Category: Law

Money lending and the origins of anti-Semitism

We study the role of economic incentives in shaping the coexistence of Jews, Catholics, and Protestants, using novel data from Germany for 1,000+ cities. The Catholic usury ban and higher literacy rates gave Jews a specific advantage in the moneylending sector. Following the Protestant Reformation (1517), the Jews lost these advantages in regions that became Protestant. We show (i) a change in the geography of anti-Semitism with persecutions of Jews and anti-Jewish publications becoming more common in Protestant areas relative to Catholic areas; (ii) a more pronounced change in cities where Jews had already established themselves as moneylenders. These findings are consistent with the interpretation that, following the Protestant Reformation, Jews living in Protestant regions were exposed to competition with the Christian majority, especially in moneylending, leading to an increase in anti-Semitism.

That is from a new AER piece by Sascha O. Becker and Luigi Pascali.

Sludge Audits

Consumers, employees, students, and others are often subjected to “sludge”: excessive or unjustified frictions, such as paperwork burdens, that cost time or money; that may make life difficult to navigate; that may be frustrating, stigmatizing, or humiliating; and that might end up depriving people of access to important goods, opportunities, and services. Because of behavioral biases and cognitive scarcity, sludge can have much more harmful effects than private and public institutions anticipate. To protect consumers, investors, employees, and others, firms, universities, and government agencies should regularly conduct Sludge Audits to catalogue the costs of sludge, and to decide when and how to reduce it. Much of human life is unnecessarily sludgy. Sludge often has costs far in excess of benefits, and it can have hurt the most vulnerable members of society.

That is the abstract of a new paper by Cass Sunstein.

Caplan, Weinersmith, and Open Borders

Caplan and Weinersmith, in their splendid forthcoming graphic novel, present some rebuttals to the “cultural critique” of open borders.  For instance (and here I am presenting their views):

1. The average immigrant has political views which poll as pretty close to those of the average American.  They don’t even by huge margins favor more immigration.  (The author do admit that low-skilled immigrants do favor significantly less free speech, in any case on all of these points they do present actual numbers and visuals.)

2. Support for the welfare state remains strong in Western European nations, even as they have taken in many more migrants.

3. Open borders once before produced American political culture.

4. In “deep roots” terms, the United States already has a mediocre ancestry score, yet America has very high gdp and relatively strong political institutions.

5. There is an extended response to Garett Jones on IQ which I do not feel I can summarize well.  Toward the end, it is noted that babies adopted from poorer countries into richer countries typically do very well later in life.

6. The end of this chapter proclaims: “Open borders won’t destroy our freedom.  It’s going to bring freedom to all of mankind.”

I will again repeat my earlier point: the value and import of this new book does not very much depend on your actual opinion of open borders.  Still, if you would like to hear my views, I’ll repeat my earlier discussion:

And no I do not favor open borders even though I do favor a big increase in immigration into the United States, both high- and low-skilled.  The simplest argument against open borders is the political one.  Try to apply the idea to Cyprus, Taiwan, Israel, Switzerland, and Iceland and see how far you get.  Big countries will manage the flow better than the small ones but suddenly the burden of proof is shifted to a new question: can we find any countries big enough (or undesirable enough) where truly open immigration might actually work?

In my view the open borders advocates are doing the pro-immigration cause a disservice.  The notion of fully open borders scares people, it should scare people, and it rubs against their risk-averse tendencies the wrong way.  I am glad the United States had open borders when it did, but today there is too much global mobility and the institutions and infrastructure and social welfare policies of the United States are, unlike in 1910, already too geared toward higher per capita incomes than what truly free immigration would bring.  Plunking 500 million or a billion poor individuals in the United States most likely would destroy the goose laying the golden eggs.  (The clever will note that this problem is smaller if all wealthy countries move to free immigration at the same time, but of course that is unlikely.)

In any case, do buy the Caplan and Weinersmith book.  I have now begun to think there should be a book like this, or two, for every major political issue of import.

*Open Borders: The Science and Ethics of Immigration*

That is the already-bestselling graphic novel by Bryan Caplan and Zach Weinersmith, and I would just like to say it is a phenomenal achievement.  It is a landmark in economic education, how to present economic ideas, and the integration of economic analysis and graphic visuals.  I picked it up not knowing what to expect, and was blown away by the execution.

To be clear, I don’t myself favor a policy of open borders, instead preferring lots more legal immigration done wisely.  But that’s not really the central issue here, as I think Caplan and Weinersmith are revolutionizing how to present economic (and other?) ideas.  Furthermore, they do respond in detail to my main objections to the open borders idea, namely the cultural problems with so many foreigners coming to the United States (even if I am not convinced, but that is for another blog post).  Even if you disagree with open borders, this book is one of the very best explainers of the gains from trade idea ever produced, and it will teach virtually anyone a truly significant amount about the immigration issue, as well as economic analytics more generally.

There is more actual substance in this book than in many a purely written tome.

It will be out in October, you can pre-order it here.

