Category: Law
Innovations>Patents
AEI held a session on patents and patent reform building off Launching the Innovation Renaissance. I opened and Judge Paul Michel, Chief Judge, United States Court of Appeals for the Federal Circuit (retired), James DeLong of the Convergence Law Institute and Michael Abramowicz of George Washington University School of Law all offered comments.
Here is one brief bit from my talk. You can find the whole thing here.
Chimpanzees have police officers
Anthropologists now reveal that chimpanzees mediate conflicts between other group members, not for their own direct benefit, but rather to preserve the peace within the group. Their impartial intervention in a conflict — so-called “policing” — can be regarded as an early evolutionary form of moral behavior.
…primatologists from the University of Zurich can now confirm that chimpanzees intervene impartially in a conflict to guarantee the stability of their group. They therefore exhibit prosocial behavior based on an interest in community concern.
…The willingness of the arbitrators to intervene impartially is greatest if several quarrelers are involved in a dispute as such conflicts particularly jeopardize group peace.
…It is primarily high-ranking males or females or animals that are highly respected in the group that intervene in a conflict. Otherwise, the arbitrators are unable to end the conflict successfully. As with humans, there are also authorities among chimpanzees.
The article is here and for the pointer I thank Eduardo Pegurier.
Pop Bonds
Pay on Performance Bonds incentivize private-sector creativity in the performance of public goals. One of the first Pop bonds (also called social improvement or social impact bonds, SIBs) was pioneered by the British government and the UK group Social Finance. The UK Pop bond is designed to reduce prisoner re-conviction rates. Social Finance raised about $8 million from investors to fund a variety of programs for released prisoners, helping them to find work, stay off alcohol and drugs, reintegrate with society and so forth. The programs are managed by a group of non-profits. The UK government has agreed to pay the investors a return but only if reconviction rates are 7.5% less than those of a control group. If reconviction rates fall below the target level, the investors will earn a good rate of return, 7.5-13%, depending on how far rates fall below the control, but they could also lose everything if rates do not fall. The Pop bond issued in 2010 and appears to be going well although no (potential) bond payments are scheduled until 2014.
A Pop bond puts little risk on governments, who pay nothing if the program does not work but who save money if the program does work. With less at risk government should be willing to experiment more and try new approaches to problems. By contracting out, the government also eliminates a public bureaucracy resistant to change. Most importantly, a Pop bond encourages creativity and innovation in social programs. Investors in a Pop bond have an incentive to monitor the groups implementing the programs and to ensure that they choose the very best, most cost-effective programs. The better the program works, the more the investors earn. If Pop bonds expand it may even pay investors to undertake their own experiments to see how best to maximize their returns.
For Pop bonds to work it is critical that outcomes be measured and marked to an appropriate, randomized, control group. If not carefully monitored, the private sector will also excel at innovative and creative gaming at the public expense (see the comments for some suggestions).
More Pop bonds are being planned in the UK and the idea is also catching on in the United States. The Department of Justice and the Department of Labor both have pilot programs in the works and Massachusetts has issued a request for proposals. By the way, Pop bonds are said to be a new idea but the U.S. bounty hunter and bail bond system which works very well is a clear precursor as is the system of privateering.
Pop bonds have the potential to produce public goods with private innovation; they are an idea worth watching.
Warn people about two things
One problem with disclosure regulation is that people grow accustomed to the warnings and caveats and their eyes glaze over. They stop paying attention.
So let’s say you are the Über-regulator. You get to warn people about two things. Once.
Of course they may not listen to you at all, but let’s assume you have enough credibility from your political post to be given half an hour on network TV and subsequent extensive coverage and commentary on blogs and Twitter. That said, especially useful warnings, such as “You’re not as smart as you think” are perhaps especially likely to be ignored. “Honor They Superior!” is perhaps also a non-starter, though you may try it if you wish.
Which two things do you pick for your warning?
“Driving is dangerous”
“Fight nuclear proliferation.”
“Don’t let your kid near a bucket.”
“Politics isn’t about policy.”
“Beware the Ides of March!”
“Some people out there suck!”
The correct answer is not obvious. And what does this imply about regulation more generally?
I thank Bryan Caplan for a useful conversation on this topic.
