Category: Law

Designer American babies for the Chinese elite

by  Tyler Cowen in

Also known as “markets in everything”:

Wealthy Chinese are hiring American women to serve as surrogates for their children, creating a small but growing business in $120,000 “designer” American babies for China’s elite.

Surrogacy agencies in China and the United States are catering to wealthy Chinese who want a baby outside the country’s restrictive family planning policies, who are unable to conceive themselves, or who are seeking U.S. citizenship for their children.

Emigration as a family is another draw – U.S. citizens may apply for Green Cards for their parents when they turn 21.

The story is here, and for the pointer I thank Fred Smalkin.

From the comments, on the economics of food stamps

by  Tyler Cowen in

In response to my earlier food stamps post, here is Brian Donahue:

Context:

http://www.fns.usda.gov/pd/34snapmonthly.htm

Economic conditions have been improving, grudingly, for three years now. But between October 2010 and October 2013, the cost of the program has risen 25%. I understand the concept of ‘countercyclical stabilizers’. This is something else. The idea of a 10% cut in this context…ok.

Food stamps aren’t being singled out here. Just because entitlement reform is paralyzingly hard, it doesn’t mean we don’t keep moving on the other stuff. Summing up 2013: fiscal cliff tax increases on rich, medicare investment tax on the rich, ending payroll tax holiday, sequester (half defense.) Republicans are playing ball – at some point along the way, food stamps get a look. If a 10% cut here is a sacred cow, we’re not close to having the stomach for the real fights to come.

And here is PLW:

Explaining the Rs food stamp focus is a little more complicated. First of all, labeling the House nutrition title of the Farm Bill as “going after” the program seems unfair. The House food stamp proposals include uncoupling categorical eligibility for food stamps with receipt of a trivial non-cash TANF benefit (a technique used by many states to waive all asset requirements for food stamps and raise the net income test to twice the poverty line), getting rid of a loophole (i.e., “LIHEAP loophole”) that a small number of states in the (primarily in the Northeast) use to artificially reduce the net income of food stamp beneficiaries in order to raise their level of benefits, and taking away the Secretary of USDA’s work requirement waiver authority for non-disabled adults without dependents.

Second (and this is where it gets complicated), many of the policies that the Rs are pushing in the context of the Farm Bill are going after policies that were put in place as direct result or an unintended consequence of other R policies. For instance, the coupling of categorical eligibility to non-TANF cash benefits is the result of the 1996 welfare reforms which ended AFDC (how one used to become categorically eligible for food stamps) in replace of a much less clear TANF benefit (rather than cash linked to AFDC, one might receive a service in the form of a 1-800 hotline for pregnancy prevention linked to TANF), but continued to bestow eligibility for food stamps to the recipients of AFDC’s successor. At the same time, the 2002 Farm Bill streamlined eligibility by creating a number of state options for food stamps with the intention of pacifying the states who were getting penalized for having high food stamp error rates (those same error rates the USDA now brags about) as the result of having more food stamp participants with earned income as the result of the 1996 welfare reforms (i.e., administratively, it’s more difficult to assign benefits to people with earned income rather than unearned income… especially if those low-income people are in and out of work through the course of a month).

Some perspective on malfunctioning ACA exchanges

by  Tyler Cowen in

It is fairly pathetic that they may not be up and running in proper form by October 1, but it is not the main issue either.  Dan Diamond has some good remarks, here are two excerpts:

Overwhelmingly, the Americans who will be shopping through the exchanges this fall are the ones who have pined for this moment for months, if not years: The chronically ill who wanted coverage but couldn’t get it, or the low-income Americans who couldn’t afford it. They likely won’t be deterred by a few software glitches.

That is a very good point, though I wonder if it will contribute to insurance company enthusiasm in the early stages of actual implementation.  Dan also notes:

There already were a mix of offline ways to purchase coverage through the exchanges, whether through call centers or in person; the AP notes that 30% of applicants were expected to use paper.

But software delays may spur additional solutions, too. Oregon, for example, will rely on insurance brokers to help state residents obtain coverage until the state’s exchange website is ready to go.

And an enormous number of stakeholders want the exchanges to be successful, from insurers that are hoping to see new business to hospitals that want to lower their uncompensated care costs. Basically, CMS can raise a virtual volunteer army if necessary.

