Category: Law
On the Hayek-Pinochet connection
Corey Robin has a long post on this, here is one part:
Hayek complied with the dictator’s request. He had his secretary send a draft of what eventually became chapter 17—“A Model Constitution”—of the third volume of Law, Legislation and Liberty. That chapter includes a section on “Emergency Powers,” which defends temporary dictatorships when “the long-run preservation” of a free society is threatened. “Long run” is an elastic phrase, and by free society Hayek doesn’t mean liberal democracy. He has something more particular and peculiar in mind: “that the coercive powers of government are restricted to the enforcement of universal rules of just conduct, and cannot be used for the achievement of particular purposes.” That last phrase is doing a lot of the work here: Hayek believed, for example, that the effort to secure a specific distribution of wealth constituted the pursuit of a particular purpose. So the threats to a free society might not simply come from international or civil war. Nor must they be imminent. As other parts of the text make clear, those threats could just as likely come from creeping social democracy at home. If the visions of Gunnar Myrdal and John Kenneth Galbraith were realized, Hayek writes, it would produce “a wholly rigid economic structure which…only the force of some dictatorial power could break.”
Hayek came away from Chile convinced that an international propaganda campaign had been unfairly waged against the Pinochet regime (and made explicit comparison to the campaign being waged against South Africa’s apartheid regime). He set about to counter that campaign.
He immediately wrote a report lambasting human rights critics of the regime and sought to have it published in the Frankfurter Allgemeine Zeitung. The editor of this market-friendly newspaper refused, fearing that it would brand Hayek as “a second Chile-Strauss.” (Franz Josef Strauss was a right-wing German politician who had visited Chile in 1977 and met with Pinochet. His views were roundly repudiated by both the Social Democrats and the Christian Democrats in Germany.) Hayek was incensed. He broke off all relations with the paper, explaining that if Strauss had indeed been “attacked for his support for Chile he deserves to be congratulated for his courage.”
There is much more at the link.
China fact of the day
The state-owned Shanghai Daily reported today that divorces now surpass marriages in China, with Shanghai reporting a 13.6 per cent rise in marital dissolutions last year, the biggest jump in recent years.
Here is more.
Addendum: This claim appears to be wrong, see the comments for further details.
No One is Innocent
I broke the law yesterday and again today and I will probably break the law tomorrow. Don’t mistake me, I have done nothing wrong. I don’t even know what laws I have broken. Nevertheless, I am reasonably confident that I have broken some laws, rules, or regulations recently because its hard for anyone to live today without breaking the law. Doubt me? Have you ever thrown out some junk mail that came to your house but was addressed to someone else? That’s a violation of federal law punishable by up to 5 years in prison.
Harvey Silverglate argues that a typical American commits three felonies a day. I think that number is too high but it is easy to violate the law without intent or knowledge. Most crimes used to be based on the common law and ancient understandings of wrong (murder, assault, theft and so on) but today there are thousands of federal criminal laws that bear no relation to common law or common understanding. The WSJ illustrates:
Last September (2011), retired race-car champion Bobby Unser told a congressional hearing about his 1996 misdemeanor conviction for accidentally driving a snowmobile onto protected federal land, violating the Wilderness Act, while lost in a snowstorm. Though the judge gave him only a $75 fine, the 77-year-old racing legend got a criminal record.
Mr. Unser says he was charged after he went to authorities for help finding his abandoned snowmobile. “The criminal doesn’t usually call the police for help,” he says.
Or how about this:
In 2009, Mr. Anderson loaned his son some tools to dig for arrowheads near a favorite campground of theirs. Unfortunately, they were on federal land….
There is no evidence the Andersons intended to break the law, or even knew the law existed, according to court records and interviews. But the law, the Archaeological Resources Protection Act of 1979, doesn’t require criminal intent and makes it a felony punishable by up to two years in prison to attempt to take artifacts off federal land without a permit.
The Anderson’s didn’t even find any arrowheads but the attempt to find was punishable by imprisonment. Under statutes such as the Lacey Act one can even face criminal prosecution for violating the laws of another country. Ignorance of another country’s laws is no excuse.
If someone tracked you for a year are you confident that they would find no evidence of a crime? Remember, under the common law, mens rea, criminal intent, was a standard requirement for criminal prosecution but today that is typically no longer the case especially under federal criminal law .
Faced with the evidence of an non-intentional crime, most prosecutors, of course, would use their discretion and not threaten imprisonment. Evidence and discretion, however, are precisely the point. Today, no one is innocent and thus our freedom is maintained only by the high cost of evidence and the prosecutor’s discretion.
