Economic sanctions, when they have an effect at all, tend to inflict misery on a targeted region’s civilian populace and often drive it further into dependence on violent overlords. That truism will surprise few libertarians, but apparently it still comes as news to many in Washington, to judge from the reaction to this morning’s front-page Washington Post account of the humanitarian fiasco brought about by the 2010 Dodd-Frank law’s “conflict minerals” provisions. According to reporter Sudarsan Raghavan, these provisions “set off a chain of events that has propelled millions of [African] miners and their families deeper into poverty.” As they have lost access to their regular incomes, some of these miners have even enlisted with the warlord militias that were the law’s targets.

Congress added the provisions to Dodd-Frank in a fit of moral self-congratulation over making sure Americans had the chance to be ethical and thoughtful consumers of such products as jewelry and cellphones (as well as thousands of other products, as it turned out, from auto parts to the foil in food packaging). Publicly held companies would be required to report on their supply connections to “conflict minerals” such as tin, tungsten, and gold mined in war-torn areas of the Democratic Republic of the Congo. Lawmakers assigned enforcement of the law to the Securities and Exchange Commission – a body with scant discernible expertise in either African geopolitics or metallurgy – and barbed it with stringent penalties for disclosure violations, to which are added possible liability in class-action shareholder lawsuits.

Reactions to this morning’s Post account frequently employ words like “unintended” or “tragic” to describe the effect on miners of the law, which people in the Congo soon came to call “Loi Obama” – “Obama’s law”.  Unintended and tragic? Maybe. But not unforeseen, because the signs that the law would backfire this way have been in plain sight for years now – as in this 2011 account by Prof. Laura Seay (via) of how “electronics companies now have a strong incentive to source minerals elsewhere, leaving Congolese miners unemployed.” Or this 2011 account by David Aronson in the New York Times of the “unintended and devastating consequences” that he “saw firsthand on a trip to eastern Congo.” Or this more recent paper by law professor Marcia Narine.

But although the evidence has been there for years, the will to believe in the law was too strong – a will fueled by anti-corporate campaigners who take it on faith that when brutalities in the underdeveloped world occur within two or three degrees of separation of the activities of multinational businesses, the right answer must be to blame and shame the businesses.

You might call it an expensive lesson for Americans too, if you assume that anything has been learned. A recent Tulane calculation found that the costs in business compliance have already topped $700 million, with billions more ahead should nothing change. Just this September, the U.S. government conceded that it “does not have the ability to distinguish” which refiners and smelters around the globe are tainted by a connection to militia groups. That is to say, the government has demanded of business a degree of certainty that it cannot achieve itself.  Courtesy of UCLA corporate law professor Stephen Bainbridge, here’s a flowchart of what complying might involve for a given business.

If the new Republican Congress wants to be taken seriously about fixing counterproductive regulation, it should make the repeal of this law an early priority. (& Bader)

Dodd-Frank conflict minerals fiasco, cont’d is a post from Overlawyered - Chronicling the high cost of our legal system

Update: that “just a rogue field office in Cincinnati” story didn’t last long. AP is reporting that the agency’s acting head knew nearly a year ago that tea party groups were being targeted, a fact that might have been of interest to lawmakers pursuing constituent reports of overly onerous document demands from the IRS (see our earlier coverage of that here and here). Meanwhile, ProPublica, the generally liberal-leaning journalistic outfit, has disclosed that the IRS shared with it confidential data from nine conservative-leaning nonprofits.

Government is simply the name for the things we do together… is a post from Overlawyered - Chronicling the high cost of our legal system

The “Loi Obama” or Obama Law — as the Dodd-Frank Wall Street reform act of 2010 has become known in the [central African] region — includes an obscure provision that requires public companies to indicate what measures they are taking to ensure that minerals in their supply chain don’t benefit warlords in conflict-ravaged Congo. The provision came about in no small part because of the work of high-profile advocacy groups like the Enough Project and Global Witness, which have been working for an end to what they call “conflict minerals.”

Unfortunately, the Dodd-Frank law has had unintended and devastating consequences, as I saw firsthand on a trip to eastern Congo this summer. …

Dodd-Frank “conflicts minerals” provision devastates Congolese is a post from Overlawyered - Chronicling the high cost of our legal system

May 2 roundup is a post from Overlawyered - Chronicling the high cost of our legal system

October 14 roundup is a post from Overlawyered - Chronicling the high cost of our legal system

January 20 roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Intimidation through subpoena is a post from Overlawyered - Chronicling the high cost of our legal system

Barney Frank and the healthy TARP banks is a post from Overlawyered - Chronicling the high cost of our legal system