Category: Law

Why the NYC congestion pricing plan is bad

I am seeing some critical comments on my latest column, mostly from people who are not reading it through, or in some cases they are making basic mistakes in economics.  Let me start with part of my conclusion:

I suspect that I could endorse a properly targeted version of congestion pricing for Manhattan, for instance, one that encouraged mass transit without discouraging density.

Many people are responding by making a version of that point and thinking it contradicts me.  Here are a few basic facts about the current proposal:

1. The off-peak price is too high at $17, relative to $23 for peak.

2. There is an odd and unjustified discrete notch at 60th St, which will cause further distortions of its own.

3. There is no difference for cars passing through and cars with passengers spending money or doing something productive in lower Manhattan.

This is not the traffic congestion charge you should be looking to implement.

A second line of responses (Erik B. and Alex) suggests that the congestion charge will not lower the flow of humans into Manhattan.  I am sorry, but demand curves slope downward!  The resulting auto commute does become more predictable and regular, but that holds only because there are fewer trips and to some extent because trips are time-shifted.  (Note that the small gap between the $17 and $23 prices suggests a small benefit from time shifting.)  Fewer outsiders will benefit from Manhattan, and those outsiders will skew richer and older.  The methods for improving the quality of the trip really do lower the number of trip-makers, probably both peak and off-peak.  It is not going to mean higher or even constant throughput for vehicles or humans.  (If you think it does, does that imply a big subsidy to car trips would get us to a carless city?  There are some non-linear scenarios where a congestion charge boosts throughput, such as when otherwise no cars move at all in extreme gridlock.  In reality, it seems cars are moving at about 12 mph in Manhattan.)

The actual possible gain — oddly not cited by the critics — is that a congestion charge might get a given visitor more effective time spent learning from Manhattan.  Though do note an offsetting effect — the higher the traffic problem, the more you will make each trip to Manhattan a grand and elaborate one, and it is your externality-less domestic time in Long Island that will suffer all the more.  So per person learning externalities from effective time spent in Manhattan could go either way, noting the number of visitors still goes down.

You might think such a congestion charge improves welfare (a sounder point than suggesting it will not have a standard price effect), but the whole point is that Manhattan density involves massive positive externalities, including for visitors and note that visitors also finance the  externality-rich activities of the natives:

In some urban settings, the clustering of human talent is of utmost importance. Manhattan is the densest urban area in the US, and it succeeds in large part because it is so crowded. You want to be there because other people want to be there. Even though I don’t live there, I nonetheless benefit from Manhattan, both when I visit and when I consume the television shows, movies, music, and art works that come, either directly or indirectly, out of this urban environment. Manhattan also supports America’s financial center, many tech start-ups, and much more.

I don’t want Manhattan to be less crowded, even though it probably would make many Manhattanites happier and less stressed. I want Manhattan to be efficient for me and others, not just for the residents. If there is any part of America where ideas rubbing together lead to great things, it is Manhattan (and the Bay Area). Arguably, Manhattan should be more crowded, at least if we consider everyone’s interest. That militates against congestion tolls, even though such charges are usually a good idea.

The actually useful solution is to make mass transit, most of all the subway, a reliable and predictable method of getting around.  Right now it is not.  (I doubt if lowering the already low subway prices gets you much.)

If you look at visits into Manhattan, whether by car or not, they already face lots of implicit taxes.  Those include poor roads, mediocre subway performance, high variance public infrastructure including on issues such as trash, pollution issues, some degree of crime, awful connecting infrastructure (NJ Transit anyone?) and much more.  And yet Manhattan is one of the world’s very top TFP factories and we are already taxing entry in so many different ways.

It does not make good economic sense to impose higher yet entry fees into that TFP factory.  Given that multiple externalities are present, the correct mix is to lower many different costs of entry and mobility (including within Manhattan), while shifting the relative use benefits toward mass transit and the subway.  Density really does have positive externalities here, and we all know how much idea makers and distributors are undercompensated.

There are a few more threads of responses on Twitter.  One is to note the noise and pollution costs of vehicles.  That is relevant, but fairly soon we will have lots more electric vehicles, which should be encouraged.  The tolls will become a revenue source that lasts forever and they will not be taken away, but the noise and pollution costs of the vehicles soon will be much lower.

