Law

Land use regulations raise prices, reduce mobility and increase income inequality in the United States. In many parts of the developing world, however, the situation is worse, much worse.

In an excellent piece Shanu Athiparambath writes:

Land is not scarce in Delhi, as I learned in one of those days, when a friend drove me around the city. There is enough land for everybody to live in a mansion. Delhi has nearly 20,000 parks and gardens. Large tracts of land remain idle or underutilized, either because the government owns it, or because property titles are weak. Politicians and senior bureaucrats live in mansions with vast, manicured lawns in the core of the city. Some of these political eminentoes farm on valuable urban land while firms and households move to the periphery or satellite cities where real estate prices are lower. So the average commute is long, roads are too congested, and Delhi is one of the most polluted cities in the world.

Zoning regulations inflict great harm. But it is difficult for Americans to imagine the cost of zoning in Indian cities. Delhi is one of the most crowded cities in the world, and there is great demand for floor space. But real estate developers are not allowed to build tall buildings. In Delhi, for apartment buildings, the regulated Floor Area Ratio (FAR) is usually 2. FAR, an urban planning concept, is the ratio of built-out floor space to the area of the plot.

This means, in Delhi, developers are not allowed to build more than 2,000 square feet of floor space on a 1,000 square feet plot. If a building stands on the whole plot, this would be a two-storey building.

To understand the harm this inflicts on the world’s second-most populous city, remember that in Midtown Manhattan, FAR can go up to 15. In Los Angeles, it can get as high as 13, and in Chicago, up to 12. In Hong Kong’s downtown, the highest FAR is 12, in Bahrain it is 17, and in Singapore it can get as high as 25. Not surprisingly, office space in Delhi’s downtown is among the most expensive in the world. It is impossible to profitably redevelop these crumbling buildings in Delhi’s downtown because they are under rent control.

You might expect the capital city to be especially restrictive, just as is Washington, DC, but in Mumbai, the densest major city in the world, the downtown FAR is an absurdly low 1.33.

Think about it like this: A FAR is like a tax on manufacturing land. Why would you impose prohibitive taxes in places where land is most desperately needed?

Arbitrage!

by on July 26, 2016 at 3:35 am in Economics, Law, Television, Travel | Permalink

Man faces prison for scheme inspired by Seinfeld plot where he ‘brought 10,000 cans from out of state to take advantage of Michigan’s higher deposit rates’

That is the headline, here is the story via the excellent Mark Thorson.  For the under-informed amongst us:

In Michigan you can get 10c for every bottle you give back – whereas places such as New York will only give you 5c.
But it is illegal for someone to knowingly bring them from somewhere else in order to get cash.

Chinese scientists are on the verge of being first in the world to inject people with cells modified using the CRISPR–Cas9 gene-editing technique.

A team led by Lu You, an oncologist at Sichuan University’s West China Hospital in Chengdu, plans to start testing such cells in people with lung cancer next month. The clinical trial received ethical approval from the hospital’s review board on 6 July.

…The Chinese trial will enroll patients who have metastatic non-small cell lung cancer and for whom chemotherapy, radiation therapy and other treatments have failed. “Treatment options are very limited,” says Lu. “This technique is of great promise in bringing benefits to patients, especially the cancer patients whom we treat every day.”

On this one, they’re ahead of us.  There is much more information at the link, including a discussion of where the U.S. is at and also the FDA.

Here is one bit, there is more analytical political science at the link:

5. Trump’s foreign policy advisor on Russia and Europe is Carter Page, a man whose entire professional career has revolved around investments in Russia and who has deep and continuing financial and employment ties to Gazprom. If you’re not familiar with Gazprom, imagine if most or all of the US energy industry were rolled up into a single company and it were personally controlled by the President who used it as a source of revenue and patronage. That is Gazprom’s role in the Russia political and economic system. It is no exaggeration to say that you cannot be involved with Gazprom at the very high level which Page has been without being wholly in alignment with Putin’s policies. Those ties also allow Putin to put Page out of business at any time.

Recommended reading for your final exams in public choice.  Do read it all.

Maybe I already covered this, but it is worth re-upping this Michael Rosenwald piece from March:

A man had just gone on a shooting rampage in Kalamazoo, Mich., allegedly killing six people while driving for Uber. Sherry Towers, an Arizona State University physicist who studies how viruses spread, worried while watching the news coverage.

