Category: Law
How willing are you to believe another human being?: the case of Picasso’s alarm installer
A 71-year-old retired electrician is at the centre of a legal battle after coming forward with more than 200 hitherto unknown paintings by Pablo Picasso, a French newspaper reported Monday.
Experts who have examined the collection have estimated it could be worth some 60 million euros (80 million dollars), Liberation reported.
…Le Guennec said he had worked installing alarm sytems at a number of Picasso's residences, including a villa in Cannes in the south of France, during the last three years of Picasso's life — he died in 1973.
He said he had had been given the works as presents, either by Picasso's wife or from the artist himself. The collection included 271 works, Liberation reported.
For the pointer (more here) I thank Chris F. Masse.
Very good sentence fragments
…once it is easier to restructure debts, the temptation is to do exactly that; the market knows this and so brings everything forward in time.
That is from Peter Boone and Simon Johnson.
Obamacare: where are we?
I became so sick of blogging this topic, but it's time to revisit where matters stand:
1. The health care sector is becoming more concentrated, largely through mergers and acquisitions. Some of this is long-term trend, and some of it is a direct response to a more regulated and rent-seeking-intensive sector. By no means I am against corporate bigness per se, but this does not augur well for cost control and affordability.
2. It seems more obvious that requiring health insurance companies to limit their overhead costs is a mistake. It is leading to more concentration in the sector and probably to more accounting chicanery as well.
3. Contrary to my earlier expectations, the legal issues are not going away. They had seemed like non-starters to me, but I now could imagine that a few Federal judges rule against the mandate and there is a subsequent crisis of confidence as some major Democrats run for cover rather than defending the policy. I now give this scenario 35-65 rather than 10-90. The fact that mandate enforcement could be passed to the state level, without much affecting the operation of the plan, doesn't matter any more, given the spin such rulings of unconstitutionality would receive.
4. Negative trends in health care markets continue, and many of these will be blamed, by many people, on the new health care reform. In fact Obamacare will make some of these trends worse (e.g., private insurance patients pushing out Medicaid patients), but Obamacare will be blamed for this problem before the extra negative effect starts operating. I understand the political logic of how benefits programs became popular and then become locked into place, but I'm seeing more clearly now that the health care reform simply isn't well timed to be very popular.
5. The differential payment rates across Medicare, Medicaid, and private insurance are becoming unsustainable more quickly than I had anticipated; see for instance the link in #4. Further reforms will be required more quickly than had been anticipated, but it's not obvious how such reforms should proceed. It's hard to either upgrade the Medicaid (and Medicare) rates or to downgrade the private insurance rates. Monitor this one closely, because it is likely to prove the breaking point of our health care status quo, with or without the Obama plan. (This is our version of the ticking time bomb within the eurozone, namely that natural rates of growth split apart a distortion, increasingly, over time.)
6. I am less worried about mandate enforcement than I used to be; Austin Frakt has had good posts on this at TheIncidentalEconomist, see here.
7. I am more worried about employers shedding employees onto the subsidized exchanges than I used to be; Reihan Salam has had good posts on this topic and how it could prove to be a fiscal breaking point for the new law. You can argue that this is the actual long-run restructuring plan, but unless we are willing to go the "Medicaid for all reimbursement rates" route, I don't see how we afford it.
8. I have the new worry of uncooperative state governors trying to shed their Medicaid loads onto the federally-subsidized health insurance exchanges. Could one or two rogue states on this issue create a crisis in the system? I find this one hard to judge, both politically and logistically, but six months ago I wasn't thinking about it at all.
9. The Republicans still don't have a good alternative plan or compromise to offer, should a chance for renegotiation arise.
Overall, the policy is shaping up to be a mess more quickly than I had thought, though not through the mechanisms I had been expecting. It still seems to have too many jerry-rigged pressure points.
I'm all for a compromise allowing greater state-level experimentation with health care policy.
