Category: Law

Beware the estate of James Joyce

J. Craig Venter and his fellow scientists managed to replace the genetic code of a bacterium with a synthetic code they made on a computer. Which is how they got sued by the estate of James Joyce.

In order to distinguish their synthetic DNA from that naturally present in the bacterium, Venter’s team coded several famous quotes into their DNA, including one from James Joyce’s A Portrait of the Artist of a Young Man: “To live, to err, to fall, to triumph, to recreate life out of life.”

After announcing their work, Venter explained, his team received a cease and desist letter from Joyce’s estate, saying that he’d used the Irish writer’s work without permission. ”We thought it fell under fair use,” said Venter.

That is from Jessica Crispin.

How to win a civil war?

Don’t overestimate the military dimension, the law matters too:

In what may be the most significant development of the civil war since the Western airstrikes began, the rebels just declared the formation of a new “Libyan Oil Company,” and “the designation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya.”

This is really important. It means that a rebel government, recognized by France, now has an oil company and a central bank.

Here is more.  The next step is to get them targeting nominal gdp.

Unemployment, Recessions and Barter: A Test

Nick Rowe explains that the essence of New Keynesian/Monetarist theories of recessions is the excess demand for money (Paul Krugman’s classic babysitting coop story has the same lesson). Here’s Rowe:

The unemployed hairdresser wants her nails done. The unemployed manicurist wants a massage. The unemployed masseuse wants a haircut. If a 3-way barter deal were easy to arrange, they would do it, and would not be unemployed. There is a mutually advantageous exchange that is not happening. Keynesian unemployment assumes a short-run equilibrium with haircuts, massages, and manicures lying on the sidewalk going to waste. Why don’t they pick them up? It’s not that the unemployed don’t know where to buy what they want to buy.

If barter were easy, this couldn’t happen. All three would agree to the mutually-improving 3-way barter deal. Even sticky prices couldn’t stop this happening. If all three women have set their prices 10% too high, their relative prices are still exactly right for the barter deal. Each sells her overpriced services in exchange for the other’s overpriced services….

The unemployed hairdresser is more than willing to give up her labour in exchange for a manicure, at the set prices, but is not willing to give up her money in exchange for a manicure. Same for the other two unemployed women. That’s why they are unemployed. They won’t spend their money.

Keynesian unemployment makes sense in a monetary exchange economy…it makes no sense whatsoever in a barter economy, or where money is inessential.

Rowe’s explanation put me in mind of a test. Barter is a solution to Keynesian unemployment but not to “RBC unemployment” which, since it is based on real factors, would also occur in a barter economy. So does barter increase during recessions?

There was a huge increase in barter and exchange associations during the Great Depression with hundreds of spontaneously formed groups across the country such as California’s Unemployed Exchange Association (U.X.A.). These barter groups covered perhaps as many as a million workers at their peak.

In addition, I include with barter the growth of alternative currencies or local currencies such as Ithaca Hours or LETS systems. The monetization of non-traditional assets can alleviate demand shocks which is one reason why it’s good to have flexibility in the definition of and free entry into the field of money (a theme taken up by Cowen and Kroszner in Explorations in New Monetary Economics and also in the free banking literature.)

During the Great Depression there was a marked increase in alternative currencies or scrip, now called depression scrip. In fact, Irving Fisher wrote a now forgotten book called Stamp Scrip. Consider this passage and note how similar it is to Nick’s explanation:

If proof were needed that overproduction is not the cause of the depression, barter is the proof – or some of the proof. It shows goods not over-produced but dead-locked for want of a circulating transfer-belt called “money.”

Many a dealer sits down in puzzled exasperation, as he sees about him a market wanting his goods, and well stocked with other goods which he wants and with able-bodied and willing workers, but without work and therefore without buying power. Says A, “I could use some of B’s goods; but I have no cash to pay for them until someone with cash walks in here!” Says B, “I could buy some of C’s goods, but I’ve no cash to do it with till someone with cash walks in here.” Says the job hunter, “I’d gladly take my wages in trade if I could work them out with A and B and C who among them sell the entire range of what my family must eat and wear and burn for fuel – but neither A nor B nor C has need of me – much less could the three of them divide me up.” Then D comes on the scene, and says, “I could use that man! – if he’d really take his pay in trade; but he says he can’t play a trombone and that’s all I’ve got for him.”

“Very well,” cries Chic or Marie, “A’s boy is looking for a trombone and that solves the whole problem, and solves it without the use of a dollar.

In the real life of the twentieth century, the handicaps to barter on a large scale are practically insurmountable….

Therefore Chic or somebody organizes an Exchange Association… in the real life of this depression, and culminating apparently in 1933, precisely what I have just described has been taking place.

