Category: Law
My excellent Conversation with Tom Tugendhat
Here is the audio, video, and transcript. Here is the episode summary:
Tom Tugendhat has served as a Member of Parliament since 2015, holding roles such as Security Minister and chair of the Foreign Affairs Select Committee. Before entering Parliament, Tom served in in Iraq and Afghanistan. He also worked for the Foreign Office, helped establish the National Security Council of Afghanistan, and served as military assistant and principal adviser to the Chief of the Defense Staff.
Tyler and Tom examine the evolving landscape of governance and leadership in the UK today, touching on the challenges of managing London under the UK’s centralized system, why England remains economically unbalanced, his most controversial view on London’s architecture, whether YIMBYism in England can succeed, the unique politics and history of Kent, whether the system of private schools needs reform, his pick for the greatest unselected prime minister, whether Brexit revealed a defect in the parliamentary system, whether the House of Lords should be abolished, why the British monarchy continues to captivate the world, devolution in Scotland and Northern Ireland, how learning Arabic in Yemen affected his life trajectory, his read on the Middle East and Russia, the Tom Tugendhat production function, his pitch for why a talented young person should work in the British Civil Service, and more.
And here is an excerpt:
COWEN: Okay. First question, what is your favorite walk around London, and what does it show about the city that outsiders might not understand?
TUGENDHAT: Oh, my favorite walk is down the river. A lot of people walk down the river. One of the best things about walking down the river in London is, first of all, it shows two things. One, that London is actually an incredibly private place. You can be completely on your own in the center of one of the biggest cities in the world within seconds, just by walking down the river. Very often, even in the middle of the day, there’s nobody there. You walk past things that are just extraordinary. You walk past a customs house. It’s not used anymore, but it was the customs house for 300, 400, 500 years. You walk past, obviously, the Tower of London. You walk past Tower Bridge. You walk past many things like that.
Actually, you’re walking past a lot of modern London as well, and you see the reality of London, which is — the truth is, London isn’t a single city. It’s many, many different villages, all cobbled together in various different ways. I think outsiders miss the fact that there’s a real intimacy to London that you miss if all you’re doing is you’re going on the Tube, or if you’re going on the bus. If you walk down that river, you see a very, very different kind of London. You see real communities and real smaller communities.
And:
COWEN: Can the British system of government in its current parliamentary form — how well can that work without broadly liberal individualistic foundations in public opinion?
TUGENDHAT: I think it works extremely well at ensuring that truly liberal foundations are maintained. I mean that not in the American sense; I mean in a genuine, the old liberal tradition that emerges from the UK in the 1700s, 1800s, where freedom of thought, freedom of assembly, the right to own property, and all those principles that then became embedded in various different constitutions around the world, including your own. I think it does very well at doing that because it forces you, our system forces you, into partnership. There are 650 people who you have to work with in some way in Parliament over the next four or five years.
And there’s four of us currently going for leadership at the Conservative Party. There’s one reason why, despite the fact that we’re competing almost in a US primary system, the way in which we are dealing with each other is very different, is because we’re all going to have to work together for the next four years. Whoever wins is going to have to work with the other three, and the idea that you can simply ignore each other isn’t true. There’s only 121 of us Conservative MPs in Parliament, and what this system forces on us is the need to deal with each other in a way that you have to deal with somebody if you’re going to deal with them tomorrow. I think that’s one of the reasons why the British political system has endured because it forces you to remember that there’s a long-term interest, not an immediate one, not just a short-term one.
Recommended, highly intelligent throughout, including on China, Russia, and Yemen.
How economists think about victims of natural disasters
That is the topic of my latest Bloomberg column, here is one excerpt:
First, whenever possible it is better to use private insurance, such as homeowner’s insurance and flood insurance, to protect against loss. One of the functions of insurance is to make losers at least partially whole after the fact, but another is to make risky decisions too expensive to contemplate in the first place.
This second function of insurance is especially important for Florida. The state is vulnerable to storms, so market prices for insurance should be allowed to adjust to higher levels, most of all for vulnerable properties. High prices in an area are a sign that building and renovation should not take place there. With fewer people living in vulnerable areas, the cost of storms will fall accordingly.
