Category: Law
Sentence to Ponder and Ponder and Ponder
Does any sentence better illustrate the human condition in all its political, social and biological complexities than this sentence?
New York state lawmakers have passed a bill banning residents from taking “tiger selfies” — a rising trend on dating websites in which single men post photos of themselves posing with the ferocious felines in hopes of impressing potential mates.
Dissertations are waiting to be written.
How good a climate change solution do we need?
Responding to the recent Henry Paulson piece, Paul Krugman writes today:
In policy terms, climate action — if it happens at all — will probably look like health reform. That is, it will be an awkward compromise dictated in part by the need to appease special interests, not the clean, simple solution you would have implemented if you could have started from scratch. It will be the subject of intense partisanship, relying overwhelmingly on support from just one party, and will be the subject of constant, hysterical attacks. And it will, if we’re lucky, nonetheless do the job.
I would put it this way: climate change is like neither the financial crisis nor the Obama health care plan, but above all it is an international problem requiring an international solution. And it’s not like banning land mines, where most countries have little reason to continue with the practice. It is also not like ozone, where a coordinated solution is relatively low cost, more or less invisible to voters, threatens few jobs, and involves few incentives for defection. A climate change solution requires a lot of countries to turn their back on coal-generated pollution long before we did (as measured in per capita income terms) and long before the Kuznets curve suggests they otherwise are going to. A climate change solution, if done the wrong way, will look to China like a major attempt to unfairly deindustrialize them and, if it is backed by trade sanctions, it will look like an act of war. Trade agreements do best when most or all of the countries already wish to act cooperatively toward much lower tariffs. For a green energy solution, China (among others) in fact has to want to solve the problem, as do we. And the already-installed or in-process coal base in China is…forbidding.
The problem isn’t just coming up with “something better.” Think of today’s fossil fuels as a stock in the ground. The problem is coming up with something “better than the lower and falling prices for the fossil fuel stock once some countries start going green.” That’s really tough, because it means competing against a lower fossil fuel price than what we see today. What will Africa choose?
In other words, a climate change solution has to involve a relatively cheap form of energy, relative to the status quo. Not just cheap to citizens because it is subsidized, but cheap to governments and cheap at the national level too. Alternatively, you could regard all of this as reason to be pessimistic. But in the meantime, it is entirely reasonable to insist on solutions which can generalized, and that means solutions which are relatively cost-effective.
Are land mines a thing of the past?
It seems so:
Despite the conflicts in Syria, Iraq and Afghanistan, the armed uprising in Ukraine and turmoil in other hot spots in the Middle East and Africa, one of war’s most insidious weapons — antipersonnel land mines — have been largely outlawed and drastically reduced, a monitoring group said in a report released Monday.
In the 15 years since a global treaty prohibiting these weapons took effect, the use and production of the mines has nearly stopped, new casualties have plummeted, and more than two dozen countries once contaminated by land mines buried since old wars have removed them, said the report by the group, the International Campaign to Ban Landmines.
“The Mine Ban Treaty remains an ongoing success in stigmatizing the use of land mines and mitigating the suffering they cause,” said Jeff Abramson, the project manager of Landmine Monitor, the group’s research unit.
There is more here. The United States, however, still has not signed the treaty.
The Anti-Nanny State
A new report from the Migration Policy Institute calculates that:
The US government spends more on its immigration enforcement agencies than on all of its principal criminal federal law enforcement agencies combined. In FY 2012, spending for CBP, ICE and US-Visit reached nearly $18 billion. This amount exceeds by nearly 24% total spending by the FBI, Drug Enforcement Agency (DEA), Secret Service, US Marshals Service, and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) which stood at $14.4 billion in FY 2012.
In other words, the Federal government spends more on preventing trade than on preventing murder, rape and theft. I call it the anti-nanny state. It’s hard to believe that this truly reflects the American public’s priorities.
Very good sentences
…the UK government should have pressed much harder for the 800,000 Scots who live in England – the natural pro-union constituency – to get a vote. Allowing the break-up of the country to be passed by a simple majority also looks careless. The bar for constitutional change in the US is set much higher.
The rest of the Gideon Rachman FT piece, on Cameron’s UK, is excellent throughout and here.
Do I feel lucky markets in everything?
