Real Estate, The Economy, and News: Government Regulation

Showing posts with label Government Regulation. Show all posts

Friday, March 9, 2018

Robocallers Use Out-of-State Loopholes to Evade Strict California Regulations

Robocalls, even from a company or political platform that you feel connected to, can be annoying at the best of times. Recently, there was a controversial legal battle centering around freedom of speech, the conclusion of which was that the state of Montana technically has the legal right to pass a law banning robocalls, even those of a political nature. At the very least, this decision could help Montanans to crack down and have specific rules regarding such calls, in an attempt to reduce the number, if not do away with them altogether. Interestingly enough, discovers David Lazarus in his L.A. Times article, California has some pretty strict laws regarding robocallers. It just so happens that nobody follows them.

Politicians in California have found loopholes to get around the laws regarding robocallers. According to the California Public Utilities Code, every robocall within California is required to begin with a live person and the name, phone number, and address of the organization making the call. Then, the live operator has to ask permission and get consent before playing the pre-recorded message. Only if every single one of those criteria is met is the robocall legally permissible. Of course, because most people are so accustomed to illegal robocalls, a call meeting those criteria tends to resemble telemarketing more than robocalling, which, of course, has its own set of negative responses.

Californian homes get constant robocalls from the beginning of election season all the way to election day. The way that most get away with the robocalls without technically breaking state law is by designing the calls to originate outside of the state. If the robocall is coming from a computer server in another state, technically it doesn't require a live operator or affirmative consent or really any other regulations before playing the message. Of course, even though this strategy avoids breaking state laws, it may be breaking federal laws, although that doesn't stop much. According to federal law, robocallers can't call cell phones (again, something that still happens all too often), but the federal policy has no restriction on robocalls to landlines. Even though many people have given up their landlines over the years, there are still several million throughout the country that can be targeted.

As you can see, there are restrictions on when and how a political representative can place robocalls. However, those regulations can be easily side-stepped. There is a potential solution, though. Because the callers can avoid state regulations by making the calls from another state, this can be prevented by passing a regulation that prohibits political robocalls from being placed out of state. If the political groups have to place their calls from in state, they will be forced to follow the state regulations, which would reduce annoyance and frustration among many recipients. Of course, this would severely limit the scope of a political group's reach, but at least they would be able to better target voters interested in their specific platform.

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Friday, July 29, 2016

Government Restrictions Eased on Secondary Housing Units

Throughout California, but especially in the Los Angeles area, housing opportunities are getting very limited. There simply isn't enough space to provide housing to the thousands of current residents and the hundreds of new people looking to find somewhere to live. Los Angeles has plenty of draws: the nice weather, the variety of shops and restaurants, and a wide array of employment opportunities. However, as more people look to come to California, the market shifts accordingly. Currently, even for those who can afford to buy a house or rent an apartment in the rising housing market, there is little room for being picky based on location; you just take what you can get. Fortunately, as Liam Dillon and Andrew Khouri describe in their L.A. Times article, California lawmakers are working on a way to address the major housing issue.

New construction of homes or apartment buildings could provide housing opportunities. Unfortunately, all available vacant land has also been growing scarce. Until recently, getting the required approvals and permits for construction was such an arduous process that it made it nearly unfeasible for most people to even try. Now, due to the push from Governor Jerry Brown and LA mayor Eric Garcetti, legislators are relaxing regulations, making it easier for homeowners to build "granny flats" in their backyards, thus converting empty space into housing.

Just a few years ago, any homeowner that wanted to convert a garage into an extra room or add an extra freestanding structure in their backyard had to face the seemingly endless trials of the governmental bureaucracy. In the end, many who tried to add on to their property, whether for guests, for family, or as a rental to bring in some extra income, inevitably failed or at least had to go through months of stressful negotiating with the city of Los Angeles. Now that the restrictions are being relaxed, at least to some extent, homeowners may help California as a whole to keep up with growing demand. Statistics show that Los Angeles needs to add at least 100,000 new units each year in order to keep up with the market, and retired individuals may benefit the most from this opportunity.

