Current Affairs

That is a new paper by Camelia Simoiu, Sam Corbett-Davies, and Sharad Goel, the abstract is familiar but depressing:

In the course of conducting traffic stops, officers have discretion to search motorists for drugs, weapons, and other contraband. There is concern that these search decisions are prone to racial bias, but it has proven difficult to rigorously assess claims of discrimination. Here we develop a new statistical method—the threshold test—to test for racial discrimination in motor vehicle searches. We use geographic variation in stop outcomes to infer the effective race-specific standards of evidence that officers apply when deciding whom to search, an approach we formalize with a hierarchical Bayesian latent variable model. This technique mitigates the problems of omitted variables and infra-marginality associated with benchmark and outcome tests for discrimination. On a dataset of 4.5 million police stops in North Carolina, we find that the standard for searching black and Hispanic drivers is considerably lower than the standard for searching white and Asian drivers, a pattern that holds consistently across the 100 largest police departments in the state.

For the pointer I thank the excellent Samir Varma.

A lot of the women go away to study and don’t come back:

There are already 2,000 more men than women on the Faroes – which has a total population of just under 50,000 – and some of those men have taken matters into their own hands by importing wives and companions from the Philippines and Thailand.

Filipinos and Thais make up two of the largest groups of foreigners on the Faroe Islands . There are now 200 Thais and Filipinos – mostly women – spread out over the islands.

In the tiny hamlet of Klaksvík located in the northern part of the islands, there are already 15 women from Asia.

Bjarni Ziska Dahl, who married his Filipino wife in 2010, said that the foreign women could well be the answer to the issues facing the Faros.

“We must recognise that there is a problem, and welcome these strangers with dignity,” Dahl told DR Nyheder. “We need these people.”

Both Dahl and his wife Che said that they have a lot in common: island life, a dedication to family and a longing for simplicity. Dahl said that Asian woman are often willing to take jobs that Faroese women will not do.

Here is the full report, one Faorese woman does not like having to say hello to everyone she meets in the street there.  And this is not just a news story, the married and younger Asian women were one of the first things I noticed getting on the plane to Faroe.  (They looked not unhappy by the way.  The other thing I noticed right away was how many disparate groups on the flight seemed to know each other.  And that you have to be careful not to assume that people who look somewhat alike are brothers, or sisters, or parents and children.)

You might consider this a metaphor for some broader social trends around the world, albeit in this case unusually concentrated along the dimensions of geography and nation/territory.  Some women just don’t want to hang out with the guys — even the best guys — who are selling to a market of 50,000 people.  Other women are happy to move into that situation.  Solve for the equilibrium.

Singapore leads the way, offering three-quarters of a million U.S. dollars to gold-medal winners, followed by Indonesia ($383,000), Azerbaijan ($255,000), Kazakhstan ($230,000) and Italy ($185,000).

I would say Italy should not be on that list, as they have some fiscal troubles, plus plenty of other sources of national pride.  And there is this:

…other countries offer alternative bait — like military exemptions (South Korea), a lifetime supply of beer (Germany) and unlimited sausages (Belarus).

Here is the article, via James Crabtree.

It seems to be living near failure, not necessarily experiencing it yourself:

Yet a major new analysis from Gallup, based on 87,000 interviews the polling company conducted over the past year, suggests this narrative is not complete. According to this new analysis, those who view Trump favorably have not been disproportionately affected by foreign trade or immigration, compared to people with unfavorable views of the Republican presidential nominee. The results suggest that his supporters, on average, do not have lower incomes than other Americans, nor are they more likely to be unemployed.

Yet while Trump’s supporters might be comparatively well off themselves, they come from places where their neighbors endure other forms of hardship. In their communities, white residents are dying younger, and it is harder for young people who grow up poor to get ahead.

The Gallup analysis is the most comprehensive statistical profile of Trump’s supporters so far. Jonathan Rothwell, the economist at Gallup who conducted the analysis, sorted the respondents by their Zip code and then compared those findings with a host of other data from a variety of sources.

That is from Max Ehrenfreund and Jeff Guo at the always-excellent Wonkblog.  And there is this:

White households tend be more affluent than other households, and Trump’s supporters are overwhelmingly white. The same is true of Republicans in general. Yet when Rothwell focused only on white Republicans, he also found that demographically similar respondents who were more affluent viewed Trump more favorably.

These results suggest that personal finances cannot account alone for Trump’s appeal. His popularity with less educated men is probably due to some other trait that these supporters share.

Rothwell’s results also very much downplay the roles of trade and China, compared to some other estimates.  Here is a link to Rothwell summarizing some of these results, I am not sure if there is a link to the full study proper.

