Category: Law

Monaco on the Marin Headlands

The Dalmation Coast in Croatia, the Amalfi Coast in Italy and Monaco’s coast on the Mediterranean Sea are often found on lists of the most beautiful coastlines in the world. Here are some pictures. Hard not to agree. The fourth picture is of the Marin coastline near San Francisco. It’s also beautiful but is it obviously more beautiful than the other coastlines? Personally, I don’t think so. But one thing is different. Far fewer people are enjoying the Marin coast. Why? Because fewer people live there. Can something be beautiful if there is no one to see it?

There is something to be said for protecting natural wilderness but must we do so on some of the most valuable land in the world?

I agree with Market Urbanism, “Quite simply, we must build Monaco on the Marin Headlands.”

Hat tip to Bryan Caplan who makes the point about beauty in his excellent, Build, Baby, Build.

Croatia

 

Amalfi

Monaco

Marin:

Blame California?

This paper reexamines the role of social policy in the doubling of divorce rates. We demonstrate that the short-run rise in divorce rates formerly attributed to unilateral divorce solely depends on the state of California. California receives considerable weight in national analyses and adopted several policies simultaneously. When we examine the independent effects of these social policies, we find that legal abortion leads to a clear and immediate rise in divorce rates. However, legal abortion’s impact also hinges on California and may be contaminated by concurrently adopted policies. We then demonstrate that California’s influence extends to the broader unilateral divorce literature. We conclude by describing best practices to confront the challenges of simultaneous policy adoption.

That is from a recent paper by Lauren Hoehn-Velasco, Jacob Penglase, Michael Pesko, and Hasan Shahid.  Via tekl.

The Sea Change on Crypto-Regulation

In the last few weeks there has been a sea change in crypto regulation:

1. Bitcoin spot ETFs were approved–reluctantly, after a 3-judge Federal Appeals court ruled unanimously that the SEC had acted arbitrarily and capriciously–but nevertheless opening Bitcoin holdings to institutional investors. Case in point, The State of Wisconsin bought Bitcoin ETFs for its pension fund.

2. In a very unusual move, SAB 121, was overturned by the House and then, even more surprisingly, overturned by the Senate including the votes of many Democrats. < href=”https://www.sec.gov/oca/staff-accounting-bulletin-121″>SAB 121 is an SEC staff accounting bulletin (not law but guidance) that said to banks if you hold crypto for your customers, i.e. a custody service, you must account for it on your balance sheet. This guidance does not apply to custody of any other asset. Essentially, SAB 121 made it prohibitive for banks to offer custody services for crypto because that service would then impact all kinds of risk and asset regulations on the bank. Aside from singling out crypto, the SEC is not a regulator of banks so this seemed like a regulatory overreach.

President Biden said he will veto but that is no longer certain. It wasn’t just crypto lobbying against SAB 121 but traditional banks. The banks point to the approval of Bitcoin ETFs saying, quite logically, why can’t we custody these ETFs the way we do every other ETF? Senate Majority leader Chuck Schumer, D-N.Y., sometimes called Wall Street’s man in Washington, voted in favor of nullifying SAB 121. Schumer can read the room.

3. The House voted to ban the Fed from establishing a Central Bank Digital Currency (CBDC).

4. The House approved a wide-ranging bill to (finally!) establish regulations for digital assets markets. The vote was 279-136 in favor with many Democrats crossing party lines to support it.

5. After saying nothing for months, usually a bad sign, the SEC approved Ethereum spot ETFs. On the surface, this might have seemed logically inevitable given the approval of Bitcoin spot ETFs but many people thought the SEC would do everything it could to find daylight between Bitcoin and ETH. Instead, it tacitly acknowledged that ETH is a commodity and not a security.

Why is this happening? I see three main factors at play. First, crypto is becoming integrated with traditional finance. As the big banks get involved, the politics around crypto are shifting. Second, crypto is becoming normalized. Ironically, the prosecution of Sam Bankman-Fried, Changpeng Zhao and manipulators like Avraham Eisenberg may have convinced some U.S. regulators that crypto doesn’t have to be destroyed, it can be tamed. Nakamoto might not be pleased but realistically this was the only option to move forward. Eventually, everyone wants to pay their mortgage. Third, Trump’s strong endorsement of crypto has alarmed the Biden administration. Most political issues are firmly divided along party lines, but crypto remains an open issue. With millions of crypto owners in the United States, a significant number are highly motivated to vote their wallets. Biden doesn’t want to give the crypto issue to Trump.

None of this means we are entering crypto Nirvana but as far as regulation is concerned a lot has changed in just a matter of weeks.

Full Disclosure: I am an advisor to several firms in the crypto space including MultiversX, Bluechip and 0L.

