Category: Law
Decoupling from China?
Maybe, but maybe not:
Amid the current U.S.-China technological race, the U.S. has imposed export controls to deny China access to strategic technologies. We document that these measures prompted a broad-based decoupling of U.S. and Chinese supply chains. Once their Chinese customers are subject to export controls, U.S. suppliers are more likely to terminate relations with Chinese customers, including those not targeted by export controls. However, we find no evidence of reshoring or friend-shoring. As a result of these disruptions, affected suppliers have negative abnormal stock returns, wiping out $130 billion in market capitalization, and experience a drop in bank lending, profitability, and employment.
That is from the NY Fed, by Matteo Crosignani, Lina Han, Marco Macchiavelli, and André F. Silva. Via RH.
Data on private security forces
From a recent paper:
We bring novel data to bear on these questions, presenting the largest empirical study of private security to date. We introduce an administrative dataset covering nearly 300,000 licensed private security officers in the State of Florida. By linking this dataset to similarly comprehensive information about public law enforcement, we have, for the first time, a nearly complete picture of the entire security labor market in one state. We report two principal findings. First, the public and private security markets are predominantly characterized by occupational segregation, not integration. The individuals who compose the private security sector differ markedly from the public police; they are, for example, significantly less likely to be white men. We also find that few private officers, roughly 2%, have previously worked in public policing, and even fewer will go on to policing in the future. Second, while former police make up a small share of all private security, roughly a quarter of cops who do cross over have been fired from a policing job. In fact, fired police officers are nearly as likely to land in private security as to find another policing job, and a full quarter end up in one or the other. We explore the implications of these findings, including intersections with police abolition and the future of policing, at the paper’s close.
That is by Ben Grunwald, John Rappaport, and Michael Berg. Via the excellent Kevin Lewis.
The Adderall Shortage: DEA versus FDA in a Regulatory War
A record number of drugs are in shortage across the United States. In any particular case, it’s difficult to trace out the exact causes of the shortage but health care is the US’s most highly regulated, socialist industry and shortages are endemic under socialism so the pattern fits. The shortage of Adderall and other ADHD medications is a case in point. Adderall is a Schedule II controlled substance which means that in addition to the FDA and other health agencies the production of Adderall is also regulated, monitored and controlled by the U.S. Drug Enforcement Administration (DEA).
The DEA aims to “combat criminal drug networks that bring harm, violence, overdoses, and poisonings to the United States.” Its homepage displays stories of record drug seizures, pictures of “most wanted” criminal fugitives, and heroic armed agents conducting drug raids. With this culture, do you think the DEA is the right agency to ensure that Americans are also well supplied with legally prescribed amphetamines?
Indeed, there is a large factory in the United States capable of producing 600 million doses of Adderall annually that has been shut down by the DEA for over a year because of trivial paperwork violations. The New York Magazine article on the DEA created shortage has to be read to be believed.
Inside Ascent’s 320,000-square-foot factory in Central Islip, a labyrinth of sterile white hallways connects 105 manufacturing rooms, some of them containing large, intricate machines capable of producing 400,000 tablets per hour. In one of these rooms, Ascent’s founder and CEO — Sudhakar Vidiyala, Meghana’s father — points to a hulking unit that he says is worth $1.5 million. It’s used to produce time-release Concerta tablets with three colored layers, each dispensing the drug’s active ingredient at a different point in the tablet’s journey through the body. “About 25 percent of the generic market would pass through this machine,” he says. “But we didn’t make a single pill in 2023.”
… the company has acknowledged that it committed infractions. For example, orders struck from 222s must be crossed out with a line and the word cancel written next to them. Investigators found two instances in which Ascent employees had drawn the line but failed to write the word.
The causes of the DEA’s crackdown appears to be precisely the contradiction in its dueling missions. Ascent also produces opioids and the DEA crackdown was part of what it calls Operation Bottleneck, a series of raids on a variety of companies to demand that they account for every pill produced.