Some, like 78-year-old Rochelle Ventura, tried previously to submit plans to the city for backyard additions, but the strict regulations led to their ultimate rejection. Since 2005, so few units have been approved that only 347 have been completed in the Los Angeles area. Some of the regulations seem unnecessary to most, especially if the secondary unit will be used by family members. One of the new bills is overturning a restriction that required secondary units to have uncovered access to a public street. Since that is no longer a necessity, under the new rules, more property owners may find it economical again to take a crack at expanding into the territory of secondary units. Hopefully, the new legislation will help to solve problems for those trying to find housing as well as those trying to gain a little bit of extra income by providing the sought after housing.

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Friday, June 10, 2016

Moon Express Decision Could Jump-Start Privately-Funded Space Exploration

On July 20, 1969, a team of astronauts including Neil Armstrong and Buzz Aldrin made history when they became the first humans to ever step on the moon. Ever since the late 1950s, the United States has been working on ways to explore our solar system and find out more about other galaxies. In 2011, the Space Program was discontinued, mainly because of the exorbitant costs and inherent danger present in space travel. Up until recently, private companies were still allowed to send up satellites into orbit for commercial and research applications. However, according to Samantha Masunaga's L.A. Times article, the US government may be preparing to grant permission for a company to send a spacecraft to the moon.

Until now, only countries have been allowed/able to conduct space missions beyond Earth's orbit. Moon Express, a Mountain View, California-based company, will set history if regulators grant them permission to send their MX-1 lander on the moon for a two-week operation. The Wall Street Journal seems confident that Moon Express will receive their approval from the Federal Aviation Administration within the next few weeks, potentially restarting the Space Program. In some ways, a Space Program run completely by private companies could be better than one run by the government. When the Space Program first started, it was mainly about national superiority and being the first country to achieve certain milestones, which meant that sometimes costs and risks took a backseat. For private companies, it will be mainly about profit, which means that they will certainly keep within specified budgets and will be more risk-averse.

While Moon Express has been pretty secretive about its major plans, it has released some information about what they're looking for on the moon. The MX-1 lander will be carrying out both scientific and commercial research. Moon Express will be partnering with a Los Angeles-based company called Rocket Lab and plans to blast off into space in 2017. The MX-1 and other moon landers will be looking for valuable resources such as platinum and rare earth elements, which scientists believe can be found on the moon and in asteroids. Another company, Planetary Resources, is looking to asteroids as a source of water that can be converted into rocket fuel.

One of the main regulatory issues standing in the way of Moon Express's exploration is the Outer Space Treaty of 1967, which states that nongovernmental entities have to get approval from the US and Russia before performing activities in outer space. Experts believe that if Moon Express receives their expected approvals, however, it will set a precedent for future private commercial activity. Several companies dedicated to moon mining and asteroid mining have sprung up in recent years but have not held for very long, probably due to the high-cost, high-risk type of business. However, Moon Express has been generating significant interest in the world of commercial space exploration, and analysts expect this company may be the one to finally jump-start the industry.

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Friday, June 3, 2016

CFPB Proposes New Regulations on Payday Loans

In an attempt to avoid situations in which borrowers get stuck in an endless cycle of debt, the Consumer Financial Protection Bureau (CFPB) released a set of new proposals this Thursday to regulate the market for payday loans and certain types of credit known as being "debt traps." James Rufus Koren, in his L.A. Times article, discusses the new rules and the effects they may have on the economy.

A payday loan is a special type of loan with very high interest rates that is made on the condition that the borrower will pay it back as soon as they receive their paycheck. Unfortunately, according to CFPB Director Richard Cordray, lenders often make the loans knowing that borrowers can't pay them back and will end up stuck in a never-ending cycle of debt. The new rules aim to limit the number of loans a consumer can take out in a year and make the lenders review the finances of potential borrowers much more thoroughly before making a loan. In a healthy credit market, lending and borrowing money should be a win-win situation. Both parties, not just the lender, should benefit from the transaction, and that is the situation the CFPB is trying to remedy.

Lenders have been outraged by the proposed changes, claiming that it will make their business more costly and will cause most of their loans to become unprofitable. The CFPB has responded that it isn't looking to put lenders out of business. Rather, the organization is trying to make sure that customers don't get stuck in debt traps, where they pay off a loan just to find out that they need to take out another loan to have enough money for day-to-day living costs. The new regulations will force the lenders to do in-depth analysis on income and living expenses to determine whether they will be able to make the payments every month without running out of money.