The Left on FDA Peer Approval

Robert Kuttner discovered an excellent treatment for colds while vacationing in France and is rightly outraged that it’s not available in the United States:

Toward the end of our stay, my wife and I both got bad coughs (happily, not COVID). We went to our wonderful local pharmacist in search of something like Mucinex or Robitussin, which are not great but better than nothing.

“We have something much better,” said he. And he did. It’s called ambroxol. It works on an entirely different chemical principle, to thin sputum, facilitate productive coughing, and also operates as a pain reliever and gentle decongestant with no rebound effect.

We experienced it as a kind of miracle drug for coughs and colds. A box cost eight euros.

Ambroxol is available nearly everywhere in the world as a generic. It has been in wide use since 1979.

But not in the U.S.

He continues the story:

…You can’t get ambroxol in the U.S. because of the failure of the Food and Drug Administration to grant reciprocal recognition to generic medications approved by its European counterpart, the European Medicines Agency, when they have long been proven safe and effective. To get FDA approval for the sale of ambroxol in the U.S., a drug company would need to sponsor extensive and costly clinical trials. Since it is a generic, as cheap as aspirin, no drug company would bother.

…I’ve petitioned the FDA, asking them to create a fast-track procedure, whereby generic drugs approved in Europe, and well established as safe and effective, could get reciprocal approval in the U.S.

This would produce approval of ambroxol as over-the-counter medication for coughs and colds without unnecessary new clinical trials. And should ambroxol turn out to have real benefits for Parkinson’s as well, it would already be well established in the U.S. as an inexpensive generic.

Influenced by my work on FDA reciprocity aka peer approval, Ted Cruz introduced a bill, the Result Act to fast-track approval in the United States for drugs and devices already approved in other developed countries. Similarly, AOC has noted that the FDA is far behind the world in approving advanced sunscreens. Perhaps there is an opportunity here for bipartisan support.

Hat tip: the excellent Scott Lincicome.

Cross-border gunshot arbitrage markets in everything, Jean Baudrillard gone wrong edition

Federal prosecutors on Friday announced charges against five people in connection with a Chicago-based scheme that staged armed robberies so the purported victims could apply for U.S. immigration visas reserved for legitimate crime victims…

Officials believe hundreds of people, including some who traveled from out of town, posed as customers in dozens of businesses across Chicago and elsewhere, all hoping to win favorable immigration status by becoming “victims” of pre-arranged “armed robberies.”

During a staged hold-up in Bucktown last year, one of the “robbers” accidentally fired their gun, severely injuring a liquor store clerk, according to one source. During that caper alone, five “customers” were “robbed.”

Here is the full story, via Ian.

Restriction of output for me, but not for thee?

Is this ultimately an issue of women not always wanting to serve immigrants?

There is simply no good reason for such a ruling

A top Wall Street regulator has proposed outlawing election betting in the U.S. derivatives markets, with officials warning that the activity poses a threat to the sanctity of American elections.

The Commodity Futures Trading Commission, which is charged with regulating the vast and complex derivatives markets, voted 3-2 on Friday to issue a new rule proposal that would ban so-called event contracts that effectively act as wagers on political elections. The plan would also prohibit those contracts related to sporting events and even awards ceremonies like the Oscars.

And from the horse’s mouth:

“Contracts involving political events ultimately commoditize and degrade the integrity of the uniquely American experience of participating in the democratic electoral process,” CFTC Chair Rostin Behnam said. “Allowing these contracts would push the CFTC, a financial market regulator, into a position far beyond its Congressional mandate and expertise. To be blunt, such contracts would put the CFTC in the role of an election cop.”

Behnam was joined in supporting the proposal by fellow Democratic Commissioners Kristin Johnson and Christy Goldsmith Romero.

Here is the full Politico article.  How can you put such people in charge of things?  What else do they want to stop us from doing?  Is it so difficult for them to imagine a world where the election forecasts we can find on Predictit — among other sources — simply continue and that is perfectly fine, as it has been for years?

Mask Mandate Costs

There is now an NBER working paper on this topic:

This paper presents the results from a hypothetical set of questions related to mask-wearing behavior and opinions that were asked of a nationally representative sample of over 4,000 participants in early 2022. Mask mandates were hotly debated in public discourse, and though much research exists on benefits of masks, there has been no research thus far on the distribution of perceived costs of compliance. As is common in economic research that aims to assess the value to society of non-market activities, we use survey valuation methods and ask how much participants would be willing to pay to be exempted from rules of mandatory community masking. The survey asks specifically about a 3 month exemption. We find that the majority of respondents (56%) are not willing to pay to be exempted from mandatory masking. However, the average person was willing to pay $525, and a small segment of the population (0.9%) stated they were willing to pay over $5,000 to be exempted from the mandate. Younger respondents stated higher willingness to pay to avoid the mandate than older respondents. Combining our results with standard measures of the value of a statistical life, we estimate that a 3 month masking order was perceived as cost effective through willingness-to-pay questions only if at least 13,333 lives were saved by the policy.

