Out of the Storm News
From the Washington Post:
SALAM: How poor are America’s poor? “(a) It is useful to think about absolute household incomes as well as household incomes in relative terms; (b) the quality of public services matters a lot, and Sweden, a country where (for example) the market for education services is much freer than it is in the U.S. seems to do a pretty good job of offering high-quality public services; and (c) it turns out that universal coverage does not mean that households no longer face financial difficulties when it comes to securing medical care, as we see in countries like Germany and France with relatively well-regarded health systems. Many Americans romanticize European social models, and this in turn leads them to embrace public policy solutions that aren’t a good fit for the particular challenges and demands that obtain in the U.S.” Reihan Salam in National Review.
This morning in the American Conservative, Jonathan Coppage writes about “The Sharing Economy’s Undead Capital, and Its Discontents,” commenting on my essay in The Ümlaut last week, as well as Pascal-Emmanuel Gobry’s excellent Forbes post on the possible distributional effects of the sharing economy.
To a large degree, the discussion about the “sharing economy” has been marred by imprecise terminology — most notably, the term “sharing economy” itself. As Coppage points out, this term has more to do with the political leanings of many of the early movers in the industry than it does with accurately characterizing the economic phenomena we are seeing. Sharing, of course, implies the non-remunerative joint use of resources, based on certain norms of reciprocity within a highly personal economy. That’s all fine and well, but it’s inimical to the idea of the larger, extended order which is an absolutely necessary feature of economic growth. Perhaps that was the sharing economy founders’ point.
I’ve been using the term “peer production economy” in lieu of “sharing economy” for a couple of reasons. First, I think it’s a less normative way to describe and categorize what we are seeing — which, though it may dismay the sharing economy vanguard, has very little to do with sharing and a re-establishment of exchange based on personal or tribal relationships. (This should be self-evident: an economy based on “gifts” and “sharing” is one that does not need smartphone apps to connect heretofore-unknown buyers and sellers, or “recipients” and “givers.”) Second, the term “peer production” highlights the larger and, to me, more interesting trend: a technology-enabled movement from big firms, big bureaucracy and big capital to connecting individual buyers and sellers. In other words, it’s a deepening of markets and the number and type of transactions that may occur within them.
PEG’s post on the distributional effects of the peer production economy is a very useful and well-grounded exercise in thinking through what an Uberfied economy might look like distributionally. I’d like to offer a couple of critiques.
For one, PEG’s UberForBabysitters actually seems to highlight the limits of the peer production economy rather than illustrate the likely next steps. Babysitting markets are one area where the personal economy seems to trump the impersonal economy, and even were such a service to be introduced, it’s hard to see how it would generate robust network effects. It seems unlikely that many parents would actually want more than a handful of babysitters to choose from (as Gobry says); here, personal knowledge of the people we are entrusting with our sprogs is a feature not a bug. That market, and many others like it, largely remains thin and personal, and that’s just fine. (Though DogVacay is, at least on the margin, a refutation of my hypothesis.)
So it seems unlikely that the full Uberization of the economy is nigh, at least for services where there is value in buyers and sellers having at least a limited personal relationship. Even Hayek argued that an extended order doesn’t preclude personal exchange, altruism and solidarity; rather, the two can be mutually supportive.
The bigger point that I think PEG misses is that an Uberized economy isn’t just about more capital and labor — it’s about who owns the capital. For better or worse, labor in our economy today has long been commoditized. This has been the progressive dream for the last century: turning people into interchangeable parts within bureaucracies that sought to efficiently administer either capital (big business) or power (big government). The civil service system, labor unions and human resources departments were all agents in this effort. Simultaneously, capital allocation has become increasingly efficient (another word for this is “ruthless”).
The peer production economy brings individually owned capital back into the equation, and this capital is tied to the labor of its owners. In the medieval guild system and the proto-industrialized workshop system, workers owned their tools and work spaces; industrialization turned laborers into mere factors of production where skill was the only determinant of value. (This radical shift in economic life not only significantly changed conceptions of class but eventually spawned an entire counter-movement.)
With firms like Uber, Lyft, Sidecar, Airbnb, Etsy, and RelayRides, sellers are putting their capital back into play — and these sellers, not the owners of the firms running the marketplaces — will bear the benefits of the returns to capital.
