Travel

They are usually reserved for impatient drivers in built-up, urban areas.

But a picturesque beauty spot in eastern China has nicked a trick from road safety campaigners worldwide – by installing speed bumps for pedestrians.

Local officials in the town of Taierzhuang have installed 50 so-called ‘calming devices’ to slow human traffic at one particular point.

…It’s believed the speed bumps, which are located at the historic site’s pedestrian entrance, are designed to encourage greater appreciation of its beauty and heritage.

Previously, there were concerns that increased footfall was becoming too frenetic – and thus compromising the experience.

Here is the story, via the excellent Mark Thorson.

Can Uber make it in India?

by on April 17, 2017 at 1:50 pm in Economics, Travel, Web/Tech | Permalink

From Farhad Manjoo at the New York Times:

India’s cellular networks can be spotty and slow, and banking, credit cards and other financial mainstays cannot be taken for granted. More than that, vast differences in education and wealth create a social dynamic between riders and drivers that cannot be smoothed over by improving an app interface.

Not only are many of Uber’s drivers here unfamiliar with smartphones, some are illiterate. Often, drivers and riders don’t speak the same language. Many drivers need financial help to purchase or lease cars, and then require continuing help to manage their finances and other details of their small businesses.

On top of all this is competition. Uber faces an aggressive and well-funded Indian rival, Ola Cabs, which operates in 100 cities and offers a wider range of services than Uber does.

…The companies must also spend time educating drivers on the social dynamics of working for themselves. Many drivers arrive after working as private drivers for middle- and upper-class Indians; those jobs can be grueling — drivers work long hours, are expected to be constantly on call, and often aren’t accorded much respect for their work. When they come to Uber and Ola, the same drivers have to adjust to a job in which they finally have some agency, and the change can be terrifying.

Those are all good points, but I don’t think they get at the two main reasons why Uber will continue to have a hard time making money in India.  First, in major cities you never will know when your ride actually is coming.  The vehicle could be around the bloc, but still take thirty minutes to arrive.  In the meantime, should you just wait?  Second, if it is immediacy you value, there is almost always an auto-rickshaw nearby.

By the way, it turns out that about 80 percent of Uber transactions in India are cash-based.

Walking around Mumbai it’s common to see some lovely, older buildings (circa 1920s perhaps) that are rentcontrol1in a great state of disrepair. A well maintained building can last for hundreds of years so why are these buildings falling apart? The answer is rent control. Bombay passed a rent control act in 1947 that froze rents at 1940 levels.

More than fifty years later, rents remained frozen at 1940 levels. It wasn’t until 1999 that the Act was modified slightly to lift controls on some new construction and to allow rent increases of 4% per year. After a fifty two year freeze, however, a 4% increase was a pittance. Thus, even today there are thousands of flats where tenants are paying rents of 400-500 rupees a month (that’s $6 to $8 a month!)–far, far below market rates.

The rent control law meant that there was virtually no construction of rental housing (WP) for decades and a slowly dilapidating housing stock. (Ironically, the only free market in rental housing is in the rentcontrol4slums.)

The nominal landlords have neither the incentive nor the funds to maintain the buildings so every year during monsoon season some of the buildings collapse and people die. As the World Bank put it, the monsoons are Natural Hazards but the collapses are Unnatural Disasters:

Rent controls in Mumbai may have initially benefited tenants at the expense of landlords, but over time everyone suffers. Rent controls cause landlords to forgo maintenance and neglect their properties, and tenants not only live in dilapidated buildings but die when they collapse in heavy rains. Even if tenants are willing to either pay higher rents or to maintain the building, each tries to not pay his share of the expense (free riding), especially if appropriate retrofitting involves structural changes to the entire residential structure and not to individual apartments. Tenants also may lack the legal authority to make changes to their building’s structure.

Consider the photo at top, it’s an elegant building on a nice plot in a highly desirable part of town but take a closer look and you can see that it is falling apart (second photo). Several businesses and flats operate in the building. Now read the sign on the wall.

rentcontrol3I don’t doubt that the sign is largely accurate but it also illustrates another aspect of rent control. Rent control transforms a mutually profitable exchange into a zero-sum war of misery. As I discovered in my investigations, a remarkable and sometimes hilarious example is illustrated by this very building.