That sounds harsh, but “incentives matter” is the first and primary principle of economics, and sometimes incentives should be allowed to operate. Unfortunately, Florida has a state-run insurer of last resort which continues to bail out homeowners.
Political debates tend to frame this issue as whether to help poor, struggling homeowners. And indeed they may well suffer some terrifying losses because of storms. But whatever you think of such bailouts after the fact, with better incentives ahead of time, that issue will come up less often.
Economists are better at ex ante institutional design than at adjudicating all claims on the public purse ex post.
Advice that is not always heeded.
“Das was damals, das ist jetzt”
The Council for German Orthography (RdR) caused a stir amongst grammar perfectionists on Monday when it announced that as of 2025, an apostrophe used to indicate possession will be considered correct.
Since 2004, the RdR has been considered the leading source on Standard High German spelling and grammar, and is relied on for school textbooks in Germany, Austria, and Switzerland.
In English, possession of an object is almost always implied by use of an apostrophe, as in: Henry’s Bar, Bloomingdale’s department store.
Not so in German, where possession is either shown by use of the genitive grammatical case, or without an apostrophe as in the case of Annes Cafe (Anne’s cafe).
However, in recent decades it has become increasingly common, especially for small businesses, to use the apostrophe in German to indicate possession: Andi’s Imbiss (Andi’s restaurant), Kim’s Kiosk.
Here is the full story, the informing email was Mike Doherty’s.
Northern Ireland fact of the day
The NHS in Northern Ireland is the worst in the UK. During the quarter April/June 2021, over 349,000 people were waiting for a first appointment, 53 percent for over a year, an increase of 39,000 for the same period in 2020. Adjusted for population size, waiting lists in Northern Ireland are 100 times greater than those in England, a country 50 times its size.
That is from the truly excellent Perils and Prospects of a United Ireland, by Padraig O’Malley. Imagine a detailed, thoughtful 500 pp. book on political issues you probably don’t care all that much about — is there any better way to study politics and political reasoning? Every page of this book offers substance.
Elsewhere, of course, we are told that reluctance to give up their health care system is a major reason why Irish reunification is not more popular in the North, and that holds for Catholics too.
This one will make the best non-fiction of the year list.
The polity that is Russia
Russia’s parliament, the State Duma, is working on a law that aims to ban so-called child-free ideology which it sees as harmful to traditional values.
Vyacheslav Volodin, the chairman of the State Duma, the lower house of parliament, announced recently that fines for “propaganda of childlessness” will amount to up to 400,000 rubles ($4,300; €3,879) for individuals and up to 5 million rubles for companies.
This legislation is based on a 2022 law banning “LGBTQ+ propaganda.”
…The first draft of this new law to ban “child-fee ideology” was discussed in the State Duma in September 2022. The following year, special “family lessons” were introduced in schools. According to officials, their aim is to “form a healthy society” and increse the “popularization of large families.” Several parliamentarians have even raised the idea of imposing taxes on childless families.
At the same time, access to emergency contraception and abortion has been limited in Russia. New Health Ministry guidelines instruct medics on how best to dissuade woman from having an abortion, while many private clinics have lost their license to carry out abortions. Ten regions in Russia have imposed fines for “inducing” women to have abortions.
Here is the full story. Via Rasheed Griffith.
How different are Trump judges?
Donald J. Trump’s presidency broke the mold in many ways, including how to think about judicial appointments. Unlike other recent presidents, Trump was open about how “his” judges could be depended on to rule in particular ways on key issues important to voters he was courting (e.g., on issues such as guns, religion, and abortion). Other factors such as age and personal loyalty to Trump seemed important criteria. With selection criteria such as these, one might expect that Trump would select from a smaller pool of candidates than other presidents. Given the smaller pool and deviation from traditional norms of picking “good” judges, we were curious about how the Trump judges performed on a basic set of measures of judging. One prediction is that Trumpian constraints on judicial selection produced a different set of judges. Specifically, one that would underperform compared to sets of judges appointed by other presidents. Using data on active federal appeals court judges from January 1, 2020 to June 30, 2023, we examine data on judges across three different measures: opinion production, influence (measured by citations), and independence or what we refer to as “maverick” behavior. Contrary to the prediction of underperformance, Trump judges outperform other judges, with the very top rankings of judges predominantly filled by Trump judges.