In other words, Gobry is wrong to assume that the owners of the firms of the peer production economy will take an outsize portion of the growth of this section of the economy, because by and large, they don’t own the capital; rather, they own the marketplace. Lyft is the New York Stock Exchange of the car-sharing movement — it’s not the General Electric.
One final note: Whatever the distributional impacts and the effects on community of the peer production economy — and it’s important to think about them and their larger effects, and kudos to Gobry for raising the subject — it’s important to not lose sight of what’s really at stake. In many of these areas, there’s a battle going on against captured regulators protecting entrenched interests that are do little either for market efficiency or for communitarian values. The status quo is neither efficient, nor is it conducive to building community.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Sweden, which represents the world’s best example of the population effect of tobacco harm reduction, is considering increasing its snus tax by 22%, according to the Swedish national newspaper Aftonbladet. An April 2 article claims “it would be the first time ever that a can of snus would cost more than a pack of cigarettes.”
Swedes are reportedly outraged by the proposal. Public health experts should be outraged as well, given such a tax hike’s threat to the developed world’s lowest smoking and lung cancer rates.
As expected, the Karolinska Institute’s tobacco expert Hans Giljam expressed support for a higher snus tax. However, even he admitted, “there is a risk that many will quit snus and move to cigarettes. And if many start smoking instead of using snus, we will get sicker. That is a certainty.”
That is unquestionably the strangest endorsement of tobacco harm reduction ever heard. Giljam couched his comment in dire, unfounded or exaggerated warnings about links between snus and a host of diseases, but he waffled on how much snus use triggers health effects.
It takes decades of study to reach such conclusions. It is one of the pedagogic problems we face; we don’t really know what the health effects of long-term snus usage are.
In fact, decades of study have defined the long-term health effects of snus use – nearly zero. And even Giljam acknowledges that smoking is at least ten times more dangerous than using snus. His support for equalizing taxes on snus and cigarettes is unfathomable.
This article is available only in Swedish, so the English translation I have could account for Giljam’s bizarre logic. But I sincerely doubt it. Like anti-tobacco extremists everywhere, those in Sweden not only completely ignore the phenomenal Swedish tobacco experience, they enthusiastically endorse policies that would destroy it.
Alan Gross, the 64-year-old American who has been imprisoned by Cuban authorities since 2009, is an unremarkable man on the surface. He could be a friend or colleague, or an uncle you’ve been meaning to call.
Yet what distinguishes Gross from most of the rest of us, myself included, is his courage. As a sub-contractor for the U.S. Agency for International Development, Gross traveled to Cuba to help private citizens gain access to the Internet, and thus to news and information not managed or manufactured by the Cuban government. Gross likely knew that his work was dangerous, but he may have underestimated the risk he was taking. In a heartbreaking letter to President Obama, Gross recounted the many ways his wife and daughters have suffered in his absence. He beseeched the president to intervene in his case.
And so Gross, a husband and father from Maryland who seems to want nothing more than to be reunited with his family, has reignited the decades-long debate over how the United States should deal with Cuba, a rogue state that continues to adhere to Marxist-Leninist one-party rule long after the collapse of its Soviet patron.
While some lawmakers, including Cuban-American Sens. Marco Rubio, R-Fla., and Robert Menendez, D-N.J., have urged the Obama administration not to negotiate — but instead to demand Gross’ unconditional release — Sen. Patrick Leahy, D-Vt., has led the chorus of those calling for the president to play ball with Cuba’s rulers, or rather to “not shrink from the obligation to negotiate for his freedom.”
What the Cuban government wants most is a relaxation of the economic sanctions the U.S. government first imposed on the island nation in 1963, when it became clear that Fidel Castro intended to align his new regime with the Soviet Union and to have Cuba serve as a staging ground for armed insurgencies throughout Latin America.
In the decades since then, the sanctions regime has evolved in various ways. There are now a number of licensed exemptions that allow Americans to provide humanitarian assistance in Cuba, or that allow academic researchers to travel there. Cuban households receive $2.6 billion in remittances from Cuban immigrants and people of Cuban origin living abroad, most of which comes from the United States. And as Emily Parker observed earlier this week, for example, the Obama administration made it somewhat easier for U.S. telecom providers to do business with Cuba in 2009, in an effort to encourage the free flow of information in and out of the country.
