Category: Law
Another piece of the puzzle concerning India’s economic slowdown
Could the Indian slowdown be the most important (but still somewhat neglected) story in the world right now? Vikas Bajaj reports:
…the country cannot get enough fuel — principally coal — to run the plants. Clumsy policies, poor management and environmental concerns have hampered the country’s efforts to dig up fuel fast enough to keep up with its growing need for power.
A complex system of subsidies and price controls has limited investment, particularly in resources like coal and natural gas. It has also created anomalies, like retail electricity prices that are lower than the cost of producing power, which lead to big losses at state-owned utilities. An unsettled debate about how much of its forests India should turn over to mining has also limited coal production.
The power sector’s problems have substantially contributed to a second year of slowing economic growth in India, to an estimated 7 percent this year, from nearly 10 percent in 2010. Businesses report that more frequent blackouts have forced them to lower production and spend significantly more on diesel fuel to run backup generators.
…In the last year, the nation’s power problem has grown acute, with the gap between demand and supply jumping to 10.2 percent last month, from 7.7 percent a year earlier. In some states like Andhra Pradesh, where Nellore is, and in neighboring Tamil Nadu, blackouts have become so common that many factories report getting more electricity from diesel generators than they do from the power grid, at a cost that is roughly three times higher.
Deregulate green carts!
Food trucks are not the only battle:
“Green carts are a quick and nimble approach that can get fresh food out there relatively quickly,” says Rick Luftglass, executive director of the Laurie M. Tisch Illumination Fund, which has provided $2 million to support green carts in New York. “And because they are mobile, you can follow the need. If sales aren’t good on one block, you can move a few blocks away. It allows the market to build around the customers.”
…Generations of immigrants to New York got their start selling on the street. In the 19th century, the Lower East Side was full of pushcarts hawking pickles, flowers, buttons and hats. But today’s arrivals are limited by strict rules for sidewalk vending. There are multiyear waits to sell those New York hot dogs and a thriving black market for permits.
That is from the excellent Jane Black. Many green carts are starting to take food stamps.
Debtor’s Prison for Failure to Pay for Your Own Trial
Debtor’s prisons are supposed to be illegal in the United States but today poor people who fail to pay even small criminal justice fees are routinely being imprisoned. The problem has gotten worse recently because strapped states have dramatically increased the number of criminal justice fees. In Pennsylvania, for example, the criminal court charges for police transport, sheriff costs, state court costs, postage, and “judgment.” Many of these charges are not for any direct costs imposed by the criminal but have been added as revenue enhancers. A $5 fee, for example, supports the County Probation Officers’ Firearms Training Fund, an $8 fee supports the Judicial Computer Project, a $250 fee goes to the DNA Detection Fund. Convicted criminals may face dozens of fees (not including fines and restitution) totaling a substantial burden for people of limited means. Fees do not end outside the courtroom. Jailed criminals can be charged for room and board and for telephone use, haircuts, drug tests, transportation, booking, and medical co-pays. In Arizona, visitors to a prison are now charged a $25 maintenance fee. In PA in order to get parole there is a mandatory charge of $60. While on parole, defendants may be further assessed counseling, testing and other fees. Interest builds unpaid fees larger and larger. In Washington state unpaid legal debt accrues at an interest rate of 12%. As a result, the median person convicted in WA sees their criminal justice debt grow larger over time.
Many states are now even charging the accused to apply for and use a public defender! As a result, some defendants are discouraged from exercising their rights to an attorney.
Most outrageously, in some states public defender, pre-trial jail and other court fees can be assessed on individuals even when they are not convicted of any crime. Failure to pay criminal justice fees can result in revocation of an individual’s drivers license, arrest and imprisonment. Individuals with revoked licenses who drive (say to work to earn money to pay their fees) and are apprehended can be further fined and imprisoned. Unpaid criminal justice debt also results in damaged credit reports and reduced housing and employment prospects. Furthermore, failure to pay fees can mean a violation of probation and parole terms which makes an individual ineligible for Federal programs such as food stamps, Temporary Assistance to Needy Family funds and Social Security Income for the elderly and disabled.
It’s difficult to argue against criminal justice fees for those who can pay, but for those who cannot– and most criminal defendants are poor–such fees can be a personal and public policy disaster. Criminal justice debt drags people further away from reintegration with civil society. A person’s life can spiral out of their control when interest, late fees, revocation of a driver’s license and ineligibility for public assistance, mean that unpaid criminal justice debt snowballs. You can’t get blood from a stone but if you try, you can break the stone.