That new paper is by Stephen J. Choi and Mitu Gulati, who seem to be academic “normies” (NYU and UVA, respectively), not MAGAland crazies.
Via the excellent Kevin Lewis.
There are not 13,099 Illegal Immigrant Murderers Roaming Free on American Streets
Migrants incarcerated for homicide are considered “non-detained” by ICE when they are in state or federal prisons. When ICE uses the term “non-detained,” they mean not currently detained by ICE. In other words, the migrant murderers included in the letter are overwhelmingly in prison serving their sentences. After they serve their sentences, the government transfers them onto ICE’s docket for removal from the United States.
And that is only part of the mistake in the numbers you may have heard. Here is more from Alex Nowrasteh:
The third untrue claim is that these 13,099 migrants convicted of homicide committed their crimes recently. Those migrant criminal convictions go back over 40 years or more. Confusion over the period covered by a dataset afflicts the interpretation of other criminal datasets too. If there really were 13,099 migrants convicted for domestic homicides in 2023, then they would have accounted for about 99 percent of all homicide convictions in the U.S. last year despite being about 4 percent of the population. That is obviously not the case because no group of people is criminally overrepresented by a factor of 25 above their share of the population. Even when the 13,099 homicide convictions of migrants are spread out over the entire Biden administration, migrants would have accounted for about one-third of all homicide convictions from 2021 through 2023. That’s obviously not true. The problem comes from erroneously increasing the numerator (the number of homicide convictions) for a single year and decreasing the denominator (the total number of homicide convictions in just one year) rather than spreading out the convictions and the total number of all murders over a 40-plus year period.
As a side observation:
Here is the whole essay. Tweetstorm here. Via Naveen.
Newsom vetoes AI bill
California Gov. Gavin Newsom has vetoed a controversial artificial-intelligence safety bill that pitted some of the biggest tech companies against prominent scientists who developed the technology.
The Democrat decided to reject the measure because it applies only to the biggest and most expensive AI models and leaves others unregulated, according to a person with knowledge of his thinking. Smaller models could prove just as problematic, and Newsom would prefer a regulatory framework that encompasses them all, the person added.
Had Newsom signed the bill into law, it would have laid the groundwork for how AI is regulated across the U.S., as California is home to the top companies in the industry. Proposals to regulate AI nationally have made little progress in Washington.
The governor is hoping to work with AI researchers and other experts on new legislation next year that could tackle in a more comprehensive way the same concerns of the bill he vetoed—about AI acting in ways its designers didn’t intend and causing economic or societal damage, the person with knowledge of his thinking said.
Here is more from the WSJ.
*Emancipation*
The author is Peter Kolchin, and the subtitle is The Abolition and Aftermath of American Slavery and Russian Serfdom. Here is one interesting excerpt of many:
Despite the surge in schools and teachers after 1880, Russian peasant children were considerably less likely to receive schooling than were African American children, especially if they were girls. As the statement about not needing literacy in order to make cabbage soup indicated, the subordination of females that characterized Russian society in general was as evident in peasant education as in any other sphere of life. Statistics on school attendance by sex indicates that, in contrast to former slaves in the Southern United States, for whom serfs in Russia rarely sent their daughters to school during the 1860s and 1870s, regarding it as a waste of time that would fill their heads with needless knowledge and make them less fit for their feminine duties. The evidence is consistent and overwhelming. Among African Americans in the Southern United States, girls were at least as likely as boys to attend school: the Freedmen’s Bureau Consolidated Monthly School Report for June 1867, for example, listed 45,855 male and 52,981 female pupils in the schools that it monitored throughout the South; in almost every state, female pupils outnumbered male pupils and there were slightly more males than females. The decennial census returns showed a similar pattern between 1870 and 1910: school enrollment rates in the United States for Black children aged five to nineteen (the great majority of whom lived in the South) were fairly evenly balanced between the sexes, with female rates slightly higher than male in four of the five census years. (The male rate was slightly higher than the female in 1880.)
You can buy the book here.
Nixon’s ten percent import duty
That is the topic of my latest Bloomberg column, with a big assist from Doug Irwin. Here is one excerpt:
In 1971, President Richard Nixon imposed a 10% tax on foreign goods brought into the US, and kept it in place for four months. The best that can be said about this experience, well-documented by Dartmouth economist Douglas A. Irwin in a 2012 essay, is that the US economy survived it.