Black market Tide free banking
The Daily‘s M.L. Nestel cites law enforcement reports from across America describing a crime-wave of Tide detergent thefts, including claims that bottles of easily resellable, name-brand washing soap can be bartered for meth and heroin in Gresham, OR.
He cites this article:
Tide has become a form of currency on the streets. The retail price is steadily high — roughly $10 to $20 a bottle — and it’s a staple in households across socioeconomic classes.
Tide can go for $5 to $10 a bottle on the black market, authorities say. Enterprising laundry soap peddlers even resell bottles to stores.
“There’s no serial numbers and it’s impossible to track,” said Detective Larry Patterson of the Somerset, Ky., Police Department, where authorities have seen a huge spike in Tide theft. “It’s the item to steal.”
Why Tide and not, say, Wisk or All? Police say it’s simply because the Procter & Gamble detergent is the most popular and, with its Day-Glo orange logo, most recognizable of brands.
For the pointer I thank Ken Feinstein and Pamela J. Stubbart.
For the next round
With the completion of this deal, the International Monetary Fund and Greece’s European partners will possess 77 percent of the country’s outstanding debt. From now on, foreign taxpayers will be asked to suffer the bulk of the loss the next time Greece confronts a financial crisis — and they are likely to be much less forgiving.
There is more here. Obviously, this will make it correspondingly difficult for Greece to borrow money from the private sector too. Lending to Greece will put you at the near-back of a very long line…
Correlations on porn
Firstly (using the General Social Survey) I found no relationship between being pro the legality of porn, or propensity to watch porn, and pro social behaviors e.g. volunteer work, blood donation, etc.
We can dismiss the feminist (and sociological) charges of porn increasing sexual violence and leading to sexism. The USA, Sweden, Germany, Netherlands (2) and Japan were just some of the countries that suddenly went from no legal pornography to quite widespread availability and consumption of it. These studies all found that greater availability of, and exposure to, pornography does not increase the rate of sexual assaults on women, and probably decreases it (3). Japanese porn is quite frequently violent and yet even there rape decreased from an already very low base. It’s interesting that an increase in porn exposure decreases sexual violence only, and has no effect on other crime. Economists would put this down to a substitution effect.
Several countries have sex offender registers – mainly of pedophiles. A wide variety of professions are represented on these registers. Members of professions that supposedly promote morality e.g. clerics or teachers, are quite common on it yet conspicuously absent from such registers are men who have worked in the porn industry.
This study (1) found no relationship between the frequency of x-rated film viewing and attitudes toward women or feminism. From the GSS (controlling for IQ, education, income, age, race and ideology) I found that those who are pro the legality of porn are less likely to support traditional female roles, more likely to be against preferential treatment of either gender, and to find woman’s rights issues more frequently salient. Although I found that women’s rights issues are less salient to male watchers, and female watchers are less likely to think women should work, I also found that watching porn is unrelated to negative attitudes toward women and feminism.
In short exposure to and tolerance of pornography does not cause anti-social behavior (and may even reduce it in relation to sex) and does not get in the way of pro social behavior either.
The sociological and religious charge that pornography undermines monogamy and family values does however receive support. From GSS (and controlling for IQ, education, income, age, race and ideology) I found that men who are pro legalizing porn are less likely to marry and are more pro cohabitation. There was no such association for women. A higher propensity to watch porn movies is also associated with a lesser likelihood of marrying but is unrelated to cohabitation attitudes – in both men and women. So a pro porn attitude is consistent with a reduced respect for marriage.
Both genders also tend to have fewer kids in marriage, if they are pro the legalizing of porn. However, for men, a higher propensity to watch porn movies is associated with having MORE children within marriage. Note that pro legal porn attitudes and porn movie viewership is not associated with having children out of wedlock – for men its associated with a lower chance of that happening – so porn doesn’t lead to that kind of irresponsible behavior.
Possibly part of this general pattern, I found that both being pro the legality of porn and watching porn are related to lower voting rates in general elections.
I found no relationship to a variety of ‘family values’ type questions e.g. importance of family, or to the value of relationships and friendship.
