Category: Law

Scotland Trainspotting fact of the day

Last year there were 1,187 drug-related deaths in Scotland, a record, and a staggering increase of 27 percent from the year before. Overdoses are more common in Scotland, by some measures, than even in the United States.

And:

Scotland wasn’t always the “sick man of Europe.”

Until around 1950, life expectancy there was on par with most of Western Europe, or better. But after World War II, things in Scotland improved more slowly than in any other Western European country.

If you would like an anecdote:

Mr. Nugent had been using the drug on and off since he was 19, but overdosed the first time he shot up again. He has overdosed three more times since last year.

“I’ve nearly died four times,” said Mr. Nugent, who turns 43 this month. “It’s getting harder for me to recover as I get older.”

Here is the full NYT story by Allison McCann.

Net neutrality for me but not for thee?

To be perfectly clear, I would prefer that 8chan did not exist. At the same time, many of those arguing that 8chan should be erased from the Internet were insisting not too long ago that the U.S. needed to apply Title II regulation (i.e. net neutrality) to infrastructure companies to ensure they were not discriminating based on content. While Title II would not have applied to Cloudflare, it is worth keeping in mind that at some point or another nearly everyone reading this article has expressed concern about infrastructure companies making content decisions.

That is from the excellent Ben Thompson and yes you should pay for his tech email newsletter.

Why not more annuities?

From a reader in the know:

Annuities are often unappealing because they’re expensive, and they’re expensive because of the capital rules and market dynamics. Capital rules make it challenging for insurers to back annuities with anything but investment grade debt. Using a 50/50 A/BBB portfolio would require capital of about 5% of annuity premium. Additionally these products never sell without the intervention of a sales rep, who will require a commission of 3-10% depending on annuity type.

So now the insurer’s shareholders have committed 10% of premium and need to earn a return on that equity. If I target an ROE of 12% (common in the industry), I need to earn a net 120 bps of spread (and more to amortize the commission!). So in effect, the customer is paying to get a treasury yield or worse. It’s understandable why they may prefer to take their chances with more traditional investments.

Open Borders in Svalbard!

Well north of Iceland there is a island archipelago that is governed by Norway but because of a peculiar treaty it has entirely open borders:

When you land in Longyearbyen, the largest settlement in the Norwegian archipelago of Svalbard, you can step off the plane and just walk away. There’s no passport control, no armed guard retracing your steps, no biometric machine scanning your fingers. Svalbard is as close as you can get to a place with open borders: As long as you can support yourself, you can live there visa-free.

In an excellent piece in The Nation, Atossa Araxia Abrahamian describes the history and what it is like to visit:

Formally, Svalbard—known as Spitsbergen until the 20th century—belongs to Norway, which writes the laws, enforces order, builds infrastructure, and regulates hunting, fishing, and housing. Last year, when a Russian man was caught trying to rob a bank in town, a Norwegian judge sentenced him under Norwegian law to a Norwegian jail. But Norway’s control over Svalbard comes with obligations outlined by an unusual 1920 treaty signed as part of the Versailles negotiations ending World War I.

Written in the aftermath of the war, the Svalbard Treaty is both of and ahead of its time. Its architects stipulated that the territory cannot be used for “warlike” purposes. They included one of the world’s first international conservation agreements, making Norway responsible for the preservation of the surrounding natural environment. The treaty also insists that the state must not tax its citizens more than the minimum needed to keep Svalbard running, which today typically amounts to an 8 percent income tax, well below mainland Norway’s roughly 40 percent.

Most radically, the treaty’s architects held Norway to what’s known as the nondiscrimination principle, which prevents the state from treating non-Norwegians differently from Norwegians. This applies not just to immigration but also to opening businesses, hunting, fishing, and other commercial activities. Other countries could not lay formal claims on Svalbard, but their people and companies would be at no disadvantage.

Some 37 percent of Svalbard’s population is foreign born and there is an abandoned Soviet town with statues of Vladmir Lenin. Tyler will also be pleased to know that there are puffins.

I can’t say that I am tempted to move, but given global climate change it’s good to know that I could.

Hat tip: The Browser.

The Pigouvian culture and polity that is Sweden

A Swedish town has become the first in the country to introduce an official begging permit, requiring anyone who asks for money in the street to pay SEK 250 (£21) upfront for a licence.

Valid for three months, the permit can be obtained by filling in a form online or at a police station and requires a valid ID. Anyone found begging for money in Eskilstuna, west of Stockholm, without one faces a fine of up to SEK 4,000 (£342).

