Category: Law

It’s all about investment, not tariffs and trade wars

I’ve been saying this for a while, here is an excellent piece by Shawn Donnan at the FT:

Since it was first created in 1975 as an inter-agency committee, Cfius has been able to review foreign investments only on narrow national security grounds. But if it adopts the broad Trumpian definition of national security as economic security, this could open a whole new range of transactions to its scrutiny. Might a mid-western auto plant that makes components purely for civilian vehicles suddenly be treated as a national security asset and be banned from foreign ownership?

Presidents have for years resisted efforts in Congress to require Cfius to consider an economic benefits test when it approves large foreign investments, as similar bodies do in countries such as Australia and Canada. Mr Trump, however, seems to be embracing the idea.  Legislation to reform Cfius, which the Trump administration will have broad powers to shape in its implementation, is nearing its final journey through Congress.

Maybe they’ll have to revise the Star Wars prequels too…

Why doesn’t Mexico’s economy grow more quickly?

That is the topic of my latest Bloomberg column, here is one bit:

Instead, it is education that is arguably Mexico’s most fundamental problem. In most emerging economies, if you are ambitious and seek higher wages, you will invest in more education. Mexicans have traditionally had another choice — crossing the border to work in the U.S. Mexicans who make this choice can move from earning a dollar or two a day to 10 or 15 dollars an hour, though with higher living costs. It is hard to beat that boost simply by finishing high school or even college in Mexico.

And:

Admittedly, this [informal, grey or black market] labor can be and often is absorbed into the more formal, more productive sectors of the economy, including exports. But the rate of absorption is quite slow, which in turn helps to set the slow growth rate of the economy. And in any case neither the high-productivity nor the low-productivity firms have that much room to grow within their respective categories, a major difference from many other emerging economies.

The odds are that Mexico will have to opt for the slow but steady long game, as Denmark once did.

Corruption and sensitive soccer games

We utilize data from sensitive soccer games in 75 countries between the years 2001 and 2013. In these games one team was in immediate danger of relegation to a lower division (Team A) and another team was not affected by the result (Team B). Using within-country variation, our difference-in-difference analysis reveals that the more corrupt the country, according to Corruption Perceptions Index, the higher is the probability that Team A would achieve the desired result in the sensitive games relative to achieving this result in other, non-sensitive games against the same team. We also find that in the later stages of the following year, the probability that Team A would lose against Team B compared to losing against a similar team (usually better than Team B) is significantly higher in more corrupt countries than in less corrupt countries. This result serves as evidence of quid pro quo behavior.

That is a recently published paper by Guy Elaad, Alex Krumer, and Jeffrey Kantor.  For the pointer I thank the excellent Kevin Lewis.

Theo asks, and I intersperse my answers

Dear Tyler,

Due to the asymmetry of fame I feel that I know you quite well so I am just going to bombard you with random questions and hope that you see fit to answer some of them.

You seem to value journalism very highly. Is it just out of necessity as a generalist, or does popular writing on a topic have important information that can’t be learned from the academic/scholarly side?

Journalists have to try to explain things that actually happened to other human beings, often educated ones but not specialists either.  It is hard to overrate the importance of that process to developing one’s thoughts and self, no matter what you may think of particular journalists in today’s MSM.

Related: Which elite profession or slice of society is most opaque to journalists and “book-learning” in general? (Oddly some of the categories that come to mind are those which are some of the most written-about – food, sex, friends, law, politics. But it’s probably maths.)

Making things.  Archaeology.  These days, tech.  Maths.  Journalism.

How much less interesting would it be to read Shakespeare if no-one else ever had? Does the answer differ much across top-tier “great” artists?

It would not be less interesting at all, maybe more interesting, because the shock of discovery would be all the greater.  Admittedly, many artists require lots of discussion with other people, maybe rock and roll most of all?  But not Shakespeare.

Overrated vs underrated: The New Yorker. How about Samin Nosrat?

The New Yorker has had a consistent voice and remarkable brand for more decades than I can remember (I recall Patrick Collison making a similar point, perhaps in a podcast?).  Since I am now above the median age for the United States, that makes them underrated.  The literariness of the historical New York and Northeast and the integration of American and European culture also have become underrated topic areas, and The New Yorker still does them, so that too makes the magazine underrated.

