Category: Law

The polity that is Poland

A new law that comes into effect in Poland this week will scrap income tax for roughly 2 million young workers.

It’s an attempt by the government to stop the dramatic brain drain Poland has experienced since it joined the European Union 15 years ago.

Prime Minister Mateusz Morawiecki said the tax exemption will bring new opportunities for young people “so they match those available in the West.” Poles under the age of 26 who earn less than 85,528 Polish zloty ($22,547) a year will be exempt from the country’s 18% income tax starting August 1. The allowance is generous, considering the average Polish salary stands at just below 60,000 zloty ($15,700) a year.

The government said 2 million people will qualify for the benefit.

Here is the full story. There are also baby bounties in Poland, and policies seem to be increasingly youth-oriented.  You can see this on the streets of Warsaw, which have more non-tourist young people than just about any other major city in Europe.

The culture that is San Francisco

The words “felon,” “offender,” “convict,” “addict” and “juvenile delinquent” would be part of the past in official San Francisco parlance under new “person first” language guidelines adopted by the Board of Supervisors.

Going forward, what was once called a convicted felon or an offender released from jail will be a “formerly incarcerated person,” or a “justice-involved” person or simply a “returning resident.”

Parolees and people on criminal probation will be referred to as a “person on parole,” or “person under supervision.”

A juvenile “delinquent” will become a “young person with justice system involvement,” or a “young person impacted by the juvenile justice system.”

And drug addicts or substance abusers will become “a person with a history of substance use.”

“We don’t want people to be forever labeled for the worst things that they have done,” Supervisor Matt Haney said.

The resolution is non-binding, was not signed by the mayor, and it is not clear it will be implemented.  Here is the full article.

Some of those terms seem quite reasonable to me, such as “person on parole,” which for many people would be the natural term in any case.  But here is my worry.  It is we who decide how powerful language is going to be.  The more we regulate language, the more we communicate a social consensus that it has great power.  And in return the more actual power we grant to those linguistic “slips” and infelicities which remain.  It is better to use norms to regulate the very worst speech terms, but not all of them.  By regulating too many parts of speech, and injecting speech with too much power, we actually grant more influence to the people and ideas we are trying to stop.

Pig semen nationalism protectionism

Two pig farmers in Western Australia will be jailed after being convicted of illegally importing Danish pig semen concealed in shampoo bottles.

Torben Soerensen has been sentenced to three years in prison, while Henning Laue faces a two-year sentence after pleading guilty to breaching quarantine and biosecurity laws.

The Perth district court was told boar semen had been illegally imported from Denmark multiple times between May 2009 and March 2017. The semen was used in GD Pork’s artificial breeding program and several breeding sows were direct offspring of Danish boars.

Federal agriculture minister Bridget McKenzie said breaches of biosecurity laws would not be tolerated.

“This case shows a disturbing disregard for the laws that protect the livelihoods of Australia’s 2,700 pork producers, and the quality of the pork that millions of Australians enjoy each year,” McKenzie said.

“GD Pork imported the semen illegally in an attempt to get an unfair advantage over its competitors, through new genetics.”

Western Australian Farmers Federation spokeswoman Jessica Wallace said the offences was “a selfish act” that could cripple an entire industry.

Here is more from Lisa Martin, via Art J.

Are Health Administrators To Blame?

The graph at right made the twitter rounds a few days ago (1.3k RTs and 2.7k likes for Noah). The graph looked off to me immediately. Between approximately 1992 and 1994 the number of administrators went up by a factor of 4? (Or, if something goes from a 500% growth since 1970 to a 2000% growth rate since 1970, is that a factor of 3? Confusing! Anyway, a big jump.) Big jumps are often a sign that definitions, not reality, have changed. Indeed, what is an administrator?

There’s another problem with this type of graph which shows not absolute numbers but percent growth since 1970. Everything in this graph depends on getting one number, the number of administrators in 1970, exactly correct! But the first number is the one that is the farthest in the past, often the hardest to find and the most suspect. But if that first number is underestimated then every other number in the chart is overestimated.

People send me this kind of thing all the time. “See,” they say, “Why are the Prices So D*mn High is wrong! It isn’t Baumol!”–and I am always reluctant to follow-up because tracking down the underlying data, figuring out what it means, if there are mistakes etc. is a huge time sink. It was the excellent Conversable Economist who go the ball rolling on the latest iteration of this graph, however, and he cites the graph to noted health economist Uwe Reinhardt’s last book, Priced Out so I thought it could be worthwhile to go deeper.