Optimal punishment is swift and sure but also has a defined endpoint. As with bankruptcy, punishment must end, leaving both hope and opportunity. We used to release criminals without a nickel or a nail but with an understanding that their debt to society had been paid. Today, we release criminals with a ball of debt that chains them to the criminal justice system and which can pull them back into prison long after their sentences have been served. Releasing people with little hope or opportunity for reintegration with civil society is good for neither the releasees nor society.
The Internet in Estonia
Free Wi-Fi is everywhere, and has been for a decade.
Viik says you could walk 100 miles – from the pastel-coloured turrets here in medieval Tallinn to the university spires of Tartu – and never lose internet connection.
…Last year, 94% of tax returns were made online, usually within five minutes. You can vote on your laptop (at the last election, Ilves did it from Macedonia) and sign legal documents on a smartphone. Cabinet meetings have been paperless since 2000.
Doctors only issue prescriptions electronically, while in the main cities you can pay by text for bus tickets, parking, and – in some cases – a pint of beer. Not bad for country where, two decades ago, half the population had no phone line.
Estonia is also at the forefront of privacy issues. Everyone in Estonia has a national ID card, which might frighten some Americans–although we already have essentially the same thing, but everyone in Estonia also knows who else has accessed their records. Thus, compared to the United States, Estonia is in many ways a more transparent society. Estonia is also on the forefront of dealing with cyber-terrorism with their own national “electronic” guard.
More at The Guardian.
Toward a 21st-Century FDA?
In a WSJ op-ed, Andrew von Eschenbach, FDA commissioner from 2005 to 2009, is surprisingly candid about how the FDA is killing people.
When I was commissioner of the Food and Drug Administration (FDA) from 2005 to 2009, I saw firsthand how regenerative medicine offered a cure for kidney and heart failure and other chronic conditions like diabetes. Researchers used stem cells to grow cells and tissues to replace failing organs, eliminating the need for expensive supportive treatments like dialysis and organ transplants.
But the beneficiaries were laboratory animals. Breakthroughs for humans were and still are a long way off. They have been stalled by regulatory uncertainty, because the FDA doesn’t have the scientific tools and resources to review complex innovations more expeditiously and pioneer regulatory pathways for state-of-the-art therapies that defy current agency conventions.
Ultimately, however, von Eschenbach blames not the FDA but Congress:
Congress has starved the agency of critical funding, limiting its scientists’ ability to keep up with peers in private industry and academia. The result is an agency in which science-based regulation often lags far behind scientific discovery.
Should we not, however, read the following ala Strauss?
The FDA isn’t obstructing progress because its employees are mean-spirited or foolish.
…For example, in August 2010, the FDA filed suit against a company called Regenerative Sciences. Three years earlier, the company had begun marketing a process it called Regenexx to repair damaged joints by injecting them with a patient’s own stem cells. The FDA alleged that the cells the firm used had been manipulated to the point that they should be regulated as drugs. A resulting court injunction halting use of the technique has cast a pall over the future of regenerative medicine.
A peculiar example of a patient-spirited and wise decision, no? And what are we to make of this?
FDA scientists I have encountered do care deeply about patients and want to say “yes” to safe and effective new therapies. Regulatory approval is the only bridge between miracles in the laboratory and lifesaving treatments. Yet until FDA reviewers can be scientifically confident of the benefits and risks of a new technology, their duty is to stop it—and stop it they will. (emphasis added).
von Eschenbach ends with what sounds like a threat or perhaps, as they say, it is a promise. Unless Congress funds the FDA at higher levels and lets it regulate itself:
…we had better get used to the agency saying no by calling “time out” or, worse, “game over” for American companies developing new, vital technologies like regenerative medicine.
Frankly, I do not want to “get used” to the FDA saying game over for American companies but nor do I trust Congress to solve this problem. Thus, von Eschenbach convinces me that if we do want new, vital technologies like regenerative medicine we need more fundamental reform.
Markets in Everything: Prison Consultants
NYTimes: Mr. Levine is a prison consultant. The business — which entails advising people who are facing jail time on how to prepare for life on the inside, deal with medical issues, transfer to other prisons and even reduce their sentences…The consultants [also] teach prison etiquette.
For example? “Never walk across a wet floor,” Mr. Mulholland advised, saying you might mess up the work of the prisoner manning the mop. And then he might kill you.
