Law

Bras, girdles and leggings infused with caffeine and sold as weight loss aids were more decaf than espresso, and the companies that sold them have agreed to refund money to customers and pull their ads, U.S. regulators said on Monday.

The Federal Trade Commission said Wacoal America and Norm Thompson Outfitters, which owns Sahalie and others, were accused of deceptive advertising that claimed their caffeine-impregnated clothing would cause the wearer to lose weight and have less cellulite.

There is more here, and for the pointer I thank Glenn Mercer.

Swiss voters on Sunday rejected a plan to ditch the country’s all-private health insurance system and create a state-run scheme, exit polls showed.

Some 64 percent of the electorate shot down a plan pushed by left-leaning parties who say the current system is busting the budgets of ordinary residents, figures from polling agency gfs.bern showed.

Going public would have been a seismic shift for a country whose health system is often hailed abroad as a model of efficiency, but is a growing source of frustration at home because of soaring costs.

“Over the past 20 years in Switzerland, health costs have grown 80 percent and insurance premiums 125 percent,” ophthalmologist Michel Matter told AFP.

There is more here, and for the pointer I thank Samir Varma.

From Joe Palazzolo at the WSJ:

There is no research yet on whether the use of risk evaluations in sentencing has aggravated, for example, the gap between sentences for black and white men for similar crimes.

Ms. Starr said the disparities created by risk measures are evident. “When it comes down to it, these assessments stand for the proposition that judges should sentence people longer because they were in foster care as children or had too many bouts of unemployment,” she said.

Christopher Slobogin, a Vanderbilt University law professor, said the alternative was potentially worse. “At least these risk-assessment instruments don’t explicitly focus on race or poverty, unlike what might occur in a sentencing regime where judges are making risk assessments based on seat-of-the-pants evaluations,” he said.

Some observers, such as U.S. District Judge Richard Kopf in Nebraska, say age or race should be considered if doing so yields a more accurate measurement of risk. He wrote in a blog post last month: “If race, gender or age are predictive as validated by good empirical analysis, and we truly care about public safety while at the same time depopulating our prisons, why wouldn’t a rational sentencing system freely use race, gender or age as predictor of future criminality?”

There is more here.

Logistics firm DHL is using a drone to fly parcels to the German island of Juist, in what it says is the first time an unmanned aircraft has been authorized to deliver goods in Europe.

The company, owned by Germany’s Deutsche Post, joins the likes of Amazon.com and Google in testing the potential for drones to deliver parcels and packages.

Its drone – the “parcelcopter” – can fly at up to 65 km (40 miles) an hour. It will deliver medication and other urgently needed goods to the car-free island of Juist, off Germany’s northern coast, at times when other modes of transport such as flights or ferries are not operating.

There is more here, via Eli Dourado.

In my post on why economics is detested I quoted Arnold Kling:

The intention heuristic says that if the intentions of an act are selfless and well-meaning, then the act is good. If the intentions are self-interested, then it is not good.

In contrast, economics evaluates an act not by its intentions but by its consequences. Since “bad” intentions can lead to good consequences (“as if by an invisible hand”). It’s not surprising that economists often praise what others denounce. Here’s a case in point:

At a Sydney technology startup conference, Evan Thornley, an Australian multimillionaire and co-founder of online advertising company LookSmart (LOOK), gave a talk about why he likes to hire women. “The Australian labor market and world labor market just consistently and amazingly undervalues women in so many roles, particularly in our industry,” he said. When LookSmart went public on Nasdaq in 1999, he said, it was one of the few tech companies that had more women than men on its senior management team. “Call me opportunistic; I thought I could get better people with less competition because we were willing to understand the skills and capabilities that many of these woman had,” Thornley said.

Thornley went on to say that by hiring women, he got better-qualified employees to whom he was able to give more responsibility. “And [they were] still often relatively cheap compared to what we would’ve had to pay someone less good of a different gender,” he concluded. To illustrate his point he showed a slide that said: “Women: Like Men, Only Cheaper.”

For his comments, Thornley’s was labelled a sexist and loudly denounced, especially so by furious women. Strange? Not according to the intention heuristic which judges self-interested actions as bad.

If we judge actions by consequences, however, Thornley should be encouraged, perhaps even praised. Accepting for the sake of argument the truth of the story, it’s Thornley who has overcome prejudice (his or his society’s), recognized the truth of equality and taken entrepreneurial action to do well while doing good. It’s Thornley who is broadcasting the fact of equality to the world and encouraging others to do likewise. Most importantly, the consequence of Thornley’s actions are to increase the demand for women executives thereby increasing their wages.