Already, the CFPB has enacted similar regulations for banks and mortgage lenders, but payday lenders may be right in complaining that the new rules are unfair or insensible. Many claim that the process will add time and cost, which hurts everyone. Under current practice, a borrower can walk into a loan branch and leave 20 minutes later with a $250 loan. A detailed analysis of "take-home pay" and expenditures would probably add a lot of cost in the form of fees, which could drive away potential borrowers. Those borrowers could end up going elsewhere to find their loans.

It is likely that the new regulations will naturally stop some people from getting loans. Some people worry about where those people will have to turn to make ends meet. Perhaps some will be forced to get a handle on their finances and will end up much better off in the long-run. Others will have to go to pawn shops or family members for help. Still others may turn to installment lenders, which are not covered under the new rules. The installment lender gives much larger sums of money, with smaller monthly payments over a long period of time, but the borrowers often end up paying more in interest on the loan than the actual value of the loan itself. Analysts believe that the regulations will help somewhat, but only in that they will stretch the debts out onto a longer time line, rather than reducing such debts altogether.

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Friday, November 6, 2015

San Francisco's Anti-Airbnb Proposition Narrowly Fails

Short-term home or apartment rentals, usually through online platforms like Airbnb and VRBO, have been steeped with controversy in recent months. Some cities have even tried to ban such rentals while others have embraced them wholeheartedly. Most recently, San Francisco put forth a proposition to limit the ability of landlords to use such websites for renting their property. Tracey Lien, in her L.A. Times article, discusses how Airbnb affects both landlords and tenants, and how this new Proposition F may affect the city.

The controversy behind services like Airbnb is mainly one of a fight between a capitalist economic theory and one in which people deserve fair treatment. On the one side, tenants in San Francisco fear that the increasing prevalence of Airbnb will eventually lead the owners of their rented homes and apartments to evict them in favor of the larger sums paid by short-term renters. It is these tenants who would vote for the proposition since it limits landlords' use of Airbnb and their ability to turn normal rentals into short-term ones quickly. The proposition aims to prevent or at least slow down the conversion of apartment buildings into pseudo-hotels.

Some see it differently. While services like Airbnb could convince landlords to evict tenants in favor of the faster income, the free market could take care of any issues that arise from it. Eventually, if enough landlords raised prices enough to match the rising demand by tourists, ten the average worker would not be able to afford to live in the city. If workers are forced to move out, then business and regular city work will grind to a halt, When the economy halts in such a way, tourists will not want to visit, which will force landlords to lower their prices back to normal rates in order to get tenants. While this situation could probably work itself out, Proposition F aims to avoid it altogether.

Even for some landlords, Airbnb has uncomfortable implications. One Balboa Park resident, who had only ever rented his units out on a long-term basis voted against Proposition F. He worried that his tenants might use Airbnb to rent out his unit for short-term stays, a concept that he wasn't completely comfortable with. However,different from many tenants, he said that he would have voted yes on the proposition if he was in their shoes for that same reason: the ability to rent out the apartment in which one is living while out of town for short periods of time.

Unfortunately for those passionate about the topic, voter turnout for the proposition was extremely low. In-person votes were in the low hundreds, and mail-in votes reached about 9,000. In the end, Airbnb beat the bill, but even while celebrating, the San Francisco-based company expects further assaults in the near future. They believe that the proposition failed mainly due to its highly specific and extreme stance regarding the short-term rentals. Even so, the vote was close, with about 45% of voters supporting the proposition. Airbnb fears, rightfully, that behind the scenes, lawmakers in places like Los Angeles and San Diego may be getting ready to start the fight all over again.

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Monday, July 20, 2015

Foreign Purchases of Some American Businesses Face Government Examination

7/20/15 - The Committee on Foreign Investment, an agency through the United States Treasury Department, is responsible for deciding whether to approve or deny any attempted purchase of an American company by a company based in another country. Some such buy-outs are simple and easily approved. Others, like the purchase of Micron Technology Inc., as discussed by James F. Peltz, in his L.A. Times article, require much more discussion and consideration.

The Committee on Foreign Investment only tends to take issue with purchases when they may affect national security. For example, in 2005, a major Chinese oil company called CNOOC Ltd. made an offer of $18.5 billion to purchase Unocal Corp., a California-based oil company. Politicians took issue with this proposed buy-out because they feared that foreign ownership of the American oil provider could possibly cause major problems for the future of American energy security. Eventually, due to complaints and protests regarding the deal, CNOOC Ltd. decided to retract its offer.