Unfortunately, Reinhardt simply calls this a “famous graph” and it’s clear that he just found it on the internet like everyone else! Oh dear. Following up further, I did find the original Woolhandler-Himmelstein analysis written in 1991 and taking the data up to 1987. WH cite the Statistical Abstract of the United States  (Table 64-2, 109th edition). You can find the SA 109th edition here but it doesn’t have the data. At least, I couldn’t find it. Ok, several hours wasted.

Finally, however, I did find a number for health administrators in an earlier edition of the SA. In the 1980 edition in Table 165, Employed Persons in Selected Health Occupations, there is a number for “Health administrators,” which says 118 thousand in 1972. Aha! Now things are beginning to make sense because from that same table there were at least 3.5 million workers (physicians, nurses, technicians and others) in health occupations and 118 thousand administrators is clearly far too low. Indeed, in a later paper Woolhandler, Campbell and Himmelstein estimate that in 1969, 18.2% of health care workers were in administration which would imply a figure of 639 thousand health administrators circa 1970, a much more plausible number.

The Woolhandler, Campbell and Himmelstein piece also finds that between 1989 and 1994 the share of health care administrators as a percent of the health care workforce increased from 25.5% to….wait for it….25.7%. In other words, no big jump and inconsistent with the huge jump seen in the graph.

It was at this point that I found Kevin Drum’s excellent analysis. Drum was also suspicious of the graph and after a lot of work he concludes that the graph exaggerates by at least a factor of 3 and probably more. Drum estimates an increase in administrators of 831%; using my initial number and Drum’s end number, I estimate an increase of 682%. All numbers to be taken with a grain of salt. Is that a big increase? Compared to what? Drum gives his best takeaway of the data as this graph, administration costs as a percent of health care costs :

I agree with Drum–this way of presenting the data looks plausible, sensible and much less sensationalist than the original graph. Note that there has been an increase in administrative costs. Why? Here’s Drum’s bottom line:

Bottom line: the health care system has grown tremendously over the past 50 years, but that’s mostly not because we have a lot more doctors. It’s because we have MRI techs and ultrasound specialists and more kinds of nurses and more kinds of pills and enormous proton beams to cure cancer. (Those proton beams are massively expensive and require large staffs, but that doesn’t mean you need any more oncologists per patient.) To manage all this new stuff, we need bigger admin and support staffs. As a result, admin and support have grown about 50-100 percent on a relative basis. That’s the real number.

I believe the original graph uses a number for administrators that is too low in 1970 and includes what I suspect was a change in definitions around 1992 (project the 1970 to 1990 line forward or the 1994 to 2009 line backward and you will get a more accurate graph.) More generally, the graph is misleading because it suggests that “administrators” are to blame for high health care costs and if only we could focus on the “real producers” of medicine, the physicians, costs would be much lower. Blaming administrators for high prices is a lot like blaming “the middlemen.” It’s easy to say and easy to tweet but blaming the middlemen reflects a naive perspective on how goods and services are actually produced in a modern economy.

Administrative costs in the United States are high compared to other countries like Canada. (Helland and I discuss this in Why are the Prices So D*mn High.) We might even be able to lower administrative costs by moving to a single-payer, universal system. But there is no free lunch and there is no returning to an administrative free Eden.

Are property rights in elephants working out after all?

To understand why these reasonable-sounding proposals should be rejected, consider what has happened to elephant numbers since CITES most recently authorised some legal trade, when Botswana, Namibia and South Africa were allowed in 2007 to sell a fixed amount of ivory to Japan, as a one-off. Elephant numbers started falling again. A survey conducted in 2014-15 estimated that elephant numbers had fallen by 30% across 18 countries since 2007; another estimated a decline of over 100,000 elephants, a fifth of the total number, between 2006 and 2015. Increased poaching was at least partly to blame.