So should the U.S. government ease economic sanctions even further? The plight of Alan Gross represents an opportunity to rethink the sanctions regime. One widely held view is that U.S. sanctions actually serve to entrench the current Cuban government, as they allow Cuba’s rulers to tightly control the flow of resources in and out of the island, and also to blame the United States for the poverty and deprivation that plagues Cuban society. The problem with this line of thinking, as Mauricio Claver-Carone, director of Cuba Democracy Advocates and a proponent of sanctions, notes, is that foreign trade and investment in Cuba is the exclusive domain of the state.
Whereas the Chinese government offers wide latitude to private enterprises, both domestic and foreign-owned, to operate on Chinese soil, the Cuban government severely limits the scope for private economic activity. This is one reason why China “feels” like a freer society than Cuba, despite the fact that the Chinese government maintains a large and expensive repressive apparatus. To grow the Chinese economy, China’s rulers have had little choice but to relax their grip on investment and entrepreneurship.
In recent years, the Cuban government has allowed for the emergence of a small-scale “self-employment” sector. Yet this sector shouldn’t be mistaken for private enterprise, as self-employed individuals are barred from building their own independent businesses. If sanctions are lifted without conditions, it seems more likely than not that the Cuban government would insist that all U.S. trade and investment be channeled through state-owned entities. Given Cuba’s parlous fiscal state, this would be an enormous boon.
Rather than lift sanctions unilaterally, the U.S. ought to consider modifying the approach it has taken since passage of the Helms-Burton Act of 1996. Under Helms-Burton, the U.S. is prepared to lift sanctions if and when Cuba releases political prisoners and allows for the inspection of its prison facilities, legalizes political activity and opposition parties and abolishes its secret police. Essentially, the law insists on immediate regime change, and it is easy to see why Cuba’s rulers find its conditions unacceptable.
Congress ought to consider a new approach: the U.S. will relax sanctions if Cuba allows its citizens greater scope to build their own private businesses, which will have the right to engage in foreign trade, receive foreign investment and employ workers. The Cuban government will, of course, be allowed to tax and regulate these private businesses, but it will have to offer its citizens at least some economic liberty, so that an influx of U.S. trade and investment won’t simply bolster the Cuban state and Cuba’s repressive apparatus.
Yes, Cuba’s propagandists will characterize this deal as yet another example of Yankee meddling. It is also true, however, that this approach would offer Cuba’s rulers a meaningful alternative to Regime Change Now while also allaying the concerns of Americans who fear that easing sanctions might strengthen the current regime. And by loosening the economic stranglehold of Cuba’s state-owned monopolies, we can give Cubans the breathing room they need to start building a free society.
Legislation to limit the ability of “patent trolls” – individuals or companies who own patents they don’t use and sue inventors for infringing upon them – is moving through Congress right now. In October, the House of Representatives passed the Innovation Act, which aimed to stem the tide of frivolous patent lawsuits. Several parallel bills have been proposed in the Senate. Just this week, the non-profit policy advocacy organization, R Street, sent a letter to the U.S. Senate Judiciary Committee urging them to take action.
“The targets of these ‘patent trolls’ are not just big technology companies,” the letter from R Street to the Senate said. “Rather, most troll lawsuits are brought against non-tech companies. These victims are often main street businesses such as restaurants, coffee shops, hotels, banks and others that don’t invent or manufacture anything, but are seen as easy targets by patent trolls.”
From The Canal:
It hasn’t always been this way. Andrew Moylan and Alan Smith of the R Street Institute describe Detroit as something of a “predecessor to today’s Silicon Valley,” and a “center of the high-tech industry of the day.” It also enjoyed rapid population during the early 20th century, being the second fastest-growing US city after Los Angeles.
However, its “just as precipitous decline” may not have been as sudden as those of us tracking auto bankruptcy had previously thought. According to a Reason article by Moylan, more than one million individuals have left Detroit since its population peak in 1950.
From The Nation:
Some conservatives do wish to expand low-income tax credits, but with certain revealing political caveats. For instance, one idea circulating on the right is to boost poor families with children by funding extra tax rebates for them with higher taxes on childless single people. Reihan Salam recently argued in Slate that the government should tax childless households extra in order to provide subsidies directly to parents who are raising the next generation (presumably while their child-free counterparts can live relatively carefree, unencumbered lives).