The tenant, called the “victim lady”, in the Bombay High Court case that she initiated alleges that her landlord has vexed her with many frivolous lawsuits and harassed her in various and sundry ways:

It is alleged that the Respondent, on the pretext of reading books and doing meditation, continues to sit near the window of the victim lady reading law books and passing unwanted remarks stating that he will become a better lawyer by reading law books and will teach the victim lady a lesson. The Respondent is also alleged to have killed the kitten to whom the victim lady regularly used to feed. He is also alleged to have called three men to remove coconuts from the coconut tree and in the process broke number of flower pots belonging to the victim lady and destroyed the garden maintained by her.

In addition, and the judges of the High Court find this especially distasteful, the landlord “has also cast aspersions on the judiciary by making certain statements” about the “inefficiency of the judicial system”. Indeed, in his affidavit-in-reply, the respondent doubled down arguing:

…”the judiciary is perceived as inefficient by most citizens of India” as a justification for what he had stated.

Where could the respondent have gotten such absurd ideas? How dare he claim to know what most citizens think!

The Respondent may be free to express his views about the judiciary, but obviously had no right to project his views as of “most citizens in India”. What survey or research has been made by the Respondent to ascertain the views of “most citizens in India”, has not been disclosed, and considering the number of the citizens in India it is impossible to believe that the Respondent has made any survey or research on these aspects, so as to be able to make an authoritative statement of what “most citizens” feel. The impropriety is so obvious that we do not wish to comment upon the same any further…[to which, of course, the judges then proceed to comment further, AT]

The landlord does come off as a troublesome fellow but dig a little deeper and it’s not hard to see the source of his frustration. The judges, to give credit where credit is due, careful sift through the history of the case and they learn that the landlord has not actually filed many lawsuits against the plaintiff. Instead of many lawsuits, it turns out that there is only one very, very lengthy lawsuit.

Now, coming to the details given in part-B of the petition classified as “facts of the case”, there is reference of the suit bearing RAE No.537/4434/63, but this suit has, admittedly, not been filed by the Respondent and apparently the same has been filed by the grandfather [emphasis added, AT] of the Respondent….It is clear from the averments in the petition itself that the legal proceedings are pending between the parties since the year 1963.

Since landlord junior “came in picture in the year 1998 only”, and was only filling in the shoes of landlord father, who was only filling in the shoes of landlord grandfather, junior can’t be said to have initiated many lawsuits against the tenant. Thus, despite the landlord’s clearly outrageous comments about the inefficiency of the judiciary and whatever else junior may have done to the kitten, the judges throw out the tenant’s petition. The lawsuit that began in 1963 moves forward!  Perhaps to be taken up by the next generation.

Addendum: I talk rent control in Mumbai with Amit Varma on his excellent podcast, The Seen and the Unseen.

Probably yes.  That is the topic of my latest Bloomberg column, here is one excerpt:

Another economic approach would consider whether the private sector, when trying to accommodate customer demand, finds that speed bumps help or hurt business. That’s a kind of market test of the concept, and indeed I often see speed bumps in shopping mall parking lots, to slow down traffic and ease the risk of accidents, including to pedestrians. The mall and parking lot owners have decided that the benefits of greater safety will attract more customers than the inconveniences of driving more slowly, and other possible costs, will put customers off. That is a seat-of-the-pants cost-benefit test, and it suggests some role for the bumps in the broader world.

That said, my personal impression is that these private-sector speed bumps are smoother and gentler than the ones I often find in neighborhoods. When it comes to local roads, the residents are actively trying to keep outside drivers away, whereas the shopping mall and parking lot owners seek the best overall environment for commercial reasons. As a tentative conclusion, I think some speed bumps are a good idea, but many are too obstructive, and perhaps they are too numerous as well; this view is supported by some recent research.

Another angle of the speed bumps debate is how much it revolves around issues of symbolic value, and that in part explains why the discussion can become so heated.

By its very design, a speed bump is a deliberate obstruction with maximum transparency as such. It is sending a message that the social goals of safety or neighborhood quiet are sufficiently important that it is worth slowing people’s progress when they travel. There are many regulations that try to make our lives safer, but most of them are hidden, with nontransparent costs, such as auto-safety regulations as applied through crash tests. A speed bump, in contrast, can work only if people notice it each time. So to the extent a society accepts speed bumps, it is visibly advertising the notion that limits to fast transportation — a symbol of progress — are acceptable in the name of safety and cozy locality.