Prison consultancy seems to be one of the few businesses where the owners aggressively advertise their criminal record:
Mr. Levine said he thought the competition would thin out over time because the competitors lack marketing smarts. Besides, he argued, he has the criminal CV to back up the marketing.
If they handed out diplomas for prison savvy, he said, “These guys have maybe an associate degree. I have like a Ph.D. or above.”
Indeed, “some prison consultants say that others are so lacking in expertise that their businesses are practically criminal enterprises.”
What happens to books when they come out of copyright?
For the United States, 1922 is the cut-off year for the end of public domain:
Here is more from Eric Crampton, drawing upon Paul Heald.
Good overview of the legal battle over eBooks
You will find it here, by Tim Carmody, and there are more issues involved than I had thought:
Knebel says there are three major points of law at stake in both the class-action suit and the Justice Department investigation against Apple and the five publishers:
- Whether and how the agency model applies to virtual goods;
- Whether Apple and publishers engaged in a “hub-and-spoke” conspiracy or simply “conscious parallelism”;
- The status of the “most-favored nation” clause, common to many legal contracts today, which Apple used to ensure that books could not be sold elsewhere at a lower price than in the iBooks store.
On the latter point there is this:
The last point at issue is Apple’s agreement with publishers that their books be sold at the same price to all other competitors. In contract law, this is called “the most-favored nation” clause.
“The most-favored nation clause has been suspicious under antitrust laws for years,” says Knebel. But at the same time, it’s extraordinarily common. “Most law firms, including mine, will agree to charge one client the lowest possible price for the same services,” he says.
So even though Apple’s insistence that HarperCollins, Hachette Book Group, Macmillan, Penguin Group Inc. and Simon & Schuster Inc all charge the same prices for their books at all e-book stores is what seems on its face the fishiest about the whole affair, it’s actually the part that, in the absence of a conspiracy, is most hallowed by practice. A change in its status under federal antitrust law would require the largest revision to current legal agreements, in industries widely separated from publishing and software.
My view is simple, namely that in the face of massive disruptive innovation, antitrust law rarely does a good job. The law should stay out of this. In any case the prices of books have been falling for some time.
Why Don’t Women Patent?
In Why Don’t Women Patent?, a recent NBER paper, Jennifer Hunt et al. present a stark fact: Only 5.5% of the holders of commercialized patents are women. One might think that this is explained by the relative lack of women with science and engineering degrees but Hunt et al. find that “women with such a degree are scarcely more likely to patent than women without.” Instead, most of the difference is “accounted for by differences among those with a science or engineering degree” especially the fact that women are underrepresented in patent-intensive fields such as electrical and mechanical engineering and in development and design.
Predictably, the authors do not ask why women might self-select into non patent-intensive fields, perhaps because this would require at least a discussion of politically incorrect questions. The failure to investigate these questions leads to some dubious conclusions, notably:
Closing the [gender] gap among S&E degree holders would increase commercialized patents by 24% and GDP per capita by
2.7%.
Right; and since only 10% of construction workers are women, closing the gender gap would result in many more houses. In the case of construction, my suspicion is that gender equality would reduce not increase the amount of construction. In the case of patents, I am not sure what would happen, indeed the point is that without a much better understanding of what causes differences in patent proclivities one shouldn’t jump to conclusions.
The quick jump from patents to innovation is also unwarranted–there is very little evidence that patents increase innovation. Moreover, most innovations are not patented. If we measured innovation more closely it wouldn’t surprise me if women accounted for a larger share of innovation than they do of patents.
By the way, both my wife and I are working to rectifiy these statistics, she has half-a-dozen patents and I have none.
Addendum: Freakonomics/Marketplace has a podcast on this topic.
The Ryan budget proposal
Ezra Klein offers some points of clarification:
Perhaps the simplest way to understand what’s going on in Paul Ryan’s budget, and whether it’s plausible, is to look at page 13 of the Congressional Budget Office’s summary of the Ryan plan (pdf). That’s where the CBO lists Ryan’s assumptions about how future budgets would differ under his proposal and under an alternative, high-deficit scenario. That lets us see where, exactly, Ryan’s presumed savings are. And they’re not, for the most part, in Medicare.
In 2030, spending on Medicare is .75 percent of GDP lower than in the alternative fiscal scenario. In fact, Ryan and the Obama administration have proposed the same rate of growth for Medicare: GDP + 0.5 percent.