Observations about Rio
I'm no expert on Rio, but I have visited the city twice, have taken a favela tour, been in a police vs. drug gang shoot out (not as a shooter), and read quite a few books about the place, so here are my observations on the latest events:
1. The authorities will not win until they have a superior ability to supply local public goods in the favelas. That is a ways away. (The broader lesson is you should not take in more immigrants than you can supply local public goods for, and that is why fully open borders is not a good idea in every setting.)
2. On a day-to-day basis, the police are outmatched in terms of weaponry and also will to win. The military cannot remain deployed forever and a tank cannot rule a neighborhood. I am skeptical about current victory claims, which from my comfortable perch in Fairfax I suspect are temporary at best.
3. Sometimes the Rio police push out the drug gangs, but the alternative is paramilitary groups which then run the drug trade. (Those groups, by the way, employ a lot of former policemen.) A police victory is not always the solution. Here are the different types of police in Brazil.
4. The Brazilian state has extended its governance, throughout the country, much less than you might think. The current battles are, among other things, an exercise in nation-state building, which historically has not come easily to most regions. Furthermore relying on the military for a (partial) victory is in the longer run a double-edged sword, especially in a nation with a history of military coups and military rule.
5. For a different and now shocking look at Rio (the hills are mostly empty), watch the stunning 1959 film Black Orpheus. Very good trailer here.
6. One of my favorite non-fiction books is Nancy Scheper-Hughes, Death Without Weeping: The Violence of Everyday Life in Brazil, highly recommended.
7. The Brazilians are now building high-speed rail between Rio and Sao Paulo.
Per unit pricing edition
It take a while to notice Ruben's scars. Though they're hardly subtle, they don't catch your eye as readily as his strong, smooth features or the big-ass smile that's totally disarming despite his size: six foot three, 225 pounds. Neck like a waist. Friendly as you please. When I pointed to each of the healed-up gashes on his fists and asked what they were from, he replied, "Teeth. Teeth. These are all from teeth." He charges $1,000 for every one that he knocks out of a person's head. It's the same price for each bone he breaks in a face, a practice that's cost him a couple of knuckles.
He enforces "justice" in a Native American community; the full story is here (interesting throughout) and I thank Mitch Mitchell for the pointer.
Department of Secondary Consequences
It is true that Irish mortgages are “recourse” – that is, you can’t just turn in the keys and walk away from a property as you can in many parts of the United States. On the other hand, Irish residents can leave the country – moving to Britain or the United States is a well-established tradition for many families. And how can an Irish lender enforce debts when someone has emigrated?
That's from Simon Johnson, interesting throughout.
Further thoughts on the TSA debates
The biggest flying/airport outrages are a lack of markets in allocating scarce resources, and the resulting unacceptable airport and flight delay problems in places such as JFK and LaGuardia. Next come airlines which ruthlessly screw you over, repeatedly, and lie to you and mistreat you. I do understand the trade-off and prefer the lower prices and fewer quality assurances; still, you can object to their behavior at the margin — it's often unethical. Let's get worked up over these problems first.
I view good scans as, in the long run, a substitute for patdowns. One option is to have very very good scans, nude "photos," fewer patdowns, and to have Americans shift to a more European attitude on nude bodies. There's even an available status attitude where you don't mind or notice the scans, much as the King allowed himself to be dressed and handled by commoners. That's the intelligent argument for the current shift in policy. Maybe the enhanced scans simply aren't useful or maybe Americans can't or won't shift their norms. Those would be reasons not to do it (and I am not pronouncing a definitive opinion here) but it's simply not, in principle, that objectionable of a policy. There's a locked-in structure which prevents a competitive test of safety levels and so all alternatives are coercive in some manner, including the difficulty any airline would face in attempting an even more restrictive set of security procedures.
It's worth asking how intrusive a search markets would provide, but keep in mind there are significant negative externalities from exploding airplanes and also there are government bailouts which limit the downside. Furthermore companies do not always care enough about "extreme negative skewness," as we have learned in financial markets and thus there is a case for regulating a tougher security standard.