Last year, Towers published a study using mathematical models to examine whether mass shootings, like viruses, are contagious. She identified a 13-day period after high-profile mass shootings when the chance of another spikes. Her findings are confirmed more frequently than she would like.

…Studies have shown that the aircraft hijackings of the 1970s were contagious. Product tampering — also contagious. So is highway speeding, rioting and even military coups. Contagion is especially pronounced in suicides.

Do read the whole thing.  It is related to my recent Bloomberg piece about macro and political and financial contagion across borders.  And here is Michael’s very latest piece on the Munich shootings.

That is the new and excellent book by Kerry Brown.  Almost all books on China are either bad or mediocre, but this one is the best book I ever have read on the exercise of power in contemporary China.  Every page is good, here is a short excerpt:

More important than a cabinet in the Western system of government, yet ostensibly separate from day-to-day decision making, the Politburo owns the crucial function of dispensing ideological, spiritual and political leadership.  This description means it covers nothing and everything.  It has the broadest framework within which to operate, which means it can wander into every area of administrative and governmental life in the country.  But like the ideal city described in Plato’s Republic, in a strange way China is really run on the model of philosopher kings.

Definitely recommended, one of my favorite non-fiction books of the year so far.  I can readily imagine re-reading it.

In early April, shortly after his team celebrated a postseason championship, a George Washington men’s basketball player visited a campus Title IX coordinator to log complaints about Coach Mike Lonergan. Lonergan, the player believed, had created an offensive, intolerable environment, evidenced in his mind — and in the minds of many of his teammates — by the spate of transfers during the coach’s five-year tenure.

There is much more to the story, here is just one bit, from a player:

“It was always weird. When he goes on those rants, it’s like, how do you react? How do you respond to something like that? Players kind of just stayed away from him. We knew every time it would be you and him, he would go on some kind of weird rant. We would just kind of stay away from him. He did a great job in terms of winning. Off the court, something weird is always going to come out.”

Can you imagine that response to either Bobby Knight or John Wooden?  But at GW many players have left the school, refusing to play under the coach’s tutelage.  He may yet be dismissed and possibly also sued for creating an abusive environment.  In the old days, at the end the team wins, everyone bonds, and the coach is a hero.  Or was it really ever like that?  Maybe we have just stopped pretending.

That is via Peter Boettke.  Via Mark Thorson, the Japanese just made their last VCR player.

Justin Winkler has a new thesis from Haverford (pdf):

This paper analyzes the impact that the influx of foreign players has had on the salaries and labor market outcomes of domestic players in the National Basketball Association (NBA). The study builds on previous literature in the field of labor economics by examining this research question in a highly specialized labor market with a rigid salary structure. First, an unbalanced panel data set at the player-year level from 1990-2008 is used in combination with a log-linear regression model to estimate the impact that the number of foreign players in the NBA has on the wages of domestic players. Results are insignificant. A handcrafted dataset tracking the careers of Chad Ford’s top 50 American prospects from 2001 through 2015 is used with a series of ordered logistic regressions to examine foreign players’ impact on the career length and outcomes of American players. Additional ordinary least squares regressions are used to estimate the career quality of American prospects by the quality of the leagues in which they played. Results of all regressions investigating the career outcomes of American prospects are also insignificant.

The initial pointer is from Ben Southwood, see his older and broadly similar paper on soccer.

Bryan Caplan writes:

The fact that Londoners showed little sympathy for Brexit is telling: People who experience true mass immigration first-hand tend to stop seeing it as a problem.  “Backlash,” as Tyler Cowen calls it, is a symptom of insufficient migration – the zone where immigrants are noticeable but not ubiquitous.  I know he disagrees, but I honestly can’t figure out why.

The post makes many other different and interesting points, but I’ll stick with this one.  Here goes:

1. Had the UK had much freer immigration, London would be much more crowded.  With truly open borders, people would be sleeping on the sidewalks in large numbers.  London itself would have turned against such a high level of immigration, which quickly would have turned into a perceived occupation.