Here is a new paper by Christin, Egelman, Vidas, and Grossklags, entitled “It’s All About the Benjamins”:
We examine the cost for an attacker to pay users to execute arbitrary code—potentially malware. We asked users at home to download and run an executable we wrote without being told what it did and without any way of knowing it was harmless. Each week, we increased the payment amount. Our goal was to examine whether users would ignore common security advice—not to run untrusted executables—if there was a direct incentive, and how much this incentive would need to be. We observed that for payments as low as $0.01, 22% of the people who viewed the task ultimately ran our executable. Once increased to $1.00, this proportion increased to 43%. We show that as the price increased, more and more users who understood the risks ultimately ran the code. We conclude that users are generally unopposed to running programs of unknown provenance, so long as their incentives exceed their inconvenience.
The article is here (pdf), for the pointer I thank Bruce Schnier.
Supreme Court Limits Software Patents (Reasonably)
In Ill-Conceived, Even If Competently Administered: Software Patents, Litigation, and Innovation Shawn Miller and I recounted the logic by which software patents had gotten out of control.
The subject matter of a patent is supposed to be a process, a machine, a manufacture, a composition of matter, or a design. Patents are supposed to protect inventions, not ideas. A pharmaceutical patent, for example, protects a specific set of closely related chemical structures, but you cannot patent a particular means of curing cancer as “any means by which cancer is cured” and thereby exclude every other means of curing cancer. In theory, the same rules apply to software, but in practice the courts have allowed software patents to be much broader and much more abstract than in other areas.
…Consider U.S. Patent #5,930,474 (Dunworth, Veenstra, and Nagelkirk 1999). The patent’s primary claim is simply “A system which associates on line information with geographic areas.” The patent gives this example of what they intend to patent: “[I]f a user is interested in finding an out-of-print book, or a good price on his favorite bottle of wine, but does not want to travel outside of the Los Angeles area to acquire these goods, then the user can simply designate the Los Angeles area as a geographic location for which a topical search is to be performed” (ibid.). In any ordinary reading the patentee has a patent on an abstract idea, thus gaining the right to exclude others from using such an idea. In any other area of patent law, this type of patent would not be allowed. It is allowed for software, however, because software patents such as this one go on to detail the means of implementing such a function. Namely,
A…system comprising: a computer network wherein a plurality of computers have access to said computer network; and an organizer executing in said computer network, wherein said organizer is configured to receive search requests from any one of said plurality of computers, said organizer comprising: a database of information organized into a hierarchy of geographical areas wherein entries corresponding to each one of said hierarchy of geographical areas is further organized into topics…. (ibid.)
In other words, the means of the patent is the Internet. By merely adding some entirely nugatory terms such as computer, database, and display—nugatory because any modern method would use these devices—the patentee has turned an unpatentable idea into a patentable, and potentially very profitable, method.
The Supreme Court has today in ALICE v. CLS decisively rejected this process:
…the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Mayo, supra, at ___ (slip op., at 3). Nor is limiting the use of an abstract idea “‘to a particular technological environment.’” Bilski, supra, at 610–611. Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to “implemen[t]” an abstract idea “on . . . a computer,” Mayo, supra, at ___ (slip op., at 16), that addition cannot impart patent eligibility.
I see this ruling as a big win for Mark Lemley who focused on the functional claiming issues of software patents and also as a loss in prestige for the Federal Circuit. It’s evident that the Supreme Court thinks, as Dourado and I argued, that the Federal Circuit has become ideologically captured by the patent bar and in a series of cases the SC has imposed its less parochial view and reasserted its dominance over patent law.
*All That is Solid*, by Danny Dorling
I have written a review of this book, subtitled The Great Housing Disaster, for the Times Literary Supplement of 13 June 2014. As I explain in the review, he tried to write a book about housing problems in the UK without accepting the Avent-Yglesias analysis that legal restrictions on supply are a big part of the problem. Rather than looking to supply and demand, Dorling instead tries to blame “inequality, selfishness and hoarded extra bedrooms.” It doesn’t succeed. Here is an excerpt from my review:
There is not much of an argument in this book against a greater reliance on additional building and thus cheaper house prices. Dorling refers to “slum landlords and cowboy builders” and complains that not all housing for low-income groups will be of high enough quality. But that’s more of a general complaint about the nature of poverty than a problem with the way the housing market works. He then retreats to the claim that the mobilization of space and empty bedrooms around the country, combined with refurbishing, will solve the problem. On any given night, he argues, most bedrooms in the country are not being slept in.
