Month: June 2015

Asset Forfeiture Looks a Lot Like Theft

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893 - Asset Forefeiture

This article describes how police decided that $16,000 in cash being carried by an individual looked suspicious… so they took it.

Joseph Rivers, a 22-year-old Michigan resident, was on his way to Los Angeles in April to fulfill his dream of becoming a music video producer, according to Rivers and his lawyer, when federal agents from the Drug Enforcement Agency (DEA) boarded his Amtrak train during a stop in Albuquerque.

DEA agents approached Rivers, the only black passenger in the train car, and asked to search his bag. Inside the bag, agents found $16,000 in cash—money Rivers said he had saved up and received from family members to pursue his music video aspirations.

The DEA decided that carrying a bunch of cash is suspicious, so they took it away. Here’s what’s really troubling about this practice, called “asset forfeiture”:

Under civil asset forfeiture laws, police and federal agents can seize property on the mere suspicion that it is connected to criminal activity. The property owner does not even have to be charged with a crime, since asset forfeiture is technically an action against the property itself.

There’s even a great quote the head of the DEA’s Albuquerque office: “We don’t have to prove that the person is guilty.” Nice.

This practice is pretty lucrative for law enforcement organizations, and money for all that fancy military-style gear has to come from somewhere, right?

The Washington Post reported in an investigative series last year that federal, state, and local law enforcement agents have seized $2.5 billion in cash since 2001 from nearly 62,000 people.

It gets really hard for me to read a story like this and understand exactly how this isn’t theft.

New Study: Inequality and Innovation Trade-Off

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Economist Stan Veuger has an article in U.S. News on the costs of redistribution. “Traditionally more common,” he writes, “but recently under sustained assault from the left, is the view that there are tough trade-offs to be made, and that while there may be a role for redistribution, it comes at a cost: It reduces innovation and growth. A new research paper…provides new theoretical and empirical support for this view.” He explains the theory:

The capitalists receive income from the firms they own that derives from their proprietary cutting-edge technology if they recently innovated or from generally available technology if it’s been a while since they or their parents did. The workers either receive wages or become capitalists themselves by innovating and replacing the incumbents. Mark-ups on products and services based on cutting-edge technology are higher than from generally available technology, so the more innovation there is, the more income goes to the capitalists. Of course, the more productive research and development there is, the more often new entrepreneurs join the capitalist class, and the higher social mobility is – unless barriers to entry keep entrepreneurs out. And if research and development is more productive, the economy grows faster, ultimately benefiting workers as well.

Now, what does the evidence show:

To measure innovation, they look at patents granted per capita, between 1975 and 2010, in all 50 states and D.C. When they relate that measure to year-by-year measures of the income share earned by the top 1 percent, they find what their model predicts: More innovative states are also more unequal. And that’s not just because the wealthy few file more patent applications. They exploit variation in innovation driven by whether states have members of Congress on Appropriations Committees and by innovation in other states that they interact with a lot to show that such quasi-experimental variation in innovativeness, not driven by the mere presence of wealth, also actually causes inequality. But only when we measure equality as the share of income that goes to the 1 percent – broader measures of inequality are not much affected; those appear to be the product solely of some of the other trends I mentioned before, like skill-biased technological change.

However, the trade-off is more social mobility:

Remember the social mobility stuff? Well that shows up in the data as well. Areas that innovate a lot show precisely the kind of Schumpeterian dynamics that make income inequality a lot more palatable to most observers who are not of the bitterly envious variety: There may be big gaps between rich and poor, but the poor today still have a reasonable shot at becoming rich tomorrow. And do you know what areas get a lot less of both innovation and mobility? Places with tons of lobbying activity, where the incumbents keep the innovators out. All in all this research suggests that some 20 percent of the increase in the share of income going to the top 1 percent since the mid-70s was caused by innovation alone. That may not sound like that much – but of course, we can’t just eliminate only the inequality we don’t like and keep the inequality that incentivized people to innovate.