That is my latest Bloomberg column, and here is just one bit from it:

Third, Brazil’s political history has been an odd mix of dictatorship and extreme decentralization. Until the late 1980s, a series of autocratic leaders took power but failed to govern outlying regions successfully. Governance remained based on a colonial model with an authoritarian leader at the center and autonomous power blocs throughout the regions — a system that, for all of its periodic dynamism, proved ill-suited for modern times.

That colonial legacy is being dismantled, in fits and starts.  Brazil now has a real democracy and some degree of political accountability, though it falls short of a well-functioning federalism, as illustrated by the fiscal troubles of Rio de Janeiro and many other parts of the country. Income inequality has been falling (contrary to the trend in most countries), extreme poverty has virtually been eliminated and Brazil has moved up the rankings in terms of education.

I love to visit Brazil. I have been chased by aggressive pre-teens wielding sharpened sticks and even shot at, yet I remain an unreconstructed optimist. It’s actually a major achievement to remain “the country of the future” for so long. Can you say the same about Argentina or Venezuela? If there’s one thing we know from Olympic competition, it’s that if you remain in the game through successive rounds, your chances of winning only go up.

Do read the whole thing, there is much more detail at the link.

Baltimore Tipped

by on August 11, 2016 at 7:23 am in Current Affairs, Economics, Law | Permalink

Last year I wrote, In Baltimore Arrests are Down and Crime is Way Up. I worried that a crime wave occasioned in part by a work stoppage could tip into a much higher level of crime:

With luck, the crime wave will subside quickly, but the longer-term fear is that the increase in crime could push arrest and clearance rates down so far that the increase in crime becomes self-fulfilling. The higher crime rate itself generates the lower punishment that supports the higher crime rate…

In the presence of multiple equilibria, it’s possible that a temporary shift could push Baltimore into a permanently higher high-crime equilibrium. Once the high-crime equilibrium is entered, it may be very difficult to exit without a lot of resources that Baltimore doesn’t have.

Writing at FEE, Daniel Bier takes a long look at crime in Baltimore and the history of problems which got us to this point. He notes that the sharp drop in arrests which I discussed was indeed temporary.

But unfortunately:

Tabarrok’s fear that “a temporary shift could push Baltimore into a permanently higher high-crime equilibrium” looks to be borne out. Crime shot up due to temporary factors, but once those factors receded, the police [have] been unable to cope with the new status quo. Baltimore’s vicious crime cycle remains stuck in high gear.

…With 178 killings already in 2016, Baltimore is on track for 294 murders this year — shy of last year’s total of 344 homicides, but well above 2014’s total of 211.

To quote HBO’s The Wire, if Baltimore had New York’s population, it would be clocking nearly four thousand murders a year.

Daniel argues that Baltimore does have the resources to get back on track but at this stage in the game it may not have the will.

In one important respect, Baltimore is worse off than Ferguson, MO. Ferguson had poor policing but an average crime rate. Baltimore has poor policing and a sky high crime rate. Baltimore desperately needs more policing but the police have lost the trust of a vital part of the community and as the Department of Justice’s report on Baltimore brutally illustrates, in some cases rightly so. The DOJ report might provide the impetus for a surge–a large but temporary influx of federal funds for new hiring under a new police administration–that could reestablish a decent equilibrium and reform the department at the same time. Many, however, will decry a federal “takeover” of policing. Ironically, the law and order candidate might be more likely to impose Federal control, albeit it would be less likely to work.

Baltimore is truly stuck between a rock and a hard place.

I am all in favor of San Francisco’s $13 per hour minimum wage (which rises to $15 by 2018), plus mandatory paid sick leave, parental leave and employer health care contributions. But labor costs at restaurants are inching past 50 percent of total expenditures, an indicator of poor fiscal health. Commercial rents have also gone bananas. Add the ever-rising cost of frisée and pastured quail eggs and it’s no wonder that many restaurants are experimenting with that unique form of sadism known as “small plate sharing,” which amounts to offering a big group of hungry people something tiny to divvy up. Even nontrendy joints now ask $30 for a proper entree — a price point, according to Mr. Patterson, that encourages even affluent customers to discover the joys of home cooking.

That is by Daniel Duane for the NYT, on how Silicon Valley shapes the northern California dining scene and it is of interest more generally.

Under the “third party” arrangements, nonprofit organizations work as a front for medical care providers trying to win higher payments from private insurers that pay more than government programs like Medicaid, insurers say. For example, UnitedHealth Group last month sued a dialysis chain, American Renal Associates, alleging fraud. In its suit, UnitedHealth said American Renal hooked patients up with a charitable organization that helped patients pay their premiums, according to media reports.