Hovering in the background is the reality that a few successful downings will kill many people and furthermore probably wipe out the insurance market and thus lead to nationalization of the airlines. It's not clear what the freedom-enhancing path looks like and there is no default setting of market accountability. It's "elephant interventions" all the way down.
It's worth comparing the current American response to earlier British crises (IRA troubles, and eventual CCTV) or for that matter Israeli responses to Palestinian suicide bombings. In these kinds of situations something has to give — usually by public demand for better outcomes more than a state usurpation of power.
I would not say that "we are now at war with the terrorists" but our situation has some war-like elements. Any persistent war has required major social changes, if only temporary ones, in how the body is viewed and handled. If we are so unwilling to even consider these changes in body viewing norms, I wonder how we will respond when scarier events happen, as they likely will.
The funny thing is this: when Americans insist on total liberty against external molestation, it motivates both good responses and bad ones. It supports a libertarian desire for freedom against government abuse, but the same sentiments generate a lot of anti-liberal policies when it comes to immigration, foreign policy, torture, rendition, attitudes toward Muslims, executive power, and most generally treatment of "others." An insistence on zero molestation, zero risk, isn't as pro-liberty as it appears in the isolated context of pat-downs. It leads us to impose a lot of costs on others, usually without thinking much about their rights.
The issue reminds me of the taxation and spending debates; many Americans want low taxes and high government spending, forever. For airline security, at times we want to treat it as a matter of mere law enforcement, to be handled by others, and one which should not inconvenience our daily lives or infringe on our rights. At the same time, so many Americans view airline security as a vital matter of foreign policy and indeed as part of a war. We own and promote this view and yet we are outraged when asked to behave as one might be expected to in a theater of war.
The main danger to liberty here is not the TSA but rather a set of American attitudes which, at the same time, take our current "war" both far too seriously and also not nearly seriously enough.
Overall, I'd like to see less posturing in these debates and more Thucydides.
What are your rights on private cruise ships?
Have you wondered? Here is one take:
The unpleasant reality is that the cruise vessel's responsibilities and your rights as an injured passenger are governed not by modern, consumer oriented common and statutory law, but by 19th century legal principals, the purpose of which is to insulate the maritime industry from the legitimate claims of passengers. The policy enunciated by the Second Circuit Court of Appeals 35 years ago in Schwartz v. S.S. Nassau67, a case involving a passenger's physical injuries, applies equally today, " The purpose of [ 46 U.S.C. 183c ]…' was to encourage shipbuilding and ( its provisions )…should be liberally construed in the shipowner's favor `". Although recent years have seen the expansion of travel consumers' rights and remedies in actions against airlines68, domestic hotels69, international hotels70, tour operators71, travel agents72, informal travel promoters73 and depository banks74, there has been little, if any, change in the passengers' rights and remedies in actions against cruise lines."75 Cruise passengers are at a distinct disadvantage in prosecuting their claims.
Being a good Coasean, I do not object to these arrangements (though I prefer to avoid them), but they are worth keeping in mind as the debate over the TSA proceeds. Note that private contracting, between passengers and the cruise ships, has not done so much to extend these rights. Here are further readings. Or try this book.
Say No!
Here is what New York State's Office of Children & Family Services recommends that you tell your children about inappropriate touching:
- You are special and important.
- Your body is your own.
- You have the right to say "NO" if someone wants to touch you in any way that makes you feel uncomfortable, afraid or confused.
- There are parts of your body that are private. You have the right to say "NO" to anyone who wants to touch your vagina, penis, breasts or buttocks. You have my permission to say "NO" even if that person is an adult … even if it's a grown-up you know.
- Pay attention to your feelings. Trust your feelings about the way people touch you.
- If someone bothers you, I want you to tell me. I promise that I will believe you.
