Category: Law
Making public goods excludable again
One of Beijing’s busiest public toilets is fighting the scourge of toilet paper theft through the use technology – giving out loo roll only to patrons who use a face scanner.
The automated facial recognition dispenser comes as a response to elderly residents removing large amounts of toilet paper for use at home.
Now, those in need of paper must stand in front of a high-definition camera for three seconds, after removing hats and glasses, before a 60cm ration is released.
Those who come too often will be denied, and everyone must wait nine minutes before they can use the machine again.
But there have already been reports of software malfunctions, forcing users to wait over a minute in some cases, a difficult situation for those in desperate need of a toilet.
The camera and its software have also raised privacy concerns, with some users on social media uneasy about a record of their bathroom use.
Here is the full story, via Michelle Dawson.
The Baffling Politics of Paid Maternity Leave in India
Policy makers and intellectuals in India are well informed about politics and intellectual developments in the United States and Europe. Among this group, for example, one can easily strike up a conversation about say Angus Deaton on RCTs versus structural econometric modelling. The similarity in the conversation extends far beyond the scientific, however, in ways that I sometimes find baffling.
When I gave a lecture at a local university, for example, I apparently shocked the students when I said matter-of-factly:
India would be a better country if it were richer and more unequal.
I think India’s extreme poverty makes this obviously true in a utilitarian sense, i.e. better for Indians, but it wasn’t so obvious to the students some-of-whom discussed inequality in terms that could easily have been duplicated at Berkeley. The inequality conversation has jumped the pond in ways that seem to me to be completely inappropriate.
Writing in the Times of India, Rupa Subramanya gives another example, a bill for paid maternity leave that has just passed the Indian parliament (waiting only on the president’s signature). As I pointed out earlier, by far the majority of Indians are self-employed and in the informal sector. The very idea of paid maternity leave, therefore, is bizarre. Is the right hand to pay the left?
As Subramanya writes, even fewer women than men work in the formal sector:
[W]omen’s labour force participation in India is 25% or less, as variously estimated by the International Labour Organisation (ILO) and from India’s National Sample Survey Organisation (NSSO) data. What is more, estimates by MLE and ILO suggest that less than 5% of female workers aged 15-49 are in the formal or organized sector. What this implies is that effectively those covered by paid maternity leave whether the old or the new provision are at best a small number of relatively privileged women working in formal sector jobs. The vast number of women working in the informal sector effectively have no social protections at all, forget about paid maternity leave benefits.
Add to this the well-known reality of poor implementation and even poorer monitoring and the truth is relatively few women benefit from paid maternity leave now, and by definition, therefore, very few stand to gain from the benefits being increased.
…Legislating generous benefits in a still poor country is putting the cart before the horse and is sure to fail. All that will happen are more frustrated women unable to find work, employers unwilling to hire women, and more non-compliance and non-enforcement of existing laws for a state that is already stretched thin trying to do far too many things with too few resources.
So why pass a bill which is so at odds with the real issues facing women on the ground? I think Subramanya is correct:
It’s hard to escape the impression that the main purpose of the increased maternity leave benefits is public relations, either aimed at educated urban women or targeted for international consumption where India is approvingly clubbed with rich countries like Norway and Canada as having the highest paid maternity leave in the world.
My Conversation with Malcolm Gladwell
He was superb, here is the transcript, audio, and video. We considered satire as a weapon, Harvard, long-distance running, Washington vs. NYC, Daniel Ellsberg and Edward Snowden, Caribbean culture and intellectual history, and of course Malcolm’s mom, among other topics. His answers are so fluid and narrative they are hard to excerpt, but here is one bit from him:
COWEN: Overrated or underrated, the idea of early childhood intervention to set societal ills right?
GLADWELL: Overrated because to my mind it’s just another form . . . it became politically impermissible to say that certain people in society would never make it because they were genetically inferior. So I feel like that group, it’s like, “All right, we can’t say that anymore. We’ll just move the goalpost up two years.” And we’ll say, “Well, if you don’t get . . .” Or three years — “If you don’t get the right kind of stimulation by the time you’re three, basically it’s curtains.”
Why is that argument, which we decided we didn’t like it when they set the goalpost at zero, and somehow it’s super-important and legitimate and chin-stroking-worthy when they moved the goalpost to three. Truth is, people, it’s not over at three any more than it was over at zero. There are certain things that it would be nice to get done by the age of three. But if they’re not, the idea that it’s curtains is preposterous. It’s the same kind of fatalism that I thought we had defeated in the . . .
If you want to say that the goalpost should be at 30, then I’m open to it.