It’s Medicaid and other health spending, which includes the Affordable Care Act, where Ryan really brings down the hammer: That category falls by 1.25 percent of GDP. So Ryan’s cuts to health care for the poor are almost twice the size of his cuts to health care for the old.
And then there’s the “everything else” category, which includes defense spending, infrastructure, education and training, farm subsidies, income supports, veteran’s benefits, retraining, basic research, the federal workforce and much, much more. And this category of spending falls by 2.5 percent of GDP.
Putting normative issues aside, I am predicting that something like this is what will happen, and it won’t require major Republican victories. In short, those are the most vulnerable interest groups.
Sentences which were not expected
“I can’t see why we should be printing bank notes at all anymore,” says Bjoern Ulvaeus, former member of 1970’s pop group ABBA, and a vocal proponent for a world without cash.
That is from The Washington Post, hat tip to Brad Plumer. The article is interesting throughout, for instance:
The Swedish Bankers’ Association says the shrinkage of the cash economy is already making an impact in crime statistics.
The number of bank robberies in Sweden plunged from 110 in 2008 to 16 in 2011 — the lowest level since it started keeping records 30 years ago. It says robberies of security transports are also down.
“Less cash in circulation makes things safer, both for the staff that handle cash, but also of course for the public,” says Par Karlsson, a security expert at the organization.
The prevalence of electronic transactions — and the digital trail they generate — also helps explain why Sweden has less of a problem with graft than countries with a stronger cash culture, such as Italy or Greece, says economics professor Friedrich Schneider of the Johannes Kepler University in Austria.
“If people use more cards, they are less involved in shadow economy activities,” says Schneider, an expert on underground economies.
Italy Fact of the Day
- Italian labor unions represent more retirees than workers.
From a good piece on reforming Italian labor law in the NYTimes.
Addendum: Some commentators are asking whether this is surprising. Answer: Italy has far more retired union members than any other European country. Circa 2003-2004 (when 48% percent of Italian union members were retired) in France and Germany just 20% of union members were retired, in the UK 10%, in Spain 4.5%. Oddly, I could not find a source for the US, although some unions like the UAW clearly have more retirees than members my guess is that the overall number is quite low and certainly well below the Italian rate.
Top marginal tax rates, 1958 vs. 2009
That is another excellent post from Timothy Taylor. Excerpt:
It’s interesting to note that the share of income tax revenue collected by those in the top brackets for 2009–that is, the 29-35% category, is larger than the rate collected by all marginal tax brackets above 29% back in the 1960s.
And:
Raising tax rates on those with the highest incomes would raise significant funds, but nowhere near enough to solve America’s fiscal woes. Baneman and Nunns offer this rough illustrative estimate: “If taxable income in the top bracket in 2007 had been taxed at an average rate of 49 percent, income tax liabilities (before credits) would have been $78 billion (6.7 percent of total pre-credit liabilities) higher, taking into account likely taxpayer behavioral responses to the rate increase.” The behavioral response they assume is that every 10% rise in tax rates causes taxable income to fall by 2.5%.
And this zinger:
One could also use the example of 1959 to argue that many more taxpayers in the broad range of lower- and middle-incomes should face marginal federal tax rates in the range of 16-28%.
I do not favor such a shift, yet somehow that is a neglected comparison.
*A Naked Singularity*
Contemporary American fiction faces an ongoing problem of what to write about. Yuppie life in Brooklyn doesn’t have the gravitas, suburban ennui is long since overdone, and so much of American life — mostly for the better — doesn’t face serious moral choices. Sergio de la Pava has solved this problem by writing about the American legal system, set in New York City and with a Colombian immigrant public defender. At first I was skeptical but at page 256 (out of 678) it is still getting better. It is likely to make my “best of the year” list. My five word summary would be “A more approachable William Gaddis.” You will note it is published by University of Chicago press and presumably it is “too serious” to have attracted a major trade contract. It’s not for everyone, but it’s living up to its billing as a sleeper under the radar. You can pre-order it here.
Innovations>Patents
AEI held a session on patents and patent reform building off Launching the Innovation Renaissance. I opened and Judge Paul Michel, Chief Judge, United States Court of Appeals for the Federal Circuit (retired), James DeLong of the Convergence Law Institute and Michael Abramowicz of George Washington University School of Law all offered comments.
Here is one brief bit from my talk. You can find the whole thing here.