- If someone touches you in a way that does not seem right, it is not your fault.
Children need to know that the safety rules about touching apply all the time, not just with strangers … or with men … or with baby sitters. In many cases …children are sexually abused by people they know and trust [including] authority figures….
Also, abusers seldom need to use physical force…Unfortunately, abusers can use threats successfully because children are taught to believe and obey adults.
Excellent advice for children and for adults.
Authority figures, for example, may also use threats of violence to engage in abuse against adults, for example, "you will be blown up unless you let me touch your genitals and take naked pictures of you."
Sentences to ponder
Well, “Mom”, if flying is a “privilege, not a right,” it’s because over the last century we have gradually accepted the proposition that anything the government tells us it can regulate, it can regulate.
Here is much more, courtesy of The Browser. And this:
Throughout my career – both as a prosecutor and as a defense attorney – I’ve observed a consistent inverse relationship: the more petty a government officer’s authority, the more that officer will feel a need to swagger and demand that you RESPECT HIS AUTHORITAH. Your average FBI agent might search your house based on a crappy perjured warrant, invade your attorney-client emails, and flush your life down the toilet by lying on the stand at your mail fraud trial. But he doesn’t feel a need to vogue and posture to prove anything in the process. He’s the FBI. But God above help you when you run into the guy with a badge from some obscure and puny government agency with a narrow fiefdom. He and his Napoleon syndrome have got something to prove. And he’s terrified that you’ll not take him very, very seriously. When I call FBI agents on behalf of my clients, they’re cool but professional and nonchalant. When I call a small agency – say, state Fish & Game, or one of the minor agency Inspector Generals – they’re hostile, belligerent, and so comically suspicious that you’d think I was asking for their permission to let my client smuggle heroin into the country in the anuses of handicapped Christian missionary orphans. They are infuriated, OUTRAGED, when a client asserts rights, when a client fails to genuflect and display unquestioning obedience. They are, in short, the TSA.
Megan says she is (partially) boycotting flying, but I am surprised by this decision. In relative terms it is the driving experience which has deteriorated, largely because of traffic congestion. Imagine what flying would be like if they were not allowed to charge you a proper price for the experience.
When it comes to airports, some high MU of money users will be better off as a result of TSA abuse; it will lower the price of flights. Personally, I'm happy to put up with the practices if it means less congestion in the airport security line.
All the Devils are Here
Lots of excellent material in McLean and Nocera's All the Devils are Here. In addition to devils there are also a few skeletons: in 1990, for example, Fannie paid Paul Volcker to defend and endorse its low capital standards.
A highlight is the chapter on the GSEs and how tightly they wound themselves into the political process.
Everything the GSEs did was behind the scenes. But for Congress, it was the homeowners who mattered, since they were the constituents….Johnson solved this problem by establishing what Fannie Mae called partnership offices. Officially, these were operations dedicated to finding opportunities to purchase mortgages…unofficially, they were the grassroots of a highly sophisticated political operation. Fannie's first partnership office was in San Antonio, which just happened to be home to Representative Henry Gonzales, then the chairman of the House banking committee…
There was a certain formula to these offices. They were staffed by someone close to power–the son of a senator, a governor's assistant, a former congressional staffer. They held ribbon-cutting ceremonies, always with a politician present, to announce, for instance, that Fannie was going to put millions into a senior citizen center. There were as many as two thousand ceremonies a year in partnership offices all over the country….
Fannie Mae also funneled money to politicians….Over the years, the foundation became one of the largest sources of charitable donations in the country. It made heavy donations to, among others, the nonprofit arms of the Congressional Black Caucus and the Congressional Hispanic Caucus.
Fannie hired key insiders to plum jobs..[long list of names,AT]…"It was like the local Tammany Hall operation–a jobs program for ex-pols!" says one closer observer.
Fannie spent a staggering amount of money lobbying: $170 million in the decade ending 2006…
McLean and Nocera go on to document how this power meant reports alterted, investigations dropped and so forth.
