Risky Business

Here's what seems to be the consensus opinion about whether or not Sonia Sotomayor will be good for business: Um, maybe?

When it comes to small businesses, law prof Richard Epstein points to one case that he says should have business owners shaking in their boots. It has to do with an entrepreneur who had bought land to build a CVS franchise, and then ran into trouble:

The case involved about as naked an abuse of government power as could be imagined. Bart Didden came up with an idea to build a pharmacy on land he owned in a redevelopment district in Port Chester over which the town of Port Chester had given Greg Wasser control. Wasser told Didden that he would approve the project only if Didden paid him $800,000 or gave him a partnership interest. The "or else" was that the land would be promptly condemned by the village, and Wasser would put up a pharmacy himself. Just that came to pass. But the Second Circuit panel on which Sotomayor sat did not raise an eyebrow. Its entire analysis reads as follows: "We agree with the district court that [Wasser's] voluntary attempt to resolve appellants' demands was neither an unconstitutional exaction in the form of extortion nor an equal protection violation."

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We have some data on the best and worst states to start a business. But local and municipal laws are often more important than state laws. So what about the best and worst cities in which to start a business? I'm not aware of any studies that compare the various business regulations of cities across the board. But a recently released study from the Institute for Justice makes an interesting case that if there were such ranking, the city of Chicago would be at or near the bottom.

According to the study, "the overlapping rules of the city of Chicago and the state of Illinois create a matrix that is so confusing and nonsensical that it often seems designed to stop entrepreneurs in their tracks."  What are some examples of these byzantine regulations?

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My last post on the FDA and e-cigarettes promised an update.  Well, I haven't seen any official statements from the FDA about any changes to their policy on e-cigarettes. But some reports show that the policy is and has effectively been a ban. For example, this:

A Florida company that imports and distributes so-called electronic cigarettes filed suit yesterday against the Food and Drug Administration, claiming the agency is illegally blocking imports of its product into the United States.

The suit, filed by Smoking Everywhere in the U.S. District Court for the District of Columbia, argues that the FDA has overstepped its regulatory authority by banning shipments of the devices and insisting they need to go through the drug approval process.

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In the past year or so, it's been hard to read the name "Nouriel Roubini" without it being preceded by "economic doomsayer." So I thought it was interesting that at the end of this lengthy and interesting New Republic profile of Roubini there are some words of hope from the economist. He says the recession may have at least one positive side effect:

Given the right changes, perhaps the United States can develop with the productive long view in mind, and maybe its human talent can be spread more equitably. "When you have more financial engineers than computer engineers, you know that the brightest minds have gone into something where, probably, the margin was excessive," he had told me earlier. "Maybe some of these bright people are going to do something entrepreneurial, more creative, or go into government. I think that's actually a good change. The transition is painful, but the result may be good."

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