Category: Law

Gangs, Labor Mobility and Development

We study how two of the world’s largest gangs—MS-13 and 18th Street—affect economic development in El Salvador. We exploit the fact that the emergence of these gangs was the consequence of an exogenous shift in American immigration policy that led to the deportation of gang leaders from the United States to El Salvador. Using a spatial regression discontinuity design, we find that individuals living under gang control have significantly less education, material wellbeing, and income than individuals living only 50 meters away but outside of gang territory. None of these discontinuities existed before the emergence of the gangs. The results are confirmed by a difference-in-differences analysis: after the gangs’ arrival, locations under their control started experiencing lower growth in nighttime light density compared to areas without gang presence. A key mechanism behind the results is that, in order to maintain territorial control, gangs restrict individuals’ freedom of movement, affecting their labor market options. The results are not determined by exposure to violence or selective migration from gang locations. We also find no differences in public goods provision.

That is from a new NBER working paper by Nikita Melnikov, Carlos Schmidt-Padilla, and Maria Micaela Sviatschi.

How should America regulate TikTok and other Chinese tech companies?

I say focus on data protection but let them keep the algorithm.  From my new Bloomberg column here is one excerpt:

A second principle for good policy is that the U.S. government should not cut off the U.S. — including of course Chinese Americans and visiting Chinese — from the Chinese internet. Let’s say TikTok and WeChat are banned altogether, along the lines of the (now court-halted) Trump executive order banning WeChat. Are all Chinese apps to be kept out of the country? How about clicking on Chinese links, which also could compromise security? Would Chinese newspapers (including from Hong Kong) be allowed?

The costs of these restrictions would be very high, most of all for Hong Kong, but for America too. Americans would become more ignorant about China, and China would fall out of touch with America. Chinese students and tourists would find it much more difficult to come to the U.S. and stay in touch with home, and as a result many of them would avoid the U.S. altogether. America’s world knowledge and soft power would decline. These too are major national security disadvantages, in addition to their economic costs.

More generally, China is America’s No. 1 trading partner. Can it really make sense to cut off the flow of so much information across the internet? For how long?

There is also a problem of enforcement. The rest of the world is unlikely to take a comparably harsh approach to Chinese technology. Will the U.S. also have to stop Americans from downloading an app from a privately owned joint Cambodian/Chinese company? Where exactly will these lines be drawn?

Regulating the algorithm won’t work, so the deal on the table, despite its ugly, politicized origins, is perhaps the best we can do at this point.  There is much more at the link, and here is more from Elaine Ou at Bloomberg.

Unintended Consequences of Criminalizing Sex Work

We examine the impact of criminalizing sex work, exploiting an event in which local officials unexpectedly criminalized sex work in one district in East Java, Indonesia, but not in neighboring districts. We collect data from female sex workers and their clients before and after the change. We find that criminalization increases sexually transmitted infections among female sex workers by 58 percent, measured by biological tests. This is driven by decreased condom access and use. We also find evidence that criminalization decreases earnings among women who left sex work due to criminalization, and decreases their ability to meet their children’s school expenses while increasing the likelihood that children begin working to supplement household income. While criminalization has the potential to improve population STI outcomes if the market shrinks permanently, we show that five years post-criminalization the market has rebounded and the probability of STI transmission within the general population is likely to have increased.

That is from a new NBER working paper by Lisa Cameron, Jennifer Seager, and Manisha Shah.

What happened to the mandate, the third leg of the stool?

But Congress did ultimately chop off a leg when it repealed the mandate penalties in 2017 — and, despite these predictions, the Affordable Care Act still stands. New federal data and economic research show the law hasn’t collapsed or entered the “death spiral” that economists and health insurers projected.

Many experts now view the individual mandate as a policy that did little to increase health coverage — but did a lot to invite political backlash and legal challenges.

The newest evidence comes from census data released Tuesday, which shows health coverage in the United States held relatively steady in 2019, even though Congress’s repeal of the mandate penalties took effect that year.

“The stool might be a bit rocky, but you can get away with two legs,” said Evan Saltzman, a health economist at Emory University who studies the topic. “It’s like the table at the restaurant that is a little wobbly. You can still sit at it, even if it’s not quite as pleasant.”