Meanwhile, the enrollment period runs through March 31. There’s no “early bird special” as Dave Morgan, a California employee benefits adviser, pointed out on Twitter; premium prices for 2014 will be the same whether you’re purchasing coverage on Oct. 1 or Dec. 15.

Dan adds, however:

All bets are off if the software problem isn’t fixed in a few days or weeks. The exchanges were touted with the promise that they’d be like Orbitz or Amazon, just for buying health coverage.

So I still say all bets are off.

Coming from other directions, Timothy Taylor offers some useful perspectives on ACA, which now it seems will cover only about 40% of the previously uninsured.

Russian shot in quarrel over Kant’s philosophy

by  Tyler Cowen in

An argument in southern Russia over philosopher Immanuel Kant, the author of “Critique of Pure Reason,” devolved into pure mayhem when one debater shot the other.

A police spokeswoman in Rostov-on Don, Viktoria Safarova, said two men in their 20s were discussing Kant as they stood in line to buy beer at a small store on Sunday. The discussion deteriorated into a fistfight and one participant pulled out a small nonlethal pistol and fired repeatedly.

The victim was hospitalized with injuries that were not life-threatening. Neither person was identified.

It was not clear which of Kant’s ideas may have triggered the violence.

The link is here, and for the pointer I thank Michael Rosenwald.

Sentences to ponder

by  Tyler Cowen in

From Nemo:

As the economy moves to cheap, scalable hardware production and the only things that are scarce are good ideas (technology, design) and human attention (clicks, impressions, brands) the whole mindset of growth driven capitalism in Asia is going to be in for a profoundly rude awakening. All those rentier assets will not be worth much anymore and the ability of the state or a couple of tycoons to control the commanding heights of an economy will be profoundly impaired by the lack of commanding heights more than anything else. Even more terrifyingly the prevailing model of intermediated financial markets with commercial banks front and centre will create incredible risks as banks do what they did previously and lend to capital intensive “stuff” businesses that do not generate much value. We may at some point develop wants and desires that are capital and credit intensive – the colonization of space perhaps – but it is a long way off just yet.

Overall the post is about “the decline of stuff,” and the source was retweeted by Izabella Kaminska.

Not From the Onion, No Really, *Not* From the Onion

by  Alex Tabarrok in

CBS News uncovers a frightening new trend, unregulated dinner parties:

As you sit down to dinner, this story illustrates eating out like you have never experienced before. We are talking about super-secret, illegal dining experiences hosted in homes.

CBS 2 investigative reporter Tamara Leitner went undercover to see firsthand how this underground world works.

It may look like a dinner party, but it’s really an underground supper club.

The diners are a mix of New Yorkers and tourists. CBS 2’s undercover cameras captured one experience — eight people who didn’t know each other eating a meal in a stranger’s home.

Horrifying. CBS, however, missed an even bigger story. It’s one thing when adults subject themselves to danger but surely even libertarians with their heads stuck in the 19th century must recognize that it is something else again when the least powerful among us are subject to these same dangers without their consent. Intrepid economist Art Carden has the story of abuse and shame that has remained hidden for too long:

…children–children, mind you–are being fed food that’s prepared in unregulated, uninspected, and possibly less-than-sanitary conditions.

Wilson.cat and the movement for independence for Catalonia

by  Tyler Cowen in

The Catalonian “human chain” was yesterday, and it drew hundreds of thousands of people, a large number for a single region.  According to the Washington Post, it was more than one million people.

If you would like to read more on this — by economists and other social scientists — Wilson.cat is one intellectual resource for independence.  The site represents writings of prominent scholars favoring independence — or at least an informed referendum — for Catalonia.

I am surprised this initiative is not receiving more attention.  If you were to ask in which ways economists today are having the most influence on the world, this movement would be close to the top of the list.  Among the economists involved are Andreu Mas-Colell, Pol Antràs, Jordi Galí, and Xavier Sala-i-Martin, all of whom are extremely well known in the profession.

Personally, I am still waiting to hear why Catalonian independence would not bring the fiscal death knell of current Spain, and thus also the collapse of current eurozone arrangements and perhaps also a eurozone-wide depression.  Otherwise I would gladly entertain Catalonia as an independent nation, or perhaps after the crisis has passed a referendum can be held.  When referenda are held during tough times, it is often too easy to get a “no” vote against anything connected with the status quo.