Another thread is to argue that most of the people who drive will switch to mass transit if there is a congestion cost.  Some will, but we are asked to believe that a) current traffic congestion is so awful, b) people put up with it anyway, and c) they nonetheless can be easily nudged into taking mass transit.  That is an uncomfortable blend of views that fails to understand the initial motivations behind the car trips.  There are plenty of people with young kids, or elderly relatives, or multiple packages, or multiple stops, or unreliable mass transportation for getting back home at the end of the evening.  Many of those people cannot feasibly switch to mass transit and that is precisely why they put up with the bad traffic.  Say you finish your Manhattan doings at 10:45 p.m., and have to get back to your New Jersey home in a timely and safe manner.  The PATH train will work for some, but a lot of these people really do need cars to consummate the trip.

(It is a theoretically defensible argument to claim that this congestion tax is the only way of financing mass transit improvements. That may or may not be true, but if it is one should still “regret” the plan, which is not the attitude people are taking.  And are there guarantees this will lead to a refurbishment of the subway?  It has proven remarkably difficult to improve the system, and that is with rising NYC budgets.  Another argument that might work is if non-car visitors so hate seeing cars in Manhattan that the net human inflow, due to auto trips, goes down rather than up.  Do note however that the car trips are still helping to finance retail and cultural infrastructure that attracts the non-car visitors, so don’t just take complaints about cars at face value.  Furthermore this car hatred factor also should become less serious as we transition to electric vehicles.)

On net, do you think our most important cities should be more or less dense?  If you support YIMBYism, which surely does make traffic worse, have you not already answered that question?  So either become a NIMBY or — better yet — be a little more consistent applying your intuitions about the net positive externality from Manhattan density.  A simple way to put the point is that an export tax on your TFP factory is unlikely to be the best way to reduce congestion.

How is Portuguese drug decriminalization going?

Is there fatigue with the experiment?:

Portugal decriminalized all drug use, including marijuana, cocaine and heroin, in an experiment that inspired similar efforts elsewhere, but now police are blaming a spike in the number of people who use drugs for a rise in crime. In one neighborhood, state-issued paraphernalia — powder-blue syringe caps, packets of citric acid for diluting heroin — litters sidewalks outside an elementary school.

Porto’s police have increased patrols to drug-plagued neighborhoods. But given existing laws, there’s only so much they can do. On a recent afternoon, an emaciated man in striped pants sleeping in front of a state-funded drug-use center awoke to a patrol of four officers. He sat up, then defiantly began assembling his crack pipe. Officers walked on, shaking their heads.

Portugal became a model for progressive jurisdictions around the world embracing drug decriminalization, such as the state of Oregon, but now there is talk of fatigue. Police are less motivated to register people who misuse drugs and there are year-long waits for state-funded rehabilitation treatment even as the number of people seeking help has fallen dramatically. The return in force of visible urban drug use, meanwhile, is leading the mayor and others here to ask an explosive question: Is it time to reconsider this country’s globally hailed drug model?

For a while the experiment seemed to be working (see the story), but matters have worsened:

Overdose rates have hit 12-year highs and almost doubled in Lisbon from 2019 to 2023. Sewage samples in Lisbon show cocaine and ketamine detection is now among the highest in Europe, with elevated weekend rates suggesting party-heavy usage. In Porto, the collection of drug-related debris from city streets surged 24 percent between 2021 and 2022, with this year on track to far outpace the last. Crime — including robbery in public spaces — spiked 14 percent from 2021 to 2022, a rise police blame partly on increased drug use.

Here is the full WaPo story.

The order of spousal names on tax returns

Married couples filing a joint return put the male name first 88.1% of the time in tax year 2020, down from 97.3% in 1996. The man’s name is more likely to go first the larger is the fraction of the couple’s allocable income that goes to him, and the older is the couple. Based on state averages, putting the man’s name first is strongly associated with conservative political attitudes, religiosity, and a survey-based measure of sexist attitudes. Risk-taking and tax noncompliance are both associated with the man’s name going first.

Here is the full NBER working paper by Emily Y. Lin, Joel Slemrod, Evelyn A. Smith, and Alexander Yuskavage.

Nigeria reform of the day (again)

President Bola Ahmed Tinubu signed the Electricity Bill 2023 into an Act (Electricity Act 2023) on June 10, 2023, to much frenzy and a bit of confusion – erstwhile president, Muhammadu Buhari, signed into law an amendment enabling states in the country to license, generate, transmit, and distribute electricity earlier in March 2023.