From CNN Money:
The chat-o-sphere has been abuzz lately about a proposal by Slate columnist Reihan Salam: The childless should pay higher taxes so that lower- and middle-income parents can pay less.
From the Washington Examiner:
“The best adaptation strategies are very good policy in any case,” said Eli Lehrer, president of the conservative R Street Institute. “And whether intentionally or not, a lot of Republicans are already taking the lead on things that are climate adaptation strategies.”
The tax code contains numerous benefits for homeowners. The largest is the mortgage-interest deduction (allowing homeowners to deduct interest paid on their mortgages from their taxable income). The idea behind these tax benefits is that they encourage homeownership. But in reality, they are regressive and expensive, and there is no indication that they actually do increase ownership, say Andrew Hanson, an associate fellow at the R Street Institute, Ike Brannon, a growth fellow at the George W. Bush Institute, and Zackary Hawley, an assistant professor of economics at Texas Christian University.
From Washington Post:
There is a growing recognition that one can be a critic of the Iraq War and yet not throw caution to the wind and join the isolationists. Reihan Salam speaks for many Republicans when he writes: “Why do I still believe that the U.S. should maintain an overwhelming military edge over all potential rivals, and that we as a country ought to be willing to use our military power in defense of our ideals as well as our interests narrowly defined? There are two reasons: The first is that American strength is the linchpin of a peaceful, economically integrating world; and the second is that we know what it looks like when America embraces amoral realpolitik, and it’s not pretty.” That realization has deepened with the collapse of Obama’s foreign policy in Syria, his retrenchment from the Middle East more generally and bipartisan skepticism over his approach to Iran. Paul is seen on the other side of the divide — standing with liberal critics of U.S. interventionism.
ALEC’s Cara Sullivan had a good post earlier this week on the American Legislator blog about the importance of balancing consumer protection with innovation in the ride-on-demand services (frequently called ride-sharing) that are a driving force (pardon the pun) within the peer production economy.
Sullivan is right that insurance provides an important consumer protection, but I think the tradeoff between innovation and consumer protection is not as black and white as she suggests. A few observations about ride-sharing and insurance:
- What exists right now is terrible. In many American cities, taxis are disastrous. Here in D.C., when we had a zone system, drivers were notorious for abusing it, such as often only picking up passengers on one side of a street to get a higher fare (the U Street corridor was a common place to see this happen) or ripping tourists off. Today, D.C. cabbies are required to take credit cards, but their systems keep mysteriously breaking; at best, the odds are even you’ll be subject to verbal abuse for wanting to pay with plastic. God help you if you want to go to Northern Virginia after dark. New York taxis are a bit better, but New Orleans’ are far worse. All of which is to say, the last thing that policymakers and regulators should be doing is looking to shoehorn new business models into the existing regulatory structures that have given us at best mediocre transport.
- You’re not as insured as you might think. In New York City, taxis only have to carry $100,000/$300,000 of liability insurance. That may sound like a lot, but it’s less than many regular drivers carry. In D.C., taxis are only required to carry $25,000/$50,000 policies. That’s actually less than regular drivers in Maryland are required by law to carry. You might think the highly-regulated taxi market would have high insurance requirements. You would be wrong.
- The market is already beginning to solve the problem. Uber insures drivers to the tune of $1 million; Lyft has a similar policy. Ride-sharing companies are working with regulators and insurance companies to identify best practices and help flesh out some of the murky areas in this emerging market. It’s unclear how exactly this will shake out, but there is a market-driven process underway; regulators should let it play out as much as possible before passing rules that restrict innovation in the insurance space.
- Insurance trumps regulation. Insurance can play a much deeper role in ride-sharing than simply protecting consumers against accidents: it can be a source of regulatory innovation. By setting insurance requirements for ride-sharing firms (which should be equal to the insurance requirements for taxis) and letting firms and insurers work together to determine how best to protect consumers, incentives are better aligned; firms have incentive to lower their insurance premiums, insurers reduce their potential exposure and consumers are better protected as a result. For instance, background checks of drivers may be either a very effective or a completely ineffective method of screening out potential bad actors. Insurers are better placed to figure that out than regulators, and regulatory rule-making precludes market innovation.
