Category: Law

Immigration enforcement ideas

My preferred immigration plan would be to massively increase the number of visas, set a very minimal bar to meet–not a terrorist, not a criminal, not carrying a hideous contagious disease–and then auction off various tranches of visas, classed not by type but by length of stay.  Let the visas be transferrable.  Then let immigrant communities do enforcement for you, as illegal immigrants suddenly threaten to erode the price of their valuable asset: the right to stay in-country.

That is from Jane Galt

The implicit model is that once people have spent money for an asset they value that asset more than they would value their prospective income stream from living in the United States.  Jane postulates a kind of endowment effect for immigrants.  Moving away from family-based immigration also limits potential trustable allies for law-breaking. 

I suspect that auction-based proposals will result in too few legal unskilled immigrants, and also more illegal immigration of the unskilled, but I would not rule out this idea just yet.  I’m still waiting for someone to write down an impossibility theorem for a good immigration policy, noting that much of the domestic demand is for immigrant traits (e.g., cheapness and immediate readiness to work) which are strongly correlated with illegality.  That is some employers want (explicitly or implicitly) to deny some of their workers the benefits of integrating with the U.S. capital stock.  Has anyone analyzed immigration policy in terms of finding optimal price discrimination on the side of a country-sized monopsonistic buyer…?

Defeat the modernity

Sadly the Dutch are turning back:

In cities across the Netherlands,
mayors and town councils are closing down shops where marijuana is
sold, rolled and smoked.  Municipalities are shuttering the brothels
where prostitutes have been allowed to ply their trade legally. 
Parliament is considering a ban on the sale of hallucinogenic "magic
mushrooms."  Orthodox Christian members of parliament have introduced a
bill that would allow civil officials with moral objections to refuse
to perform gay marriages.  And Dutch authorities are trying to curtail
the activities of an abortion rights group that assists women in
neighboring countries where abortions are illegal.

The very interesting article ascribes these tendencies to growing unease about globalization and immigration.  Here is another shift of opinion:

"In the past, we looked at legal prostitution as a women’s liberation
issue; now it’s looked at as exploitation of women and should be
stopped," said de Wolf, sitting in the offices of the medical complex
where he works as an HIV-AIDS researcher.

This article can be read as illustrating many different points of view.  I’ll start with two points.  First, people [voters] need to feel they are in control, even if they indulge this preference irrationally.  Second, Europe will sooner become like the United States than vice versa.

Can this work? High state-level fines for driving offenses

Say you are driving 78 mph on the Capital Beltway and a state trooper
tickets you for "reckless driving — speeding 20 mph over."  You will
probably be fined $200 by the judge.  But then you will receive a new,
additional $1,050 fine from the Old Dominion, payable in three
convenient installments.  So convenient that you must pay the first one
immediately, at the courthouse.

Coming to Virginia, July 1.  Imagine all the people braking as they cross the Potomac coming from Maryland.  The argument against, of course, is simply that traffic cannot work at 55 mph and this puts too much discretion into the hands of police.  Or will some poor offenders simply flee and set off a police chase?  (If you can’t pay the fine you lose your license.)  The goal of the fines is to fund state-level public works and perhaps the precedent is not ideal either.

Addendum: Larry Ribstien piles on.

How Should the FDA Incentivize?

The FDA often wants manufacturers to provide additional studies such as for pediatric uses or for testing of off-label uses of already approved drugs.  How should the FDA incentivize these studies?  Long-time reader Steve (who has good reason to know and thus shall otherwise remain anonymous) writes:

I was reading an article about pediatric drug testing and the BPCA, and I had an epiphany–the people at the 
table don’t have the incentives necessary to solve the problem.

…possible solutions to the problem of limited pediatric testing appear to boil down to: 1) Modify the reward (primarily through exclusivity); 2) 
Give out grants; and 3) Force studies through a government mandate. 
These solutions reflect the interests of the three groups sitting at 
the bargaining table, i.e., 1) Big pharma, 2) Academics, and 3) 
Bureaucrats. What is totally missing is the idea that incentives can be created on both the risk and reward side of the equation. … For example, if the FDA fast-
tracked NDAs with pediatric data, and guaranteed a decision in 90 days, they could, with minimal cost, cause a major shift in incentives. 

