In Ferguson and the Modern Debtor’s Prison I noted that Ferguson raises an unusually high rate of revenues from fines.
You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant “low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay.”
It doesn’t inspire confidence, therefore, when we learn that Ferguson plans to increase its reliance on police fines as a source of revenue.
Ferguson, Missouri, which is recovering from riots following the August shooting death of an unarmed black teenager by a white policeman, plans to close a budget gap by boosting revenue from public-safety fines and tapping reserves.
Missouri’s attorney general, however, wants to enforce limits on predatory fining:
Missouri’s attorney general announced lawsuits against 13 of this city’s suburbs on Thursday, accusing them of ignoring a law that sets limits on revenue derived from traffic fines. The move comes after widespread allegations of harassment and profiteering by small municipal governments against the poor and minorities.
…demonstrators have frequently complained about a perceived hypervigilance to minor traffic violations in St. Louis County’s patchwork of 90 municipalities. Many of those cities have their own courts and police departments, but some are only a few square blocks in size and have populations smaller than some high schools.
“When traffic ticketing is used to promote public safety, that’s appropriate,” Mr. Koster said. “When traffic tickets are used to promote revenue, that’s inappropriate.” Such practices, he said, are “predatory.”
(Technically Ferguson isn’t one of the smaller governments being sued but the battle lines are being drawn.)
The current focus on predatory fining and minorities is well justified but these issues are also the spearhead for important changes being brought about by the intersection of policing and mass surveillance. We all commit multiple felonies regularly, no one is innocent. Today most of our violations are simply ignored, never discovered nor prosecuted, but when the eye turns to us we won’t have a defense. As a result, as Stephen Carter wrote in a superb editorial, technological change and the law puts us all in the same danger as Eric Garner.
Hat tip: Michael Cohen.
Cell biologist Andrew Hessel of Autodesk is designing viruses in software to attack a specific individual’s cancer and then using DNA Printers to create the viruses as a drug. Here from an interview with New Scientist (gated).
It’s really about making a specific medicine tailored to one person–”N-of-1″ medicine–rather than try to make it a best fit for a whole population. My vision is to create a personalized treatment that can be made in a day by printing bespoke cancer-fighting viruses.
I’m not fully convinced by his economic model but it may be useful as a vision-goal:
I see the business model shifting away from the blockbuster-drug model of the pharma industry–getting the best product for the most people and charging the most for it–to more of a Netflix model, in which you might purchase a subscription for all-that-you-need medicine to manage your cancer.
…I’m pretty sure I can get the virus printing costs down to a dollar a dose. The virus itself is designed by algorithms using diagnostic data from the patient. That info is put into a program that will design the cancer-fighting virus, so the cost of design is cheap. Then there’s testing, and there is no simpler test than on the patient’s own cancer cells in a dish. So that whole process should cost less than $100 end-to-end. If you are on a cancer subscription model paying $100 a month, I see that as ultimately profitable.
Hessel is also far too sanguine about the FDA who he thinks will allow this under “compassionate use.” No way – not today when the FDA prohibits 23andMe from even providing information about DNA and its probable consequences, see my post Our DNA, Our Selves. To make this a reality we will need scientific breakthroughs and also A New FDA for the Age of Personalized Medicine.
In particular, about 57% of the papers accepted by the first committee were rejected by the second one and vice versa. In other words, most papers at NIPS would be rejected if one reran the conference review process (with a 95% confidence interval of 40-75%)
Here is another framing:
If the committees were purely random, at a 22.5% acceptance rate they would disagree on 77.5% of their acceptance lists on average.
That is from Eric Price on the NIPS experiment, there is more here.
For the pointer I thank a loyal MR reader.
I now regularly find that when I buy something from a cashier — especially small ticket items — that I have the option of tipping the salesperson. There will be a cup for tips, or the space to write a tip into the credit card transaction. If I buy a gelato, or a newspaper in the airport, these tipping chances present themselves.
