Category: Law

Pacific Heights: A Movie Ahead of Its Time

by  Alex Tabarrok in

Pacific Heights is a 1990 movie starring Michael Keaton, Melanie Griffith, and Matthew Modine. Conventionally described as a “psychological thriller,” or a horror movie it’s actually a Kafkaesque analysis of tenancy rights and the legal system. The movie centers on a young couple, Drake and Patty, who purchase a San Francisco Victorian with dreams of fixing it up and renting several of the units to help pay the mortgage. Their dream turns into a nightmare  when Carter Hayes (Michael Keaton) moves in and exploits tenant protection laws to torment and exploit them.

Hayes moves in without permission and without paying rent and he changes the locks. It doesn’t matter. When Drake (Modine) shuts off the power and heat, Hayes calls the police and the police explain to Drake:

What you did is against the law….turn the power and heat back on and apologize because according to the California civil code he has a right to sue and most likely he will win. If he’s in, he has rights, that’s how it works.

A lawyer later adds “He’s taken possession so whether he signed a lease or paid money or not he’s legally your tenant now and he is protected by laws that say you have to go to court to prove that he has to be evicted but the net effect of these laws is to…slowly drive you bankrupt and insane.”

What makes Pacific Heights a horror movie is that the tenant’s rights laws depicted are very real. Here’s just one example of thousands from NYC:

As I wrote on twitter “Decades of anti-landlord legislation has created a moocher-class of squatters who steal homes and then call the police on the owners.” Moreover, even today such laws continue to be added to the books. A bill in Congress, for example, would prevent landlords from being able to screen tenants for criminal records.

All of this has been exacerbated recently by COVID laws preventing eviction (some of which remain but which acclimatized some tenants to not paying rent and contributed to court backlogs), court backlogs and the greater ease of finding unoccupied houses using foreclosure data, death announcements, Zillow and so forth. In extreme cases it can take decades to evict a squatter who uses the law to their advantage.

Returning to Pacific Heights, what the movie gets wrong is the second half where Patty (Melanie Griffith) extracts revenge against Hayes. A less cathartic but more accurate ending would have had the couple exhausted with the complexities of tenant law and the court system and finally giving up when they realize that the law is not for them. Instead, they pay Carter Hayes a ransom to leave their own home. Of course, Drake and Patty choose never to rent to anyone ever again.

My excellent Conversation with Marilynne Robinson

by  Tyler Cowen in

Here is the audio, video, and transcript.  Here is the episode summary:

Marilynne Robinson is one of America’s best and best-known novelists and essayists, whose award-winning works like Housekeeping and Gilead explore themes of faith, grace, and the intricacies of human nature. Beyond her writing, Robinson’s 25-year tenure at the famed Iowa Writers’ Workshop allowed her to shape and inspire the new generations of writers. Her latest book, Reading Genesis, displays her scholarly prowess, analyzing the biblical text not only through the lens of religious doctrine but also appreciating it as a literary masterpiece.

She joined Tyler to discuss betrayal and brotherhood in the Hebrew Bible, the relatable qualities of major biblical figures, how to contend with the Bible’s seeming contradictions, the true purpose of Levitical laws, whether we’ve transcended the need for ritual sacrifice, the role of the Antichrist, the level of biblical knowledge among students, her preferred Bible translation, whether The Winter’s Tale makes sense, the evolution of Calvin’s reputation and influence, why academics are overwhelmingly secular, the success of the Iowa Writer’s Workshop, why she wrote a book on nuclear pollution, what she’ll do next, and more.

And an excerpt:

COWEN: As a Calvinist, too, would not, in general, dismiss the Old Testament, what do you make of a book such as Leviticus? It’s highly legalistic, highly ritualistic. Some Christians read Leviticus and become a split Christian Jew almost. Other Christians more or less dismiss the book. How does it fit into your worldview?

ROBINSON: I think that when you read Herodotus, where he describes these little civilizations that are scattered over his world — he describes them in terms of what they eat or prohibit, or they paint themselves red, or they shave half their head. There are all these very arbitrary distinctions that people make in order to identify with one clan over against another.

At the point of Leviticus, which of course, is an accumulation of many texts over a very long time, no doubt, but nevertheless, to think of it as being Moses — he is trying to create a defined, distinctive human community. By making arbitrary distinctions between people so that you’re not simply replicating notions of what is available or feasible or whatever, but actually asking them to adopt prohibitions of food — that’s a very common distinguishing thing in Herodotus and in contemporary life.

So, the arbitrariness of the laws is not a fault. It is a way of establishing identification of one group as separate from other groups.

