Governments may be the main threat to big tech companies’ current approach to encryption, but there is another, more surprising threat: their own business interests. The techno-libertarians’ absolutist rejection of lawful access has never been tenable in a commercial context. Barr lambasted Silicon Valley for claiming that government access to consumer devices was never acceptable, even for a purpose as critical as stopping terror attacks, while insisting that its companies had to have access to all their customers’ devices for the purpose of sending them security updates (and, in Apple’s case, promotional copies of unwanted U2 albums). What’s more, Big Tech’s best customers—that is, businesses—don’t want unbreakable end-to-end communications direct to the end user. That encrypted pipe makes it impossible to find and stop malware as it comes in and stolen intellectual property as it goes out. It also thwarts a host of regulatory compliance mandates. So, pace the absolutists, tech companies have found ways to ensure that their business customers can compromise end-to-end security.
And there is this:
…I believe the tech companies are slowly losing the battle over encryption. They’ve been able to bottle up legislation in the United States, where the tech lobby represents a domestic industry producing millions of jobs and trillions in personal wealth. But they have not been strong enough to stop the Justice Department from campaigning for lawful access. And now the department is unabashedly encouraging other countries to keep circling the tech industry, biting off more and more in the form of law enforcement mandates. That’s a lot easier in countries where Silicon Valley is seen as an alien and often hostile force, casually destroying domestic industries and mores.
The Justice Department has learned from its time on the receiving end of such an indirect approach to tech regulation. It has struggled for 30 years against a European campaign to use privacy regulation to prevent tech companies from giving the U.S. government easy access to personal data. But as the tide of opinion turned against U.S. tech companies around the world, the EU was able to impose billions in fines on them in the name of privacy. Soon it really didn’t matter that these companies’ data practices weren’t regulated at home. They had to comply with Europe’s General Data Protection Regulation. And once they accepted that, their will to lobby against similar legislation in the United States was broken. That’s why California—and perhaps the federal government—is inching closer to enacting a privacy law that resembles Europe’s.
Here is the full Stewart Baker post, interesting throughout.
The lack of growth response to “Washington Consensus” policy reforms in the 1980s and 1990s led to widespread doubts about the value of such reforms. This paper updates these stylized facts by analyzing moderate to extreme levels of inflation, black market premiums, currency overvaluation, negative real interest rates and abnormally low trade shares to GDP. It finds three new stylized facts: (1) policy outcomes worldwide have improved a lot since the 1990s, (2) improvements in policy outcomes and improvements in growth across countries are correlated with each other (3) growth has been good after reform in Africa and Latin America, in contrast to the “lost decades” of the 80s and 90s. This paper makes no claims about causality. However, if the old stylized facts on disappointing growth accompanying reforms led to doubts about economic reforms, new stylized facts should lead to some positive updating of such beliefs.
With the arrival of autonomous weapons systems (AWS) on the 21st century battlefield, the nature of warfare is poised for dramatic change. Overseen by artificial intelligence (AI), fueled by terabytes of data and operating at lightning-fast speed, AWS will be the decisive feature of future military conflicts. Nonetheless, under the American way of war, AWS will operate within existing legal and policy guidelines that establish conditions and criteria for the application of force. Even as the Department of Defense (DoD) places limitations on when and how AWS may take action, the pace of new conflicts and adoption of AWS by peer competitors will ultimately push military leaders to empower AI-enabled weapons to make decisions with less and less human input. As such, timely, accurate, and context-specific legal advice during the planning and operation of AWS missions will be essential. In the face of digital-decision-making, mere human legal advisors will be challenged to keep up!
p.s. What’s with the “Frank”? How about just Frank?
p.p.s. Don’t ask about the judges.
The Prospect has identified 30 meaningful executive actions, all derived from authority in specific statutes, which could be implemented on Day One by a new president. These would not be executive orders, much less abuses of authority, but strategic exercise of legitimate presidential power.