What about today? Unfortunately, the IRS doesn’t keep statistics on barter (although barterers are supposed to report the value of barter exchanges).  Google Trends shows an increase in searches for barter in 2008-2009 but the increase is small. Some reports say that barter is up but these are isolated, I don’t see the systematic increase we saw during the Great Depression. I find this somewhat surprising as the internet and barter algorithms have made barter easier.

In terms of alternative currencies, the best data that I can find shows that the growth of alternative currencies in the United States is small, sporadic and not obviously increasing with the recession. (Alternative currencies are better known in Germany and Argentina perhaps because of the lingering influence of Heinrich Rittershausen and Silvio Gesell).

In sum, the increase in barter and scrip during the Great Depression is supportive of the excess demand for cash explanation of that recession, even if these movements didn’t grow large enough, fast enough to solve the Great Depression. Today there seems to be less interest in barter and alternative currencies than expected, or at least than I expected, given an AD shock and the size of this recession. I don’t draw strong conclusions from this but look forward to further research on unemployment, recessions and barter.

Food Safety and Culture

Scientific American has an excerpt from Myhrvold, Young and Bilet’s magnum opus, Modernist Cuisine, in which they discusses the often arbitrary, subjective and culturally bound nature of “food safety” rules and practices.

In decades past, pork was intrinsically less safe than other meats because of muscle infiltration by Trichinella and surface contamination from fecal-borne pathogens like Salmonella and Clostridium perfringens . As a result, people learned to tolerate overcooked pork, and farms raised pigs with increasing amounts of fat—far more fat than is typical in the wild ancestors of pigs such as wild boar. The extra fat helped to keep the meat moist when it was overcooked.

Since then… producers have vastly reduced the risk of contamination through preventive practices on the farm and in meat-processing facilities. Eventually the FDA relaxed the cooking requirements for pork; they are now no different than those for other meats. The irony is that few people noticed—­culinary professionals and cookbook authors included….

After decades of consuming overcooked pork by necessity, the American public has little appetite for rare pork; it isn’t considered traditional. With a lack of cultural pressure or agitation for change by industry groups, the new standards are largely ignored, and many new publications leave the old cooking recommendations intact.

Clearly, cultural and political factors impinge on decisions about food safety. If you doubt that, note the contrast between the standards applied to pork and those applied to beef. Many people love rare steak or raw beef served as carpaccio or steak tartare, and in the United States alone, millions of people safely eat beef products, whether raw, rare, or well-done. Beef is part of the national culture, and any attempt to outlaw rare or raw steak in the United States would face an immense cultural and political backlash from both the consumers and the producers of beef.

…Cultural and political factors also explain why cheese made from raw milk is considered safe in France yet viewed with great skepticism in the United States. Traditional cheese-making techniques, used correctly and with proper quality controls, eliminate pathogens without the need for milk pasteurization. Millions of people safely consume raw milk cheese in France, and any call to ban such a fundamental part of French culture would meet with enormous resistance there….

Raw milk cheese aged less than 60 days cannot be imported into the United States and cannot legally cross U.S. state lines. Yet in 24 of the 50 states, it is perfectly legal to make, sell, and consume raw milk cheeses within the state. In most of Canada raw milk cheese is banned, but in the province of Quebec it is legal.

One point they don’t note is that there may be multiple equilibria–that is, it may be more dangerous to produce raw milk cheese in a country or region without a history of producing raw milk cheese than elsewhere. Still, this is no reason we shouldn’t be eating more horse.

Trash Talk

The normally sure-footed Arnold Kling slips with this really bad argument against private garbage collection:

Surely, if we all lived in small mountain communities we would need less government. But imagine purely private trash collection in an urban area. If you pay for somebody to collect the trash in front of your house, then instead of paying for my trash to be removed, my strategy is to put my trash in front of your house and free ride on your trash collection.

First, let me tell you I know Arnold Kling and no way is he sneaking out in the wee hours of the morning to secretly stash his trash.  No way.  Not ever.  Unlike other rotten people, I bet Arnold even pays for his house number to be painted on the curb.

Second, private trash collection works!  I know because my neighborhood has two private, competing garbage collectors and the service is better than I have ever experienced in any other neighborhood.  I get two trash collections a week (three counting yard matter such as leaves and cuttings), they take everything including recycling, the price is low and they work on government holidays.  Most of Fairfax County has private trash collection. In fact, around the United States and the world private trash collection is quite common and there are typically substantial cost savings, on the order of 20-30%.

It is important to note that cost savings come from creating competition rather than from privatization per se–substituting a private monopoly for a public one is not very helpful but creating and maintaining a competitive environment can work wonders.

