Category: Law

A blow to Canadian rule of law

Canada’s prime minister Justin Trudeau has invoked emergency powers in an attempt to quell protests against mandatory Covid-19 vaccinations that continue to grip the nation’s capital, drawing the ire of some provincial leaders.

Trudeau pledged at a press conference on Monday that use of the powers under the Emergencies Act — which gives the federal government broad authority, including the ability to prohibit public assembly and travel — “will be time-limited, geographically targeted, as well as reasonable and proportionate to the threats they are meant to address”. He also said the military would not be called in to deal with blockades.

Chrystia Freeland, finance minister, said Canadian banks and other financial service providers will be able to immediately freeze or suspend accounts without a court order if they are being used to fund blockades. She also warned companies that authorities will freeze their corporate accounts and suspend insurance if their trucks are being used in the protests.

Here is more from the FT.  Should not the Canadian police be able to solve this issue on their own?

Bram Stoker, Dracula, and Progress Studies

The Dracula novel is of course very famous, but it is less well known that it was, among other things, a salvo in the direction of what we now call Progress Studies.  Here are a few points of relevance for understanding Bram Stoker and his writings and views:

1. Stoker was Anglo-Irish and favored the late 19th century industrialization of Belfast as a model for Ireland more generally.  He also was enamored with the course of progress in the United States, and he wrote a pamphlet about his visit.

2. From Wikipedia:

He was a strong supporter of the Liberal Party and took a keen interest in Irish affairs. As a “philosophical home ruler”, he supported Home Rule for Ireland brought about by peaceful means. He remained an ardent monarchist who believed that Ireland should remain within the British Empire, an entity that he saw as a force for good. He was an admirer of Prime Minister William Ewart Gladstone, whom he knew personally, and supported his plans for Ireland.Stoker believed in progress and took a keen interest in science and science-based medicine.

3. The novel Dracula contrasts the backward world of Transylvania with the advanced world of London, and it shows the vampire cannot survive in the latter.  The Count is beaten back by Dr. Van Helsing, who uses science to defeat him and who serves as a stand-in for Stoker and is the de facto hero of the story.

4. One core message of the novel is “Ireland had better develop economically, otherwise we will end up like a bunch of feudal peasants, holding up crosses to fend off evil, rapacious landowners.”  At the time, the prominent uses of crosses was associated with Irish Catholicism.  And is there a more Irish villain than the absentee landlord, namely Dracula?  Dracula is also the kind of warrior nobleman who, coming from England, took over Ireland.

5. In the novel, science and commerce have the potential to defeat underdevelopment.  Stoker’s portrait of Transylvania, most prominent in the opening sections of the novel, also suggests that “underdevelopment is a state of mind.”  And it is correlated with feuding sects and clans, again a reference to the Ireland of his time, at least as he understood Catholic Ireland.  Here is more on Stoker’s views on economic development and modernization for both Ireland and the Balkans.

6. Stoker was obsessed with “rationalizing” (in the Weberian sense) the employment relation and also the bureaucracy  His first non-fiction work was “The Duties of Clerks of Petty Sessions.”  Progress was more generally a recurring theme in his non-fiction writings, for instance “The Necessity of Political Honesty.”  He called for an Ireland of commerce, education, and without “warring feuds.”

7. For Stoker, sexual repression is needed to further societal progress and economic development, and in this regard Stoker anticipates Freud.  Dracula abides by most laws and norms, except the sexual/cannibalistic ones.  Dracula and Lucy, who give in to their individual desires, end up as the big losers.  For the others, societal order is restored, and the lurid sexuality that pervades the book is dampened by the restoration of order.

8. Christ and Dracula are mirror opposites (the stake, the cross, resurrection at dawn rather than sunset, the role of blood drinking reversed, the preaching of immortality in opposite ways, the inversion of who sacrifices for whom, and more).  A proper societal outcome is obtained when these two opposites end up neutralizing each other.  Stoker’s vision of progress is fundamentally secular.  (See Clyde Leatherdale on all this.)