Do read the whole thing.

In 2014, Narenda Modi campaigned on the slogan “maximum governance, minimum government”. It was a brilliant slogan that neatly captured India’s dichotomous problem, too much government and not enough capacity to actually govern. Since then, however, Modi’s government has not done much to fulfill its promise. The latest absurdity is a plan to govern the size of meal portions that restaurants may serve–apparently an attempt to fulfill Modi’s musings on the subject as if they were commands from the Maharaja. Add to this the absurd paid leave maternity bill–something akin to having the US government mandate seatbelts on flying cars, not exactly wrong but not exactly dealing with a problem relevant to most people either. Top off with the Supreme Court’s ban on any liquor sales within 500 meters of a highway (Mumbai, by the way, will follow Rajasthan in recategorizing highways within the city as roads to get around the ban). Put it all together and it looks like we are back to the old India model of maximum government, minimum governance.

In an excellent piece, Rupa Subramanya asks exactly the right question:

…how exactly is intervening in food portion sizes, a matter which in any sensible country would be left to the market system to decide, an example of good governance?

As a first principle of good governance, the government must recognize the limitations of state capacity and prioritize in areas in which it wishes to intervene in the market economy, based on a cost benefit analysis and grounded in a market failure it’s trying to correct.

…Modi campaigned on good governance. It’s time for him to start delivering on that promise.

By Omri Ben-Shahar and Lior Strahilevitz, both at University of Chicago Law School:

Abstract

Interpreting the language of contracts is the most common and least satisfactory task courts perform in contract disputes. This article proposes to take much of this task out of the hands of lawyers and judges, entrusting it instead to the public. The article develops and tests a novel regime — the “survey interpretation method” — in which interpretation disputes are resolved though large surveys of representative respondents, by choosing the meaning that a majority supports. The article demonstrates the rich potential under this method to examine variations of the contractual language that could have made an intended meaning clearer. A similar survey regime has been applied successfully in trademark and unfair competition law to interpret precontractual messages, and the article shows how it could be extended to interpret contractual texts. To demonstrate the technique, the article applies the survey interpretation method to five real cases in which courts struggled to interpret contracts. It then provides normative, pragmatic, and doctrinal supports for the proposed regime.

Just to be clear, I do not favor such a regime, but I think it is what we will be getting.

For the pointer I thank William the Irishman.

Patrick is co-founder and CEO of Stripe, based in San Francisco.  I recently told a reporter he was one of the five smartest people I have known; he is so smart, in fact, that he asked to interview me rather than vice versa, and so he and I created a new episode of Conversations with Tyler (transcript and podcast at that link, alas no video, and note that was recorded in January so on a few points the timeline may feel off).

We discuss whether macro is underrated, what makes Silicon Valley special, optimal immigration policy, whether Facebook is beneficial for society, whether I might ever vote for Donald Trump, how to start a new religion, Peter Thiel, Brian Eno, where I differ from Thomas Schelling, Michel Houllebecq, how to maintain your composure in an age of Trump, the origins of this blog, how I read so much, why Twitter is underrated, and the benefits of having a diverse monoculture, among many other topics.

Here is one bit:

COLLISON: …You’ve written a lot about how the study of economics has influenced your appreciation for the arts, and for literature, and for food, and all of the rest. You haven’t written as much about the influence in the reverse direction. How has your appreciation for and study of the arts influenced your study of economics? And is this a version of that?

COWEN: This is a version of that. Here would be a simple example: If you think about Renaissance Florence, at its peak, its population, arguably, was between 60,000 and 80,000 people. And there were surrounding areas; you could debate the number. But they had some really quite remarkable achievements that have stood the test of time and lasted, and today have very high market value. Now, in very naive theories of economics, that shouldn’t be possible. People in Renaissance Florence, they didn’t produce a refrigerator that we’re still using or a tech company that we still consult.

But there’s something different about, say, the visual arts, where that was possible, and it was done with small numbers. So there’s something about the inputs to some kinds of production we don’t understand. I would suggest if we’re trying to figure out, like what makes Silicon Valley work, actually, by studying how they did what they did in the Florentine Renaissance is highly important. You learn what are the missing inputs that make for other kinds of miracles.

Ireland and writing would be another example.

