Category: Law
How much might marginal tax rates be going up?
Gerald T. Prante and Austin John have a new paper and a report for us:
This paper compares state-by-state estimates of the top marginal effective tax rates (METRs) on wages, interest, dividends, capital gains, and business income for tax year 2012 to the rates scheduled for 2013 under scheduled law. Scheduled tax law for 2013 assumes the expiration of the 2001 and 2003 tax cuts and the new PPACA taxes. Overall, the average top METR on wage income is scheduled to increase by approximately six percentage points (41.8 percent to 47.8 perent), while taxes on dividends would increase the greatest (19.0 percent to 47.9 percent). The top METRs on wages, dividends, interest, and partnership/sole proprietor income would exceed 50 percent in California, Hawaii, and New York City.
In Texas, not all joint products are legal (the value of pets)
Last May, the Texas Banking Commission, which regulates funerals and cemeteries [does that make sense to you?], deep-sixed burials of pets in cemeteries for homo sapiens. But Texas still welcomes human burials alongside animals in pet cemeteries.
Do not underestimate the power of arbitrage:
…some Texans are also opting for their own burials–sans Bootsie—in pet cemeteries. The cost of room and board, notes the clip, beats its counterpart in people cemeteries by a mile. So why not think outside the box?
For the pointer I thank Lou Wigdor.
Do interest groups reward politicians for their votes in the legislature?
That is the title of the job market paper of Sungmun Choi, here is the abstract:
Abstract: Interest groups lobby politicians in various ways to influence their policy decisions, especially, their voting decisions in the legislature. Most, if not all, of the studies on this issue examine “pre-vote” lobbying activities of interest groups that occur before politicians vote in the legislature. In this paper, however, I examine “post-vote” lobbying activities of interest groups that occur after politicians vote in the legislature. I first develop theoretical models to show how such post-vote lobbying can be sustained. Then, by using data on the amount of monetary contributions given by interest groups to the members of the U.S. House of Representatives who have served in the 109th (2005-06) through 111th (2009-10) Congress, I find evidence that the politicians who voted in favor of the Emergency Economic Stabilization Act (EESA) of 2008, one of the most significant pieces of legislation and possibly the biggest government bailout in U.S. economic history, received more monetary contributions from the interest groups in the financial sector after passage of the EESA.
Markets in everything
Our ballistic backpack provides built-in ballistic protection in a backpack that weighs just ounces more than a non-armored backpack. RynoHide carbon nanotube armor is lined in the back panel of the backpack. Sewn into the rear of the pack, you can always be confident that the armor hasn’t been accidentally left at home and that you or your child are protected in case of the unthinkable. The backpack can be quickly brought to the front as a shield or can serve as center of mass protection while fleeing the scene of the shooting.
Maybe it is some kind of sorry joke but still a sign of an especially bad year for mass shootings. For the pointer I thank FM.
Addendum: These seem to be real, and also fairly popular.
Robert Bork has passed away
Here is an appreciation from AEI, and here is LA Times coverage, and the NYT. Here is Bork on scholar.google.com. I liked him as an antitrust analyst, less as a moralist or legal or political theorist.
Does privacy make us productive?
Here is the job market paper and abstract from Ethan Bernstein, who is on the job market from Harvard Business School:
Does Privacy Make Us Productive?
We have grown accustomed to calls for transparency. Transparency, or accurate observability, of an organization’s low-level activities, routines, behaviors, output, and performance provides the foundation for both organizational learning and operational control, and it has an untarnished reputation: rarely does one hear about any negative effects of transparency or problems stemming from too much transparency. Nonetheless, using data from embedded participant-observers and a field experiment at the second largest mobile phone factory in the world, located in China, I introduce the notion of a transparency paradox, whereby maintaining observability of workers may counterintuitively reduce their performance by inducing those being observed to conceal their activities through codes and other costly means; conversely, creating zones of privacy may, under certain conditions, increase performance. This research suggests that careful design and implementation of zones of visual privacy within an organization is an important performance lever but remains generally unrecognized and underutilized. Paradoxically, an organization that fails to design effective zones of privacy may inadvertently undermine its capacity for transparency.
Do cash transfers reduce domestic violence?
Here is one set of new results from Ecuador, by Hidrobo M and Fernald L.
Violence against women is a major health and human rights problem yet there is little rigorous evidence as to how to reduce it. We take advantage of the randomized roll-out of Ecuador’s cash transfer program to mothers to investigate how an exogenous increase in a woman’s income affects domestic violence. We find that the effect of a cash transfer depends on a woman’s education and on her education relative to her partner’s. Our results show that for women with greater than primary school education a cash transfer significantly decreases psychological violence from her partner. For women with primary school education or less, however, the effect of a cash transfer depends on her education relative to her partner’s. Specifically, the cash transfer significantly increases emotional violence in households where the woman’s education is equal to or more than her partner’s.
Hat tip goes to @vaughnbell, who is excellent to follow on Twitter.
