Category: Uncategorized

What would you say if someone figured out a way to reduce congestion by taking vans off the roads, reduce pollution, increase convenience, and reduce costs while helping the elderly and disabled by delivering groceries and meals to their doors?  Maybe a gesture of gratitude or a pat on the back for making life better for more people?  No, here in San Francisco in the heart of the tech capital of the world, not only is such technology not being welcomed with open arms—one member of the Board of Supervisors has proposed a total ban on robot deliveries.  According to Supervisor Norman Yee, “Our streets and our sidewalks are made for people, not robots.  This is consistent with how we operate in the city, where we don’t allow bikes or skateboards on sidewalks.”  On the positive side, San Francisco’s Small Business Commission voted 5-1 against the ban, but ultimately the entire Board of Supervisors will decide if the proposed ban will become law.  If past experience is any indicator, San Francisco will continue its role to “lead the nation” as The Banning Capital of the Country. 

First and foremost are the safety concerns of ban proponents.  At least that’s what they say.  The robots, which travel at around the mind-boggling speed of four miles per hour, are said to pose a danger to vulnerable populations like children, seniors, and folks with disabilities.  Notwithstanding the fact that autonomous delivery robots are highly visible and easy to avoid, they are equipped with sensors and cameras specifically designed to avoid running into pedestrians.  Furthermore, right now while the technology is relatively new, each robot is chaperoned by a live human being who could step in and take control in an emergency.  Absent any rules, regulations—or $1,000 fines plus a jail sentence as proposed by Yee—what business is going to let its robots wander the sidewalks, run amok, and mow pedestrians down?  What insurance company would insure a robot delivery company that didn’t have a safety plan in place, especially in today’s sue-happy society?  Since the insurance company would have to pay out big bucks if anyone were hurt, chances are very high that its safety standards would be more stringent than lax government safety standards with no accountability.  And, despite the fact that several states have passed laws allowing the robots to deliver food, flowers, and other small packages, and tens of thousands of pavement miles in cities around the world have already been logged by the robots, not one single robot accident has ever been recorded.  We assume that the possibility than an accident could occur is reason enough for the ban.     

The next biggest concern of the banners is the prospect of taking away “many entry level jobs that are shrinking away every day.”  The hypocrisy of the Luddites is breathtaking considering that it’s these very same folks who push for minimum wage increases and more mandated employee benefits and then suddenly are concerned about “shrinking” jobs.  Furthermore, while indeed some mundane delivery jobs would be lost to the delivery robots, other new jobs will be created.  Two robot companies named Dispatch and Marble are already operating in the Bay Area—and creating new jobs of their own.  After all, designing, building, testing, and improving robots requires someone to come up with a better and better product, and ultimately those high-tech jobs are more satisfying (and pay more) than delivery jobs.  Small Business Commission Chair Mark Dwight, who opposed Yee’s ban, owns Rickshaw Bagworks, which makes custom bags, noted, “There would be a lot of things in society that were based on technology that wouldn’t exist today if we were just concerned about people losing their jobs.  We wouldn’t have sewing machines.  What would I be doing?  Sewing all my bags by hand?  That’s a 150-year-old technology that made it a lot easier to make the things we wear and carry.”

So, if safety isn’t really the issue and lower-level jobs will be replaced by better, high-paying jobs, why even suggest a ban?  We suspect a darker motive here as voiced by Yee:  “I see the value of innovation for public and private good; however, let’s be honest about how some emerging technologies have been operating as if no rules apply to them.”  Hmm…“some emerging technologies”?  That can only mean the evil and hated (by politicians, not the riding public) Uber and Lyft.  The tech busses could also be added to the list, though by this time they’re more accepted by the bureaucrats (who don’t mind the millions paid out in fees).  The politicians have definite concerns about not repeating past “mistakes” when not regulating tech services at the first sign of their existence meant having to play catch up.  Thus, Yee taking the proactive approach, noted that in meetings with representatives from the robot delivery companies, safety was discussed and their claims “weren’t convincing.”  Coupled with this obsession to micromanage every activity in The City is the lack of enforcement that the bureaucrats fear in this “Wild West.”  At the end of the day, without laws—and enforcement—on the books, the bureaucrats have absolutely no control over citizens’ voluntary choices, and nothing infuriates a power-lusting bureaucrat more than inadequate enforcement.  As the only member of the Small Business Commission to vote for the ban noted, “The enforcement factor in this town is the weakest link in our administration.  There is just not the manpower to do that properly.”  Of course they could hire more city employees to “help” with enforcement, but there goes that $10.1 billion budget again. 