One of the responses to the revelations about the mass spying on Americans by the NSA and other agencies is “I have nothing to hide. What me worry?” I tweeted in response “If you have nothing to hide, you live a boring life.” More fundamentally, the NSA spying machine has reduced the cost of evidence so that today our freedom–or our independence–is to a large extent at the discretion of those in control of the panopticon.
Lobbies lobby lobbies, etc.
Washington’s cities, counties, ports, Indian tribes, public utility districts and school districts spent about $2.5 million lobbying state lawmakers during the regular legislative session — more than any other group.
That’s Washington state of course. The details are here, and for the pointer I thank JS.
Report from Bangalore, 2013
Okalipuram corporator Queen Elizabeth was granted anticipatory bail in a forgery case.
Allowing her bail plea, high court vacation judge AN Venugopala Gowda told her to surrender her passport before the trial court and execute a personal bond for Rs 50,000.
The corporator has to be available for interrogation as and when required on any day between 8am and 6pm and shouldn’t make attempts to induce or issue threat/promise to persons acquainted with the facts of the case, the judge said.
An FIR was registered against Queen Elizabeth under sections 198 and 420 of the IPC and section 3(1)(ix) of SC/ST(Prevention of Atrocities) Act, 1989, for allegedly forging documents and obtaining a false caste certificate.
The story is here, via James Crabtree, and yes the person’s name is Queen Elizabeth and she is on the city council.
A small step toward cosmopolitan efficiency and away from nationalism (Mexican law about beach homes)
Morgan Warstler points me to this article:
Mexican congressmen voted on Tuesday to change a law that makes it difficult for foreigners to own beach homes in Mexico.
The law prevents any foreigner from directly owning a home that is located within 50 kilometers of Mexico’s coasts. Foreigners in Mexico are also banned from owning homes that are located within 100 kilometers of the country’s international borders.
Congressmen from Mexico’s house of representatives argued that the law was “outdated,” that it hampers investment in the country, creates unnecessary bureaucracy and no longer matches reality.
They pointed out that thousands of Americans and Canadians already own beach homes in Mexico anyways, and many more are interested in buying.
But currently, foreigners who want to have coastal properties in Mexico need to acquire these assets through Mexican companies or real estate trusts in which a local bank buys a property and then “leases” it to its foreign occupant for an annual fee. A report that was compiled by the Mexican congressmen who support this legal shift said that, between 2000 and 2012, about 49,000 foreigners bought homes in “restricted areas,” by going through these legal loopholes.
But do note:
The Mexican Senate, and the President of Mexico must now vote on this proposal for it to pass. Because this proposal would strike down a law that is part of Mexico’s constitution, it must also be approved by a majority of Mexico’s state legislatures.
The Great Canadian Sperm Shortage
As I was researching yesterday’s post on The Oocyte Cartel I came across an old MR post from 2003 on plans in Canada to restrict the import of American sperm:
The US is a world leader in sperm exports primarily because sperm banks in the U.S. are run on a for-profit basis. As a result, US sperm is reckoned to be of high quality particularly because the US version comes with a background on the vitals of the donor. Denmark also exports a lot of sperm because of high standards and demand for that blond, blue-eyed look.
Exports to Canada have increased in recent years because of a scandal involving poorly screened Canadian sperm. Canadians also import a lot of US eggs. The Canadian government, however, is apparently miffed as a new law is being readied that would forbid donations involving a paid donor. The law would not only make paid donation illegal in Canada it would make it illegal to use any paid-for sperm. Canadian couples seeking fertility options will suffer and who will benefit? I cannot think that this law is anything but spiteful and ridiculous. Is paying for sperm an original sin?
So what happened? In 2004, Canada made it a criminal offense to compensate sperm and egg donors. Loyal readers will not be surprised by the results (as of 2011)
…currently, in the entire country, there are only 35 active sperm donors. Over the last decade, our government has made its donation system so thoroughly unappealing that this ubiquitous fluid is almost impossible to obtain through official channels. There is a single operating sperm bank in all of Canada.
…If 35 national donors is an ugly statistic for the most removed observer, it’s especially devastating for the women and couples who have come to rely on our lone sperm bank in order to have a child.
Ironically, it’s been easier to prevent payments to Canadian donors than it has been to police sperm and egg imports because it is still technically legal to use paid-for sperm just not to buy sperm. As a result, the importation of US sperm has increased:
Patients here obtain more than 90% of semen from the United States, and the federal government appears to turn a blind eye to the fact they buy it from mostly for-profit sperm banks — a criminal offence in this country.