That is from Sarah Kliff at the NYT, the whole piece is excellent and full of substance.  And:

Mr. Saltzman went on to earn a doctorate in economics after his job at RAND, and focused his research on the mandate. He has found that the mandate isn’t a very effective tool for increasing enrollment. One recent paper of his estimated that eliminating the mandate penalties would reduce marketplace enrollment by 2 percent and increase premiums by 0.7 percent.

“My viewpoint on the mandate has changed,” he said. “Back in 2012, my sense was it was essential. The evidence indicates that the marketplaces are doing about the same as they were before the mandate was set to zero.”

Separately, in The New England Journal of Medicine last year, researchers concluded that “the individual mandate’s exemptions and penalties had little impact on coverage rates.”

To be clear, this surprises me too.  Was it Ross Douthat who once said on Twitter that it was the Trump administration and the Republican courts that saved Obamacare?  The Krugman line, pushed without qualification for over a decade (and with incessant moralizing), that all of the legs of the stool are necessary, seems…wrong.  I would say be careful with this one, as sometimes elasticities don’t kick in for a long time (as maybe with the corporate income tax cuts as well?…let’s be consistent here…).  Still, it seems that an update of priors is in order.  As you will see in the piece, even Jonathan Gruber thinks so.

And here are useful comments from John Graves.

Incentives matter, high school college football divorce edition

For a transfer student to be immediately eligible under Georgia High School Association rules, he or she must make a “bona fide move,” in which the “student moved simultaneously with the entire parental unit or persons he/she resided with at the former school, and the student and parent(s) or persons residing with the student live in the service area of the new school.”

Moving to Georgia wasn’t a problem for Randy, who retired in 2012 after working for 32 years with the Los Angeles Police Department. Yvonne, who works as an administrative assistant, had to remain in California for her job. For Jake to be eligible for one season at Valdosta High, Randy and Yvonne legally separated to meet the Georgia residency rules. According to court records, Randy and Yvonne dissolved their marriage on Aug. 20. They plan to get back together once Jake’s season at Valdosta High ends.

“The requirements [are] a full family move, so that and, obviously, grades and that kind of thing,” Randy said. “So at this point, we got a legal separation. We’re right down the guidelines as far as being eligible to play.”

Here is the full story, via Tom G.

Green vs. green: whose side are you on?

An Australian mining firm wants to turn a Nevada valley into a quarry for lithium and boron – key elements for green technologies – but a rare plant may stand in its way. Researchers say that biodiversity and clean energy should not be in opposition.

The company, Ioneer, says the quarry in Rhyolite Ridge valley would be the first US quarry of its kind, able to supply lithium for 400,000 electric car batteries a year and boron to power wind turbines. But soil containing these elements is also the perfect environment for Tiehm’s buckwheat (Eriogonum tiehmii), a plant that looks like a pile of leaves. When it blooms, it could be the dandelion’s fuzzy cousin.

There are only about 40,000 specimens of the buckwheat, and its namesake, Arnold Tiehm at the University of Nevada, Reno, says its closest relative is more than 80 kilometres away.

Most of the buckwheat’s natural home lies in the area mapped to be dug up for the quarry. “That puts the buckwheat on a one-way path to extinction,” says Patrick Donnelly at the Center for Biological Diversity (CBD) in Nevada. Ioneer will remove 65 per cent of the buckwheat’s population if the first planned quarry goes ahead, the company confirmed to New Scientist.

Although rare, the buckwheat isn’t yet considered endangered, but that may change. Following a petition by the CBD, the US Fish and Wildlife Service announced in July that the plant is both valuable enough and under sufficient threat to warrant a year-long review to decide whether to list the plant under the US Endangered Species Act. The listing would spell the end for the quarry as currently planned.

Here is the full story, via Ilya Novak.