And who is Samin Nosrat?  She must therefore be underrated.

Does the world have too many writers, or not enough? What about comparative literature professors? How should we think about the future of literary culture when the written word is becoming so much more culturally dominant at the same time as books and journalism are falling apart?

What variable are we changing at the margin?  If people watch less TV and write more, that is probably a plus.  I also would favor fewer photographs and more writing.  But I wouldn’t cut back on charity to increase the quantity of writing.  If only comparative literature professors were people who simply loved books — at the margin a bit more like used book store owners and somewhat less like professors — and would compare them to each other…then I would want more of them.  Until then, I don’t know how to keep the extra ones busy.

Why does the USA not have open borders with Canada?

I believe America should have open borders with any nation that has a more generous welfare state than we do.  That covers Canada, even though Canadian insurance coverage for mental health and dentistry isn’t nearly as good as you might think.  As to why we don’t have open borders with Canada, I don’t think American voters would see that as solving any concrete problem (can’t we get many of the best Canadians anyway?), and it would feel a bit like giving up control, so why do it?

To what extent are Trump, Brexit, Orban, Erdogan, rising murder rates and stalling trade growth worldwide part of the same phenomenon? If they aren’t completely separate, which way does the contagion run?

Yes, no, and maybe so, get back to me in a few years’ time.

Have a great day…

You too!

Informational autocrats

That is a new and important paper by Sergei M. Guriev and Daniel Treisman, here is the abstract:

In recent decades, dictatorships based on mass repression have largely given way to a new model based on the manipulation of information. Instead of terrorizing citizens into submission, “informational autocrats” artificially boost their popularity by convincing the public they are competent. To do so, they use propaganda and silence informed members of the elite by co-optation or censorship. Using several sources–including a newly created dataset of authoritarian control techniques–we document a range of trends in recent autocracies that fit the theory: a decline in violence, efforts to conceal state repression, rejection of official ideologies, imitation of democracy, a perceptions gap between masses and elite, and the adoption by leaders of a rhetoric of performance rather than one aimed at inspiring fear.

Again, here is my related Bloomberg column from June 18.

And this story is a metaphor for what, what would Baudrillard say?

The US Postal Service has been ordered to pay $3.5m (£2.6m) for copyright infringement after mistakenly using the wrong Statue of Liberty on a stamp.

The Postal Service used the image of sculptor Robert Davidson’s Las Vegas replica on a 2010 stamp design instead of the New York original.

Mr Davidson called his replica “sexier”, and a judge ruled that the statues were indeed “unmistakably” different.

The Postal Service has not commented on the verdict.

In his original 2013 complaint, Mr Davidson said his work gave the American icon a more “fresh-faced, sultry and even sexier” look, US media reported.

Federal Judge Eric Bruggink ruled on 29 June that Mr Davidson was entitled to a share of the US Postal Service’s (USPS) earnings from the stamp.

USPS sold 4.9bn stamps with the Vegas Lady Liberty image, amounting to profits of $70m before it was retired in 2014, according to court documents.

Here is the link, via Michael Rosenwald, who now has a new history podcast series.

U.S.A. facts of the day

In 2000, 55 percent of American playgrounds had seesaws, but only 7 percent did by 2004.

The New York City Department of Parks and Recreation claims it has not installed a new one, except by special request, in over thirty years.  There are now only a few seesaws left in the city.

(TC: As a child, I never had an interest in those infernal things, which seemed to me dangerous and not much fun.)

Most of the “monkey bars” in NYC had been installed by master builder Robert Moses, between 1934 and 1960.

Between 2001 and 2008, about two hundred thousand American children sustained playground injuries, 36 percent of them being broken bones.

That said, Helle Nebelong, a Danish landscape architect, argues that too much uniformity in the environment of children creates other risks, because they come to expect the whole world will be smooth and predictable.  Nature, in particular, is not.

In 1949, “junk” playgrounds were a trend.  They often had paint, nails, and many kinds of secondhand building materials.