More recently, another Chinese company, Tsinghua Unigroup Ltd., has reportedly been preparing a $23 billion offer for the purchase of Micron Technology Inc., a major manufacturer of dynamic random-access memory chips. While Micron claims that no offer has been received yet, Peltz’s sources believe that the deal may not go through anyway, even without interference from the Committee on Foreign Investment. Micron’s stock prices in December were at $36 per share, and while those prices have dropped throughout the year, analysts still believe that the expected offer of $21 per share will not be enough to convince Micron to sell.

Were such an offer proposed by Tsinghua Unigroup and accepted by Micron, it is unlikely that the sale would be approved without a struggle. The Committee on Foreign Investment would have to come up with some pretty compelling reasons to grant approval for a state-owned Chinese country to gain control of one of the only major American producers of memory chips, found in so many devices from smartphones to personal computers. Memory chips are everywhere, in the public sector and in the government, and the change in ownership could pose a security risk, especially after the large number of recent cyber-attacks that have been traced back to China.

Having spent over $200 billion, last year alone, on importing integrated circuits, China, like other Asian countries, wants to become more independent and work on developing its own network of memory chip production, rather than continuing to purchase from America and other countries. Unfortunately for them, they will probably not achieve this goal through a purchase of Micron. Between the Department of Defense’s responsibility to protect national security and Micron’s high stock prices, it is more than likely that this Micron deal will end the same way as Unocal Corp.’s did.

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Tuesday, May 19, 2015

Major Theater Chains Face Investigations Into Anti-Trust Violations

4/17/15 - Competition is a necessary part of economics. Without competition, a company or group of companies could gain control of a market and charge outrageous prices for goods and services, against which consumers may have no recourse. When competitors arise, such companies are forced to lower prices since consumers will be able to choose. As supply increases, prices must decrease, or the companies risk allowing demand to decrease.

A monopoly is when a single company gains complete control of a market or commodity. A cartel is when a group of companies have control over the market and agree among themselves on what prices to set. A trust is a group of companies that work together to force other, usually smaller, companies out of the market. Each of these is regulated by the federal government and is prevented as much as possible, so as to allow smaller companies the ability to be economically competitive. In his article, Richard Verrier looks into recent investigations into anti-trust violations by several major movie theater chains like AMC, Regal, and Cinemark.

Many complaints and lawsuits have been filed over the years by owners of smaller theaters, who claim that the major theaters have been involved in a practice called “clearance,” in which the smaller theaters are prevented from playing newly released movies. Is this practice considered a violation of anti-trust laws, though? While a Supreme Court decision in 1948 required that movie studios give up ownership in movie theaters, larger theaters still have the financial clout necessary to have some control over where popular movies will be played first.

Thus, the Department of Justice's anti-trust division has been spurred into action in an attempt to determine if clearances are against federal law. To the large chains, it's simply a matter of economic reasoning. The film studios have the supply, and the movie theaters have the demand. If a company like AMC wants a specific movie from the studio, it will effectively be providing more revenue to the studio, because the purchase of the film will involve hundreds of theaters across the country, while the purchase by a small company like IPic Entertainment will only involve a dozen or so. The studio will be more willing to give in to AMC's requests, because AMC provides more business.

With the Department of Justice on the case, we can assume that the matter will eventually be settled. The conclusion of this argument, however, could mean big things for small businesses. If the DoJ concludes that the major theater companies are not breaking any laws, then the small companies will be at a distinct disadvantage. If the DoJ rules that the major companies are breaking anti-trust laws through the use of clearances, then governmental entities may get more involved in economic issues that are out of their jurisdiction. What will it come down to: the natural order of economics, or the imposed order of government regulation?

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Wal-Mart To Increase Minimum Wage to $9 Per Hour

3/13/15 - Statistics show that six out of ten Americans believe that the federal minimum wage should be raised. Many believe the raise is necessary, as a wage of $7.25 per hour is not necessarily enough to live on, especially for individuals trying to support their family. Others believe that if the minimum wage is raised, companies will be forced to lay off some workers, or raise prices on goods, in order to compensate for the extra money being payed to employees. In their L.A. Times articlerticle, Jim Puzzanghera, Shan Li, and Sarah Parvini discuss a recent decision by Wal-Mart to raise their minimum wage and what this decision means for them and their workers in the long run.