My Conversation with Matt Yglesias

Substantive, interesting, and fun throughout, here is the audio, video, and transcript.  For more do buy Matt’s new book One Billion Americans: The Case for Thinking Bigger.  Here is the CWT summary:

They discussed why it’s easier to grow Tokyo than New York City, the governance issues of increasing urban populations, what Tyler got right about pro-immigration arguments, how to respond to declining fertility rates, why he’d be happy to see more people going to church (even though he’s not religious), why liberals and conservatives should take marriage incentive programs more seriously, what larger families would mean for feminism, why people should read Robert Nozick, whether the YIMBY movement will be weakened by COVID-19, how New York City will bounce back, why he’s long on Minneapolis, how to address constitutional ruptures, how to attract more competent people to state and local governments, what he’s learned growing up in a family full of economists, his mother’s wisdom about visual design and more.

Here is one excerpt:

It was so much fun we even ran over the allotted time, we had to discuss Gilbert Arenas too.

Are School Reopening Decisions Related to Union Influence?

Yes, in short.  Here is a new paper from Corey Deangelis and Christos Makridis:

The COVID-19 pandemic led to widespread school closures affecting millions of K-12 students in the United States in the spring of 2020. Groups representing teachers have pushed to reopen public schools virtually in the fall because of concerns about the health risks associated with reopening in person. In theory, stronger teachers’ unions may more successfully influence public school districts to reopen without in-person instruction. Using data on the reopening decisions of 835 public school districts in the United States, we find that school districts in locations with stronger teachers’ unions are less likely to reopen in person even after we control semi-parametrically for differences in local demographic characteristics. These results are robust to four measures of union strength, various potential confounding characteristics, and a further disaggregation to the county level. We also do not find evidence to suggest that measures of COVID-19 risk are correlated with school reopening decisions.

And please do note that last sentence again:

We also do not find evidence to suggest that measures of COVID-19 risk are correlated with school reopening decisions (emphasis added).

Via the excellent Kevin Lewis.

Should NBA referees call fouls objectively in playoff games?

I call them “rule of law” foul calls, because they are in accord with clearly defined standards for a foul call.  In contrast, in the “good ol’ days” referees used to think: “I’m not going to let a foul call determine the outcome of this playoff game in the decisive moments.”  So unless the defender really slugged the guy, or whacked his hand down when shooting, the refs would “let them play,” and the chips would fall as fate determined.

But Wednesday night I saw three critical foul calls (across two games) in the closing moments that were all “marginal fouls.”  They were, in my opinion (and in the opinion of former referee Steve Javie), all legitimate foul calls.  But just barely, and I am pretty sure that none of them would have been called fifteen years ago, or maybe not even five years ago.  Bumping into a guy after he already missed his shot and the clock ran out?  Is it a foul objectively speaking?  Yes.  Should it be called?  Well…

The case against rule of law fouls is that games decided by the referees have less legitimacy, and that in turn hurts both the legitimacy and the popularity of the league.  Even if it was “objectively a foul,” the fans either don’t know that, were unwilling to recognize that, or they may, like I, favor the good ol’ days when fouls were called less objectively and also less frequently in the closing moments of close games.

The case in favor of rule of law foul calls is that replays and social media make the truth easier to determine, and place extra burden on the refs to appear fair and consistent over time, to protect the legitimacy and popularity of the league.  Furthermore, the heightened salience of racial issues encourages a more consistent standard to limit charges of discrimination, whether those charges are founded or not.  It is more defensible to always call the same play the same way, regardless of the clock or the closeness of the score, which are ultimately somewhat subjective standards (just how close does the game have to be?).

So I recognize that rule of law foul calls may now be necessary, even if I do not myself prefer them.

One relevant point here is that with better recording and a wider dissemination of the recordings, the NBA has in fact moved much closer to the rule of law.

So it can be done, and perhaps others can do it too.  Just like the spit testing.

Addendum from the comments: “The real reason must be gambling – they want gambling on the NBA to be legitimate, and this causes a lot of problems if the refs have a lot of latitude to make choices. The NBA has had problems with this.”