The first edition of the Handbook for Public Playground Safety appeared in 1981.

That is all from the new and interesting The Design of Childhood: How the Material World Shapes Independent Kids, by Alexandra Lange.

How well is Germany dealing with the migration crisis?

Anna Sauerbrey offers an optimistic perspective on the actual outcomes (NYT):

For all its shortcomings, Europe has actually managed the crisis quite well, in practice. Its external borders are stronger, and better policed and managed. Cooperation with Libya’s border-patrol militias, however ethically suspect, has brought down the numbers crossing from that country to Italy. So has the agreement with Turkey to host migrants in return for financial aid. In 2015, more than 450,000 pleas for asylum were filed; in 2016, about 745,000. So far this year, there have been only 68,000.

According to figures by the German Federal Agency for Migration and Refugees, only about a quarter of those applying for asylum in Germany in 2018 are already registered in another European country. This means that the C.S.U. risked blowing up the government to push through a regulation that applies to about 100 individuals a day, scattered over all of Germany’s points of entry.

But she is pessimistic about the politics:

Whatever respite Germany may have gained this week is offset, and then some, by the arrival of a new and frightening political dynamic. Mr. Seehofer succeeded by going nuclear; chances are, he won’t be the last. The politics of fear and menace may be here to stay, undermining the foundations of democracy. In sound democracies, policies are the results of compromise between parties representing a majority of the voters. Through the politics of artificial crisis, minorities take the system hostage. They create policies redeeming fictional problems for fictional majorities.

Recommended, this is one of the better takes on the problem I have seen.

Pay more attention to Congress

That is the topic of my latest Bloomberg column.  Here is one excerpt:

Americans’ growing preoccupation with the culture wars has meant a greater focus on the two branches of government where these often symbolic battles are most fought and noticed: the presidency and the Supreme Court. A byproduct is the relative neglect of the third branch, Congress.

This has led to poor governance. Not long ago, the Republicans passed a tax reform bill, in part because they thought voters would like it. Six months later, the bill is losing popularity. The benefits of the bill are not generally transparent, the economy is doing fine anyway, and even diehard Republicans don’t seem so excited.

If you think that exercising the “power of the purse” is one of the most fundamental roles of Congress, this reflects relative voter indifference toward the legislative branch. The incentives are weak for either party to try again to improve the U.S. tax system, and so it will remain distortive and overly complex.

…I would prefer to see the electorate give up some of its current fascination with the Supreme Court and the presidency and take a stronger interest in Congress. For one thing, a change of focus might encourage Congress to check the powers of the president when it comes to trade, foreign policy and immigration.

There is much more at the link.  And Peter Suderman covers related themes (NYT).

Trump understands this, perhaps you do not

Given the very negative baseline views that respondents have of immigrants, simply making them think about immigration in a randomized manner makes them support less redistribution, including actual donations to charities.

That is from research by Alesina, Miano, and Stantcheva.  And don’t forget this:

We also experimentally show respondents information about the true i) number, ii) origin, and iii) “hard work” of immigrants in their country. On its own, information on the “hard work” of immigrants generates more support for redistribution. However, if people are also prompted to think in detail about immigrants’ characteristics, then none of these favorable information treatments manages to counteract their negative priors that generate lower support for redistribution.

The culture that will be Danish Plato’s Republic show them Babette’s Feast?

When Rokhaia Naassan gives birth in the coming days, she and her baby boy will enter a new category in the eyes of Danish law. Because she lives in a low-income immigrant neighborhood described by the government as a “ghetto,” Rokhaia will be what the Danish newspapers call a “ghetto parent” and he will be a “ghetto child.”

Starting at the age of 1, “ghetto children” must be separated from their families for at least 25 hours a week, not including nap time, for mandatory instruction in “Danish values,” including the traditions of Christmas and Easter, and Danish language. Noncompliance could result in a stoppage of welfare payments. Other Danish citizens are free to choose whether to enroll children in preschool up to the age of six.

Denmark’s government is introducing a new set of laws to regulate life in 25 low-income and heavily Muslim enclaves, saying that if families there do not willingly merge into the country’s mainstream, they should be compelled.