To be sure, the opioid epidemic is a problem but the big, multi-national plants are not responsible for fentanyl on the streets and even in the early years the opioid epidemic was a prescription problem (with some theft from pharmacies) not a factory theft problem (see figure at left). Maybe you think Adderall is overprescribed. Could be but the DEA is supposed to be enforcing laws not making drug policy. The one thing one can say for certain is that Operation Bottleneck has surely been a success in creating shortages of Adderall.
The DEA’s contradictory role in both combating the illegal drug trade and regulating the supply of legal, prescription drugs is highlighted by the fact that at the same as the DEA was raiding and shutting down Ascent, the FDA was pleading with them to increase production!
For Ascent, one of the more frustrating parts of being told by the government to stop making Adderall is that other parts of the government have pleaded with the company to make more. The company says that on multiple occasions, officials from the FDA asked it to increase production in response to the shortage, and that Ron Wyden, the Democratic senator from Oregon, also pressed Ascent for help. They received responses similar to those the company gave the stressed-out callers looking for pills: Ascent didn’t have any information. Instead, the company directed them to the DEA.
UNOS Kills
I’ve long been an advocate of increasing the use of incentives in organ procurement for transplant; either with financial incentives or with rules such as no-give, no-take which prioritize former potential organ donors on the organ recipient list. What I and many reformers failed to realize, however, is that the current monopolized system is so corrupt, poorly run and wasteful that thousands of lives could be saved even without incentive reform. (To be clear, these issues are related since an incentivized system would never have become so monopolized and corrupt in the first place but that is a meta-issue for another day.) Here, for example, is one incredible fact:
An astounding one out of every four kidneys that’s recovered from a generous American organ donor is thrown in the trash.
Here’s another:
Organs are literally lost and damaged in transit every single week. The OPTN contractor is 15 times more likely to lose or damage an organ in transit than an airline is a suitcase.
Organs are not GPS-tracked!
In an era when consumers can precisely monitor a FedEx package or a DoorDash dinner delivery, there are no requirements to track shipments of organs in real time — or to assess how many may be damaged or lost in transit.
“If Amazon can figure out when your paper towels and your dog food is going to arrive within 20 to 30 minutes, it certainly should be reasonable that we ought to track lifesaving organs, which are in chronic shortage,” Axelrod said.
Here’s one more astounding statistics:
Seventeen percent of kidneys are offered to at least one deceased person before they are transplanted….
Did you get that? The tracking system for patients is so dysfunctional that 17% of kidneys are offered to patients who are already dead–thus creating delays and missed opportunities.
All of this was especially brought to light by Organize, a non-profit patient advocacy group who under an innovative program embedded with the HHS and working with HHS staff produced hard data.
Many more details are provided in this excellent interview with Greg Segal and Jennifer Erickson, two of the involved principals, in the IFPs vital Substack Statecraft.
Why is there a movement to ban lab-grown beef?
That is the topic of my latest Bloomberg column, here is one bit:
…let me offer another theory: The anti-lab-grown-meat movement is about conservative cultural insecurity — the fear that, without the force of law, some conservative cultural norms will fade away…
Imagine that lab-grown meat proves feasible at a reasonable cost. It might end up as cheaper than beef from a cow, and it might also be better for the climate. In such a world, there might be growing pressures to abandon real meat for the lab-grown kind. There could even be a political movement to tax or ban real meat, similar to carbon taxes or plans to phase out fossil fuels.
Currently there is no momentum in that direction. For all the talk of vegetarianism and veganism, the percentage of Americans who practice those beliefs seems to be roughly flat. Many Americans like eating meat, for better or worse. But if real meat had a true substitute, perhaps the political calculus would differ.
This is the real fear — not of lab-grown meat itself, but of the changing culture its popularity would represent. Whether conservatives find the meat substitute to be adequate is beside the point. Society would have decided that some of their most cherished beliefs can be disposed of. Both humankind’s dominion over nature, which runs strong in the Christian strand of conservative thought, and the masculinized meat-eating culture — more specifically, the meat-grilling culture — would be under threat.
If artificial meat is banned, of course, none of that can happen.
In one sense, critics of conservatism should be heartened by the campaign against lab-grown meat. If I were a mainstream animal-rights advocate, I would revise upwards my estimate of my own power and influence.