Addendum: FYI, Arnold was replying to a good review by Stan Liebowitz of Arnold’s (also good) book, Unchecked and Unbalanced. Arnold, next time resist!

Hong Kong markets in everything

…a McWedding starts at $1,280, which includes food and drinks for 50 people. The package includes a budget version of the usual trappings: a “cake” made of stacked apple pies, gifts for the guests and invitation cards, each with a wedding photo of the couple. (Hong Kong wedding photos are taken in advance, with the couple in rented finery.)

McDonald’s employees dressed in black suits mimic the actions of hostesses at upscale hotels. They greet guests at the entrance, usher them to the signature book and deliver food, even if it is just a Big Mac and fries.

The story is here and for the pointer I thank Chris F. Masse.  Don’t forget this part:

McWeddings were first announced on Oct. 10, 2010, because “10-10-10” is another lucky combination.

The lack of alcohol has not seemed to bother anyone, and Ms. Chang said there had been no requests for it so far. Instead, couples toast with something sugary, because of the implications of “sweetness” in Chinese belief. “That’s why we toast with sundaes,” she said. “You can have a lot of fun with soft drinks.”

The culture that is Manhattan James Heckman gone wild edition

A mad-as-heck Manhattan mom says her daughter’s Ivy League dreams have been all but dashed — and she’s only 4 years old.

Nicole Imprescia is suing the $19,000-a-year York Avenue Preschool, saying her daughter, Lucia, was forced to spend too much time with lesser-minded 2- and 3-year-olds when she should have been focusing on test preparation to get into an elite elementary school.

The suit, filed in Manhattan Supreme Court, notes that “getting a child into the Ivy League starts in nursery school” and says the Upper East Side school promised Imprescia it would “prepare her daughter for the ERB, an exam required for admission into nearly all the elite private elementary schools.”

But “it became obvious [those] promises were a complete fraud,” the suit says. “Indeed, the school proved not to be a school at all but just one big playroom.”

The miffed mom yanked her daughter after just three weeks — but the school is refusing to refund the $19,000 she had to pay up front, said her lawyer, Mathew Paulose.

The article is here.  For the pointer I thank Michael Rosenwald.

Makena and the Orphan Drug Act

Makena is a drug used for premature birth therapy. It’s been available off-label for a long-time but KV pharmaceuticals ran a clinical trial and applied for FDA approval under the Orphan Drug Act (ODA). Under the ODA, KV is entitled to seven years of market exclusivity, this is even stronger than a patent because it gives KV the right to exclude from the market any drugs (not just similar drugs) that treat the same condition.

Now that KV has a monopoly—enforced against compounding pharmacies by threats from the FDA—the price will rise from about $10 to a listed price of $1,500. Naturally a lot of people are outraged.

In The Blessed Monopolies (pdf) I  explained how the ODA and similar rules such as pediatric exclusivity can be gamed by pharmaceutical firms for big profits. The early AIDS drug AZT managed to get market exclusivity under the ODA, for example, because it appeared when the patient population was below 200,000, thus meeting ODA requirements, even though everyone knew the patient population was expanding rapidly.

Once a drug is off-patent, however, there is very little incentive to study it further or to run the clinical trials necessary to get FDA approval. Although the drug has been used off-label for some time (another example of the importance of off-label prescribing) a decent clinical trial still has considerable value. The problem is that as with patents there is very little connection between the effort required to get exclusivity under the ODA and the potential profits (see my paper Patent Theory v. Patent Law).

Despite my skepticism of the ODA, however, I was convinced by Lichtenberg and Waldfogel’s Does Misery Love Company that the ODA as a whole has done some good. Lichtenberg and Waldfogel find that after the ODA was passed (but not before) mortality rates for people with orphan diseases decreased faster than mortality rates for those with more common diseases. The decrease in mortality was consistent with the introduction of more new drugs for orphan diseases.

The important point is that like patents the ODA should be evaluated as a rule and not on a case-by-case basis. I am all for patent reform and FDA/ODA reform but this is truly a case where we don’t want to throw the baby out with the bathwater.

Hat tip: Eddie W.

Addendum: See also Derek Lowe who, as usual, offers intelligent comments.

The Big Society just got smaller

Migrants from outside the European Economic Area will no longer be allowed to work in the UK as chefs in takeaway restaurants, the government has said.

…A similar ban will apply to workers such as hairdressers, beauty salon managers and estate agents from April.

The number of skilled migrants not from the European Economic Area is being capped annually at 21,700.

…The government wants to cut net migration from about 200,000 a year to tens of thousands by 2015.

