Category: Law

Will there be a trade war with China?

by  Tyler Cowen in

No.  That is the topic of my latest Bloomberg column.  Here is one bit:

Keep in mind that the U.S. is a relatively large buyer in many markets; in economic lingo, it has some monopsony power. So if it cuts back purchases of, say, Chinese toys, China cannot simply reroute those now-surplus toys and sell them to Canada or Indonesia at the same price. This gives the U.S. significant power in trade conflicts. And China cannot throw around its weight as a buyer in similar fashion because it does not import on the same scale.

The Chinese don’t have that many ready American targets for economic retaliation. Aircraft are one of the major U.S. exports to China, where market demand for domestic flights is rapidly growing. Beijing has a backlog of about 400 orders with the Boeing Co. It could try to switch some or all of those orders to Airbus SE, but that would mean delays. Airbus would also know it could increase its prices and the Chinese would have to pay. As a buyer, China doesn’t have as much leverage in this market as it might appear.

The U.S. has many more targets when it comes to restricting foreign investment, as there is plenty of Chinese capital that would love to flee. The Chinese government already limits the activities of the big technology companies and many other U.S. multinationals in China, so they don’t have as many extra sticks in this regard.

The reality is China has margins for responding to the U.S., but they are mostly not in the economic realm.

I thank Ray Lopez for a useful email conversation related to this column.

How much more can be built in Los Angeles?

by  Tyler Cowen in

Now, a bill under consideration in Sacramento would upend that arrangement, allowing multistory apartments and condominiums in neighborhoods where city leaders have long prohibited them. Senate Bill 827, written by state Sen. Scott Wiener (D-San Francisco), would loosen or eliminate restrictions on height, density, parking and design for residential properties near major rail and bus stops.

The impact could be huge. A Times analysis found that about 190,000 parcels in L.A. neighborhoods zoned for single-family homes are located in the “transit rich” areas identified in SB 827. Residences in those neighborhoods could eventually be replaced with buildings ranging from 45 to 85 feet, city officials say.

“While we are still evaluating the full effects of the bill, close to 50% of the city’s single-family homes would be impacted under SB 827,” said Yeghig L. Keshishian, spokesman for the Department of City Planning.

That is from Zahniser, Dillon, and Schleuss at the LA Times.  Via Matt Yglesias, who adds:

Note that ecologically the big win isn’t even about transit-oriented development. California’s mild climate and low-carbon electricity mix make it one of the greenest places in America, so more houses in California is an environmental win.

It is time for this referendum to translate into larger excitement at the national level, as say Proposition 13 once did and some of the marijuana referenda have done as well.

Here is a thread on real estate in the Bay Area, worst is maybe Menlo Park.

Iranian “CyberAttack” Threatens Elsevier Not USA

by  Alex Tabarrok in

Here’s what Geoffrey Berman, U.S. attorney for the Southern District of New York, said when announcing charges against a group of Iranian “cyber attackers”:

“We have worked tirelessly to identify you,” Berman said. “You cannot hide behind a keyboard halfway around the world and expect not to be held to account. Together, along with our law enforcement partners, we will work relentlessly and creatively to apply the legal tools at our disposal to unmask and charge you. We will do all we can to bring you to justice. While the defendants remain at large, they are now fugitives from the American judicial system.

So what are these horrendous people being charged with? Stealing unreleased scripts of Game of Thrones and a bunch of academic articles. I am not making this up.

…members of the conspiracy used stolen account credentials to obtain unauthorized access to victim professor accounts, through which they then exfiltrated intellectual property, research, and other academic data and documents from the systems of compromised universities, including, among other things, academic journals, theses, dissertations, and electronic books.

(That is from the press release and here is the earlier press release on GOT, with which this has been combined in many news accounts. The full indictment is here).

In other words, the Iranians were running something like Sci-Hub, the website that some of you have probably used to bypass publisher paywalls to read articles linked to on MR that you haven’t paid for. I don’t defend such actions but neither do I want the federal attorney  working tirelessly to identify you. As crimes go this is a yawner.

Indeed, since Sci-Hub is already used in Iran, one wonders how useful the additional Iranian hacking was. A few companies are also listed as targets, although they turn out to be publishers, a stock image company, two online car companies etc. A few government agencies are thrown in for good measure although that appears to be window dressing.

The federal attorney claims the hacking (hacking not attacking) cost billions which they estimate because:

Through the course of the conspiracy, U.S.-based universities spent over approximately $3.4 billion to procure and access such data and intellectual property.