I take it there are a few classes of customer:
1. Those who are looking for chances to tip more, to feel good about themselves.
2. Those who are uncertain about when they should be tipping, and who will now enter a tip to avoid feeling bad, out of fear that the social default has shifted toward tipping in some additional arena. They don’t prefer to tip, but they figure they are supposed to, and do not therefore hold a grudge.
3. Those who are indifferent to this new possibility, or perhaps who actively resent it, and who will leave no tip at all and do not feel guilty about that.
4. Those who aren’t sure what they should be doing, ultimately decide against the tip, feel bad about this, identify the establishment which made them feel bad, and avoid that establishment in the future.
If the share of individuals described by #4 is sufficiently large, suppliers will be reluctant to create new tipping opportunities, but it seems that is not the case. And so the practice of tipping is spreading. Note that as new tipping opportunities spread, uncertainty about the true social defaults increases (“hmm…maybe coffee servers do deserve a tip…”) and that increases the share of individuals who fall into #2. Which in turn raises the profitability of creating new tipping opportunities, which in turn muddies the understanding of social defaults, and so on. That is indeed the Dantean inferno we live in these days.
As a good Coasian, I feel tipping makes most sense when the quality of service potentially varies, and is elastic to the effort of the server. Those are not the boosts in tipping opportunities which I am observing. I’ve never had anyone scoop me a bad gelato, but service quality at the supermarket checkout varies a good deal, mostly depending on whether the cashier knows not to engage the (other) customers in too much chatter.
The words of Gillian Tett are worth a ponder:
…corporate leverage in regions such as Asia is considerably higher today, relative to gross domestic product, than it was before the 1998 Asian financial crisis, as Frank Neumann of HSBC notes. What is even more alarming is that these numbers might understate the risk since many emerging market companies have been using offshore vehicles to raise funds — and those flows are not well tracked.
The BIS reckons that about half of the debt securities sold between 2009 and 2013 by emerging market entities, along with a large chunk of loans, were channelled via offshore entities, not onshore parent companies. These offshore entities typically swap this money from dollars into domestic currency and repatriate it to the head office.
Brazilian, Russian and Chinese firms, for example, are thought to have created some $35bn of these internal intra-company flows in the first quarter of 2013 alone. But these flows are often recorded in the data as a “foreign direct investment flow”, not debt. The risk, then, is that companies are exposed to currency mismatches that will only become clear at a later date.
On the topic of pallets, Jacob Hodes writes:
There are approximately two billion wooden shipping pallets in the United States. They are in the holds of tractor-trailers, transporting Honey Nut Cheerios and oysters and penicillin and just about any other product you can think of: sweaters, copper wire, lab mice, and so on. They are piled up behind supermarkets, out back, near the loading dock. They are at construction sites, on sidewalks, in the trash, in your neighbor’s basement. They are stacked in warehouses and coursing their way through the bowels of factories.
The magic of these pallets is the magic of abstraction. Take any object you like, pile it onto a pallet, and it becomes, simply, a “unit load”—standardized, cubical, and ideally suited to being scooped up by the tines of a forklift. This allows your Cheerios and your oysters to be whisked through the supply chain with great efficiency; the gains are so impressive, in fact, that many experts consider the pallet to be the most important materials-handling innovation of the twentieth century.
And there is this:
Not all pallets belong to the world of whitewood. The most important other category—and whitewood’s chief antagonist—is the blue pallet. These blues are not just a different color; they are also built differently, and play by different rules, and for the past twenty-five years, the conflict between blue and white has been the central theme in the political economy of American pallets.
6. “There is such negativity about clouds written into our language…” And don’t be too shocked: “Half of Cloud Appreciation Society members – the group celebrates its 10th anniversary next year – are British.”
7. Jonathan R. Macey on the Bebchuk/SEC kerfluffle (I agree with him).
This post isn’t about smuggling Cuban cigars it’s an incredible story about smuggling Cuban baseball players.
The average wage in Cuba is about $20 per month so a typical Cuban might earn 50 times more in the United States but a star Cuban baseball player (who also earns about $20 per month in Cuba) might earn 10,000 times more in the United States. Markets abhor a price differential so there is an active market in smuggled Cubans.