COWEN: So, you read it as a narrative of how human communities are created, but you still would take a reading of, say, Sermon on the Mount that the Mosaic law has been lifted? Or it’s still in place?

ROBINSON: Oh, it’s not still in place. We’ve been given other means by which to create identity. Moses was doing something distinctive in a certain period of the evolution of Israel as a people. He didn’t want them to be Egyptians. He didn’t want them to subscribe to the prevailing culture, which was idolatrous, and so on. He’s doing Plato in The Republic. He’s saying, “This is how we develop the idea of a community.”

Having said that, then there are certain other things like “Thou shall not kill,” or whatever, that become characterizing laws. Jesus very often says, when someone says to him, “How can I be saved?” He says, “You know the commandments.” It’s not as if God is an alien figure from the point of view of Christ, whom we take to be his son.

Interesting throughout.

*Build, Baby, Build*, by Bryan Caplan

by  Tyler Cowen in

Here is my blurb for the book:

“Bryan Caplan is a pioneer in the use of graphic novels to expound economic concepts. His new book Build, Baby, Build is thus a landmark in economic education, how to present economic ideas, and the integration of economic analysis and graphic visuals. If you want to learn the economics, ethics, and political economy of YIMBY— namely the freedom to build this is the very best place to start.”

And from Bryan:

Please forgive my laughable arrogance, but I assure you that BBB is the most fascinating book on housing regulation ever written. In fact, I assure you that there will never be a more fascinating book on housing regulation!

While objective self-interest impels you to buy the book as soon as it releases, it would be a huge favor to me if you would take the extra step of pre-ordering right away from Amazon, Barnes and Noble, Bookshop, Apple Books, or anywhere else. Why? Because all pre-orders count as “first-week sales” for national best-seller lists — and I’m aiming high.

Here is the book’s home page.  It is really very good.

The Puzzling Law and Economics of Out-of-State Tuition

by  Alex Tabarrok in

Bryan Caplan has a good post on out-of-state tuition:

[State schools] almost always charge students from their own state much lower tuition. In the most recent data, average out-of-state tuition for four-year colleges was $26,382, versus $9,212 for in-state — roughly a 3:1 ratio.

I’ve argued for a long time that an enterprising lawyer ought to sue on the grounds that this is a violation of the constitution’s Privileges and Immunities Clause (Article IV, Section 2): “The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.” Indeed, in Toomer v. Witsell the Supreme Court noted that

“…without some provision of the kind removing from the citizens of each State the disabilities of alienage in the other States, and giving them equality of privilege with citizens of those States, the Republic would have constituted little more than a league of States; it would not have constituted the Union which now exists.

and they ruled that it was unconstitutional to charge out-of-state fisherman a much higher price for a fishing license than in-state fishermen.

Thus, we hold that commercial shrimping in the marginal sea, like other common callings, is within the purview of the privileges and immunities clause. And since we have previously concluded that the reasons advanced in support of the statute do not bear a reasonable relationship to the high degree of discrimination practiced upon citizens of other States, it follows that § 3379 violates Art. IV, § 2, of the Constitution.

Appellants maintain that by a parity of reasoning the statute also contravenes the equal protection clause of the Fourteenth Amendment. That may well be true, but we do not pass on this argument, since it is unnecessary to disposition of the present case.

Education is more important than fishing licenses, especially in creating a Union, the purpose Article IV, S.2, thus I suggest the case for the unconstitutionality of out-of-state tuition is high.

Caplan’s article is about the economics, not the legality, of out-state-tuition. although the two issues have some bearing. Caplan asks how are we to think about the out-state fee. Is the out–of-state fee the monopoly price and the in-state fee the competitive price? Or is the out-of-state fee the competitive price and the in-state fee a highly subsidized price?

If the out-of-state fee represents a monopoly price, it is surprising that there isn’t more competition to attract out-of-state students. Given the potential profitability of out-of-state fees, it’s also curious why sought-after institutions such as UVA limit out-of-state enrollment! Moreover, out-of-state students are likely to have a more elastic demand than in-state students. After all, the out-of-state students have 49 states from which to choose while the in-state students may prefer to live closer to home. Thus, theory suggests that it’s the in-state students who should be charged the higher price not the out-of-state students.

Caplan instead argues that we should think of the out-of-state fee as the competitive (close to cost) price and the in-state fee as highly subsidized. But if we do that then state subsidies are much, much higher than is commonly considered. Indeed, so much so, that we have to start thinking about “dark subsidies” (like dark matter) to account for the differences (Caplan suggests such things as the implicit land subsidy).