These numbers suggest that the existence of even a small legal market increases the incentive for poaching. It allows black-marketeers to pass off illegal ivory as the legal variety, and it sustains demand. The biggest market is in China. Last year the government banned domestic sales of ivory, but its customs officials seize a lot of smuggled products—notably from Japan, which licensed as a market in 2007. For the poachers, ivory is fungible. If it is hard to secure in Zambia or Botswana, another country’s elephants will be in the gun-sights. Congo, Mozambique and, especially, Tanzania, have seen sharp declines. Unfair though it is, countries with better-run conservation programmes are, in effect, paying for the failings of those with feeble institutions.

That is from The Economist.  Yet there is another twist:

In the long run technology can help make trade compatible with conservation. In better-resourced national parks, drones are used to make it easier for rangers to spot poachers. DNA testing of ivory shipments can establish where they came from, and thus whether they are legal. As prices fall and countries get richer, both technologies are likely to spread.

Developing…

What should I ask Ben Westhoff?

I will be doing a Conversation with him, no associated public event, here is from his home page:

Ben Westhoff is an award-winning investigative journalist who writes about culture, drugs, and poverty. His books are taught around the country and have been translated into languages all over the world.

His new book Fentanyl, Inc.: How Rogue Chemists Are Creating the Deadliest Wave of the Opioid Epidemic releases September 3, 2019 in the U.S. (Grove Atlantic) and October 10, 2019 in the UK, Austrailia, and New Zealand (Scribe). Here’s more information.

His previous book Original Gangstas: Tupac Shakur, Dr. Dre, Eazy-E, Ice Cube, and the Birth of West Coast Rap has received raves from Rolling Stone and People, a starred review in Kirkus, a five-star Amazon rating, and made numerous year-end best lists. More info can be found here.

…his 2011 book on southern hip-hop, Dirty South: OutKast, Lil Wayne, Soulja Boy, and the Southern Rappers Who Reinvented Hip-Hop was a Library Journal best seller.

Here is my review of his excellent forthcoming Fentanyl, Inc.  He also has a well-acclaimed book on New York City bars and dives.  All of his work is fascinating.

So what should I ask him?

Patient Empowerment and the Collective Action Problem

In an insightful paper with human interest but also public policy implications Jasmin Barman-Aksözen writes:

My parents and I searched throughout my entire childhood for an explanation of why I frequently had unbearable burning pain after spending even short periods of time outdoors on a sunny day. This pain was incapacitating and often left me in agony for days, during which I was unable to go to school, to sleep, to tolerate even weak light exposure, or the body heat of my parents as they tried to comfort me. Not a single pain killer provided any relief, and the only option for me was to wait alone in a darkened and cooled room until the pain sub-sided. Of course, we tried everything that physicians recommended; still, not even high sun protection factor sunscreens helped prevent the symptoms despite the fact that they were obviously caused by sunlight. It must have been hard for my parents to see me in such a painful state without being able to alleviate or prevent it. What’s more, the worst thing was that classmates, teachers, and even physicians did not believe me when I told them about the symptoms; I even brought photographs showing myself with swollen and burnt hands and face. Yet, this didn’t stop some from making fun of me when I wore long clothing, hats, or used an umbrella on sunny days to protect myself from the sun’s rays. Eventually, after I was sent to see a psychologist for my “made-up symptoms,” I could no longer tolerate the derision and being treated with such condescension, and decided to stop sharing my experiences with healthcare professionals altogether.

Finally, a full 26 years after the first symptoms, Dr Google provided the answer! In April 2006, I found myself yet again unable to sleep because, despite all precautionary measures taken, I had burnt myself in the strong sunlight of spring. I entered the combination of my symptoms in the Google search mask and, surprisingly, there was a new link in Wikipedia with an expression I had not encountered before “Erythropoietic Protoporphyria.”

The made-for-tv aspect continues as Barman-Aksözen earns a PhD, moves to Switzerland to join the world’s leading lab studying these issues and, yes, develops the first effective treatment!

Afamelanotide was approved for the treatment of adult EPP patients in the European Union (EU) at the end of 2014.

But now is where reality and public policy step back in.

In April 2019, most EPP patients in Europe, however, still do not have access to the only treatment for their condition and are still unnecessarily suffering from fre-quent excruciating pain, social isolation, and impaired life choices. What went wrong? Before a newly approved medicine reaches patients, most European countries per-form a Health Technology Assessment (HTA) to evaluate the benefits in relation to the costs of the new product in order to support decisions on whether it should be reimbursed by the respective national health systems.