…COWEN: And I worry now that people in Ireland hear too much American English, too much English English, and that style of writing, talking, joking, limericks, is becoming somewhat less distinct. Still many wonderful writers from Ireland, but again, it’s like an optimal stock depletion problem, and maybe we’ve pressed on the button a little too hard.

COLLISON: The transaction costs should be higher?

And here is another:

COLLISON: Do we just need a sufficiently obfuscated version of the UBI and then we’re fine?

COWEN: We call it “disability insurance.”

And:

COWEN: Well, I voted on each of these hires. I voted for them. For a lot of them, I was on the hiring committee. Robin Hanson’s a good example. When we hired Robin, he was much older than a typical assistant professor would be. And of course, we don’t practice age discrimination, and neither does anyone else, but . . .

[laughter]

COWEN: Robin was going to have a tough time being hired. And I gave Robin some of my papers to read. He came in. He was a little, actually, obnoxious to me. Though he’s one of the nicest people you’d ever want to meet. He sent me back comments on my papers, that they were all wrong.

[laughter]

COWEN: There was no preliminary politeness: ‘I thought this was interesting, but…’ I thought this was great. So I thought, “We need to hire Robin. Robin is different.” And Robin wrote papers I thought were crazy, but he clearly also was a genius. I pushed very hard to hire Robin, and he made a good impression on a lot of other people. He’s been with us ever since.

COLLISON: Were the papers in fact all wrong?

COWEN: Robin’s criticisms were all good points.

[laughter]

COWEN: But they weren’t entirely wrong.

Self-recommending!

I agree the man should have left the plane in the first place, the police should not have used violence, the CEO should have apologized right away, United (possibly) should have known earlier it needed to transport the employees, and a bunch of other things.  Perhaps United should have mimicked Ryan Air and charged people fifteen euros (or much more!) for dragging them off the flight.  But let’s put that behind us and consider some analysis:

United policy says:

The priority of all other confirmed passengers may be determined based on a passenger’s fare class, itinerary, status of frequent flyer program membership, and the time in which the passenger presents him/herself for check-in without advanced seat assignment.”

There is also an exception for disabilities.

From the passenger’s point of view, this operates like randomization, as customers were told “the computer will decide.”  An alternative of course is to eliminate the random shuffle and require cash payments to passengers no matter what, waiting until someone volunteers to give up his or her seat at the required high price.

One problem with using money to buy people out of queues is that it encourages more upfront queuing to begin with, and that involves negative externalities for passengers as a whole.  In any model of stochastic demand and fixed capacity in the short run, demand will sometimes be too high, and I don’t know of many retail markets that rely on price alone to ration quantity.  Given that reality, I am not sure why everyone is insisting the airlines should do things this way.  If Nordstrom starts to run out of their blue cooking pots on the day of the sale, so be it, they don’t raise the price toward the end of the day as supplies dwindle.  Paying $5 to each denied pot-buyer just ensures they are more likely to run out of pots the next time around.

You could spend many moons debating whether price-only solutions to short-run shortages lead to higher or lower upfront prices (and thus higher or lower deadweight loss) than price + quality adjustment solutions to short-run shortages.  As far as I know, this question hasn’t been settled, and quality adjustment is well-known as a means of enabling more upfront price discrimination.  If nothing else, it pushes more people into business class.  The subtler mechanism is that the airlines have plenty of reasons to favor their more loyal customers, if only because of market segmentation, and this is one of them.  The market segmentation effects brings more collusion, and higher prices, but the price discrimination effect tends to boost output.

To consider possible analogies, let’s say it was a queue to buy concert tickets, with more people in line than seats for the show.  One option is to give cash to those who can’t get tickets, rather than just turning them away, but I’ve never heard anyone argue this would be efficient.  The cash payments are a tax on product supply and also they encourage too much queuing in the first place.  Instead we send some people home without tickets, even if they have waited in line for a long time.  In essence, randomization is one factor behind who is sent home without a ticket, because no arrival, when deciding whether or not to show up, knows exactly how many other people will have been prior in line.  Don’t be surprised if the airlines sometimes use a similar system.

As Garett Jones points out, sometimes the ATM runs out of cash and you don’t get any bonus afterwards.  There are plenty of other examples.

