Category: Law
A new meta-meta analysis says things I agree with
We combine societal-level institutional measures from 51 countries between 1996 and 2017 with individual decision-making outcome data from 1,126 laboratory experiments in six meta-analyses to evaluate the effects of within-country institutional change on pro-social and Nash behavior. We find that government effectiveness and regulatory freedom positively correlate with pro-social behavior. We find that freedom from each of the following components of regulation; interest rate controls, binding minimum wages, worker dismissal protections, conscription, and administrative requirements; are correlated with prosocial behavior and are inversely correlated with Nash behavior. These results suggest the importance of considering spillover effects in pro-social behavior when designing government policy.
That is from a new NBER working paper by
Tariff sentences to ponder
In a September 2024 report, UBS, an investment banker, predicted both tech hardware and semiconductors to be among the top four sectors that would be hardest hit by a general tariff. Their analysis is spot on. Many of the hardware components that make AI and digital tech possible rely on imported materials not found or manufactured in the United States. Neither arsenic nor gallium arsenide, used to manufacture a range of chip components, have been produced in the United States since 1985. Legally, arsenic derived compounds are a hazardous material, and their manufacture is thus restricted under the Clean Air Act. Cobalt, meanwhile, is produced by only one mine in the U.S. (80 percent of all cobalt is produced in China). While general tariffs carry the well-meaning intent of catalyzing and supporting domestic manufacturing, in many critical instances involving minerals, that isn’t possible, due to existing regulations and limited supply. Many key materials for AI manufacture must be imported, and tariffs on those imports will simply act as a sustained squeeze on the tech sector’s profit margins.
China’s Libertarian Medical City
You’ve likely heard of Prospera, the private city in Honduras established under the ZEDE (Zone for Employment and Economic Development) law, which has drawn global investment for medical innovation. The current Honduran government is trying to break its contracts and evict Prospera from 
Honduras. The libertarian concept of an autonomous medical hub, free to attract top talent, pharmaceuticals, medical devices, ideas, and technology from around the world is, however, gaining traction elsewhere—most notably and perhaps surprisngly in the Boao Hope Lecheng Medical Tourism Pilot Zone in Hainan, China.
Boao Hope City is a special medical zone supported by the local and national governments. Treatments in Boao Hope City do not have to be approved by the Chinese medical authorities as Boao Hope City is following the peer approval model I have long argued for:
Daxue: Medical institutions within the zone can import and use pharmaceuticals and medical devices already available in other countries as clinically urgent items before obtaining approval in China. This allows domestic patients to access innovative treatments without the need to travel abroad…. The medical products to be used in the pilot zone must possess a CE mark, an FDA license, or PMDA approval, which respectively indicate that they have been approved in the European Union, the US, and Japan for their safe and effective use.
Moreover, evidence on the new drugs and devices used within the zone can be used to support approval from the Chinese FDA–this seems to work similar to Bartley Madden’s dual track procedure.
Daxue: Since 2020, the National Medical Products Administration has introduced regulations on real-world evidence (RWE), with the pilot zone being the exclusive RWE pilot in China. This means that clinical data from licensed items used within the zone can be transformed into RWE for registration and approval in China. Consequently, medical institutions in the zone possess added leverage in negotiations with international pharmaceutical and medical device manufacturers seeking to enter the Chinese market.
… This process significantly reduces the time required for approval to just a few months, saving businesses three to five years compared to traditional registration methods. As of March 2024, 30 medical devices and drugs have been through this process, among which 13 have obtained approval for being sold in China.
The zone also uses peer-approval for imports of health food, has eliminated tariffs on imported drugs and devices and waived visa requirements for many medical tourists.
To be sure, it’s difficult to find information about Boao Hope medical zone beyond some news reports and press releases so take everything with a grain of salt. Nevertheless, the free city model is catching on. There are already 29 hospitals in the zone including international hospitals and hundreds of thousands of medical tourists a year. The medical zone is part of a larger free port project.
Prospera is ideally placed for a medical zone for North and South America. The Honduran government should look to China’s Boao Hope Medical Zone to see what Prospera could achieve for Honduras with support instead of oppositon.
Hat tip: MvH.
Where they are headed
The Australian government has pledged to legislate an age limit of 16 years for social media access, with penalties for online platforms that do not comply.
But the Labor government has not spelled out how it expects Facebook, Instagram, TikTok and others to actually enforce that age limit. Anthony Albanese is facing pressure from the Coalition opposition to rush the bill through parliament in the next three weeks, although a federal trial into age assurance technology has not yet commenced.
Albanese and the communications minister, Michelle Rowland, did not rule out the potential for social media users to have their faces subject to biometric scanning, for online platforms to verify users’ ages using a government database, or for all social media users – regardless of age – being subject to age checks, only saying it would be up to tech companies to set their own processes.
Here is the full story. Keep in mind this move, if applied consistently, would eliminate anonymous postings. It also would have to be enforced across a very large number of apps, even for Meta alone. Should everyone’s biometrics be put into what might be China-hackable form? And it means the government — not the parents — is deciding the proper level of social media access for children.
Are the major social media critics for this? Against it? Or are they not so keen to say, one way or the other?
The Amazon nuclear project
Nuclear power plants are designed to withstand a plane crash. We are now getting a live experiment in whether the nuclear sector is built of similar stuff, after federal regulators dropped a bomb on Friday night. In a 2-1 vote, the Federal Energy Regulatory Commission rejected an amended interconnection agreement for the deal that sparked a frenzy for nuclear power stocks earlier this year: Amazon.com’s acquisition of a datacenter co-located with a reactor owned by Talen Energy Corp. Few saw it coming, and the sector dived on Monday morning.
Here is more from Bloomberg, via Nicanor.
How much is a rare bee worth?
Plans by Mark Zuckerberg’s Meta to build an AI data centre in the US that runs on nuclear power were thwarted in part because a rare species of bee was discovered on land earmarked for the project, according to people familiar with the matter.
Zuckerberg had planned to strike a deal with an existing nuclear power plant operator to provide emissions-free electricity for a new data centre supporting his artificial intelligence ambitions.
However, the potential deal faced multiple complications including environmental and regulatory challenges, these people said.
Here is more from the FT.
My Conversation with the excellent Christopher Kirchhoff
Here is the audio, video, and transcript. Here is the intro:
Christopher Kirchhoff is an expert in emerging technology who founded the Pentagon’s Silicon Valley office. He’s led teams for President Obama, the Chairman of the Joint Chiefs of Staff, and CEO of Google. He’s worked in worlds as far apart as weapons development and philanthropy. His pioneering efforts to link Silicon Valley technology and startups to Washington has made him responsible for $70 billion in technology acquisition by the Department of Defense. He’s penned many landmark reports, and he is the author of Unit X: How the Pentagon and Silicon Valley are Transforming the Future of War.
Tyler and Christopher cover the ascendancy of drone warfare and how it will affect tactics both off and on the battlefield, the sobering prospect of hypersonic weapons and how they will shift the balance of power, EMP attacks, AI as the new arms race (and who’s winning), the completely different technology ecosystem of an iPhone vs. an F-35, why we shouldn’t nationalize AI labs, the problem with security clearances, why the major defense contractors lost their dynamism, how to overcome the “Valley of Death” in defense acquisition, the lack of executive authority in government, how Unit X began, the most effective type of government commission, what he’ll learn next, and more.
Excerpt:
COWEN: Now, I never understand what I read about hypersonic missiles. I see in the media, “China has launched the world’s first nuclear-capable hypersonic, and it goes 10x the speed of sound.” And people are worried. If mutual assured destruction is already in place, what exactly is the nature of the worry? Is it just we don’t have enough response time?
KIRCHHOFF: It’s a number of things, and when you add them up, they really are quite frightening. Hypersonic weapons, because of the way they maneuver, don’t necessarily have to follow a ballistic trajectory. We have very sophisticated space-based systems that can detect the launch of a missile, particularly a nuclear missile, but right then you’re immediately calculating where it’s going to go based on its ballistic trajectory. Well, a hypersonic weapon can steer. It can turn left, it can turn right, it can dive up, it can dive down.
COWEN: But that’s distinct from hypersonic, right?
KIRCHHOFF: Well, ICBMs don’t have the same maneuverability. That’s one factor that makes hypersonic weapons different. Second is just speed. With an ICBM launch, you have 20 to 25 minutes or so. This is why the rule for a presidential nuclear decision conference is, you have to be able to get the president online with his national security advisers in, I think, five or seven minutes. The whole system is timed to defeat adversary threats. The whole continuity-of-government system is upended by the timeline of hypersonic weapons.
Oh, by the way, there’s no way to defend against them, so forget the fact that they’re nuclear capable — if you want to take out an aircraft carrier or a service combatant, or assassinate a world leader, a hypersonic weapon is a fantastic way to do it. Watch them very carefully because more than anything else, they will shift the balance of military power in the next five years.
COWEN: Do you think they shift the power to China in particular, or to larger nations, or nations willing to take big chances? At the conceptual level, what’s the nature of the shift, above and beyond whoever has them?
KIRCHHOFF: Well, right now, they’re incredibly hard to produce. Right now, they’re essentially in a research and development phase. The first nation that figures out how to make titanium just a little bit more heat resistant, to make the guidance systems just a little bit better, and enables manufacturing at scale — not just five or seven weapons that are test-fired every year, but 25 or 50 or 75 or 100 — that really would change the balance of power in a remarkable number of military scenarios.
COWEN: How much China has them now? Are you at liberty to address that? They just have one or two that are not really that useful, or they’re on the verge of having 300?
KIRCHHOFF: What’s in the media and what’s been discussed quite a bit publicly is that China has more successful R&D tests of hypersonic weapons. Hypersonic weapons are very difficult to make fly for long periods. They tend to self-destruct at some point during flight. China has demonstrated a much fuller flight cycle of what looks to be an almost operational weapon.
COWEN: Where is Russia in this space?
KIRCHHOFF: Russia is also trying. Russia is developing a panoply of Dr. Evil weapons. The latest one to emerge in public is this idea of putting a nuclear payload on a satellite that would effectively stop modern life as we know it by ending GPS and satellite communications. That’s really somebody sitting in a Dr. Evil lair, stroking their cat, coming up with ideas that are game-changing. They’ve come up with a number of other weapons that are quite striking — supercavitating torpedoes that could take out an entire aircraft carrier group. Advanced states are now coming up with incredibly potent weapons.
Intelligent and interesting throughout. Again, I am happy to recommend Christopher’s recent book Unit X: How the Pentagon and Silicon Valley are Transforming the Future of War, co-authored with Raj M. Shah.
What do panda rental contracts look like?
Administrators cannot discuss panda illness, death, disease or “any other important matters” without first consulting with their Chinese partners, whose views “shall be fully respected.”
“In cases where release of related information to the outside world or acceptance of media interviews is necessary, it shall be implemented only after communication and consultation between the parties and a consensus is reached,” the contracts read. “And where no consensus is reached, no news shall be released.”
In a statement, the San Diego Zoo said it was common for partners to discuss animal well-being “and come to a mutual understanding before sharing updates publicly.”
Previous contracts did not contain such “information management” restrictions.
Here is more from Mara Hvistendahl at the NYT, interesting throughout.
The protest culture that is Maine
A man used homemade explosives, some of which he dropped from drones, to attack or intimidate in a dispute rooted in local politics in a community in northern Maine, law enforcement officials said. No one was hurt.
Joshua Brydon, 37, of Woodland, appeared in court this week after authorities say he set off explosives near the homes of several people with devices he created from fireworks, propane bottles and other materials, according to court documents. One of the blasts was strong enough to knock items off a wall in a home, and several of the explosives were dropped by drones operated by Brydon, according to documents.
Court records indicate Brydon targeted people who had taken issue with a former member of the Woodland Select Board or with his father-in-law, the town’s road commissioner.
Here is the full story, via Mike Rosenwald.
Iranian Kidney Donors
Iran is one of the few countries in the world to have eliminated the shortage of kidneys. A useful new paper looks at what donors are like,
First some background:
The adoption of a regulated market mechanism for kidney procurement in Iran started in 1988 in the absence of sufficient posthumous donations (Ghods and Savaj, 2006). The mechanism allows living unrelated Iranian individuals to donate kidneys to Iranian patients with end stage renal disease (ESRD) for financial gains. The program was successful in eliminating the renal transplant waiting list within a decade of its implementation (Mahdavi-Mazdeh, 2012). In addition, the Organ Transplant Act legalized brain-stem death donations in 2000. Both ESRD patients and potential kidney donors are referred to and registered with The Association for Supporting Renal Patients, a non-profit organization (NGO) which conducts a primary medical evaluation and facilitates the market exchange. Upon successful completion of the test, a formal consent is acquired and the potential donor and the recipient are introduced to each other. At this stage both the patient and the donor are referred to a nephrologist for further evaluation, cross-match, and angiography. If the patient-donor pair is compatible, in the next step the pair negotiate the terms and conditions of the exchange. All terms within the price-cap are guaranteed and enforceable by the NGO. The price-cap is frequently adjusted for inflation and during the course of our study was set at 180 million Iranian Rial (US$4700 in August 2017). However, the negotiation is private and the pair can agree any terms they wish. The donor also receives a “gift of altruism” and 1 year of insurance from the government through the Charity Foundation for Special Diseases. Transplant surgery is carried out free of charge in public university hospitals. The Iranian Ministry of Health and Medical Education introduced further procedural changes in July 2019. In particular, they established a center for organ transplant and procurement at the ministry which acts as the matching centre and provides oversight and overall control of the process.
Are the donors irrational, risk-loving, impatient? No, they are normal people making the best of sometimes limited opportunities:
The overall picture is of individuals who were in financial need, often unemployed but with a family to support and where alternatives sources of financial support were grim. However, despite their financial position, these individuals were typically patient and not especially prone to risk-taking. They were no less rational than the average, but those who ended up completing the process might be characterized as more altruistic than those who did not….More broadly our findings indicate that even in situations of extreme poverty we should not assume lower levels of rationality will be pervasive.
Given that donation saves lives and that kidney donation is not especially risky (much less risky than driving a motorcycle, for example) the tradeoff seems positive and well within ordinary bounds.
Turning to the US, here is Sally Satel on a proposed tax credit for kidney donation:
What if we could solve the organ donor shortage with a simple tax credit? That is the idea behind the End Kidney Deaths Act (EKDA) (HR 9275).
The bill, advanced by the Coalition to Modify NOTA (NOTA stands for the National Organ Transplant Act passed in 1984) would provide a $50,000 refundable tax credit—$10,000 per year for five years—to any living donor who gave a kidney to the next person on the waiting list. The tax credit would be a 10-year pilot program.
The credit would save 10,000 to perhaps as many as 100,000 lives over ten years.
FYI, I am a supporter of Modify NOTA (along with Al Roth, Steve Levitt, and Mario Macis, to name just a few of the economists, joined by surgeons, nephrologists and others).
Hat tip: Kevin Lewis.
“California officials cite Elon Musk’s politics in rejecting SpaceX launches”
Elon Musk’s tweets about the presidential election and spreading falsehoods about Hurricane Helene are endangering his ability to launch rockets off California’s central coast.
The California Coastal Commission on Thursday rejected the Air Force’s plan to give SpaceX permission to launch up to 50 rockets a year from Vandenberg Air Force Base in Santa Barbara County.
“Elon Musk is hopping about the country, spewing and tweeting political falsehoods and attacking FEMA while claiming his desire to help the hurricane victims with free Starlink access to the internet,” Commissioner Gretchen Newsom said at the meeting in San Diego.
The agency’s commissioners, appointed by the governor and legislative leaders, voted 6-4 to reject the Air Force’s plan over concerns that all SpaceX launches would be considered military activity, shielding the company from having to acquire its own permits, even if military payloads aren’t being carried.
Here is more from Politico, which is the source of that headline. Wildlife issues are significant as well.
Matt Yglesias on regulation and deregulation
…it’s notable that if you look at the major deregulator measures of the past four years, it mostly happened under Jimmy Carter (Natural Gas Policy Act of 1978, Airline Deregulation Act of 1978, Motor Carrier Act of 1980, Depository Institutions Deregulation and Monetary Control Act of 1980) or Bill Clinton (Interstate Banking and Branching Efficiency Act of 1994, Telecommunications Act of 1996, Graham-Leach-Bliley Act of 1999) rather than Reagan. What Reagan did was cut taxes, staff the agencies with business-friendly appointees, and build the power of the conservative legal movement. Similarly, George W. Bush cut taxes, staffed the agencies with business-friendly appointees, and built the power of the conservative legal movement. Donald Trump, who in some ways represented a conceptual break with the Reagan-Bush political tradition, also cut taxes, staffed the agencies with business-friendly appointees, and built the power of the conservative legal movement.
That’s what Republican presidents do. Deregulatory efforts tend to happen when market-oriented thinkers persuade some prominent Democrats that they’re right about something, and then bipartisan deals get made. Also note that there’s something funny about the extent to which Carter has become retroactively famous for legalizing home brewing rather than, say, the natural gas thing, which legitimately transformed the national and global economy.
Here is the whole post (gated), with other interesting points as well.
From the Department of Energy
PIER Plans will be evaluated as part of the merit review process and will be used to inform funding decisions. The review criterion, Quality and Efficacy of the Plan for Promoting Inclusive and Equitable Research, will be included as one of the merit review criteria that peer reviewers will use to evaluate applications.
The Office of Science’s standard merit review criteria are set forth by 10 CFR Part 605.10 and may include additional criteria relevant to the scope and objectives of the solicitation.
Here is the notice, with further detail, it seems that will apply to all of their grant funding?
Via a loyal MR reader.
My excellent Conversation with Tom Tugendhat
Here is the audio, video, and transcript. Here is the episode summary:
Tom Tugendhat has served as a Member of Parliament since 2015, holding roles such as Security Minister and chair of the Foreign Affairs Select Committee. Before entering Parliament, Tom served in in Iraq and Afghanistan. He also worked for the Foreign Office, helped establish the National Security Council of Afghanistan, and served as military assistant and principal adviser to the Chief of the Defense Staff.
Tyler and Tom examine the evolving landscape of governance and leadership in the UK today, touching on the challenges of managing London under the UK’s centralized system, why England remains economically unbalanced, his most controversial view on London’s architecture, whether YIMBYism in England can succeed, the unique politics and history of Kent, whether the system of private schools needs reform, his pick for the greatest unselected prime minister, whether Brexit revealed a defect in the parliamentary system, whether the House of Lords should be abolished, why the British monarchy continues to captivate the world, devolution in Scotland and Northern Ireland, how learning Arabic in Yemen affected his life trajectory, his read on the Middle East and Russia, the Tom Tugendhat production function, his pitch for why a talented young person should work in the British Civil Service, and more.
And here is an excerpt:
COWEN: Okay. First question, what is your favorite walk around London, and what does it show about the city that outsiders might not understand?
TUGENDHAT: Oh, my favorite walk is down the river. A lot of people walk down the river. One of the best things about walking down the river in London is, first of all, it shows two things. One, that London is actually an incredibly private place. You can be completely on your own in the center of one of the biggest cities in the world within seconds, just by walking down the river. Very often, even in the middle of the day, there’s nobody there. You walk past things that are just extraordinary. You walk past a customs house. It’s not used anymore, but it was the customs house for 300, 400, 500 years. You walk past, obviously, the Tower of London. You walk past Tower Bridge. You walk past many things like that.
Actually, you’re walking past a lot of modern London as well, and you see the reality of London, which is — the truth is, London isn’t a single city. It’s many, many different villages, all cobbled together in various different ways. I think outsiders miss the fact that there’s a real intimacy to London that you miss if all you’re doing is you’re going on the Tube, or if you’re going on the bus. If you walk down that river, you see a very, very different kind of London. You see real communities and real smaller communities.
And:
COWEN: Can the British system of government in its current parliamentary form — how well can that work without broadly liberal individualistic foundations in public opinion?
TUGENDHAT: I think it works extremely well at ensuring that truly liberal foundations are maintained. I mean that not in the American sense; I mean in a genuine, the old liberal tradition that emerges from the UK in the 1700s, 1800s, where freedom of thought, freedom of assembly, the right to own property, and all those principles that then became embedded in various different constitutions around the world, including your own. I think it does very well at doing that because it forces you, our system forces you, into partnership. There are 650 people who you have to work with in some way in Parliament over the next four or five years.
And there’s four of us currently going for leadership at the Conservative Party. There’s one reason why, despite the fact that we’re competing almost in a US primary system, the way in which we are dealing with each other is very different, is because we’re all going to have to work together for the next four years. Whoever wins is going to have to work with the other three, and the idea that you can simply ignore each other isn’t true. There’s only 121 of us Conservative MPs in Parliament, and what this system forces on us is the need to deal with each other in a way that you have to deal with somebody if you’re going to deal with them tomorrow. I think that’s one of the reasons why the British political system has endured because it forces you to remember that there’s a long-term interest, not an immediate one, not just a short-term one.
Recommended, highly intelligent throughout, including on China, Russia, and Yemen.
How economists think about victims of natural disasters
That is the topic of my latest Bloomberg column, here is one excerpt:
First, whenever possible it is better to use private insurance, such as homeowner’s insurance and flood insurance, to protect against loss. One of the functions of insurance is to make losers at least partially whole after the fact, but another is to make risky decisions too expensive to contemplate in the first place.
This second function of insurance is especially important for Florida. The state is vulnerable to storms, so market prices for insurance should be allowed to adjust to higher levels, most of all for vulnerable properties. High prices in an area are a sign that building and renovation should not take place there. With fewer people living in vulnerable areas, the cost of storms will fall accordingly.
That sounds harsh, but “incentives matter” is the first and primary principle of economics, and sometimes incentives should be allowed to operate. Unfortunately, Florida has a state-run insurer of last resort which continues to bail out homeowners.
Political debates tend to frame this issue as whether to help poor, struggling homeowners. And indeed they may well suffer some terrifying losses because of storms. But whatever you think of such bailouts after the fact, with better incentives ahead of time, that issue will come up less often.
Economists are better at ex ante institutional design than at adjudicating all claims on the public purse ex post.
Advice that is not always heeded.