Posts tagged ‘Rhode Island’

Our Business Needs Government Funding Because We Don't Want To Drive Out Of State To Talk To Bankers

This is from an article in Distro, free publication that Engadget pushes to my iPad.  The only version I can find to link to is this pig of a pdf.  The article is on 38 Studios, the Curt Shilling video game company that the taxpayers of Rhode Island lost over $50 million funding.  This is a justification for a similar tech funding program in Nevada:

“The Catalyst Fund and the NCIC Fund are two of the best things that have happened in Nevada in the time that I’ve been here,” he said. “The biggest challenge facing Nevada is that we have very little in the way of risk capital. Our funding capacity is only a fraction of what our actual funding needs are.”

Meanwhile, most of the limited venture money available in the area tends to be in the hands of investors who lack familiarity with the tech sector, said Colin Loretz, co-founder and CEO of Web-based  startup Cloudsnap. Loretz — whose company recently received support from startup accelerator TechStars — ended up going out of state to secure funding from investors in San Antonio and San Francisco.

“What we’ve always found was that there were few funding options in Reno, and most of them didn’t understand what we were doing,” Loretz said. “They were very, very knowledgeable in more traditional areas such as manufacturing, mining and clean energy, but not cloud services.”

This is simply bizarre.  Why does every single geographical box we might draw on the map need to be self-sufficient in tech venture capital?  What is the big deal about going out-of-state for investment.  It can't be hard to do, since the person speaking actually did exactly that himself.

According to Google Maps, Sand Hill Road, the epicenter of tech venture capital, is just 4 hours and 24 minutes from downtown Reno by car.  That makes the venture capitalists in Menlo Park closer to Reno than to LA.  What is the big freaking deal that makes it so important for Nevada to have in-state tech venture capital, even at the cost of blowing a lot of taxpayer money to get there?

By the way, I thought this was a funny adjunct to that justification:

Meanwhile, Nevada officials said they have learned from the problems experienced by other states and built the necessary protections into their programs. Management of the NCIC fund, for example, will be overseen by a private equity firm, said Nevada State Treasurer Kate Marshall.

We need a state private equity fund because we have no private equity expertise in Nevada.  The state fund will be run well because we will put the (supposedly nonexistent) state private equity experts in charge of it.  Not to worry.  No chance at all that this state money will just be used to back and bail out the private equity managers' investments.

The article is light on details about how the whole Rhode Island debacle went down.  I would really like to find a step by step history that shows how debacles like this occur.

Where is Coyote?

I am on the road for a week long trip combining business (visits to some parks the government wants us to manage), college interviews, and baseball camps (the latter two for my son).  I will end up staying in or driving through Virginia, W. Virginia, Maryland, Pennsylvania, New Jersey, New York, Massachusetts, New Hampshire, Maine, Rhode Island, and Connecticut.

The Looming Failure of Obamacare, Part 3: Rent-Seeking

The third installment of my series on Obamacare is now up at Forbes.  An excerpt:

In the health care field, the Holy Grail of rent-seeking is to get one’s medical device, drug, or procedure added to state health insurance mandates.  Before Obamacare, health care insurance regulation had been a state function, and each state had written laws mandating that all health insurance policies written in the state must cover certain services.   By getting one’s particular service added to such a mandate, the service essentially becomes “free” to consumers in that state  (of course it’s not free — everyone pays in the form of higher premiums, but the marginal price for the service goes to zero).

Imagine you have a procedure — let’s use laser elimination of birthmarks as an example.   This procedures requires a series of treatments using a fairly expensive piece of equipment to produce results that are of enormous value to a few people with extensive birthmarks, and of smaller value to many other people with smaller birthmarks.  Business growth in such a field is typically good at first as those who most value the procedure pay for it.  But it can be hard to grow outside of a relatively small niche, as most potential customers may consider it to be an expensive elective cosmetic procedure that, given other uses for their money, they can do without.  What can an aspiring dermatologic surgeon do?  Run to the government!

In 1997, the University of Indiana conducted a study of the laser treatment of these birthmarks.  I don’t know who funded the study, but tellingly the study findings did not really touch on the efficacy of the treatment or its risks.  The study surveyed a number of dermatologic surgeons.  What was its primary finding?  ”Based on current health care policy guidelines, laser treatment of port-wine stains should be regarded, and covered, as a medical necessity by all insurance providers.”  In other words, the sole purpose of this research was to convince legislators to add this procedure to their state’s  insurance mandates.   To date, this procedure has been added to the must-carry list in only two states, but in those two states doctors no longer have to convince price-sensitive patients that this elective procedure is worth the cost – after all, its free!

As you can imagine, the cost of these mandates are staggering for those of us who pay the premiums.  State governments are requiring us to pay higher insurance rates in order to cover procedures we might never consider.   Four states have mandated coverage for naturopaths;  three for athletic trainers; one for oriental medicine; eleven for hair prosthesis; four for massage therapists; and three for pastoral counselors.  The state with the most such mandates is Rhode Island, with 70, a state which not coincidently also has the third highest insurance premiums in the country.

On a quasi-related note, John Goodman has thoughts on "government failure" (an analog to market failure) as it applied to health care.  It is a point that cannot be made too often.  Merely pointing out supposed imperfect outcomes from private action does not immediately justify government action -- too often people take the default position that if an improved outcome can be imagined, the government can achieve it.  But does this ever happen?  In health care, the irony is that many of the supposed market failures we are "fixing" with Obamacare are in fact results of past ham-handed government action.