This seems to fit with the Thomas Sowell quote above: there are no solutions, only trade-offs. This new study also fits with past research on cut-throat US capitalism vs. cuddly Nordic capitalism, top earners and skill-biased technological change, and Schumpeterian profits.

Do You Own Your Stuff?

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John Deere 8760 farm tractor with a folded farm tractor disc attached driving down a country road in Indiana.
John Deere 8760 farm tractor with a folded farm tractor disc attached driving down a country road in Indiana.

It’s been a while since I’ve written about a technology issue, but a recent article from Wired deserves widespread attention: We Can’t Let John Deere Destroy the Very Idea of Ownership. If you didn’t know that John Deere wasn’t out to destroy the concept of ownership, you’re not alone. But it’s actually not a very new argument. The idea is that you may be able to own physical property, but you can only license software. The trouble, of course, is that an awful lot of physical property does you absolutely no good without the software to run it, and so if you don’t own the software you don’t really own the physical property either. What good is a tractor you can’t turn on? Or a car that won’t drive? There’s a reason that the verb for utterly breaking a piece of hardware by destroying the software is “bricked” as in “to render an electrical gadget as useful as a brick.”

I encourage you to read the article to learn more: it’s mostly about the Digital Millennium Copyright Act and whether or not property owners will be guaranteed the right to modify, hack, repair, tinker, and customize their own devices. I’m also curious to hear from folks–especially law-folks–who might know a little bit more about this issue than I do. It’s not like ownership is actually always a trivial concept, and figuring out how to split the rights of consumers to their own property vs. the rights of companies to control their software is probably not going to be a no-brainer in all cases.

Still, the lengths to which John Deere, General Motors, and other corporations seem willing to go to seem like some weird hybrid of amusing and sinister.

Closure 80+ Years in the Making

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And now for something inspiring:

Eugene Drucker: In this photo taken Wednesday, May 27, 2015, Grammy Award-winning American violinist Eugene Drucker, plays his violin during a rehearsal concert at the Music Hall in Raanana, central Israel. In 1933, the violinist Ernest Drucker left the stage midway through a Brahms concerto in Cologne at the behest of Nazi officials, in one of the first anti-Semitic acts of the new regime. Now, more than 80 years later, his son, Eugene, has completed his father’s interrupted work. With tears in his eyes, Drucker performed an emotional rendition of the Brahms Violin Concerto in D Major, Op. 77, over the weekend with the Raanana Symphonette Orchestra.In 1933, the promising young Jewish-German violinist Ernest Drucker left the stage midway through a Brahms concerto in Cologne at the behest of Nazi officials, in one of the first anti-Semitic acts of the new regime.

Now, more than 80 years later, his son, Grammy Award-winning American violinist Eugene Drucker, has completed his father’s interrupted work. With tears in his eyes, Drucker performed an emotional rendition of the Brahms Violin Concerto in D Major, Op. 77, over the weekend with the Raanana Symphonette Orchestra.

“I think he would feel a sense of completion. I think in some ways many aspects of my career served that purpose for him,” the 63-year-old Drucker said of his father, who passed away in 1993. “There is all this emotional energy and intensity loaded into my associations to this piece.”

Check out the full story at MSN.

Christianity, the Invention of Childhood, and the Failure of Total Success

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895 - Suffer the Little Children
Still image from video, “Suffer the Little Children to Come Unto Me.” Click image to view.

There is an idea, I believe I first encountered it when reading Free to Choose, that prior to capitalism material comfort was the rare privilege of the elite, and as a result no one much wondered at its scarcity. But after capitalism fueled tremendous rise in standards of living that made comfort accessible to a very large number of people, the question of why some still had to do without became acute. When everybody is poor, poverty is taken for granted. When only some are poor, then poverty becomes an outrage. Before, it demanded no explanation. Now, it did. Thus, by making most people substantially better off than they had been, capitalism became its own worst enemy. It was blamed for the evils and inequalities that it had exposed as though it had caused them.

A recent article by Pascal-Emmanuel Gobry at The Week makes a similar case for Christianity and the idea of childhood: How Christianity invented children. The first task of the article is to convince the reader that the way we view children today (“Today, it is simply taken for granted that the innocence and vulnerability of children makes them beings of particular value, and entitled to particular care.”) is an anomaly that requires an explanation rather than the natural state of affairs.