Is the view simply that “now is the time to strike” and “it is worth it”?  Obviously, an independence movement will not wish to speak too loudly about transition costs, but I would wish for more transparency.  Or is the view that Spain could fiscally survive the shock of losing about twenty percent of its economy, with all the uncertainties and transition costs along the way?  That could be argued, but frankly I doubt it, OMT or not, furthermore other regions would claim more autonomy too.  An alternative, more moralizing view is that the fiscal problems are “Spain’s fault in the first place” and need not be discussed too much by the pro-independence side, but I am more consequentialist and marginal product-oriented than that.

This piece, in Catalan, does cover the fiscal implications of debt assumption for an independent Catalonia.  The site also links to this somewhat spare piece by Gary Becker, but I still want more of a discussion of the issues raised above.

Keep in mind that two clocks are ticking.  The first is that education in Catalonia is becoming increasingly “hispanicized,” the second is that as economic conditions in Spain improve, or maybe just become seen as a new normal, getting a pro-secession vote in a referendum may become harder.  It doesn’t quite seem like “do or die” right now, but overall time probably is not on the side of Catalonian independence.

If anyone connected with the independence movement could point me to source materials addressing my questions, I would gladly cover it more on MR.

Here is Edward Hugh on the Catalan Way explained.  And here is more from Hugh.

The assumption of “free disposal,” as applied to children

by  Tyler Cowen in

This rather horrifying link has been making the rounds on Twitter, here is the bottom line:

When a Liberian girl proves too much for her parents, they advertise her online and give her to a couple they’ve never met. Days later, she goes missing.

The practice is called “private re-homing,” and it seems plenty of it goes on, and without government scrutiny (in many cases a simple notarized statement may accompany the handover).

Maybe I’ve read too much Walter Block ($2.99 on Kindle) in my day, but well, um, well…you know.  Is the solution to make the initial adopting parents keep the girl?  That seems doubtful.  Are the children better off being sent back to an orphanage rather than being re-gifted?  Possibly so, but this is not obvious.  From a legal point of view, for sure.  But as for the utilitarian and Benthamite angle?  A lot of evil parents might keep their newly adopted children (and to the detriment of those children) because return to the orphanage could be bureaucratic, costly, and also humiliating, at least compared to giving them away rather rapidly over the internet.

Should we screen adopting parents more rigorously, so as to prevent lemon parents from adopting in the first place?  Well, maybe, and if you read the article you will see some cases where better upfront screening would have been highly desirable.  But tougher screening as a general rule?  I don’t know.  Adoption is already costly and bureaucratic, it is on average welfare-enhancing, and maybe we can’t easily screen out most of the lemon parents anyway.  Etc.

On the other side of the issue, limiting free disposal likely would improve the average quality of adopting parent through positive selection.  Quite possibly that effect will predominate but I would ask for the same standards of evidence here that we apply to other policy decisions.

I say we don’t yet know the proper policy response to this issue, but it’s worth thinking this through with more rigor than a simple “mood affiliation” response might suggest.

The FTC vs. the DC Taxi Cab Commission

by  Alex Tabarrok in

The FTC recently released a letter supporting competition in the DC Taxicab industry:

[The FTC] staff respectfully suggests that DCTC carefully consider the potential direct and indirect impact of its proposed regulations on competition. We believe that unwarranted restrictions on competition should be avoided, and any restrictions on competition that are implemented should be no broader than necessary to address legitimate subjects of regulation, such as safety and consumer protection, and narrowly crafted to minimize any potential anticompetitive impact.

In response, taxi commission chair Ron Linton suggested that Uber had a hand in writing the FTC letter. Regulators can sometimes be captured but not by firms launched in 2010! FTC commissioner Joshua Wright (formerly a colleague at GMU law) responds in the Washington Post with a telling point:

Linton’s uninformed comment tells us more about the commission’s approach to regulation than about the FTC’s. According to The Post, Linton described the commission’s regulatory role to that of a referee of competing interest groups.

Indeed, what competing groups is Linton talking about? Might it be producers and consumers? And what does it mean to “referee” the competition between producers and consumers if not to raise prices and incumbent profits?

Firefighter Hysteresis

by  Alex Tabarrok in

The number of fires is down but the number of career firefighters is up, as I showed last year in my post firefighters don’t fight fires. Leon Neyfakh of the Boston Globe covers the situation in Boston:

…city records show that major fires are becoming vanishingly rare. In 1975, there were 417 of them. Last year, there were 40. That’s a decline of more than 90 percent. A city that was once a tinderbox of wooden houses has become—thanks to better building codes, automatic sprinkler systems, and more careful behavior—a much less vulnerable place.