- Reputation is a strong motivator. Unlike with taxis, where both drivers and passengers are unknown to one another until a ride is underway, most ride-sharing firms allow passengers to rate drivers and vice versa. This helps screen out the dangerous, the directionally challenged and the just plain rude. If drivers want to keep driving and passengers want to continue to get rides, they both had better mind their Ps & Qs. Similarly, Uber, Lyft, Sidecar and other firms have brands they wish to maintain. In most municipalities, taxis are essentially commodities, and to the extent that fleets are even branded, passengers are unlikely to have a preference for Yellow Cab over Blue Cab or vice versa.
- Be realistic about regulators. Finally, it’s easy to fall into the trap of assuming that regulators have either the incentives or knowledge to regulate these markets effectively. As we’ve seen from the ongoing regulatory battles across the country, too many regulators have been captured by the industries they are supposed to be regulating. In thinking about how regulators operate, a little public choice goes a long way.
One final note: the major innovation in this industry is a business process innovation, not a technical one. Policymakers do well to consider these new firms as expansions of existing markets enabled by technology rather than something wholly sui generis.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
I’ll say one positive thing about supporters of the Marketplace Fairness Act: they’re nothing if not persistent. They’ve been trying to hammer a square peg into a round hole for more than a decade now. Despite the bill being totally discredited, Rep. Scott Rigell, R-Va., is back at it again. He is organizing a letter to the House Judiciary Committee urging them to report the bill out as soon as possible.
Unfortunately for Rigell, the MFA has run aground because it is fundamentally incompatible with a system of limited government. It would empower states to expand their tax authority beyond their borders to anywhere the Internet exists. In doing so, it would subject businesses in Rigell’s (and my) home state of Virginia to the tax, audit and enforcement authorities from every other sales tax state in the country, including aggressive big-government monoliths like California, New York, and Illinois. Why Rigell would want to give California’s IRS the power to drag his district’s businesses into California courts to enforce their tax laws is a mystery to me.
In the last year or so, the American public has learned a great deal about the bill and it turns out they don’t much like it. In fact, in a poll we commissioned with our friends at the National Taxpayers Union, we found that virtually every subcategory one can think of opposed such a bill by substantial margins.
- Self-identified Republicans and conservatives disliked MFA by 2 to 1 margins.
- Independents opposed MFA by a 56 percent to 37 percent margin, Democrats by a 48-43 percent margin, and split ticket voters by a 58-36 percent margin.
- When respondents were informed “the proposed legislation would allow tax enforcement agents from one state to collect taxes from online retailers based in a different state,” and that it would entail new tax collection obligations for businesses, the margins against it swung to 70 percent and 69 percent, respectively.
- When confronted with the best arguments in favor of the legislation and against it, more than 60 percent of respondents supported the anti-MFA arguments.
I testified last month at a House Judiciary Committee hearing on the Internet sales tax issue and offered an alternative to address the concerns of big-box retail without unwisely erasing borders as boundaries of state tax power and letting loose the hounds of revenue agents: simply extend the collection standard used for brick-and-mortar sales (where tax is collected based on where the business is located) to all remote sales as well. It would create a simple system that wouldn’t unduly burden sellers while keeping appropriate limits on tax power. This is the way to “level the playing field,” as Rigell desires, without providing a cure that’s worse than the disease like the MFA.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
One of the benefits of the Congressional Data Coalition has been our ability to collaborate on mutual projects of interest. CDC members recognize that reusable, cleaned-up legislative information, especially the laws themselves, is essential for both the legislative data community and the public. Unfortunately, at least some information will likely not be provided by Congress or will not be provided in a timely manner.
Almost 3½ years ago, in November 2010, GPO and the Library of Congress were authorized by the Joint Committee on Printing to make the following three document sets available on the Internet: Statutes-at-Large, the Congressional Record (1878-1998), and the Constitution of the United States: Analysis and Interpretation (CONAN). Quoting from the JCP letter:
These are key primary research sources, essential to understanding our laws and legislative history, and they should all be readily available online in electronic format.
Why are the Statutes-at-Large important?
