Law

In my opinion, neither will stick, and from surface indications neither arrangement sounds very effective.  But probably both have to be tried.  One deal opens the way for true Grexit, if the deal fails.  The U.S.-Iran agreement opens the way for an actual attack on Iran, or some other non-constructive form of engagement (in a proxy war?), if the deal fails.  These deals thus each contain a very real streak of danger.

I give each deal about a 30-40% chance of succeeding.  Above all, these deals show the limits of what is possible, and not possible, in international affairs where there is not an obvious concordance of self-interest.

You will read much about whether these are good or bad deals.  But sometimes the positive perspective is more illuminating than the normative.  In both cases, the relevant participants still “have a deal in their system,” and so we will be working through the logic of these agreements, for better or worse.

Keep your fingers crossed.  In the meantime, even if you think, as I do, that both of these deals will fail, these are still — stochastically speaking — big wins for Obama.  Let’s just call July “Obama’s month.”

Federal Judge Alex Kozinski (9th circuit) has written a scathing indictment of the US justice system. Kozinski starts out discussing a number of myths such as that eyewitness testimony or forensic evidence is highly reliable. Business Insider gives a quick rundown of this part of the paper but they clearly didn’t read very far because the incendiary material comes later.

Kozinski, writing in part based on his personal experience as a judge, says that prosecutors are too often running roughshod over justice:

…there are disturbing indications that a non-trivial number of prosecutors—and sometimes entire prosecutorial offices— engage in misconduct that seriously undermines the fairness of criminal trials. The misconduct ranges from misleading the jury, to outright lying in court and tacitly acquiescing or actively participating in the presentation of false evidence by police.

Discussing the Ted Stevens case he writes

Did Justice Department lawyers rend their garments and place ashes on their head to mourn this violation of their most fundamental duty of candor and fairness? No way, no how. Instead, the government argued strenuously that its ill-gotten conviction should stand because boys will be boys and the evidence wasn’t material to the case anyway.

…Instead of contrition, what we have seen is Justice Department officials of the highest rank suffering torn glenoid labrums from furiously patting themselves on the back for having “done the right thing.”

Under Imbler v. Pachtman prosecutors have absolute immunity from damages liability from misconduct committed in the course of their work. Kozinski is outraged:

Under Imbler, prosecutors cannot be held liable, no matter how badly they misbehave, for actions such as withholding exculpatory evidence, introducing fabricated evidence, knowingly presenting perjured testimony and bringing charges for which there is no credible evidence. All are immune from liability. A defense lawyer who did any such things (or their equivalents) would soon find himself disbarred and playing house with Bubba. The Imbler majority seemed reassured by the possibility that rogue prosecutors will be subject to other constraints.

…This argument was dubious in 1976 and is absurd today. Who exactly is going to prosecute prosecutors? Despite numerous cases where prosecutors have committed willful misconduct, costing innocent defendants decades of their lives, I am aware of only two who have been criminally prosecuted for it; they spent a total of six days behind bars.

…What kind of signal does this send to young prosecutors who are out to make a name for themselves? I think it signals that they can be as reckless and self-serving as they want, and if they get caught, nothing bad will happen to them. Imbler and Van de Kamp should be overruled. It makes no sense to give police, who often have to act in high pressure situations where their lives may be in danger, only qualified immunity while giving prosecutors absolute immunity. It is a disparity that can only be explained by the fact that prosecutors and judges are all part of the legal profession and it’s natural enough to empathize with people who are just like you. If the Supreme Court won’t overrule Imbler and Van de Kamp, Congress is free to do it by amending 42 U.S.C. § 1983.

Read the whole thing, there is a lot more.

Wintergerst says introducing a new currency typically takes at least six months, and sometimes as long as two years. Artists must draw the notes, security experts then add anti-counterfeiting measures such as watermarks and special inks, and bank officials need to plan how much of each denomination is needed and get the money to banks.

“The most challenging thing was to establish efficient distribution and make sure the new currency was available everywhere,” said Boris Raguz, head of the Treasury Directory at Croatia’s central bank, who in 1993 oversaw the introduction of the country’s currency, the kuna, after the breakup of Yugoslavia.

That is from Matthew Campbell and Alex Webb.  Here is a declaration signed by 246 Greek professors — can you guess what it says?

One of the most striking aspects of the Greek situation is just how much the Greek government has lost the public relations battle.  They have lost it among the social democracies, and they have lost it most of all with the other small countries in Europe.  They retain some sympathy in the American government, but we are not willing to put any money on the table and basically we want the European Union to clean up the problems for us.