To begin, let’s distinguish between the recent assents by President Buhari and President Tinubu in relation to electricity. President Buhari’s amendment to the constitution marked a necessary initial step toward decentralizing the electricity sector, granting states greater control over generation, regulation, and distribution. However, it did not establish specific laws or regulations for the sector itself.

President Tinubu’s recently signed Electricity Act, on the other hand, constitutes the second phase of decentralization. This Act sets the stage for the electricity market by introducing rules governing generation, transmission, and distribution. Moreover, it empowers states to develop their own laws and regulations tailored to their unique circumstances.

In summary, President Buhari’s constitutional amendment laid the foundation for increased state autonomy, while President Tinubu’s Electricity Act provides the framework for implementing this autonomy.

Here is the full discussion from Basil Abia, who tells me his Substack will be covering Nigeriam reforms in more detail.

My excellent Conversation with Reid Hoffman

Here is the audio, video, and transcript.  Here is the episode summary:

In his second appearance, Reid Hoffman joined Tyler to talk everything AI: the optimal liability regime for LLMs, whether there’ll be autonomous money-making bots, which agency should regulate AI, how AI will affect the media ecosystem and the communication of ideas, what percentage of the American population will eschew it, how gaming will evolve, whether AI’s future will be open-source or proprietary, the binding constraint preventing the next big step in AI, which philosopher has risen in importance thanks to AI, what he’d ask a dolphin, what LLMs have taught him about friendship, how higher education will change, and more. They also discuss Sam Altman’s overlooked skill, the biggest cultural problem in America, the most underrated tech scene, and what he’ll do next.

Here is one excerpt:

COWEN: Given GPT models, which philosopher has most risen in importance in your eyes? Some people say Wittgenstein. I don’t think it’s obvious.

HOFFMAN: I think I said Wittgenstein earlier. In Fireside Chatbots, I brought in Wittgenstein in language games.

COWEN: Peirce maybe. Who else?

HOFFMAN: Peirce is good. Now I happen to have read Wittgenstein at Oxford, so I can comment in some depth. The question about language and language games and forms of life and how these large language models might mirror human forms of life because they’re trained on human language is a super interesting question, like Wittgenstein.

Other good language philosophers, I think, are interesting. That doesn’t necessarily mean philosophy-of-language philosophers à la analytic philosophy. Gareth Evans, theories of reference as applied to how you’re thinking about this kind of stuff, is super interesting. Christopher Peacocke’s concept work is, I think, interesting.

Anyway, there’s a whole range of stuff. Then also the philosophy, all the neuroscience stuff applied with the large language models, I think, is very interesting as well.

COWEN: What in science fiction do you feel has risen the most in status for you?

HOFFMAN: Oh, for me.

COWEN: Not in the world. We don’t know yet.

HOFFMAN: Yes. We don’t know yet.

COWEN: You think, “Oh, this was really important.” Vernor Vinge or . . .

HOFFMAN: Well, this is going to seem maybe like a strange answer to you, but I’ve been rereading David Brin’s Uplift series very carefully because the theory of, “How should we create other kinds of intelligences, and what should that theory be, and what should be our shepherding and governance function and symbiosis?” is a question that we have to think about over time. He went straight at this in a biological sense, but it’s the same thing, just a different substrate with the Uplift series. I’ve recently reread the entire Uplift series.

Self-recommending!

Does Britain Have High or Low State Capacity?

Tim Harford writing at the FT covers the question “Is it even possible to prepare for a pandemic?” drawing on my paper with Tucker Omberg.

[I]n an unsettling study published late last year, the economists Robert Tucker Omberg and Alex Tabarrok took a more sophisticated look at this question and found that “almost no form of pandemic preparedness helped to ameliorate or shorten the pandemic”. This was true whether one looked at indicators of medical preparedness, or softer cultural factors such as levels of individualism or trust. Some countries responded much more effectively than others, of course — but there was no foretelling which ones would rise to the challenge by looking at indicators published in 2019. One response to this counter-intuitive finding is that the GHS Index doesn’t do a good job of measuring preparedness. Yet it seemed plausible at the time and it still looks reasonable now.

…perhaps we need to take the Omberg/Tabarrok study seriously: maybe conventional preparations really won’t help much. What follows? One conclusion is that we should prepare, but in a different way….Preparing a nimble system of testing and of compensating self-isolating people would not have figured in many 2019 pandemic plans. It will now. Another form of preparation which might yet pay off is sewage monitoring, which can cost-effectively spot the resurgence of old pathogens and the appearance of new ones, and may give enough warning to stop some future pandemics before they start. And, says Tabarrok, “Vaccines, vaccines, vaccines”. The faster our systems for making, testing and producing vaccines, the better our chances; all these things can be prepared.