I then consider how we might use science to arrive at a better resolution of these disputes.
Modi and investment
Yes, India is doing well but the picture could be much better:
During Modi’s tenure, GFCF [gross fixed capital formation] as a percentage of GDP declined and has remained low until the post-pandemic recovery. In fact the highest level of GFCF as a percentage of GDP during the first nine years of Modi’s leadership is lower than the lowest level in PM Singh’s tenure.
Here is more from Shruti.
Lockean homesteading for goats, bonus added
The mayor of an Italian island is attempting to solve an animal overpopulation problem with an unusual offer: free goats for anyone who can catch them.
Riccardo Gullo, the mayor of Alicudi, in Sicily’s Aeolian archipelago, introduced an “adopt-a-goat” program when the small island’s wild goat population grew to six times the human population of about 100.
Gullo said anyone who emails a request to the local government and pays a $17 “stamp fee” can take as many goats as they wish, as long as they transport them off the island within 15 days of approval.
“Anyone can make a request for a goat, it doesn’t have to be a farmer, and there are no restrictions on numbers,” he told The Guardian.
He said the scheme is currently available until April 10, but he will extend the deadline until the goat population is back down to a more manageable number.
The mayor told CNN that officials will not investigate the intentions of prospective goat owners, but “ideally, we would like to see people try to domesticate the animals rather than eat them.”
Here is the full story, via the excellent Samir Varma.
My contentious Conversation with Jonathan Haidt
Here is the transcript, audio, and video. Here is the episode summary:
But might technological advances and good old human resilience allow kids to adapt more easily than he thinks?
Jonathan joined Tyler to discuss this question and more, including whether left-wingers or right-wingers make for better parents, the wisest person Jonathan has interacted with, psychological traits as a source of identitarianism, whether AI will solve the screen time problem, why school closures didn’t seem to affect the well-being of young people, whether the mood shift since 2012 is not just about social media use, the benefits of the broader internet vs. social media, the four norms to solve the biggest collective action problems with smartphone use, the feasibility of age-gating social media, and more.
It is a very different tone than most CWTs, most of all when we get to social media. Here is one excerpt:
COWEN: There are two pieces of evidence — when I look at them, they don’t seem to support your story out of sample.
HAIDT: Okay, great. Let’s have it.
COWEN: First, across countries, it’s mostly the Anglosphere and the Nordic countries, which are more or less part of the Anglosphere. Most of the world is immune to this, and smartphones for them seem fine. Why isn’t it just that a negative mood came upon the Anglosphere for reasons we mostly don’t understand, and it didn’t come upon most of the rest of the world? If we’re differentiating my hypothesis from yours, doesn’t that favor my view?
HAIDT: Well, once you look into the connections and the timing, I would say no. I think I see what you’re saying now, but I think your view would say, “Just for some reason we don’t know, things changed around 2012.” Whereas I’m going to say, “Okay, things changed around 2012 in all these countries. We see it in the mental illness rates, especially of the girls.” I’m going to say it’s not just some mood thing. It’s like (a), why is it especially the girls? (b) —
COWEN: They’re more mimetic, right?
HAIDT: Yes, that’s true.
COWEN: Girls are more mimetic in general.
HAIDT: That’s right. That’s part of it. You’re right, that’s part of it. They’re just much more open to connection. They’re more influenced. They’re more subject to contagion. That is a big part of it, you’re right. What Zach Rausch and I have found — he’s my lead researcher at the After Babel Substack. I hope people will sign up. It’s free. We’ve been putting out tons of research. Zach has really tracked down what happened internationally, and I can lay it out.
Now I know the answer. I didn’t know it two months ago. The answer is, within countries, as I said, it’s the people who are conservative and religious who are protected, and the others, the kids get washed out to sea. Psychologically, they feel their life has no meaning. They get more depressed. Zach has looked across countries, and what you find in Europe is that, overall, the kids are getting a little worse off psychologically.