If you look at the progressive economists, Stiglitz, Krugman, Piketty and Sachs all recommend a “no” vote on the referendum.  Though they would not frame it this way, they are advocating a kind of extra austerity for the purposes of a greater long-run good; Greece’s primary surplus vanished some time ago, so signaling a break with Europe will only make matters tougher.  You could call this “properly mood affiliated austerity,” cloaked by strange presumptions about bargaining, namely the view that a “no” vote will induce a more favorable offer.  It seems, with their on the ground understanding, most Greek economists are strongly in the “yes” camp.

The progressives do have some good points and I absolutely favor significant debt relief for Greece.  That said, the Greek government has handled the last few months so badly it really is incumbent on them to show they will do better.  I don’t see many signs in that direction, quite the contrary, and any reasonable democratic government will ask for Greek institutional progress before putting up much more in the way of money.  The entire handling of Greferendum should alert the progressives that they have been egging on the wrong horse; the heroic Hugo Dixon nails it.

I take the progressive “clustering out on a limb” here as a sign that, for better or worse, progressivism as an ideology has reached and indeed gone beyond its high water mark.  The progressives are siding with a corrupt, clientist state, which won’t cut its defense spending down to Nato norms, against some admittedly imperfect social democracies, thereby sustaining the meme of powerful aggressor vs. victim, Arnold Kling telephone.

Interfluidity has an interesting but quite wrong post on how to think about Greece.  International relations simply could not be run on the principles he advocates, most of all in conjunction with democratic nation states.  His weakest point becomes evident when he writes:

Among creditors, a big catchphrase now is “moral hazard”. We cannot be too kind to Greece, we cannot forgive their debt with few string attached, because what kind of precedent would that set? If bad borrowers, other sovereigns, got the idea that they can overborrow without consequence, if Spanish and Portuguese populists perceive perhaps a better deal is on offer, they might demand that. They might continue to borrow and expect forgiveness, and where would it end except for the bankruptcy of the good Europeans who actually produce and save?

The nerve. The fucking nerve. Lenders, having been made nearly whole on their ill-conceived, profit-motivated punts, now fear that if anybody is nice to somebody who doesn’t deserve it, where will it end? I’d resort to that cliché about chutspa, the kid who murders his parents then seeks leniency ‘cuz he’s an orphan. But it’s really too cute for the occasion.

That’s a non-answer, with anger filling in for the required substance as to why Germany and others should allow this.  “Your government is making things much worse.  If you want to borrow so much more from us, you have to play by the rules and also stop spitting in our face and calling us Nazis and terrorists while negotiating” is more relevant — and yes relevant is the right word here — than any point he makes.

A political program has to be something that voters could at least potentially believe, and international negotiations therefore cannot stray too far from common-sense morality, including when it comes to creditor-debtor relations.  That is the point which today’s progressive economists are running away from as fast as is humanly possible.  And for all the Buchanan-esque and public choice points about “rules of the game” this one about common sense morality unfortunately has ended up as the most important.

Look at this way: if you lost a public relations battle to Germany, you are probably doing something very badly wrong.

Fewer than 4,000 tigers roam across the Asian continent today, compared to about 100,000 a century ago. But researchers are proposing a new way to protect the big cats: redefine them.

The proposal, published this week in Science Advances, argues current taxonomy of the species is flawed, making global conservation efforts unnecessarily difficult.

There are up to nine commonly accepted subspecies of tigers in the world, three of which are extinct. But the scientists’ analysis, conducted over a course of several years, claims there are really only two tiger subspecies: one found on continental Asia and another from the Indonesian islands of Sumatra, Java and Bali.

If the tiger is redefined more broadly, the emphasis can be on saving tigers as a whole, rather than having to treat subpopulations in very particular and sometimes inefficient ways.  Monetary theory enters into this problem as well:

At the heart of the debate is a concept called “taxonomic inflation,” or the massive influx of newly recognized species and subspecies. Some critics blame the trend in part on emerging methods of identifying species through ancestry and not physical traits. Others point to technology that has allowed scientists to distinguish between organisms at the molecular level.

[Nearly 200,000 ‘new’ marine species turn out to be duplicates]

“There are so many species concepts that you could distinguish each population separately,” Wilting said. “Not everything you can distinguish should be its own species.”

That is all from Robert Gebelhoff.

