Category: Law
Edward Luce is what I call “prescient plus”
A few days ago he wrote this subtitle in the FT:
Self-interest guides the Big Data companies, and the same is often true of the White House
And this:
Big data’s agenda is not confined to immigration reform. Among other areas, it has a deep interest in shaping what Washington does on privacy, online education, the school system, the internet, corporate tax reform, cyber security and even cyber warfare. Big data is also likely to be influential in the US-European trade partnership talks, which start this month. Whether the sector becomes a thorn in the side of the process remains to be seen. Either way, Americans should be relieved someone is making the case for privacy.
He closes with this:
A century ago, Theodore Roosevelt pushed back against the power of the rail barons and oil titans – the great technological disrupters of his day. Mr Obama should pay closer heed to history. And he should become wary of geeks bearing gifts.
Don’t forget this line:
One of the geekocracy’s main characteristics is a serene faith in its own good motives.
The general problem is the unholy government and tech alliance, based on a mix of plutocracy, information-sharing, and a joint understanding of the importance of information for future elections. Which current politician wouldn’t want to court the support of tech, and which major tech company can today stand above politics?
I will add this: if you were surprised by today’s revelations, shame on you!
Should states jump on the Medicaid expansion bandwagon?
Carter C. Price and Christine Eibner have a new study in Health Affairs suggesting a definite “yes,” and I have seen this piece endorsed numerous times in the blogosphere and on Twitter. I do understand that part of their argument is a normative one, given the desire to expand insurance coverage for the currently uninsured. But they and their endorsers also seem to be making a state-level financial prudence argument, as if there were no possible reason for a state not to expand participation behind sheer ideological stubbornness. On that matter I don’t think they have pondered the problem deeply enough and they fail an intellectual Turing test.
Let’s start with a simple observation, namely that a Republican may win the next Presidential election. There is also quite a good chance that such a victory would be accompanied by a Republican Senate (and House), given the distribution of vulnerable seats. That means a very real chance that the federal government will scale back its commitment to Medicaid expansion, for better or worse. States don’t want to be left holding the bag, and governors know it is hard to take back benefits once granted.
I often interpret the Republicans as operating in a “they don’t really mean what they say” mode, but on Medicaid I think they basically do mean it and we already can see some of the demonstrated preference evidence. Furthermore a new Republican President would face very real pressure to “repeal Obamacare,” yet we all know that the “three-legged stool” centered around the mandate is hard to undo selectively. That ups the chance Medicaid will be the target and much of the rest will be relabeled (“repealed,” in the press release) but in some manner kept in place in its essentials.
Another possibility is that a Republican administration would somehow restructure the deal to, in some way, favor the holdout red states, relative to the deal already on the table. (Why not reward your supporters?) That increases the prospective return to being a holdout red state.
On top of all this, there is option value. The chance to jump on the Medicaid expansion bandwagon won’t go away tomorrow. Even if the cost-benefit ratio > 1, you still might want to play wait and see. There is even a chance that in the meantime you are somehow offered a better deal yet.
Now if someone wants to argue that, given these considerations, Medicaid expansion still makes financial sense for a state, fine, I would be keen to read such an analysis. But that is not what I am seeing. The Price and Eibner piece doesn’t analyze these considerations or even bring up most of them. Governors are not stupid, or their chiefs of staff are not stupid, and many governors are far less ideological than they let on. They are politicians. And they are politicians who understand that the federal government is not to be trusted and yes if you wish you really can blame that on the Republicans, or indeed on any prospective switch of power. That is why we are not seeing more states do the Medicaid expansion. In the meantime, the debate needs to catch up to the reality.
Is there ACA rate shock in California?
I wasn’t going to weigh in on this, but enough of you have asked me what I think of Avik Roy’s claim that California insurance premiums, under ACA, will go up 64% to 146%. Let me start by telling you this: based on a reading of the secondary commentary, I cannot tell you how much rates in California will be going up (and my original inclination was not to blog it for this reason).
Still, the question having been raised, let’s go back in time. In 2009, the CBO wrote (pdf):
CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.
About half of those enrollees would receive government subsidies that would reduce their costs well below the premiums that would be charged for such policies under current law.
If you read their subsequent discussion, it seems fairly clear to me they are not averaging “higher premia for those still getting insurance” with “a price decline from infinity, for those who couldn’t get any insurance in the pre-ACA days,” in some kind of complicated index number fashion. They are talking about price increases on already-existing policies and what kind of continuation one can expect.
I will treat this as the canonical estimate, and stipulate that we will have had “rate shock” if the percentage increases are three times higher than had been forecast by the CBO.
You will note that these higher rates still may be an efficient form of lump sum taxation, or they may be unsustainable price hikes which cause the mandate to unravel (read Will on this point) by encouraging non-participation, or perhaps a bit of both. Megan McArdle considers some public choice implications of unpopular and unexpected high rates.