Here is the story, hat tip goes to Random Variable.

Blood Money: Diyat

LA Times: Aziz Ahmed was supposed to die. In 2006 he used a meat cleaver to kill a friend he thought had been sleeping with his wife. He confessed and was sentenced to be hanged.

But last month Ahmed won his freedom; not because his confession was recanted or fresh evidence was presented, but because of a wad of cash. He paid the victim’s family $9,400 and walked out of prison a free man. The slain man’s relatives said they would use the money to buy the widow a cookware shop in this dusty farm town in Punjab, near the Indian border.

“We’re not bitter about this at all,” said Mohammed Nasir, brother of the victim, Ghulam Sarwar. “This money will take care of Ghulam’s wife and children.”

What outsiders might describe as “blood money” is a tenet of Islamic law sanctioned by Pakistani jurisprudence and used, by some estimates, in up to 60% of homicide cases here. The practice is called diyat, and it could be the means by which the United States and Pakistan extricate themselves from a dangerous diplomatic row that has strained relations between the two governments.

It is important to understand that diyat arose as a progressive measure designed to substitute restitution for retribution. Restitution systems have a number of virtues. One virtue of restitution is that it puts the victim’s family at the center of the process rather than ignoring their interests. Criminal law, in contrast, replaces the interests of victims with the interests of the state. Perhaps this is sometimes necessary (what to do about victims without families?) but restitution systems have been quite sophisticated at dealing with these problems. David Friedman, for example, explains the Icelandic system of wergeld and Bruce Benson discusses the medieval Ango-Saxon system. I am not aware of much work, however, on Islamic diyat. Randy Barnett makes the case for restitution as a substitute for criminal law today.

If restitution is to work well it’s crucial that restitution be set at the right levels. It’s not always clear that this is done. In Saudi Arabia maximum compensation prices are as follows (from Wikipedia, according to this document, take at your own risk)

  • 100,000 riyals if the victim is a Muslim man
  • 50,000 riyals if a Muslim woman
  • 50,000 riyals if a Christian or Jewish man
  • 25,000 riyals if a Christian or Jewish woman
  • 6,666 riyals if a Hindu man
  • 3,333 riyals if a Hindu woman.

More generally, however, Diyat will vary by the wages and prospects of the deceased. If that sounds wrong do note that US tort law compensates in a similar way, although as a supplement rather than substitute for criminal law.

The optimal scope and overlap of criminal and tort law is an under-researched topic.

*Understanding Cairo*

The author is David Sims and the subtitle is The Logic of a City Out of Control.  It is interesting throughout for anyone studying urban density or informal land titles or urban sprawl or Third World mega-cities.  This passage is off the central topics of the book, but I found it an interesting corrective to the usual picture:

There is a misconception held by many Egyptian professionals, especially engineers, that informal housing is haphazardly constructed and liable to collapse.  However, such precarious housing is almost unknown in informal areas.  Since informal housing is overwhelmingly owner-built without use of formal contractors, it is in the owner’s own best interest to ensure that care is taken in construction.  In fact, one of the main features of informal housing construction is its high structural quality, reflecting the substantial financial resources and tremendous efforts that owners devote to these buildings.  It is worth noting that in the 1992 earthquake in Cairo, practically all building collapses and the resulting fatalities occurred not in informal areas, but either in dilapidated historic parts of the city or informal areas…where apartment blocks had been constructed by (sometimes) unscrupulous developers and contractors.

This guy is serious about competing, or the culture that is Philadelphia

"I've been at this for 47 years, and I've never seen mice used as a criminal tool"…

How so?

The owner of a suburban Philadelphia pizza shop was arraigned on Tuesday on charges he schemed to plant live mice in competing pizza parlours in hope of putting them out of business.

Nickolas Galiatsatos, owner of Nina's Bella Pizzeria in Upper Darby, Pennsylvania, is accused of putting bags of mice at nearby competitors on Monday afternoon, according to Upper Darby Police Superintendent Michael Chitwood.

The owner of Verona Pizza watched Galiatsatos go into his restroom carrying a bag but emerge empty-handed, and alerted two patrol officers who were in the restaurant, Chitwood said.

The officers found a bag of mice and footprints on a toilet seat, suggesting someone had been trying to reach the ceiling tiles, he said.

For the pointer I thank Daniel Lippman.

Former markets in everything

Ice cream made from [human] breast milk has been removed from a central London restaurant on health grounds following complaints by members of the public.

Here is more.  The response?:

Mr O'Connor, said: "We have had an amazing response – many women have come forward and offer to give us milk.

"You can buy alcohol and tobacco but not breast milk in Westminster.

For the pointer I thank John Chilton.