But that hides the fact that in Eastern Europe, which is getting more religious, the kids are actually healthier now than they were 10 years ago, 15 years ago. Whereas in Catholic Europe, they’re a little worse, and in Protestant Europe, they’re much worse.
It doesn’t seem to me like, oh, New Zealand and Iceland were talking to each other, and the kids were sharing memes. It’s rather, everyone in the developed world, even in Eastern Europe, everyone — their kids are on phones, but the penetration, the intensity, was faster in the richest countries, the Anglos and the Scandinavians. That’s where people had the most independence and individualism, which was pretty conducive to happiness before the smartphone. But it now meant that these are the kids who get washed away when you get that rapid conversion to the phone-based childhood around 2012. What’s wrong with that explanation?
COWEN: Old Americans also seem grumpier to me. Maybe that’s cable TV, but it’s not that they’re on their phones all the time. And you know all these studies. If you try to assess what percentage of the variation in happiness of young people is caused by smartphone usage — Sabine Hossenfelder had a recent video on this — those numbers are very, very, very small. That’s another measurement that seems to discriminate in favor of my theory, exogenous mood shifts, rather than your theory. Why not?
Very interesting throughout, recommended. And do not forget that Jon’s argument is outlined in detail in his new book, titled The Anxious Generation: How the Great Rewiring of Childhood is Causing an Epidemic of Mental Illness.
Why aren’t Canada and other Anglo nations turning against immigration more?
That is the topic of my latest Bloomberg column. I cover several points, here is one of them, based on the economic idea of intertemporal substitution:
In this sense, Canada is ahead of much of the rest of the world in seeing the importance of these factors and turning it into actionable policy. It is willing to give up some of its present cultural identity to achieve a brighter cultural and political future.
This trade-off is much better than it looks at first. For one thing, birth rates for native-born citizens may fall further than they have already. If a country wants to preserve its national culture, it may be better off allowing more migration now, when there is still a critical mass of native-born citizens to ease assimilation.
To put the point more generally: Whatever costs there might be to immigration, successful nations will have to deal with them sooner or later. And the sooner they do, the better off they will be. The choice is not so much between more immigration and less immigration, but rather a lot of immigration now or a lot later. This choice will become all the more pressing as the need to fund national retirement programs requires more tax-paying citizens.
And on real estate prices:
One of the most common criticisms of immigrants is that they push up real estate prices. Yet there is a home-grown explanation: Stringent regulations on building make it difficult for the supply of housing to respond when demand increases.
In fact, there is a way immigration can help address this problem. First, immigrants may themselves induce their adopted country to free up its real estate markets. So immigration might increase real estate costs in the short run, but help reduce them in the longer run. Second, immigrants can help lower-tier cities move to the fore. The suburbs of Toronto, for example, have seen much of their growth driven by Asian in-migration, and longer term that will give Canadians more residential (and commercial) options.
These points aside, note that higher real estate prices, to the extent they result from immigrant demands, largely translate into capital gains for homeowners — most of whom are native-born. To be sure, the higher home prices may be bad for many younger Canadians, who may be locked out of housing markets, but eventually many of them will inherit high-valued homes from their parents.
Rrecommended.
The law and economics of permitting
Here is an important new paper by Zachary D. Liscow:
Given the benefits to economic growth and the need to transition to green energy, getting infrastructure built is an urgent issue. I describe what to consider in designing a system of permitting infrastructure. I then review the evidence: in the US, permitting is slow, infrastructure is expensive, and environmental outcomes are not particularly good. I propose a framework for reform with two dimensions: the power of the executive branch to decide and its capacity to plan. After considering reform possibilities, I propose that reforming both dimensions could lead to a possible “green bargain” that benefits efficiency, the environment, and democracy.
Via Heidi Williams.
The polity that is German
None dare call it eugenics:
Dachshunds, the German dog breed known for their distinctive long bodies and short legs, face an uncertain future if proposed changes to an animal protection law are approved, Germany’s kennel club said.
A draft of the bill, from the German Ministry of Food and Agriculture, was published in February and aims to combat “torture breeding,” or breeding to produce animals with characteristics that will cause them to suffer, and to regulate the online trade of animals.
