Category: Law

Elite high school TJ will continue as it was

Fed. judge holds that Fairfax County, Virginia violated 14A by changing its high-ranked magnet school’s admission policies to decrease the proportion of Asian-American students. Strict scrutiny applies, and racial balancing is not a compelling interest.

The thread is of interest more generally, for instance “…the county officials here perceived that racial balancing was the goal because they got that cue from state-level Education officials on a DEI taskforce.”

I have been predicting privately for a while that TJ would be saved.  I’ll say it again: I think Wokeism has peaked, and the conflict in Ukraine will make it seem all the less relevant.

The GEZ: A Digital Special Zone

The Catawba are a federally recognized tribe of Native Americans with land in South Carolina, near the city of Rock Hill. The Catawba nation has just voted to establish a new digital special economic zone, the Green Earth Zone (GEZ), which aims to specialize in fintech and cryptocurrency.

…The GEZ can be prosperous thanks to the ability of Native-American Tribes under US law to have their own commercial code, regulation-making and administrative capacities.

…Using a model similar to Estonia’s eResidency, after completing the ‘know your customer’ (KYC) requirements, anyone in the world will be able to set up an eCorporation online in the GEZ, and take advantage of policies and regulations that allow them to safely manage their digital assets, raise investment capital and offer digital-banking services. eCorporations are legal corporations, permitted to conduct business virtually from the GEZ, and can open bank accounts within the United States. GEZ eCorporations are ideal for online companies, software developers, remote workers, banking and finance, insurance and firms involved in the creation, sale or management of digital assets.

This is a very interesting development for crypto which needs some legibility and rational rule making that the SEC is not providing.

Trudeau has turned off the invocation of the Emergencies Act

After two days it is no more.  I was and remain completely opposed to this invocation of the emergency powers.  I think they simply should have arrested the protestors early on, before the whole thing became such a big deal.

Here is a good short essay on the “digital jail” created by having your funds frozen in a nearly cashless society.  How is it you are supposed to pay for a lawyer?  What about joint bank accounts with other family members?  The more you think about this option, the worse it gets.

That all said, I have never been sold on the more dramatic claims of the critics.  No, this is not the transition moment for crypto.  Canada has not become a fascist state.  The government made a mistake, and the mistake has been corrected.  They should not have had this power to begin with.

I would stress that eternal vigilance is the price of liberty, and vigilance was needed to push this one back.  But if this was your freakout for the week, most of your attention is directed to the wrong places.

Be Green: Buy an (Australian) Coal Mine!

In Be Green: Buy A Coal Mine! I wrote:

Buying a coal mine and leaving the coal in the ground looks like a cost-effective way of sequestering carbon dioxide.

Recall, the key idea is that there are coal mines that are barely profitable now so shuttering mines can be a cheap way of sequestering carbon dioxide. Well, it’s starting to happen in Australia.

Tech billionaire Mike Cannon-Brookes has teamed up with international fund manager Brookfield to launch an audacious takeover bid for Australian energy giant AGL with the intention of setting stronger emissions-reduction targets and forcing the early closures of its remaining coal-fired power stations.

Mark Carney, former governor of the Bank of England and the Bank of Canada, is also involved. Unclear whether the bid will be accepted. The Australian government is actually against the idea.

Addendum: Philosopher William MacAskill also told me recently that he liked the idea because it would leave a source of energy that could be used to reboot civilization after an existential crisis. Hadn’t thought about that! MacAskill is always thinking ahead.

Hat tip: Sam Roggeveen.

What has been driving America’s opioid problem?

Matt Yglesias had an excellent (gated) Substack on this question lately, now Jeremy Greenwood, Nezih Guner and Karen A. Kopecky have a new and quite valuable paper.  I found this to be the most interesting segment:

Through the eyes of the model, there were two key forces.  The first force is the decline in prices for bot prescription and black market opioids.  This had a big effect.  The second force is the increase in the dosages per prescription meted out by doctors.  This also had a significant impact.  The fact that doctors kept pain sufferers on prescription opioids for a longer period of time had little effect.  Last, an analysis is conducted on medical interventions that reduce either the probability of becoming addicted or the odds of an addict dying from an overdose.  Reducing the odds of addiction can result in even more deaths due to the rise in users.

The opioid problem is a very difficult one to solve!  I should stress that the paper has other results of interest.

*The Invention of Power*

The author is Bruce Bueno de Mesquita, and the subtitle is Popes, Kings, and the Birth of the West.  Here is the main thesis:

Why Europe became distinct after the year 1000 and not before can be reduced to this surprisingly simple reason: in Europe, the head of religion and the head(s) of state were different people who faced off against one another in long-standing, long-lasting, intense competition for political control.  Certainly, the rulers of China and Japan were thought to be gods.

I consider this broadly consistent with my own views, although I see many other significant factors in the broader history, including natural geography and political fragmentation.  Nor can you dismiss the role of imperialism entirely, plus that the growth of the West came “at the right time” (for the West at least).  I like this book, but I don’t think it quite has the knockdown proof of its thesis that it pretends to.  And the book is oddly silent about Christianity as a general phenomenon.  There is talk of popes and churches on almost every page, and yet Christianity as an intellectual innovation, helping to make liberalism more likely, does not play much of a role in the narrative.  And given how general and deeply rooted some of the mechanisms are, I don’t quite understand why so much stress is placed on the 1122 Concordat of Worms — surely that is endogenous too?  It is an odd philosophy of history in which so much hinges on a single event and then for almost a thousand years the rest that follows is locked in.

Against alcohol, part #6437

Utah’s shift to lower the legal limit for a driver’s blood-alcohol concentration successfully reduced car-crash deaths in its first year of adoption, according to a new report from the National Highway Traffic Safety Administration.

The law, which took effect on Dec. 30, 2018, made Utah the only state in the country in which a driver can be arrested for having a blood-alcohol concentration between .05% and .079%.

NHTSA’s report found that fatal car crashes in Utah were down 5.1% in 2019 from the year before the law went into effect. Nationally, fatal car crashes fell 2% in the same period. Fatal crashes in which alcohol was detected dropped to 38 from 56 in 2019, the first time such crashes declined in three years, Utah Highway Safety Office data shows.

Here is more from the WSJ, via Tim Gillespie.

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.