Even though patients were eligible for Medicaid coverage for the poor, according to this New York Times report, the kidney care company wanted them to be covered by a private insurer so the dialysis providers could be paid a higher reimbursement.

Here is more, via Megan McArdle.  And here is Megan on who is gaming Obamacare — everyone.

That is the topic of my latest Bloomberg column, and that idea is banking union:

Imagine a pan-European version of the FDIC…By making depositors indifferent to the risks banks take on, the guarantee would eventually spread to other parts of the economy. A financially troubled government, for example, could easily pressure banks to buy its securities — effectively relying on the insurance to support its fiscally questionable behavior. If the government ultimately defaulted, other countries’ taxpayers would be responsible for making the depositors whole — not quite the same as a fiscal union, but pretty close.

Experience suggests this is entirely possible. Around the time of the 2011 sovereign-debt crisis, European banks were very heavily loaded with government securities, in part because fiscally weak domestic governments had encouraged it. Some commentators compared this arrangement to two drunks leaning against each other, with no lamppost in sight. The incentives for such a dangerous dependence would be stronger yet if bank deposits were guaranteed at the euro area level.

Governments could also take advantage of deposit insurance more directly, through state-owned banks. Suppose Portugal expanded the operations of the government-owned Caixa Geral de Depósitos, the largest bank in the country, to attract deposits and invest the money in infrastructure and other state projects. By insuring the deposits, the EU authority would in essence be guaranteeing a bond issue of the Portuguese government, even though the funds would be channeled through a bank. This wouldn’t be a fiscal guarantee of the entire Portuguese government budget, but it could prop up spending at the margin.

Do read the whole thing.

Donald Trump created quite the stir a few days ago when he suggested that the forthcoming Presidential election was going to be “rigged.”  I’m not sure what exactly he meant by that, or even if it’s worth debating, but I did see my Tweeter feed respond with real furor.  This will undercut faith in democracy I read, and thus the media needs to call him out on it.  Yet over the last few years or indeed decades I also have seen the following:

1. Numerous arguments insist that money buys elections and campaign finance reform is imperative.  That’s not exactly my view, with Trump himself now being Exhibit A on the other side of the issue, but please try to be consistent.  A lot of you believe that elections are (were?) rigged!  (Hey, psst…when can we go back to them being rigged againAsking for a friend!)

2. Numerous arguments that Republican-backed voter registration requirements are keeping significant numbers of voters, most of all minority voters, away from the polls.  That wouldn’t quite count as “rigging,” because the outcome still is not preordained, but it would be a form of slanting.

3. Not long ago, the conventional wisdom was that the race would be Clinton (Hillary) vs. Bush (Jeb).  Fortunately, that is not rigging, rather we call it “spontaneous order.”  Besides, it didn’t happen.  We ended up with Clinton vs…Tormentor of Bush.

4. Do we not all teach the Gibbard-Sattherthwaite theorem to our Principles classes on week three?  In case you forget, the theorem shows that under some fairly general assumptions elections processes are manipulable in a rigorous sense which is defined in social choice theory.  You can think of this as a corollary of the Arrow Impossibility Theorem, actually.

People, I am so glad we don’t teach our students that elections are rigged, it is so much more important to teach that they are “manipulable” in the precise sense defined by social choice theory.  Sadly, Mr. Trump failed that part of the course, because the silly boy wrote down the word “rigged” instead and botched the whole answer, heal so messed up the distinction between inter- and intra-profile versions of the theorem.

5. A related branch of social choice theory, stemming from Dick McKelvey’s work in 1979, suggests that when the policy space has more than one dimension, the agenda setter in Congress has a great deal of power and typically can shape the final outcome.  True, that is Congress rather than a general democratic election.  By the way, how many dimensions does the policy space have these days?  If you’re not sure, that means the answer is “more than one.”  Good thing that only “Congress keystone of the Washington establishment” is rigged!

6. Major political scientists from schools such as Princeton tell us that elites determine policy and ordinary voters have very little say in what happens.  Don’t know if he used “the r word” or not!  (By the way, I agree with the critique of Dylan Matthews.)

7. The American electoral system is designed to give the two major parties a huge initial advantage.  I’m not suggesting that the public is actually itching to elect Jill Stein, but it would shape final outcomes a good deal, for better or worse, if the electoral playing field were more even in this regard.