Without signing a single new law, the next president can lower prescription drug prices, cancel student debt, break up the big banks, give everybody who wants one a bank account, counteract the dominance of monopoly power, protect farmers from price discrimination and unfair dealing, force divestment from fossil fuel projects, close a slew of tax loopholes, hold crooked CEOs accountable, mandate reductions of greenhouse gas emissions, allow the effective legalization of marijuana, make it easier for 800,000 workers to join a union, and much, much more. We have compiled a series of essays to explain precisely how, and under what authority, the next president can accomplish all this.
Nonetheless, 75% of immigrants integrate into the majoritarian culture over the period of a generation. Interestingly, we show by counterfactual analysis that a lower cultural intolerance of Italians towards minorities would lead to slower cultural integration by allowing immigrants a more widespread use of their own language rather than Italian in heterogamous marriages.
That is from a new NBER paper by Alberto Bisin and Giulia Tura.
Observing India tends to make people more libertarian. At least parts of the private sector are quite vibrant, and the heavy hand of government can be seen in many places. Plus you might think “the country is too big in the first place,” so you will be thinking in terms of decentralization, and devolving power to the states and union territories, rather than strengthening the central authority.
Observing Pakistan tends to make people more statist. The private sector has fewer well-known successes. The central authority appears too weak, and problems with insufficient tax revenue are extreme, even for a developing economy. As for federal income tax, there are only about 1.2 million active taxpayers, in a country of over 200 million people. The very pleasant Islamabad aside, urban public goods seem underprovided, even relative to Indian cities.
It is an interesting question which countries at least seem to provide evidence for which sets of political views.
I like to ask some CWT guests (Charles Mann, Juan Pablo Villarino, and Alain Bertaud) why New World cities are so often so much more violent than Old World cities, including in Europe and Asia. In the case of Asia, wartime episodes aside, it does seem that so many Asian cities are remarkably safe, especially for men but often for women too.
Recall one of the key principles of reasoning: look for the cross-sectional variation.
While Karachi is relatively safe now, before 2013 it had at least two decades of fairly extreme violence.
And what are some special features of Karachi history, relative to many other Old World and Asian cities?
The city had a very large “new” population, with Hindus (formerly the majority inhabitants) having left and migrants having come from many other parts of Pakistan, Afghanistan and Myanmar too.
The city was hit by a major wave of drug trafficking, heroin in particular.
The city was hit by a major wave of arms trafficking, run by thugs and mafias, often related to the wars in Afghanistan.
This is only one data point, but it supports hypotheses that higher levels of New World violence stem from relatively recent population shifts, drug trafficking, and arms trafficking. When Old World cities have that blend, they too become quite violent.
Now consider that America’s top universities are among the most ideologically “left-wing” institutions in the country. At Harvard, for instance, 84% of faculty donations to political parties and political action committees from 2011 to 2014 went in the Democratic direction. The Democrats, of course, are supposed to be the party opposed to income inequality. So what has gone wrong here? Why should these elites be trusted?
If any institution should be able to buck social trends, it is Harvard. It has an endowment of about $39 billion (circa 2018), its top administrators are employable elsewhere, and most of its significant faculty hold tenured positions. It might also have the world’s best academic reputation, and it could fill its entering class with top students even after taking a big reputational or financial hit.
Here is the rest of my Bloomberg column, some parts in full mood affiliation mode.
Most recently, the city has been beset by a plague of flies — a “bullying force,” says the New York Times, “sparing no one.” The swarm of flies, which I was fortunate enough to miss, was the result of monsoon season, malfunctioning drainage systems clogged with solid waste, and slaughtered animals from the Muslim celebration of Eid. (The same monsoon season, by the way, led to power blackouts of up to 60 hours.) On a livability index, Karachi ranks near the bottom, just ahead of Damascus, Lagos, Dhaka and Tripoli.
There is no subway, and a typical street scene blends cars, auto-rickshaws, motorbikes and the occasional donkey pulling a cart. It’s fun for the visitor, but I wouldn’t call transportation easy.