Addendum: Some readers may find all this talk of sex and sperm to be risque but do remember this is a family-friendly blog.
Detroit facts for today
…the city’s per capita income, averaged over its 684,799 residents, is just $15,261 per year. (That’s less than half the income of neighboring Livonia.) Auto insurance alone eats up a good $4,000 of that, for residents with a car.
And then comes the litany of municipal woes: Detroit has the highest violent crime rate of any major US city, at five times the national average; there were 344 murders in 2011, of which just 39 were solved. Right now, the average response time, if you put in an emergency call to the Detroit Police Department, is 58 minutes.
Detroit’s infrastructure is crumbling: 40% of its street lights are out of order, and it has 78,000 abandoned and blighted structures, of which 38,000 are considered dangerous buildings. Those buildings account for a large proportion of the 12,000 fires Detroit has every year. At the moment, firefighters are instructed not to use the hydraulic ladders on their firetrucks unless there is an immediate threat to life, because the ladders have not received safety inspections for years. Detroit also has just 36 ambulances, of which generally no more than 14 are in operation at any given time. And in terms of the city’s IT infrastructure — well, you can probably guess; suffice to say that a recent IRS audit characterized the city’s income tax system as “catastrophic”.
As far as Detroit’s balance sheet is concerned, there is $9 billion of debt, excluding pension liabilities, and also excluding healthcare and life insurance obligations which are calculated at roughly $6 billion. Debt service in 2013 is projected at more than $240 million, or about 22% of total revenues. Worryingly, under the section of the proposal headed “Realization of Value of Assets”, one finds the priceless collection owned by the Detroit Institute of Arts…
That is all from Felix Salmon.
The Oocyte Cartel
The Society for Assisted Reproductive Technology (SART) represents more than 85 percent of the assisted reproduction industry. SART requires that its members work only with agencies that limit compensation to egg-donors to around $5000 or a maximum of $10,000 (figures decided upon by the ethics committee of an affiliated organization, The American Society for Reproductive Medicine (ASRM)). In other words, ASRM-SART acts as a buyer’s cartel.
In 2011, Lindsay Kamakahi launched a class action suit against ASRM-SART challenging their horizontal price-fixing agreement as per se illegal under the Sherman Antitrust Act. ASRM-SART tried to have the case dismissed but a judge recently denied the dismissal in the process making it clear that the plaintiffs have a good case.
ASRM-SART argue that their maximum price is really about protecting women and that compensation “should not be so excessive as to constitute undue inducement.” Egg donation does involve extensive screening, time and some health risks. One would think, however, that the proper response for those interested in protecting women would be to ensure that the women are fully informed and that they are paid high wages not low wages.
The paternalistic policy of the ASRM-SART especially rankles because it applies only to women, sperm donations are not regulated. Of course, sperm donation isn’t risky but we also don’t see laws limiting the wages of miners to protect miners (mostly men) from “undue inducement.” The societal expectation seems to be that men are appropriately motivated by self-interest but women may be appropriately motivated only by altruism.
I am in agreement with Kimberly D. Krawiec who writes in her excellent paper Sunny Samaritans and Egomaniacs: Price-Fixing in the Gamete Market:
It is ASRM’s paternalistic and misguided attempts to control oocyte donor compensation through the same type of professional guidelines that courts have rejected when employed by engineers, lawyers, dentists, and doctors that should raise an ethical red flag.
ASRM-SART surely believe that they are doing good but I think it no accident that they also do well from a policy that reduces the price of their inputs. A price controlled below the market price generates rents. In the traditional analysis, the rents are dissipated away by long-lines, a form of rent seeking (see Modern Principles–first edition now a bargain!). It’s also possible, however, for suppliers to grab up the rents, especially suppliers of complementary goods.
For example, it’s often been pointed out that in the organ donor market the hospitals, surgeons and executives all get paid and paid well; the only person not getting paid is the person who provides the transplant organ. But we can say more–one of the reasons the hospitals, surgeons and executives get paid well is precisely that the donor is not paid. The shortage created by the price control drives the demander’s willingness to pay upward and some of the difference between the willingness to pay and the maximum legal price is captured by the suppliers of complementary inputs. How do we know? In the 1990s, entry into the transplant business grew much faster than did the supply of transplant organs. In fact, transplants were so profitable there was a rush to transplant that increased the number of centers but drove down center volume thereby reducing patient survival rates.