Getting serious in the privacy wars

A three-hour drive north of the Philippine capital Manila, local leaders have drawn a line in the sand against a swelling tide of scuttlebutt and innuendo.

They outlawed gossip.

In a world awash with fake news and online rumors, more than half a dozen neighborhoods in Binalonan have introduced an anti-gossip ordinance to put an end to too much idle chitchat. Town Mayor Ramon Guico III says the worst time is during the summer, when the scorching heat pushes people to huddle beneath the broad branches of century-old acacia trees, sipping soft drinks or munching on snacks in the shade.

“That’s how it starts,” he complains.

The chin-wagging usually revolves around who might be cheating on their spouse or running up debts. Facebook and messaging apps worsened the problem, but Mr. Guico says the really damaging stuff is gossip— the sort of thing your mother might have warned you about…

The first offense starts with a fine of 500 pesos, or around $10, followed by an embarrassing afternoon spent picking up trash.

Here is the full James Hookway piece at the WSJ.

Slavery is usually worse than you think

The men were allowed to come on deck night and day if they wished, but it was the rule to whip the Negro men if they went in the hold with the women.  Aboard the Creole, sex was apparently (and, it turned out, wrong) deemed a greater threat than slave rebellion.  Gonorrhea, according to slaveholding commonplace, was a disease “generally contracted among Negroes en route who are brought for sale.”  A number of different traders had their slaves aboard the ship, and segregating them by sex was a way to keep one slaveholder’s slaves from diminishing the value of another’s by passing a disease — or starting a pregnancy.

That is from Walter Johnson, Soul By Soul: Life Inside the Antebellum Slave Market.

Not Going Postal

Dueling declined as state capacity, measured by post offices, expanded:

Abstract: Scholars have long tried to understand the conditions under which actors choose to use violent versus non-violent means to settle disputes, and many argue that violence is more likely in weakly-institutionalized settings. Yet, there is little evidence showing that increases in state capacity lowers the use of violent informal institutions to resolve disputes. Utilizing a novel dataset of violence — specifically, duels — across American states in the 19th Century, we use the spread of federal post offices as an identification strategy to investigate the importance of state capacity for the incidence of violent dispute resolution. We find that post office density is a strong, consistent, and negative predictor of dueling behavior. Our evidence contributes to a burgeoning literature on the importance of state capacity for development outcomes.

Hat tip: Kevin Lewis.

Counterfactuals about social media

Let’s assume, for purposes of argument, that basically all of the complaints about social media are correct.  Then let’s also imagine, as Matt Yglesias periodically suggests on Twitter, that Facebook is shut down altogether, toss in Twitter and the others as well.

What would happen?

One possibility is that America would move toward a Chinese-style solution, with heavy censorship of the internet.  Still, I think both public opinion and the First Amendment make that outcome unlikely.  Furthermore, while the Chinese solution has been relatively practicable (as opposed to desirable) to date, there is no guarantee that will continue to be the case.

Alternatively, without tight censorship substitutes for Facebook and Instagram and YouTube and Twitter will arise, possibly based in other countries if regulation so dictates.  They might be less ad-funded, less profitable, and less easy to use, but the basic technologies for “putting every single idea out there” are already out of the box.  Furthermore, it won’t be that hard to find and circulate those ideas, including the very bad ones, through a mix of aggregation and search and focused spread and redistribution.

The first question is whether anyone actually thinks that such a world of less heavily capitalized communications entities would lead to greater responsibility.  The first cut answer, drawing on basic economics, would seem to be no.

The broader point is the relative popularities of various ideas and sources still will be upended, just as the printing press and radio also had some fairly radical (and not entirely positive) effects in their times.  In essence, various intellectual and ideological debates will need to be re-litigated and re-fought over the internet, just as they were redone over television and radio, or earlier through papyrus and also clay tablets, of course with somewhat different results each time.

Many people hate that reality, but a reality it is.  Let’s even say you are right to hate that reality (NB: not exactly my view).

Should you:

a) Go after the companies that make the clay tablets?

b) Go after the clay tablets and try to smash them?

c) Equip yourself to try to win the new intellectual and ideological battles for hearts and minds?

And what should we infer about the spiritual vigor of a society that might so heavily promote options a) and b)?

Sentences to ponder

In fact, recognising a face is only the first step of biometric surveillance, he suggests. “It’s really like an entry-level term to much broader, deeper analysis of people’s biometrics. There’s jaw recognition — the width of your jaw can be used to infer success as CEO, for example. Companies such as Boston-based Affectiva are doing research that analyses faces in real time, to determine from a webcam or in-store camera if someone is going to buy something in your store.”

Other analyses, he adds, can be used to determine people’s tiredness, skin quality and heart rate, or even to lip-read what they are saying. “Face recognition is a very deceiving term, technically, because there’s no limit,” he concludes. “It ends ultimately only with your DNA.”

That is from Madhumita Murgia at the FT.

Tooth extraction markets in everything

Dozens of medical professionals in seven states were charged Wednesday with participating in the illegal prescribing of more than 32 million pain pills, including doctors who prosecutors said traded sex for prescriptions and a dentist who unnecessarily pulled teeth from patients to justify giving them opioids…

Another Alabama doctor allegedly prescribed opioids in high doses and charged a “concierge fee” of $600 per year to be one of his patients.

