Category: Law

*The Dope: The Real History of the Mexican Drug Trade*

That is a new and very useful book by Benjamin T. Smith, oddly it came out first in the UK.  Here is one excerpt:

Over the past fifty years, to earn the median wage, a Mexican has had to sell an average of 700 grams of marijuana, 18 grams of heroin, or 66 grams of cocaine on the U.S. streets. It amounts to weed weighing two cans of soup, coke weighing a tennis ball, or smack weighing just three U.S. quarters. And this is only the average. During the economic collapse of the mid-1980s, it took only 280 grams of marijuana and 4.8 grams of heroin to make the annual wage. You could earn as much growing a single marijuana plant or a window box of poppies as driving a cab for a year.

And this:

Up to the 1970s, violence was rarely employed to sort out disputes between drug traffickers. The trade was relatively peaceful. Cooperation was the rule. Deep ties of blood, marriage, friendship, and neighborhood, which linked many of the traffickers, prevented the frequent use of force. In general, so did the local protection rackets. Both state governors and state cops were keen to avoid conflicts that risked exposing their own ties to the traffickers.

This changed because sometimes the later state authorities sought to institute their own protection rackets, using force toward that end. Many of the gangs sought to extend their turf beyond drugs to other commercial areas, also leading to conflict. Finally, the U.S.-led war on drugs induced a form of Mexican aggressive counternarcotics policing that bred conflict as well.

Overall this is a good book about a hard to research topic.

Sentences to ponder solve for the cycling equilibrium

Austin Cyclists Split On Sharing Bike Lanes With Pizza Delivery Robots

Some Austin cyclists are not happy about the robots using bike lanes, while others are optimistic that sharing their path will lead to good things down the road…

“My personal view is that I don’t believe these belong in the bike lane,” said Jake Boone, who serves as vice-chair of the city’s Bicycle Advisory Council.

“I almost feel like we’re the test subject for this new technology, and that does bother me,” he said. “What if in two years we have several hundred of these on the road?”

Here is the full story, via Mike Doherty.

The Effect of Adult Entertainment Establishments on Sex Crime

This paper studies how the presence of adult entertainment establishments affects the incidence of sex crimes, including sexual abuse and rape. We build a high frequency daily and weekly panel that combines the exact location of not-self-reported sex crimes with the day of opening and exact location of adult entertainment establishments in New York City. We find that these businesses decrease sex crime by 13% per police precinct one week after the opening, and have no effect on other types of crimes. The results imply that the reduction is mostly driven by potential sex offenders frequenting these establishments rather than committing crimes. We also rule out the possibility that other mechanisms are driving our results, such as an increase in the number of police officers, a reduction in the number of street prostitutes and a possible reduction in the number of potential victims in areas where these businesses opened. The effects are robust to using alternative measures of sex crimes.

That is from a new paper by Ciacci and Sviatschi, via Jennifer Doleac.  We find this clash of values repeatedly in public policy.  Do you wish to side with the interests of the actual victims — the people who might end up abused and raped? — or do you wish to side with landlords and homeowners who might find their property values reduced by sex establishments?  “Export the bad stuff!”, this is a NIMBy dilemma yet again.

“How Britney Spears was trapped in a web of injustice”

That from the FT is the kind of headline we should be seeing.  From Henry Mance:

…for 13 years, courts in California have rewarded Spears’s father Jamie, a failed businessman who struggled with alcoholism, once filed for bankruptcy and who, according to the documentary Framing Britney Spears, was often absent from his daughter’s childhood. They have enabled arguably the most egregious villain of them all. In 2008, when his daughter suffered an apparent mental health crisis, Jamie asked a court to make him her conservator — that is, legal guardian. He has mostly kept the power since. He has decided which friends she sees, what medical treatment she receives and what happens to her fortune, estimated at $60m.

…They had made her work seven days a week, taken her credit cards and given her no privacy when undressing. “In California the only similar thing to this is called sex-trafficking,” she said. They would not let her have an intrauterine device removed, because they didn’t want her to have more kids. But they did allow a doctor to prescribe her lithium “out of nowhere”.

I get that you might have doubts about this case, or be able to cite many other cases where some form of guardianship might be useful.  But if something like this is possible at all, it is time to realize the whole system is broken and we need to work much harder to root out its abuses.

Time to wake up!  Be woke!  Really woke.

#FreeBritney

USA facts of the day

A survey of almost 200 police departments indicated that retirements were up 45 percent and resignations rose by 18 percent in the year from April 2020 to April 2021 when compared with the previous 12 months, according to the Police Executive Research Forum, a Washington policy institute.