Women’s wages aren’t pushed down by employers who hire women but by employers who don’t hire women. So why does Thornley get the blame? Instead of denouncing Thornley, whose actions push up the wages of women he hires and the wages of the women he does not hire, why not ask, How can we encourage employers not to overlook talented women and minorities?

For those wanting to break the bonds of discrimination whether they be women, blacks or Dalits, lower wages and a competitive market aren’t the cost of discrimination but the cure. It’s the lower wages that give employers an incentive to overcome prejudice, seek out talent, and experiment with new ways of doing business. And it is the self-interested pursuit of profit that is the surest means to increase the wages of the unjustly ignored and overlooked.

Just hours after Scotland voted “no” to independence from the United Kingdom, Catalonia’s regional parliament announced on Friday that it had passed a law, which Catalan leaders say authorizes them to hold a non-binding “consultation” on independence from Spain in November.

The law was passed with a vote of 106 to 28.

Spain’s central government and Spanish Prime Minister Mariano Rajoy, however, categorically oppose Catalonia’s campaign for a referendum, as the Spanish constitution doesn’t allow referendums that don’t include all Spaniards.

There is more here, and much more here.  My view is that we’ve been getting lucky on these European political events — in relative though not absolute terms — and sooner or later that streak of good fortune is bound to end.

The Obama administration on Thursday announced measures to tackle the growing threat of antibiotic resistance, outlining a national strategy that includes incentives to spur the development of new drugs, tighter stewardship of existing ones and a national tracking system for antibiotic-resistant illness. The actions are part of the first major federal effort to confront a public health crisis that takes at least 23,000 lives a year.

The full story is here.

The Hill has more detail.  It is an executive order:

The president’s directive creates the Task Force for Combating Antibiotic-Resistant Bacteria, co-chaired by the secretaries of Defense, Agriculture and Health and Human Services.

The group is charged with implementing a plan to track and prevent the spread of antibiotic-resistant bacteria, promote better practices for the use of current drugs and push for a new generation of antibiotic medications.

To that end, the White House on Thursday announced a $20 million prize “to facilitate the development of rapid, point-of-care diagnostic tests for healthcare providers to identify highly resistant bacterial infections.”

The added incentive and the timeframe given to the task force indicate the urgency with which the administration is acting, said Dr. Eric Lander, who co-chairs the President’s Council of Advisors on Science and Technology.

“This is a pretty tight timeline to now come up with a national game plan,” Lander said.

There is also this:

In December, the Food and Drug Administration (FDA) unveiled a plan to phase out the use of antimicrobials for the purpose of fattening chickens, pigs or other animals destined for human consumption. But the plan relies in part on voluntary industry cooperation, and advocates argue the government’s efforts are lagging behind even some industry players.

Here is the new full 78 pp. report to the President on antibiotic resistance (pdf).

This initiative — or its failure — is potentially a more important health issue than Obamacare, yet it will not receive 1/1000th of the attention.  Without reliable antibiotics, a lot of now-routine operations would become a kind of lottery.

Here are previous MR posts on antibiotic resistance.  I would note it is difficult to judge such a plan at the current level of detail.  It is better than nothing, but any initial plan is going to be not nearly enough, relative to an ideal.  By the way, Alex tells me there is also a British prize, discussed here.

Colombia extends its wealth tax

by on September 17, 2014 at 11:03 am in Current Affairs, Economics, Law | Permalink

Colombia is one of the world’s most unequal societies. Last week, the government of Juan Manuel Santos, who began his second term as president in August, announced the extension of a wealth tax introduced in 2002 to pay for the mounting costs of the country’s 50 year drug-fuelled guerrilla war.

“In that sense, we are actually ahead of the curve of what Piketty proposes,” says Mr Cárdenas.

…“This touches only 50,000 Colombians out of the entire population” of 48m people, he says, “that is less than 1 per cent of the population.”

President Santos himself is a product of that 1 per cent. A US-educated economist and member of a wealthy family of the Colombian establishment, he heads up a centrist administration, not a Venezuela-style leftist regime.

Mr Santos has increased rates for various tranches of the levy, in some cases by 50 per cent. Those with a net worth of between $510,000 and $1.5m must pay a 0.4 per cent tax. The rate rises to 2.25 per cent for net worth above $4m. That applies to 45,000 businesses and about 1,000 individuals, Mr Cárdenas said.

Only about five percent of Columbians actually pay into the standard income tax system.  The FT piece by Andres Schipani is here.

Here is the latest:

David Cameron faces a “bloodbath” at the hands of Tory MPs after all three parties pledged to continue high levels of funding for Scotland if it rejects independence.

The Prime Minister is facing mounting dissent among English backbenchers after promising that Scotland’s special funding arrangements will continue even when the country is given control over its own taxation and spending.