Maybe United should allow for a secondary market for the doctor to stay on the plane by buying flying rights from some other passenger, one who wouldn’t take the United offer but who might take the doctor’s better offer.  That idea is worth consideration, though arranging the contract could be tricky unless the passengers belong to a common system with pre-arranged arbitration in place (Facebook could run it?  PayPal?)  With tickets this kind of resale works smoothly through StubHub and the like.  (By the way, once the guy proclaimed he was a doctor going to see his ailing patients, did any of the other passengers offer to get off instead?  Hmm…)

The “re-accommodation” seems much worse to many people because the doctor already was seated.  An endowment effect argument therefore might require that the airline use a full auction once seats are taken.  That would increase the incentive of the airline to spot demand-supply imbalances in advance of boarding, and it might well be a good idea.  On the other hand, the presence of an endowment effect can help make “removal” an especially effective pre-emptive demand tax in world-states of potential excess demand.  The more you hate being removed from your seat, the fewer people have to be removed to achieve a greater S-D balancing ex ante.  Furthermore, the highest valuation buyers will make sure to be loyal buyers, which presumably is what the airline wants.

The cynical, who have studied randomization in optimal tax theory (that is not I, I love human rights too much and spent my youth reading the Salamancans), would even say that the higher value are the trips, and the more people fear being manhandled, the more it makes sense to use stochastic pain as a deterrent for overbooking.  Think of it as a way to increase the degree of ex ante price discrimination, and limit cross-buyer externalities, at minimal cost in terms of actual output.

Finally, the United episode gets at a more general problem with algorithms.  Even if the selection of seat loser is “truly random,” it will not always look random to the outside world.  The bumping of the doctor has been a huge event on Chinese social media, and how many of those Chinese are thinking that the doctor was bumped because he was Chinese.  The international loss of reputation here is significant, and it damages the United States as a whole, not just United as a brand name.  In essence, individual companies under-invest in perceptions of fairness, and reliance on “truly random” algorithms can make this worse rather than better.  A deliberate human chooser might well have done better, if only by knowing that a public defense of the choice would have been required, and that might have nudged United back toward the full auction or some other solution.  In essence, companies may be oversupplying “reliance on randomness,” not taking the collective negative externality into account.  Counterintuitively, relying on algorithms can increase perceptions of unfairness, and many of the costs of unfairness come on the perceptions side, even if “the true model” is making choices using a fair process.

Two other factors are worth considering.  First, due to social media it will be increasingly difficult to write and enforce retail contracts with legal meanings very different from their “common sense” meanings.  Maybe I’ll write a separate post on whether that will raise or lower transactions costs, but I suspect a bit of both.

Second, given that the stock of United tanked after the incident, now airline customer service will improve rather rapidly.  In the long run of course that will translate into higher prices too, so the net effect of this shift will prove regressive.  The more you complain, the more you are redistributing wealth — through the medium of preferred price-quality configurations — away from lower earners and toward the wealthy.

I’m not saying that the United rules are efficient, either generally or in this particular case, but I do see many people not even willing to ask the question of under what conditions they might be efficient.  And that is indeed to correct way to start on analyzing this problem.

Addendum: This is also a story of price controls, on that let’s turn the microphone over to Air Genius Gary Leff:

More importantly, United didn’t do it because Department of Transportation regulations set maximum required compensation for involuntary denied boarding (in this case 4 times the passenger’s fare paid up to a maximum of $1350). So they’re not going to offer more than that for voluntary denied boardings, especially since the violent outcome here wasn’t expected and the United Express gate agent had no authority to do more.

The first China-bound cargo train carrying British products left London on Monday for an eastern Chinese city, highlighting another historic moment in the China-initiated Belt and Road Initiative.

The cross-continent freight, loaded with 32 containers carrying products including milk powder and soft drinks, left from east London’s DP World gateway for the Chinese city of Yiwu amid cheers and applause.

The front of the red locomotive was seen with a sign board that reads “First London-Yiwu Train.”

The 12,000-km journey will pass through nine countries in 18 days. During the trip, the train’s locomotives have to be changed due to different railway gauges in the countries.

Here is the article, via George Chen.

The Hijra of India

by on April 11, 2017 at 7:31 am in Economics, Law, Religion, Travel | Permalink

Driving around Mumba one sometimes sees hijra begging at street intersections. The Indian term hijra is typically translated as eunuch but not all hijra are eunuchs or even want to be eunuchs so the term transgender is more accurate. In India, transgendered people are discriminated against, widely disliked, and feared. At the same time their blessings are sometimes sought after on important occasions.

hijraIt’s common for a transgendered person to be abandoned and thrown out of their home. Most then come to live in small communes of hijra headed by a guru and served by chelas (disciples/students).