The United States Statutes at Large is the legal and permanent evidence of all the laws enacted during a session of Congress (1 U.S.C. 112). Every law, public and private, is published in the order of its passage. The set contains treaties and international agreements before 1948, concurrent resolutions, proposed and ratified amendments to the Constitution and proclamations by the president. Pretty much the whole enchilada. And before you ask about the Constitution, yes, volume 1 includes the Declaration of Independence, the Articles of Confederation and the Constitution of the United States.
But isn’t the U.S. Code the law? Only a subset of the laws in the Statutes at Large are contained within the U.S. Code and many of those laws have been modified by subsequent laws to the point that the original language is difficult to discern. Hundreds of laws have been enacted that never made it into the U.S. Code. For example, of the 440 laws enacted in 1949, 235 made it into the U.S. Code.
The importance of Internet accessibility to the laws enacted before 1951 should be obvious. The Law Revision Counsel (the organization responsible for putting together the U. S. Code) in their Table of Acts Cited by Popular Name have identified almost 2,100 laws that were enacted before 1951. Searching legislative text from the 112th Congress (2011-2012) shows that the past is not completely forgotten. About 6 percent of Statute-at-Large citations reference pre-1951 volumes.
So, while some of these laws are cited in current bills, they remain officially available only as paper documents and, unofficially, there are scanned versions of the volumes at the Constitution Society’s website, but these volume files until now have not been broken down into individual laws, treaties, presidential proclamations, etc.
Making more laws available
Starting in January 2014, the Congressional Data Coalition and citizens joined together to make the individual laws and other documents of the U.S. Statutes-at-Large available as discreet PDF files. We’re a little over halfway through the initiative, but we need volunteers to help for the final push.
Rather than attempting to produce a full-text table of contents for each volume, as was accomplished by GPO for the post-1950 volumes, we’ve extracted the page number where each component (public law, resolution, etc.) begins by reusing the OCR’d text from the Constitution.org PDF files. We then crowd-source the proofreading and correcting of data, which is where we need your help. Once the simple table of contents is completed, software extracts the individual PDF files for each sub-document. The software to do all this is open source and available online.
As of April 2014, volumes 28 through 64 (1893-1951) have been processed. We’ve also begun extracting the text from the tables of contents from the volume files and combined it with the simple table of contents data being used to create the files (sort of like a final QA check). By combining the two data sources (the text from the tables of contents along with the public law number and stat page data) we’ve been able to build more usable tables of contents. See the U. S. Statutes-at-Large Pre-1951 Directory.
The future of legislative data collaboration
Our approach has combined crowd-sourcing, manual editing and automated processes. We’ve received help from a variety of outstanding volunteers. In two months, we have expanded the availability of laws by 50 years and over 15,000 acts, treaties and international agreements.
Similar approaches should be strongly considered for publishing other historical documents on the Internet. The best example of the elephant in the room, of course, is the Congressional Record – only available on the Internet back to 1994 but published since 1873. As software developers, both inside and outside of government, we should be thinking in terms of how crowd-sourcing can help us build the necessary document repositories for the 21st century.
Our role, as the Congressional Data Coalition, includes supporting public initiatives that provide improved legislative information for ourselves and the public. Tom Bruce, Director of the Cornell Law Information Institute, said it eloquently in his hangout session when he talked about the dream of having an open-access Westlaw or LexisNexis with layered access to information providing legal/legislative services housed under many roofs – a federation of services and data.
We should not shy away from identifying data anomalies and providing corrected data in a fully transparent and constructive way to support the public need for accurate and timely legislative information. It might not seem that having all of these laws as discreet files on the Internet would mean much. We’ve lived without them as discreet electronic files for a long time without any apparent problems. My hope for now is that these documents will extend our electronic legislative library so that our history can be read and referenced over the Internet.
Please consider helping our effort and volunteering along with us at http://legisworks.org/sal. Special thanks to Owen Ambur, Daniel Schuman, Sara S. Frug, Joe Jerome and Matt Steinberg.
The New England Journal of Medicine and authors of a commentary on e-cigarette use have ignored our call for correction of a substantial error regarding e-cigarette use among American schoolchildren in 2011 and 2012. Authors Amy L. Fairchild, Ronald Bayer and James Colgrove of Columbia University double-counted some users in a figure they used to illustrate data from the National Youth Tobacco Survey (NYTS)(seen at left).
The commentary, published Dec. 18, addressed the legitimate question, what is the appropriate public health goal: eradication of smoking or elimination of all tobacco products?