But how to redistribute this unjust largesse of sheets and pillows? It is not as if a bureaucratic authority can scour the country for the empty bedrooms of the elderly and hand over keys to struggling young families. Dorling repeats the incantation that housing inequality is immoral, but without much of a recipe for turning spare rooms into cheaper housing. Refurbishment, as the author suggests, is all to the good. But why isn’t more of that happening already? Either regulatory forces are holding back redevelopment (a suggestion Dorling is reluctant to entertain), or landlords are waiting because it is not yet clear which kinds of investments will be best on a piece of land. In that latter case, the law would be unwise to force the matter too quickly and, more generally, legal control could well discourage entrepreneurs from refurbishing at all.
As I write in the concluding section of the review: “You can’t write a good book which attempts to repeal the laws of economics, especially when it focuses on an economic topic.”
I don’t yet see any link on line, not even a gated one.
A new argument for ACA, and how ACA interacts with disability insurance
This paper examines the effects of the Affordable Care Act (ACA) by considering a dynamic interaction between extending health insurance coverage and the demand for federal disability insurance. This paper extends the Bewley-Huggett-Aiyagari incomplete markets model by endogenizing health accumulation and disability decisions. The model suggests that the ACA will reduce the fraction of working-age people receiving disability benefits by 1 percentage point. In turn, the changes associated with disability decisions will help fund 47 percent of the ACA’s cost. Last, compared to the ACA, an alternative plan without Medicaid expansion will reduce tax burdens and improve welfare.
The pointer is from the excellent Kevin Lewis. I have not yet read the piece but thought it of sufficient interest to pass along right away.
Is there a lot more insider trading than most people think?
I’ve long thought so, here are some new results supporting that view:
… a groundbreaking new study finally puts what we’ve instinctively thought into hard numbers — and the truth is worse than we imagined.
A quarter of all public company deals may involve some kind of insider trading, according to the study by two professors at the Stern School of Business at New York University and one professor from McGill University. The study, perhaps the most detailed and exhaustive of its kind, examined hundreds of transactions from 1996 through the end of 2012.
The professors examined stock option movements — when an investor buys an option to acquire a stock in the future at a set price — as a way of determining whether unusual activity took place in the 30 days before a deal’s announcement.
The results are persuasive and disturbing, suggesting that law enforcement is woefully behind — or perhaps is so overwhelmed that it simply looks for the most egregious examples of insider trading, or for prominent targets who can attract headlines.
The professors are so confident in their findings of pervasive insider trading that they determined statistically that the odds of the trading “arising out of chance” were “about three in a trillion.” (It’s easier, in other words, to hit the lottery.)
There is more here, via Ray Fisman.
What does the Argentina Supreme Court decision mean?
Joseph Cotterill writes:
Pari passu will now be enshrined as a powerful enforcement device in New York-law sovereign debt.
The Supreme Court declined to hear the case, meaning the current ruling will stand. The bottom line is that if Argentina tries to bypass a holdout debtor and make a payment somewhere else, the denied debtor has a potential legal claim to those funds. To expand on that a bit:
This law supports courts in deciding that ratable payment could be a remedy to use against sovereigns who refuse to pay their debts, and that third parties — settlement banks, clearing systems, other bondholders — may be sued if they are seen to handle funds in violation of such orders.
In more practical terms, that raises the cost to banks which are still dealing with Argentina or other defaulting nations. Most likely, this means creditors have a stronger incentive to be holdouts in the first place. I take that to be a negative and welfare-decreasing. If creditor rights were weaker up front, as I would prefer, it would be harder for nations to over-borrow in the first place, and ex post less of the cost of that over-borrowing will fall on the taxpayers and citizens of the poorer citizenry. Furthermore this could mean that associated financial institutions will be quicker to run for the exits once trouble materializes for a country, and that may worsen “sudden stop” and “runs” problems with lending to sovereigns.
In a separate but related judgment yesterday:
Ruling seven to one, the justices decided that the holdouts are allowed to “seek information about Argentina’s worldwide assets generally” to enforce judgment debt.
You can think of both judgments as telling Argentina they cannot default in the manner in which they had attempted to. And what might Argentina’s response be? They might once again…default. The country has two weeks to try to make it work under the current arrangements.
Here is yet another explanation. Here is Peter Coy on the same. Here is The Economist. This piece discusses the constraints on negotiating with the holdouts.
The importance of tax evasion
Mr. Zucman’s tax evasion numbers are big enough to upend common assumptions, like the notion that China has become the world’s “owner” while Europe and America have become large debtors. The idea of the rich world’s indebtedness is “an illusion caused by tax havens,” Mr. Zucman wrote in a paper published last year. In fact, if offshore assets were properly measured, Europe would be a net creditor, and American indebtedness would fall from 18 percent of gross domestic product to 9 percent.