And yet to see only those negatives is to miss the point. Markets speak more loudly than anecdotes, and the population of Karachi continues to rise — a mark of the city’s success. This market test is more important than the aesthetic test, and Karachi unambiguously passes it.
Most of all, I am impressed by the tenacity of Pakistan. Before going there, I was very familiar with the cliched claim that Pakistan is a fragile tinderbox, barely a proper country, liable to fall apart any moment and collapse into civil war. Neither my visit nor my more focused reading has provided any support for that view, and perhaps it is time to retire it. Pakistan’s national identity may be strongly contested but it is pretty secure, backed by the growing use of Urdu as a national language — and cricket to boot. It has come through the Afghan wars battered but intact.
That is all from my longer than usual Bloomberg column, all about Karachi.
Excellent throughout, Alain put on an amazing performance for the live audience at the top floor of the Observatory at the old World Trade Center site. Here is the audio and transcript, most of all we talked about cities. Here is one excerpt:
COWEN: Will America create any new cities in the next century? Or are we just done?
BERTAUD: Cities need a good location. This is a debate I had with Paul Romer when he was interested in charter cities. He had decided that he could create 50 charter cities around the world. And my reaction — maybe I’m wrong — but my reaction is that there are not 50 very good locations for cities around the world. There are not many left. Maybe with Belt and Road, maybe the opening of Central Asia. Maybe the opening of the ocean route on the northern, following the pole, will create the potential for new cities.
But cities like Singapore, Malacca, Mumbai are there for a good reason. And I don’t think there’s that many very good locations.
COWEN: Or Greenland, right?
BERTAUD: Yes. Yes, yes.
COWEN: What is your favorite movie about a city? You mentioned a work of fiction. Movie — I’ll nominate Escape from New York.
Here is more:
COWEN: Your own background, coming from Marseille rather than from Paris —
BERTAUD: I would not brag about it normally.
COWEN: But no, maybe you should brag about it. How has that changed how you understand cities?
BERTAUD: I’m very tolerant of messy cities.
COWEN: Messy cities.
COWEN: Why might that be, coming from Marseille?
BERTAUD: When we were schoolchildren in Marseille, we were used to a city which has a . . . There’s only one big avenue. The rest are streets which were created locally. You know, the vernacular architecture.
In our geography book, we had this map of Manhattan. Our first reaction was, the people in Manhattan must have a hard time finding their way because all the streets are exactly the same.
BERTAUD: In Marseille we oriented ourselves by the angle that a street made with another. Some were very narrow, some very, very wide. One not so wide. But some were curved, some were . . . And that’s the way we oriented ourselves. We thought Manhattan must be a terrible place. We must be lost all the time.
COWEN: And what’s your best Le Corbusier story?
BERTAUD: I met Le Corbusier at a conference in Paris twice. Two conferences. At the time, he was at the top of his fame, and he started the conference by saying, “People ask me all the time, what do you think? How do you feel being the most well-known architect in the world?” He was not a very modest man.
BERTAUD: And he said, “You know what it feels? It feels that my ass has been kicked all my life.” That’s the way he started this. He was a very bitter man in spite of his success, and I think that his bitterness is shown in his planning and some of his architecture.
COWEN: Port-au-Prince, Haiti — overrated or underrated?
Strongly recommended, and note that Bertaud is eighty years old and just coming off a major course of chemotherapy, a remarkable performance.
Again, I am very happy to recommend Alain’s superb book Order Without Design: How Markets Shape Cities.
#1 on prefiguring of the so-called Coase theorem, consider also p. 396-7 of W.H. Hutt, “Co-ordination and the Size of the Firm,” South African Journal of Economics 2(4), December 1934:
“Now, under one ownership, their relations would, given competitive institutions, be exactly the same, provided that both methods were equally efficient from the social standpoint. There is no reason why the spreading of the lines of responsibility back to several sources should lead to less effective planning than subordinacy to an authority emanating from one source, given the equal availability of relevant knowledge to the managers who devise the plans…The most important significant difference between the two cases is that, in practice, in the one case there may not be the availability of relevant knowledge that there is in the other.”