    …Any thoughts on how the situation can be improved?

The FDA significantly raises the costs of creating new drugs – there are some benefits in better safety and efficacy but I think the current system results in too much drug lag and drug loss.  I would cut back on FDA regulation considerably but I am not against more government-financed studies of safety and efficacy.  Once a drug is on the market and especially when it is off-patent, knowledge about the drug is a public good and thus often underprovided.  I would thus reduce the FDA’s control over drug choice but increase the budget for drug information e.g. through NIH financed studies like the Women’s Health Initiative which shockingly showed that then widely used homorone replacement therapy increased not decreased coronary disease.


Libertarian paternalism

There is a new Econoblog, Mario Rizzo vs. Richard Thaler.  Here is Mario in closing:

Richard wants to use the word "libertarian" to differentiate his
paternalism from the traditional variants.  Yet he uses the word in a
fuzzy way.  He wants to define libertarian along a continuous variable
— the cost of exercising the exit option.  However, libertarianism, as
every libertarian understands it, uses a bright-line test — who
imposes the cost?

The phrase "libertarian paternalism" is misleading.  It isn’t libertarian, but I don’t mean this point in the usual "rage against governmental coercion" sort of way.  A more consistent Thaler would simply emphasize that both paternalism and coercion are often ill-defined concepts or perhaps matters of degree.  Thaler wants to shock us by rejecting non-paternalism but when pressed he denies the underlying distinctions behind his big claim in the first place.  In other words, the whole debate should be focused on specific proposals, there is less to the philosophy than meets the eye. 

Protection Racket

Who is protecting borrowers from "predatory lending"?  The trial lawyers!  Feel better?  I didn’t think so.  Ted Frank, writing in the Wall Street Journal has the story.  Yours truly makes an appearance.

The trial lawyers’ entrepreneurial solution is to go
after the deep pocket. And so we have lawsuits alleging that the
investment banks providing financing to the mortgage banks are "aiding
and abetting" the alleged fraud through securitization.

What would be the upshot? If an investment bank is
potentially liable for every conversation and every phone call involved
in the underlying mortgages, the costs of due diligence becomes
prohibitive, far outstripping the fees it can bring in for packaging
the loans…The securitization
simply will not take place….

To make matters worse, the House Financial Services Committee held
hearings last week on writing this judicial mistake — and more — into
federal statutory law. Committee Chair Barney Frank (D., Mass.), wants
to hold not only the packagers of mortgages liable but also the purchasers in
the secondary market. "Anybody, including the original borrower, can
make a claim, and the liability would go up the chain," Mr. Frank told
the press….

It is not speculation to say that the results will be disastrous if
such a bill becomes law….the 2002 Georgia Fair Lending Act created unlimited liability
to purchasers of mortgages for any legal violations by the loan
originator…all three of the major credit ratings agencies (S&P, Moody’s, and
Fitch) announced they could not rate any securitization containing any
loans subject to Georgia law for fear that the entire security would be
tainted by unquantifiable liability. Liquidity for the state’s mortgage
market disappeared and the Georgia legislature quickly repealed the
worst parts of the law to restore access to credit.

Trade Secrets

In Race, Poverty and American Tort Awards (and here), Eric Helland and I show that tort awards increase strongly with county poverty rates especially with minority poverty.  A 1% increase in black poverty rates, for example, can increase tort awards by 3-10 percent with a similar increase in Hispanic poverty rates.   Careful forum shopping can easily raise awards by 50-100%.

Anthony Buzbee, a famed plaintiff’s attorney, inadvertently let the cat out of the bag recently when talking about Starr county in Texas.

"That venue probably adds about seventy-five percent to the value of
the case," he said. "You’ve got an injured Hispanic client, you’ve got
a completely Hispanic jury, and you’ve got an Hispanic judge. All
right. That’s how it is."

