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How Regulation & Enforcement Works

12/19/2014

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When people suggest regulation as the solution to every problem, they imagine honest, competent, and diligent regulators doing whatever they should be doing in the public interest. But law is made and enforced by ordinary people, not saints. Ordinary people people look out for themselves, and are easily captured by special-interests. Here's a look at how state attorneys general decide to sue companies on behalf of their state.

New York Times: Lawyers Create Big Paydays by Coaxing Attorneys General to Sue

Much as big industries have found natural allies in Republican attorneys general to combat federal regulations, plaintiffs’ lawyers working on a contingency-fee basis have teamed up mostly with Democratic state attorneys general to file hundreds of lawsuits against businesses that make anything from pharmaceuticals to snack foods.

The lawsuits follow a pattern: Private lawyers, who scour the news media and public records looking for potential cases in which a state or its consumers have been harmed, approach attorneys general. The attorneys general hire the private firms to do the necessary work, with the understanding that the firms will front most of the cost of the investigation and the litigation. The firms take a fee, typically 20 percent, and the state takes the rest of any money won from the defendants.

While prospecting for contracts, the private lawyers have also donated tens of thousands of dollars to campaigns of individual attorneys general, as well as party-backed organizations that they run. The donations often come in large chunks just before or after the firms sign contracts to represent the state, campaign finance records and more than 240 contracts examined by The Times show.

“This has gotten out of hand,” said Scott Harshbarger, a Democrat who was the attorney general of Massachusetts in the 1990s, when this practice first burst into prominence as a result of the litigation against tobacco companies. “And it seriously threatens the perception of integrity and professionalism of the office, as it raises the question of whether attorneys are taking up these cases because they are important public matters, or they are being driven more by potential for private financial gain.”
I am not claiming that the  attorneys general should not be suing these companies. Maybe these are bad companies that ought to be sued. But the timing of the donations clearly tells us that there are variables besides company behavior that factor into the equation.

So when weighing how much regulation and what kind of regulation is needed for something--whether for banks or taxicabs or immigration--always keep in mind that these regulations are created and enforced by ordinary self-interested individuals, not tireless, incorruptible saints.  A complex regulatory regime will provide greater opportunities for corruption. The simpler and more transparent the rules are, the less room there will be for a highly imperfect regulatory process to muck things up.
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The Right Move on Cuba

12/17/2014

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President Obama made the right move on Cuba today. Isolating a country is not an effective way of fixing  anything. Isolation entrenches the political regime, suffocates the economy, and foments trouble.

CNN: Obama Announces U.S. and Cuba Will Resume Diplomatic Relations
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Torturing the Innocent

12/12/2014

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As was bound to happen, sometimes our government tortured innocent people.

It strikes me as odd that many people on the right who believe that government bureucracies are inept when it comes to running schools and parks and police and the DMV, nevertheless show a lot of faith in government employees when it comes to grabbing foreigners, holding them indefinitely in detention camps without due process, and torturing them.
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Owning Up to Torture

12/10/2014

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America tortured its captives. This should never, ever have happened. Owning up to what happened and saying "never again" is the best we can do now. Thank you, Senator Dianne Feinstein, for leading the effort.

Huffington Post highlights some of the torture practices detailed in the Senate Report.
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Sal Khan and Reed Hastings on Education

12/6/2014

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Good interview of Sal Khan and Reed Hastings by Vanity Fair (Scroll down to the video at the end.) Lots of good thoughts from both Sal and Reed. Here's one from Sal (about 2/3 into the video):
Regardless of your starting point, regardless of how quickly you may be able to process something initially, that most people who get to a high degree of success, it's usually because of this growth mindset. They're doing a lot of struggle, a lot of effort, they're embracing failure on a regular basis, and that's what's allowing them to succeed. Sure, I could have practiced basketball everyday, and I wouldn't be LeBron. That's just a reality of the world. But I would be a lot better. And it's hard to say who's going to get to that point. And you know there's a lot of even in our society and i think our Prussian model of school kind of reinforces this, we associate the ideas of slower and dumber together because it's like if you can't keep up with the assembly line, okay you're just going to be tracked someplace else. But there's actually starting to be a lot of research even that people who read slower, who process slower, actually get a much deeper understanding and if you kind of give them the time to process, they are more likely to be able to make significant connections in an idea. One example I give right now, you know, math, science, engineering, these are intensely creative fields. But they don't feel creative because, you know, the way we assess students right now in this domain is like if you were to assess future painters based on how well you mix paint, or future dancers based on how flexible they are, that's the same thing, to assess someone's mathematical creative ability based on how well they can factor a polynomial and how fast they can do it when they are twelve.
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Barbie Can Be a Computer Engineer

12/4/2014

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How to screw up Barbie Can Be a Computer Engineer.
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Superbugs in India

12/3/2014

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New York Times article on the rise of antibiotic-resistant superbugs in India.
“In the absence of better sanitation and hygiene, we are forced to rely heavily on antibiotics to reduce infections,” said Ramanan Laxminarayan, vice president for research and policy at the Public Health Foundation of India. “The result is that we are losing these drugs, and our newborns are already facing the consequences of untreatable sepsis,” or blood infections.

Some health experts and officials here say that these killer bugs are largely confined to hospitals, where heavy use of antibiotics leads to localized colonies.

But India’s top neonatologists suspect the large number of resistant infections in newborns in their first days of life demonstrates that these dangerous bacteria are thriving in communities and even pregnant women’s bodies.

“Our hypothesis is that resistant infections in newborns may be originating from the maternal genital tract and not just the environment,” Dr. Paul said in an interview.

In a continuing study in Delhi at several government-run hospitals that has so far included more than 12,000 high-risk newborns, and was made available to The New York Times, about 70 percent of the babies’ infections were found to be immune to multiple powerful antibiotics, confirming the results of earlier and smaller studies.
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    Ben Mathew

    Author of Economics: The Remarkable Story of How the Economy Works

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