I asked what changes he would make to higher education:
GLADWELL: OK. I would establish a set of baseline criteria for admissions, and then I would have a lottery after that. So if you’re in the top 2 percent of your high school class — 5 percent, whatever cutoff we want — following test scores at a certain point, whatever cutoff we want, some minimum number of other things you do — you just go into the pot and we’re pulling out names. I’d probably triple or quadruple the size in the next 10 years, open campuses — probably two other campuses in the United States, one overseas.
I had this idea, I’m not sure how you’d do it, where I think that it would be really, really useful to ban graduates of elite colleges from ever disclosing that they went to an elite college.
I thought the Steve Pearlstein material was perhaps Malcolm’s highlight, but you need to read it straight through.
Here is a very short bit from me:
Most of my questions will be quite short, but my first question will be really, really long. Since everyone knows you and your work so well, I asked myself, “Who is Malcolm Gladwell?” And I tried to come up with an answer. I’ll give you my answer, and then you can correct me or add to that, and this will take a little while.
Definitely recommended.
The two Irelands have ties Brexit cannot destroy
That is the title of my latest Bloomberg column, here is one bit from it:
…the U.K. seems to be in a crisis of ideas, as outlined by Michael Moran in his recent “The End of British Politics?”. He points out that the earlier Protestant, imperial and social democratic rationalizations for the political union largely have fallen away. Scottish separatism — now very much back on the agenda — is one manifestation of this problem. In such a setting, it’s possible to imagine a slightly different legal status for Northern Ireland, where the border check — if there is to be one — is done for flights to London rather than for ground transport to the Republic of Ireland, such as on the ground in Donegal County.
I don’t expect full union anytime soon, as I explain in the piece, but here is the closing tag line:
I’m seeing a world where the past is emerging as stronger than we had thought, and where nationalism has arguably been the most influential idea since the 17th century. That probably means the two Irelands still have some surprises in store for us.
Do read the whole thing. And now there is talk of a Northern Irish referendum.
I wish to thank Ray Lopez for the pointer to Moran.
Fatigued Physicians Make Mistakes and Harm Patients
Fatigued drivers cause accidents. In response to this obvious fact, we limit bus and taxi drivers to a maximum of 10 hours of driving after 8 consecutive hours off duty. Yet when it comes to physicians, the current standard is significant more lax; first-year residents are restricted to 16-hour shifts! That already is nuts. I often teach a night class, 7:20-10 pm and I always try to teach the more difficult material early because by 9pm I am not at the top of my game. Needless to say, medical residents are far more stressed and fatigued than teachers. Moreover, while first year residents can work up to 16 hours, second year residents can work up to 24 hours straight and even up to 30! Isn’t it amazing how one year of residency can teach physicians how to function without sleep?
The current standards, which strike me as absurdly low, are actually due to restrictions put in place in 2003 and 2011–restrictions which are now being lifted. The new plan is to allow longer hours for first year residents:
Rookie doctors can work up to 24 hours straight under new work limits taking effect this summer — a move supporters say will enhance training and foes maintain will do just the opposite.
A Chicago-based group that establishes work standards for U.S. medical school graduates has voted to eliminate a 16-hour cap for first-year residents. The Accreditation Council for Graduate Medical Education announced the move Friday as part of revisions that include reinstating the longer limit for rookies — the same maximum allowed for advanced residents.An 80-hour per week limit for residents at all levels remains in place under the new rules.
Studies have found that physicians who work longer hours are much more likely to get into auto accidents on the way home. Physicians and nurses who work longer hours also make more medical mistakes.
The main argument in favor of long hours is that the 2003 and 2011 restrictions do not seem to have greatly improved patient safety. That is surprising but the micro and experiential evidence that fatigue makes for mistakes is so strong that the lesson to be drawn isn’t that longer hours don’t lead to mistakes–the lesson is either that the restrictions were routinely ignored (as the National Academy of Science study found), that the studies done to date are misleading for a statistical or design reason or that there is another constraint in the system that needs to be examined. One possibility for another constraint is that handoffs of patients between physicians aren’t handled well. But that means that poor handoffs are killing as many people as fatigue!
In no other field do we tolerate error as much as we do in medical care. Why does the government regulate driving hours more than medical hours? It’s not just the government. It’s amazing that in a society where McDonald’s can be sued for making people fat that the tort system hasn’t shut down absurdly long residency hours (there have been a few cases). Medical care is a peculiar field (cue Robin Hanson).
Aside from Hanson-type factors, a key factor that explains what is going on is that residents are a huge profit source for the hospitals. Much like student athletes, residents are underpaid. As a result, hospitals want to use residents as much as possible so they lobby for longer hours even at the expense of patient safety.