Being pro the legality of porn, and porn viewing, are associated with unhappiness with the family or marriage – especially for men. Those who are pro porn also tend to have a greater number of sexual partners and are more likely to have a sexual affair. This supports the 1984 and 1988 discoveries of Dolf Zillman and Jennings Bryant (4) that the effects of repeated exposure to standard, non-violent, commonly available pornography includes: increased callousness toward women; distorted perceptions about sexuality; devaluation of the importance of monogamy; decreased satisfaction with partner’s sexual performance, affection, and appearance; doubts about the value of marriage; and decreased desire to have children. Later research studies further confirm their findings.
Garth’s excellent and underrated blog is here. I have put it in my RSS feed.
The public choice of higher French tax rates
Remember last week when Hollande and the Socialists proposed a top marginal rate of 75% and enjoyed a boost in the polls? Suddenly the idea is meeting with greater public resistance:
Even though the vast majority of earners in France wouldn’t be liable, Hollande’s tax has been a headline-grabber in the presidential campaign, partly because football is proving to be among the most vocal of its critics. Only income above 1 million euros ($1.31 million) would face the top whack of 75 percent. The first million earned would be taxed at lower rates. Just 3,000 of the highest-earning taxpayers in France are likely to be affected.
From French league president Frederic Thiriez down, the refrain is often the same: top players will flee to countries with lower taxes, leaving France — the 1998 World Cup champion — with second-rate football. Thiriez estimates 120-150 players — about one-quarter of those in France’s top division — earn enough to make them liable for Hollande’s tax. In Italy, Germany, England and Spain, which have Europe’s strongest leagues and clubs, top income tax rates range from 43 to 52 percent. The current top rate in France is 41 percent.
“It would be the death of French football,” Thiriez told sports newspaper L’Equipe. To RMC radio, he spoke of a “catastrophe” and of France relegated to “play in the second division of Europe, along with Slovenia or countries like that.”
Michel Seydoux, president of current French champion, Lille, said Hollande’s tax would produce “an impoverished spectacle.”
Still, there is pushback:
He’s thrown back the criticism from football, suggesting it is living too well. Specifically, he cited the multimillion euro salary the Qatari owners of Paris Saint-Germain reportedly pay their Italian manager, Carlo Ancelotti.
“Football administrators need to clean house a bit,” Hollande said. “Does the level of our league justify such astronomic salaries?”
…”When you see their cars in the garage here, it makes you sick,” said Thomas Mascheretti, a fan who approved of Hollande’s proposal.
File under: Ideas have Consequences.
The article is here, and for the pointer I thank Fred Smalkin.
The evolution of labor markets, most of all in Spain
Temporary contracts were introduced in a labor reform approved in 1984 by the Socialist government of Felipe González, and they have remained in favor ever since – even more so during times of crisis, such as those currently being seen in Spain, where 93 out of every 100 contracts signed of late have been temporary.
Here is more.
I don’t see the core to this game
Mr Weidmann proposed last week that Germany’s Target 2 claims should be securitised. Just think about this for a second. He demands contingent access to Greek and Spanish property and other assets to a value of €500bn in case the eurozone should collapse. He might as well have suggested sending in the Luftwaffe to solve the eurozone crisis. The proposal is unbelievably extreme.
It also tells us something else: by seeking insurance against a collapse of the euro, the Bundesbank tells us it no longer regards the demise of the euro as a zero-probability event. If the Bundesbank seeks insurance, so should everybody else.
Here is more, from Wolfgang Münchau. Here is another account, Weidmann by the way runs the Bundesbank. As a general rule of thumb, any time you see an article about “Target 2,” it is important.
The calculus of consent?
A few years ago, two researchers, both then at Carnegie Mellon, decided to calculate how much time it would take to actually read every privacy policy you should.
First, Lorrie Faith Cranor and Aleecia McDonald needed a solid estimate for the average length of a privacy policy. The median length of a privacy policy from the top 75 websites turned out to be 2,514 words. A standard reading rate in the academic literature is about 250 words a minute, so each and every privacy policy costs each person 10 minutes to read.
Next, they had to figure out how many websites, each of which has a different privacy policy, the average American visits. Surprisingly, there was no really good estimate, but working from several sources including their own monthly tallies and other survey research, they came up with a range of between 1,354 and 1,518 with their best estimate sitting at 1,462.
So, each and every Internet user, were they to read every privacy policy on every website they visit would spend 25 days out of the year just reading privacy policies! If it was your job to read privacy policies for 8 hours per day, it would take you 76 work days to complete the task. Nationalized, that’s 53.8 BILLION HOURS of time required to read privacy policies.