My view is that the in-state fee is close to costs (after the obvious subsidies are taken into account) and the out-state fee is well above cost but that it’s not a “monopoly” price per se because the state-schools are not profit-maximizers. Instead, some in-state schools are able to attract some out-state students and earn a bit of cream to spread the fixed costs but they can do so only under a political constraint not to let to many out-of-state students in because the voting public thinks every out-of-state student in the “good” school could have been their in-state kid (this may well be false, the out-of-state kids allow the university to expand but it’s how the voters think.)

I agree with Caplan, however, that the economics of out-of-state and in-state tuition are sorely under researched and not well understood. Moreover, the economics connect to the constitutional issues, because subsidies for in-state students (i.e. with taxpaying parents) are more likely to be constitutionally acceptable than naked discrimination against out-of-state students simply because they are residents of another state of the union.

Haiti vs. the Dominican Republic

by  Tyler Cowen in

I am setting aside most of the cultural and “macro” issues, and just considering policy, in my latest Bloomberg column.  Excerpt:

Consider agriculture. If you fly over Hispaniola, you can see a notable difference between the Haitian and Dominican sides of the border. The Dominican side has plenty of trees, whereas the Haitian side is denuded. Much of that can be explained by Haiti’s history of weaker property rights. A “tragedy of the commons” has led to systematic exploitation of Haitian land.

The deforestation of Haiti dates from at least 1730, when French colonial policies, timber exports and the clearing of the land for coffee production all did damage. That hurt the prospects for Haitian agriculture, but much of the tree-clearing took place in the middle of the 20th century. Haitians have long used charcoal as an energy source, which led to unchecked deforestation, soil erosion and desertification. Thus, despite its beautiful natural setting, most of Haiti does not appear green and sparkling.

In the Dominican Republic, deforestation is also a problem — but not nearly on the scale of Haiti. Forests still cover about 40% of the country’s land (estimates for Haiti have ranged as low as 2%). The Dominican Republic has some national parks and reforestation programs, and developed alternative energy sources to reduce the demand for charcoal. Forest cover, and the quality of the soil, made a comeback. The country is also working toward selling its reforestation for carbon credits, giving it further economic incentive to protect its land.

To the extent that the Dominican Republic still experiences deforestation, it often comes from livestock cultivation, a far more economically productive activity than gathering wood for charcoal.

To citizens of wealthy countries, these differences may not sound enormous. But agriculture is an important driver of early economic development. Surpluses from agriculture enable the accumulation of savings, which finances broader commercial investment and helps people start small businesses. The economy obtains a base for diversifying into manufacturing, as happened in East Asia. Ethiopia’s double-digit growth spurt, before the recent tragic civil wars, also was rooted in agricultural productivity gains.

Today the Dominican Republic is essentially self-sufficient in food, including rice. According to the US government, Haiti now relies on imports for “a significant portion of the agricultural products it consumes,” including 80% of its rice. In 1981, by contrast, food imports were only 18% of the Haitian diet.

There are further arguments at the link.

Marc Andreessen and I talk AI at an a16z American Dynamism event

by  Tyler Cowen in

a16z has issued the talks from that event, and we are issuing it too, as a bonus episode of CWT.  But note it is shorter than usual, and not the typical CWT format — this was done for an audience of actual DC human beings!

Excerpt:

COWEN: Why is open-source AI in particular important for national security?

ANDREESSEN: For a whole bunch of reasons. One is, it is really hard to do security without open source. There are actually two schools of thought on information security, computer security broadly, that have played out over the last 50 years. There was one school of security that says you want to basically hide the source code, and you want to hide the source code precisely. This seems intuitive because, presumably, you want to hide the source code so that bad guys can’t find the flaws in it, right? Presumably, that would be the safe way to do things.

Then over the course of the last 30 or 40 years, basically, what’s evolved is the realization in the field (and I think very broadly) that actually, that’s a mistake. In the software field, we call that “security through obscurity,” right? We hide the code. People can’t exploit it. The problem, of course, is: okay, but that means the flaws are still in there, right?

If anybody actually gets to the code, they just basically have a complete index of all the problems. There’s a whole bunch of ways for people to get the code. They hack in. It’s actually very easy to steal software code from a company. You hire the janitorial staff to stick a USB stick into a machine at 3:00 in the morning. Software companies are very easily penetrated. It turned out, security through obscurity was a very bad way to do it. The much more secure way to do it is actually open source.