Similarly, by limiting egg-supply the suppliers of assisted reproductive services may be able to increase their share of the total gains from trade.
Although ASRM-SART may profit from restricting donor compensation there is another issue at large, the repugnance constraint. The repugnance and disgust centers of the brain are old and deep and often revolve around issues of body integrity, body products, hygiene, sex and death. Birth treads uneasily in many of these waters already and egg donation adds to this volatile mix issues of gender, personhood, identity and genetics all of which prime for a repugnance storm. The plaintiff’s case is sound but if the antitrust laws prevent ASRM-SART from limiting prices–or saying that they limit prices–and if egg donation were to become even more of a market in everything might there not be a backlash and an outright ban on compensated donors, as is the case in many other countries and for transplant organs in this country? I hope not but it is a real possibility.
The ban on compensated transplant organ donation has led to hundreds of thousands of excess deaths. A ban on compensated sperm and egg donation would lead to a dearth of lives.
Which market segment is being targeted by Kaiser in California?
Megan McArdle updates us:
Kaiser Permanente is one of the places that always gets cited as a model by health care reformers. It’s the biggest insurer in California, using a model that ended up being the basis for the HMO revolution. Kaiser owns its own hospitals, pays its doctors a salary, and provides the “continuum of care” that everyone says they want from our fragmented health care system–and does it at a reasonable price. So it’s a bit surprising to see the LA Times report that this model citizen submitted some of the highest bids for California’s health care exchanges.
…California is headed for two-tier service on the Exchanges. The carriage trade will head for full-service networks like Kaiser, with full access to the whole network of doctors and hospitals. The price conscious buyers–likely to be a sizeable majority–will crowd into plans with restrictive networks. And those networks will be very, very crowded. Effectively, they may end up as quasi-catastrophic insurance, simply because it will be difficult to actually access care outside of the emergency room.
Lower down the income scale, the new Medicaid patients–about half the expected additional coverage in states like California–will be similarly crowded, simply because Medicaid’s low reimbursement rates make doctors reluctant to take it.
Note that, for reasons explained in the post, this may not apply outside of California in every other state.
Where does the right to publicity lie? (hard to discern)
The Screen Actors Guild and several players’ unions have filed briefs supporting Mr. Hart, saying that athletes, actors and other celebrities must have the right to control the use of their identities and to harvest the financial fruits of their fame. The movie industry, book publishers and news organizations, including The New York Times, have lined up on the other side, saying that allowing celebrities to control speech about them runs afoul of the First Amendment.
The dueling briefs cited a grab bag of cases that are hard to wrestle into a coherent legal framework.
The courts have, on the one hand, rejected right-of-publicity suits arising from a painting of Tiger Woods, a comic book evoking the musicians Johnny and Edgar Winter, parody baseball trading cards and a fantasy baseball game that used the names, statistics and biographies of Major League players. But courts have allowed suits over the broadcast of a human cannonball’s entire act, a comic book using a hockey player’s nickname, an ad evoking Vanna White’s skill at turning letters on “The Wheel of Fortune” and a reference to Rosa Parks in a song.
If there is a legal principle that unites these rulings, it is hard to discern. What is clear, though, according to an expansive 2011 Supreme Court decision, is that video games deserve full First Amendment protection.
Here is more, by Adam Liptak. Here is a Gloria Franke paper (pdf) on some of the underlying legal (and economic) issues.
Sentences to ponder
While the ethics behind holograms of deceased celebrities might be questionable (in the words of a parody Twitter account called Aaliyah’s Ghost, “The best duets imo are the ones where both artists are alive & agreed to work together”), copyright permissions and objections from various estates, in addition to the high costs, have so far prevented “resurrections” from becoming a more widespread trend. For its closing ceremony, the London Olympics scrimped on costs, reviving Freddie Mercury for a duet with Jessie J by broadcasting his image on a flat screen rather than a hologram body. It is hard to imagine the Tupac hologram moving forward without permission from his mother Afeni Shakur. The Marilyn Monroe estate, on the other hand, contested plans for a “Virtual Marilyn” concert organised by Musion partner Digicon Media.
Here is more, from the always interesting Joanne McNeil.
No Patents on Genes
The Supreme Court ruled unanimously yesterday in Association of Molecular Pathology v. Myriad Genetics that a gene, such as BRCA1 or BRCA2, does not qualify for a patent. The fact that Myriad isolated the DNA is not enough to distinguish it from its in situ counterpart as the information it contains is the same. However, cDNA, a version of the gene that has been stripped of non-coding sequences is subject to patent.