Personally, I think median voters more or less get what they want on a large number of issues, especially broad-based ones in the public eye.  You won’t find the word “rigged” popping up too much in the MR search function, besides I started blogging (and breathing) after Kennedy vs. Nixon.  But my goodness, I can in fact understand why Donald Trump thinks the system is rigged.  For years, you have been telling him that it is.

p.s. I don’t in fact teach the Gibbard-Sattherthwaite theorem in Principles and you won’t find it in the world’s very best Principles textbook.  That we rigged.

Addendum: How many Democrats have alleged that the 2000 Presidential election was rigged?  Or that today most Americans want some form of tougher gun control, but that the system is rigged against that outcome happening?

Welcome to public housing in Puerto Rico, a realm of high intentions and low outcomes. The island has America’s second-largest public housing system, after New York’s. Roughly 125,000 people inhabit 54,000 apartments, paying rent according to a federal formula: Rent, plus utilities, must be no more than 30 percent of a household’s adjusted income.

Paychecks here are small, and the tenants’ rents are never enough to cover the system’s costs. So Washington subsidizes the rest, currently to the tune of $254 million a year.

It isn’t the housing that’s making Ms. Ramos want to leave. It’s the crime and a culture of cheating.

“Negative rent!” she exclaims. “It doesn’t exist in other parts of the world, but in Puerto Rico, sí!”

Public housing experts say “negative rent” is theoretically possible; Ms. Ramos says she sees it all around her. She pays to live in the projects, but other people have found ways to be paid.

That is from Mary Williams Walsh at the NYT.  And here is some more detail on negative rent:

Federal Housing and Urban Development records say that 36 percent of the families in Puerto Rico’s housing projects have incomes of zero. By law, tenants with no income must pay $25 a month. This turns into “negative rent” when their electric bills are factored in.

That’s because Washington gives public housing tenants a “utility allowance,” which is normally deducted from their rent. But if someone is paying just $25 a month, for example, and gets a utility allowance of $65 a month, they’ll end up with a “negative rent” of $40. It’s paid in cash.

Some people pocket the money and stiff the Electric Power Authority, a government monopoly with a bad track record for bill collections. The Power Authority is responsible for $9 billion of the government’s $72 billion debt. It could use the money.

Ms. Ramos suspects that if rates go up, Washington will send bigger utility allowances — and people living on “negative rent” will get more money.

Solve for the equilibrium, as they say…

Swedish church to use drones to drop thousands of Bibles in ISIS-controlled Iraq

The story is here, via Joel Grus.

…there were at least two instances in which top officials tried to slow, or undermine, the president’s nuclear authority.

The first came in October 1969, when the president ordered Melvin R. Laird, his secretary of defense, to put American nuclear forces on high alert to scare Moscow into thinking the United States might use nuclear arms against the North Vietnamese.

Scott D. Sagan, a nuclear expert at Stanford University and the author of “The Limits of Safety,” a study of nuclear accidents, said Mr. Laird tried to ignore the order by giving excuses about exercises and readiness, hoping that the president who sometimes embraced the “madman theory” — let the world think that you are willing to use a weapon — would forget about his order.

But Nixon persisted. Dr. Sagan reports that during the operation, code-named Giant Lance, one of the B-52 bombers carrying thermonuclear arms came dangerously close to having an accident.

Then, in 1974, in the last days of the Watergate scandal, Mr. Nixon was drinking heavily and his aides saw what they feared was a growing emotional instability. His new secretary of defense, James R. Schlesinger, himself a hawkish Cold Warrior, instructed the military to divert any emergency orders — especially one involving nuclear weapons — to him or the secretary of state, Henry A. Kissinger.

It was a completely extralegal order, perhaps mutinous. But no one questioned it.

That is from William Broad and David Sanger at the NYT.

Addendum: Here is a 2008 Alex post on the same.

Richard “Scott” Silverthorne, the mayor of the City of Fairfax, has been arrested after he allegedly gave methamphetamine to an undercover detective in exchange for a sexual encounter, Fairfax County police say.

Story here.  It is nonetheless a wonderful place to work and live!

For the pointer I thank Yana and Scott.

I have been pushing this line for a while, now I am pleased to see coverage from The New York Times:

Industry leaders point to a number of areas where China jumped first. Before the online dating app Tinder, people in China used an app called Momo to flirt with nearby singles. Before the Amazon chief executive Jeff Bezos discussed using drones to deliver products, Chinese media reported that a local delivery company, S.F. Express, was experimenting with the idea. WeChat offered speedier in-app news articles long before Facebook, developed a walkie-talkie function before WhatsApp, and made major use of QR codes well before Snapchat.

Before Venmo became the app for millennials to transfer money in the United States, both young and old in China were investing, reimbursing each other, paying bills,and buying products from stores with smartphone-based digital wallets.

The Paul Mozur article is interesting throughout.