Show your work, people — advice on vaccines and approval timing

Every day I read maybe twenty or more tweets decrying Trump’s acceleration of the FDA vaccine approval process.  And yet I do not see a single blog post with back of the envelope calculations.  This is such an important decision, and it deserves better, just as we analyze the Fed’s monetary policy decisions in great detail.  On those points, here is my latest Bloomberg column, excerpt:

One of your weaker arguments is that Trump’s push is disturbing because it is making the FDA “too political.” First, American responses to crises, such as Sept. 11 or the Great Recession, have always been political. Second, and more to the point, there is a strong case that the FDA should take politics into account more, not less.

The FDA has been too risk-averse in the very recent past, for instance in its reluctance to approve additional Covid-19 testing. Economists have generally concluded that the FDA is too risk-averse in the long term as well, considering all relevant trade-offs. What kind of fix might there be for those problems, if not a “political” one? Of course the initial risk-aversion was itself the result of a political calculation, namely the desire to avoid blame from the public and from Congress…

The American people will not buy the claim that the current [pre-Trump] FDA is above politics. Nor should they.

And:

As a public-health expert, you are also missing the broader context behind the current vaccine debate. In the early months of the pandemic, as late as April, it was common to hear that there might not be a vaccine for at least four years, and many were not sure if it would be possible at all. It is now likely (though not certain) that there will be a pretty good vaccine within a year.

That is a wonderful development, and it speaks well of your intelligence and hard work. Still, given that recent history, is it crazy for the American people to wonder if the process could be accelerated further? After all, the Chinese have a vaccine right now (albeit probably an inferior one), and they have been known to complete complicated infrastructure projects with a speed not previously thought possible.

And:

It’s not just about wanting to speed things up. One might argue that, due to the unprecedentedly high number of vaccines currently under consideration, the optimal threshold should be higher, not lower, for fear that the world will be left with a suboptimal choice.

Finally:

Too often I have seen one of you cite a single factor on one side of the approval equation, then invoke your authority or some previously existing institutional standard to suggest that this factor is decisive. In a Trumpian world, where credentials and authority no longer settle a debate — on public health or other matters — this kind of argument is not sufficient.

My plea is that such arguments and others be accompanied by concrete numbers, if only rough back-of-the-envelope estimates, and that all of the factors be considered together. Those numbers should incorporate the human, economic and public-health costs of allowing the current situation to continue for months. The result could be a useful public debate about the optimal speed of vaccine approval.

Yes, blah blah blah.  But — public health experts — show your work.

The impact of economic regulation on growth: survey and synthesis

This study provides a survey of research that uses cross-country comparisons to examine how economic regulation affects growth. Studies in the peer-reviewed literature tend to rely on either World Bank or Organisation for Economic Co-operation and Development measures of regulation. Those studies seem to reflect a consensus that entry regulation and anticompetitive product and labor market regulations are generally harmful to growth. The results from this cross-country research, taken in conjunction with economic theory as well as other country-specific studies of economic regulation, support the hypothesis that economic regulation tends to reduce welfare in competitive markets. Given the continued use of certain types of economic regulation, the findings may offer important lessons for policymakers.

That is a new Mercatus working paper by James Broughel and Robert Hahn.

My Conversation with Jason Furman

Yes, the Jason Furman, here is the audio and transcript, please note this was recorded in January.  Here is part of the summary:

Jason joined Tyler for a wide-ranging conversation on how monopolies affect investment patterns, his top three recommendations to improve American productivity, why he’s skeptical of place-based development policies, what some pro-immigration arguments get wrong, why he’s more concerned about companies like Facebook and Google than he is Walmart and Amazon, the merits of a human rights approach to privacy, whether the EU treats tech companies fairly, having Matt Damon as a college roommate, the future of fintech, his highest objective when teaching economics, what he learned from coauthoring a paper with someone who disagrees with him, why he’s a prolific Goodreads reviewer, and more.

And here is one excerpt:

COWEN: The US is losing some of its manufacturing capacity, and certainly a lot of its manufacturing workforce. Are there external benefits to keeping those activities more in the US? Significant benefits?

FURMAN: I don’t think that manufacturing itself should be an important objective of US policy. It’s one type of job. It’s been a good type of job, but there’s other good types of jobs as well. I wouldn’t focus on where physical things are being made as opposed to where services are being made. In fact, if anything, I think the error in policy is probably a little bit too much emphasis on manufacturing and a little bit less on services.