One Tory MP said the promise to Scottish voters, issued by Mr Cameron, Ed Miliband and Nick Clegg in the Daily Record newspaper, “smacks of desperation”.

Under the Barnett formula, devised in the 1970s by Labour Treasury minister Lord Barnett, spending is allocated according to population size, rather than the amount each country actually needs.

Critics say this gives Scotland an unfair share of government spending and even Lord Barnett has called for it to be replaced.

According to research at Stirling University, England loses around £4.5 billion of public spending every year because the money is handed to Scotland instead

In other words, this story will not end with a “no” vote from Scotland, unless it is strongly decisive.  Regardless of the result, allowing this referendum to go forward likely will go down as one of the greatest unforced errors in recent times.

Chitmahals

by on September 15, 2014 at 1:57 am in Books, History, Law, Uncategorized | Permalink

I had not known of these:

The Indo-Bangladesh enclaves, also known as the chitmahals (Bengali: ছিটমহল chitmôhol), sometimes called pasha enclaves, are the enclaves along the Bangladesh–India border, in Bangladesh and the Indian state of West Bengal.

There are 106 Indian enclaves and 92 Bangladeshi enclaves. Inside the main part of Bangladesh, 102 of these are first-order Indian enclaves, while inside the main part of India, 71 of these are Bangladeshi first-order enclaves. Further inside these enclaves are an additional 24 second order- or counter-enclaves (21 Bangladeshi, 3 Indian) and one Indian counter-counter-enclave, called Dahala Khagrabari #51. They have an estimated combined population between 50,000 and 100,000.

In September 2011, the Prime Ministers of the two countries (Manmohan Singh of India and Sheikh Hasina of Bangladesh) signed an accord on border demarcation and exchange of adversely held enclaves; however, the Indian parliament has yet to ratify it. Under this intended agreement, the enclave residents could continue to reside at their present location or move to the country of their choice.

Here is the Wikipedia entry.  It now seems the ruling BJP party seems to want to take that 2011 agreement back.

Alastair Bonnett, in his new and excellent Unruly Places: Lost Spaces, Secret Cities, and other Inscrutable Geographies, notes that these enclaves are usually not supplied with public goods.  Furthermore:

In order to leave these tiny enclaves, the inhabitants have to obtain a visa to travel through the foreign territory that surrounds them.  But in order to obtain a visa they have to leave their enclave, since visas can only be obtained in cities many miles away.

And:

The Indian Enclave Refugees’ Association has been formed to lobby for the right to “return” to India.

Many of them are denied the right to settle in what is ostensibly their home country, namely India.

Thirteen percent of US citizens play the lottery every week. The average household spends around $540 annually on lotteries and poor households spend considerably more than the average. The high demand for lotteries, especially among the poor, has led many to suggest that we use them to promote some other good. Los Angeles, for example, has recently discussed giving voters lottery tickets–a great idea if we want to encourage more voting by uninformed people with a penchant for get-rich-quick schemes. What could go wrong?

A somewhat better idea is to use lotteries to promote saving. Prize linked savings (PLS) accounts offer savers pro-rata lottery tickets based on how much they save. The average return on a PLS account can be the same as on regular account but the interest rate is lowered to make up for the small probability of a big gain. It’s illegal for banks in the United States to offer lotteries but a few credit unions have experimented with PLS accounts and they are used in some 20 other countries around the world.

Does the option of saving in a PLS account increase total savings or does it merely reallocate savings? In a new paper, Atalay, Bakhtiar, Cheung and Slomin run an experiment in which participants allocate a budget to consumption, saving, lottery tickets, and a PLS account. They conclude:

…the introduction of a PLS account indeed increases total savings quite dramatically (on average by 12 percentage points), and that the demand for the PLS account comes from reductions in lottery expenditures and current consumption. We further show that these results are stronger among study participants with the lowest reported savings on the survey.

Thus, PLS accounts appear to be a kind of crafty nudge, a way to trick the get-rich-quick brain module to save more.

If we allow PLS accounts, the poor may save more and in a competitive bank market the return on PLS accounts will trump the lousy returns offered by state lotteries. Win, win. If we deregulate all kinds of lotteries, however, I have little doubt that entrepreneurs will come up with schemes that will easily trump PLS accounts–but without the social benefit of encouraging saving among the poor. As a libertarian, I can live with that but as a political economist I wonder how well we can draw the line between banning gambling and allowing gambling so long as it’s tied to a nice nudge.

Civil forfeiture cash seizures

by on September 8, 2014 at 12:42 am in Economics, Law | Permalink

Under the federal Equitable Sharing Program, police have seized $2.5 billion since 2001 from people who were not charged with a crime and without a warrant being issued. Police reasoned that the money was crime-related. About $1.7 billion was sent back to law enforcement agencies for their use.

