Law

Remember the fiduciary rule, the one that “requires brokers to act in the best interests of savers and went into partial effect in June”?  Who could be opposed to such a thing?  But of course when a regulation sounds so very good, there is usually some other consideration around the corner, perhaps involving secondary consequences.  And, as some of us had predicted, it is not working out so well:

The rule requires brokers to act in the best interests of retirement savers, rather than sell products that are merely suitable but could make brokers more money. Financial firms decried the restriction, which began to take effect in June, as limiting consumer choice while raising their compliance costs and potential liability.

But adherence is proving a positive. Firms are pushing customers toward accounts that charge an annual fee on their assets, rather than commissions which can violate the rule, and such fee-based accounts have long been more lucrative for the industry. In earnings calls, executives are citing the Department of Labor rule, known varyingly as the DOL or fiduciary rule, as a boon.

“Primarily because of DOL” and market appreciation, assets are growing in fee-based accounts, said Stifel Financial Corp. SF 0.40% Chief Executive Ronald Kruszewski, on a call in July. In an interview, he said such accounts can be twice as costly for clients.

That is from Lisa Beilfuss at the WSJ.  Allison Schraeger is one who saw this coming.

From Levy and Rodrik:

What is striking is that this dualism has worsened during the period of Mexico’s liberalizing reforms. Research by one of us (Levy) shows that informal firms have absorbed a growing share of the economy’s resources. The cumulative growth of employment between 1998 and 2013 in the informal sector was a whopping 115%, compared to 6% in the formal economy. For capital, cumulative growth was 134% for the informal sector and 9% for the formal sector.

The short article is interesting throughout.

Fifteen volunteer firefighters have been arrested in Sicily on suspicion of starting wildfires and reporting non-existent blazes so they could earn €10 (£9) an hour for putting them out.

Police in Ragusa province, in the south of the Mediterranean island, said the fire department became suspicious when it emerged that the auxiliary brigade had responded to 120 incidents compared with just 40 tackled by other volunteer teams over the same period.

The brigade commander, a refrigeration technician identified as DDV, was deemed dangerous enough to be held under house arrest, the Ansa news agency reported, because he was suspected off continuing to start fires after others had stopped.

Most of the remaining team members, whose private phone calls were recorded as part of the investigation, have since admitted calling the 115 emergency number or getting friends or relatives to do so.

Here is the full story.

In West Virginia, the median hourly wage is just $14.79; in Arkansas, it’s $14.48; and in Mississippi, it’s a depressingly low $14.22.

That is from an excellent column by Catherine Rampell, do read the whole thing.

There is a newly published article on that topic, by Valerie M. Hudson and Hilary Matfess, here is the abstract:

Approximately seventy-five percent of the world’s population lives in countries where asset exchange upon marriage is obligatory. Rising brideprice—money or gifts provided to a woman’s family by the groom and his family as part of marriage arrangements—is a common if overlooked catalyst of violent conflict. In patrilineal (and some matrilineal) societies where brideprice is practiced, a man’s social status is directly connected to his marital status. Brideprice acts as a flat tax that is prone to sudden and swift increases. As a result, rising brideprice can create serious marriage market distortions that prevent young men, especially those who are poor or otherwise marginalized, from marrying. This phenomenon is especially evident in polygamous societies, where wealthy men can afford more than one bride. These distortions incentivize extra-legal asset accumulation, whether through ad hoc raiding or organized violence. In such situations, rebel and terror groups may offer to pay brideprice—or even provide brides—to recruit new members. Descriptive case studies of Boko Haram in Nigeria and various armed groups in South Sudan demonstrate these linkages, while an examination of Saudi Arabia’s cap on brideprice and its efforts to arrange low-cost mass weddings illustrates the ways in which governments can intervene in marriage markets to help prevent brideprice-related instability. The trajectory of brideprice is an important but neglected early indicator of societal instability and violent conflict, underscoring that the situation and security of women tangibly affect national security.

For the pointer I thank the excellent Kevin Lewis.