One interesting footnote to this issue is a robot company called Starship Technologies, which is based in Estonia.  It’s been pre-empting the type of ban Yee is proposing by working with lawmakers in states across the country to pass legislation to allow autonomous robots to make deliveries, and it’s been successful in Virginia, Idaho, and Wisconsin.  Unfortunately, Starship helped guide the new laws that specify acceptable robot sizes and shapes.  Needless to say, the laws “happen to” match the very same dimensions of Starship’s robots, so what a neat way to eliminate the competition from other robot companies.  Another example of crony capitalism, not the Real McCoy. 

Finally, we find a certain irony in Yee’s proposed ban in that he claims to want to “help” those with less resources, like older residents and the disabled, yet his ban would eliminate an opportunity to cut costs for these folks who rely on delivery services to bring them food, medicine, and other essentials.  By cutting delivery fees and tipping, deliveries by robots could eventually cut the cost of local, same-day delivery to $1.  Now, that would actually help those who could use a break, and it wouldn’t involve another useless ban, fines, enforcement—and hypocrisy.

It’s a unique property in the city. Not a public housing project, but controlled by the city government, which collects rent from the folks living there.

Resident tenents say their units are supposed to have been transferred to tenant ownership, and according to a 2015 SF Weekly story, they are correct:

“The Midtown Park Apartments, a block of unremarkable buildings in the Fillmore District, were built in 1964 atop land cleared during San Francisco’s ‘Urban Renewal’ projects. Transformations of Edwardian and Victorian neighborhoods into concrete blocks were hailed by anti-‘blight’ groups. Critics, like author James Baldwin, had another name for the improvements: ‘Negro removal.’

“At Midtown’s ribbon-cutting ceremony, then-Mayor Jack Shelley waxed optimistic, calling Midtown a “successful experiment” on the way to ‘our ultimate goal…a home for all who wish to live in San Francisco.’

“The 139-unit, three-story project was unique in that it was financed by the city. Once the city’s mortgage was paid off, the residents — members of a nonprofit cooperative — would own their places outright. ‘Own your own,’ as the original sales brochure hyped.

According to the residents’ website, “Mortgage on property residents did not own was paid off by Midtown Park in 2007 in hopes that the city promise and later a  Board of Supervisors Resolution 070858 calling for a long-term ownership structure would come to fruition.”

The city government’s promise to these modest income residents should be kept (better a decade late than never). An upgrade to newer, nicer housing than what they live in now (if the building project goes through and they are given title to units therein) seems like appropriate recompense in lieu of paying them their backrent for the past 10 years during which time they already should have been owners.

But what’s happened instead is that Supervisor London Breed and nonprofit Mercy Housing are reportedly planning to demolish the complex and build new housing there, and residents have been given 14 days notice to pay rent or quit (there’s been a rent strike).

If you agree the current residents should be given units in the new buildings if the city government destroys their apartments to create upgraded housing on its land there, come to Wednesday’s organizing meeting and voice your support! It’s happening across the street from the apartment complex:

Gateway High School auditorium, 1430 Scott Street,
Wednesday October 18 (6:30 – 8:30pm)

Please RSVP on the LPSF Meetup site so we know you’re coming.

District 5 residents (London Breed is “your” Supervisor) are especially encouraged to attend.

When is your property not really your property? If you don’t pay your property taxes, you’ll soon discover a lien has been placed on your property by the county assessor, so in a sense, your property is only yours if you pay your property taxes. Now, what if you decide to rent out your property? By becoming a housing provider, a whole new nightmarish world is created whereby control over your property is severely limited by law: who you must rent to, the amount you charge, when you can change the amount of rent, how many roommates the renter can bring in, and most important when you can terminate the agreement and get the renter to vacate. And let’s not forget the outrageous amounts mandated by San Francisco law that must be paid to tenants if you decide to get out of the rental business period. Just when you thought respect for property rights couldn’t get any lower in San Francisco, the statists have another trick up their sleeve—a vacancy tax. If you own your property and—sin of sins—decide not to live in it or rent it out, under a vacancy tax, you would now have to pay an additional tax over and above the regular property tax. Theoretically, this is not a case of “takings,” but you’d have to pay through the nose if you chose to leave it vacant.

Just last month, Supervisor Aaron Peskin requested the City Attorney “to explore legislation that would allow The City & County of San Francisco to impose a vacancy tax on property owners to help mitigate the impacts of the widespread practice of warehousing valuable residential and commercial units.” He stated that he has gotten reports and complaints from constituents about “the overwhelming number of vacancies both commercial and residential that continue to contribute to our housing crisis as well as the displacement and struggles of small businesses.” The issue of vacant units of housing came up at City Hall last month when the Planning Commission was discussing a report on The City’s housing supply. One commissioner noted that vacant units appear to be on the rise, adding to the perennial “housing crisis.” According to SPUR’s 2014 data research, there are 30,000 vacant units in The City, of which 8,900 are in the process of being rented; 2,400 units are in the process of being sold; 9,100 units are used for vacation or seasonal use; and 9,700 units don’t fall in any of the above categories.