9. From Hollis Robbins: “Britain’s economic prosperity in the nineteenth century was largely dependent on the adoption of international standards such as Greenwich Mean Time and the universal day, which ensured smooth coordination for trade, legal transactions, railroad travel, and mail delivery. Dracula, whose powers are governed by the sun and the moon rather than clocks and calendars, works to destabilize social coordination. His objective is not only literally to “fatten on the blood of the living,”6 but also more broadly to suck the lifeblood of a thriving commercial economy at the dawn of a global age. Under Dracula’s spell, humans forget the time, becoming listless, unproductive, and indifferent to social convention. At heart, the fundamental battle in Stoker’s Dracula is a death struggle between standard time as an institutional basis for world markets and planetary time governing a primitive, superstitious existence.”

10. In an interview Stoker once said: “I suppose that every book of the kind must contain some lesson, but I prefer that readers should find it out for themselves.”  There are numerous ways to take that remark, not just what I am suggesting.

What does the Truckers Convoy want?

Freedom?  Well, it depends what you mean by that concept.  Here is one relevant bit from from The National Post, hardly a left-wing rag:

“Freedom convoy” supporters convinced that the Governor General can dissolve Parliament on a whim have “absolutely inundated” Rideau Hall with calls over the past week, National Post has learned…

The callers are participants and supporters of the so-called “freedom convoy” that has been occupying the streets around Parliament for a week, demanding that the Trudeau government put an end to all public heath measures (even though the majority of them are under the provincial government’s purview.)

Last week, organizers also published a manifesto billed a “memorandum of understanding” demanding that the Governor General and the Senate unite to force all levels of government to end any COVID-19 measures and vaccine passports, and re-instate all workers laid off due to vaccine requirements.

That has seemingly pushed protesters and their supporters to flood Rideau Hall’s phone and email lines demanding that Mary Simon act, going as far as demanding that she dissolve government and remove Prime Minister Justin Trudeau from power…

It’s useless for protesters to be “calling Rideau Hall or pressuring senators to do something, that’s not how things work,” he added. “It’s a democratic system, and neither the senate nor the Governor General are elected, so they don’t have the democratic legitimacy” to dissolve government.

Originally those memorandum demands came from a group called Canada Unity, a major force behind the Convoy.  Canada Unity has since withdrawn their proposals for a non-democratic transfer of power.  Good for them!  Still, “we withdraw the demands for an anti-democratic coup d’etat that we were promoting a few days ago” is hardly a reason for enthusiastic affiliation.

By the way, here are the responsibilities of the Canadian Governor General.

I’m not suggesting that all of the Convoy members have this particular political vision (though 320,000 signatures on the memorandum were reported), or even that those promoting this idea necessarily “mean it.”  Maybe for many of them it is just a way to stir up trouble.  Still, you can take this as another sign of “incipient knuckleheadism” in the movement.

By the way, I am myself opposed to the idea of governmental mandates for Covid-19 vaccines.  (In part because I feared exactly this kind of backlash, but for liberty reasons too.)  But it is very far from the worst governmental mandate the Canadians have!

Do you know what those people in the trucks actually should do?  Go get vaccinated.

A related group for a while shut down the Ambassador Bridge, which carries 30% of the U.S.-Canada trade.  The Convoy and associated movements are doing a great deal to restrict the free movement of goods and of people, hardly my idea of freedom either.

So I am happy to double down on my previous post.

The incidence of India’s crypto tax

The crypto tax is the first item listed in a section of the budget memo headed “Revenue Mobilization”. The document [PDF] explains that India wants to tax income from crypto-assets at a 30 per cent flat rate.

By comparison, India currently taxes short-term capital gains made by selling shares at 15 per cent. The budget memo also calls for a one per cent tax on sales of cryptographic assets, payable by parties to the transaction, to widen India’s tax base.

Here is the first article link.  As I understand it, the 30% is on net income from crypto, and there is no tax deductions for losses (see this explainer).  (Does the tax define gains “year by year,” or “for each bitcoin sold”?)

I am wondering what is the incidence of this tax.  Presumably India is a price-taker in the crypto market as a whole, so this initiative should not much affect the global price of crypto, unless you take the policy as a signal about other, future crypto taxes to come around the world.