Puerto Rico fact of the day

by on July 3, 2015 at 2:09 am in Current Affairs, Law | Permalink

From Max Ehrenfreund:

…because of an obscure law known as the Jones Act, which bans foreign vessels from shipping goods between U.S. ports, businesses in Puerto Rico have to use the U.S. merchant marine to import anything. They can’t just hire whatever boats and crew are available, which makes shipping even more expensive. The cost of transportation in Puerto Rico is twice that in the neighboring Caribbean nations…

Robert Laszewski writes:

After all of this and two complete open enrollments, only 40% of those who are eligible for Obamacare have signed up—far below the proportion of the market insurers have historically needed to assure a sustainable risk pool.

If this were a private enterprise enjoying these kinds of benefits [ namely legal coercion], and only sold its product to 40% of the market, its CEO would be fired.

Looking at this picture, only 20% of those eligible for Obamacare, who make between 251% and 300% of the poverty level, bought Obamacare. Why?

ACA

The Obama administration will in fact be increasing the subsidies it will pay to insurance companies.

“The law will not treat a ledger record as authoritative if everyone knows that the current longest chain contains blocks generated by an anonymous attacker who replaced a bit of history that was chronologically prior,” he says. “In financial markets there’s always a mechanism to correct an attack. In a blockchain there is no mechanism to correct it — people have to accept it.”

That is an FT quotation from Robert Sams, the article is interesting more generally, focusing on Wall Street’s attempt to incorporate the blockchain in settlement in some manner.

Drug cops took a college kid’s savings and now 13 police departments want a cut

Andrew Batson reports:

…[recent developments] may well mark the beginning of an important longer-term shift in China’s labor market and policies: the State Council lowered employers’ required contributions to two social insurance programs, injury and maternity insurance, a move it said would save firms 27 billion renminbi a year (see the China Labour Bulletin for an English-language summary). Yes, I know this sounds boring and technical, so why is it important? Because it starts to address one of the biggest but least-known issues in China’s job market: the very high costs employers face to hire workers.

It is not a very well-known fact that China has some of the toughest labor regulations in the world, and some of the highest required contribution rates to social insurance programs. As a result, the “labor wedge”–the percentage of the total cost of an employee that comes from things other than wages–in China is around 45%, as high as in a number of European countries (this is according to an estimate by John Giles in a World Bank paper;…

This fact does not square with the widespread perception of China as a nation of sweatshops employing hordes of migrant workers, and indeed is a relatively recent development stemming from the 2008 Labor Contract Law. But China’s problem with these generous worker protections is ultimately the same one that many other developing countries have encountered: strong legal protections and generous insurance programs are so expensive that in practice they only become available to part of the workforce. Effectively China has two labor markets: one for urban white-collar jobs with all the legal protections, and one for blue-collar jobs held by rural migrant workers that generally lack the full set of benefits.

That is yet another neglected China story…

In our textbook, Tyler and I write:

Farmers use the subsidized water to transform desert into prime agricultural land. But turning a California desert into cropland makes about as much sense as building greenhouses in Alaska! America already has plenty of land on which cotton can be grown cheaply.  Spending billions of dollars to dam rivers and transport water hundreds of miles to grow a crop which can be grown more cheaply in Georgia is a waste of resources, a deadweight loss. The water used to grow California cotton, for example, has much higher value producing silicon chips in San Jose or as drinking water in Los Angeles than it does as irrigation water.

In Holy Crop, part of Pro-Publica’s excellent, in-depth series on the water crisis the authors concur:

Getting plants to grow in the Sonoran Desert is made possible by importing billions of gallons of water each year. Cotton is one of the thirstiest crops in existence, and each acre cultivated here demands six times as much water as lettuce, 60 percent more than wheat. That precious liquid is pulled from a nearby federal reservoir, siphoned from beleaguered underground aquifers and pumped in from the Colorado River hundreds of miles away.

…Over the last 20 years, Arizona’s farmers have collected more than $1.1 billion in cotton subsidies, nine times more than the amount paid out for the next highest subsidized crop. In California, where cotton also gets more support than most other crops, farmers received more than $3 billion in cotton aid.

…If Arizona’s cotton farmers switched to wheat but didn’t fallow a single field, it would save some 207,000 acre-feet of water — enough to supply as many as 1.4 million people for a year.

…The government is willing to consider spending huge amounts to get new water supplies, including building billion-dollar desalinization plants to purify ocean water. It would cost a tiny fraction of that to pay farmers in Arizona and California more to grow wheat rather than cotton, and for the cost of converting their fields. The billions of dollars of existing subsidies already allocated by Congress could be redirected to support those goals, or spent, as the Congressional Budget Office suggested, on equipment and infrastructure that helps farmers use less water.