There is more here, interesting throughout. You will find some of the related research here.
What is the “sticker shock” for ACA reform?
There is a new NBER Working paper on that topic, by Mark Pauly, Scott Harrington, and Mark Leive, here is the abstract:
This paper provides estimates of the changes in premiums, average or expected out of pocket payments, and the sum of premiums and out of pocket payments (total expected price) for a sample of consumers who bought individual insurance in 2010 to 2012, comparing total expected prices before the Affordable Care Act with estimates of total expected prices if they were to purchase silver or bronze coverage after reform, before the effects of any premium subsidies. We provide comparisons for purchasers of self only coverage in California and in 23 states with minimal prior state premium regulation before the ACA now using federally managed exchanges. Using data from the Current Population Survey, we find that the average prices increased by 14 to 28 percent, with similar changes in California and the federal exchange states; we attribute the increase primarily to higher premiums in exchanges associated with insurer expectations of a higher risk population being enrolled. The increase in total expected price is similar for age-gender population subgroups except for a larger than average increases for older women. A welfare calculation of the change in risk premium associated with moving from coverage that prevailed before reform to bronze or silver coverage finds small changes.
You will find an ungated version here. The general point is that you hear enormous amounts of talk, including from economists, about what a success ACA has been. This talk does not in general consider trade-offs or welfare calculations, as could be illustrated by these results.
All hail Khan!
Congratulations to Razib Khan, the noted genetics blogger, on the birth of his son. Born just last week, Razib’s son is already making the news:
An infant delivered last week in California appears to be the first healthy person ever born in the U.S. with his entire genetic makeup deciphered in advance.
Razib, a graduate student at a lab at UC Davis in California, had some genetic material from his in-womb son from a fairly standard CVS test.
When Khan got the DNA earlier this year, he could have ordered simple tests for specific genes he was curious about. But why not get all the data? “At that point, I realized it was just easier to do the whole genome,” he says. So Khan got a lab mate to place his son’s genetic material in a free slot in a high-speed sequencing machine used to study the DNA of various animal species. “It’s mostly metazoans, fish, and plants. He was just one of the samples in there,” he says.
The raw data occupied about 43 gigabytes of disk space, and Khan set to work organizing and interpreting it. He did so using free online software called Promethease, which crunches DNA data to build reports—noting genetic variants of interest and their medical meaning. “I popped him through Promethease and got 7,000 results,” says Khan.
Promethease is part of an emerging do-it-yourself toolkit for people eager to explore DNA without a prescription. It’s not easy to use, but it’s become an alternative since the FDA cracked down on 23andMe.
Craig Venter was the first person to have his genome sequenced, that was in 2007. Now, just seven years later, costs have fallen by a factor of 10,000. Personal genome sequencing is going to become routine regardless of the FDA.
Charlie Stross unintentionally explains why Scottish independence is a bad idea
Here is one of the end paragraphs of his “interesting throughout” but unsettling piece in favor of independence:
Which brings me to the punch-line: I’ll be voting “yes” for an independence Scotland in September. Not with great enthusiasm (as I noted earlier, if Devo Max was on the ballot I’d be voting for that) but because everything I see around me suggests that there is some very bad craziness in the near future of England, and I don’t want the little country I live in to be dragged down the rabbit hole by the same dark forces of reaction that are cropping up across Europe, from Hungary to Greece. The failure modes of democracy, it seems to me, are less damaging the smaller the democracy.
Stross is a smart guy and I am an admirer of his writing. But my view remains pretty straightforward: when dislike of the policy choices of the electorate leads to a serious movement for secession, something has gone deeply wrong with the preconditions for democratic attachment. The UK is hardly the Third Reich, it has a long tradition of honest elections, and for left-leaning individuals the share of British government in gdp is likely to stay well over 40% in all plausible futures and furthermore most of the conservatives are relatively liberal on social questions. For those who favor independence for the Scots, what kind of general principle might you lay out for when other peoples also should seek secession? Do they think that the strongly red states in America also should consider secession? How about Vermont? I understand the libertarian case for such secessions, but most supporters of Scottish independence are not arguing from libertarian premises. How much secession do they think should be happening? Or do they hold particularist views which do not admit of any generalization at all? Either way, I consider this a true crisis of governance.
Addendum: Scottish wealth seems to be lower than they have been claiming: “More than 70% of Scotland’s total economic output – excluding banking and finance and the public sector – is controlled by non-Scottish-owned firms, according to Scottish government data.”