We chelas must work hard, do the cooking inside the house, and most of the dancing outside. We have an obligation to look after our guru when she grows old, just like we would look after our own mother. In return, when we first become hijras our Chaman Guru teaches us chelas the way of the eunuchs.

(The quote is from William Dalrymple’s wonderful book, City of Djinns: A Year in Delhi. Dalrymple, however, draws too close a connection between hijra and the kind of eunuchs who were forcibly created to guard harems among the Mughals).

The communes of 5-15 hijras are like families but also like firms. The hijra make money by begging and by blessing weddings and births. The guru’s job is to learn the time and place of such celebrations for which she develop informants among midwives, musicians and caterers. A supra-community of hijra divide each city into exclusive territories. Each guru thus has a local monopoly and any hijra thrown out by her guru forfeits the right to work. A hijra thus has little choice but to work as a chela especially since other avenues of work are closed. Thus, the guru is both mother, father and boss.

The woman in the guru makes him feel motherly toward his chelas, but the man in him makes him authoritarian and dictatorial.

The blessings of the hijra are always double-edged. When are the blessed paying for the blessing and when are they are paying for the hijra not to curse them or just to go away? The hijra are not above embarrassing your wedding guests with bawdy and rude behavior.

Times have never been easy for the hijra but times are especially tough now because only the traditional occupations are open to them yet fewer people today believe in either their blessings or their curses. Many people consider them a nuisance. As a result, earnings are down.

Our main occupation is to perform badhai at weddings, or when a child is born. At such times we sing and dance to bless the newlyweds or the newborn. But can badhai alone fill our stomachs? Obviously not, and so we supplement our earnings by begging on city streets, and performing sex work, and dancing in bars and night clubs. Dancing comes naturally to us hijras.

…We are thus destitute. Estranged from family and ostracized by society, people couldn’t care less how we earn a livelihood, or where our next meal comes from. If a hijra commits a crime, the mob rushes to attack him while the police are only too glad to press charges against him. This is not to justify crime, but to reiterate that all crimes have a social dimension, and in the case of hijras this cannot be overlooked. Yet it is never taken into account.

A small trans and hijra empowerment movement works to bring greater acceptance to allow hijra to move into other occupations. On Sunday, I attended a hijra festival. The hijra were sweet and welcoming when I talked with them but it was not well attended.

The movement has found success among India’s liberal “internationalized” elite. India’s Supreme Court, for example, recognized a third gender in 2014, so Indian passports, driver’s licenses and other official documents now include M, F and an Other category. Gay sex, however, is still against the law (although prosecutions are rare to nonexistent). It’s notable that Bangladesh and Pakistan, two other countries not known for their liberalism, also recognize a third gender. The seeming contradiction is in part because sexual categories are different than in the West so, for example, sex between men and the third gender (hijra) isn’t considered sex between two men. As is true everywhere, all these issues are complicated and contested.

Ardhanari 2Intellectuals can also find support for the third gender in Hindu culture. The Vedas, for example, refer to Tritiya prakrti, people of the third sex, and the major Hindu texts treat homosexuality as normal, or at most give it mild admonishments. Hindu gods will often be reincarnated in different genders or even as hermaphrodites (the sculpture at Elephanta island near Mumbai shown at left depicts a hermaphrodite reincarnation of Shiva). The famous erotic carvings at the Khajuraho temples and elsewhere include depictions of homosexual sex.

The relative tolerance of the Hindu classics leads some people to blame Islamic and British influences on Indian society for it’s intolerance but discrimination against the Hijra is widespread. Although intellectuals may find support for tolerance in Hindu classics, the folk do not. Indians by and large are embarrassed about Khajuraho’s depiction of heterosexual sex, let alone anything more challenging.

The willingness of trans and hijra, both in India and the West, to live with discrimination and abandonment is testament to the great drive to live as one feels one is. I wish the hijra good fortune.

Hat tip: Kshitij Batra for discussion.

Hijra festival 2

Today is a good day to remember the great Julian Simon. Here’s a piece on just one of his many accomplishments.