If you think that a vacancy tax for not using your property is another harebrained dream of San Francisco politicians to “lead the nation” yet again that can’t possibly become law, think again. Vancouver, British Columbia recently enacted a vacancy tax which has set our local politicians’ hearts aflutter. They consider it a successful model and are keeping a close eye on how it works out in Vancouver. The vacancy tax applies to all residential properties in Greater Vancouver which are occupied for less than 180 days of the year, and the annual tax is calculated at a rate of 1% of the assessed value. Since Vancouver strangely enough is also in the midst of a “housing crisis” and houses priced at $1 million or more are not unusual, a vacancy tax of $10,000 or more each year is likely for many homeowners, and the redistributed collections are set to go to “affordable housing” in the city. The exemptions to the tax are limited to cases where the owner is in long-term medical care, is doing major renovations on the property, is unable to rent due to building-specific restrictions, or has expired. The government is sending out declaration forms to all property owners this December, which they are required by law to fill out, and the new tax will be collected next February. The bureaucrats are not in any mood for hanky panky and are promising severe penalties and fines to those property owners who don’t comply or lie on the declaration forms. Inspections and enforcement are going to be major facets of this tax.

Aside from the constitutionality of such an outrageous tax, enforcement will obviously be a major challenge for The Vacancy Police (and we’re glad about that). Short of turning the city into a complete police state, how would you know just who lives in a residence, when they come and go, and how many nights per year someone is sleeping there? (We heard many of these same privacy concerns when the Airbnb measure was on the ballot a few years ago.) Privacy might become a thing of the past. Of course, neighborhood snoops are always a good source of surveillance, but we prefer them for keeping the neighborhood safe, not helping the government with tax extraction and spying on its own citizens. Perhaps the bureaucrats may even offer a reward for snitching on your neighbors.

Since when is it the business of government to dictate what you do or don’t do with your property? Folks might have perfectly legitimate reasons for not wanting to rent out their property—most of which have to do with the headaches associated with complying with government rent boards and all their onerous mandates and regulations. Or folks might have no compelling reason why they don’t want to go into the rental business—it doesn’t matter because it’s their business, not the government’s. We have no doubt that there are thousands of units in San Francisco that are rentable but property owners have chosen to keep them off the market, and we don’t blame them one single bit. They are shrugging. It’s one thing when a property owner decides to become a housing provider; it’s understood that there are many ridiculous rules which the housing provider is now subject to, and by deciding to enter the business, he or she will have to comply or face the law. However, with this latest proposal, the government is now going after even those who simply want to be left alone and are willing to forego the extra income that could have been earned (and pay a chunk to other tax collectors). This is a huge step away from freedom towards collectivism. It’s part of the creeping trend to consider all personal property to be “resources” available to all. Note Peskin’s wording when he said “warehousing valuable residential and commercial units.” Valuable to whom?

We hope the Vancouver property owners fight this latest encroachment on personal choice with everything they’ve got—in the courts, noncompliance, and of course all the many creative ways that people dream up to get around busybody laws. Local governments are getting increasingly bold—and desperate—when all their interventions make things worse, not better, for the average person, so they have to step on more toes to “do something.” We hope the Vancouver law is a total disaster since it is not an isolated anomaly. The mayor of Toronto, Canada’s largest city, is also considering a vacancy tax, and Peskin is trigger-ready to propose such a tax for San Francisco. When “for the good of all” becomes more important than individual rights, absolutely no one is safe from the government’s grasp.

What is the City & County of San Francisco’s solution to the problem of its bloated bureaucracy? Consider cutting back to essential services and lowering taxes and letting The City’s residents pick and choose the projects they choose to support? No, our leaders feel hiring more bureaucrats and paying them high salaries makes more sense. We’ve seen this pattern again and again over the years, and they just did it again. Last month the Board of Supervisors voted unanimously to create the Office of Cannabis, which is supposed to be a “one-stop shop” to handle cannabis business applications, serve as a “conduit” to state regulatory departments, and handle complaints. The vote was completely expected as Mayor Lee had already earmarked $700,000 in his $10,106,950,947 2017-2018 budget for this purpose. The new Director of the Office of Cannabis will be paid $207,677/year, and 3 new helpers will be hired for a total of $472,465 to “issue, deny, condition, suspend, or revoke cannabis-related permits in accordance with applicable laws and regulations.” The mayor also earmarked $665,227 in the new budget for five new Department of Public Health employees for handling the permitting for medical cannabis dispensaries. All this flurry of activity precedes recreational sales of marijuana becoming legal on January 1, 2018 following the passage of Prop 64 last November. After all, without all the rules and regulations of government dictating to buyers and sellers of recreational pot how to conduct business, the sun just might not rise in the east on New Year’s Day of 2018.