That is hardly good news, but it is a partial comfort. At the time, Republican officials were demanding an end to undervalued foreign currencies, better trade treatment of US exports and more spending on defense by US allies. (Sound familiar?) After this rhetoric and policy, however, came an era of trade liberalization. The costs of protection and the incentives for freer trade simply proved too strong, and subsequent presidents of both parties oversaw tariff reductions.
In 1971, Nixon’s key demand was specific: Countries had to let their currencies float upward against the US dollar. The goal was to weaken the dollar in relative terms and thus help US exports.
And these key points:
After imposing the tariff, and much negotiation, the US did receive something concrete in return: More countries allowed their currencies to float against the dollar — notably the yen, the mark and the franc. Those moves then led to a broader collapse of the Bretton Woods fixed exchange rate system, and accelerated the arrival of floating exchange rates with the Smithsonian agreement of December 1971.
Trump has no equivalent concrete demands for US trading partners. Nixon’s demand to let the exchange rates float was something that could happen immediately and was fully transparent. And it was virtually impossible to reverse. Once it happened, the US could remove the import duty. The other demands of the time — better treatment of US exports and more burden-sharing for defense — went largely unheeded, as it is much harder to negotiate over such long-term and hard-to-define changes.
Recommended.
Crime vs. disorder
A similar pattern emerged in my recent report on crime in Washington, D.C. There, too, there are signs that disorder has risen, relative to both the pandemic and pre-pandemic, as the police have attended to it less. Unsheltered homelessness, unsanitary conditions, shoplifting, farebeating—all seem to have become more common in D.C. And those problems have come as a smaller police force has deprioritized order enforcement—if you look at table 2 of that report, you’ll see that arrests for minor crimes were down as much as 99% in 2023 relative to 2019.
I increasingly think this is a more general phenomenon. Disorder is not measured like crime—there is no system for aggregating measures of disorder across cities. But if you look for the signs, they are there. Retail theft, though hard to measure, has grown bad enough that major retailers now lock up their wares in many cities. The unsheltered homeless population has risen sharply. People seem to be controlling their dogs less. Road deaths have risen, even as vehicle miles driven declined, suggesting people are driving more irresponsibly. Public drug use in cities from San Francisco to Philadelphia has gotten bad enough to prompt crack-downs.
These are fuzzy signals, but they jive with my personal experience (for whatever that is worth). In the half-dozen cities I’ve visited in the past year, visible disorder has been a common feature.
Here is more from Charles Fain Lehman.
Why “Buy American” is not such a great idea
That is the topic of my latest Bloomberg column, here is one excerpt:
Then there is the money. European and South Korean infrastructure companies, for example, tend to be much less expensive than US firms. The Buy American Act often prevents them from bidding on US contracts. And when the federal government is spending more on contracts for US suppliers, it has less money to invest elsewhere.
And:
Under current law, as has been supported by the administrations of both Donald Trump and Joe Biden, the domestic-content requirement is slated to rise to 75% in 2029. That is likely to raise the cost of Buy American provisions even more, especially in a world where more countries are entering the market as cost-effective producers. Furthermore, the higher that percentage, the more likely it is that the US is protecting sectors that spend their money on capital goods, rather than on US labor. Job creation or job protection is likely to dwindle accordingly. In the future, use of the program may cost between $154,000 and $237,000 per job.
The column draws on this NBER working paper by
The Value of De Minimis Imports
Section 321 of the 1930 Tariff Act allows up to $800 in imports per person per day to enter the US duty-free and with minimal customs requirements. Fueled by rising direct-to-consumer trade, these “de minimis” shipments have exploded yet are not recorded in Census trade data. Who benefits from this type of trade, and what are the policy implications? We analyze international shipment data, including de minimisshipments, fromthreeglobalcarriers andUS Customs and Border Protection. Lower-income zip codes are more likely to import de minimis shipments, particularly from China, suggesting that the tariff and administrative fee incidence in direct-to-consumer trade is pro-poor. Theoretically, imposing tariffs above a threshold leads to terms-of-trade gains through bunching, even in a setting with complete pass-through to linear tariffs. Empirically, bunching pins down the demand elasticity for direct shipments. Eliminating §321 would reduce aggregate welfare by $11.8-$14.3 billion and disproportionately hurt lower-income and minority consumers.