In 2009, you will find a claim by Jonathan Gruber:
What we know for sure the bill will do is that it will lower the cost of buying non-group health insurance.
Maybe he had in mind an index-number weighting where the “price decline from infinity” weighs heavily in the calculation and in that sense such a claim can always be true if even one person receives extra coverage. Still, I am more likely to call it a misspoken sentence, a Denkfehler, an excess enthusiasm, and most of all a highly inexact way of describing the issue no matter what is the truth. It was always the case that the median and modal individual premium was likely to go up, even with full political cooperation from the Republicans. After all, that is part of the “efficient lump sum taxation” idea behind the use of the mandate in the first place. And yes I do understand that a competitiveness effect and a transparency effect still may push prices down but that is not the way I would bet it and for sure it is not “for sure,” to quote Gruber, that such prices are going to fall. (By the way here is an Indiana estimate of rate increases in the range of 70-90%; I can’t vouch for the underlying data. It also seems that price declines are highly likely for New York state, in part because the current system has so many problems. So we also need to be disaggregating the different states here. Also, here is some informal poll evidence for a 30-40% rate increase at the individual level, with some higher increases for some other groups. Caveat emptor, but those would be higher rates and they might even surpass the 3x standard I have set up.)
If you add in President Obama’s varied comments on the matter, I absolutely do see the real truth behind conservative and Republican complaints of “bait and switch.” The median and modal cost of buying non-group health insurance is likely to go up, not down, and not everyone will enjoy the option of keeping the status quo, as had been promised. And that whole matter is being given a different spin today than it was say in 2009. On that Roy is entirely correct.
(In passing, I see employer shedding of coverage as a greater danger to ACA at the macro level, so in my view it is a mistake to see too much of ACA as turning on this issue.)
On the other side of the debate, you will find criticisms of Roy here, here, here, here, and here, among many others. At least two points of the critics seem to stick, first that these may be teaser (status quo) rates sampled by Roy and second we don’t know actually which individuals can end up getting those rates, once they fill out the questionnaires about the earlier medical histories. But even there we are left with “we don’t know” more than “I have better numbers which show Roy to be wrong.” The level of subsidies is relevant too. I think also that Roy’s response undercounts the number of uninsurable people. The worry is not that the market price for insurance is infinite, but rather at the prevailing market price one is simply paying one’s medical bills, plus a processing premium to the insurance company, rather than obtaining ex ante insurance.
To raise two other points critical of Roy’s position, first I am uncomfortable with putting so much emphasis on percentage rate increases, when some of these sums in question may be relatively small. (I find the emphases in Megan’s presentation of the numbers more useful.) I also think it requires a lot more argumentation to measure the number of “those who can’t get useful insurance” than by looking at the number of applications for the high-risk pools, even if that argument ultimately succeeds.
That all said, I find the screeds of most but not all of Roy’s critics to be inappropriate or in some cases beyond inappropriate. It is disturbing how much space and emotional energy is devoted to attacking Roy, and to attacking conservative policy wonkery, relative to trying to calculate the actual extent of rate shock or possible lack thereof. That is not how good policy wonks go about their job.
I think there is quite a good chance we will see rate shock, as I have defined it above. I also think we still don’t know. I also see rhetorical bait and switch from ACA defenders. I also see that Roy is too quick to jump on possible negative information about the California rates without nailing down the case. I also don’t think these are the most important issues for ACA, though they are issues worth discussing.
Overall this is not a debate which is going very well.
Do Japanese companies have banishment rooms?
This seems speculative, but of interest nonetheless:
Basically, banishment rooms are departments where companies transfer surplus employees and give them menial or useless tasks or even nothing to do until they become depressed or disheartened enough to quit on their own, thus not getting full benefits, unlike if they were actually let go. Imagine having to stare at a TV monitor for 10 hours at a time each day, in order to look for “program footage irregularities.” Of course companies would not admit to doing this, and instead will make up generic (or even creative) titles and department names like “Business & Human Resource Development Center” or “career development team”. And it’s not small companies that are doing this, but big ones like Hitachi Ltd., Sony Corp., Toshiba Corp., Seiko Instruments Inc., a NEC Corp. subsidiary, and two subsidiaries of Panasonic Corp.
A public relations from the main office of Panasonic said that the BHC section is “training employees to acquire new skills so they can work at different sections,”. 468 employees were added to this department in April, mostly coming from sections that were doing poorly. In short, 1 in 10 workers at the company are at the BHC. So far, only 35 employees have left the company while 29 got transferred to other departments.
Via Mark Thorson, the story is here. Here is another article about banishment rooms, with more documentation and more legal detail about the difficulties of firing employees.
Elsewhere from Japan, a new and possibly very effective malaria vaccine has been invented. Here is electronic Samurai sword quick draw and cut trainers. Here is an argument that competitive vending machines make Japanese inflation more difficult to achieve.