Often the cash is seized from motorists (carrying costs now exceed liquidity premium, I suppose).  There is this too:

  • Only a sixth of the seizures were legally challenged, in part because of the costs of legal action against the government. But in 41 percent of cases — 4,455 — where there was a challenge, the government agreed to return money. The appeals process took more than a year in 40 percent of those cases and often required owners of the cash to sign agreements not to sue police over the seizures.
  • Hundreds of state and local departments and drug task forces appear to rely on seized cash, despite a federal ban on the money to pay salaries or otherwise support budgets. The Post found that 298 departments and 210 task forces have seized the equivalent of 20 percent or more of their annual budgets since 2008.

There is much more here, by Michael Sallah, Robert O’Harrow Jr., and Steven Rich at The Washington Post, give them a Pulitzer.

And please note, this may seem like an Alex post but it is a Tyler post.

It is interesting throughout, here is just one bit:

SPIEGEL: What did people talk about?

W.: People weren’t enthused about the leadership. We of course knew and everybody almost felt that it couldn’t end well, that it couldn’t been good when trains were being brought here full of people who were then getting killed. We all had that feeling. But, I mean, when you’re a soldier …

[Commentary] In the personnel files of camp staff members, there are official declarations stating, “I may not cause bodily harm or death to opponents of the state (prisoners).” It also states, “I am aware and I have been informed today that I will be punished by death if I misappropriate Jewish property of any kind.” The SS team at Auschwitz — a camp where the indiscriminate torture, robbing and murder of people was part of everyday life — were required to pledge in advance to do precisely the opposite.

One could view forms like that as a special form of cynicism. Or one could see it as a pseudo-legal facade aimed at covering up the Holocaust. One provision called for “absolute secrecy” to be maintained. In practice, it had no meaning.

The full interview is here.

What does a tattoo signal?

by on September 3, 2014 at 7:17 pm in Economics, Law | Permalink

WE RECENTLY wrote about how a tattoo affects your job prospects. A paper from Kaitlyn Harger, a PhD student at West Virginia University, takes it a step further. Ms Harger found data from Florida and looked at what happened to people when they left prison. But her dataset was different: she knew which prisoners were tattooed.

Lots of employers are loth to employ people with tattoos. The US Army, for example, recently tightened its rules on body art. Ms Harger suggests that tattooed ex-cons, shunned by the legal labour market, slip back into criminality as a means to earn a crust: hence higher recidivism.

Her results are striking. On average, someone lasts 5,000 days (about 14 years) before finding themselves back in the cooler. A tattooed ex-con lasts half that (see chart).

That is from Free Exchange, there is more here.

Well, “endorsed” isn’t exactly the right word, but I did say “simpatizante.”  Here are my views:

1. I disagree with most of his economic policy, for reasons you can find stated in Adam Smith and the other classical economists.

2. Governments work very hard to stay in power.

3. In a weighted average of public opinion sense, I think of Bolivia as about 60-70% “indigenous,” one way or another.

4. If a Bolivian government is not strongly connected to the country’s indigenous population, that government cannot have a strong base.  Yet it will still work hard to stay in power (#2), which will mean it will resort to oppressions and distortions, with high long-run costs.  Bolivian history has seen an especially large number of coups and attempted coups, illustrating this weakness of the power base, which you can think of as the major problem in historical Bolivian public choice.  Think of Mancur Olson on permanent vs. temporary bandits, where most of the past bandits have been temporary, and thus Bolivian governance has been of extremely low quality, even relative to its region.

5. The government of Evo Morales is quite popular and pretty stable.  It has a strong and enduring power base, partly because of its specific policies and partly for symbolic reasons, such as its strong and explicit attachment to indigenous culture and “cosmovisions,” a notion newly embedded in the nation’s constitution.

6. The stability gains from #5 — the permanency of the bandit so to speak — exceed the costs from #1.

7. A democratic Bolivia will have “an indigenous government” sooner or later, better sooner.  Let’s hope they learn some better economic policy.  Something like the Morales government was in any case a necessary step, again without denying #1.

8. Bolivia is too decentralized for the Morales government to collapse into true dictatorship and Chavismo of Venezuela.  That said, I would feel better if it were assured that the Morales government were to be limited in term.

9. See also my reasons why I am optimistic about Bolivia, including their fiscal prudence, supported by Morales I might add.

I made this argument to an audience of elite Bolivians and elite Bolivian students.  Some of them hated it, some of them really liked it.  A speaker should usually try to shake up his or her listeners in some manner.