That is from a recent paper by Pablo Fajgelbaum and Amit Khandelwal.
IP and unrealized capital gains (from my email)
I was thinking about the unrealized cap gains tax after Taylor Swift’s endorsement today and I think I see a new problem distinct from those you and Alex have raised so far. Maybe someone else has pointed this out, but I figured I’d write out the logic and see what you think.
I think there is a big problem of unrealized capital gains in terms of IP.
Much IP is monetized via licenses and royalties that have long term perpetuity like payments that could go up or down based on other market conditions which would directly affect the value of the asset for more than the income growth from the asset.
An example by way of Taylor Swift:
She is expected to make 200M+ off the streaming of her music.
Her music rights would likely be considered an asset. These music rights would likely be valued as a perpetuity or cash flows/ discount rate. Perplexity reported a range of 5-10% as common in the entertainment business meaning Taylor’s current streaming rights are currently worth between 2B and 4B. (200M/.1 and 200M/.05).
If Spotify/Youtube get better at selling ads and increase their reimbursement rate by 10% then Taylor would receive 220M next year and song collection would grow to be worth between 2.2B and 4.4B for an unrealized gain of 200M to 400M.
Taylor would owe 25% tax on this gain or between 50-100M which would be greater than her additional earnings of 20M.
What makes this doubly ironic is, would the federal government force Taylor to sell the rights to her music to pay the cap gains tax?
One thing I forgot to mention is what share of patents in the medical field + copywriters have that sort of payment structure? Where they get a license for a certain future amount of payments. If the stream of payments increases what happens to the unrealized capital gains tax?
There was that baseball player that got paid with that comically large future contract. Is that an asset too?
From Stephen Jonesyoung.
Facts about Britain
- Between 2004 and 2021, before Russia’s invasion of Ukraine, the industrial price of energy tripled in nominal terms, or doubled relative to consumer prices.
- With almost identical population sizes, the UK has under 30 million homes, while France has around 37 million. 800,000 British families have second homes compared to 3.4 million French families.
- Per capita electricity generation in the UK is just two thirds of what it is in France (4,800 kilowatt-hours per year in Britain versus 7,300 kilowatt-hours per year in France) and barely over a third of what it is in the United States (12,672 kilowatt-hours per year). We are closer to developing countries like Brazil and South Africa in terms of per capita electricity output than we are to Germany, China, Japan, Sweden, or Canada.
- Britain’s last nuclear power plant was built between 1987 and 1995. Its next one, Hinkley Point C, is between four and six times more costly per megawatt of capacity than South Korean nuclear power plants, and four times as expensive as those that South Korea’s KEPCO has agreed to build in Czechia.
- Tram projects in Britain are two and a half times more expensive than French projects on a per mile basis. In the last 25 years, France has built 21 tramways in different cities, including cities with populations of just 150,000, equivalent to Lincoln or Carlisle. The UK has still not managed to build a tramway in Leeds, the largest city in Europe without mass transit, with a population of nearly 800,000.
- At £396 million, each mile of HS2 will cost more than four times more than each mile of the Naples to Bari high speed line. It will be more than eight times more expensive per mile than France’s high speed link between Tours and Bordeaux.
- Britain has not built a new reservoir since 1992. Since then, Britain’s population has grown by 10 million.
- Despite huge and rising demand, Heathrow annual flight numbers have been almost completely flat since 2000. Annual passenger numbers have risen by 10 million because planes have become larger, but this still compares poorly to the 22 million added at Amsterdam’s Schiphol and the 15 million added at Paris’s Charles de Gaulle. The right to take off and land at Heathrow once per week is worth tens of millions of pounds.
- The planning documentation for the Lower Thames Crossing, a proposed tunnel under the Thames connecting Kent and Essex, runs to 360,000 pages, and the application process alone has cost £297 million. That is more than twice as much as it cost in Norway to actually build the longest road tunnel in the world.
That is from the new study of British stagnation by Ben Southwood, Samuel Hughes, and Sam Bowman.