Very good sentences
This raises an interesting, tangentially related question. Liberals fulminate constantly against outrageous conservative obstruction, yet often seem nevertheless surprised by its effectiveness. Why is that? My guess is that liberals are sometimes deceived by assumptions about the scope of liberalising moral progress. Modern history is a series of conservative disappointments, and the trend of social change does have a generally liberal cast. The surprisingly rapid acceptance of legal gay marriage is a good example. Liberals are therefore accustomed to a giddy sense of riding at the vanguard of history, routed reactionaries choking in their dust. But all of us, whatever our colours, overestimate the moral and intellectual coherence of our political convictions. We’re inclined to see meaningful internal connections between our opinions—between our views on abortion and regulatory policy, say—when often there’s no connection deeper than the contingent expediencies of coalition politics. For liberals, this sometimes plays out as a tendency to see resistance to all liberal policy as an inevitably losing battle against the inexorable tide of history. This occasionally leads, in turn, to a slightly naive sense of surprise when a hard-won political victory isn’t consolidated by a decisive, validating shift in public opinion, but instead begins to be ratcheted back.
That is from Will Wilkinson.
Titling of Property
The NYTimes has an excellent piece on Greece’s broken property system:
In this age of satellite imagery, digital records and the instantaneous exchange of information, most of Greece’s land transaction records are still handwritten in ledgers, logged in by last names. No lot numbers. No clarity on boundaries or zoning. No obvious way to tell whether two people, or 10, have registered ownership of the same property.
As Greece tries to claw its way out of an economic crisis of historic proportions, one that has left 60 percent of young people without jobs, many experts cite the lack of a proper land registry as one of the biggest impediments to progress. It scares off foreign investors; makes it hard for the state to privatize its assets, as it has promised to do in exchange for bailout money; and makes it virtually impossible to collect property taxes.
… less than 7 percent of the country has been properly mapped, officials say. Experts say that even the Balkan states, recovering from years of Communism and civil war, are far ahead of Greece when it comes to land registries attached to zoning maps — an approach developed by the Romans and in wide use in much of the developed world since the 1800s.
Here from our course on development economics at MRUniversity is our video which covers the theory and empirical research on titling from Peru to Palau:
http://youtu.be/1CFqK_lHngs
Oops, and double oops…
Au pair programs are in danger of ending, a possible victim of legislation now moving through Congress…
At issue is a provision of the bill that would bar any labor contractor from charging a fee to foreign workers being brought into the country. Supporters say the measure is aimed at preventing the exploitation of foreign workers.
The roughly 13,000 au pairs who enter the U.S. each year are considered participants in an “exchange visitor program” run by the State Department. The Senate bill would change their status to “workers,” meaning the new bar on charging upfront fees would apply to them.
The story is here. I predict they will find some semi-legal way around this stipulation, should the bill pass, but still this is a big mistake. Au pairs should not be considered controversial immigrants.
The second oops is this, from the Detroit Institute of Arts:
Museum officials here said Friday they strongly opposed any forced art sales, after the powerful emergency manager of the city indicated that its prized holdings could be sold to pay off creditors in the event of a bankruptcy filing…legal experts say that in a municipal bankruptcy, it is possible for a city to sell assets, even cultural icons. James Spiotto, a bankruptcy attorney and author on municipal-finance issues based in Chicago, said that “in order to provide essential government services like public safety, roads and education, certain other programs are going to be curtailed or eliminated. So it’s not surprising that the sale of art is on the table.”
Putting that museum into private hands would not have been a bad idea. You also can take this as an illustration of the more general point, which I am fond of stressing, that once you consider wealth, hardly anywhere is actually bankrupt or insolvent. Debt problems are most of all problems of politics.
Prisoner unemployment is rising in California
Prison labor, once best known for making license plates, has grown to 57 factories doing such work as modular building construction, toner cartridge recycling, shoemaking and juice packaging, according to its latest annual report. Convicts supply closed-captioning for television and transcribe movies into Braille…
Yet even with workers paid 35 to 95 cents an hour, business is off. Sales are exclusively to state and local governments, almost all under budget pressure. The biggest customer, the Corrections Department, has 43,000 fewer inmates since 2006, many shifted to county jails to ease crowding. Revenue slipped 18 percent to $173 million in the fiscal year that ended in June, from almost $210 million five years earlier.
“We are statutorily required to be self-sufficient,” said Eric Reslock, a spokesman for the California Prison Industry Authority. Some work programs have been scaled back and all are being reviewed, he said.
That is from James Nash of Bloomberg. Here is one specific report for Bakersfield.
You can see that the initial shock to this system is largely demand-side. Yet there is still a relevant supply-side reason why many of these laid-off workers remain unemployed.