As Tim Worstall puts it:

That’s just DoJ making up some number to make them look good. The direct losses in this scheme almost certainly amount to zero, bupkiss, nada. Universities certainly haven’t lost anything – the data was copied, not taken. The publishers might have lost a bit, but even then it would only be the revenue they would have got from papers that would have been bought if they hadn’t been copied. A useful estimate of the size of that loss still being zero, bupkiss, nada.

Frankly, this is a joke of an indictment. But headlines like “US Charges 9 Iranians With Massive Cyberattack” are certainly fortuitously timed for new national security designate John Bolton and others who want to take a hardline on Iran.

Prisoners who study prison

by  Tyler Cowen in

After leaving prison, some ex-convicts are becoming academics themselves. There is a growing convict criminology group, which has members in countries around the world.

…Stephen Richards spent nine years in prison for conspiracy to distribute marijuana, and is now professor emeritus of criminology at the University of Wisconsin at Oshkosh.

He was arrested while he was a college student, and finished his degree by correspondence while in U.S. federal prison. After he was released from prison, he went directly to graduate school and completed a Master’s degree and a PhD.

“Five years out of prison, I was a professor, and I became one of the first convict criminology professors,” he says.

Richards’s experiences in jail made him want to work to fix the system once he got out.

“Part of being a convict criminologist is realizing that you know something that most academics in the social sciences don’t know. You’ve got inside information about what’s wrong with the criminal justice system — literally, inside. You know what a failure the system is, and you want to do something about it,” he says.

That is from CBC Radio, via Michelle Dawson.  And here is the Journal of Prisoners on Prisons.

The state and culture that is Utah

by  Tyler Cowen in

SALT LAKE CITY — So-called free-range parenting will soon be the law of the land in Utah after the governor signed what appears to be the country’s first measure to formally legalize allowing kids to do things on their own to foster self-sufficiency.

The bill, which Gov. Gary Herbert announced Friday that he’d signed, specifies that it isn’t neglectful to let kids do things alone like travel to school, explore a playground or stay in the car. The law takes effect May 8.

Utah’s law is the first in the country, said Lenore Skenazy, who coined the term free-range parent. A records search by the National Conference of State Legislatures didn’t turn up any similar legislation in other states.

Here is more, bravo.  Via Interfluidity.

In tech, we fear what we can’t control

by  Tyler Cowen in

That is the topic of my new Bloomberg column, here is one bit:

Like drones, driverless cars possess some features of an especially potent scare story. They are a new and exciting technology, and so stories about them get a lot of clicks. We don’t actually know how safe they are, and that uncertainty will spook people above and beyond whatever is the particular level of risk. Most of all, driverless cars by definition involve humans not feeling in direct control. It resembles how a lot of people feel in greater danger when flying than driving a car, even though flying is usually safer. Driverless cars raise a lot of questions about driver control: Should you be allowed to sleep in the backseat? Or must you stay by the wheel? That focuses our minds and feelings on the issue of control all the more.

And:

The recent brouhaha over Facebook and Cambridge Analytica (read here and here) reflects some similar issues. Could most Americans clearly and correctly articulate exactly what went wrong in this episode? Probably not, but people do know that when it comes to social networks, their personal data and algorithms, they don’t exactly feel in control. The murkiness of the events and legal obligations is in fact part of the problem.

When I see a new story or criticism about the tech world, I no longer ask whether the tech companies poll as being popular (they do). I instead wonder whether voters feel in control in a world with North Korean nuclear weapons, an erratic American president and algorithms everywhere. They don’t. Haven’t you wondered why articles about robots putting us all out of work are so popular during a time of full employment?

We are about to enter a new meta-narrative for American society, which I call “re-establishing the feeling of control.” Unfortunately, when you pursue the feeling rather than the actual control, you often end up with neither.

Do read the whole thing.

Sheriff Takes Food from Prisoners, Locks up WhistleBlower

by  Alex Tabarrok in

A sheriff in Alabama bought a house using money that was budgeted to feed jail inmates. When I saw this headlined a week ago I assumed that this was a run-of-the-mill story about white collar fraud and I ignored it. Yesterday, prodded by new developments, I investigated further. The truth is much worse than I had imagined. What the sheriff did was perfectly legal.

Alabama has a Depression-era law that allows sheriffs to “keep and retain” unspent money from jail food-provision accounts. Sheriffs across the state take excess money as personal income — and, in the event of a shortfall, are personally liable for covering the gap.