One thing that did seem to matter, as Tim notes, was state capacity. In other words, it’s not so much being prepared as being prepared to act. And here I have a mild disagreement with Tim. He writes:

In an ill-prepared world, the UK is often thought to have been more ill-prepared than most, perhaps because of the strains caused by austerity and the distractions of the Brexit process.

My view is that the UK got three very important things right. The UK was the first stringent authority to approve a COVID vaccine. The UK switched to first doses first and the UK produced and ran the most important therapeutics trial, the Recovery trial. Each of these decisions and programs saved the lives of tens of thousands of Britons. The Recovery trial may have saved millions of lives worldwide.

I don’t claim that Britain did everything right, or that they did all that they could have done, but these three decisions were important, bold and correct. The coexistence of both high and low state capacity within the same nation can be surprising. The United States, for example, achieved an impressive feat with Operation Warp Speed, yet simultaneously, the Centers for Disease Control and Prevention (CDC) flailed and failed. Likewise, India maintains a commendable space program and an efficient electoral system, even while struggling with tasks that seem comparatively simpler, like issuing driver’s licenses.

Instead of painting countries with a broad brush of ‘high’ or ‘low’ state capacity, we should recognize multi-dimensionality and divergence. How do political will, resources, institutional robustness, culture, and history explain capacity divergence? If we understood the reasons for capacity divergence we might be able to improve state capacity more generally. Or we might better be able to assign tasks to state or market with perhaps very different assignments depending on the country.

High Fructose Corn Syrup and the Sugar Quota

A viral tik-tok video compares the ingredients in American Heinz ketchup with those in Canadian Heinz ketchup. The American version contains high fructose corn syrup (HFCS) while the Canadian one contains sugar. An an economist I can’t tell you whether, “this is why America makes you sick” but I can tell you why the American version doesn’t contain sugar. It’s the sugar quota!

The American sugar quota taxes any imports above a small amount at a very high rate. As a result, the US price of sugar is typically about twice the world price of sugar. The higher price of sugar means that US consumers spend billions more for candy, soda and other products and American sugar farmers increase their sales and profits. But the high price also incentivizes producers of goods that need a sweet kick, including Heinz, to substitute with high fructose corn syrup. Americans are the biggest consumers of HFCS in the world.

The two effects of the higher price–raising the price of domestic sugar and causing substitution towards high fructose corn syrup–illustrate the peculiar political economy of the sugar quota. Most obviously, the sugar quota is supported by domestic sugar producers, including the infamous Fanjul brothers, but it’s also supported and indeed was lobbied for by Archer Daniels Midland the inventors of HFCS! Even though the two sides sit together uneasily, there has apparently been enough profits to go around.

India bots to the rescue

None of women in the Bangalore trial had heard of ChatGPT and some of them had given up on receiving aid after struggling with language barriers, and government officials and middlemen demanding bribes.

The Bangalore trials were led by Saurabh Karn and his team at the nonprofit OpenNyAI. By feeding a collection of millions of parallel sentences spoken in different Indian languages into machine translation software, and adding thousands of hours of dialogue for speech recognition, the bot, named Jugalbandi, offers text-to-speech multi-language translation on the fly. For instance, a rural farmer can pose a question in Haryanvi, the language spoken just outside Delhi, and the tool translates it into English, searches the database for an appropriate answer, and then translates the answer back to Haryanvi and voices it out in a human voice via Meta Platforms Inc.’s WhatsApp to the farmer…

Vijayalakshmi, who goes by a single name as is common in southern India, voiced a question to a bot in her native Kannada language on education scholarships. Moments later, a human-like voice responded to explain the government aid available to her 15-year-old son.

Here is the full story, via the excellent Samir Varma.

The Road to Socialism and Back: An Economic History of Poland, 1939–2019

For four decades during the latter half of the 20th century, Poland and its people were the subjects of a grand socio-economic experiment. Under the watchful eye of its Soviet masters, the Polish United Workers’ Party transformed the mixed economy of this nation of 35 million into a centrally planned, socialist state (albeit one with an irrepressible black market). Then, in the closing decade of the 20th century, under the leadership of Polish minister of finance Leszek Balcerowicz, the nation was transformed back into a mixed economy.