Here is much more, via Shaffin.  Note that some beggars are trying to circumvent the ban by “selling blueberries.”

Gun policy suggestions from Jennifer Doleac

Several programs are at least worthy of consideration. Summer jobs programs for teens reduce mortality by 18 to 20 percent among participants. This effect is driven by a reduction in young men killed by homicide or suicide. Cognitive behavioral therapy for at-risk young men lowers violent crime arrests by 45 to 50 percent for participants. Access to Medicaid in early childhood decreases suicide by 10 to 15 percent later in life. Mandating that health insurance cover mental health benefits at parity reduces the suicide rate by 5 percent. Access to antidepressants also reduces suicide rates: An increase in antidepressant sales equivalent to one pill per capita reduced suicide by 5 percent.

In addition, repealing duty-to-warn laws for mental health providers—which require that they report a patient’s violent threats, perhaps causing patients to be less honest—could reduce teen suicides by 8 percent and decrease homicides by 5 percent. Repealing juvenile curfews could lower urban gunfire by two-thirds. And if the goal is to reduce mortality in general—not just gun deaths—then there are many more options policymakers should consider.

Here is more.  I don’t read her as endorsing all of those uncategorically, simply as noting that many available options are on the table.

The parrot culture that is British the First Amendment is underrated

British newspapers can legitimately mock parrots and compare them to psychopaths, the press regulator has ruled, after an unsuccessful complaint that the Daily Star misrepresented the emotions of a pet bird.

The Independent Press Standards Organisation (Ipso) rejected the complaint after the tabloid mocked a “pain-loving parrot” which it Photoshopped with a flat cap to look like a violent character from the TV show Peaky Blinders.

Here is enough more, via Michelle Dawson.

Collective reputation matters for firms

This paper uses the 2015 Volkswagen emissions scandal as a natural experiment to provide evidence that collective reputation externalities matter for firms. We find that the Volkswagen scandal reduced the U.S. sales of the other German auto manufacturers—BMW, Mercedes-Benz, and Smart—by about 105,000 vehicles worth $5.2 billion. The decline was principally driven by an adverse reputation spillover, which was reinforced by consumer substitution away from diesel vehicles and was partially offset by substitution away from Volkswagen. These estimates come from a model of vehicle demand, the conclusions of which are also consistent with difference-in-differences estimates. We provide direct evidence on internet search behavior and consumer sentiment displayed on social media to support our interpretation that the estimates reflect a reputation spillover.

That is from a new NBER Working Paper by Ruediger Bachmann, Gabriel Ehrlich, Ying Fan, and Dimitrije Ruzic.

The Venetian electoral college

For more than five centuries (from 1268 to 1797) the procedure to elect the doge (chief of state) did not change.

  1. Choose 30 members of the Great Council by lot.
  2. These 30 people are reduced by lot to 9.
  3. These 9 people choose 40 other people.
  4. These 40 are reduced by lot to 12.
  5. These 12 people choose 25 other people.
  6. These 25 people are reduced by lot to 9.
  7. These 9 people choose 45 other people.
  8. These 45 people are reduced by lot to 11.
  9. These 11 people choose 41 other people.
  10. These 41 people elect the doge.

Funny that many Americans blame their electoral system for being complicated. You may think what you want about the Venetian system but it guaranteed what was probably the most stable government in the history of mankind.

That is from Alexey Tereshchenko on Quora, cited in this excellent post on the success of Venice.

My Conversation with Kwame Anthony Appiah

Here is the audio and transcript.  We covered Ghana, Africa more generally, cosmopolitanism and the resurgence of nationalism, philosophy and Karl Popper, Lee Kuan Yew, the repatriation of cultural objects, Paul Simon, the smarts of Jodie Foster, sheep farming in New Jersey, and the value of giving personal advice.

Here is one excerpt:

COWEN: Take Pan-Africanism. Do you think, in the broader course of history, this will go down as merely a 20th-century idea? Or is Pan-Africanism alive and well today?

APPIAH: Pan-Africanism involves two different big strands. One is the diasporic strand. The word Pan-Africanism and the Pan-African Congresses were invented in the diaspora by people like Sylvester Williams in Jamaica and W. E. B. Du Bois from the United States and Padmore.

That idea of a diasporic African identity seems pretty lively in the world today, though it doesn’t produce much actual politics or policy, but the sense of solidarity of people of African descent, of the African diaspora seems pretty strong to me.