Julian Simon helped revolutionize the airline industry by popularizing the idea that carriers should stop randomly removing passengers from overbooked flights and instead auction off the right to be bumped by offering vouchers that go up in value until all the necessary seats have been reassigned. Simon came up with the idea for these auctions in the 1960s, but he wasn’t able to get regulators interested in allowing it until the 1970s. Up until that time, Litan writes, “airlines deliberately did not fill their planes and thus flew with less capacity than they do now, a circumstance that made customers more comfortable, but reduced profits for airlines.” And this, of course, meant they had to charge passengers more to compensate.

By auctioning off overbooked seats, economist James Heins estimates that $100 billion has been saved by the airline industry and its customers in the 30-plus years since the practice was introduced.

A loyal MR reader writes to me:
I’m planning on…spending the summer in China before starting the program in Beijing in September…
How much emphasis should I spend generally on language study vs. travel in China vs. reading in English about the country? For this summer, I was thinking of holing up in one city and finding tutors to do 10hrs/day of study, traveling around the country, or some combination of the two.
Here’s how one blogger described what three months of intensive gave him: “My level of Chinese is sufficient to deal with most basic necessities of living, travel, make new friends and have interesting conversations entirely in Chinese. I can also read most of simple emails, menus and signs, although my reading still lags behind my speaking ability. I’m still not at a level where I could easily understand group conversations, movies, television or read books or newspapers.”
Also, any cities in particular you’d like to spend three months in?
What type/mix of books should I be reading over the next few months in the states to prep? Any particular titles come to mind?
Ideas for Master theses in economics that would benefit from being in-country even with relatively limited language ability?

TC here: Tough questions!  I would offer a few points:

1. You can’t study a foreign language for ten hours a day, as you need to intersperse more rewards to keep yourself motivated (like most things!).  The best way to learn Chinese is how I learned German, namely through a romantic partner.  That probably implies having a home base city for a big chunk of your time.

2. You need to ask how well you can handle air pollution, especially for the winter months.  Overall, I prefer Western China, which also tends to be less polluted.  Yunnan province is to me one of the very best visits in the world, and the environment there is downright pleasant, but everywhere I’ve gone in China was worth visiting.  Of course Beijing, Shanghai, and Shenzhen are where much of the action is at, of those three I enjoy Beijing the most (by far) but would pick Shanghai to live, mostly because it has less air pollution.

3. It is hard to tackle China through books, and single titles don’t get you very far (but here are a few recommendations).  Maybe start with John Keay for an overview, but finish up by reading it yet again.  Along the way, pick a few particular pre-communist topics, such as the Taiping rebellion, the history of a part of the country, Christianity in China, the Great Divergence, or the Grand Canal (understudied!), rather than just pawing through dozens of basically similar books on “where China is at right now.”  If I had to suggest one topic, maybe it would be “reading Chinese history through the lens of the state capacity idea,” as my colleague Mark Koyama has been working on.

4. The economic history of China is an area where economics research is making some very rapid advances from a pretty low base of knowledge.

5. Ask someone who has moved to China.

The amazing story of Lal Bihari, founder of the Uttar Pradesh Association of Dead People, illustrates many of the issues I wrote about in my post on the chaos of land records in India.

When Lal Bihari first heard about his death, he thought it was a joke. He smiled at the lekhpal, the village officer responsible for land records. But there was no smile in return. “Lal Bihari died last year,” the lekhpal repeated. “I don’t know who you are.” That was when the 22-year-old from Amilo in Azamgarh, Uttar Pradesh (UP), realised something was amiss. He had come to his birthplace Khalilabad for residence, income and caste certificates. He needed them to get a bank loan for his handloom business.

“But I am here before you,” he said, puzzled. “You know me. I have met you before.” The lekhpal showed him the land record, a piece of paper, and read it out. It said that the previous year, 30 July 1976, after the death of Lal Bihari, his one bigha (one-fifth of an acre) of land had devolved to his cousins. He was officially dead.

Lal’s cousins had bribed a local official and declared him dead in order to take his land. One would think it a fairly easy procedure to prove that you aren’t dead but even in the United States this can take months. In India, it took 17 years.

“The price of my death was Rs 300,” says Lal Bihari. After he discovered he had ‘died’, Lal Bihari went to a lawyer, who said, “A dead man has come to me,” and laughed. Neighbours would mock him—“Look, there goes the ghost.” He felt humiliated. Since a court case could take decades, he visited various government departments. He beseeched and quarreled with officials. He filed complaints. In vain. “The enquiry would be conducted by the very officials who had listed me as dead,” he says.