COWEN: What do you think of the national security argument? That, say, when building a ship, we might be dependent on South Korean components. If there were a war in Asia, those might be, for some reason, unreliable. We depend on China for rare earths. We depend on Taiwan, to some extent, for high-quality chips, even though we make our own. Is the supply chain extended too long, and it was a kind of economic fantasy, and it doesn’t make national security sense?

FURMAN: I don’t consider myself an expert in any of those national security questions, so I would be open to thinking about the national security concerns associated with the supply chain. I have an awful lot in specific cases — both when I was in government and just in the world more generally — heard people make national security arguments that I found tendentious and pretty unpersuasive.

There may be some that are persuasive and that are true. There’s an awful lot that aren’t. Our administration, towards the end, worried a bit about semiconductors. When I’ve looked at that, there’s enough of a diversified world supply, enough of an ability to scale up if necessary in the United States, that I don’t think on semiconductors — there, it was protectionism under the guise of national security.

So I think we should accept the possibility of national security, take it seriously, but be really, really wary that a lot of protectionist arguments use that trappings.

Economics throughout, with a touch of Dickens.  Recommended.

Swiss Chinese markets in everything

Swiss authorities want to renew a discreet agreement with China, signed in 2015, which allows officials from Beijing to enter the country and question Chinese citizens residing here illegally…

The agreement allows Chinese officials to enter Switzerland for a period of two weeks – without official status – in order to investigate Chinese citizens found to be staying illegally in the Alpine Nation. Once identified, these people can be deported in collaboration with SEM.

Individuals affected by the agreement include rejected asylum seekers, illegal travellers, and those without identity papers.

And what exactly do the Swiss get in return?  Here is the full story, via Fergus McCullough.

The polity that is San Francisco

If you were hoping to cure your cabin fever with a quick jaunt to San Francisco to eat a $200 dinner in a geodesic dome next to a homeless encampment, it looks like you’ve missed your chance. The San Francisco Chronicle reports that after a surprise inspection, the city’s health department has ordered Japanese fine dining spot Hashiri to take down the fine dining domes that have made it internationally famous…

Hashiri opted to erect three plastic garden igloos on the sidewalk and reopened for dinner on August 5. The structures, which cost $1,400 apiece, immediately generated controversy, as the restaurant, which caters to the ultra-rich, happens to be located in an area where people experiencing homelessness congregate.

“Mint Plaza is a phenomenal space, it’s just sometimes the crowd is not too favorable,” Matsuura said to the Chronicle. “There are people who come by and spit, yell, stick their hands in people’s food, discharging fecal matter right by where people are trying to eat. It’s really sad, and it’s really hard for us to operate around that.”

The restaurant began receiving hate mail prior to last Thursday’s surprise inspection, which Matsuura suspects was the result of anonymous complaints to the Department of Public Health. The domes were ordered removed “due to the enclosed nature of the structure, which may not allow for adequate air flow,” per the inspection report.

Not enough air flow?  I wonder how many kitchens would pass that test?  Here is the full story, via Air Genius Gary Leff.

The Australian Aboriginal flag

For those who don’t know, the Australian Aboriginal flag (https://i.imgur.com/sGsnLkv.png) is actually copy-righted by an individual although it is recognized as a national flag.

It was created in 1971 by an artist named Harold Thomas and went onto to become culturally accepted as the flag of the Aboriginal people. And then as above, went onto being proclaimed a national flag by the government.

Unfortunately, since then, Harold Thomas has licensed the flag to various private agencies. One of the licenses was exclusive to a clothing label, which now means that no other Aboriginal business can print clothes with the flag on it without paying royalties. (Sitting around 20%) A lot of Aboriginals feel dismay at the current situation of the licensing.

I am rather free market orientated and do respect the artists desires.

But, the situation is rather unique, I can’t seem to find any other examples in the world of a nations/cultures flag being owned by an individual.

The creator has no intention to relinquish the copyright, so movements have already sprung up.

Here is further discussion, via Andrew Burchill.  Imagine in the United States if private individuals had copyrights over the flag (in general, not just particular images), the American bald eagle, the U.S. dollar, and so on.