enhances freedom. The current system of several billion words of law does not protect against a regulatory tyrant. No one, not even large companies with hundreds of lawyers, can conceivably comply with volumes of detailed rules. When noncompliance is unavoidable, officials have carte blanche to be tyrants: "Sorry, you don’t comply with Rule 256 (v)(3) (iii)."

Moreover, our options for a government operating philosophy are not limited to 1) mindless rules or 2) anything goes. The Rule of Law can constrain officials with goals and general principles, while still providing flexibility to act sensibly. Our most important principles of law—say the "reasonable person" standard—always require application by reference to social norms. But, to some conservatives, the idea of an official having discretion—even limited discretion—is like holding a cross in front of Dracula. 

Here’s how Mr. Albright criticized my vision of law that leaves room for human judgment: 

"Howard suggests that an exhaustive list of food standards for nursing home could be simplified to a simple requirement that they provide ‘nutritious meals.’ This sounds like common sense, but what exactly is a nutritious meal? If the inspector happens to be a vegetarian, what is to stop them for forbidding red meat, when the residents and their families were perfectly happy to have it? Discretion allows the biases of individuals to creep into enforcement, and to pretend that anyone is capable of acting wholly without bias is to deny human nature."

Is requiring "nutritious meals" really an invitation to abuse? There are accepted guidelines for nutritious meals from professional medical societies. No inspector ever has unfettered discretion to demand whatever he wants. If an inspector demanded vegan meals for everyone, or caviar at dinner, the nursing home operator could just say no. To enforce his order the inspector would have to go to court. Who do you think would win?  

General principles of law are not invitations to tyranny but the opposite. "Standards that capture lay intuitions about right behavior," Judge Richard Posner notes, "may produce greater legal certainty than a network of precise…rules."

Principles are enforced according to current social norms. True, they leave room for argument. But so, usually, do precise rules. "Clear law" (with a few exceptions like speed limits and age eligibility) is generally a myth. Ambiguity is inherent in most language. With general principles, the argument focuses on right and wrong: Is this food nutritious? With precise rules, the argument focuses on parsing a legal language. The argument is no longer tethered to lay intuitions of what’s right.   

I know conservatives would prefer to have no regulation. But will de-regulated nursing homes pass muster in a democracy? Over 50% of nursing home residents suffer from dementia. Can we really rely on market forces? Mr. Albright may not trust government regulators, but I suspect most Americans wouldn’t trust nursing home operators either.    

How does it work out when rules permit human judgment? Airplanes are certified to be "airworthy" by FAA experts without detailed guidelines on how many rivets, etc. Would you prefer that market forces decide which planes can fly safely? Or, in the alternative, would you prefer a regime of thousands of rules where plane manufacturers can go to court, over the objections of FAA experts, and get a judge to decide that the plane complies with rules? Personally, I’d like the FAA experts to make the final decision. 

Nursing homes in America, notwithstanding a thousand rules, are generally awful. How do we make them better? Mr. Albright says deregulate. I suggest radically simplified standards for oversight. In the late 1980s Australia abandoned its detailed nursing home rule book and replaced it with 31 general principles that focused on goals, such as requiring "a homelike setting," and respecting the "dignity of the residents." Within a year, nursing homes were materially better, and they’ve continued to improve over time. The reason? People are empowered to do what they think is right, not act like mindless robots.

Mr. Albright places his faith mainly in markets:

"The market is a sorting mechanism that keeps these people in line in order to preserve their profits, but government is not subject to market pressures. As such, the problem is more fundamental than too much or too little rigidity. Government is fundamentally corrupt, as it rests entirely on the premise of coercive power. Rather than tinkering with the levels of discretionary authority officials possess, we would do better to limit their power."

I too believe in the effectiveness of markets. But markets are not always good at making moral judgments, or protecting against abuse. That’s why law is essential to freedom.

Just as unfettered government authority is an evil, so too an unfettered market can lead to evil. The trick is to have the right tension between government and markets, and to have accountability over government. Democracy too should be a kind of market, with people voting their preferences. Instead democracy is out of anyone’s control. It doesn’t matter much whom we elect, because the law tells everyone what to do. By clinging to the orthodoxy of detailed law, we have unwittingly removed accountability from democracy while trying to guarantee against its abuse. 

At the end of his life, Hayek recanted his demand for mechanical government, saying that he had reconsidered "the supposed greater certainty [when]…all rules of law have been laid down in written and codified form." Law works better, he concluded, when decisions are made "by generally held views of what is just."

Human initiative, not rules, make the world go round. This is what conservatives believe, and they are right. Then why don’t they see that the same truism applies to government? Government will never get fixed until humans within it are allowed the flexibility that goes along with taking responsibility. Only then can democracy hold them accountable for the many failings of modern government.

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