South Sudan sentences to ponder
Late last month, famine was declared in two counties of the civil-war torn East African country of South Sudan. With 100,000 people at risk for dying of starvation in that area alone and millions more on the brink of crisis-level food shortages throughout the country, South Sudanese President Salva Kiir promised “unimpeded access” to humanitarian aid organizations working there.
A few days later the South Sudanese government hiked the fee for work permits for foreign aid workers from $100 to $10,000.
Here is further information, via Tom Murphy.
Excellent Yuval Levin piece on the House health care proposal
It is not easy to excerpt, so do read the whole thing. But here is the closing bit:
And in any case, momentum depends on a strong, successful push at the start. This could have started better, and it needs to end smarter.
A Border Adjustment Tax just means more new loopholes
That is the focus of my latest Bloomberg column, here is one bit from it:
Under one somewhat-neglected feature of [one version of] the tax, companies could no longer deduct advertising, interest, rent and employee benefit costs from their bills for tax due. This is a recipe for major tax dodges and the further politicization of government-business relations.
To think through these problems, note that under circulating versions of the tax reform a company still can deduct its asset acquisition and inventory costs. So, to cite one potential problem, if a company acquires a building it can deduct that expense, but not if it rents a similar building. The result is that the rental market would suffer badly. Some companies would put up their own structures, but others might engage in temporary “repurchase” agreements so they are owning their space (“asset acquisition”) rather than renting it. That’s just one example of the big loopholes the new tax code could create.
There is no single canonical account of how a border adjustment tax would work, so maybe that loophole won’t apply to your preferred version. (Here is a 2016 outline, but expect further changes and details; this KPMG document is useful on options.) But the general point is this: By creating such a sharp distinction between deductible and nondeductible business expenses, the opportunities for tax arbitrage and tax-code lobbying are huge. The suspicion is that most business expenditures could, one way or another, be converted into forms that allow for full and immediate expensing.
How about a version of the tax that allows for deductibility of newly constructed but not purchased buildings? Well, that would encourage overinvestment in new construction. You can also imagine building purchases accompanied by overbilled site modifications (with some of that money being returned in another associated transaction), so the refitted structure could count as new construction.
As I say in the piece, please do note that many people have their particular favored versions of the tax, sometimes designed to avoid various specific problems that are raised. But I don’t think any version of the tax will avoid these problems in general. Full and immediate expensing is a potent lure, and it will attract a great of gamesmanship.
ACHA, the Republican health care plan, appears to be a non-starter
Here is Ezra Klein on the new health care bill. Avik Roy doesn’t seem entirely crazy about it either. I don’t have anything to add to their two fine reports. Read Bob Laszewski too.
The new era of segregation
Here is the second video based on The Complacent Class:
Here is the first video and a way to sign up for the whole series.
Theft! A History of Music
Theft! A History of Music is a graphic novel by James Boyle, Jennifer Jenkins and the late Keith Aoki. It’s about musical borrowing and the laws that have attempted to regulate musical borrowing and inter-mixing over the past 2000 years.
The history in this book runs from Plato to Blurred Lines and beyond. You will read about the Holy Roman Empire’s attempts to standardize religious music with the first great musical technology (notation) and the inevitable backfire of that attempt. You will read about troubadours and church composers, swapping tunes (and remarkably profane lyrics), changing both religion and music in the process. You will see diatribes against jazz for corrupting musical culture, against rock and roll for breaching the color-line. You will learn about the lawsuits that, surprisingly, shaped rap. You will read the story of some of music’s iconoclasts—from Handel and Beethoven to Robert Johnson, Chuck Berry, Little Richard, Ray Charles, the British Invasion and Public Enemy.
Theft! is informative and quite fun. I enjoyed it a lot. You can buy a paperback or get a free download. Here’s one page:
Global trade Danish shipping company fact of the day
Maersk had found that a single container could require stamps and approvals from as many as 30 people, including customs, tax officials and health authorities.
While the containers themselves can be loaded on a ship in a matter of minutes, a container can be held up in port for days because a piece of paper goes missing, while the goods inside spoil. The cost of moving and keeping track of all this paperwork often equals the cost of physically moving the container around the world.
That is by Nathaniel Popper and Steve Lohr, mostly about blockchains, via Ángel Cabrera.
Mumbai Razes Apartment Building, I Raise Questions
A story in The Times of India unwittingly illustrates the problems of construction in Mumbai. It is headlined, 11-storey illegal building near tracks finally razed. Many newspapers carried the story and all of the ones that I read took a righteous tone. ‘Finally this illegal monstrosity has been demolished’, they said. The authors appeared to regret only that the city had taken so long to act.
The building was not illegally constructed on public property or park land nor on a historical landmark. There were no safety claims, as far as I could find, although people worried about the safety of the demolition job given the nearness to the railroad. The photo at right shows a before and after picture. The after does not look better to me than the before.