That is from Ellen Barry and Martin Selsoe Sorensen at the NYT, interesting throughout.  It seems pretty clear that “culture wars” — in various forms — are the big political issue for some time to come.

Why Sexism and Racism Never Diminish–Even When Everyone Becomes Less Sexist and Racist

The idea that concepts depend on their reference class isn’t new. A short basketball player is tall and a poor American is rich. One might have thought, however, that a blue dot is a blue dot. Blue can be defined by wavelength so unlike a relative concept like short or rich there is some objective reality behind blue even if the boundaries are vague. Nevertheless, in a thought-provoking new paper in Science the all-star team of Levari, Gilbert, Wilson, Sievers, Amodio and Wheatley show that what we identify as blue expands as the prevalence of blue decreases.

In the figure below, for example, the authors ask respondents to identify a dot as blue or purple. The figure on the left shows that as the objective shading increases from very purple to very blue more people identify the dot as blue, just as one would expect. (The initial and final 200 trials indicate that there is no tendency for changes over time.) In the figure at right, however, blue dots were made less prevalent in the final 200 trials and, after the decrease in the prevalence, the tendency to identify a dot as blue increases dramatically. In the decreasing prevalence condition on the right, a dot that previously was previously identified as blue only 25% of the time now becomes identified as blue 50% of the time! (Read upwards from the horizontal axis and compare the yellow and blue prediction lines).

Clever. But so what? What the authors then go on to show, however, is that the same phenomena happens with complex concepts for which we arguably would like to have a consistent and constant identification.

Are people susceptible to prevalence-induced concept change? To answer this question, we showed participants in seven studies a series of stimuli and asked them to determine whether each stimulus was or was not an instance of a concept. The concepts ranged from simple (“Is this dot blue?”) to complex (“Is this research proposal ethical?”). After participants did this for a while, we changed the prevalence of the concept’s instances and then measured whether the concept had expanded—that is, whether it had come to include instances that it had previously excluded.

…When blue dots became rare, purple dots began to look blue; when threatening faces became rare, neutral faces began to appear threatening; and when unethical research proposals became rare, ambiguous research proposals began to seem unethical. This happened even when the change in the prevalence of instances was abrupt, even when participants were explicitly told that the prevalence of instances would change, and even when participants were instructed and paid to ignore these changes.

Assuming the result replicates (the authors have 7 studies which appear to me to be independent, although each study is fairly small in size (20-100) and drawn from Harvard undergrads) it has many implications.

in 1960, Websters dictionary defined aggressionas an unprovoked attack or invasion,but today that concept can include behaviors such as making insufficient eye contact or asking people where they are from. Many other concepts, such as abuse, bullying, mental disorder, trauma, addiction, and prejudice, have expanded of late as well

… Many organizations and institutions are dedicated to identifying and reducing the prevalence of social problems, from unethical research to unwarranted aggressions. But our studies suggest that even well-meaning agents may sometimes fail to recognize the success of their own efforts, simply because they view each new instance in the decreasingly problematic context that they themselves have brought about. Although modern societies have made extraordinary progress in solving a wide range of social problems, from poverty and illiteracy to violence and infant mortality, the majority of people believe that the world is getting worse. The fact that concepts grow larger when their instances grow smaller may be one source of that pessimism.

The paper also gives us a way of thinking more clearly about shifts in the Overton window. When strong sexism declines, for example, the Overton window shrinks on one end and expands on the other so that what was once not considered sexism at all (e.g. “men and women have different preferences which might explain job choice“) now becomes violently sexist.

Nicholas Christakis and the fearless Gabriel Rossman point out on twitter (see at right) that it works the other way as well. Namely, the presence of extremes can help others near the middle by widening the set of issues that can be discussed or studied without fear of opprobrium.

But why shouldn’t our standards change over time? Most of the people in the 1850s who thought slavery was an abomination would have rejected the idea of inter-racial marriage. Wife beating wasn’t considered a violent crime in just the very recent past. What racism and sexism mean has changed over time. Are these examples of concept creep or progress? I’d argue progress but the blue dot experiment of Levari et al. suggests that if even objective concepts morph under prevalence inducement then subjective concepts surely will. The issue then is not to prevent progress but to recognize it and not be fooled into thinking that progress hasn’t been made just because our identifications have changed.