That is by Patrick Carlin, Shyam Raman, Kosali I. Simon, Ryan Sullivan, and Coady Wing.  A few comments:

1. Willingness to be paid magnitudes are often much higher than willingness to pay numbers.  Especially when issues of justice and desert are involved.  I know some people who might say: “I have a right to refuse a mask.  I’m not going to pay anything not to wear one, but you would have to pay me a million dollars to put it on.”  There are less extreme versions of this view, noting that even in quite normal laboratory circumstances WTBP can be 5x higher than WTP.

2. For many people the value of masking — either positively or negatively — depends on what others do.  Some might feel “I guess I can wear a mask, but if you make everyone do that, that is a gross Orwellian dystopia.”  Others, perhaps leaning more to the political left, might say: “I am willing to do my share, but of course I expect the same from everyone else.  Let us sing this collective song and with our masks dance to the heavens!”

3. Why not just look at what private sector establishments chose when the force of law was not present?  Don’t they have the best sense of how to internalize all the different factors behind what their customers want?  Of course the answer here will vary, depending on what stage of the pandemic we are in.

The world of labor shortages, the culture that is alcohol

Drunken-driving deaths in the U.S. have risen to levels not seen in nearly two decades, federal data show, a major setback to long-running road-safety efforts.

At the same time, arrests for driving under the influence have plummeted, as police grapple with challenges like hiring woes and heightened concern around traffic stops.

Here is more from the WSJ.  “About 13,500 people died in alcohol-impairment crashes in 2022…”  Here is my earlier post on the culture of guns and the cultural of alcohol.

Via the excellent Kevin Lewis.

Migrants at Sea: Unintended Consequences of Search and Rescue Operations

Many countries are facing and resisting strong migratory pressure, fueling irregular migration. In response to mounting deaths in the Central Mediterranean, European nations intensified rescue operations in 2013. We develop a model of irregular migration to identify the effects of these operations. We find that smugglers responded by sending boats in adverse weather and utilizing flimsy rafts, thus inducing more crossings in dangerous conditions and ultimately offsetting intended safety benefits due to moral hazard. Despite the increased risk, these operations likely increased aggregate migrant welfare; nevertheless, a more successful policy should instead restrict supply of rafts and expand legal alternatives.

That is by Claudio Deiana, Vikram Maheshri and Giovanni Mastrobuoni, published in the latest issue of the AEA policy journal.

As a side point, the call for greater legality is under-argued to say the least.  This is a classic example of academic bias not being called out, as there is zero consideration of the costs of such migration.  Loyal MR readers will know I am hardly unsympathetic to immigration, but there are reasons why the arrival of so many migrants in Europe is unpopular.  Policy recommendations can be issued without considering those reasons?  And there is a call for the EU to help Africa grow — are there plausible policy instruments there with benefits above costs?  Enough to matter for the migration problem?  Doesn’t making poor societies richer often boost the flow of migrants because now migration can be planned and afforded?  Also not discussed.

Or maybe it is that no one thinks these are real policy discussions, rather it is not “mood affiliation permissible” to simply end a piece on the note that trying to help vulnerable individuals can backfire and lead to a lot of moral hazard?  And so a mood affiliation of “we care about them nonetheless” has to be slipped in at the end?

Either way come on, both authors and editors…

Nonetheless this is an interesting paper, worthy of attention!  Here are less gated versions of the paper.

My Conversation with the excellent Coleman Hughes

Here is the audio, video, and transcript.  Here is part of the episode summary:

Coleman and Tyler explore the implications of colorblindness, including whether jazz would’ve been created in a color-blind society, how easy it is to disentangle race and culture, whether we should also try to be ‘autism-blind’, and Coleman’s personal experience with lookism and ageism. They also discuss what Coleman’s learned from J.J. Johnson, the hardest thing about performing the trombone, playing sets in the Charles Mingus Big Band as a teenager, whether Billy Joel is any good, what reservations he has about his conservative fans, why the Beastie Boys are overrated, what he’s learned from Noam Dworman, why Interstellar is Chris Nolan’s masterpiece, the Coleman Hughes production function, why political debate is so toxic, what he’ll do next, and more.

Here is one excerpt:

COWEN: How was it you ended up playing trombone in Charles Mingus Big Band?

HUGHES: I participated in the Charles Mingus high school jazz festival, which they still do every year. It was new at the time. They invite bands from all around to audition, and they identify a handful of good soloists and let them sit in for one night with the band. I sat in with the band, and the band leader knew that I lived close by in New Jersey, and so essentially invited me to start playing with the band on Monday nights.