With this ruling the price of most of Myriad’s tests will fall as competition enters the market (the BRACAnalysis tests are actually a number of different tests, as I read the technical specifications, only some of these depend on cDNA. The markets appeared to have been initially confused about this.). Even more importantly, the Myriad patents were broad and they prevented researchers from freely studying the BRCA1 and BRCA2 genes, from improving the tests or from developing additional applications. The giants demanded payment (video) from those who would stand on their shoulders. I think the restrictions retarded progress–as have similar restrictions–to an extent that made the patents difficult to justify.
Although I am broadly in agreement with the ruling, it’s also clear that the limited flexibility of patent law–you get a 20-year patent or nothing–and the fact that patent law is not based on patent theory (pdf) greatly hampers the ability to tailor patent law optimally. The ruling, for example, says that a firm can’t patent a gene that it discovers but it can patent the cDNA that it develops. It’s the discovery, however, that’s expensive. The development of cDNA is today a trivial step. Thus, you can patent the trivial step but not the giant leap.
You might think that the law draws a bright line between discoveries which cannot be patented and inventions which can but that’s not correct. Discoveries can be patented and the ruling goes out of its way to push back against the view that they can’t. The ruling correctly notes that a “considerable danger” is that patents on basic ideas and tools would “inhibit future innovation”. Yet the law makes no mention of these considerations and the court provides no guidance on implementation.
Coherent or not, the recent patent cases do indicate that the SC is no longer acceding to the United States Court of Appeals for the Federal Circuit–they are reestablishing control and pushing back in the right direction on the Tabarrok curve.
Finance and the Common Good
That is a new paper by E. Glen Weyl, and here is one excerpt:
Using relatively crude methods to translate publicly-available data into income estimates, I estimate that approximately 40% of income of authors in both fi elds comes from consulting activities, roughly consistent with self-reported income figures for the broader profession in the National Center for Education Statistics’s National Study of Postsecondary Faculty. Second, I show that consulting activity in industrial organization is primarily policy-oriented while consulting work in finance is primarily geared toward private interests. Together these two facts are weakly suggestive that material incentives are at least complementary with research focus.
But this is not Inside Job either:
…the view I put forward is not that financial economists defended the interests of the firms for which they worked in regulatory disputes; this is precisely what I believe industrial organization economists, in contrast to fi nancial economists, often did. Instead it is that financial economists were simply not interested in such disputes instead focusing on aiding private accumulation of wealth in markets rather than pushing public policy in one direction or the other.
Glen predicts that future work in finance will become more like research in industrial organization and move in a more legal and regulatory and policy-oriented direction, as the real world shifts toward greater regulation of finance.
Breakthrough with Honduran charter cities
Written reports from Central America often require Straussian skills, but at least on the surface it would appear that Honduras will go forward with some version of the free city/charter city idea. A translation passing through Google, Tom Bell, and Lotta Moberg (not holding any one of them responsible for it, but to my eye it appears acceptably close) indicates:
“The Law complements the amendments to Articles 294, 303 and 329 of the Constitution which paved the way for the creation of these special areas. [Those amendments fixed the problems that caused the Honduran S.Ct. to strike down the earlier version of the statute, which aimed to establish REDE.] The ZEDE legislation authorizes the establishment of courts with exclusive jurisdiction, which may adopt legal systems and traditions of other parts of the world, provided that they ensure equal or better protection of constitutional human rights protected under Honduran law.”
The legislation was hardly crammed down the legislature’s throat. As I mentioned, the Honduran S.Ct. struck down an earlier version of the statute. The ZEDE legislation sparked “a fierce debate because several municipalities fear losing their autonomy and tax collection.” (The answer to those objections, in floor debate: You can arrange annexation by the ZEDE, winning the same legal status.)
Interested in moving there? “The ZEDE may establish coexistence agreements with people who wish to live or reside freely within their jurisdiction.”
There is a Honduran Spanish-language link here (it doesn’t work in every browser, but experiment). It starts with this, which seems clear enough:
La ley orgánica especial que regulará las Zonas de Empleo y Desarrollo Económico (ZEDE), la nueva versión de las “ciudades modelos”, fue aprobada ayer por el Congreso Nacional en su último debate, lo que deja las puertas abiertas para que empresarios extranjeros inviertan en regiones específicas con reglas diferentes al resto del país y con autonomía propia.
Developing…
And for the pointer I thank Lotta Moberg.