Getting the drug approved is only the first step. Now they have to get the medical authorities to pay for it and that means they have to show the drug is not only effective but cost effective given the disability. Barman-Aksözen goes on to describe her efforts to get the drug approved for actual use. She doesn’t put it this way but essentially she has to solve the collective action problem and form a lobbying group to make the case that patients with her disease, EPP, face a serious disability. It’s easy to measure death, however, but hard to measure the “disability weight” on say blindness. The WHO says blindness has a disability weight of .195 today, but in 2004 they gave it a weight of 0.594. Hmmm. One study of Afamelanotide suggests it has a cost of £373,000 per DALY averted, which is high, even though the article recommends adoption. Many meetings ensue in which the case for and against Afamelanotide is made. The process is slow. Years go by. Much depends on seemingly minor choices in how to present the data.

I was reminded of Mancur Olson’s discussion in the Rise and Decline of Nations:

Distributional coalitions make decisions more slowly than the individuals and firms which they comprise [and] tend to have crowded agendas and bargaining tables…The accumulation of distributional coalitions increases the complexity of regulation, the role of government, and the complexity of understandings, and changes the direction of social evolution.

In other words, socializing health care means socializing decisions about how to allocate health care. A difficult tradeoff.

Addendum: The FDA has yet to approve Afamelanotide.

Hat tip: Joe P.

Brazil fact of the day

Brazil’s fiscal incontinence is legendary. The number of civil servants grew by 60% between 1995 and 2016, to 12m. Since public-sector workers cannot be fired or have their pay cut, they become a permanent expense once hired. Perks such as raises for seniority can even extend to widows’ pensions, producing the unique “post-mortem promotion”. Nearly 80% of government spending in Brazil goes on salaries and pensions, compared with a global average of 50-60%. “Instead of a state that serves the public, you have a state that serves the state,” says Samuel Pessôa of the Brazilian Institute of Economics at Fundação Getúlio Vargas, a university.

Here is the full article from The Economist, which focuses on fiscal sanity in the state of Espirito Santo.

Slavery in the history of Venice

There was a thriving trade in human flesh.  By the twelfth century the slave trade in Venice far surpassed that of other cities and other countries.  The Venetians were incorrigible slave traders, and the markets of the Rialto and S. Giorgio were centres of slavery.  They were eager for this particular source of income, since the profit on each item was said to be 1,000 per cent.  They sold Russians and even Greek Christians to the Saracens.  Men and women and children were bought or captured in the region of the Black Sea — Armenians and Georgians among them — before being despatched to Venice where they were in turn sold on to Egypt and Morocco and Crete and Cyprus.  They sold boys and young women as concubines.  One doge, Pietro Mocenigo, had in his seventies two young Turkish men in his entourage.

Many of them were consigned to Venetian households.  No patrician family was complete without a retinue or three or four slaves; even Venetian artisans owned slaves, and used them in their shops or workshops.  Venetian convents possessed slaves for domestic service.  The galleys were stocked with slaves.  But the city always needed a fresh supply; servile status was not inheritable.  Many slaves were freed in the wills of their masters or mistresses.  Marco Polo manumitted one of his slaves, Peter the Tartar, before his own death in 1324.  In 1580 there were three thousand slaves in the capital.  The black gondoliers in Carpaccio’s paintings of Venice are all slaves.

That is from Peter Ackroyd’s Venice: Pure City.

How honest again is big business?

“A 2015 study of self-checkouts with handheld scanners, conducted by criminologists at the University of Leicester, also found evidence of widespread theft. After auditing 1 million self-checkout transactions over the course of a year, totaling $21 million in sales, they found that nearly $850,000 worth of goods left the store without being scanned and paid for. The Leicester researchers concluded that the ease of theft is likely inspiring people who might not otherwise steal to do so…. As one retail employee told the researchers, ‘People who traditionally don’t intend to steal [might realize that] … when I buy 20, I can get five for free.’

The links are here and here, via The Browser.  And here is the deal on all those super-centenarians.

Scotland Trainspotting fact of the day

Last year there were 1,187 drug-related deaths in Scotland, a record, and a staggering increase of 27 percent from the year before. Overdoses are more common in Scotland, by some measures, than even in the United States.

And:

Scotland wasn’t always the “sick man of Europe.”