Snitching markets in everything
The prisoners in Atlanta’s hulking downtown jail had a problem. They wanted to snitch for federal agents, but they didn’t know anything worth telling. Fellow prisoner Marcus Watkins, an armed robber, had the answer.
For a fee, Watkins and his associates on the outside sold them information about other criminals that they could turn around and offer up to federal agents in hopes of shaving years off their prison sentences. They were paying for information, but what they were really trying to buy was freedom. “I didn’t feel as though any laws were being broken,” Watkins wrote in a 2008 letter to prosecutors. “I really thought I was helping out law enforcement.”
That pay-to-snitch enterprise — documented in thousands of pages of court records, interviews and a stack of Watkins’ own letters — remains almost entirely unknown outside Atlanta’s towering federal courthouse, where investigators are still trying to determine whether any criminal cases were compromised. It offers a rare glimpse inside a vast and almost always secret part of the federal criminal justice system in which prosecutors routinely use the promise of reduced prison time to reward prisoners who help federal agents build cases against other criminals.
Snitching has become so commonplace that in the past five years at least 48,895 federal convicts — one of every eight — had their prison sentences reduced in exchange for helping government investigators, a USA TODAY examination of hundreds of thousands of court cases found. The deals can chop a decade or more off of their sentences.
That is from USA Today, from this source. Hat tip goes to @matt_levine.
Mexico fact of the day
Ciudad Juárez, once a byword for narco-violence, suffered 33 homicides in October, less than Chicago, with 36.
The article, on the economic surge of Mexico, is interesting throughout, though FT gated.
U.S. politics in two sentences
If the two parties fail to come to a deal by Jan. 1, taxes on the average middle-income family would rise about $2,000 over the next year. That would follow a 12-year period in which median inflation-adjusted income dropped 8.9 percent, from $54,932 in 1999 to $50,054 in 2011.
That is from Annie Lowrey, here is more.
Police, Crime and the Usefulness of Economics
In 1994 the noted criminologist David Bayley wrote:
The police do not prevent crime. This is one of the best kept secrets of modern life. Experts know it, the police know it, but the public does not know it.
Economists were skeptical based on intuition but in truth the empirical work from economists at that time was mixed with some papers showing little or no effect of police on crime, just as Bayley argued. Since Levitt’s pioneering paper, however, there have been many papers applying a wide variety of more credible research designs like natural experiments, regression discontinuity, matching and other techniques. Any one of these papers is subject to criticism but as group the results have been remarkably consistent: police reduce crime with a 10% increase in police reducing property crime by about 3-4% and violent crime a little bit more perhaps by 4-5% (average elasticities of .35 and .48 from my review paper).
Two interesting new papers add to this literature. The University of Pennsylvania has a large private police force, some 100 officers who patrol the Penn campus and a substantial fraction of the surrounding neighborhood. The city police also police the Penn neighborhood but the UP police stay within a known (but not demarcated) region. Thus, there are more police on the Penn side of the border than on the other side. MacDonald, Kick and Grunwald apply regression discontinuity to look at what happens to crime around the border region and they find that it drops as one crosses the border. Their measures of the elasticity of crime with respect to police are similar to those found elsewhere in the literature.
Chalfin and McCrary take another approach. I always assumed that the reason standard (OLS) techniques do not pick up an effect of police on crime was reverse causality, places with a lot of crime also have a lot of police. Chalfin and McCrary argue that an even more serious problem may have been measurement error. The usual measure of police is produced by the FBI and the Uniform Crime Reports. CM find another measure produced by the Annual Survey of Governments. The two measures are close enough in levels but the relationship is surprisingly weak when looking at growth rates. Although we can’t say which measure is correct (or if either are correct) just knowing that they are different tells us that measurement error is important and measurement error will bias results downward (i.e. away from showing a significant effect of police on crime.) Moreover, if you know that measurement error exists it’s also possible to correct for it (surprisingly one can do this even without knowing the truth!) and when CM do this they find large and significant effects of police on crime, very much in line with earlier results. CM also show that there is lots of variability in police numbers that is not accounted for by crime so reverse causality is not as big a problem as one might imagine.
Using a range of reasonable elasticity estimates from the new literature and a back of the envelope calculation, Klick and I argue that it would not be unreasonable to double the number of police officers in the United States. At current levels, it’s also my belief that police are much more effective than prisons at reducing crime and with far fewer of the blowback effects. Chalfin and McCrary do a more detailed cost-benefit calculation for individual cities and they also find that many cities are severely underpoliced (and some are overpoliced–the police force of Richland County, South Carolina probably does not need a tank).
Estimates of the elasticity of crime with respect to police are largely consistent across many papers which suggests that the new techniques are more credible. The elasticity estimates are also important because their size implies that major changes in policy could improve social welfare. I see the empirical economics of crime as one of the more useful areas in economics in which substantial progress has been made in recent years.