The 8th Amendment Case Against Civil Asset Forfeiture

The Supreme Court has agreed to look at whether the 8th Amendment clause forbidding “excessive fines” applies against the states.

The case in question involves the controversial practice of civil asset forfeiture. Tyson Timbs was convicted and served time and paid fines for selling a small amount of drugs to an undercover officer. The state also launched a civil asset forfeiture case against his car:

…But the trial court ruled against the government. Because taking Tyson’s car would be “grossly disproportionate” to his offense—for which Tyson had already been punished—the trial court held that the forfeiture would violate the Excessive Fines Clause of the Eighth Amendment. The Indiana Court of Appeals agreed. Tyson suffered from drug addiction, the court noted, but his only record of dealing was selling a small amount of drugs to undercover police. The court also noted the “financial burdens” that Tyson had already faced when he pleaded guilty. Taking his car on top of all that would violate the Eighth Amendment.

Then the Indiana Supreme Court stepped in. Breaking with at least 14 other state high courts, the Indiana Supreme Court ruled that the Eighth Amendment provides no protection at all against fines and forfeitures imposed by the states.

…“This case is about more than just a truck,” said Wesley Hottot, an attorney with the Institute for Justice. “The Excessive Fines Clause is a critical check on the government’s power to punish people and take their property. Without it, state and local law enforcement could confiscate everything a person owns based on a minor crime or—using civil forfeiture—no crime at all.”

The case has potentially very wide application, far beyond civil asset forfeiture, because municipal governments desperate for revenue are criminalizing and fining minor infractions (see also my posts on Ferguson, MO and here)

Hilda Brucker went down to the municipal court in October 2016 after receiving a phone call. She hadn’t received a formal summons or known of any wrongdoing; instead, she thought she needed to clear a ticket.

But when she arrived at the Doraville, Georgia, courthouse, Brucker said she was placed before a judge and prosecutor who accused her of violating city code — because of cracks in her driveway.

She was fined $100 and sentenced to six months criminal probation, even though this was the first time she was made aware her driveway was considered a problem.

…About 25 percent of Doraville’s operating budget is reliant on fees and fines, according to IJ, a nonprofit law firm. From August 2016 to August 2017, it raked in about $3.8 million in fines, according to IJ’s lawsuit.

“It’s unconstitutional because it creates a financial incentive for the city government … to ticket people,” Josh House, an IJ attorney on the case, told Fox News. He said people in the town were being “punished” for the condition of their property by having to “fund the Doraville city government.”

The Institute for Justice is doing great work.

San Francisco substitution the rent is too damn high

Restaurateurs who say they can no longer find or afford servers are figuring out how to do without them. And so in this city of staggering wealth, you can eat like a gourmand, with real stemware and ceramic plates. But first you’ll have to go get your own silverware.

…Restaurateurs here have taken a model familiar to taquerias and fast-casual, cafeteria-style places like Sweetgreen and Chipotle Mexican Grill, and pushed it further up the fine-dining food chain. Call it fast-fine, they suggest, or fine-casual. Or counter service “in a full service environment” that includes $11 cocktails and $22 pan-roasted salmon.

By the way, rent is not the only problem:

On July 1, the minimum wage in San Francisco will hit $15 an hour, following incremental raises from $10.74 in 2014. The city also requires employers with at least 20 workers to pay health care costs beyond the mandates of the Affordable Care Act, in addition to paid sick leave and parental leave.

Even the dosa is troubled:

In December, he opened a counter-service version of Dosa in Oakland. The new restaurant serves cardamom- and fenugreek-spiced cocktails. But there’s also a self-service water station, and a busing station for diners inclined to clear their own tables. (If they aren’t, an employee will do the job.)

Here is more from Emily Badger (NYT).  Addendum: Hadur in the comments writes: “Who could have predicted that this would happen in America’s most high-tech city?”

Are asylum rights misguided?