If “one-stop shopping” was the goal, San Francisco’s officials are off to a poor start. San Francisco already has a 22-member Cannabis State Legalization Task Force and a separate Medical Cannabis Task Force. The Cannabis Legalization Task Force was scheduled to be terminated this month, but once created, government bureaucracies do not die an easy death, and this layer of redundant bureaucrats will now be around until at least the end of 2018, if not longer. Furthermore, the medical marijuana dispensaries in The City are being overseen by the San Francisco Public Health Department, and we know the health department will never go away. And of course, the Planning Commission is heavily involved in granting conditional use permits if cannabis businesses want to set up shop anywhere in The City, so it is unlikely the Office of Cannabis is going to get those bureaucrats out of a very crowded kitchen.

And who will pay for all these busybodies? The official word is that the taxpayers will not get stuck with the tab, but rather the fees for permits paid by the cannabis businesses will fund the new department’s operating budget. In principle Libertarians agree that user fees are a fairer way to pay for government services since only those who use the service will end up paying for the associated cost. However, in this case, we see a few problems. First of all, while the bureaucrats are expecting an explosion of new businesses coming this way on January 1, what if the anticipated stampede doesn’t materialize? They would already have hired all these new, highly paid bureaucrats with not enough business to fund their salaries and benefits. In a normal business, pink slips would be forthcoming, but government is immune to the normal rules in the real world, so in the end, it would be the taxpayers paying for the dead weight. The other likely scenario is that the fees will be passed along to the ultimate consumers, but the fees will be so high that the pot prices will not compare favorably with the black market. Already there is speculation that 29% of cannabis users will choose to continue to purchase under the radar if the cost of new regulation requiring testing, tracking, and taxes hits the 15% rate or more. This is precisely one of the major reasons the Libertarian Party of California, which has been staunchly opposed to drug laws for decades, nevertheless opposed Prop 64 last year. A golden opportunity to open up all kinds of business opportunities for a segment of the population that obviously wants to purchase this product will be squandered by crushing bureaucracy and regulation.

Some of the possible avenues legalization could have opened up would have been in the areas of delivery, cannabis events, cannabis online exchanges and marketplaces, on-site consumption, and branded merchandise. Just as many consumers these days prefer to buy online and have goods delivered to their residences, so it could have been with cannabis, but it is extremely unlikely the Office of Cannabis will allow such delivery services. Just a few years ago, cannabis events were very popular until state cannabis regulations (in states that legalized pot) put a stop to any sort of gifting of cannabis. Likewise, online exchanges could have been a great way to put willing buyers and sellers together, but no doubt the Office of Cannabis will feel its job is to “protect” unsuspecting consumers from “unscrupulous” sellers, so in-person transactions will most likely be the only way for consumers to get what they want. Many folks enjoy consuming pot in a social setting, but no state currently allows public consumption of cannabis, so it is unlikely the Office of Cannabis will allow such socializing (though of course you can currently walk downtown any day of the week and on most any street the strong scent of marijuana is clearly permeating the air). Lastly, selling branded pot merchandise could have been a way for cannabis businesses to earn a few extra bucks, but the State of California is trying to stop cannabis businesses from selling any branded merchandise, let alone branded merchandise with a pot theme. As always, at all costs, the “children” (including grown-up adult ones) must be protected from the poor choices they might make.

Supervisor Ahsha Safai’s comments when the Board of Supervisors voted to create the latest bureaucracy are telling: “So the idea is—how are we going to manage that growth? What’s the right number? What’s the right amount for San Francisco?” Our leaders actually think they’re smart enough to figure out the “right” amount of cannabis businesses needed to satisfy the demand coming on January 1. How typical of all central planners. The taxi medallion mess in all major US cities is a perfect illustration of the futility of trying to find “the right number.” For all their planning—and the havoc it caused—in the end, it was the free market that satisfied consumers the most, despite the non-stop attacks from the government bureaucrats and the government-sanctioned taxi companies.