I was probably 16 or 17 at this point, so I would take the NJ Transit into New York City on a Monday night, play two sets with the Mingus Band sitting next to people that had been my idols and were now my mentors — people like Ku-umba Frank Lacy, who is a fantastic trombone player; played with Art Blakey and D’Angelo and so forth. Then I would go home at midnight and go to school on Tuesday morning.

COWEN: Why is the music of Charles Mingus special in jazz? Because it is to me, but how would you articulate what it is for you?

Here is another:

COWEN: If I understand you correctly, you’re also suggesting in our private lives we should be color-blind.

HUGHES: Yes. Broadly, yes. Or we should try to be.

COWEN: We should try to be. This is where I might not agree with you. So I find if I look at media, I look at social media, I see a dispute — I think 100 percent of the time I agree with Coleman, pretty much, on these race-related matters. In private lives, I’m less sure.

Let me ask you a question.

HUGHES: Sure.

COWEN: Could jazz music have been created in a color-blind America?

HUGHES: Could it have been created in a color-blind America — in what sense do you mean that question?

COWEN: It seems there’s a lot of cultural creativity. One issue is it may have required some hardship, but that’s not my point. It requires some sense of a cultural identity to motivate it — that the people making it want to express something about their lives, their history, their communities. And to them it’s not color-blind.

HUGHES: Interesting. My counterargument to that would be, insofar as I understand the early history of jazz, it was heavily more racially integrated than American society was at that time. In the sense that the culture of jazz music as it existed in, say, New Orleans and New York City was many, many decades ahead of the curve in terms of its attitudes towards how people should live racially: interracial friendship, interracial relationship, etc. Yes, I’d argue the ethos of jazz was more color-blind, in my sense, than the American average at the time.

COWEN: But maybe there’s some portfolio effect here. So yes, Benny Goodman hires Teddy Wilson to play for him. Teddy Wilson was black, as I’m sure you know. And that works marvelously well. It’s just good for the world that Benny Goodman does this.

Can it still not be the case that Teddy Wilson is pulling from something deep in his being, in his soul — about his racial experience, his upbringing, the people he’s known — and that that’s where a lot of the expression in the music comes from? That is most decidedly not color-blind, even though we would all endorse the fact that Benny Goodman was willing to hire Teddy Wilson.

HUGHES: Yes. Maybe — I’d argue it may not be culture-blind, though it probably is color-blind, in the sense that black Americans don’t just represent a race. That’s what a black American would have in common — that’s what I would have in common with someone from Ethiopia, is that we’re broadly of the same “race.” We are not at all of the same culture.

To the extent that there is something called “African American culture,” which I believe that there is, which has had many wonderful products, including jazz and hip-hop — yes, then I’m perfectly willing to concede that that’s a cultural product in the same way that, say, country music is like a product of broadly Southern culture.

COWEN: But then here’s my worry a bit. You’re going to have people privately putting out cultural visions in the public sphere through music, television, novels — a thousand ways — and those will inevitably be somewhat political once they’re cultural visions. So these other visions will be out there, and a lot of them you’re going to disagree with. It might be fine to say, “It would be better if we were all much more color-blind.” But given these other non-color-blind visions are out there, do you not have to, in some sense, counter them by not being so color-blind yourself and say, “Well, here’s a better way to think about the black or African American or Ethiopian or whatever identity”?

Interesting throughout.

Dean Ball on the new California AI bill (from my email)

SB 1047 was written, near as I can tell, to satisfy the concerns of a small group of people who believe widespread diffusion of AI constitutes an existential risk to humanity. It contains references to hypothetical models that autonomously engage in illegal activity causing tens of millions in damage and model weights that “escape” from data centers—the stuff of science fiction, codified in law.

The bill’s basic mechanism is to require developers to guarantee, with extensive documentation and under penalty of perjury, that their models do not have a “hazardous capability,” either autonomously or at the behest of humans. The problem is that it is very hard to guarantee that a general-purpose tool won’t be used for nefarious purposes, especially because it’s hard to define what “used” means in this context. If I use GPT-4 to write a phishing email against an urban wastewater treatment plan, does that count? Under this bill, quite possibly so.

If, back in the 70s, Steve Jobs and Steve Wozniak had to guarantee that their computers would not be used for serious crimes, would they have been willing to sign with potential jail time on the line? Would they have even bothered to found Apple?

Finally, because of its requirements (or very strong incentives) for developers to monitor and have the means to shut off a user’s access, the bill could make it nearly impossible to open-source models at the current AI frontier—much less the frontiers of tomorrow.

And here is Dean’s Substack on emerging technology (including AI) and the future of governance.