2. Changes often have different effects than levels: “Where foreign-born populations increased by more than 200% between 2001 and 2014, a Leave vote followed in 94% of cases. The proportion of migrants may be relatively low in Leave strongholds such as Boston, Lincolnshire, but it has soared in a short period of time. High numbers of migrants don’t bother Britons; high rates of change do.”

In other words, had there been higher levels of immigration into non-London parts of the UK, the backlash may well have been stronger yet.  For a careful reader of the Caplanian corpus, that is in fact a Caplanian point and I am surprised it did not occur to Bryan.

3. The highest quality and most easily assimilating immigrants will be attracted to London and the greater London area.  Packing Birmingham with London-style levels of immigration won’t give you London-style immigrants, nor will it turn Birmingham into London.

4. London already has a population pre-selected to like immigration.  Spreading London-like levels of immigration to the rest of England wouldn’t make immigration as popular elsewhere as it is currently in London, even if that immigration went as well elsewhere (which would not be the case, see #3).

5. Post 1980s, England underwent a very rapid and significant change with respect to the number of immigrants it allowed to stay in the country.  If that wasn’t fast enough for the open borders idea to avoid a backlash along the way, then perhaps the new saying ought to be “Only whiplash avoids backlash.”  But that won’t exactly be popular either.

There is a very simple interpretation of current events, including of course the Trump movement in the United States.  It is “the backlash effect against immigration is stronger than we used to think, and we need to adjust our expectations accordingly.”  When Bryan writes “I know he disagrees, but I honestly can’t figure out why”, I think he is simply afraid to stare that rather obvious truth in the eye.  In any case, it’s staring rather directly at him.

Theresa May has indicated that Brexit could be delayed as she said she will not trigger the formal process for leaving the EU until there is an agreed “UK approach” backed by Scotland.

The Prime Minister on Friday travelled to Scotland to meet Nicola Sturgeon, the First Minister, and discuss plans for Britain’s Brexit negotiation.

In a sign that the new Prime Minister is committed to keeping the Union intact, she said she will not trigger Article 50 – the formal process for withdrawing from the EU – until all the devolved nations in the country agree.

That is from The Daily Telegraph.  Here is my previous post on whether Article 50 ever will be invoked.

A central Pennsylvania man is accused of spraying fluid used to embalm a human brain on marijuana that he then smoked.

State police in Carlisle on Thursday charged Joshua Lee Long, 26, with abuse of a corpse and conspiracy.

WGAL-TV says court records indicate Long’s aunt discovered the brain in a department store bag while cleaning out a trailer.

…Court records indicate a coroner concluded the brain was real and that Long supposedly named it Freddy. According to the arrest affidavit, the coroners who examined the brain believe it is “most likely” a stolen medical specimen.

Here is more, via Tim B.

In other words, last night was an outlier.  Here is Jonathan M. Powell and Clayton L. Thyne in the Journal of Peace Research:

We also see some interesting trends in the frequency of coup attempts over time. As shown in Figure 2, there is a fairly clear decline in the total frequency of coup attempts over time. The high point for coup attempts came in the mid-1960s, followed by two more bubbles in the mid-1970s and the early 1990s. The number of successful coups has likewise decreased over time. We saw 12 successful coups in both 1963 and 1966. The mid- to late-1970s also saw a brief burst of successful coups (ranging from 3 to 9 for each year). An interesting trend emerges when we look at the percentage of coup attempts that resulted in successful regime changes, which we plot on the right side of the Y-axis. The mean success rate is 48% during the entire time span. This rate saw early peaks around 1970 and 1980, and then a decline until the turn of the century. However, we see another spike in the success rate starting in 2003. Twelve of the 18 (67%) coup attempts since then have been successful, and only one of the most recent four coup attempts has failed. While coups have certainly waned over time, the recent success of coup plotters suggests that coups remain a key element of governmental instability.

I cannot readily pull out Figure 2 from the pdf, but it is on p.7 of the document.  Note that their data run up through 2010, and thus do not cover the Arab Spring.

The FDA versus the Tooth

by on July 15, 2016 at 7:20 am in Economics, Law, Medicine | Permalink

The NYTimes has an incredible story on a simple, paint-on liquid that stops tooth decay and prevents further cavities:

Nobody looks forward to having a cavity drilled and filled by a dentist. Now there’s an alternative: an antimicrobial liquid that can be brushed on cavities to stop tooth decay — painlessly.

