Category: Law
New law and economics blog
The focus is litigation, and it is run by the Manhattan Institute; the name is www.pointoflaw.com. Here is one good post on biases in expert witness testimony.
Halloween Banned!
A school in Puyallup Washington has banned all Halloween activities. Why?
“We have been contacted by followers of the Wiccan religion, and they indicated they have been offended after seeing elementary school depictions of witches with long noses, warts, cauldrons and such,” said Tony Apostle, the superintendent who banned Halloween.
Halloween activities have also been banned elsewhere in the country but for a different reason:
Complaints about Halloween from Pentecostal parents in Texas have forced a significant number of that state’s school districts to cancel in-school parties, said Richard W. Stadelmann, a professor of religious studies at Texas A&M University.
There is a geographical pattern to the grumbling, according to Stadelmann and others. Christian complaints come mostly from the South and Midwest, whereas Wiccan complaints are more likely to come from California and the Pacific Northwest.
Gay marriage and the deficit
What would happened if all of America’s roughly 600,000 cohabitating gay couples decided to marry?
For one thing, they would all start paying the marriage penalty. Each year, over the next five years, the deficit would fall about $350-450 million per year. Yes that is about one-tenth of one percent of the yearly deficit, but at least a move in the right direction. It is also estimated that social security and related expenditures would increase only slightly as a result of the marriages.
That is from The Atlantic Monthly, October issue, p.64. If you are looking for a good historical introduction to some of the issues surrounding gay marriage, I recommend George Chauncey’s recent Why Marriage?.
China fact of the day
China is stepping up its hard line against internet pornography by threatening life imprisonment for anyone caught peddling porn.
Ne’er-do-wells involved in the production and distribution of online adult content – including “phone sex” – face a range of punishments including compulsory surveillance and imprisonment. Those behind sites that generate more than 250,000 hits will be treated as “very severe” and could face life imprisonment.
Linking the jail sentence to the number of hits, now that is a saddening use of optimal punishment theory. Here is the full story.
We will not rock you
Virginia and 39 other states sued eight music distributors and retailers accusing them of price-fixing and all I got was a lousy Michael Bolton CD. Well, not me personally, but that is what lots of libraries and public schools in Virginia and across the nation are getting as their share of the $75 million non-cash part of the settlement. Other CDs distributed as part of the deal include teen band Hanson’s “Snowed In” and, get this, Martha Stewart’s “Spooky, Scary, Sounds for Halloween.” Not every CD is a dud but it’s fair to say that the value of the CDs is substantially less than $75 million. If you were a member of the class and signed up you could also get a check for almost $13, $67 million in total.
According to the judge, pure transaction costs were $6-8 million and the lawyers got just over 14 million so depending on how you evaluate the free CDs (I think $35 million is generous) total transaction costs might eat 20-30 percent of the settlement – not bad as far as these things go. Note, however, that the plaintiff’s claim was that consumers were being overcharged by 23 cents a CD. Personally, I’d be happy to pay the extra 23 cents to be free of class-action lawsuits like this. But then again I don’t buy as many CDs as Tyler.
Courses (markets) in everything
How about a $10,000 class for teaching top executives how to cope with prison? Students are taught the following:
1. Learn meditation and physical exercise routines.
2. Get used to the fact that nothing changes and everything is outside your control.
3. Discard your addictions and vices.
4. Bring a cheap watch.
5. Never make eye contact with anyone; no one is your friend.
6. “If you are going to hurt somebody, drag them into your cell, because then you have an excuse that they invaded your privacy.”
Here is the full story. The entrepreneurs claim they have had twelve clients a year for the last two years.
Seeking safety in Latin America
In Mexico City I am relieved to step out of the taxicab and into the street. Cabs are a major venue for robbery and kidnapping. In Rio de Janeiro I am relieved to step out of the street and into the taxicab. Cabs are relatively safe, but a twelve-year old street urchin might knife you in the gut for a dollar.
I’ve yet to find a good explanation for this difference in criminal method. Could it be that Mexican crime is more closely linked to the drug trade and especially the export of drugs to the U.S.? This increases the optimal size for a criminal gang and might cause robbery and mayhem to be better organized and more capital-intensive. Brazil also appears to have an especially bad educational system, which lowers the average criminal age but also diminishes the relevance of taxis.