By contrast, “in ancient Greece and Rome, children were considered nonpersons.” Part of this is due to high infant mortality (it’s hard to get attached when your child is likely to die), partially this is due to the fact that children were associated with women (and women were already considered feebler, weaker versions of men), and partially it’s just a consequence of the eternal oppression of the vulnerable by the powerful. Particularly, in this case, as men viewed young children (especially boys) as objects of sexual gratification. Against this context, Gobry argues that:

This is the world into which Christianity came, condemning abortion and infanticide as loudly and as early as it could. This is the world into which Christianity came, calling attention to children and ascribing special worth to them.

Gobry concedes that “like everything else about Christianity’s revolution, it was incomplete,” but he insists that above all:

Christianity’s invention of children — that is, its invention of the cultural idea of children as treasured human beings — was really an outgrowth of its most stupendous and revolutionary idea: the radical equality, and the infinite value, of every single human being as a beloved child of God. If the God who made heaven and Earth chose to reveal himself, not as an emperor, but as a slave punished on the cross, then no one could claim higher dignity than anyone else on the basis of earthly status.

That much is beautiful and inspirational, but Gobry ends on a bittersweet note that gets back to my first paragraph describing the curse of capitalism’s success:

That was indeed a revolutionary idea, and it changed our culture so much that we no longer even recognize it.

In this particular area–the invention of children–Christianity was so successful that people have forgotten that it was ever any other way, and have therefore forgotten the important role Christianity continues to play in our society. Like the prosperity afforded by capitalism, the special protection afforded to children is not naturally occurring and–if we discard the social infrastructure that guarantees it–can and will be lost once more.

Forthcoming ‘Markets Without Limits’: An Excerpt

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Presidential candidate Bernie Sanders recently made headlines when he stated in an interview, “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.” Many have criticized the comment, while others have labeled it “one of the most substantive of the campaign so far.” Over at Bleeding-Heart Libertarians, philosopher Jason Brennan of Georgetown University responded to Sanders with an excerpt from the forthcoming book Markets Without Limits: Moral Virtues and Commercial Interests. I’m quite excited for this volume and those interested in economics and the morality of markets should be too. Here is a snippet:

Philosophers advocate that we do what economists say doesn’t work and avoid doing what economists say does work. On this point, [philosopher] Bas van der Vossen rebukes his colleagues:

As a profession, we are in an odd but unfortunate situation. Our best philosophers and theorists develop accounts of global justice that are disconnected from the best empirical insights about poverty and prosperity. Reading these theories, one might think that our best prospects for alleviating poverty around the world lie in policies of redistribution, foreign aid, reforms to the international system, new global institutions, and so on. And one might think that markets, property rights, and economic freedom are at best incidental, and more likely inimical, to the eradication of global poverty. Such ignorance, if not denial, of the empirical findings about development and growth is irresponsible.

We share van der Vossen’s concerns.

Mainstream development economics, in a nutshell, holds that the poverty is an institutional problem. More precisely, poverty is human being’s natural state. Poverty is normal and does not need to be explained, but wealth does. The main reason some nations are rich and others poor is not because some nations have better geography, better natural resources, or better genes. Rather, rich countries are rich because they have better institutions. Rich countries have institutions that incentivize growth and development. These institutions include strong private property rights, inclusive and honest governments, stable political regimes, a dependable and inclusive legal system characterized by the rule of law, open and competitive markets, and free international trade. Poor countries have institutions that fail to incentive growth and development, and often instead have institutions that encourage predation. These countries have weak recognition or active disregard of property rights, exclusive and dishonest governments, instable political regimes, undependable legal systems characterized by the capricious rule of men rather than the rule of law, and closed, rent seeking, crony capitalist markets, or few markets at all, and little international trade.

Check out the full excerpt and be sure to pre-order Brennan’s book. You can watch an interview with Brennan on his Why Not Capitalism? below: