Category: Law
*Fentanyl, Inc.*, by Ben Westhoff
The slightly misleading subtitle is How Rogue Chemists are Creating the Deadliest Wave of the Opioid Epidemic. Why misleading? So many substance abuse books are a mix of hysterical in tone and a disappointing “paint by numbers” in their execution, but this one really stands out for its research, journalism, and overall analysis. To give just one example, it is also a great book on China, and how China and the Chinese chemicals industry works, backed up by extensive original investigation.
Start with this:
Americans take more opioids per capita — legitimate and illegitimate uses combined — than any other country in the world. Canada is second, and both far outstrip Europe. Americans take four times as many opioids as people do in the United Kingdom.
And this:
For many years, Chinese organized-crime groups known as triads have been involved in the international meth trade. But experts familiar with triads say their influence appears to be waning in the fentanyl era. “They’re a shadow of their former selves,” said Justin Hastings, an associate professor in international relations and comparative politics at the University of Sydney…Though ad hoc criminal organizations continue to move drugs in China, major trafficking organizations are rare there, and cartels basically nonexistent. This leaves the market wide open for Chinese chemical companies, who benefit from an air of legitimacy.
As for marijuana and cocaine, they are used by only about one in every forty thousand individuals in China. But the book covers the entire U.S. history as well.
Definitely recommended, this will be making my year-end “best of” list for non-fiction. And yes I did go and buy his earlier book on West Coast rap music.
California’s regulatory code for housing is too strict
The sponsors of SB 50 seem to recognize that the state’s housing problems are at least partially man-made. Indeed, California is a leader in regulating just about everything — including insurance carriers, public utilities and housing construction. If California’s regulatory code underwent some serious spring cleaning, it could help the state at least make a dent in its housing affordability crisis.
The California Code of Regulations — the compilation of the state’s administrative rules — contains more than 21 million words. If reading it was a 40-hour-a-week job, it would take more than six months to get through it, and understanding all that legalese is another matter entirely.
Included in the code are more than 395,000 restrictive terms such as “shall,” “must” and “required,” a good gauge of how many actual requirements exist. This is by far the most regulation of any state in the country, according to a new database maintained by the Mercatus Center, a research institute at George Mason University. The average state has about 137,000 restrictive terms in its code, or roughly one-third as many as California. Alaska and Montana are among the states with as few as 60,000.
That is from James Broughel and Emily Hamilton at Mercatus, in The Los Angeles Times.
*The Narrow Corridor: States, Societies, and the Fate of Liberty*, the new Acemoglu and Robinson book
Due out in September, by Daron Acemoglu and James Robinson, here is an excerpt from the Amazon summary:
State institutions have to evolve continuously as the nature of conflicts and needs of society change, and thus society’s ability to keep state and rulers accountable must intensify in tandem with the capabilities of the state. This struggle between state and society becomes self-reinforcing, inducing both to develop a richer array of capacities just to keep moving forward along the corridor. Yet this struggle also underscores the fragile nature of liberty. It is built on a fragile balance between state and society, between economic, political, and social elites and citizens, between institutions and norms. One side of the balance gets too strong, and as has often happened in history, liberty begins to wane. Liberty depends on the vigilant mobilization of society. But it also needs state institutions to continuously reinvent themselves in order to meet new economic and social challenges that can close off the corridor to liberty.
You can pre-order here.
My Conversation with Eric Kaufmann
Interesting and excellent throughout, here is the audio and transcript. Eric is political scientist at Birkbeck College in London and the author of the recent Whiteshift: Populism, Immigration, and the Future of White Majorities. Here is part of the opening summary:
Kauffman’s latest book Whiteshift, which examines how declining white ethnic majorities will respond to these changes, is on Tyler’s list as one of the best books of the year. The two discuss the book and more, including Orangeism in Northern Ireland, Switzerland’s secret for stability, what Tocqueville got most wrong about America, predictions on Brexit’s final form, why Portugal seems immune from populism, how Notre Dame should be rebuilt, whether the Amish — or Mormons — will take over the world, and much more.
Here is one excerpt:
COWEN: Do conservative Muslims also have a much higher fertility rate?
KAUFMANN: The gradient between very conservative and sort of secular and liberal is not as strong in Islam as it is in Judaism or Christianity, but it’s about a twice higher fertility for women who are most in favor of Sharia compared to those who are most opposed to Sharia, in the cities. So I do think there is also this dynamic within Islam, yes.
COWEN: If we look at a country such as Iran, which now has a very low total fertility rate, is that a sign they’re not actually very religious? Or there’s something unusual about religion in Iran? What accounts for that?
And:
COWEN: Which group of French Muslims has assimilated most successfully and why?
KAUFMANN: Well, the outmarriage rate is almost 50 percent for French Algerian men, but even across the Franco-Algerian community, I think it’s in the 40 to 50 percent outmarriage —
COWEN: And they’re marrying ethnically white French women?
KAUFMANN: Right, or men. I think part of this stems from Algeria in its history. You have a large Berber population in Algeria, many of whom are anti the regime. They’re anti the Arab-Islamist regime. So they’re actually quite secular in many ways.
That’s part of it, but even amongst the Moroccans in France, there’s quite a high outmarriage rate of like 40 percent. So yeah, the French Muslims do seem to be melting in better than Muslims even of the same ethnicity. Compared to Moroccans in the Netherlands, for example, there’s a much higher outmarriage in France.
COWEN: And that’s the Berber factor, in your view?
KAUFMANN: I think it is the Berber factor. I don’t think there’s anything magical that the French are doing that the Dutch are not in terms of integration policy. I think too much is made of that.
And:
COWEN: What’s the most plausible scenario for Irish reunification?
KAUFMANN: I think the most plausible scenario is that Northern Ireland Protestants don’t have the same hostility to the Republic that they have traditionally had, so maybe a kind of charm offensive.
In a way, the unionist population is the one they have to win over. They are kind of foursquare against reunification. Somehow, the Irish Republic has to find a way to reassure them. That’s going to be the ticket to reunification, but it’ll never really happen just through economic integration. I think there’s got to be something symbolic that will win over the unionists.
Finally:
COWEN: So there’ll be more of a turn against immigration?
KAUFMANN: Yeah.
COWEN: In Canada.
KAUFMANN: Yes, and immigration attitudes are now very different, depending if you’re a Conservative or a Liberal voter. That didn’t use to be the case even five years ago, so there is more of a politicization of that issue now.
Recommended, and I found all of Eric’s books very interesting as well.
https://medium.com/@mercatus/tyler-cowen-eric-kaufmann-population-religion-culture-6e85bf9c8c07
*The Impeachers*
This fun book, by Brenda Wineapple, has the subtitle The Trial of Andrew Johnson and the Dream of a Just Nation. Excerpt:
“The long haired men and cadaverous females of New England think you are horrid,” Johnson’s secretary reported to him. “I had a conversation with an antique female last night, in the course of which she declared that she hoped you would be impeached. Said I ‘Why should he be impeached — what has he done that he should be impeached?’ ‘ Well,’ replied she, ‘he hasn’t done anything yet, but I hope to God he will.'”
You can order the book here.
Housing zoning reform in Oregon
After a dramatic false start, the Oregon Senate on Sunday gave final legislative approval to a bill that would effectively eliminate single-family zoning in large Oregon cities.
House Bill 2001 passed in a 17-9 vote. It now heads to Gov. Kate Brown desk to be signed into law.
It will allow duplexes, triplexes, fourplexes and “cottage clusters” on land previously reserved for single family houses in cities with more than 25,000 residents, as well as smaller cities in the Portland metro area. Cities with at least 10,000 residents would be required to allow duplexes in single-family zones.
Here is more by Elliott Njus, via Jan Fure and several other MR readers. Next up perhaps is this…
*The Nonsense Factory: The Making and Breaking of the American Legal System*
That is the new book by Bruce Cannon Gibney, and it is one of my favorite books on the American legal system and one of my favorite books of this year. Here is just one driblet from the work:
…only in America would an administrative law judge sue a local dry cleaner, claiming damages of $67 million for a lost pair of pants.
And this I had not known:
Worse, the legal content of any given state’s bar exam is not actually the law in that state. The “multistate” part of the bar exam is exactly what it sounds like, but there is no such thing as “multistate” law: different states have different laws. But even though the larger states, notably New York, California, and Texas, could create their own bar exams, almost all states use the synthetic law of a multistate exam, which is worse than useless: the right answer for the bar might not be the right answer in any state, which wastes students’ time and risks confusing them about the actual law.
I learned also that America has at least 940 legal journals. Yet the Harvard Law Review had only 1,722 paid subscriptions for 2012, and the extremely well-known University of Virginia review had only 304 subscribers.
Between 1987 and 2017, staff available to Congress declined by about 30 percent. The Capitol Police, however, expanded in numbers. Congressional aides often make less than the janitors of the Senate.
OIRA, which is tasked with reviewing major regulations, typically has about 45 staffers.
The book offers up numerous anecdotes about how poorly some Supreme Court justices understand modern technology; Judge Scalia, for instance, was afraid that people could “capture” HBO signals from the airwaves.
…the entire federal judiciary costs about $7 billion, not even enough to buy 55 percent of the Gerald R. Ford aircraft carrier or fund federal health-care programs for fifty hours.”
Recommended, you can buy the book here.
Crypto is here to stay?
That is the theme of my latest Bloomberg column, here is one excerpt:
One reason for the rise in Bitcoin’s price may have to do with the U.S. and China and the trade war. It no longer seems that China will join the international economic order as that term might have been understood 15 years ago. Instead, there will be an ongoing cold war; China will not liberalize, and capital controls may persist. In that world, Bitcoin will continue to prove a useful way of getting funds out of China. The Chinese Communist government may or may not crack down on that practice, but outright liberalization would have ended this use of Bitcoin altogether.
For related reasons, a China that does not liberalize may influence the broader tenor of the global economy away from freedom, again giving Bitcoin additional uses around the world for evading central authorities.
A second development is that the Democratic Party in the U.S. continues to shift to the left, including on the possibility of a wealth tax. As America’s fiscal deficits grow (due often to the Republicans, I might add), there will be a long-term need to restore fiscal sanity. Presidential candidate Elizabeth Warren, for one, advocates a 2% wealth tax (over $50 million) toward this end.
No matter what you think of this idea, it likely would boost the demand for Bitcoin and other crypto assets, as cryptocurrencies are potentially a way to store assets out of reach of many tax authorities. And the U.S. is hardly the only nation that may be looking to a wealth tax in the future to balance the books. In essence, the new and higher price of Bitcoin is telling us that fiscal solvency will be hard to come by, and the wealthy will not give up their assets without a fight.
Do read the whole thing.
Prisoners
New Yorker: On May 13, 1943, Axis forces in North Africa surrendered. The Allies suddenly found themselves saddled with nearly three hundred thousand prisoners of war, including the bulk of General Erwin Rommel’s famed Afrika Korps. Unable to feed or house their share, the British asked their American comrades to relieve them of the burden. And so, by the tens of thousands, German soldiers were loaded aboard Liberty Ships, which had carried American troops across the Atlantic. Eventually, some five hundred P.O.W. camps, scattered across forty-five of the forty-eight United States, housed some four hundred thousand men. In every one of those camps, the Geneva conventions were adhered to so scrupulously that, after the war, not a few of the inmates decided to stick around and become Americans themselves. That was extraordinary rendition, Greatest Generation style.
That’s the opening to a piece by Hendrik Hertzberg from 2011 and thus the piece is motivated neither by President Trump nor about separating children from their parents on the border. For that reason it is perhaps more relevant to these issues than otherwise. We can and have been worse but let no one say that we have not and cannot be better.
Hat tip: Jason Kuznicki.
Will price transparency in health care markets work?
The scholarship suggests that more transparency in health care could backfire, causing prices to rise instead of fall…
“I don’t know if you have had the misfortune of having health economists tell you about Danish cement,” said Amanda Starc, an associate professor of strategy at the Kellogg School of Management at Northwestern, one of several scholars who mentioned a paper with a punny name: “Government-Assisted Oligopoly Coordination? A Concrete Case.”
“Everybody loves the Danish concrete example!” said Matthew Grennan, an assistant professor of health care management at Wharton, who has studied the effects of price transparency on hospital purchases.
The Danish government, in an effort to improve competition in the early 1990s, required manufacturers of ready-mix concrete to disclose their negotiated prices with their customers. Prices for the product then rose 15 percent to 20 percent.
The reason, scholars concluded, is that there were few manufacturers competing for business. Once companies knew what their competitors were charging, it was easy for them to all raise their prices in concert. They could collude without the sort of direct communication that would make such behavior illegal. It wasn’t easy for new companies to undercut the existing ones, because the material hardens so fast that you can’t ship it far…
Research on gasoline markets has likewise found that publicizing prices appears to enable collusion in places where there are only a few competitors. But among more plentiful Israeli supermarkets, a database of prices appears to have lowered them.
Scholars at the Federal Trade Commission put out a paper in 2015 cautioning against the kind of price transparency that the president is embracing.
That is all from Margot Sanger-Katz (NYT). And via Ilya Novak, here is a recent piece by Zach Y. Brown:
This paper examines whether information frictions in the market for medical procedures lead to higher prices and price dispersion in equilibrium. I use detailed data on medical imaging visits to examine the introduction of a state-run website
providing information about out-of-pocket prices for a subset of procedures. Unlike other price transparency tools, the website could be used by all privately insured individuals in the state, potentially generating both demand- and supply-side effects. Exploiting variation across procedures available on the website as well as the timing of the introduction, estimates imply a 3 percent reduction in spending for visits with information available on the website. This is due in part to a shift to lower cost providers, especially for patients paying the highest proportion of costs. Furthermore, supply-side effects play a significant role—there are lower negotiated prices in the long-run, benefiting all insured individuals even if they do not use the website. Supply-side effects reduce price dispersion and are especially relevant when medical providers operate in concentrated markets. The supply-side effects of price transparency are important given that high prices are thought to be the primary cause of high private health care spending in the US.
I hope we learn more about this soon.
China Bible fact of the day
The parent company of the two largest Bible publishers in the United States has warned the Trump administration that proposed tariffs on China would amount to a “Bible tax.”
Trump’s proposed tariffs on $300 billion in Chinese-made products would affect books and other printed materials, according to Bloomberg. That includes Bibles, which are overwhelmingly printed in China because of the specialized technology and skills they require to produce…
More than half of the 100 million Bibles printed every year have been printed in China since the 1980s, he said. Of those, 20 million are sold or given away in the United States.
That’s because of the specialized printing requirements for a complex book such as the Bible, which requires thin paper that cannot be fed into standard printing equipment, leather covers, stitched binding, color pages and special inserts such as maps.
Here is the full Washington Post story.
The legal culture that is America
The battle for supremacy in the world of hand hygiene is a dirty one, and nothing demonstrates this better than the depressing sight of a paper towel dispenser with a EULA.
That’s right: even dumb plastic boxes whose only use in this world is to hold paper towels apparently need an end-user license agreement now. In this case, the EULA — spotted by Harvard Library curator and Twitter user John Overholt at a recent conference — forbids the people who have to refill this Tork dispenser from using rival, non-Tork products.
Here is the full story, via the excellent Samir Varma.
The politics of order in informal markets: Evidence from Lagos
That is the title of a new paper by Shelby Grossman, here is the abstract:
Property rights are important for economic exchange, but in much of the world they are not publicly guaranteed. Private market associations can fill this gap by providing an institutional structure to enforce agreements, but with this power comes the ability to extort from group members. Under what circumstances do private associations provide a stable environment for economic activity? Using survey data collected from 1,179 randomly sampled traders across 199 markets in Lagos, I find that markets maintain institutions to support trade not in the absence of government, but rather in response to active government interference. I argue that associations develop pro-trade institutions when threatened by politicians they perceive to be predatory, and when the organization can respond with threats of its own; the latter is easier when traders are not competing with each other. In order to maintain this balance of power, the association will not extort because it needs trader support to maintain the credibility of its threats to mobilize against predatory politicians.
Via Henry Farrell, that abstract reminds me of my earlier essay, and critique of libertarian anarchy, “Law as a Public Good,” shorter version of the argument here.
How to Become a Federal Criminal
Mike Chase, author of the excellent twitter feed @CrimeADay, has now written the illustrated handbook, How to Become a Federal Criminal. In truth, a handbook wasn’t necessary because it is very easy to become a federal criminal.
You may know that you are required to report if you are traveling to or from the United States with $10,000 or more in cash. Don’t hop over the Canadian border to buy a used car, for example, or the Feds may confiscate your cash (millions of dollars are confiscated every year). Di
d you also know that you can’t leave the United States with more than $5 in nickels??? That’s a federal crime punishable by up to five years in prison. How about carrying a metal detector in a national park–up to six months in prison. And God forbid you should use your metal detector and find something more than 100 years old, that can put you away for up to a year. Also illegal in a national park? Making unreasonable gestures to a passing horse.
The expansion of Federal criminal law into every nook and cranny of life can be amusing but there is a darker side.
The feds also have unbelievably powerful tools at their disposal. They can subpoena your bank records, listen to your phone calls, indict you in a secret proceeding called a grand jury, an, if they think you lied to them, they can charge you for that alone. Then, if you can get a jury to find you guilty on just one charge, the judges is allowed to sentence you up to the statutory maximum based on things you were never charged with, or even things a jury acquitted you of, so long as the judge decides you probably did them. (italics added).
Moreover, when anyone can be charged with a crime, the application of criminal law becomes discretionary and that discretion may be used to suppress the free exercise of other rights. Indeed, the recent Supreme Court case, Nieves v. Bartlett, makes it easier for the police to arrest people even if the reason for the arrest is retaliation for lawful behavior.
Slate: The First Amendment makes it unconstitutional for government officials to retaliate against you because they dislike your speech. At the same time, federal law gives you the right to sue state officials for compensation if they violate constitutional rights such as your right to free speech. But on Tuesday, the Supreme Court invented a rule that will often allow police officers to arrest people in retaliation for disfavored speech without liability.
….Because local laws are full of minor infractions, like “loitering,” that are frequently violated without incident, police will often have a pretext to arrest people engaged in speech the officers don’t like. By immunizing such abuse, Nieves may have devastating effects on demonstrators, press photographers, and anyone who wants to exercise their speech rights in public, like the right to film the police or verbally challenge officer misconduct. The power to arrest is a potent tool for suppressing speech because even if charges are later dropped, arrestees must undergo the ordeal—and dangers—of being booked and jailed, and they may have to disclose the arrest on future job and housing applications, among other ramifications.
My Conversation with Hal Varian
Hal of course was in top form, here is the audio and transcript. Excerpt:
COWEN: Why doesn’t business use more prediction markets? They would seem to make sense, right? Bet on ideas. Aggregate information. We’ve all read Hayek.
VARIAN: Right. And we had a prediction market. I’ll tell you the problem with it. The problem is, the things that we really wanted to get a probability assessment on were things that were so sensitive that we thought we would violate the SEC rules on insider knowledge because, if a small group of people knows about some acquisition or something like that, there is a secret among this small group.
You might like to have a probability assessment of whether that would go through. But then, anybody who looks at the auction is now an insider. So there’s a problem in you have to find things that (a) are of interest to the company but (b) do not reveal financially critical information. That’s not so easy to do.
COWEN: But there are plenty of times when insider trading is either illegal or not enforced. Plenty of countries where it’s been legal, and there we don’t see many prediction markets in companies, if any. So it seems like it ought to have to be some more general explanation, or no?
VARIAN: Well, I’m just referring to our particular case. There was another example at the same time: Ford was running a market, and Ford would have futures markets on the price of gasoline, which was very relevant to them. It was an external price and so on. And it extended beyond the usual futures market.
That’s the other thing. You’re not going to get anywhere if you’re just duplicating a market that already exists. You have to add something to it to make it attractive to insiders.
So we ran a number of cases internally. We found some interesting behavior. There’s an article by Bo Cowgill on our experience with this auction. But ultimately, we ran into this problem that I described. The most valuable predictions would be the most sensitive predictions, and you didn’t want to do that in public.
And:
COWEN: But then you must think we’re not doing enough theory today. Or do you think it’s simply exhausted for a while?
VARIAN: Well, one area of theory that I’ve found very exciting is algorithmic mechanism design. With algorithmic mechanism design, it’s a combination of computer science and economics.
The idea is, you take the economic model, and you bring in computational costs, or show me an algorithm that actually solves that maximization problem. Then on the other side, the computer side, you build incentives into the algorithms. So if multiple people are using, let’s say, some communications protocol, you want them all to have the right incentives to have the efficient use of that protocol.
So that’s a case where it really has very strong real-world applications to doing this — everything from telecommunications to AdWords auctions.
And:
VARIAN: Yeah. I would like to separate the blockchain from just cryptographic protocols in general. There’s a huge demand for various kinds of cryptography.
Blockchain seems to be, by its nature, relatively inefficient. As an economist, I don’t like this proof of work that this is. I don’t like the fact that there’s one version of the blockchain that has to keep being updated. I don’t like the fact that it’s so slow. There are lots of things that you could fix, and I expect to see them fixed in the future, but I would say, crypto in general — big deal. Blockchain — not so much.
And finally:
COWEN: Now, users seem to like them both, but if I just look at the critics, why does it seem to me that Facebook is more hated than Google?
VARIAN: Well, you know, I actually don’t use Facebook. I don’t have any moral objection to it. I just don’t have the time to do it. [laughs] There are other things of this sort that can end up soaking up a substantial amount of time.
I think that one of the reasons — and this is, of course, quite speculative — I think that one of the reasons people are most worried about Facebook is they don’t really understand the limits of what can be done at Facebook. Whereas at Google, I think we’re pretty clear that we’re showing you ads. We’re showing you ads that are targeted to one thing or another, but that’s how the information’s used.
So, you’ve got this specific application in our case. In Facebook’s case, it’s more amorphous, I think.
There is much, much more at the link.