That is Alexis Madrigal, the article is here, for the pointer I thank Jeffrey Deutsch.
A new paper on the economics of network neutrality
Nicholas Economides† and Benjamin E. Hermalin have a new paper (pdf), coming out in the Rand Journal of Economics, summarized here, here is the abstract:
Pricing of Internet access has been characterized by two properties: Parties are directly billed only by the Internet service provider (isp) through which they connect to the Internet. Pricing, moreover, is not contingent on the type of content being transmitted. These properties define a regime known as “network neutrality.” In 2005, some large isps proposed that application and content providers directly pay them additional fees for accessing the isps’ residential clients, as well as differential fees for prioritizing certain content. We analyze the private and social incentives to introduce such fees when the network is congested and more traffic implies greater delays. We derive conditions under which network neutrality would be welfare superior to any feasible scheme for prioritizing service. Extending our analysis to encompass isps’ incentives to invest in more bandwidth, we show that the ability to price discriminate increases their incentives to invest. In terms of overall welfare, we show the additional investment may or may not offset any static inefficiency associated with discrimination.
This strikes me as a funny way to put the point. Might the authors also have written?: “A strict welfare calculation is indeterminate in the theory of price discrimination, yet the standard presumption is that price discrimination is welfare-improving. That is all the more likely to be the case when investment in new capacity, and usage, is endogenous”?
For the pointer I thank Richard Harper.
Not a joke
…as far as I can tell. From a quite reputable newspaper, here goes:
For 150 years, no country has expressed interest in adopting the Canadian dollar — the poor cousin to the coveted greenback.
But now tiny Iceland, still reeling from the aftershocks of the devastating collapse of its banks in 2008, is looking longingly to the loonie as the salvation from wild economic gyrations and suffocating capital controls.
And for the first time, the Canadian government says it’s open to discussing the idea.
In brief remarks to be delivered Saturday in Reykjavik, Canadian ambassador Alan Bones will tell Icelanders that if they truly want the Canadian dollar, Canada is ready to talk.
But he will warn Icelanders that unilaterally adopting the loonie comes with significant risk, including complete loss of control over their monetary policy because the Bank of Canada makes decisions only for Canadians and the Canadian economy.
Kudos to all of you who had been predicting that.
For the pointer I thank M Kaan, maybe someone is playing an elaborate joke on Bob Mundell here.
True or false?
As commodities prices fall, the rights of women rise.
The value of diversification, Haitian style
The confirmation that senior Haitian officials hold foreign nationality lends growing credence to a leading senator’s charge that Haitian President Michel Martelly is a U.S. citizen and hence illegally in power.
Two weeks ago, Sen. Moïse Jean Charles submitted what he called “irrefutable” evidence to a special Senate Select Committee that Martelly and 38 other high government officials hold dual, and sometimes triple, nationalities.
On Jan. 24, Sen. Joseph Lambert, the Commission’s president, announced in a press conference that the Commission has confirmed dual nationality for two of the 10 cases it has investigated to date. However, Lambert has so far refused to release the names of dual citizenship officials, saying his commission would proceed “impartially” and “without emotion.” He said arrangements have been made to continue the nationality investigations overseas.
The Senate inquiry threatens to create a political crisis which may force President Martelly, his Prime Minister Garry Conille, and other ministers to step down. If the charges against him prove true, it means that candidate Martelly lied to election officials about holding dual citizenship, which current Haitian law explicitly forbids for a high elected official.
Here is more. There is the small matter of the Haitian constitution:
Commission member Sen. Steven Irvenson Benoît said that Haiti’s 1987 Constitution prohibits any foreign national not only from becoming president or prime minister, but also from acting as a minister or secretary of state. The Constitution’s Article 56 stipulates: “An alien may be expelled from the territory of the Republic if he becomes involved in the political life of the country, or in cases determined by law.“
Michel Martelly (“Sweet Mickey”) spent so much time in the United States, often giving concerts, that for years I simply assumed he held dual citizenship. Until recently, I had not known about this provision of the Haitian constitution. What is the old Haitian saying?:
“The constitution is paper, the bayonet is steel.”
Or something like that.