New York City saw 2,600 officers retire in 2020 compared with 1,509 the year before. Resignations in Seattle increased to 123 from 34 and retirements to 96 from 43. Minneapolis, which had 912 uniformed officers in May 2019, is now down to 699. At the same time, many cities are contending with a rise in shootings and homicides.

Asheville was among the hardest hit proportionally, losing upward of 80 officers, more than one third of its 238-strong force.

Here is more from Neil MacFarquhar at the NYT.

New York Fact of the Day

NYTimes: New York City built only 163,000 units of housing in the 2010s, fewer than the 205,000 created in the 1930s, during and after the Great Depression, according to a city report. From 2009 to 2018, the New York metro region added 0.5 units of housing for every new job, down from 2.2 units per job in the previous decade.

The article continues:

In December, a New York Supreme Court judge annulled the city’s rezoning plan for Inwood…The Inwood plan would have increased the allowable height and density in parts of the neighborhood, which could have brought 3,900 new units to the area, including 1,600 below-market apartments, according to the Department of City Planning. The city is appealing the decision.

The judge agreed that the city’s environmental review process, which aims to measure the impact of development, did not adequately study a number of concerns, including the risk of racial displacement and the effect of speculative development on local businesses, many of which can be more valuable to landlords as land sales.

This is another illustration of how collective decision making impedes innovation. Neither judges nor regulators should be making these “balancing” decisions which politicizes and creates veto players who can dam innovation at low-cost to themselves. Decisions about when and where to build should by left to the spontaneous order operating under the principles of private property and the rule of law.

Look at this nonsense and imagine if every decision had to be so studied for every group and interest that one could possibly imagine:

“They don’t have to study the racial impact? That’s ridiculous,” said Michael Sussman, the petitioners’ attorney, who argued that speculation would have an outsize impact on minority residents in the area, many of whom live in rent-regulated apartments.

The CDC is broken, our regulatory state has been failing us

I was surprised by how good this NYT piece was, for instance here is one of the better diagnoses of the problem, or at least part of it:

Allen disputes the notion that she and her colleagues are doing work that the C.D.C. itself should be doing; in fact, she says, the task force and the federal agency have worked closely together. But she acknowledges that the interdisciplinary approach of the collaborative — it consists not only of doctors and public-health professionals but also of political scientists, economists, lawyers and M.B.A.s — enables it to spot problems that the federal institution can’t necessarily see. Infection control is a good example. “This is not a public-health problem, or even a medical one,” she says. “It’s an issue of organizational capacity.” The C.D.C. is not equipped to identify organizational issues, let alone resolve them.

And:

Around half of the agency’s domestic budget is funneled to the states, but only after passing through a bureaucratic thicket. There are nearly 200 separate line items in the C.D.C.’s budget. Neither the agency’s director nor any state official has the power to consolidate those line items or shift funds among them. “It ends up being extremely fragmented and beholden to different centers and advocacy groups,” says Tom Frieden, who led the C.D.C. during the Obama administration.

How about this?:

This funding system also hobbles emergency-response efforts, because there is no real budget for the unexpected.

Highly recommended, one of the best pieces of this year, here is the full article by Jeenen Interlandi.

The best mask-wearing study so far?

Mask-wearing has been a controversial measure to control the COVID-19 pandemic. While masks are known to substantially reduce disease transmission in healthcare settings (Howard et al 2021), studies in community settings report inconsistent results (Brainard et al 2020). Investigating the inconsistency within epidemiological studies, we find that a commonly used proxy, government mask mandates, does not correlate with large increases in mask-wearing in our window of analysis. We thus analyse the effect of mask-wearing on transmission instead, drawing on several datasets covering 92 regions on 6 continents, including the largest survey of individual-level wearing behaviour (n=20 million) (Kreuter et al 2020). Using a hierarchical Bayesian model, we estimate the effect of both mask-wearing and mask-mandates on transmission by linking wearing levels (or mandates) to reported cases in each region, adjusting for mobility and non-pharmaceutical interventions. We assess the robustness of our results in 123 experiments across 22 sensitivity analyses. Across these analyses, we find that an entire population wearing masks in public leads to a median reduction in the reproduction number R of 25.8%, with 95% of the medians between 22.2% and 30.9%. In our window of analysis, the median reduction in $R$ associated with the wearing level observed in each region was 20.4% [2.0%, 23.3%]. We do not find evidence that mandating mask-wearing reduces transmission. Our results suggest that mask-wearing is strongly affected by factors other than mandates. We establish the effectiveness of mass mask-wearing, and highlight that wearing data, not mandate data, are necessary to infer this effect.