In this book, we document the results of this experiment. We show that there was a wide chasm between the lofty goals of socialist ideology and the realities of socialism as the Polish people experienced them. We also show that while the transition back from a socialist to a mixed economy was not without its own pain, it did unleash the extraordinary productive power of the Polish people, allowing their standard of living to rise at more than twice the rate of growth that prevailed during the socialist era. The experiences of the Poles, like those of so many behind the Iron Curtain, demonstrate the value of economic freedom, the immiserating consequences of its denial, and the often painful process of regaining lost freedoms.

That’s the opening to an excellent new book (pdf) from the Fraser Institute written by Boettke, Zhukov, and Mitchell. More than an economic history of Poland, this book is also a very good introduction to the economics of socialism.

Web 3.0 has a future after all

That is the theme of my latest Bloomberg column, here is one excerpt:

I fully expect the ideas behind Web 3.0 to make a major comeback — as the legal and institutional framework for AI bots. It’s worth thinking through how this might work.

Say you run a charity and want to create and distribute an AI bot that will teach mathematics to underprivileged schoolchildren. That’s great, but the bot will encounter some obstacles. In some jurisdictions, it may need to pay licensing and registration fees. It may need to purchase add-ons for recent innovations in teaching. If it operates abroad, it may wish to upgrade its ability to translate. For a variety of reasons, it might need money.

All those transactions would be easy enough if AIs were allowed to have bank accounts. But that’s unlikely anytime soon. How many banks are ready to handle this? And imagine the public outcry if there were a bank failure and the government had to bail out some bot accounts. So bots are likely to remain “unbanked” — which will push them to use crypto as their core medium of exchange.

Critics often point out that dollars are more efficient than crypto as a form of exchange. But if AI bots can’t use dollars, then they will have to use crypto. Yes, some owners might give bots access to their checking accounts, while others might want to OK every bot expenditure through the dollar-based banking system. But most people, I suspect, would rather let the bots operate on their own, without all those risks and hassles — and again, that brings us back to crypto.

There are well-known arguments for why “agentic” bots are often more efficient than “tool” bots, and they are going to need money that is consistent with a reasonable degree of bot autonomy. Furthermore, possibly for liability reasons (do you want to be indicted in some foreign country because of something your bot said or did?), many of these bots won’t be owned at all. That will be another force pushing the bots to operate in the crypto nexus.

There is much more at the link, including a discussion of NFTs as property rights in this regime.  You can expect law, adjudication services, and smart contracts as well, all as substitutes for a “proper” legal system.

Air Pollution Redux

New York City today has the worst air quality in the world, so now seems like a good time for a quick redux on air pollution. Essentially, everything we have learned in the last couple of decades points to the conclusion that air pollution is worse than we thought. Air pollution increases cancer and heart disease and those are just the more obvious effects. We now also now know that it reduces IQ and impedes physical and cognitive performance on a wide variety of tasks. Air pollution is especially bad for infants, who may have life-long impacts as well as the young and the elderly. I’m not especially worried about the wildfires but the orange skies ought to make the costs of pollution more salient. As Tyler noted, one reason air pollution doesn’t get the attention that it deserves is that it’s invisible and the costs are cumulative:

Air pollution causes many deaths. But it is rare to see or read about a person dying directly from air pollution. Lung cancer and cardiac disease are frequently cited as causes of death, even though they may stem from air pollution.

That’s the bad news. The good news, hidden inside the bad news, is that the costs of air pollution on productivity are so high that there are plausible ways of reducing some air pollution and increasing health and wealth, especially in high pollution countries but likely also in the United States with well-targeted policies.

For evidence on the above, you can see some of the posts below. Tyler and I have been posting about air pollution for a long time. Tyler first said air pollution was an underrated problem in 2005 and it was still underrated in 2021!

The price discrimination culture that is Finland

A businessman in Finland has been slapped with a hefty €121,000, or $129,400, fine for speeding in a country where tickets are calculated based on income, a local paper Nya Åland reported.

Anders Wiklöf, the chairman of Wiklöf Holding AB, was driving at 82km/h, or 51mph, when he entered a zone where the speed limit was 50km/h, or 31mph, per Nya Åland.

“I had just started to slow down, but I guess it didn’t happen fast enough,” Wiklöf told Nya Åland. “I really regret the matter.”