Until around 1950, life expectancy there was on par with most of Western Europe, or better. But after World War II, things in Scotland improved more slowly than in any other Western European country.

If you would like an anecdote:

Mr. Nugent had been using the drug on and off since he was 19, but overdosed the first time he shot up again. He has overdosed three more times since last year.

“I’ve nearly died four times,” said Mr. Nugent, who turns 43 this month. “It’s getting harder for me to recover as I get older.”

Here is the full NYT story by Allison McCann.

Net neutrality for me but not for thee?

To be perfectly clear, I would prefer that 8chan did not exist. At the same time, many of those arguing that 8chan should be erased from the Internet were insisting not too long ago that the U.S. needed to apply Title II regulation (i.e. net neutrality) to infrastructure companies to ensure they were not discriminating based on content. While Title II would not have applied to Cloudflare, it is worth keeping in mind that at some point or another nearly everyone reading this article has expressed concern about infrastructure companies making content decisions.

That is from the excellent Ben Thompson and yes you should pay for his tech email newsletter.

Why not more annuities?

From a reader in the know:

Annuities are often unappealing because they’re expensive, and they’re expensive because of the capital rules and market dynamics. Capital rules make it challenging for insurers to back annuities with anything but investment grade debt. Using a 50/50 A/BBB portfolio would require capital of about 5% of annuity premium. Additionally these products never sell without the intervention of a sales rep, who will require a commission of 3-10% depending on annuity type.

So now the insurer’s shareholders have committed 10% of premium and need to earn a return on that equity. If I target an ROE of 12% (common in the industry), I need to earn a net 120 bps of spread (and more to amortize the commission!). So in effect, the customer is paying to get a treasury yield or worse. It’s understandable why they may prefer to take their chances with more traditional investments.

Open Borders in Svalbard!

Well north of Iceland there is a island archipelago that is governed by Norway but because of a peculiar treaty it has entirely open borders:

When you land in Longyearbyen, the largest settlement in the Norwegian archipelago of Svalbard, you can step off the plane and just walk away. There’s no passport control, no armed guard retracing your steps, no biometric machine scanning your fingers. Svalbard is as close as you can get to a place with open borders: As long as you can support yourself, you can live there visa-free.

In an excellent piece in The Nation, Atossa Araxia Abrahamian describes the history and what it is like to visit:

Formally, Svalbard—known as Spitsbergen until the 20th century—belongs to Norway, which writes the laws, enforces order, builds infrastructure, and regulates hunting, fishing, and housing. Last year, when a Russian man was caught trying to rob a bank in town, a Norwegian judge sentenced him under Norwegian law to a Norwegian jail. But Norway’s control over Svalbard comes with obligations outlined by an unusual 1920 treaty signed as part of the Versailles negotiations ending World War I.

Written in the aftermath of the war, the Svalbard Treaty is both of and ahead of its time. Its architects stipulated that the territory cannot be used for “warlike” purposes. They included one of the world’s first international conservation agreements, making Norway responsible for the preservation of the surrounding natural environment. The treaty also insists that the state must not tax its citizens more than the minimum needed to keep Svalbard running, which today typically amounts to an 8 percent income tax, well below mainland Norway’s roughly 40 percent.

Most radically, the treaty’s architects held Norway to what’s known as the nondiscrimination principle, which prevents the state from treating non-Norwegians differently from Norwegians. This applies not just to immigration but also to opening businesses, hunting, fishing, and other commercial activities. Other countries could not lay formal claims on Svalbard, but their people and companies would be at no disadvantage.

Some 37 percent of Svalbard’s population is foreign born and there is an abandoned Soviet town with statues of Vladmir Lenin. Tyler will also be pleased to know that there are puffins.

I can’t say that I am tempted to move, but given global climate change it’s good to know that I could.

Hat tip: The Browser.

The Pigouvian culture and polity that is Sweden

A Swedish town has become the first in the country to introduce an official begging permit, requiring anyone who asks for money in the street to pay SEK 250 (£21) upfront for a licence.

Valid for three months, the permit can be obtained by filling in a form online or at a police station and requires a valid ID. Anyone found begging for money in Eskilstuna, west of Stockholm, without one faces a fine of up to SEK 4,000 (£342).

Here is much more, via Shaffin.  Note that some beggars are trying to circumvent the ban by “selling blueberries.”