We need more of this kind of historical public choice, history written with an eye to how power is wielded in the political sphere and how law is really made. (For another example see my paper, The Separation of Commericial and Investment Banking: The Morgans vs. The Rockefellers.)
Addendum: Arnold Kling's review.
France outlaws discount pricing for eBooks
A mobilization by French publishers at last month’s Frankfurt Book Fair has proven successful: Last Tuesday the French Senate voted for a law imposing a fixed price on eBooks for sale within French territory – that is, just as with print books in France, everyone has to sell a given ebook for the same price. No discounting.
Here is more; solve for the equilibrium! Oddly, in the United States, the market has been moving toward an approximation of this outcome, at least for new books, though not for classics. Probably both prices need to fall, though perhaps they will in rough tandem. I believe the equilibrium value of a hardcover or e-version of a bestseller is below $10, given the recent shift out of the supply curve for the written word.
Will pot become legal?
Megan McArdle clinches it:
In my experience, the big dividing line is having kids. Read this interview with P.J. O’Rourke and discover some shocking things coming out of his mouth about how he doesn’t want his kids to do drugs. Having kids makes you realize how narrowly you escaped killing yourself–and remember all the friends who overdosed, or got arrested on a DUI, or spent their twenties working at a job that would let them smoke up three times a day, only to realize at age 35 that they had pushed themselves into a dead end.
Before the pot-smoking parents start crawling out of the woodwork to tell me that I’m totally wrong, that there are lots of parents who support legal marijuana–I’m not saying this happens to every single person who has a kid. But in my experience, as the kids approach the teenage years, a lot of parents do suddenly realize they aren’t that interested in legal marijuana any more, and also, that totally unjust 21-year-old drinking age is probably a very good idea.
I would add to this. Parents are not even preferring the policy which (necessarily) best protects their kids. Parents are preferring the policy which gives them a slightly better feeling of being in control of their kids, whether or not they are.
Sentences to ponder
California law (namely the Coogan Act) states that a child actor's income is 100% theirs, making it difficult for parents to use the money to support the family.
There is more here.
Regulatory Capture and Judicial Incentives
John Kay recounts the classic story of regulatory capture:
In 1887, Congress passed an act to regulate the US railroad industry. The legislation originated in the demands of farmers and merchants for protection against the “robber barons”.
Despite this background, railroad interests supported the bill. Charles Adams, president of the Union Pacific Railroad, explained his reasoning to a sympathetic congressman, John D. Long. “What is desired,” he wrote, “is something having a good sound, but quite harmless, which will impress the popular mind with the idea that a great deal is being done, when, in reality, very little is intended to be done.”
On the whole, he got what he wanted. The Interstate Commerce Commission established by the act was chaired by a lawyer with experience of the railroad industry – acquired, naturally, by acting on behalf of his railroad clients. When, a decade later, the Supreme Court ruled that a rate-fixing agreement between railroads was illegal, the ICC was crestfallen: surely, the commission said, it should not be unlawful to confer, to achieve what the law enjoins – the setting of just and reasonable rates. Soon after, Congress approved legislation making it a criminal offence to offer rebates on tariffs the ICC had approved, and the commission thereafter operated as the manager of a railroad cartel.
Kay is a little too quick, however, to argue in favor of judges. Aside from the tradeoff (which Kay notes) that Judges will be less informed than people closer to the industry (the bias-efficiency tradeoff familiar from econometrics), judges also have their own set of interests and incentives. Elected judges, for example, tend to be biased towards plaintiffs (voters) and against out-of-state corporate defendants (non-voters). More generally, I think Kay understands politics without romance but still sees law with a romantic lens.
The application of public choice insights to legal institutions, "law without romance," is a new and growing field. If you are interested, I recommend The Pursuit of Justice, a very good new book on this topic (edited by Ed Lopez, I was general editor.)