For those who feel that if the Office of Cannabis had not been created, a “Wild West” might have ensued, indeed, that might have happened at the beginning, but if too many pot stores had popped up all at once, then those who served their customers the best would have survived and the others would have gone out of business before long. The market would have adjusted itself—without the unnecessary busybodies at City Hall. Furthermore, if cannabis businesses had been foolish enough to set up shop in hostile residential neighborhoods, angry residents of the neighborhoods could have solved the problem themselves the old-fashioned way by boycotting the businesses, without blocking the entrances to the businesses, rather than rallying government bureaucrats for “help.”

In the end, the new Office of Cannabis will just be more highly paid busybodies inviting unnecessary contention in the neighborhoods, wasting taxpayer money, and scaring away new business that could have brought in more commerce and value to the community. All this to “protect” the general population from something that any middle school kid can get hold of pretty easily these days.

Is the college algebra requirement a “civil rights issue”? Eloy Ortiz Oakley, Chancellor of California Community Colleges, thinks so. He wants to eliminate the requirement for non-STEM (science, technology, engineering, and math) majors to get an AA degree or transfer to a four-year college in California. He said, “If you think about all the underemployed or unemployed Americans in this country who cannot connect to a job in this economy—which is unforgiving of those students who don’t have a credential—the biggest barrier for them is this algebra requirement. It’s what has kept them from achieving a credential.” Currently intermediate algebra is the lowest level of math needed at community colleges to graduate or transfer. Oakley is correct this is a major hurdle for community college students, as it is the single most failed course in community colleges today.

The dismal state of the academic results of the state’s community colleges is hard to overlook. The community college system is not called the Bermuda Triangle of Higher Education without reason. While the rate fluctuates slightly from year to year, currently only 48% graduate from California’s community colleges with an AA or transfer to four-year school within six years. According to a report entitled “Vision for Success,” prepared for and adopted by the California community college system’s Board of Governors recently, even the 48% figure is overstated because it doesn’t include students who earned less than six units or did not even attempt to take a math or English course within 3 years of entering the system. Another problem pointed out by the report is that students often accumulate far more course units than they need to graduate, earn a certificate, or transfer to a four-year college. While 60 units is generally all that is needed to move on, currently the average number of units a community college student accumulates is 87 units. While students linger in community colleges for no useful reason, the report states that they “crowd out or slow down the trajectory of other students who need these same courses for reaching their own educational goals.” Wasn’t community college supposed to be a two-year program? OK, some people have to work full or part-time while they attend school, so it’s understandable that they might take longer, but six years and less than 50% graduating?

So, how to improve the outcome for the students? The educators could try to teach math more effectively—or simply lower the bar. Clearly Oakley is making the case for lowering the standard by getting rid of the algebra requirement. He says, “What we’re saying is we want as rigorous a course as possible to determine a student’s ability to succeed, but it should be relevant to their course of study. There are other math courses that we could introduce that tell us a lot more about our students.” While “rigorous” is a nice soundbite, the educational trend over the years, especially in government schools, has been moving them in and out with a diploma in hand, regardless if the students learned anything. We have to at least sympathize with Oakley on one issue: the academic preparedness of high school graduates entering community colleges is so low that 74% require remedial work. As one community college administrator put it, “Community colleges are open access. Students can come here whether or not we have courses that are appropriate for them. We get students who can’t read. That blows me away! My curriculum is not designed to teach someone how to read.”

With such a daunting job ahead of them, lowering the bar would definitely be a step in the wrong direction. For one thing, college—and all of formal education, for that matter—is supposed to give students the skills to think, and there are some forms of reasoning that may not actually be used on the job but are essential to becoming a critically-thinking adult. A journal article from Frontiers in Human Neuroscience had this to say about the role that algebra plays in the development of abstract mathematical reasoning: “Algebra typically represents the students’ first encounter with abstract mathematical reasoning and it therefore causes significant difficulties for students who still reason concretely…In agreement with previous research, we can conclude that, on average, children at the age of 15-16 transition from using concrete to abstract strategies while solving the algebra problems addressed within the present study.”

Since it is not unreasonable to expect 15 and 16-year-olds to start reasoning abstractly, is there any good reason not to expect the same of community college students? Especially since California taxpayers are paying $9 billion per year—not to mention the parcel taxes imposed by local governments—to sustain such unimpressive results. If the stated purpose of low cost government higher education for all “for the overall betterment of society” is the goal, we would give California’s community colleges a failing grade. And Chancellor Oakley’s proposal would sink the system to a new low.

For a change, we have something good to report: SB 562, The Healthy California Act, a bill proposed to make single-payer healthcare a reality in California, was shelved by Assembly Speaker Anthony Rendon on June 23 when he decided that the proposed bill will remain in the Assembly Rules Committee until further notice. The bill, which had passed the State Senate by a vote of 23-14, was supported by San Francisco politicians Scott Wiener and David Chiu (no surprise). Rendon, himself an advocate for single-payer, was nevertheless apprehensive about the bill and noted, “It certainly wasn’t a bill. There was absolutely no funding attached to a $400 billion proposal, no service delivery mechanism.” For his hesitation to allow the Assembly to vote on the bill and cave in to the powerful California Nurses Association, Rendon received death threats and a cartoon was posted with a California bear being stabbed in the back with a butcher knife that said “Rendon.” So much for civility on the left.