Not everyone was pleased. The locals, presumably mostly residents (or perhaps hired thugs), tried to stop the demolition:
The BMC began demolition of the structure in June 2016, but owing to severe resistance from locals and no adequate police protection, the work had to be stopped abruptly.
The demolition resumed in August 2016 with the help of around 80 labourers. Though locals again threatened the labourers, the BMC continued the work amid police protection.
Eventually, however, the building was razed to the ground. But here is where it gets interesting. Amazingly, this is not the first time a building on this site has been demolished. According to another report this is in fact the third demolition. Now either the developer is an idiot or it must be so costly to construct a building legally that it’s worth the very real risk of demolition to construct it illegally.
I understand the frustration that people feel when the law is flouted but the real question stories like this raise is, What kind of law makes it so expensive to construct new apartment buildings in a city that by some measures is the most unaffordable in the entire world?
The bureaucratization of protest
That is the topic of my latest Bloomberg column, here is one excerpt:
Take the famed Selma civil-rights marchers of 1965, when the protesters had obtained the legal right, through petition, to conduct a 52-mile, five-day march down an interstate highway. Of course, that blocked the highway and inconvenienced many motorists and truckers. America’s NIMBY mentality would most likely prevent a comparable event today.
Starting in the 1970s, the federal courts began to assert that public spaces are not automatically fair game for marches and demonstrations, and so local governments have sought to please the users of such facilities rather than marchers and protesters. For instance, during the 2004 Democratic National Convention, numerous would-be demonstrators ended up being confined to a “demonstration zone,” which one federal judge described as analogous to Piranesi’s etchings of a prison. The zone was ringed by barricades, fences and coiled razor wire.
Here is the closer:
Could we not have kept public demonstrations and protests more alive as a vital and nonbureaucratized tradition?
For a long time, most people ignored this issue, but I wonder if it won’t start to seem urgent once again.
Do read the whole thing.
Ji Haan, Minister
One of the unfortunate legacies of British colonial rule in India is a permanent civil service that tends to subvert any change that it deems against its interests, even when such change is promoted by elected officials. This is one reason why change in India is often two steps forward, 1.9 steps back. A case in point is India’s newly passed Goods and Service Tax (GST).
The GST was supposed to solve a long-standing problem of Indian intra-national trade. Unlike say the US common market, Indian states erect tariff and non-tariff barriers against the products of other states. As a result, production is allocated inefficiently–Indian firms with high costs hide behind barriers and produce too much while Indian firms with low costs can’t expand sales to other states and so produce too little.
(Canada, by the way, also has this problem. It’s often cheaper for a Canadian firm to ship to the US than to another province in Canada. You can find similar problems in Southern Africa where it is cheaper for South Africa to import produce from South America than from Zambia, as this excellent video discusses.)
In addition to the inefficient allocation of production, barriers to internal trade have also raised India’s transportation and logistics costs.
At the Walayar checkpoint in southern India, lines of idle trucks stretch as far as the eye can see in both directions along the tree-lined interstate highway, waiting for clearance from tax inspectors that can take days to complete.
Delays are so bad that textile entrepreneur D. Bala Sundaram has stopped sending his trucks to the international container terminal at nearby Cochin, instead diverting them hundreds of kilometres to a smaller regional port and onwards via Sri Lanka…
Two-thirds of India’s freight travels by road. But only 40% of the travel time is consumed by driving, according to the World Bank. The rest is spent on waiting at state border checkpoints, paying state government levies and dealing with regulatory bureaucracies that vary from state to state.
The sad irony is that India spends billions improving its roads only to force its trucks to stop at state border checkpoints, sometimes for days, undermining the gains from the investment in roads.
The GST was going to simplify all this with a single umbrella tax creating one-tax, one-nation. Alas, the dream is being subverted. The law created a GST council of federal and state ministers and through this council the GST is rapidly becoming more complex and convoluted. First, one-tax was changed into four and with numerous exemptions the final number may end up being more like seven or eight.
Second, as I witnessed traveling between Uttar Pradesh and Rajasthan recently, the trucks are still lining up and may continue to do so:
The revolution the proposed goods and services tax (GST) promised might not be all that rosy because it would be hobbled by the need for an e-permit to be flashed at inter-state borders as the states insisted the old analogue practises continue.
The states seem to have gotten their way and will continue with the old ‘permit raj’ system, undermining one the biggest gains of GST.
The E-permit, by the way, sounds modern but don’t be fooled. Like India’s e-visa there is really nothing e about it–it’s just modern labeling for an old system.
Eventually the GST will be beneficial to India but it’s two steps forward, 1.9 steps back.