Etowah County Sheriff Todd Entrekin told the News that he follows that practice of taking extra money from the fund, saying, “The law says it’s a personal account and that’s the way I’ve always done it.”

Sheriffs across the state do the same thing and have for decades. But the scale of the practice is not clear: “It is presently unknown how much money sheriffs across the state have taken because most do not report it as income on state financial disclosure forms,” the Southern Center for Human Rights wrote in January.

And if that isn’t bonkers enough. It gets worse. The primary source for the story, written by journalist Connor Sheets, was Sheriff Entrekin’s lawnmower, Matt Qualls. Qualls has since been arrested and is now in a jail overseen by Sheriff Entrekin.

Sheets’ initial story was published on Feb. 18. On Feb. 22, Qualls was arrested and charged with drug trafficking after an anonymous call complained of the smell of marijuana from an apartment.

Qualls, who had never been arrested before, faces six charges and is being held on a $55,000 bond, Sheets reports. He is detained in a jail that Entrekin oversees.

…The sheriff’s office denies involvement in Qualls’ case, noting that the landscaper was not arrested or charged by the sheriff’s office. The extra charges were added by the Drug Enforcement Unit, which consist of agents drawn from the sheriff’s department, the FBI and other law enforcement agencies.

Addendum: You may be reminded of the story that Tyler and I use to open our principles of economics textbook. Ship captains in the 18th century were paid to ship convicts to Australia according to a very similar procedure as used today (!!!) to fund prisoner food in Alabama–and the results were equally predictable.

The wisdom of Ben (Stratechery) Thompson

by  Tyler Cowen in

It seems far more likely that Facebook will be directly regulated than Google; arguably this is already the case in Europe with the GDPR. What is worth noting, though, is that regulations like the GDPR entrench incumbents: protecting users from Facebook will, in all likelihood, lock in Facebook’s competitive position.

This episode is a perfect example: an unintended casualty of this weekend’s firestorm is the idea of data portability: I have argued that social networks like Facebook should make it trivial to export your network; it seems far more likely that most social networks will respond to this Cambridge Analytica scandal by locking down data even further. That may be good for privacy, but it’s not so good for competition. Everything is a trade-off.

Here is the link to the longer piece, to get them regularly you have to pay, definitely recommended, now more than ever.

Solve for the music legal equilibrium

by  Tyler Cowen in

Pop superstar Miley Cyrus now being sued for copyright infringement — with damages potentially hitting $300 million.  That is, for one lyric in her hit single, “We Can’t Stop”.  The song is from her fourth studio album, Bangerz, released in 2013.

The lawsuit is coming from Michael May, better known as Flourgon, a Jamaican dancehall artist.  Flourgon had several Jamaican hit singles in the late 1980s and 1990s, and remains an active performer today.

May alleges that Cyrus ripped off his catch-phase, ‘We Run Things,’ which is actually the name of a song written by May.  In “We Can’t Stop,” Cyrus repeats the lyric ‘we run things’ in the chorus.

“We run things/Things don’t run we” are the lyrics of Miley’s single.

In May’s track, the lyrics are: “We run things/Things no run we.”

Here is the full article, via Ted Gioia.

The electoral campaign that is Russia

by  Tyler Cowen in

It’s early March, two weeks before Russia’s polling day, but the presidential election season is already in full swing in Chubulga, a reindeer-herding settlement in north-eastern Yakutia. It’s an hour’s flight to the nearest village, which is itself a further two hours from the nearest asphalt road and 5,000km east of Moscow.

With a population of just three, this district is unlikely to turn the electoral tide. But with election officials desperate to raise turnout and show support for current president Vladimir Putin, no expense has been spared.

So they sent a team of election officials by plane, plus some trudging through the snow.  And this:

Results differ across regions. Some areas allegedly concoct results to show their loyalty to the Kremlin: Putin regularly polls above 99 per cent in Chechnya. In major cities like Moscow and St Petersburg, Putin is so unpopular among the middle class that he wins less than half the vote, despite accusations of voter fraud. In Yakutia, Putin’s last election return of 69 per cent was typical for ­Russia’s far-flung provinces. But the region’s vastness means that the key is maintaining the 75 per cent turnout. As a result, officials have to go further than anywhere else to show democracy in action.

Here is the FT story by Max Seddon, via BaldingsWorld.

The revenge of the pecuniary externalities on cryptocurrencies

by  Tyler Cowen in

The town of Plattsburgh, New York, has become the first in the US to place a moratorium on cryptocurrency mining. It’s not an outright ban, at least not yet — it doesn’t affect miners currently operating in the city, just new ones looking to set up shop, and it’s only in place for 18 months.