In other parts of Texas, Buzbee went on, a plaintiff may have the
burden of showing "here’s what the company did wrong, all right? But
when you’re in Starr County, traditionally, you need to just show that
the guy was working, and he was hurt. And that’s the hurdle: Just prove
that he wasn’t hurt at Wal-Mart, buying something on his off time, and
traditionally, you win those cases."

Buzbee’s words were caught on tape.  Need I tell you the rest of the story?  Buzbee, of course, is suing.  I wonder where he will bring the case?

Thanks to Ted Frank at Overlawyered for the pointer.

The economics of traffic fines

“Everyone seems to have a pre-programmed “set point” for happiness — a level of happiness they’re genetically programmed for, and to which they’ll always tend to return. There isn’t much that can be done to change this set point.

Genetics and inheritance seem to be responsible for as much as half your tendency towards happiness or unhappiness.

Even huge positive changes in a person’s life — getting married, winning the lottery — only affect happiness levels for about six months.

The rich are certainly happier than the abject poor. But for most people, more money doesn’t tend to lead to much additional happiness, at least once basic material needs have been met.

Three of the hardest things to cope with emotionally are widowhood (or widowerhood), longterm unemployment, and caring for a sick loved one.

The best way to deal with a case of severe, long-lasting unhappiness is to take a mood-boosting pill. In many cases, a six-month course of treatment will effectively jolt the depressed person out of his or her rut.

Pursuing sex and status don’t make people happy. They’re things that we, being human, do — but they don’t necessarily lead to happiness. [TC: What if they conducted these happiness surveys *during* the act?]

People who are forever chasing after happiness — who crave blasts of euphoria — tend to be much less happy than people who are willing to let life (and their moods) take their own course.

Some tips for being happy:

If your job isn’t especially rewarding, pursue a hobby you love, one that delivers experiences of “flow.”

Don’t focus too much on making money and buying things.

Maintain a wide variety of friendships, and don’t spend too much time alone.

Cultivate gratitude and forgiveness, including forgiveness towards yourself.

Don’t try to feel great all the time — that’s not the way life works.”

My take: The conventional (academic) wisdom underrates money, status, sex, and marriage. [Could it be that academics do not always get these goods, and thus hope to manage their expectations and feel better about their failures?] As pure “ends in themselves,” they can be a mixed bag. But if you can pursue them in a meaningful way, enjoy the process, and meet with relative success…well…you won’t forget Oscar Wilde: “The only thing worse than being famous is not being famous,” etc.

Here is Michael’s full post, replete with useful happiness links at the end.

Here is some earlier advice from MR guest-blogger Bryan Caplan, who recommends “gratitude journals.” And here are some philosophical ruminations on happiness and utilitarianism, from Will Wilkinson.

Prizes and Open Source Software

Richard Branson and Al Gore announced today a $25 million prize for the best way to remove significant amounts of carbon dioxide from the atmosphere.

Prizes can draw on dispersed knowledge to produce solutions that were unlikely to have been foreseen in advance.  Open source software has a similar advantage –  with enough eyes all bugs are shallow. 

I think prizes are becoming more common not because people have suddenly learned of their advantages but because the internet has magnified their advantages.  A prize today can at low-cost attract and draw from a much larger pool of contestants than in the past.  The rise of open source software and the rise of prizes are thus similar responses to the same improvement in communications technology.   

Thanks to Lance at A Second Hand Conjecture for the pointer.

Abigal Alliance v. FDA

In May I wrote about the stunning ruling by the DC Circuit Court of Appeals that dying patients have
a due process right to access drugs once they have been through
FDA approved safety trials.  (See the link for some amazing quotes from the ruling.)  The case is now on appeal and possibly headed to the Supreme Court and I am thrilled to have a role.