The economy that is Dubai (a different kind of driverless car)
Thousands of the finest automobiles ever made are now being abandoned every year since Dubai’s financial meltdown, left by expatriates and locals alike who flee in a hurry because they face crippling debts. With big loans to repay to the banks (unpaid debt or even bouncing a cheque is a criminal offence in Dubai), the panicked car owners make their way to the airport at top speeds and leave their vehicles in the car park, hopping on the next flight out of there, never to return…
Ferraris, Porsches, BMWs, Mercedes are regularly abandoned at the car park of Dubai International Airport, some with loan documents and apology notes simply left on the windscreen and in some cases with the keys still in the ignition.
…Residents complain about the unsightly vehicles hogging parking spaces at the airport and sitting slumped outside their fancy yacht clubs– it’s like, so not a good look.
There is more here, hat tip goes @jscarantino. By the way, a 19-year-old in Romania may have just made driverless cars significantly cheaper.
Further problems with ACA implementation
From Christopher Weaver and Anna Wilde Mathews:
Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.
Benefits advisers and insurance brokers—bucking a commonly held expectation that the law would broadly enrich benefits—are pitching these low-benefit plans around the country. They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn’t cover surgery, X-rays or prenatal care at all. Others will be paired with limited packages to cover additional services, for instance, $100 a day for a hospital.
Federal officials say this type of plan, in concept, would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing. Employers could still face other penalties they anticipate would be far less costly.
It is unclear how many employers will adopt the strategy, but a handful of companies have signed on and an industry is sprouting around the tactic. More than a dozen brokers and benefit-administrators in 10 states said they were discussing the strategy with their clients.
There is more detail at the link, including a discussion of some of the legal uncertainties. Veronique de Rugy adds comment here.
Sentences to ponder
Fashion models are almost twice as likely to get their visas as computer programmers, by one rough measure.
Here is more, and for the pointer I thank Andrew Rowe.
Sentences to ponder
A family can get implicitly taxed 238% on that additional $501.
The thing is, I don’t even need to tell you what the topic is. The original source is here.
U.S. clothing chains do not support pact on Bangladesh reforms
From Brad Plumer:
Nearly all U.S. clothing chains, citing the fear of litigation, declined to sign an international pact ahead of a Wednesday deadline, potentially weakening what had been hailed as the best hope for bringing about major reforms in low-wage factories in Bangladesh.
Companies including Wal-Mart, Gap, Target and J.C. Penney had been pressed by labor groups to sign the document in the wake of last month’s factory collapse in Bangladesh that killed at least 1,127 people. More than a dozen European retailers did so. But U.S. companies feared the agreement would give labor groups and others the basis to sue them in court.
…Wal-Mart reiterated Wednesday that it would not sign the accord at this time, because it “introduces requirements, including governance and dispute resolution mechanisms, on supply chain matters that are appropriately left to retailers, suppliers and government, and are unnecessary to achieve fire and safety goals.”
…Most U.S. companies, however, balked at the language in the accord. Some said it would would expose them to excessive legal liability — particularly in America’s litigious courts. Written by labor groups, the agreement would require retailers who source clothing from Bangladesh to commit to pay for inspections, building upgrades and training — all enforced by binding arbitration.
Here is more. Most likely, the damage done to Bangladesh will continue. Note that the prospect of successful litigation was not what drove FDI into the 19th century United States, or twentieth century Singapore, to the point where wages rose significantly.
Red Lights for Profit
TAMPA BAY, Florida — A subtle, but significant tweak to Florida’s rules regarding traffic signals has allowed local cities and counties to shorten yellow light intervals, resulting in millions of dollars in additional red light camera fines.
The 10 News Investigators discovered the Florida Department of Transportation (FDOT) quietly changed the state’s policy on yellow intervals in 2011, reducing the minimum below federal recommendations. The rule change was followed by engineers, both from FDOT and local municipalities, collaborating to shorten the length of yellow lights at key intersections, specifically those with red light cameras (RLCs).
…Red light cameras generated more than $100 million in revenue last year…with 52.5 percent of the revenue going to the state. The rest is divided by cities, counties, and the camera companies….”Red light cameras are a for-profit business between cities and camera companies and the state,” said James Walker, executive director of the nonprofit National Motorists Association. “The (FDOT rule-change) was done, I believe, deliberately in order that more tickets would be given with yellows set deliberately too short.”
See Buchanan and Brennan’s The Power to Tax for an analytic approach and Benson, Rasmussen and Sollars for another example of bureaucratic revenue maximization.
Hat tip: Radley Balko.
Markets in everything
The market for methadone vomit in prison is lively, and the preferred recipe for this cocktail is one part puke (strained, please, bartender) to one part Tang.
Here is more, interesting on other points too, by Graeme Wood, mostly on the drug problem in the country of Georgia, and the pointer is from Wonkbook.