That is a new paper by Gavin Leech, et.al., recommended.  And here is the tweet storm version of the paper.

It’s Time to Open the Canada-US Border

When infection rates in two areas are similar the argument for closing borders is weak. Canadian and US infection rates are now similar and both countries are highly vaccinated by world standards. The arguments for not opening are mostly psychological, a fear of foreigners. As a result, we have both Canadians fearful of opening to Americans and Americans fearful of opening to Canadians which doesn’t make sense. At least one must be wrong! Moreover, if we require even a weak proof of vaccination to cross borders then the average Canadian coming to America will be safer than the average American and the average American traveling to Canada will be safer than the average Canadian.

It’s time to open the border.

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Nach dem Gleichgewicht auflösen

Swiss-based multinationals such as commodities trader Glencore will receive subsidies and other incentives under plans Switzerland is drawing up to maintain its competitive tax rates, even as the country prepares to sign-up to the G7’s new plan for a global minimum tax on big businesses.

Bern is consulting its cantonal governments — which set their own corporate tax rates — to examine how measures such as research grants, social security deductions and tax credits could create a “toolkit” to offset any changes to headline tax rates, officials told the Financial Times.

Here is the full FT story by Sam Jones.

Austin Vernon on El Salvadoran bitcoin acceptance, from my email

Sent this to [redacted, a man of substance] yesterday. LN = Lightning Network, Bitcoins layer 2 scaling solution based on channels:

As far as I understand it, everyone using LN in El Salvador has primarily been using Strike. Classic crypto conundrum in that they had to centralize to get it to work. There is a Twitter thread with the CEO where he shows they had to block their software using most non Strike LN nodes because there were so many failed payments.

https://mobile.twitter.com/JackMallers/status/1291403528116883456

https://strike.me/faq/howitworks

Also looks like you submit USD and they have some kind of centralized payment system to manage the transactions to the Bitcoin layer 1 chain.

I imagine this is a big improvement for people in El Salvador and I’ve heard Strike has already been popular, but I don’t see it as what is being touted as.

Additionally to the email above:

There was an out at the end of the law that says you don’t have to accept Bitcoin if you are too poor. But a basic smartphone with the app means you can accept it. There is a small town where a donor gave the town Bitcoin and forced them to use it as currency and even started doing a private UBI in Bitcoin. Some of the stores started taking it. Strike is only available in the US and El Salvador. So in a truth is stranger than fiction, the idea probably got jumpstarted by a surfer that loved both a beach town and bitcoin. Helps that El Salvador uses the dollar. The legislators would just have to drive to the town to see how it works rather than read about it.

https://www.bitcoinbeach.com

To me this is more like a new kind of bank than some decentralized currency takeover, because Strike is relatively centralized. Being like a bank probably implies some of the same advantages and vulnerabilities of a regular bank. The PR is nice! Not having to get cash at a Western Union that might be far (and where you can get robbed) could have more impact than cheaper fees. It will be a few years before the technology exists to do this in a more decentralized way. Interesting nonetheless.

The coming regulation of bank crypto

A $100 exposure in bitcoin would result in a minimum capital requirement of $100, Basel said. The standards would apply to assets created for decentralised finance (DeFi) and non-fungible tokens (NFTs), but potential central bank digital currencies were outside the scope of the consultation, it added.

Here is more from the FT.  While that is an entirely understandable move, the net result will be to hinder the incorporation of crypto into the traditional banking system, and speed the growth of non-bank crypto institutions.  How they will try to regulate those is of course the more important question.

Bitcoin as legal tender in El Salvador

Here is FT coverage, I still feel I don’t know the whole story, but bitcoin will be legal tender and furthermore:

The government will set up a trust at the Development Bank of El Salvador to enable automatic conversion of bitcoin to dollars. The law will take effect 90 days after its publication in the official gazette.

“The entry of bitcoins will be equivalent to an increase in the country’s monetary supply, which will temporarily boost El Salvador’s economic activity, but will also pressure inflation higher and with that, interest rates will rise,” Gabriela Siller, head of economic analysis at Banco Base in Mexico, said in a note to clients.