Clive and I, along with my University of Louisville colleague Nantaporn Plurphanswat, submitted a letter to the NEJM editor on Dec. 22. We explained:
The [Fairchild] figure inaccurately represents data from the National Youth Tobacco Survey on use of cigarettes and e-cigarettes by U.S. students in 2011 and 2012 in a report from the Centers for Disease Control and Prevention (2). For example, the figure shows that 16.8% of high school students used either product in 2012. However, the correct percentage is 14.6% because of dual use, which was reported in another CDC publication (3). We submit a revised figure that accurately represents the information in both CDC reports. [below]
On Feb. 19, Editor Debra Malina informed us that our letter and corrected figure would not be published.
We subsequently sent an email request to Dr. Fairchild. We advised that her figure was constructed incorrectly, noting:
It does not properly account for e-cigarette users who also smoke, and these are the majority. Given this misconstruction, the chart should not be reproduced in its current form. We have taken this up with the NEJM, but they do not wish to publish an alternative from us. That being the case, the responsibility for amending the chart rests with you as lead author. We urge you to submit a revised figure along the lines we included in our communication with the editor. We attach our letter and revised chart and would be happy to discuss the underlying data (also available in the referenced CDC publications) that we used to create it.
Dr. Fairchild ignored that missive, and a March 3 follow-up email.
The NYTS survey has been subject to repeated and egregious abuse by anti-tobacco forces, all to serve the specious claim that e-cigarettes are a gateway to cigarette smoking.
Tom Frieden, director of the Centers for Disease Control and Prevention; Dr. Tim McAfee, director of the CDC Office of Smoking and Health; and FDA Tobacco Center Director Mitch Zeller started the gateway fallacy with reports and press releases, a tactic that I labeled “irresponsible theatrics.” I also detailed how the CDC abused the data.
The inaccurate information in the NEJM is a dangerous error that can undeservedly gain traction through repetition. This happened in 1981, when National Cancer Institute epidemiologist Dr. Deborah Winn misstated oral cancer risks related to smokeless tobacco. Her erroneous data became gospel for anti-tobacco forces, despite her subsequent acknowledgement of the misstatement.
The NEJM is doing public health and science a disservice by refusing to correct the error.
Arguably the two biggest economic stories of the last decade are the Great Recession and the rise of a category of new businesses that turn noncommercial capital and individuals’ spare time into valuable commercial assets. It’s too early to say which will have the greater lasting impact in fifty years’ time, but there’s a strong case to be made for the latter.
If the key economic trend of the 19th and 20th centuries was the growth of economies of scale—factories, big firms, multinationals—we are now seeing the opposite. And nowhere is the discontinuity with the industrial past more evident than with the new firms using smartphone apps and online markets to meet consumer demand for services ranging from physical storage space to urban transportation—a list that continues to expand and may soon impact virtually every corner of commercial life.
Libertarians have risen to the defense of these new firms against local regulators whose attitudes toward innovation run the gamut from apathetic to thuggish. But they have largely missed the most interesting part of the story: America is seeing what Peruvian development economist Hernando de Soto calls “dead capital” come to life.
This “peer production economy”—the development of new platforms to connect buyers and sellers who otherwise would not have connected, either because of supply- or demand-driven constraints, regulatory barriers or high transaction costs—is placing that which we didn’t formerly think of as productive capital into the stream of commerce. The result may be a blurring of the lines between personal consumption goods and productive capital, and we may become much wealthier as a consequence.
Take the burgeoning markets that allow people to rent out part of their homes, either as a kind of bed and breakfast (e.g., Airbnb) or for storing other people’s goods (e.g., StoreAtMyHouse.com). Census data show that America has over 460 million bedrooms in our more than 190 million housing units; that’s about 1.5 bedrooms for every man, woman, and child in the country. This represents a great deal of capital that people own but aren’t leveraging to earn returns.
And while this unused real estate wealth is not the “dead capital” of the world’s poor that de Soto describes, overzealous or captured regulators can cause it to take on some of the same characteristics, chief among them the inability to enter the stream of commerce. That’s what we have seen in New York’s attacks on Airbnb or Seattle’s war on any form of private transit aside from taxis and livery service. Regulators are, in effect, seizing some of the bundle of rights of capital ownership—and mostly for purposes inimical to the idea of free markets.