After facing intense protests and rallies led by labor groups and increases in state minimum wages throughout the country, Wal-Mart decided to protect its public image and raise its minimum wage to $9 per hour, $1.75 per hour above the federal minimum wage, for around 40% of its employees, starting in April. This will provide about 500,000 Wal-Mart employees a substantial pay increase, and the company plans to raise the minimum wage even more, to $10 per hour, by February 2016.

According to Doug McMillon, a Chief Executive at Wal-Mart, these changes are to help build a stronger business while also providing for the needs of their employees. While the pay raises do place the company in a better light, prevent the federal government from having to propose higher minimum wages, and lower costs incurred by having to continuously train new hires, they will also cost over $1 billion in extra costs during this fiscal year. Shares in Wal-Mart fell 3.2% since the beginning of the fiscal year, but economist Justin Wolfers is confident that the benefits will far outweigh the added costs.

By Wolfers' argument, as an employee's salary increases, so does their productivity. Several companies, including Costco, Trader Joe's, and the Gap, have illustrated this point of view, showing a correlation between happy customers and employee wages well above the federal minimum. Could this just be a matter of correlation versus causation, however?

It makes financial sense for Wal-Mart to increase their wages, and some believe that this may force similar businesses like Target, Safeway, and Kroger to raise wages or risk losing employees. Craig Johnson, president of Consumer Growth Partners, believes that Wal-Mart's changes may convince Target employees to change teams, but he doubts that others will give up good jobs at other stores to join Wal-Mart.

For some, the wage increases are not enough. “Ten dollars is pocket change,” says Sanders Mosley, a current Wal-Mart employee. Many feel that companies can afford to and should pay their employees $15 per hour, rather than the ten to thirteen dollar per hour wages on the high end of the spectrum. Is $10 enough to live on, with the rising cost of living and the improving economy? Maybe, maybe not. Can companies really afford to a minimum of $15 per hour and still keep workers employed and shareholders happy? Probably not. While Wal-Mart and many others are raising their wages, they are careful not to go too far, and thus make sure that happy employees are a benefit, not a net financial loss.

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FCC Introduces Rules Promoting Net Neutrality

2/27/15 - One of the most controversial topics in recent discussion is net neutrality. Net neutrality is the principle by which Internet providers provide equal access to all online materials, without favoring particular websites. The push for net neutrality comes from a common practice among Internet providers by which certain online content has slower speeds than others. This “speed discrimination” leaves users with two options: wait extra time to access certain data, or pay to use “faster lanes.” The FCC has, as of Thursday, passed a set of rules that provide for the government's regulation of Internet speeds. Jim Puzzanghera, in his L.A. Times article, discusses what this means, economically and otherwise.

While the Federal Communications Commission claims that these regulations will not be anywhere near as tough as the provisions in other industries, these net neutrality rules mean that the government will have some semblance of control over the Internet. Conservatives and telecommunications companies fear governmental intrusion in a system that is already working well, and liberals applaud the FCC for promoting free and equal access to all legal online materials.

Broadband, just like water and electricity, has become a commodity, a necessity in the everyday life of an average American. However, like with water and electricity, there may be some sense in the government regulating broadband, since it would give everyone access. Quoting similarities to freedom of speech, supporters of net neutrality feel that it is the best way to give everyone equal ability to acquire information.

Generally, neither side of the argument disagrees that Internet providers should have some sort of checks and balances. It is the extent of these regulations that worry many. The Internet, if treated as a commodity, should be as it is now. People can pay more money for a better product, just as people can pay more money for access to a better Internet connection. The two seem very similar. On the other hand, if treated as a utility, like water or electricity or telephone service, broadband seemingly should be equally available to all potential consumers.

In the past, two attempts by the FCC to introduce net neutrality rules have been blocked by federal judges as illegal in some way. Tom Wheeler, Democratic member of the FCC and architect of this net neutrality plan, seems confident that it will be successful. Wheeler decided to classify Internet as a “utility-like” product, which may or may not help his cause. There are sure to be many attempts to throw out the proposed FCC rules, and so, none are quite sure whether net neutrality will be a lasting phenomenon in our future.

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