Cutting the fat
Dieting is difficult because it’s so much easier to give in to temptation and consume what you should not. It’s a constant struggle to cut the fat. The same is true in business. Economists may write down a “cost curve” on the blackboard but these curves, which represent the minimum cost of producing a particular quantity, are not given to the firm they are products of the firm. It takes effort and attention and willpower to keep costs low. Letting costs go by raising salaries, increasing benefits and paying little attention to the bottom line is easy and, for a time, pleasant which is why firms need strong incentives, including the carrot of profit and the stick of loss, to get and stay trim.
Government agencies face few such incentives. As a result, fat is rampant. Case in point, California prison guards. To encourage fitness the California Department of Corrections created a fitness bonus some years ago. The bonus was quite substantial, $100 per month but to get it guards had to pass a fitness test involving sit-ups, running and jumping. Five years ago the state paid out about $5 million for the fitness incentive. But who wants to be the bad guy who denies a prison guard a bonus? No one – if they aren’t paying the bills.
As a result, the fitness test started to get easier as the bonus got larger. Last year, California shelled out $33.2 million for fitness bonuses and some 80 percent of prison employees, not just guards but wardens and mangers also, now get the fitness bonus. Of course, a test is no longer required – all the employee need do to get the bonus is visit a doctor once per year.
With the California budget crunch even the politically poweful prison guards are having to cut some fat but in the long run recognize the incentive structure and don’t expect government to go on a diet.
Posner on copyright renewal
Our guest bloggers are second to none but you might also be interested to know that Richard Posner is guest blogging at Larry Lessig’s blog. I recently argued in favor of renewal fees for copyright thus I was pleased to see that Posner is also in favor of a copyright renewal system (he even wants to sneak such a system in through the back door of fair use).
Facts about the Mexican judiciary
1. In Mexico the federal judiciary employs 29,800 employees; in the much larger and richer United States the same number is 34,000.
2. Mexico employs about 900 federal judges; in the United States it is 1700.
3. The Mexican Supreme Court employs 3400 individuals; in the United States the corresponding number is 430.
4. The Mexican federal judiciary employs more chaffeurs than judges.
I can think of at least two explanations. First, Mexico, which has lower wage rates, chooses a higher labor-to-capital ratio. Second, the Mexican system is full of corrupt perks.
My blog source writes:
En México, el tercer poder es totalmente disfuncional en todos sus niveles y funciones. [In Mexico the third branch of government is totally dysfunctional in all of its levels and functions.]
Number of judges do not the rule of law make.
The data are from La Boveda, an excellent Spanish-language blog, from Mexico, for economics and politics.
Economic foundations of law
If tenants benefit from a law that says apartments must have hot water then surely a law that says tenants must have hot water and a dishwasher benefits them even more, right? What about a law that says tenants must have hot water, a dishwasher and cable tv? By now the students have cottoned on to the idea that the rent will increase. Once you realize that the law causes the rent to increase it’s no longer obvious if tenants benefit or if landlords are harmed.
We can work out what happens with sone numbers. Let’s suppose that after much bargaining the tenant and landlord have agreed upon the rent and the amenities – each party to the contract is profit maximizing, doing as well as they can given market conditions and the interests of the other. Now suppose that tenants value the hot water benefit at $100 and that it costs the landlord $150 to provide the hot water. At these prices the tenant does not buy the hot water. The law is passed; by how much does the rent increase? By at least $100 but no more than $150. The landlord knows for certain that he can increase the rent by $100 because this will make the tenant just as well off as he was before, which by assumption was an equilibrium price. Similarly, if the landlord could profitably raise the rent by more than his cost he would have done so already – the fact that he did not indicates that an increase of more than $150 would not be profitable
Thus the rent rises somewhere between $100 and $150, the precise amount to be determined by bargaining power. Suppose that the rent increases by $120. Then the tenant gets a benefit worth $100 at a price of $120 and is worse off by $20 and the landlord gets a benefit of $120 at a cost of $150 and so is worse off by $30. The law makes both the landlord and tenant worse off!
The lesson here is that a contract is multi-dimensional so if the government changes one dimension of a contract the other dimensions will adjust towards offsetting that change.
Bonus points: a) Suppose the tenant values the hot water at $150 and it cost the landlord $100. Does the regulation benefit the tenant and landlord now?. If so, what is odd about this example? b) Explain why the loss to the tenant and the loss to the landlord must add up to $50. How does this further illustrate the principle?
The glory of Athens
Politicians often refer to our Judeo-Christian heritage but in math, science, philosophy, and especially politics we owe much more to our Greco-Roman heritage. Consider; democracy, republicanism, and the rights of citizenship, these idea owe virtually nothing to the Judeo-Christian tradition and everything to Greece and Rome.
I am reminded of this by rereading Pericles’ Funeral Oration. Here, from nearly 2500 years ago, is Pericles, in the midst of war in a ceremony to honor the dead he speaks to Athens, and also perhaps to us, about liberty and war.
If we turn to our military policy, there also we differ from our antagonists. We throw open our city to the world, and never by alien acts exclude foreigners from any opportunity of learning or observing, although the eyes of an enemy may occasionally profit by our liberality; trusting less in system and policy than to the native spirit of our citizens; while in education, where our rivals from their very cradles by a painful discipline seek after manliness, at Athens we live exactly as we please, and yet are just as ready to encounter every legitimate danger.
Do Not Pass Go…
Crime doesn’t pay, but criminals just might.
That is what more and more local governments are hoping, as they grapple with soaring prison populations and budget pressures.
To help cover the costs of incarceration, corrections officers and politicians are more frequently billing inmates for their room and board, an idea popular with voters.
Here in suburban Macomb County, 25 miles north of Detroit, Sheriff Mark Hackel has one of the most successful of these programs in the nation. Last year, the sheriff’s department collected nearly $1.5 million in what are being called “pay to stay” fees from many of the 22,000 people who spent time in the county jail.
Inmates are billed for room and board on a sliding scale of $8 to $56 a day, depending on ability to pay [TC: hey, that’s price discrimination!]. When they are released, the sheriff’s office will go to court to collect the unpaid bills, seizing cars or putting some inmates back in jail. The wife of one inmate, a Chrysler truck factory worker who is serving half a year for drunk driving, dropped off a check for $7,212 this week to cover part of his bill, the largest single amount ever collected by the sheriff.
I’m not comfortable with this notion, since I don’t think government prisons should move toward becoming profit centers. And ex post, elasticity of demand is not very high. But now more than half of the states are collecting fees of some kind from their prisons. It is noted, however, that Martha Stewart will not be paying for her time in jail.
Here is the full story.
What has Virginia come to?
A Virginia mother was sentenced yesterday to 10 days in jail for defying a court order not to smoke in front of her children.
Tamara Silvius, 44, who has said she smokes about a pack of cigarettes a day, was led from a Caroline County courtroom in handcuffs. But the judge allowed her to post a $500 bond to stay out of jail while she appeals the ruling.
“It should never have come to this,” Silvius said in a telephone interview, after spending four hours in jail before being released. “. . . I hope and pray my two little kids don’t think they had their mama sent to jail.”
The sentence is the latest development in a bitter and long-running battle between Silvius and her ex-husband, Steven Silvius, over custody of their children, ages 10 and 8…
Tamara Silvius already had violated the court order once. At Thanksgiving, while driving her children to South Carolina, Silvius, wanting to smoke as she drove, tacked up plastic between the front and back seats and secured it with duct tape. In January, she was found guilty of violating the order in that instance and was given a 10-day suspended sentence.
Here is the full story.
More on the Patriot Act
Orin Kerr at Volokh disputes my one-liner on the Patriot Act (reprinted here).
The USA Patriot Act has so far been used to fine PayPal $10 million dollars in an effort to crack down on internet gambling, it’s been used to intimidate a New York artist’s collective, and most recently to shut down a Stargate fan site.
I invite readers to read Kerr and follow up on the links I provided. Kerr’s defense is, not suprisingly, one crafted by a lawyer. It consists of the following. Point 1 is accepted as correct. On point 2, Kerr concedes that the artists were intimidated and that the Patriot Act was involved but he says we shouldn’t blame the Patriot Act as other laws could just as easily have been used. Oh, now I feel better. On Point 3, Kerr agrees that the Patriot Act was used to gather information that was used to shut down the web site but thinks it unfair to say the Patriot Act shut the site down. Ok, I give him this one. I should have written the Patriot Act was used to help shut down a Stargate fan site.
The lawyer’s vice is to miss the forest for trees. The point is that laws passed for one purpose are often used for other purposes not originally intended (RICO, anyone?). (Some of them may even be legitimate, I’m not claiming, for example, that the Stargate fan site was legal). In this case, the Patriot Act and the general increased willingness to defer to law enforcement have not to my knowledge led to many arrests of terrorists but have been used for all manner of other purposes.