Finding no help from officials, Lal began to engage in more and more desperate measures:

In 1985, he tried to get himself arrested. He kidnapped his cousin, a boy named Baburam in the fifth standard, whose family had shown him dead. But once he picked up Baburam from school, he didn’t know what to do. “I took him to a movie every day,” he says.
After five days, when the family did not file a police complaint, he decided to soak Baburam’s shirt in goat’s blood and send it over. “I thought it would scare them into going to the police,” he says. But the butcher he knew didn’t help and told him to go to the poultry seller. “The blood from a chicken was never going to be enough,” says Lal Bihari. He dropped the idea. The plan flopped, though Baburam got a new shirt.

…He bribed a policeman Rs 500 to get a case registered against him and his cousin for rioting. The policeman returned the money when he discovered the motive. He applied for widow’s pension for his wife, Karami. “They would refuse because I was alive. This would be a record for me,” he says. But the government’s refusal made no mention of him.

Next, Lal Bihari sold his property to contest the 1988 Lok Sabha election from Allahabad against former Prime Minister VP Singh. Surprising even himself, he got about 1,600 votes.

Lal’s bizarre case began to get newspaper attention and finally in 1994 he was once again declared alive and his property restored. The story, however, doesn’t end there. In his adventures, Lal had befriended many dead people and so he founded the UP Mritak Sangh, the Uttar Pradesh Association of Dead People. The association organizes marches of the walking dead. In 2003 Lal Bihari won the IgNobel peace prize.

Lal Bihari continues to be very much alive.

Hat tip: Amit Varma.

The Indian Supreme Court has just banned sales of alcohol within 500 meters of a national highway. The ban affects not just liquor stores but tens of thousands of restaurants and hotels. In response, the Rajasthan Public Works Department announced that they would now recategorize highways in urban areas as roads! Other states may follow suit. (David Keohane at the FT has further background on the India ban.)

Lost in the shenanigans is that even if the ban were implemented perfectly it’s not at all obvious that it would reduce traffic accidents. Alcohol can be easily stored and if you are thirsty driving 500 meters doesn’t seem like very far to go to buy alcohol.

Entire counties in the United States have banned alcohol but that doesn’t seem to have reduced traffic fatalities. It may even have increased fatalities because residents of dry counties drive to a wet county to find a bar and then they drive drunk for longer distances as they head home.

In India you will often see signs asserting Ownership and Possession on buildings and lots that are Meena1unoccupied or under construction. The reason is not to stop squatters but rather to avoid the double selling problem. In the United States, it’s fairly easy to find out who owns a piece of land or even an expensive asset like a car. The land registry and titling system in India, however, is expensive and not always easy to check. As Gulzar Natarajan writes:

For something so valuable, land records in most developing countries are archaic. No register, which reliably confirms title, exists anywhere in India. Small experiments in some states to build such register have not been successful. Existing registers suffer from problems arising from lack of updation, fragmentation of lands, informal family partitions, unregistered power of attorney transactions, and numerous boundary and ownership disputes. The magnitude of these problems gets amplified manifold in urban areas.

It’s possible, for example, for a family member to sell family land without anyone else knowing about it. In Muslim customary law, gifts made on the deathbed can override a will which (surprise!) tends to benefit late-stage caregivers. Verbal deals in general are not uncommon.

land ownershipIndeed, without proper land registration it’s possible for an entirely unconnected person to sell land that he doesn’t own. Even if the real owners have some type of title, the ensuing court process between the real owners and those who thought or claimed they were the real owners will be time and wealth consuming. Forged documents are common. A large majority of all legal cases in India’s clogged court system are property disputes. The best thing is to occupy the land but if you can’t do that you want to signpost the land to make it as clear as possible who owns it so if someone is offered the land for sale they know who to call to verify.

Signposting is an old device for avoiding the double spending/selling problem by making ownership claims public and verifiable. The blockchain ledger is a modern version. A land registry system on the blockchain could work and systems are being tested in Sweden, Georgia and Cook County. Implementing such systems, however, first requires that land be mapped and parceled–and in many states in India the last land surveys were done by the British before independence. Surveys are becoming easier with drones and automatic surveying but India’s land surveying, registering and titling system still has a long way to go.