Under one (unlikely) scenario, all Indians were marginal crypto buyers, and so with a 30% tax they just stop holding crypto.  The Coase theorem suggests that others are always willing to bid more, because in many other countries the crypto taxes are lower.

More realistically, many Indians are infra-marginal buyers, with sufficiently high expectations of price appreciation that some of them will stay in the market.  The “saner” marginal buyers will drop out, and sell their crypto to non-Indians, and the most optimistic Indian buyers will stay in.  Looking forward, crypto in India will be shaped by the giddiest and most bullish asset holders, compared to the status quo.  More crypto will be held by fewer, more enthusiastic hands.

The Indian government is also signaling that it will not ban crypto outright.  That ought to increase the demand of the “giddy” buyers all the more.  If you are going to stay in with the higher tax burden, at least you know that bitcoin and other markets will continue in India.

How does the tax affect the value of the rupee?  In the short run, some Indian taxpayers may sell their crypto for rupees, raising the value of the rupee, but probably very slightly.  Longer term, the rupee may be worth less because it is a less effective vehicle for investing in crypto, again with the effect here likely being small.

Otherwise, the demand for non-crypto risky assets in India will increase.  If those assets can be used for loss offsets, they will be relatively more valuable because crypto cannot be so used.

Insofar as India has a local, “India-only” crypto market, new issues there will have to be lower in price to attract buying interest.  That will serve as a tax on those Indians who supply inputs into crypto production.

Indians who have made a great deal from crypto may attempt to give up their Indian citizenship and Indian taxpaying liabilities (how easy is that?).

What else?

Does the Mafia hire good accountants?

Yes, or so it seems:

We investigate if organized crime groups (OCG) are able to hire good accountants. We use data about criminal records to identify Italian accountants with connections to OCG. While the work accountants do for the OCG ecosystem is not observable, we can determine if OCG hire “good” accountants by assessing the overall quality of their work as external monitors of legal businesses. We find that firms serviced by accountants with OCG connections have higher quality audited financial statements compared to a control group of firms serviced by accountants with no OCG connections. The findings provide evidence OCG are able to hire good accountants, despite the downside risk of OCG associations. Results are robust to controls for self-selection, for other determinants of auditor expertise, direct connections of directors and shareholders to OCG, and corporate governance mechanisms that might influence auditor choice and audit quality.

That is from a new paper by Pietro A. Bianchi, jere R. Francis, Antonio Marra, and Nicola Pecchiari, via the excellent Kevin Lewis.

The need to deregulate legal advice

Offering tips on how to fight a suit would probably be illegal. Rules in New York, as in most states, forbid practicing law without a license, and giving individualized advice on how to respond to litigation is generally considered practicing law.

On Tuesday, Upsolve took a step aimed at undoing the catch: It filed a lawsuit against the state attorney general’s office in federal court in Manhattan, arguing that barring nonlawyers from giving the kind of basic advice Upsolve would teach them to offer would violate the First Amendment. Pastor Udo-Okon is a co-plaintiff.

Upsolve says a ruling in its favor would clear the way for thousands of lay professionals — social workers, clergy members, community organizers and the like — to help correct a gigantic imbalance in the legal playing field.

According to a 2020 Pew Charitable Trusts report, at least four million Americans a year are sued over consumer debt. Less than 10 percent retain lawyers, and more than 70 percent of cases end in default judgments against the defendant.

In 2018 and 2019, a total of 265,000 consumer debt suits were filed in city and district civil courts in New York State. Over 95 percent of the defendants were not represented by a lawyer, and of those, 88 percent did not respond to the suit, according to figures from the state court system.

Upsolve’s co-founder, Rohan Pavuluri, called the situation a “fundamental civil rights injustice.”

Here is the full NYT piece, and I am pleased that Emergent Ventures has been an early supporter of their work.

Did Ireland really have a housing bubble?

Ireland was not a story of overbuilding caused by laissez-faire policy, or an experience that defied standard economics. Ireland built very few ghost towns – housing excesses, where they occurred, were a product of government tax policy, rather than irrational markets. And supply and demand perform very well in explaining the trends.

And:

How on earth, you might ask, has Ireland ended up with almost all parts of its policy system trying to get lots more housing built – but the key cogwheel doing its utmost to hold new housing back? The answer, ironically, is Ireland’s own policymakers falling for the myths of the last bubble. It seems that the key personnel of the OPR believe the north-west of the country built too many homes in the 2000s because of state inattention and a wayward market, rather than as the result of extraordinary state effort to bring about that outcome. Without those reliefs, there is now little risk that new homes will be built where there is no long-term need.

Here is more from Ronan Lyons at Works in Progress, volume 6.  Irish housing is for the most part very expensive today. Dublin is one of the most expensive rental markets in the world.  Here is the 2019 NYT on the housing crisis in Ireland:

Homeownership has dropped, evictions and homelessness have climbed sharply, surging demand for rental units has led to a shortage, and soaring rents are fodder for daily conversation, political campaigns and street protests.

So perhaps we should speak of the Irish housing panic of the downturn rather than the bubble of the upturn?  The full history here remains to be written.  Somehow these are episodes most commentators do not wish to revisit.

We need a better tax system for crypto

From N., an MR reader:

I own crypto in 3 different centralized exchanges, two hardware wallets, one software wallet (Metamask), have four cryptos staked in multiple different pools and I also have some cryptos I gained by mining them using my GPUs. I have made 600+ transactions between the exchanges, wallets, and staking pools. I hold 75% of my portfolio and trade the rest. So most of these transactions were for trading one coin for another from which I have profited handsomely in the 2021 bull cycle run.

But I am doing my Crypto taxes right now its an unbelievably complicated nightmare. Prior to 2020 I only held a Coinbase account and I downloaded the tax forms or the transaction list as a .csv file from it and submitted them to my tax advisor. But in 2021 I have gone deeper into crypto and I have purchased hardware wallets, held crypto in soft wallets, DeFi platforms like Aave, staked crypto, mined crypto, and traded crypto between exchanges for lower transaction fees, for coins that are available only in certain centralized and decentralized exchanges, etc etc. Many of these types of crypto transactions are taxed differently and are from different institutions.

So it’s impossible for me to do my crypto taxes easily with just a single tax form from Coinbase. I have to link all my exchanges (and expose all my crypto holdings and trades) to a crypto tax website, I have decided to use Koinly.io which charges $99 to do my taxes. I do not have any other realistic choice.

After I linked all 3 centralized exchanges where I hold crypto, the capital gains estimate Koinly.io gave seemed too large. I realized it was because it was counting the crypto I sent from centralized exchanges like Coinbase to my hardware wallets as a “Sell” so it was counting them as capital gains. I have too many transactions of this nature to manually go through them one by one and mark them as “Transfer” i.e. transfer between my own wallets. So if I want the tax software to do it automatically, I have to expose the public keys of my hardware wallets so Koinly can automatically mark them as transfers. (I haven’t done this step yet because I don’t want to expose my hardware wallet public address to anyone or anywhere and I am researching alternate ways to do this.)

But if there isn’t any other way either a) I have to spend hours going through each transaction manually and marking them as “Transfers” or b) expose the public keys of my hardware wallets to Koinly.io.

Also, there is more manual work to be done for categorizing certain transactions as moved to staking pools, marking transactions from my mining pool to exchanges as income, etc.

I know that fiat currency debit and credit card purchases are absolutely not analogous to crypto but that’s the comparison many crypto maximalists make (“take down the traditional financial and banking system!”).

Imagine if TurboTax needs your complete transaction history from your banking institutions and it goes through all credit and debit card transactions to accurately do your taxes. Would anyone accept that?

How many lives were lost because of the vaccines holdup?

…economist Garett Jones recently opined that Trump’s scuttled hopes to release a COVID-19 vaccine a few weeks earlier “likely would have saved at least 100,000 American lives.”

…Pfizer did not reveal its trial’s favorable results until November 9—six days after the election. The company had originally planned to consider submitting an EUA request to the FDA with just 32 data points; instead it gathered 94, and it waited another 11 days to accrue the requested safety data, plus even more data showing how well the vaccine worked, before making its filing.

…If a compassionate use program for COVID-19 vaccines had gone forward, doctors would have been able to prescribe them to nursing-home residents, even as the vaccine makers completed their clinical trials with integrity and gathered all the safety data requested under the “EUA Plus” requirements.

According to Marks, Birx asked Anthony Fauci and FDA Commissioner Stephen Hahn to encourage Pfizer and Moderna to apply for that program…

The actual timing of the COVID-19 vaccines’ release resulted from a complicated mix of bureaucratic caution, political calculations, and the choices made by vaccine manufacturers. While the benefits of the vaccines have become very clear since then, the precise human cost of that short delay remains a mystery.

Here is the full Brendan Borrell piece in The Atlantic, excellent throughout.  And don’t forget Brendan’s new and exciting book The First Shots: The Epic Rivalries and Heroic Science Behind the Race to the Coronavirus Vaccine.

Via Rich Dewey.

My Israel-only Conversation with the excellent Russ Roberts

Here is the audio, video, and transcript, here is the CWT summary:

In this special crossover special with EconTalk, Tyler interviews Russ Roberts about his new life in Israel as president of Shalem College. They discuss why there are so few new universities, managing teams in the face of linguistic and cultural barriers, how Israeli society could adapt to the loss of universal military service, why Israeli TV is so good, what American Jews don’t understand about life in Israel, what his next leadership challenge will be, and much more.

We didn’t shy away from the tough stuff, here is one question:

COWEN: Let me ask you another super easy question. Let’s say we think that under current circumstances, a two-state solution would not lead to security either for Israel or for the resulting Palestinian state. Many people believe that. Let’s say also, as I think you believe, that a one-state solution where everyone votes would not lead to security for a current version of Israel or even a modified version of it.

Let’s say also that the current reliance of the Palestinian territories on the state of Israel for protection, security, intelligence, water — many important features of life — prevent those governing bodies from ever attaining sufficient autonomy to be a credible peace partner, guaranteer of its own security, and so on. From that point of view, what do we do? We’re not utilitarians. We’re thinking about what’s right and wrong. What’s the right thing to do?

Do read Russ’s answer!  (Too long to excerpt.)  And:

COWEN: Now, the United States has about 330 million people, yet there are more Israeli TV shows I want to watch than American TV shows. There’s Srugim, there’s Shtisel, there’s Prisoners of War, there’s In Judgment, there’s Tehran. There’s more. Why is Israeli TV so good?

ROBERTS: I’m glad you mentioned Prisoners of War, which doesn’t get enough — Prisoners of War is in my top five. If I had to list my top five, I’d pick Shtisel, Prisoners of WarThe Americans, probably The Wire, and The Crown. Do you have a top five that you could reel off?

COWEN: The Sopranos would be my number one. Srugim and Prisoners of War plausibly would be in my top five.

We then consider the Israeli topic at hand.  Interesting throughout, a very good dialogue.

Raise your hand if you think this is a good idea

…if the Food and Drug Administration decides to update Covid-19 vaccines to take better aim at Omicron or other variants, it is unlikely to go it alone.

Instead, a senior FDA official told STAT, the agency expects to take part in an internationally coordinated program aimed at deciding if, when, and how to update Covid-19 vaccines. The approach would ensure decisions are not left solely to individual vaccine manufacturers.

“We can’t have our manufacturers going willy-nilly [saying], ‘Oh well, the EMA decided they wanted this composition, but FDA wanted that composition,’” the official said, referring to the European Medicines Agency. “So we are very much of the mind that we would like to be part of a more global process in helping to come to what vaccine composition there should be now.”

Designed for flexbility and speedy response?  I guess we’ll see.  Here is the full StatNews article.  And obviously, the entire public health community is up in arms about this…

The prisoner’s dilemma for prisoners and Mafia men

We develop experimental evidence on cooperation and response to sanctions by running prisoner’s dilemma and third party punishment games on three different pools of subjects; students, ordinary criminals and Camorristi (Neapolitan ‘Mafiosi’). The latter two groups were recruited from within prisons. Camorra prisoners show a high degree of cooperativeness and a strong tendency to punish defectors, as well as a clear rejection of the imposition of external rules even at significant cost to themselves. The subsequent econometric analysis further enriches our understanding demonstrating inter alia that individuals’ locus of control and reciprocity are associated with quite different and opposing behaviours amongst different participant types; a strong sense of self-determination and reciprocity both imply a higher propensity to punish for Camorra inmates, but quite the opposite for ordinary criminals, further reinforcing the contrast between the behaviour of ordinary criminals and the strong internal mores of Camorra clans.

Here is the paper by Annamarie Nese, et.al., via Ethan Mollick and Ilya Novak.

Where are the Variant Specific Boosters?

I wasn’t shocked at the failures of the CDC and the FDA. I am shocked that our government still can’t get its act together in the third year of the pandemic. Consider how lucky, yes lucky, we have been. Here’s Eric Topol:

…the original vaccines were targeted to the Wuhan ancestral strain’s spike protein from 2019. The spike protein, no less the rest of the original SARS-CoV-2 structure, is almost unrecognizable now in the form of the Omicron strain (see antigenic drift from prior post). While there’s naturally been much focus on the extraordinary number of mutations in the receptor binding domain and the rest of the spike protein, over 50 mutations are spread out throughout Omicron, making the prior major variants of concern (Alpha, Beta, Gamma, Delta) lightweights with respect to changes in structure that are not just linear or uni-dimensional. Each mutation can interact with others (epistasis); any mutation or combination of mutations has the potential to change the 3D structure of the virus. In this sense, Omicron is an overwhelming reboot of the ancestral strain.

Omicron is very different from the Wuhan ancestral strain and it’s only a matter of luck that the vaccines continue to work and that Omicron is likely less severe than Delta. Don’t tell me that viruses evolve to be less severe over time–that isn’t correct in theory or practice. The most one might say is that a very deadly virus may be difficult to transmit but that only closes off a small part of the evolutionary design-space. There is plenty of room for transmission and lethality to both increase. So the vaccines continue to work well. We got lucky. But for how long will our luck last? Do we really have to wait for a more transmissible, more deadly, more vaccine escaping variant before we act?

Where are the variant-specific boosters? The FDA has said they would approve them quickly, without new efficacy trials so I don’t think the problem is primarily regulatory. Why not catch-up to the virus and maybe even get a jump ahead with pan-coronavirus vaccines?

More generally, in our February 2021 paper in Science my co-authors and I argued that we were still leaving trillion dollar bills on the sidewalk by not investing in more vaccine capacity. I am sorry to say that we were right. Why the failure to invest more broadly?

Mostly I blame American lethargy. After 9/11 the country was angry and united and we had troops in Afghanistan within a matter of weeks and we had taken over the country in a matter of months. For better or worse, we acted quickly and with resolve. Yet, when the virus was killing at 9/11 levels every day the public never reached the same level of anger or resolve. Even now Congress has spent trillions on unemployment insurance, business protection, money for schools and stimulus but has not passed the American Pandemic Preparedness Plan, a pretty decent, mostly science-based investment plan.

80,000 hours ranks research and investment against Global Catastrophic Biologic Risk (GCBR) as among the most pressing and yet tractable problems to work on and yet they estimate that quality-adjusted only about a billion dollars is being spent on these risks. Moreover, COVID doesn’t even count as a GCBR, i.e. 80000 hours at least recognizes that things could be much worse.

I understand that future people don’t vote but even so I expected a little bit more foresight.

Australian sentences to ponder

The world number one player was questioned for over seven hours about his paperwork and who had approved medical exemption permission for his arrival in Australia.

Here is the link.  Supposedly the star won his case.  But another source relates:

However, Australia’s immigration minister has said he is “currently considering the matter” and the process of suspending Djokovic’s visa is “ongoing”.

Resentment people, resentment.  And why are the politicians doing so much speaking, rather than say the public health authorities?  I am a fan, however, of Judge Kelly (FT):

Kelly said that Djokovic had been granted a medical exemption and had filled out the necessary paperwork to enter Australia. “The point I am somewhat agitated about is what more could this man have done?” the judge told the court. He also questioned whether Djokovic had adequate time to consult his lawyers and agent after being told he would be deported.

I might even watch some of the tourney.