By Sari Horwitz and Scott Higham, there is more of interest at the link.  For the pointer I thank Harrison Brown.

Are volunteers better fighters?

It seems so:

A voluntary army’s quality exceeds or falls below a drafted army’s average quality depending on whether selection is advantageous or adverse. Using a collection of data sets that cover the majority of the US Army soldiers during World War II, we test for adverse selection into the army. Rather, we find advantageous selection: volunteers and drafted men showed no significant difference in fatalities, but volunteers earned distinguished awards at a higher rate than drafted men, particularly after the attack on Pearl Harbor. Analyses at the level of units concur with our findings based on enlistment records.

That is from a newly published article by Javier A. Birchenall and Thomas G. Koch, via Robin Hanson.

Solve for the (tri-state) equilibrium

New York recently approved congestion pricing, a plan to make it more expensive to drive into the heart of Manhattan. Officials in New Jersey are enraged and have griped, half-jokingly, that it will cost less to travel to California than to cross the Hudson River.

And they are vowing revenge.

The mayor of Jersey City suggested that New Jerseyans should toll New Yorkers entering their state.

Here is more from Emma G. Fitzsimmons at the NYT.

Tax returns should not be made public information

That is the topic of my latest Bloomberg column, here is an excerpt:

This idea has been suggested recently by Binyamin Appelbaum of The New York Times and also Matt Yglesias of Vox. In Norway it has been policy since 1814 and Finland does something similar.

I’m afraid, though, that universal tax transparency would boost U.S. economic inequality, take away second chances and devastate privacy.

And:

Or think about the dating market. Tax transparency would give high-earning men and women a bigger advantage and hurt their lower-earning competitors. Do we really wish to do that in an age of growing income inequality and diminished upward mobility?

Is it better if your parents and all your friends can see how well your new job is going or how much in royalties your last book earned? As it stands, we exist in a slightly more comfortable social equilibrium where your close associates assume the best or at least give you the benefit of the doubt. Transparency of earnings would increase stress and make failure and disappointment all too publicly evident. Or entrepreneurs with long-term projects which are going to make it — but not right away — might face too many social or family pressures to quit.

Snooping through the tax system would definitely happen. Evidence from Norway indicates that in 2007, 40 percent of Norwegian adults checked somebody’s tax information online, higher than the penetration of Facebook in Norway. Anonymity of the snooper was removed in 2014, and visits fell dramatically (88 percent by one measure), but still you can imagine paying others to snoop for you or the information eventually getting out over time.

The result of tax-record publication was that “this game of income comparisons negatively affected the well-being of poorer Norwegians while at the same time boosting the self-esteem of the rich,” according to Ricardo Perez-Truglia, a UCLA economics professor writing last week in VoxEU. There’s even a smartphone app that creates income leaderboards from the data on your Facebook friends.

Just as personal freedom and economic freedom are not so easily separable, the same is true for personal privacy and financial privacy.  Are there actually people out there worried about Facebook privacy violations who wish to make all tax returns public and on-line?

Should we break up the big tech companies?

That is my piece in the Globe and Mail, excerpted with edits from my new Big Business: A Love Letter to an American Anti-Hero, here is one excerpt:

Furthermore, it is striking just how effective the major tech companies have been as innovators. Other than providing the best free search in the world, Alphabet – the umbrella corporation under which Google is a subsidiary – gave us Gmail, one of the best and biggest e-mail services in the world, for free. Google Maps, which is also free, is pretty neat, too.

Then, despite the risks identified by critics of the deal – that YouTube appeared to be a bottomless pit for copyright-violation suits and nasty comments – Google bought the streaming-video service for US$1.65 billion, and dramatically upgraded it. Google cleaned up the legal issues, using its advanced software capabilities to spot copyright violations while enforcing takedown requests, improving search and heavily investing in the technology that has helped make video so widely used on the internet today.

In 2005, Google purchased Android and elevated the company’s open-source system to the most commonly used cellphone software in the entire world. Because of the Google-Android combination, hundreds of millions of people have enjoyed better and cheaper smartphones. More generally, Google has made most of its software open-source, enabling others to build upon it with additional advances, with entire companies now devoted to helping other companies build upon that infrastructure – meaning Google has not likely been the major beneficiary of its own actions.

Google, by way of Alphabet, has taken a lead role in developing self-driving vehicles and the underlying artificial intelligence, now being developed through Waymo; by throwing its weight behind this, Alphabet made the concept more publicly acceptable, and it could potentially save many lives on the road. After Hurricane Maria devastated Puerto Rico, Alphabet also stepped in to do good, deploying its work-in-progress Project Loon to restore internet access, which may eventually be integral for remote areas in Africa. It’s a bold attempt to create a better and more connected living situation for some of the world’s more vulnerable people.

All that from a company that is just a little more than 20 years old. Is this really the kind of company we should be punishing?

There are other points of interest at the link.