Yasiel Puig, now a star player for the Los Angeles Dodgers, was smuggled out of Cuba in 2012. The smuggling operation was paid for by a group of Miami businessmen:
Investigators and court documents say Suarez was one of the Miami-based financiers of the 2012 smuggling venture in which Puig was taken by boat from Cuba to a fishing village near Cancun, Mexico, eventually crossing into the U.S. at Brownsville, Texas, on July 3 of that year. In return, the financiers were getting a percentage of the seven-year, $42 million contract Puig signed with the Dodgers.
The story is not unique
The plea is the second in Miami federal court this year involving the smuggling of a Cuban baseball player into the U.S. Last month, 41-year-old Eliezer Lazo was sentenced to 14 years in federal prison for conspiring to smuggle 1,000 Cubans, including baseball players such as Texas Rangers outfielder Leonys Martin.
Puig did in fact pay Suarez $2.5 million. A high price for a relatively simple operation–the going rate to smuggle an ordinary Cuban is about $10,000–but, as we will see, more than smuggling was involved. It took five attempts before Puig reached the shores of Mexico. On one of the earlier attempts Puig was captured by the US Coast guard who sent him back–after some of the crew asked for his autograph!
On the fifth attempt, Puig, along with “a boxer, a pinup girl, and a Santeria priest, the latter of whom blessed their expedition with a splash of rum and a sprinkle of chicken blood” managed to escape Cuba guided by the smugglers and their accomplices—“The Chinaman” and “The Hungarian”. Once in Mexico, however, the operation got messy because Mexico’s Zetas gang were acting as intermediaries and with Puig in hand they demanded a greater share of the proceeds.
“If they didn’t receive the money, they were saying that at any moment they might give him a machetazo”—a whack with a machete—“chop off an arm, a finger, whatever, and he would never play baseball again, not for anyone.”
The case has lots of interesting asides: Why flee to Mexico first and only then to the United States? It’s all about the money and the weird rules of MLB:
A foreign-born player who immigrates without a contract is treated as an amateur by MLB; he can negotiate only with the team that drafts him. By declaring himself a free agent before arriving, that player can entertain all comers; the difference is worth millions. Federal law, of course, bars Americans from paying money to Cubans—or “trading with the enemy”—so a ballplayer like Puig needs not only to defect but also to establish legal residency in a country that he does not actually intend to live in.
Now back to the Zetas and the hostage negotiations.
As the standoff entered its third week, the smugglers began looking elsewhere to recoup their costs. The idea occurred to them that they could auction Puig off.
Eventually a rescue operation was staged by the Miami businessmen (details are unclear) and Puig escapes to Mexico City where in essence an auction is held in which the Dodgers win with a bid of $42 million over seven years.
Puig, however, continued to be threatened by the Zetas, hence, it seems, the aforementioned $2.5 million dollar payment to the Miami businessman who in turn paid off the Zetas (a murder also appears to be related).
As if all of this isn’t astounding enough these details have come to light only because of a US civil case against Puig. Puig had been approached a few years earlier when he was just 19 by another would be smuggler. Fearing the state police who monitored him constantly, Puig alerted the sports ministry to the offer and they notified state security. The alleged smuggler was arrested by the Cuban police, jailed, and perhaps tortured. Now here is where it gets really strange. The alleged smuggler, still in jail in Cuba, and his mother are suing Puig in American court for $12 million dollars for turning the smuggler over to the Cuban authorities and thus potentially violating the Torture Victim Protection Act.
There are many lessons here about open(ing) borders, rent seeking, the law, and how making some trades illegal creates black markets often ruled by violence. Thankfully an opening of relations with Cuba may cause this market to wither away. Next up, college athletes.
Switzerland is introducing a negative interest rate on the deposits it holds for lenders, its central bank said on Thursday, moving to hold down the value of the Swiss franc amid the turmoil in global currency markets.
The Swiss National Bank said in a statement from Zurich that it would begin charging banks 0.25 percent on bank deposits exceeding a certain threshold.