Government Health Care: Only For the Little People

Not much I even need to add to this, via Riehl World View:

On Tuesday, the Senate health committee voted 12-11 in favor of a two-page amendment courtesy of Republican Tom Coburn that would require all Members and their staffs to enroll in any new government-run health plan. Yet all Democrats -- with the exceptions of acting chairman Chris Dodd, Barbara Mikulski and Ted Kennedy via proxy -- voted nay.

In other words, Sherrod Brown and Sheldon Whitehouse won't themselves join a plan that "will offer benefits that are as good as those available through private insurance plans -- or better," as the Ohio and Rhode Island liberals put it in a recent op-ed. And even a self-described socialist like Vermont's Bernie Sanders, who supports a government-only system, wouldn't sign himself up.

Does anyone else find this reminiscent of Obama's decision to send accept a scholarship for his own education, send his kids to private school in DC, and then, nearly as his first action as President, kill the voucher program that let other African American kids in DC go to private school.

Horrible Verdict

In what we may look back on as one of the worst and most destructive jury verdicts of the decade, three paint makers were found guilty of selling lead paint back when it was, well, legal:

A Rhode Island jury today found Sherwin-Williams Co. and two other
paintmakers guilty of creating a 'public nuisance' by manufacturing
lead paint after it was found to be dangerous." If upheld, the verdict
will force the companies to contribute millions toward abatement of
existing paint; a judge will also consider demands for punitive
damages. The ruling, the first of its kind, is also expected to
encourage the filing of more suits against the industry

As Walter Olson points out, the suit was dreamed up by veteran law firms from tobacco and asbestos lawsuits, using bits of both litigation models:

The verdict is an unfortunate confirmation that the "tobacco model" of
mass tort litigation remains alive and well. In particular,
contingency-fee private counsel have once again managed to 1) dream up
a novel idea for litigation based on the idea that some category of
public expenditure is really blameable on long-ago sales of a product;
2) sell the idea of suing to public officials who agree to front the
action, and who thus provide (along with advocacy groups) a suitably
public face for the lawsuit; and 3) manage to get liability attributed
retroactively to businesses whose actions decades ago were plainly
lawful under the standards of that time.

The firm Ness Motley who is RI's partner in this, is, surprise surprise, the largest single political donor in the state.

The WSJ($) has more thoughts today about why this verdict is so bad:

There are so many screwy aspects to this case that
it's hard to know where to begin. The jurors heard no evidence about an
injured party, nor were they informed of any specific house or building
that constituted the "nuisance." As for the defendants, Judge Michael
Silverstein instructed the jury that it wasn't necessary to find that
Sherwin-Williams, NL Industries and Millennium Holdings had actually
manufactured the paint present in Rhode Island or that they had even
sold it there.

Oh, and did we mention that at the time the companies
may or may not have sold lead paint in Rhode Island it was an entirely
lawful product? "The fact that the conduct that caused the nuisance is
lawful does not preclude liability," Judge Silverstein said. Lead paint
was banned for residential use in 1978.

So why is this such a big deal?  One only has to look at the situation in asbestos to see the potential ramifications.  The asbestos mess began, sensibly enough I guess, with lawyers suing makers and heavy users of asbestos products into bankruptcy for the benefit of people seriously ill (though one can argue that most of these cases belonged in the workers comp. system, but workers comp. doesn't allow those juicy punitive damage payments that pay the fuel bills for the lawyers' Gulfstream V's).  Eventually, the asbestos mass tort morphed into lawyers suing any company with deep pockets that had even heard of the word asbestos for the benefit of tens of thousands of people who had never been harmed but only claimed to have been present in the same zip code as asbestos. 

Here is the problem with the potential lead paint mass tort:  It has skipped right to the asbestos end-game, bypassing the "helping people who were seriously harmed" stage and jumping right to the settlements for billions without proof of any related injury.  And for all the ubiquity of asbestos, lead paint was even more prevalent in its day.  Will Sears be bankrupted for selling lead paint?  Will auto-makers and homebuilders be bankrupted for using it?   And, separately, will any of the settlement money that flows to states really go to lead paint abatement, or will most go to general revenue, as it did with tobacco?

OK, so its clear why those of use who care about stuff like property rights and individual responsibility might be appalled at this decision, but you progressive public policy types should be appalled as well.  If this thing gets rolling, the country will end up diverting hundreds of billions of dollars to a problem, mainly childhood lead poisoning, that while not solved has really been greatly reduced over the past few years.  Just to get a sense of scale, for example, we are talking about far more money potentially focused on lead paint than the total spent today publicly and privately on AIDS and cancer research combined.  Totally insane.

Phallocrats of the World, Unite

This letter to the editor at SIU about embattled professor Jonathon Bean is hilarious if parody, and even funnier if real.  The letter begins:

To the Editor:

My eyes were edged with tears as I read Caleb
Hale's article
in the Southern which exposed Southern Illinois University at
Carbondale history ("His-Story") Professor Jonathan Bean as a racist
hate-mongering phallocrat.

"Phallocrat" -- I love that term!  Great name for a new political party.  Stealing a joke shamelessly from one of the commenters:  "you are going to elect a dick anyway, so vote Phallocrat".

Backstory on the whole blowup at SIU is here, but the gist is that professor Bean is being excoriated for having the temerity to suggest one (1) piece of optional reading in his course (which has scads of required reading from African-American writers about white racism) about an incident of black racism.

Update:  Oh no!  The campus phallocrats are meeting stiff resistance in Rhode Island.