Basically, put the code in public and then basically build the code in such a way that when it runs, it doesn’t matter whether somebody has access to the code. It’s still fully secure, and then you just have a lot more eyes on the code to discover the problems. In general, open source has turned out to be much more secure. I would start there. If we want secure systems, I think this is what we have to do.

Marc is always in top form.

Those new service sector jobs, squatter removal edition

by  Tyler Cowen in

Via the excellent Samir Varma, hail to Handyman Flash Shelton:

After local law enforcement couldn’t help, Shelton spent days dissecting laws around squatters’ rights. He managed to get rid of the women within a day by drafting a lease agreement with his mother designating him the legal resident of the home, then took over the house when the women stepped out one day and barred them from re-entering.

Now he uses his experience to provide squatter removal services for others and has successfully helped several landlords in California reclaim their homes.

“I think it’s just something that is coming to light … and I believe that it’s going to get worse,” Shelton told Fox News. “Squatters’ rights were never intended to allow the takeover of residential maintained properties. So until we make it criminal, it’s just going to keep happening, and people are going to be afraid to rent out or buy.”

In October, a 4,000 square foot, five-bedroom Atlanta home was taken over by squatters who ran an illegal strip club inside on weekends and kept horses on the property, neighbors told WSB-TV. Ultimately, the FBI arrested four people residing in the trashed house.

Another Atlanta resident discovered squatters had broken into her property that she was selling. She said there was prostitution, drug use and $30,000 worth of damage done to her home.

Here is the full story, here is (gated) LA Times coverage.

TikTok divestiture

by  Tyler Cowen in

I’ve blogged this in the past, and don’t have much to add to my previous views.  I will say this, however: if TikTok truly is breaking laws on a major scale, let us start a legal case with fact-finding and an adversarial process.  Surely such a path would uncover the wrongdoing under consideration, or at least strongly hint at it.  Alternately, how about some research, such as say RCTs, showing the extreme reach and harmful influence of TikTok?  Is that asking for too much?

Now maybe all that has been done and I am just not aware of it.  Alternatively, perhaps this is another of those bipartisan rushes to judgment that we are likely to regret in the longer run.  In which case this would be filed under “too important to be left to legal fact-finding and science,” a class of issues which is sadly already too large.

The Irish reject a “Woke” constitutional change

by  Tyler Cowen in

Ireland’s effort to remove old-fashioned family values from its constitution suffered a double defeat Saturday as voters rejected the amendments on offer as maddeningly vague and threatening to property rights…

In final results announced Saturday night, the amendment to change the constitutional definition of family was rejected by 67.7 percent of voters. The proposed changes on family care took an even harsher drubbing, with 73.9 percent against — the greatest defeat of an amendment in Irish constitutional history…

The outcome means that the 1937 constitution, the legal bedrock for the Irish state, will continue to declare marriage a requirement for any family, while women’s value to society comes from delivering “duties in the home.”

Those notions from a bygone era contrast starkly with the reality of Ireland today, where two-fifths of children are born out of wedlock and most women work outside the home.

The government, with support from all the main opposition parties, had wanted the public to accept two amendments.

Here is the full story, via Rich D.

In Conversation with Próspera CEO Erick Brimen & Vitalia Co-Founder Niklas Anzinger

by  Alex Tabarrok in

During my visit to Prospera, one of Honduras’ private governments under the ZEDE law, I interviewed Prospera CEO Erick Brimen and Vitalia co-founder Niklas Anzinger. I learned a lot in the interview including the real history of the ZEDE movement (e.g. it didn’t begin with Paul Romer). I also had not fully appreciated the power of reciprocity stacking.

Companies in Prospera have the unique option to select their regulatory framework from any OECD country, among others. Erick Brimen elaborated in the podcast how this enables companies to do normal, OECD approved, things in Prospera which literally could not be done legally anywhere else in the world.

…so in the medical world for instance you have drugs that are approved in some countries but not others and you have medical practitioners that are licensed in some countries but not the others and you have medical devices approved in some countries but not others and there’s like a mismatch of things that are approved in OECD countries but there’s no one location where you can say hey if they’re approved in any country they’re approved here. That is what Prosper is….Our hypothesis is that just by doing that we can leapfrog to a certain extent and it’s got nothing to do with the wild west or doing weird things.

…so here so you can have a drug approved in the UK but not in the US with a doctor licensed in the US but not in the UK with a medical device created in Israel but not yet approved by the FDA following a procedure that has been say innovated in Canada, all of that coming together here in Prospera.