This cracks me up:
The illustrations on the banknotes show generic examples of architectural styles such as renaissance and baroque rather than real bridges from a particular member state, which could have aroused envy among other countries. “The European Bank didn’t want to use real bridges so I thought it would be funny to claim the bridges and make them real,” Stam told Dezeen.
The article headline is “Fictional bridges on Euro banknotes constructed in the Netherlands.” Perhaps this will prove a broader and subtle metaphor for making the eurozone actually work…
For the pointer I thank Joel Cazares.
Felix Salmon writes:
Facebook’s algorithm is already working overtime on trying to slim down a virtually infinite range of possible News Feed posts to a much smaller number. A significant chunk of the NewsFeed is already ads, so in order to make it into the News Feed if you’re not an ad, you need to be really, really good. Like, one close friend announcing her engagement, or a video of another friend pouring a bucket of ice water over her head, or a long and hilarious comment thread on a third friend’s status update. What’s not really, really good? A link to some random website which has a user experience which Facebook can’t control, and which is probably suboptimal on mobile.
In 2015, then, the winners of the Facebook attention lottery are going to be more videos, as well as genuinely native, in-app content from advertisers. The losers are going to be external websites who have become reliant on the Facebook traffic firehose. That traffic is going to start falling, in 2015, for the first time. And the repercussions are likely to be huge.
And here is a very good Nicholas Carson piece on the future of Google, I found this point (among others) interesting:
The only reason search makes money for Google is that people use it to search for products they would like to buy on the internet, and Google shows ads for those products. Increasingly, however, people are going straight to Amazon to search for products. Desktop search queries on Amazon increased 47% between September 2013 and September 2014, according to ComScore.
I often find that people take the current landscape of the web for granted when they try to imagine the future of media.
David Cay Johnston takes a trip to Disneyland some 60 years after his first visit. It looks better than ever, even as America has declined.
Every night Disneyland gets freshened up. When the park closes at midnight, the lights go up, and crews steam gum off the sidewalks, daub fresh paint where needed, water the flowers, polish the streetlights and examine the walkways. I had to look hard just to find unrepaired cracks on Main Street and the paved walkways. By chance, I got to walk backstage, where the asphalt and concrete surfaces were in near perfect shape, the walls painted, the handrails free of rust.
…Yet outside the gates, America fails to invest in its infrastructure, costing us lives from accidents, floods, sinkholes from water-main failures and explosions from faulty natural gas lines. Sidewalks buckle or heave after winter freezes, making many hazardous to walk on. America’s roads deteriorate, costing the economy in efficiency, though the front-end-alignment shops and tire dealers do well.
…The water fountains at Disneyland all worked, while in city halls and airports, many barely dribble because there is no budget to replace their filters before sediment clogs them.
Johnston’s piece is titled America should be more like Disneyland but instead of thinking seriously about what this means he fumbles on the 20 yard line and concludes that what makes Disneyland different is….happy thoughts. If only we were more like W.D., he says, “we could make America into a happy place.”
No, what makes Disney invest in infrastructure is not happy thoughts. Johnston is in fact clear about this:
The Walt Disney Co. invests in infrastructure because it makes the company money.
The problem with America is that our public infrastructure has been turned over to a fickle political process that is not governed by a rational calculation of cost and benefit, market test and experimentation but by a pursuit of power, glory and advantage that only rarely coincides with the public interest.
America should be more like Disneyland and to do that we need to develop institutions that allow more infrastructure to built by the private sector. Most ambitiously we need more cities as hotels, more proprietary cities. As Rajagopolan and I wrote in our study of India (in Cities and Private Planning):
The lesson of Gurgaon, Walt Disney World, and Jamshedpur is that a system of proprietary, competitive cities can combine the initiative and drive of private development with the planning and foresight characteristic of the best urban planning. A proprietary city will build infrastructure to attract residents and revenues. A handful of proprietary cities built within a single region will create a competitive system of proprietary cities that build, compete, innovate, and experiment.