Here are a few observations:

1. El Salvador already uses the U.S. dollar, so there is not much loss of monetary sovereignty here.

2. Maybe the easing into bitcoin is intended to lower the cost of sending remittances from the U.S., which are fundamental to the El Salvadoran economy?  According to the FT, remittances are about one-fifth of gdp, and transfer charges can be steep.

3. Is this all just?: “You don’t have to move to Puerto Rico to avoid capital gains tax, you can just invest in El Salvador!  We’re going to precommit to accepting your bitcoin so you will plan around that.”

3b. Isn’t it suspicious that their legislature approved the legal tender law by such an overwhelming margin?  Is it that they all have read and digested so many Medium crypto essays?  Or do they just see this as “a deal”?

4. I don’t see why this should increase price inflation in El Salvador.  Prices are denominated in dollars, and El Salvadorans, or for that matter visiting tourists, already had the option of converting their crypto into dollars before buying more pupusas.

5. Even in the United States the retail demand for bitcoin transactional use has been quite low.  Making merchants in El Salvador take bitcoin seems like a PR move to me.  What does it mean to make a low-tech merchant in the countryside “take bitcoin”?  How is he supposed to take it?  Do the abuelas in the market have to set up Coinbase accounts?

6. Could this be a transitional or bridge move to ease El Salvador away from the U.S. dollar and to replace it with a native currency?

7. Is the increasingly authoritarian government of El Salvador looking to PR moves to boost its international legitimacy?

8. Given all the surrounding publicity, it does seem that “they really mean it,” and the government will try to “get something” out of the initiative.

I will keep you posted as I learn more.  But as a general rule, if Central America is the laboratory for your ideas, beware before leaping to conclusions too quickly!  At the very least do go visit the country you are wondering about, and, in trying to understand the equilibrium, have the country more prominent in your mind than the innovation.

The IRS tax data leak

Sometimes I wonder if I should blog on topics where I feel most of you already know what I think.  I’ll just say this.  The information was stolen illegally, yet on Twitter so many intellectuals were crowing about the disclosure.  (Did some of those same people condemn the theft from Biden Jr.’s laptop?  How many of them, in other contexts, will defend strong rights of privacy?  I guess that right is for everyone except rich people who create a lot of jobs and output.)

ProPublica acted unethically, and in fact nothing fundamentally new or interesting or surprising was learned from their act as accessory.

The real story is how the numbers were obtained, and here I fear the worst.  A single rogue agent can’t just pull up the files of rich people on demand, as I understand the system (if so, Trump’s return would have leaked a long time ago).  So this was probably a coordinated effort of some sort, is it crazy to suspect the Russians having some role in it?  Who else has the will and ability?  (China has the ability, but the “coddled rich people” meme is not one they are looking to push.)  What other breach of national security has occurred in the process of unearthing this information?  How was it done?  Are conspiracy theories becoming more true these days?

It is stunning to me how little consideration these issues are being given and how poorly so much of our MSM has performed.

Should gambling be functionally separate from professional sports leagues?

In my latest Bloomberg column I consider the NBA:

A conservative estimate is that sports betting in the U.S., both legal and illegal, amounts to about $150 billion a year. How much of that is on basketball is an open question, but the NBA generates about $8 billion of revenue a year. It is quite possible that betting on the NBA already generates more revenue than the NBA itself, so integrating betting money into the sport could have a major influence.

The appeal of all this betting money brings me to my second worry: that the NBA, for commercial reasons, will create more bettable events, such as a mid-season tournament. Tennis is well-suited for betting (and corruption) because there are so many discrete wins and losses distributed across games, sets, matches and tournaments. Very frequently something decisive is on the line.

I prefer the longer story arc of a basketball season. Unlike the French Open, which takes place over the course of two weeks, the NBA season is nine months long, and the ongoing stories often are the relatively small events, understood primarily by the harder-core fans. That requires more patience, but it makes for a richer long-term narrative.

To be clear I think sports betting should be legal, but simply done apart from the leagues, such as in Las Vegas or through non-league-affiliated apps.  And this:

The backdrop is that in 2018 the Supreme Court struck down federal restrictions on sports betting, clearing the way for states to allow the practice. State laws vary, and even when sports betting is legal, it may be restricted to casinos or to mobile devices. But the trend is to allow more betting, not less.

Finally:

Again, the question is not whether sports betting should be prohibited. It’s how much official sanction it should receive. What would you think of a university that allowed betting on which students passed their exams? Like schools, sports leagues play roles as rule-setters and impartial referees. Maintaining that role is more important than pursuing the gamification of everything.