However, the draft contains requirements that could end the breeding of certain dogs, such as the dachshund, according to a statement from the V.D.H., Germany’s kennel club.
The bill lists various disease characteristics, like anomalies of the skeletal system, that would be outlawed. That could be interpreted as a ban on breeding animals with any significant size deviation from the “original wolf type,” the V.D.H. said…
The restrictions could be applied to the leg length of dachshunds. The breeding of beagles, Jack Russell terriers and miniature schnauzers could also be affected, as well as of dogs with short noses, like the English bulldog, French bulldog and pug.
Here is the full NYT article.
Should whales have the status of legal persons?
Indigenous leaders of New Zealand, Tahiti and the Cook Islands signed a historic treaty that recognizes whales as legal persons in a move conservationists believe will apply pressure to national governments to offer greater protections for the large mammals.
“It’s fitting that the traditional guardians are initiating this,” said Mere Takoko, a Māori conservationist who leads Hinemoana Halo Ocean Initiative, the group that spearheaded the treaty. “For us, by restoring those world populations we also restore our communities.”
Conservationists have good reason to believe they will succeed: In 2017, New Zealand passed a groundbreaking law that granted personhood status to the Whanganui River because of its importance to Māori, New Zealand’s Indigenous people.
And:
Legislation would be built around several pillars: monitoring, penalties for killing whales and even whale insurance. A $100 million fund would back the initiative.
“When you recognize a whale as a legal person — that doesn’t mean they’re human — they’re a legal person, meaning you can endow them with certain rights,” said Ralph Chami, the project’s head economist. “And with that comes a responsibility that if you hurt or bring harm to a whale, then there are remedies.”
Here is more from Remy Tumin at the NYT, interesting throughout.
Be careful what you announce about your expected value maximization
Judge Kaplan: A man willing to flip a coin as to the continued existence of life on earth. Mr. Bankman-Fried knew that Alameda was spending customer funds on risky investments, political contributions and Bahamas real estate. The funds were not his to use
— Inner City Press (@innercitypress) March 28, 2024
That is via Shiraz. Here is my CWT with Sam Bankman-Fried, here is the key passage:
COWEN: Should a Benthamite be risk-neutral with regard to social welfare?
BANKMAN-FRIED: Yes, that I feel very strongly about.
COWEN: Okay, but let’s say there’s a game: 51 percent, you double the Earth out somewhere else; 49 percent, it all disappears. Would you play that game? And would you keep on playing that, double or nothing?
BANKMAN-FRIED: With one caveat. Let me give the caveat first, just to be a party pooper, which is, I’m assuming these are noninteracting universes. Is that right? Because to the extent they’re in the same universe, then maybe duplicating doesn’t actually double the value because maybe they would have colonized the other one anyway, eventually.
COWEN: But holding all that constant, you’re actually getting two Earths, but you’re risking a 49 percent chance of it all disappearing.
BANKMAN-FRIED: Again, I feel compelled to say caveats here, like, “How do you really know that’s what’s happening?” Blah, blah, blah, whatever. But that aside, take the pure hypothetical.
COWEN: Then you keep on playing the game. So, what’s the chance we’re left with anything? Don’t I just St. Petersburg paradox you into nonexistence?
BANKMAN-FRIED: Well, not necessarily. Maybe you St. Petersburg paradox into an enormously valuable existence. That’s the other option.
COWEN: Are there implications of Benthamite utilitarianism where you yourself feel like that can’t be right; you’re not willing to accept them? What are those limits, if any?
There are other gems, including this one:
COWEN: In which respects have you brought a legal mind to your endeavors?
BANKMAN-FRIED: It’s becoming increasingly important over time…
Recommended.
Is there Hope for Evidence-Based Policy?
Vital City magazine and the Niskanen Center’s Hypertext have a special issue on the prospects for “evidence-based policymaking.” The issue takes as its starting point, Megan Stevenson’s Cause, effect, and the structure of the social world, a survey of RCTs in criminology which concludes that the vast majority of interventions “have little to no lasting effect.” The issue features responses from John Arnold, Jonathan Rauch, Anna Harvey, Aaron Chalfin, Jennifer Doleac, myself, and others. It’s an excellent issue.