SB 562 would have abolished voluntary health care coverage for all 39 million Californians, and the moment such a system would have gone into effect, all voluntary (private) health plans, Medicare, Medi-Cal, and Covered California would be out the window. One-size-fits-all to be serviced by a government-run bureaucracy with unelected appointees who would make all the decisions about health care services and prices. Since 18% of California’s workforce currently works in the health care industry, SB 562 would have increased the unemployment rate in California immediately, not to mention the doctors and health care professionals who would have left the state to seek greener pastures elsewhere. The proponents of SB 562 proclaimed, “Californians can choose their doctors from a full list of health care providers, not a narrow network chosen by insurance companies.” Everything would be completely covered, including dental, vision, reproductive services, and mental health services. There would have been no co-pays, no deductibles, no premiums, and no medical forms to fill out—everything would have been completely and unconditionally “free.”

Well, not exactly. How would such a massive changeover from a mostly voluntary system to complete government monopoly been paid for? The estimate ranged from the optimistic $331 billion per year from the Californian Nurses Association to the more realistic $400 billion per year from the Senate Appropriations Committee. Three revenue sources were mentioned most often regarding SB 562: an additional 15% payroll tax, an additional sales tax of 2.3%, and a gross receipts tax of 2.3% of all revenue over $2 million. In addition to increasing the payroll tax on employees and employers, the proposed payroll tax increase would have had no cap on it, unlike Social Security, disability insurance, and unemployment insurance, which are currently capped at various levels. In addition, even though the proposed single-payer system would have abolished Medicare, both employees and employers would have continued to pay for it anyway. As for the proposed sales tax increase over what is already the highest state sales tax in the country, the bill’s proponents wanted to add many services to this increase, so it would no longer just be physical goods that would be subject to sales/use tax in California. The plan’s proponents preferred the gross receipts tax because “it does not discriminate in its impact between labor-intensive and capital-intensive firms” (equal misery for all), but a gross receipts tax is less popular these days as a tax funding mechanism and several states have repealed their gross receipt taxes in recent years, and those that retain them have very low rates, mostly way under 1%. Oregon voters rejected a gross receipts tax of 2.5% last year by over 19 percentage points, so while Bay Area voters would easily approve a 2.3% gross receipts tax, statewide it would likely fail. Any way you cut it, and whichever extraction method the politicians use, including a combination of all three taxes, this “free” medical care will be anything but.

The proponents of single-payer point to the savings that would result from California employers just switching from paying insurance companies to paying the state in taxes. Furthermore, they say SB 562 would have cut overall state spending on healthcare by 18%. They say that California businesses that currently have health plans for their employees would see a decline in their payroll costs of 22% for small businesses and 13% for medium-size businesses. They say that single-payer will cut costs through better administration and lower drug prescription costs. They point to the purported lower administrative costs of Medicare (the closest thing we have to single-payer right now) as “proof” that there are huge savings to be gained by single-payer. Administrative costs in the voluntary sector have been estimated at 11-14% of premiums while Medicare’s administrative costs are estimated at 3%. The reasons cited for the higher voluntary insurance companies’ expenditures are the superior efficiency of government, voluntary insurance companies’ charges on marketing, efforts to deny claims, unrestrained profit, and higher executive salaries. Superior efficiency of government—we won’t touch that one! The problem here is that they aren’t comparing apples to apples. Medicare administrative costs are being measured as a percentage of total costs, and with Medicare patients being older, disabled, and generally with more health problems than the general population, it stands to reason that Medicare administrative costs are going to be lower because of the much larger denominator. Furthermore, voluntary insurance companies provide disease management services for patients with chronic conditions and on-call nurses for patients to consult by phone, and most states impose a premium tax on health insurers—obviously Medicare is exempt—and both of these extra costs count as “administrative” costs. Also, other government agencies help administer Medicare: the IRS collects the taxes, the Social Security Administration helps collect some of the premiums paid by the beneficiaries, and the Department of Health & Human Services helps to arrange accounting, auditing, fraud control, and marketing; voluntary insurance companies do not have this off-budget help. Lastly, denying claims is a legitimate part of the health insurance industry where fraud is concerned, and while voluntary insurance companies do spend more money combating fraud than Medicare, is that so terrible? Fraud prevention is said to return $15 back for every dollar spent, so if voluntary insurance companies spend more, that benefits their customers but makes their administrative costs look higher than Medicare’s. According to the Medicare Payment Advisory Commission, “The Centers for Medicare & Medicaid Services estimated that about $9.8 billion in erroneous payments were made in the fee-for-service program in 2007, a figure more than double what CMS spent for claims processing and review activities. In Medicare Advantage, CMS estimates that erroneous payments equaled $6.8 billion in 2006, or approximately 10.6% of payments…The significant size of Medicare’s erroneous payments suggests that the program’s low administrative costs may come at a price.” If you actually compare the administrative costs of Medicare versus voluntary insurance on a per-person basis, rather than as a percentage, the “efficiency” of the government-run program doesn’t look so great. In fact, in 2005 it was $453 per beneficiary for voluntary insurance companies and $509 per beneficiary paid by Medicare—and that’s with all the differences noted above.