As this has happened, however, the number of professional firefighters in Boston has dropped only slightly, from around 1,600 in the 1980s to just over 1,400 today. The cost of running the department, meanwhile, has increased by almost $43 million over the past decade, and currently stands at $185 million, or around 7.5 percent of the city’s total budget.

Later, I am quoted:

Alex Tabarrok, an economist at George Mason University who discussed the fire statistics on the blog Marginal Revolution, explains it in terms of what’s called the “March of Dimes problem.” When polio was defeated, the March of Dimes, started under Franklin Delano Roosevelt to combat the disease, suddenly had no reason to exist. “They were actually successful, and it was something they never planned for,” said Tabarrok. “But instead of disbanding the organization, they set it onto a whole bunch of other tasks…and so it’s kind of lost its focus. It’s no longer easy to evaluate whether it’s doing a good job or not.”

This, in Tabarrok’s view, is what happened to the country’s fire departments: At a certain point, they became an organization in search of a mission. “So they ended up doing things they’re not necessarily the optimal people to do, like responding to medical emergencies.”

Some cities are trying to change but as I said in my original piece, “it’s hard to negotiate with heroes”. The situation in Toronto illustrates. Paramedics were recently assigned to more emergency calls at the expense of firefighters who have responded with photos ops in front of burned homes and threats that if their budget is cut children will die. Not wanting to lose their newly found responsibilities, the paramedics have responded with a campaign of their own leading to an awesome cat fight between the two agencies.

I enjoyed Margaret Wente’s conclusion:

A powerful combination of fear-mongering and hero worship has made Canada’s fire departments largely immune to budget cuts. As a consequence, the citizens are getting hosed.

The charitable deduction in Singapore

by  Tyler Cowen in

There is no reason why deductions cannot be super-charged:

To encourage greater charitable giving in Singapore as the economy recovered, the Minister for Finance announced in Budget 2011 that  tax deduction of 2.5 times will be extended for another 5 years to donations made from 1 January 2011 to 31 December 2015.

The full document is here.  If that does not sink through, here is another discussion:

What this means is that for every dollar that you donate to charities, the government will deduct $2.50 off your tax payable. If you have been paying Income Tax, you will know that this is something extremely beneficial.

A few years ago the deduction was only 2x and that in turn was a relatively new policy.  Do any of you know of research on the impact of these policies and changes?

Here is Bruce Bartlett, who is skeptical about the charitable deduction in the United States.

American violence is higher than you think

by  Tyler Cowen in

From Christopher Glazek:

…the figures that suggest that violence has been disappearing in the United States contain a blind spot so large that to cite them uncritically, as the major papers do, is to collude in an epic con. Uncounted in the official tallies are the hundreds of thousands of crimes that take place in the country’s prison system, a vast and growing residential network whose forsaken tenants increasingly bear the brunt of America’s propensity for anger and violence.

Crime has not fallen in the United States—it’s been shifted. Just as Wall Street connived with regulators to transfer financial risk from spendthrift banks to careless home buyers, so have federal, state, and local legislatures succeeded in rerouting criminal risk away from urban centers and concentrating it in a proliferating web of hyperhells. The statistics touting the country’s crime-reduction miracle, when juxtaposed with those documenting the quantity of rape and assault that takes place each year within the correctional system, are exposed as not merely a lie, or even a damn lie—but as the single most shameful lie in American life.

From 1980 to 2007, the number of prisoners held in the United States quadrupled to 2.3 million, with an additional 5 million on probation or parole.

Here is one detail:

…the Justice Department finally released an estimate of the prevalence of sexual abuse in penitentiaries. The reliance on filed complaints appeared to understate the problem. For 2008, for example, the government had previously tallied 935 confirmed instances of sexual abuse. After asking around, and performing some calculations, the Justice Department came up with a new number: 216,000. That’s 216,000 victims, not instances. These victims are often assaulted multiple times over the course of the year. The Justice Department now seems to be saying that prison rape accounted for the majority of all rapes committed in the US in 2008, likely making the United States the first country in the history of the world to count more rapes for men than for women.

Here is more, via Eli Dourado.