“There is enough water in the West. There isn’t any pressing need for more water, period,” Babbitt said. “There are all kinds of agriculture efficiencies that have not been put into place.”

The consumers, most of all.  But how about amongst the workers?  I think you have to slot French taxi drivers under “don’t benefit.”  And otherwise?  That is the topic of my latest New York Times column for The Upshot:

On the positive side, the so-called sharing economy allows workers to use their time more flexibly. Drivers can earn money without working full time, and without having to wait around at taxi stands for the next passenger. The workers can use their newly acquired spare time for other purposes, including studying for college, teaching themselves programming or simultaneously offering themselves out for different sharing services: If no one wants a ride, go help someone with repairs around the house.

In short, these developments benefit those workers who are willing and able to turn their spare time to productive uses. These workers tend to be self-starters and people who are good at shifting roles quickly. Think of them as disciplined and ambitious task switchers. That describes a lot of people, but of course, it isn’t everybody.

That’s where some of the problems come in. Uber drivers are much more likely to have a college degree than are taxi drivers or chauffeurs, according to the Hall and Krueger study. It found striking differences between the two groups: 48 percent of Uber drivers have a college degree or higher, whereas that figure is only 18 percent for taxi drivers and chauffeurs.

Only some workers benefit when each hour, or each 15-minute gap, is up for sale. One way to put the general principle is this: The more efficient market technologies become, the more important are human capabilities and backgrounds in determining who prospers and who does not.

The piece offers other ideas of interest, including about education.  For instance, corporate investments in worker training may decline as the likelihood of freelance work rises.  That too favors self-starters, who can learn on their own.  Do read the whole thing.

Hugo Dixon has a good analysis:

My instant reaction to Alexis Tsipras’ decision to call a referendum on whether to accept creditors’ terms on Jul 5

1 Tsipras is effectively calling for Greece to quit the euro. Even if that’s not the question, that’s what it will amount to.

2 All sides have mishandled negotiation but Tsipras has mishandled it particularly badly.

3 Tsipras didn’t even complete the talks and wring out the last concessions. There was one more day to go.

4 Greece obviously won’t be able to pay the IMF on Tuesday.

5 Greece won’t be able to get extension of bailout which runs out on Tuesday, as referendum is following Sunday. Ie bailout expires.

6 ECB highly likely to stop emergency liquidity to banks. if capital controls not imposed on Monday, there will probably be bank run.

I would put it this way: when you call for a referendum in this kind of setting, you suffer all the costs of having to take a stance, and yet give up all of the potential benefits of control.

There are already reports of long lines at Greek ATMs.  What’s the chance the Greferendum even ends up happening?  As I’ve said before, the only thing worse than the Very Serious People are the Not Very Serious People.

This is exciting and very positive news.  Most of all, it is a breakthrough for those people who can now marry, or exercise the choice not to marry.  There are two other aspects of the decision which I like.  First, it keeps current the idea that the United States still is a world leader when it comes to liberty.  Second, it encourages the idea that there are significant freedoms still to be won.

Which freedom will be next?  Here is my earlier piece on Andrew Sullivan as the most influential public intellectual in recent times.  Andrew even wrote a new post for the occasion.

I have not been a fan of Obamacare, which I consider to be a highly inefficient form of wealth insurance.  Nonetheless, had this decision gone the other way at this point we would have ended up with something worse, or ended back at “Obamacare as know it,” but only after a lot of political stupidity and also painful media coverage.  So on net I take this to be good news, although arguably it is bad news that it is good news.

From the decision, insurers gained $3 billion in market value, and hospital stocks surged about ten percent, make of that what you will.

I found the remarks of Robert Laszlewski to be most to the point.  Philip Wallach had some excellent legal and constitutional points, see also Cass Sunstein.  I am very much a legal outsider, but it seems to me this does indeed rejigger something or other looking forward.

Elsewhere in the world, Schaueble does his best Scalia impression and tells us that June 30 is June 30, not July 1.  Greece hasn’t exploded — yet — and everyone is wondering how much time is left on the shot clock.  I’m still predicting an agreement, albeit one which will break pretty quickly.

TPP received fast track approval.

It’s been one of the best political weeks in years, although disconcertingly most of the good news has been avoiding even worse outcomes, not actual forward political progress of the kind one would like to be celebrating.

In Berlin, you can rent the smallest house in the world for one euro a night.  And here is a baby owl, learning to fly, or so one would expect.