Per capita income in Eritrea is about $600 a year (estimates vary however), and in El Salvador about $8000 a year, PPP-adjusted.  We hear a lot about the horrible violence in El Salvador, and indeed I have been to the country only twice, and yet saw a murdered dead body simply lying alongside the highway.  Here are various anecdotes about the problem, noting that not all of them involve death.  Nonetheless keep in mind that life expectancy in El Salvador is a bit over 73 years.  Life expectancy in Eritrea is about 64.

Yet a person from El Salvador can make his or her way to the U.S. border and plead for asylum rights, often with some justification I might add.  (More generally, the number of asylum seekers from Latin America is rising rapidly.)  It is much harder for an Eritrean to do the same, most of all because there is no direct land route and furthermore the paucity of resources in Eritrea makes almost any kind of action harder to pull off.  Eritreans do however request and sometimes receive asylum rights through the U.S. Embassy in Eritrea itself.

So asylum rights favor El Salvadorans relative to Eritreans, at least once people realize there is an incentive to try to migrate north.  Does that make sense?  In general, Latin American countries are wealthier and healthier than most of the world’s other poorer countries, though they are on average more violent.

To be clear, I do not wish to revoke or limit asylum rights today.  That would lead to less humane outcomes with no offsetting advantage.  But say we were designing an ideal immigration policy from scratch.  Would you not want to pare back asylum rights in return for allowing more legal immigration from very needy countries?

Keep in mind that a stronger chance of asylum rights for Latin Americans, or those in the Caribbean, means more dangerous journeys to get here, and thus a greater exhaustion of “migration rents” through the very process of trying.  It would be possible to offer greater legal migration rights to more Eritreans, if only through a lottery (though I suspect a better method yet can be found), without inducing comparably risky or costly behavior.

Asylum rights still could be kept for situations of special humanitarian, cultural, or political importance, such as the Holocaust, Soviet Jews, or the current situation in Syria.  But ask yourself a simple question: when the genocide was going on in Rwanda, how many Rwandans did the U.S. grant asylum rights to?  Does that not indicate something is broken about the current system?

Consider these figures:

Immigration court records show that more asylum cases were denied over the previous five years than have been granted. In fiscal year 2016, 62 percent of asylum cases were denied, compared with 44.5 percent five years earlier. Among Mexicans and Central Americans, the approval rate is substantially lower.

You might think that is a sign of the system working along the ex post dimension, but it also indicates there is too much ex ante “regulatory arbitrage” across different immigration categories.

It seems that hundreds of millions of people in today’s world are worthy of asylum, given the criteria as written.  Yet during the Obama years a typical intake was about 60,000 asylum seekers yearly, which suggests an extreme degree of moral arbitrariness.  Is there not a better way to write asylum law to target…whatever you think is most worth of being targeted?  Admittedly opinions on the proper standard will differ.

Or consider this:

Every month, thousands of deportees from the United States and hundreds of asylum-seekers from around the world arrive in Tijuana. Many never leave….this flood tide of outsiders is pushing Tijuana toward a humanitarian crisis.

The best case for a broad application of asylum rights is simply that it gives the authorities more discretion to accept a larger number of very worthy cases.  For instance, teenager Martina Navratilova received asylum in the United States, and for the better, even though she was not facing death or torture back home in Czechoslovakia.  Keep in mind, though, that (for the moment) we are designing an ideal immigration system from scratch.  Cases such as Navratilova’s suggest that ordinary immigration policy ought to be more geared to taking in especially talented individuals, with or without an asylum case.

You should note, by the way, that Australia has relatively tough asylum rights, but takes in a large number of legal immigrants.  The country also goes to great lengths to stop people from showing up at the border in boats and claiming asylum.  So it seems there is at least one case where this is a sustainable posture.

In closing, I would note that asylum rights seem to be creating major political problems for Europe.  Partially for non-rational reasons, many voters view asylum-linked immigration as “more out of control” than other kinds of migration.  And the EU arguably has poorly designed institutions for handling asylum, and doling out relative responsibilities to member nations.  Plus Europe is very close to the Middle East and Africa.  Reforming the treatment of asylum in Europe might well improve the functioning of democracy there and actually put immigration on a more stable path.