COWEN: But strongest outside of Africa in a way, right?

APPIAH: Yes, where it began. In Africa, I think, on the one hand, that most contemporary sub-Saharan Africans do have a sense of themselves as belonging to a kind of Black African world. But if you ask them to do something practical about it, like take down borders or do more political integration, I don’t know that that is going to go anywhere anytime soon, which I regret because I think, for lots of reasons, it would be . . .

My sister and her husband live in Lagos. If they want to go to Accra by road, they have to cross the border between Nigeria and Benin, the border between Benin and Togo, the border between Togo and Ghana. And at each of those borders, they probably have to interact with people who are going to try and extract an illegal tax on them.

COWEN: Easier to fly to London, right?

APPIAH: Much easier to fly to London and back to Accra. That’s crazy. And we’ve had these weird things. On the one hand, there’s probably a million Ghanaians in Nigeria, living Ghanaian citizens.

And:

COWEN: Is cosmopolitanism not only compatible with nationalism, but in a way quite parasitic upon it? And in a sense, the parasite is being ejected a bit? Think back to your boyhood in Kumasi. You have all these different groups, and you’re trading with them. You see them every day, and that works great, but there’s some central coherence to Ghana underlying that.

You go to Lebanon today — that central coherence seems to have been gone for some time. You could call Lebanon a cosmopolitan place, but it’s not really an advertisement for Lebanon the way it’s worked out. Are we just moving to a new equilibrium, where the parasitism of cosmopolitanism is now being recognized for what it really is?

APPIAH: I don’t like the metaphor of the parasite.

[laughter]

APPIAH: But yes, I do want to insist that cosmopolitanism . . . Look, cosmopolitanism, as I said, does not only require, or the right kind of cosmopolitan requires a kind of rootedness, but its point, precisely, is that we are celebrating connections among different places, each of which is rooted in its own something, each of which has its distinctive virtues and interest, each of which has its own history. And we’re making connections with people for whom that place is their first place, just as I am in a place which is my first place.

So yes, cosmopolitanism requires, I think, a national sense of solidarities that are not global. That’s why, as I say, you can be a cosmopolitan patriot. Now, if the nationalist says, “Okay, but why do we need anything beyond national citizenship?” The answer is, we have a world to manage. The economy works better if we integrate.

There is much, much more at the link, self-recommending…

More on street-by-street zoning

A number of commentators on my recent column have suggested that allowing street-by-street zoning would lead to more restrictionist outcomes than under the status quo.  It might well be true that the improvement will be zero, but if new construction already is constrained at zero perhaps matters won’t get much worse.  I see two reasons, however, for believing a number of streets would be willing to make bold or at least modest experiments in the direction of more development.

First, if you are considering more development for a larger area, say half of a county, you might worry that traffic problems will become much worse and thus the veto rights will prevail.  In contrast, if a street of say thirty homes decides to add three homes more, they probably are less worried about the net traffic impact of that very small decision (unless running kids over in that very street is the main worry).  Of course, if every street makes a matching decision, aggregate traffic still will go up a lot.  But in essence, by breaking the problem down street by street, the traffic veto motives are weakened in prisoner’s dilemma-like fashion.

Of course you might think all that extra traffic and development is a bad thing, but that is a different and indeed opposite critique from fearing excess restrictionism.

Second, a lot of streets just aren’t up to making these decisions across a long series of legally complex variables.  I can well imagine that generalized holding companies spring up to represent individual streets in their negotiations with the municipality/county/developer — whatever.  Imagine negotiating companies funded by the developers, whether directly or indirectly, which in turn fund additional amenities for the street whenever new revenue is generated by a micro-local decision.  Coase!  “Well…if you will accept these five new homes, the developer will donate some money to park maintenance and a scholarship at the K-12 school.”  It might not even amount to illegal bribery.

I don’t think street-by-street zoning is “the answer” to NIMBY, rather it is one idea worth experimenting with on a limited basis.  If it works well, it can spread.  If you start trying it in already NIMBY-dysfunctional areas, I just don’t see the downside.

*Our Man: Richard Holbrooke and the End of the American Century*

By George Packer, I thought this book would be dull, but in fact it is interesting throughout.  Holbrooke, if you don’t already know, was a lifetime American diplomat, but much more than that too.  Here is one excerpt:

After the evacuation of dependents and the arrival of ground troops in 1965, South Vietnam became a vast brothel.  But even before there were half a million Americans, sex was an elemental part of the war.  “I have the theory that if the women of Vietnam had big copper spoons through their noses and looked like Ubangis,” a reporter once said, “this war wouldn’t have lasted half as long, and maybe wouldn’t have even started.”  The whole scene repelled the Boston Puritan Henry Cabot Lodge.  “I not only don’t wanna,” he said, “I don’t wanna wanna.”