The liquid is called silver diamine fluoride, or S.D.F. It’s been used for decades in Japan, but it’s been available in the United States, under the brand name Advantage Arrest, for just about a year.

The Food and Drug Administration cleared silver diamine fluoride for use as a tooth desensitizer for adults 21 and older. But studies show it can halt the progression of cavities and prevent them, and dentists are increasingly using it off-label for those purposes.

Ari Armstrong has the right reaction:

So the Japanese have been using this drill-free treatment for “decades,” yet we in the United States have had to wait until last year to get it. And the only reason we can get it now to treat cavities is that it happens to be allowed as on “off-label” use for what the FDA officially approved it for.

The NYTimes continues:

Silver diamine fluoride is already used in hundreds of dental offices. Medicaid patients in Oregon are receiving the treatment, and at least 18 dental schools have started teaching the next generation of pediatric dentists how to use it.

…The main downside is aesthetic: Silver diamine fluoride blackens the brownish decay on a tooth. That may not matter on a back molar or a baby tooth that will fall out, but some patients are likely to be deterred by the prospect of a dark spot on a visible tooth.

…[But] “S.D.F. reduces the incidence of new caries and progression of current caries by about 80 percent,” said Dr. Niederman, who is updating an evidence review of silver diamine fluoride published in 2009.

Fillings, by contrast, do not cure an oral infection.

But as Armstrong writes the craziest part of the story is this:

American dentists first started using similar silver-based treatments in the early 1900s. The FDA is literally over a century behind the times.

It seems that the future of dental treatment has been here all along but a combination of dentists wanting to be surgeons, lost knowledge, and FDA cost and delay prevented it from being distributed. Incredible.

For some time now I have had mixed feelings about the move to electronic medical records, here is another reason why:

On the dark web, medical records draw a far higher price than credit cards. Hackers are well aware that it’s simple enough to cancel a credit card, but to change a social security number is no easy feat. Banks have taken some major steps to crack down on identity theft. But hospitals, which have only transitioned en masse from paper-based to digital systems in the past decade, have far fewer security protections in place.

…These records can sell for as much as (the bitcoin equivalent) of $60 apiece, whereas social security numbers are a mere $15. Stolen credit cards sell for just $1 to $3. During the tour, we spotted one hacker who claimed to have a treasure trove of just shy of 1 million full health records up for grabs.

As IBM’s Kuhn explained in a follow-up interview, these medical records can be leveraged for a wide variety of nefarious purposes. In some cases, it’s about stealing a person’s identity and billing them for a surgery or a prescription, and in others it’s about opening a new line of credit. Security researcher Avi Rubin told Fast Company in an recent interview that he suspects hacked medical records are often routinely used for blackmail and extortion.

Such hacking is indeed a trend:

More than 113 million medical records were hacked in 2015 alone, according to data compiled by the Health and Human Services. A newly released report from the Institute for Critical Infrastructure Technology, a cybersecurity think tank, found that some 47% of Americans have had their medical record hacked in the past 12 months.

That is from Christina Farr.

Analysts said the Philippines’ temptation to cut a side deal with China could undercut US efforts to put pressure on Beijing to back off its more maximalist claim to 85 per cent of the South China Sea — the nine-dash line” — by using the tribunal’s decision to mobilise international public opinion.

According to Richard Heydarian, a political analyst at De La Salle University in Manila, the new president of the Philippines, Rodrigo Duterte, “will surely look at ways to leverage the arbitration . . . to extract concessions from China”.

…Zhu Feng, director of the China Center for Collaborative Studies of the South China Sea at Nanjing the University, said Beijing’s efforts to cut deals with neighbours on maritime claims is a longstanding policy which even has a name: roughly translated it is called “shelve disputes in favour of joint development”.

He pointed to a number of diplomatic successes — a compromise with Vietnam on maritime claims in Beibu Bay in 2000 and a joint marine seismic work agreement signed with Vietnam and the Philippines in 2005.

…A number of areas of co-operation have been floated in the Chinese media: joint development of oil and gas resources, shared access to the fishing waters and collaboration in research for restoration of coral reefs in the region.

That is from Charles Clover at the FT.