Finally, no discussion of SB 562’s problems would be complete without mention of the legendary wait times experienced by Canadian residents in their single-payer system that at least allows some voluntary insurance in some areas. In 2004 Canadian provincial governments committed to a 10-year plan to reduce waiting times in 5 primary areas: cardiac care, cancer care, diagnostic imaging, joint replacement, and sight restoration. Ten years—and many tax dollars—later Canadian residents have seen little improvement in the wait times. But according to the Wait Time Alliance, an organization formed by Canadian doctors in 2004, “Don’t forget to congratulate your elected representatives and health care providers when you have received timely access to care!” As for the Veterans Administration scandal in Phoenix, the secret waiting time list, and the 40 (at least) deaths caused by the bureaucratic nightmare of single-payer in action, we won’t even go there.

As usual, San Francisco’s Board of Supervisors feels the need to act like our mothers and fathers. Recently they voted unanimously to ban the sale of flavored nicotine-based liquid used in e-cigarettes and flavored tobacco products in San Francisco. The justification of the ban is that nicotine masked in fruity flavors like cotton candy, banana cream, mint, and other flavors entices children into the sordid life of nicotine addiction. Another “Save The Children” law. Supervisor Malia Cohen, who represents the historically black Bayview-Hunters Point neighborhood, also doesn’t think too highly of the intelligence of adults in black neighborhoods and the LGBT community since she said, “Big Tobacco loves vulnerable populations. They advertise 10 times more in black neighborhoods, and market gummy bears and cotton candy flavors near schools and in the LGBT community.” These adults apparently must be treated and “protected” like children too.

What do the scientists have to say about vaping? Regardless of what the Board of Supervisors proclaims, as with so many issues, there is no consensus. The pro-vaping scientists say the benefits of vaping as a no-smoking aid outweigh potential harms. They point to the estimated 480,000 deaths in the US annually attributed to smoking and note that if vaping can help reduce the horrendous damage of cigarette smoke, then the government should not be making it harder to obtain such products. They point out that nicotine, while powerfully addictive and present in both tobacco and e-cigarettes, is not the cause of cancer, lung disease, or vascular disease—rather, it’s the combustion products of smoke that cause all the health problems. On the other side, the anti-vaping scientists say studies show that folks using e-cigarettes were less likely to quit smoking tobacco and most e-cigarette users continue to smoke tobacco. The point out that the e-cigarette market has evolved quickly in recent years, and most of the earlier studies were on first-generation products, while many of the products available today have not been studied enough. They concede that while some of the newer vaping products may deliver nicotine more efficiently than the earlier products, which should make them better quitting tools, they also generate more heat and produce more chemicals and fine particles, which could create new health problems. Clearly, the science is not settled on this issue yet.

It’s also notable that the Centers for Disease Control and Prevention (CDC) released a report recently that found the number of high school and middle school students using e-cigarettes dropped from 3 million in 2015 to 2.2 million in 2016. The CDC also estimated that tobacco use among high school and middle schoolers showed a similar drop from 4.7 million in 2015 to 3.9 million in 2016. But even this trend in the healthier direction was not good enough for the Board of Supervisors.

Then there’s the issue of the ban hurting San Francisco small businesses, which the Board proclaims to champion but passes one ordinance and mandate after another which hurt mom and pop stores. Small businesses complained that flavored tobacco products are anchor products that bring folks in to their stores, and it’s hard enough trying to compete with big-box stores like Safeway and Walgreen’s, not to mention online retailers, without losing up to 15% of your sales due to the ban. Customers can just as easily buy the banned flavors in nearby cities or simply order them online and have them delivered to their San Francisco residences. Not to worry though, promises Cohen—government will come charging to the rescue: she said that she would support increased city funding to “help” small stores adjust their business models under the Healthy Food Retail program. Hmm… we pass that a law that creates a new problem, but we will spend hard-earned taxpayer money to try and solve the problem we created with another useless bureaucrat’s “program.”