I am one of the authors of an Amici Curiae brief, a friend of the court brief.  The DC Circuit Court of Appeals made it’s ruling based on the right to control one’s own body:

A right of control over one’s body has deep roots in the common law. The
venerable commentator on the common law William Blackstone wrote that the right
to “personal security” includes “a person’s legal and uninterrupted enjoyment
of his life, his limbs, his body, [and] his health,”…barring a terminally ill
patient from use of a potentially life-saving treatment impinges on this right
of self-preservation.

But the court noted that a patient’s fundamental right could be rebutted if the FDA can show
that its policy of barring access to these drugs is "narrowly tailored
to serve
a compelling governmental interest."

The brief, submitted by Jack Calfee, Dan Klein, Sam Peltzman, Benjamin Zycher and myself, argues that barring access to experimental drugs does not serve a compelling governmental interest and in fact reduces patient welfare.

Unfortunately, I do not think that the Abigail Alliance can win the case; recognizing the rights that the DC Circuit of Appeals recognized would be too big a blow to our nanny state.  Nevertheless, if we can help the court to be aware of some of the tradeoffs involved with drug regulation that will be valuable and it’s also great to be on a paper with Peltzman.

Thanks also to Ted Frank and others for acting as Counsel for the Amici Economists.

Would cocaine legalization help Colombia?

Alvaro Vargas Llosa says yes:

In a country that has made admirable progress on other fronts, the drug
war is preventing the government from finishing off the narco-terrorist
organizations.  Between 2002 and 2005, Uribe’s “democratic security”
policy successfully pushed those organizations, especially the Marxist
empire known as FARC, away from many cities.  There was a one-third drop
in the number of murders and a two-thirds drop in the number of
terrorist attacks.  The economy picked up handsomely.  But then a
stalemate ensued in the campaign against the terrorists that cannot be
attributed only to the country’s jungles.  The mafias that owe their
existence to the criminalization of cocaine continue to generate enough
funds to match every attempt by the government to beef up its military

Legalizing or decriminalizing cocaine would do much to improve America’s inner cities and it ought to be seriously considered, even if it means more doped-up middle-class white teenagers.  But legalization — whether in Colombia or the United States — is not obviously the way out for Colombia. 

The positive scenario is that legalization eliminates the profits from the drug trade and the Colombian nasties pack up shop and go away.  In a legal market, Merck would outcompete the drug barons.  Maybe they would grow more coffee.

I see two negative scenarios.  First, cocaine production has been a boon to the Colombian economy.  It is no accident that Colombia experienced no currency crisis, unlike most other Latin countries.  (For contrast, here are some arguments that cocaine has hurt the Colombian economy; I don’t believe it.)  The rural Colombian economy might well collapse, taking civil order with it.

Second, the Colombian civil war is 40 years old and it predates the importance of cocaine.  Narco-traffickers set up processing labs in Colombia because the government did not control the country in the first place.  Legalizing cocaine would devastate their incomes, and probably bring political assassinations and military conflicts into the capitol.  It is not clear Colombia can handle it.  Keep in mind these same groups once, when threatened with more extraditions, stormed the Supreme Court and almost got away with it.  Cocaine profits, however evil they may be, give the guerrilla groups some stake in the status quo. 

That said, cocaine legalization probably would have helped Colombia in the late 1970s, before the paramilitaries became so rich.  That doesn’t mean the same idea will work today.

The bottom line: There is no simple way out of the Colombian mess.  Slow evolution away from cocaine production, combined with increasing economic diversification, is probably the best hope.  Chemical substitutes, such as Ecstasy, mean that the cocaine market
will slowly dry up anyway.  This slower change, which can’t be pinned
on any government, is a better way out of the current mess than a
drastic and more sudden legalization.  In the meantime, Uribe’s policy of getting tough has paid some dividends, and there is no reason to think these gains cannot be extended.

Addendum: Anne Applebaum argues for opium legalization in the context of Afghanistan.  But note that opium production may account for as much as 2/3 of Afghani gdp.  It is unclear that Afghanistan would keep these markets in a purely legal setting, so how would the country survive the shock to its real income?  Or should we give them a monopoly and cartelize their industry to boost profits but limit consumption?