Steve Teles on kludgeocracy
This is a very interesting essay, here is one bit:
While liberals are harmed by the opacity of kludgeocracy’s successes, conservatives are hurt by the lack of traceability of its failures. The fact that so much of our welfare state is jointly administered — either inter-governmentally or through contracting with private agents — makes it hard for Americans to attribute responsibility when things go wrong, thus leading blame to be spread over government in general, rather than affixed precisely, where such blame could do some good. The consequence of complexity, then, is diffuse cynicism, which is the opposite of the habit needed for good democratic citizenship.
And this:
The last thirty years of American history have witnessed, at least rhetorically, a battle over the size of government.1 Yet that is not what the history books will say the next thirty years of American politics were about. With the frontiers of the state roughly fixed, the issues that will dominate American politics going forward will concern the complexity of government, rather than its sheer size.
There are many interesting points in this piece (pdf), with some comments from Reihan.
“Did the Community Reinvestment Act (CRA) Lead to Risky Lending?”
The first sentence of the abstract of this paper reads “Yes, it did.” Please don’t take this as support for whackier theories of the cause of the crisis, but as to whether this was an amplifying mechanism, well it seems it was. I have never myself been obsessed with this question, or pushing the significant relevance of the CRA theories, but earlier this received so much attention in the blogosphere, and it led to so many excoriations, I thought I would pass this new result along.
An ungated copy is here.
Just how bad is corruption in China?
In a new paper, my colleague Carlos Ramirez has the scoop:
Abstract:
This paper compares corruption in China over the past 15 years with corruption in the U.S. between 1870 and 1930, periods that are roughly comparable in terms of real income per capita. Corruption indicators for both countries and both periods are constructed by tracking corruption news in prominent U.S. newspapers. Several robustness checks confirm the reliability of the constructed corruption indices for both countries. The comparison indicates that corruption in the U.S. in the early 1870s — when it’s real income per capita was about $2,800 (in 2005 dollars) — was 7 to 9 times higher than China’s corruption level in 1996, the corresponding year in terms of income per capita. By the time the U.S. reached $7,500 in 1928 — approximately equivalent to China’s real income per capita in 2009 — corruption was similar in both countries. The findings imply that, while corruption in China is an issue that merits attention, it is not at alarmingly high levels, compared to the U.S. historical experience. The paper further argues that the corruption and development experiences of both the U.S. and China appear to be consistent with the “life-cycle” theory of corruption — rising at the early stages of development, and declining after modernization has taken place. Hence, as China continues its development process, corruption will likely decline.
Why did the Senate refuse to ratify the disabilities Convention?
Many people are criticizing the Senate for failing to ratify the UN Convention on the Rights of Persons With Disabilities, background here. The text of the Convention is here. In terms of enforceability, it is the usual “shall undertake to do” approach, with nothing in the way of actual teeth.
Erik Voeten seems upset that the United States did not ratify and seems to regard ratification as a no-brainer. Keep in mind that many of the good aspects of the Convention are already law in the United States and indeed often stem from American precedents.
If you would like one starting point for thinking about this issue, here is a simple exercise: imagine yourself a specialist in international law advising the U.S. government. Here is a Wikipedia summary of one part of the Convention:
In accordance with international law, to ensure that law protecting intellectual property rights do not constitute an unreasonable or discriminatory barrier to access by persons with disabilities to cultural materials.
What do you advise? Consider that the United States, when writing bilateral trade treaties, tries to enforce or even redefine IP law to the hilt. (NB: I don’t at all favor this, but it is a fact of life and will very likely remain so, for obvious public choice reasons.) You are the most powerful country on earth, so why should you ratify a Convention which will make this IP policy harder to see through and which will in fact create an entire series of loopholes, or at least rhetorical moves, many of which could end up involving weaker IP enforcement against the non-disabled? Imagine a nation, negotiating with the U.S., insisting that derivative works with subtitles for the hearing-impaired receive weaker IP protection, and citing the U.S. ratification of this Convention. (Personally, I probably would favor this by the way.) All of a sudden the U.S. would have to spend some political capital whacking this back down.
Very often UN Conventions are fights over the rhetoric which will be allowed and recognized in (binding) negotiations elsewhere. It is thus weaker nations which favor the increased ability to use such rhetoric, and stronger nations which wish to limit such rhetoric. Guess where that puts the United States?
I do not personally have any problem with the United States ratifying this Convention. But I recognize that a failure to ratify is simply “business as usual,” reflecting longstanding and rather deeply rooted priorities, rather than some strange Senatorial or Republican intransigence against the disabled.
More generally, the U.S. will be most interested in ratifying Conventions only if they bind other nations in a useful way to the United States. The WTO (although not legally a “Convention”) is a good example of that, but such examples are not that frequent.
This entire debate could use a closer look at the differences between being a states party to a Convention, signing, and ratifying.
I’ve read a bunch of articles on this Convention, from various media outlets, and not one of them is setting out the basic principles here with much accuracy.