That is from Daniel B. Klein. And:
For a still earlier ‘discovery’ with transaction costs and all see my former colleague Yehoshua Liebermann’s “The Coase Theorem in Jewish Law,” Journal of Legal Studies, Vol. 10, No. 2 (Jun., 1981), pp. 293-303
That is from Moshe Syrquin, link for both here.
This paper reconsiders the impact of the Earned Income Tax Credit (EITC) on labor supply at the extensive margin. I investigate every EITC reform at the state and federal level since the inception of the policy in 1975. Based on event studies comparing single women with and without children, or comparing single mothers with different numbers of children, I show that the only EITC reform associated with clear employment increases is the expansion enacted in 1993. The employment increases in the mid-late nineties are very large, but they are influenced by the confounding effects of welfare reform and a booming macroeconomy. Based on different approaches that exploit variation in these confounders across household type, space and time, I show that the employment effects align closely with exposure to welfare reform and the business cycle. Single mothers who were unaffected by welfare reform (but eligible for the EITC) did not respond. Overall and contrary to consensus, the case for sizable extensive margin effects of the EITC is fragile. I highlight the presence of informational frictions, widely documented in the literature, as a natural explanation for the absence of extensive margin responses.
Via A. Dube. The effectiveness of EITC used to be a consensus view, so if this result holds up, it would require some substantial revisions in how we think about both welfare and job incentives.
I will be doing a Conversation with him, no associated public event. As you read blogs, you might know Henry’s longstanding work over at CrookedTimber, and also his role in Monkey Cage. Henry is also professor of political science at George Washington University, has with Abraham L. Newman recently published a path-breaking book on the increasingly important concept of weaponized interdependence, is an expert on comparative labor relations, and is an all-around polymath, including on fiction, science fiction, and the politics of Ireland, his home country. Here is his home page.
So what should I ask Henry?
For better or worse, it is not the source of so much political romance or glamour:
The public influences government policy primarily through elections. Elections affect policy largely by determining which party controls the government. We show that a majority of the public supports policies to protect the environment. But the environment is rarely the most important issue for voters, and thus the environment usually does not have a large impact in elections. Moreover, there are increasingly large divisions between Democrats and Republicans, which incentivizes politicians from both parties to embrace extreme positions. Democratic and Republican elected officials are increasingly polarized on environmental issues, with Democrats staking out much more liberal positions than Republicans in Congress. At the state level, Democratic control of legislatures and governorships leads to more stringent environmental policies. Democratic control of state government seems to have smaller effects, however, on environmental outcomes, such as air pollution emissions.
That is the abstract of a new working paper by Parrish Bergquist and Christopher Warshaw.
Here are some new and very thorough results from Peter Arcidiacono, Josh Kinsler, and the excellent Tyler Ransom:
The lawsuit Students For Fair Admissions v. Harvard University provided an unprecedented look at how an elite school makes admissions decisions. Using publicly released reports, we examine the preferences Harvard gives for recruited athletes, legacies, those on the dean’s interest list, and children of faculty and staff (ALDCs). Among white admits, over 43% are ALDC. Among admits who are African American, Asian American, and Hispanic, the share is less than 16% each. Our model of admissions shows that roughly three quarters of white ALDC admits would have been rejected if they had been treated as white non-ALDCs. Removing preferences for athletes and legacies would significantly alter the racial distribution of admitted students, with the share of white admits falling and all other groups rising or remaining unchanged.
Am I allowed to observe that this seems wrong to me? And that our “liberal elite” (not my preferred term, but what you see in the discourse and I don’t know which other referent to use) has failed us?
And from Garett Jones:
Controlling for academic traits and much else, being Asian American predicts a substantially lower probability of Harvard admission… And being female predicts a substantially higher probability of admission.
Here is the full paper. For the pointer I thank various MR readers.