A different perspective on power grid YIMBY and NIMBY (from my email)

by  Tyler Cowen in

Just flagging that while YIMBY is important…it’s only part of the solution. And it’s unclear just how important it is compared to the issues below because so few projects are even proposed and most that are do in fact get built without too much NIMBY delay (though it certainly does happen and as an attorney I’ve had clients on both sides of those fights).

A major cause of the decline in transmission miles built is that transmission owners (typically incumbent utilities often with some amount of government granted monopoly power) have chosen not to build the kind of high voltage transmission lines that bring power from generation, largely in an effort to avoid competition and construction risk. In short, they make more money building smaller projects that maintain reliability but don’t increase the transmission capacity of the system because those smaller projects are immune from planning scrutiny and competition.

FERC is currently sitting on a new rule that will attempt to improve this, though in my opinion should go much further than I suspect it will. Eg, FERC should significantly roll back the rate of return and assumption of prudence for small projects that are increasingly making up the bulk of transmission investments as well as forcing transmission planners to fully incorporate multiple benefits of projects when deciding what projects get priority (similar to what the Midcontinent Independent System Operator does for its Long Range Transmission Planning portfolios).

Hope that context is helpful. NIMBY is all the talk in transmission right now, but it is in reality not the main source of drag on development in my experience. In some ways I’d love for NIMBY to be the biggest hurdle because it would at least mean we’d be trying to build ambitious new projects.

From Anonymous.

We need YIMBY for the U.S. power grid

by  Tyler Cowen in

The amount of new transmission line installed in the United States has dropped sharply since 2013, when 4,000 miles were added. Now, the nation struggles to bring online even 1,000 new miles a year. The slowdown has real consequences not just for companies but for the climate. A group of scientists led by Princeton University professor Jesse Jenkins warned in a report that by 2030 the United States risks losing out on 80 percent of the potential emission reductions from President Biden’s signature climate law, the Inflation Reduction Act, if the pace of transmission construction does not pick up dramatically now.

I had not know this:

To answer the call, some states have passed laws to protect crypto mining’s access to huge amounts of power.

Or that this had come so far:

Northern Virginia needs the equivalent of several large nuclear power plants to serve all the new data centers planned and under construction. Texas, where electricity shortages are already routine on hot summer days, faces the same dilemma.

Here is the full WaPo article by Evan Halper.

Tide turning in Washington State?

by  Tyler Cowen in

From an MR reader:

Good story here about one man in Washington state fighting the battle against the progressive tide. He single handedly got six initiatives on the ballot to repeal progressive reforms over the past few years. These include a police pursuit law that prevents police from chasing criminals in most cases, and a capital gains tax despite the Washington State constitution specifically banning income tax.

One man takes on state government and wins after passage of 3 voter initiatives (fox13seattle.com)

Big recent news is that 3 of the 6 initiatives have already passed in the State legislature, and the rest will be sent to the voters as ballot questions.

We also have a new moderate city council in Seattle that is pressing charges against protestors who disrupt city meetings, making hard drugs illegal again, and trying to re-fund the police department. Also it looks like 12 (out of hundreds) of protestors that recently shut down I-5 in the heart of the city will be prosecuted.  This all would have seemed impossible under the former mayor and city council.  Definitely a feeling in the air that the tide has turned to some degree.

I await further reports.

What can be learned from Singaporean health care institutions?

by  Tyler Cowen in

Besides the usual, that is.  Max Thilo of the UK has a new and excellent study on this, here is one excerpt from the foreword by Lord Warner:

Second, and critical, the Singaporeans are not fixated on delivering services from acute hospitals – the most expensive part of any healthcare system because of its fixed overheads and expensive maintenance. As this report demonstrates “the reason why Singapore spends so much less on health than other developed countries is its low hospital utilisation.” Instead, Singapore has invested in highly productive polyclinics and low-cost telemedicine. The result is that Singaporeans can visit their GP more often than English patients. In their polyclinics they also improve productivity by separating chronic and acute care.

And from Max:

During a recent trip, I met with the CEO of the largest telemedicine provider in Singapore. He casually mentioned that UK patients were already using his service. This seemed surprising. No comprehensive data is available for the costs of UK telemedicine services, so I googled the cost of online appointments in the UK and Singapore. Singaporean appointments are less than half the price of those in the UK. The most affordable online appointment I found in the UK was £29. Yet, many providers charge significantly more – for instance, Babylon Health lists its price for private GP appointments at £59. In contrast, Doctor Anywhere, Singapore’s leading telemedicine provider, offers services for just £12.27 Doctor Anywhere has an app where patients can log on and see patients virtually. They make and then register the diagnosis. The rest of the process, including referrals and prescriptions, is automated.

Recommended.