My contribution focuses on the difference between changing preferences versus constraints. Here’s one bit:
Some other programs that Stevenson mentions elsewhere are also not predominantly constraint- or incentive-changing. Take, for example, the many papers estimating the effect of imprisonment on the post-release behavior of criminal defendants via the random selection of less and more lenient judges. At first, it may seem absurd to say that imprisonment is not about incentives. Isn’t deterrence the ne plus ultra of incentives? Yes, but the economic theory of deterrence, so-called general deterrence, is rooted in the anticipation of consequences — the odds before the crime. By the sentencing stage, we’re merely observing where the roulette wheel stopped. Criminals factor in the likelihood of capture as just another cost of doing business. Thus, the economic theory of deterrence predicts high rates of recidivism, as the calculus that justified the initial crime remains unchanged after punishment. To be sure, imprisonment might change behavior for all kinds of reasons. Maybe inmates learn that they underestimated the unpleasantness of prison, but perhaps they improve their criminal skills while in prison or join a gang, or perhaps the stain of a criminal record reduces the prospect of legitimate employment. Thus, the study of imprisonment’s effects on criminal defendants is intriguing, but it’s not testing deterrence or incapacitation, on which we have built a body of work with clear predictions.
Indeed, on Stevenson’s list only hot-spot policing is a clear example of changing constraints. It is perhaps not coincidental that hot-spot policing is one of the few interventions that Stevenson acknowledges “leads to a small but statistically significant decrease in reported crime in the areas with increased policing.” While I do not begrudge Stevenson her interpretation, other people shade the total evidence differently. Here, for example, is the Center for Evidence-Based Crime Policy, in my experience a rather tough-minded and empirically rigorous organization not easily swayed by compelling narratives:
As the National Research Council review of police effectiveness noted, “studies that focused police resources on crime hot spots provided the strongest collective evidence of police effectiveness that is now available.” A Campbell systematic review by Braga et al. comes to a similar conclusion; although not every hot spots study has shown statistically significant findings, the vast majority of such studies have (20 of 25 tests from 19 experimental or quasi-experimental evaluations reported noteworthy crime or disorder reductions), suggesting that when police focus in on crime hot spots, they can have a significant beneficial impact on crime in these areas. As Braga concluded, “extant evaluation research seems to provide fairly robust evidence that hot spots policing is an effective crime prevention strategy.”
Indeed, I argue that most of the programs that Stevenson shows failed, tried to change preferences while those that succeeded tend to focus on changing constraints. There are lessons for future policy and funding. Read the whole thing.
Opening Borders
Open borders hasn’t been getting a lot of good press recently but next week Bulgaria and Romania will join the Schengen Area for air and sea travel (road travel will likely follow). No more passports or visa necessary! The Schengen Area is a remarkable achievement for a part of the world once riven by violence and rivalry. Recall:
Created in 1995 with 10 countries, the Schengen Area has since grown to cover more than 1.5 million square miles, allowing almost 420 million people to move freely between 27 countries, currently. It’s important not to confuse the Schengen Area with the European Union—the former is a travel zone where citizens can cross country borders without a passport or visa, whereas the latter is an economic and political union of countries. The Schengen Area currently includes Austria, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland.
According to the Council of the European Union, “Each day around 3.5 million people cross internal borders for work or study or to visit families and friends, and almost 1.7 million people reside in one Schengen country while working in another.” Being a part of the zone saves citizens time and hassle from passport checks. It also helps travelers from 59 countries outside the EU, including the United States, as they can travel without visas for up to 90 days within the Schengen Area for tourism and business.
Unfortunately, the European Travel Information and Authorization System (ETIAS) means that US citizens will require a visa to travel to Europe next year–this is a step in the wrong direction. Nevertheless, the entry of Bulgaria and Romania to the Schengen Area is something to celebrate.
It would be great to see a Schengen Area for say the United States, Canada, Australia, the U.K and New Zealand (the US plus the CANZUK countries).