Of course none of this should matter regarding “protecting” the kids, since just last year, the Board of Supervisors passed a law banning the sale of all tobacco products (including e-cigarettes) to anyone under 21. Since we know how effective such ridiculous laws are—as none of us has ever seen anyone under 21 smoking since the law went into effect!—just who were the supervisors protecting when they passed this latest ban? Apparently the work of The Nanny State will never be done.

“From the first day of the first congress at the moment of the passage of the first law, we became weaker. The extra-large B. Franklin said it well that you can test the strength of a society by the paucity of the pages in its book of laws. Today we are surrounded by laws—Tax Law, civil law, criminal law, Statutes, and Bills. Laws that make large and small criminals of us all. And sometimes just doin’ something that you like to do that hurts no one is also criminal, or at least strongly discouraged. Seems we can’t be trusted to live well and safely on our own. On our own we would all probably descend quickly into mayhem, cannibalism, and ultimately shoplifting and jaywalking. If only we could all be trusted. It is good to have such wise fathers looking out for us… Isn’t it…? Whatever.”

At times, it seems like the busybodies at City Hall and in Sacramento are so intent in running our lives that the American spirit of personal freedom, self-reliance, adulthood, and entrepreneurship is sadly disappearing, at least in the Bay Area. So we were pleasantly surprised to run into the quote above from a local business that truly embodies the liberty-leaning spirit that we Libertarians love—Lagunitas Brewing, which is based in Petaluma.

The company has an interesting history, not just because it started out as a typical family business in someone’s kitchen and now has annual sales of $40 million and over 600 employees and sells its products in 35 states, but because of its irreverent attitude toward The Nanny State. It was such an attitude that got the company in hot water with the State of California in 2005. The ABC (Alcoholic Beverage Control) got wind of the fact that the company was allowing pot consumption on its premises, so it conducted a sting undercover operation at Lagunitas for 8 weeks to nab someone—anyone—to send a message. As founder Tony Magee put it, “Once in a while, God—the ABC—drops in and tells you he’s in charge.” The ABC was trying to catch anyone selling pot, but in the jovial and friendly spirit of the weekly beer tastings, they had no luck because folks were trying to share it, not sell it. Frustrated, the ABC finally conducted a St. Patrick’s Day “Massacre” on Thursday, March 17, 2005, complete with handcuffs, badges, what seemed like every police car in Petaluma blocking all roads to and from the brewery according to witnesses, and cops in riot gear mode. In the end, three people were cited (two for possession of marijuana and one for possession for sale), but all charges against the three were dropped after the big hullabaloo. However, Lagunitas was charged with being in violation of Section 24200 of California’s Business & Professions Code, otherwise known as “Disorderly House” Law, which is a facility that “disturbs the neighborhood or is maintained for purposes which are injurious to the public morals, health, convenience or safety.” The ABC did suspend Lagunitas’ license to sell beer for 20 days and placed the company on one year’s probation, so that did manage to disrupt the business and threaten all the employees’ livelihoods for a short while. One has to wonder: is crime so low in Petaluma that the police had no real crimes to tend to like murder, assault, and break-ins instead of harassing a small business and its patrons who were bothering no one?

We are happy to report that not only is the company thriving and growing, but again in the truly American spirit of skepticism towards overbearing government, Lagunitas had the final word on the incident. In 2006 it released a seasonal beer with the name of Undercover Investigation Shut-Down Ale, which has proven to be quite popular. Furthermore, taking a philosophical jab at the ABC for its heavy handedness, Magee designed a label aptly for the ale. The ABC agent who returned the suspended license to Lagunitas was asked by one of its employees what the agent (as a child) had wanted to be when he grew up, rather than harassing small businesses and threatening livelihoods, and the agent replied, “An astronaut.” The label for Undercover Investigation Shut-Down Ale says, “Especially bitter ale in dedication to all the world’s would-be astronauts.”

To support this liberty-leaning business which embodies the Live And Let Live spirit that Libertarians love—and put our money where our mouth is—the LPSF will be hosting a strictly social get-together at Lagunitas in Ghirardelli Square Beer Garden in the upcoming weeks. The pop-up tent is a summertime experiment in San Francisco only open between noon and 7:00 PM Thursdays through Sundays. Let’s help to make this experiment a success for a company that celebrates the original spirit of the holiday that just passed last week that most folks have forgotten the true meaning of (Independence Day). The details of the date and time of our social will be forthcoming. Please join us for lively spirits and conversation!