Why Plattsburgh, New York? It’s simple: the small town has the “cheapest electricity in the world,” as Mayor Colin Read told Motherboard. Mining involves using high powered computers to solve complex problems, and thus be rewarded with cryptocurrency. It generates a lot of heat and uses an inordinate amount of electricity. It makes sense that these mining enterprises would look for places with inexpensive electricity. The problem is that it’s resulted in higher electric bills for everyone else in the town.

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

My Conversation with Chris Blattman

by  Tyler Cowen in

The very very highly rated but still underrated Chris Blattman was in top form, here is the transcript and audio.  We had a chance to do this one when he was in town for a week.  We talked about the problem with cash transfers, violence, child soldiers, charter cities, Rene Girard, how to do an Africa trip, Battlestar Galactica, why Ethiopia is growing rapidly, why civil war has become less common, why Colombia and the New World have been so violent, the mysteries of Botswana, and Chris’s favorite Australian TV show, among other topics, including of course the Chris Blattman production function.  Here is one excerpt:

BLATTMAN: There’s this famous paper on Vietnam veterans in the US where they find that being conscripted into fighting in Vietnam had positive effects on the wages of blacks and negative effects on the wages of whites. The reason was, it was really down to, what was your alternative labor market and training experience in the absence of this war?

We found something similar in Uganda, something eerily familiar, which is that the women economically weren’t so worse off. I wouldn’t say they were better off, but they weren’t necessarily affected adversely in an economic sense — they were adversely affected in other ways 5 or 10 or 15 years down the road — while the men were.

It spoke to just how terrible women’s options were. Being conscripted and abducted to be a rebel wife, to some degree, wasn’t that different than what your marriage opportunities looked like if there wasn’t a war.

For men, it just meant that you were out of the civilian labor market, getting a bunch of skills that had turned out not to be very useful. It was bad for them. A different war, a different context, and a different labor market, and that can switch.

COWEN: How many northern Ugandan child soldiers have you interviewed?

BLATTMAN: A few hundred. At least a couple hundred, maybe more. It depends if you count someone who’s involved for a month versus two years. Certainly, the long, long-term soldiers who were there for many, many years are few, maybe only a couple dozen.

COWEN: Those contacts, those conversations, how have they changed your outlook on life emotionally, intellectually, otherwise?

And:

COWEN: True or false, most humans are bad at violence?

BLATTMAN: I think they learn quickly. Probably they’re bad at first.

COWEN: In the micro evidence on violence, and the more individual-level evidence, and then finally macro evidence — like will there be a civil war? — do you think there’s ultimately an overarching theory that ties these all together? Or are they just separate levels of investigation, where you have empirical results, and they stand somewhat separate, and they’ll always be distinct areas?

How optimistic are you about a grand unified theory of violence?

BLATTMAN: I think these individual, how I react in the moment, fight-or-flight-type mechanisms are quite distinct from the way that small groups or large groups or nations go to war. But once you get beyond that to the level of small groups and larger groups and nations, I see a lot of unity in the theory.

Do read or listen to the whole thing.  By the way, he says the Canadian political system is overrated.

Can Britain make itself less complacent?

by  Tyler Cowen in

Educators in Britain, after decades spent in a collective effort to minimize risk, are now, cautiously, getting into the business of providing it.

Out went the plastic playhouses and in came the dicey stuff: stacks of two-by-fours, crates and loose bricks. The schoolyard got a mud pit, a tire swing, log stumps and workbenches with hammers and saws.

“We thought, how can we bring that element of risk into your everyday environment?” said Leah Morris, who manages the early-years program at the school in Shoeburyness in southeast Britain. “We were looking at, OK, so we’ve got a sand pit, what can we add to the sand pit to make it more risky?”

Now, Morris says, “we have fires, we use knives, saws, different tools,” all used under adult supervision. Indoors, scissors abound, and so do sharp-edged tape dispensers (“they normally only cut themselves once,” she says).

Limited risks are increasingly cast by experts as an experience essential to childhood development, useful in building resilience and grit.

I suppose I am skeptical of this approach, as it may lead to harm and furthermore the benefits of risk have to arise more organically.  It will in any case be interesting to see how the public digests these changes as they play out in the lives of children.

Here is the full story by Ellen Barry.  In any case, there is also a bingo revival in Britain, is that a sign of renewed passivity?