In Finland, speeding fines are linked to the offender’s salary and the speed at which they were going when they committed the offense.

Here is the full story.  Via Anecdotal.

Evidence from Italy’s ChatGPT Ban

We analyse the effects of the ban of ChatGPT, a generative pre-trained transformer chatbot, on individual productivity. We first compile data on the hourly coding output of over 8,000 professional GitHub users in Italy and other European countries to analyse the impact of the ban on individual productivity. Combining the high-frequency data with the sudden announcement of the ban in a difference-in-differences framework, we find that the output of Italian developers decreased by around 50% in the first two business days after the ban and recovered after that. Applying a synthetic control approach to daily Google search and Tor usage data shows that the ban led to a significant increase in the use of censorship bypassing tools. Our findings show that users swiftly implement strategies to bypass Internet restrictions but this adaptation activity creates short-term disruptions and hampers productivity.

That is from a recent paper by David Kreitmeir and Paul A. Raschky.  Via Pradyumna Shyama Prasad.

How D.C. densified

DC’s relative success can be traced to a few decisions made decades ago. In the 1970s, policymakers in Arlington County made a decision to adopt what’s known as ‘transit-oriented development planning’ ahead of the opening of DC’s Metro Orange Line, which runs between Arlington and Prince George County, Maryland (via DC). Arlington policymakers identified that zoning for apartment construction in commercial areas could bring in property taxes and help balance the budget without the level of controversy of changing zoning in existing residential areas. Some nearby jurisdictions followed suit, learning from Arlington’s example, helping the DC region stay more affordable than the country’s other superstar cities.

Here is the full essay by Emily Hamilton of Mercatus, serving up a very good short economic history of Arlington.  And this on the District:

The District itself has permitted extensive redevelopment of formerly industrial neighborhoods when they received new Metro stations, including Navy Yard and NoMA. In the years since the 2010 financial crisis, DC has permitted thousands of apartments each year, a high rate compared to peer cities. As in Arlington, they’ve primarily been permitted on land that previously housed industrial or low-value commercial development where there are few or no existing residents to oppose new construction.

Interesting throughout.  I am pleased to live in the land of partial YIMBY.

That is all from the new and excellent issue of Works in Progress.

How effective was the IAEA?

Here is the Open AI call for international regulation, most of all along the lines of the International Atomic Energy Agency.  I am not in general opposed to this approach, but I think it requires very strong bilateral supplements, from the United States of course.  Which in turn requires U.S. supremacy in the area, as was the case with nuclear weapons.  From a 564 pp. official work on the topic:

For nearly forty years after its birth in 1957 the IAEA remained essentially irrelevant to the nuclear arms race. (p.22)

There is also this:

However, in the late 1950s and early 1960s it was not the failure of the IAEA’s functions as a ‘pool’ or ‘bank’ or supplier of nuclear material that inflicted the most serious blow on the organization, on its safeguards operation and eventually on Cole himself. For a variety of reasons, the Agency’s chief patron, the USA, chose to arrange nuclear supplies bilaterally rather than through the IAEA. One reason was that the IAEA had been unable to develop an effective safeguards system. Another was that in a bilateral arrangement it was the US Administration, under the watchful eyes of Congress, that chose the bilateral partner rather than leaving the choice to an international organization that would have to respond to the needs of any Member State whatever its political system, persuasion or alliance. But the most serious setback came in 1958 when, for overriding political reasons, the USA chose the bilateral route in accepting the safeguards of EURATOM as equivalent to — in other words as an acceptable substitute for — those of the IAEA.

It is frequently suggested that the IAEA has been partially captured by the nuclear sector itself.  I do not consider that bad news, but it is a sobering thought for those expecting too much from this approach.  Do note that it took years to set up the agency, and furthermore when North Korea wanted to acquire nuclear weapons the country simply left the agency and broke its earlier agreement.  Perhaps the greatest gain from this approach is that the non-crazy nations have a systematic multilateral framework to work within, should they decide to defer to the external, bilateral pressure from the United States?

On the other side, my fear is that the international agreement will lead to excess regulation at the domestic level.

There is also this:

The fact that Iraq’s nuclear weapon programme had been under way for several years, perhaps a decade, without being detected by the IAEA, led to sharp criticism of the Agency and posed the most serious threat to the credibility of its safeguards since they had first been applied some 30 years earlier.

All of these issues could use much more intelligent discussion.