Consider the growth of the so-called “ride-sharing” industry. Most of these firms aren’t about sharing per se; the term “sharing” suggests the non-remunerative joint use of resources, and most ride-sharing drivers are in it to make money. By placing their cars (and their work as drivers) into the stream of commerce, they are bringing to the market resources that would otherwise have lain fallow. (And, of course, if you want to put your capital to work for you without any additional work, RelayRides connects car owners with the carless, a pure instance of valuable personal property turned instantly into commercial capital stock.)
This injection of non-commercial capital into the commercial sphere is remarkably democratic. More than 90 percent of American households have one or more cars, with half owning two or more; the median household has more than $6,800 equity in motor vehicles. That means that vast majority of American adults have an asset that they could make economically productive, which could be particularly valuable to the unemployed or people who have seen their wages fall or their hours cut back.
While the growth of the peer production economy has been cast in the popular media largely as a technology issue, from an economic perspective the technical aspect is relatively banal; the novelty is found in the underlying business models. The value lies in creating new marketplaces and new markets that allow sellers (owners of capital and labor) and buyers to transact in a way they could not before. These firms are simply using technology—and fairly mundane technology at that—to reduce search costs and information asymmetries. In that regard, they’re no more innovative than any marketplace developed by men to engage in Smith’s “propensity to truck, barter and exchange one thing for another.”
Notably, few if any of these peer production companies actually provide the services they purvey; Uber connects black car drivers with passengers, Airbnb links renters with travelers and Etsy allows small artisans to create virtual storefronts. Uber owns no cars, Airbnb has no properties and Etsy prints no Insane Clown Posse fan art. They are really marketplace innovations, not tech innovations—and have as a result little of the “gee whiz” appeal of, for instance, Google Glass or commercial drones.
Just as Hernando de Soto estimated there is more than $9 trillion in dead capital globally, a non-trivial amount of the trillions of dollars in Americans’ non-financial household net worth is undoubtedly dead—not because of informal titles, uncertainty of ownership, or dysfunctional financial institutions, but because the owners of this capital didn’t really see what they have as capital. And even if they did, markets were too riddled with information asymmetries, barriers to entry and high transaction costs for this capital to be commercialized.
What we are seeing now is likely the tip of the iceberg; who knows what other capital lies dormant and how entrepreneurs may find ways to use it? Next month marks 15 years since Berkeley’s Space Science Laboratory released SETI@Home to take advantage of the spare CPU cycles of home computers to crunch radio telescope data in the search for extraterrestrial life. The concept has since been expanded to everything from biomedical research to climate modeling. If we can figure out ways to take spare clock cycles and donate them—or in the case of Bitcoin mining, monetize them—there are undoubtedly any number of other commodities from which we can extract wealth.
Hernando de Soto’s realization that across the world, the poor were sitting on trillions of dollars of dead capital was a significant breakthrough for the development community. Today in the United States, entrepreneurs are coming to a similar conclusion, and they are developing innovative ways to bring that capital to life.
The question now is whether regulators and policymakers will allow this capital to make us wealthier—or send it back to the grave.
The study, conducted by economists at R Street Institute and published on March 24, 2014, analyzed IRS data on a zip code basis to assess the distribution of tax benefits across the major metropolitan regions as well as income levels. The findings of this study only serve to affirm economic research that points towards tax preferences not really benefiting Americans, although they lead to forgone revenues of about $175 billion each year for the government.
From the Tallahassee Democrat:
Hays had also been pushing to reduce the size of the Cat Fund. As in past years, the effort faced bipartisan opposition because of concerns that lowering the coverage limit would boost costs that would be passed on to homeowners. Free-market think tanks such as R Street Institute, as well as private reinsurance companies, support Hays’ approach to the Cat Fund.
From Wall Street Journal:
At the other end of the generational spectrum, elderly Americans are trending Republican but do not favor the cuts in Social Security and Medicare that many conservatives advocate. Younger party intellectuals such as Ross Douthat, Reihan Salam and Henry Olsen have advanced a populist agenda—focused more on working people than on “job creators”—that would use government to address the neglected needs of downscale Americans. Nor have conservative reformers gathered under the banner of the journal National Affairs shied away from government as an instrument of public purpose.