A vivid passage to be sure, but two points.  First, why call the one sensible guy a “Puritan”?  (Yes, the Puritans in fact were great, but I don’t think the remark is to be taken in that spirit.)  Second, it seems to me that many Ubangi women are likely quite beautiful, and probably I saw some of them while in Ethiopia.  Furthermore, at least these days, it is optional whether they wish to take on the famed “lip plate.”

In any case, I would describe the book as “rollicking.”  You can order it here.

For the recommendation I thank Mr. C. Weber.

Street-by-street zoning

That is the theme of my latest Bloomberg column, think of it as a new way to push for YIMBY.  Here is one excerpt:

I call this idea “street by street zoning,” and it has been outlined in a recent paper by John Myers, co-founder of London YIMBY. The basic idea is simple: Let each street decide on its own how it wants to zone commercial activity, including construction. Of course, in some contexts the deciding entity won’t be a street but rather a block or some other very small neighborhood area.

That might sound a little crazy, like a 1960s hippie commune dream. Yet the idea has hidden potential. If streets chose their own zoning, city-level zoning rules could be quite general and open-ended, opening up the possibilities for more construction and also for more mixed-use neighborhoods. With that liberalizing backdrop, residents on any given street always have the option of more restrictive zoning.

The upside is that street-by-street zoning would allow so much room for experimentation. Some zoning reforms might increase home values; a street might decide to allow for multiple dwellings on a lot (an in-law apartment in a backyard barn?), or make it easier to “upzone” by making it easier to rebuild. And what about allowing, say, a small Sichuan restaurant on each residential street — would that boost home values? Maybe not, but at least there’d be a way to find out.

And:

Some of these problems may be a feature rather than a bug. If outside developers find local communities easier to manipulate than a city-wide board, it may actually result in more new construction. If neighbors on some streets really are not sure what they want, maybe it’s not a bad thing if they are nudged toward approving more new construction.

Imagine dealing with the developers on Coasean terms.  There is much more analysis at the link.

John Maynard Keynes, “National Self-Sufficiency,” 1933

That was then, this is now:

There may be some financial calculation which shows it to be advantageous that my savings should be invested in whatever quarter of the habitable globe shows the greatest marginal efficiency of capital or the highest rate of interest. But experience is accumulating that remoteness between ownership and operation is an evil in the relations among men, likely or certain in the long run to set up strains and enmities which will bring to nought the financial calculation.

I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel–these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national. Yet, at the same time, those who seek to disembarrass a country of its entanglements should be very slow and wary. It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction.

For these strong reasons, therefore, I am inclined to the belief that, after the transition is accomplished, a greater measure of national self-sufficiency and economic isolation among countries than existed in 1914 may tend to serve the cause of peace, rather than otherwise. At any rate, the age of economic internationalism was not particularly successful in avoiding war; and if its friends retort, that the imperfection of its success never gave it a fair chance, it is reasonable to point out that a greater success is scarcely probable in the coming years.

And here is Keynes anticipating Dani Rodrik:

But I am not persuaded that the economic advantages of the international division of labor to-day are at all comparable with what they were. I must not be understood to carry my argument beyond a certain point. A considerable degree of international specialization is necessary in a rational world in all cases where it is dictated by wide differences of climate, natural resources, native aptitudes, level of culture and density of population. But over an increasingly wide range of industrial products, and perhaps of agricultural products also, I have become doubtful whether the economic loss of national self-sufficiency is great enough to outweigh the other advantages of gradually bringing the product and the consumer within the ambit of the same national, economic, and financial organization. Experience accumulates to prove that most modem processes of mass production can be performed in most countries and climates with almost equal efficiency. Moreover, with greater wealth, both primary and manufactured products play a smaller relative part in the national economy compared with houses, personal services, and local amenities, which are not equally available for international exchange; with the result that a moderate increase in the real cost of primary and manufactured products consequent on greater national self-sufficiency may cease to be of serious consequence when weighed in the balance against advantages of a different kind. National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford, if we happen to want it.

Here is the full text, whether or not you agree this is interesting throughout, and the prose is lovely too.