Category Archives: Econ & Money

It Could Have Been Any of Us

Posted on June 2, 2013 by Michael Froomkin

I am a new member of a new group of poor people: the college-educated, middle-aged working poor. When you make what I now make, about $1,500 take home, forget about saving any money, every cent will be spent. It’s not a lifestyle choice or lack of discipline, it’s just math. Take out $600 for rent, $400 for bills and what’s left over has to cover co-pays for my heart meds and cardiologist, food and sundries, and any unplanned expenses. That means you’re always running out of things you previously took for granted, from toilet paper to shaving cream.

Rental Cars as a Civilization Advance (Herein Also of the Valuation of Locks)

Posted on May 26, 2013 by Michael Froomkin

The ubiquity of rental cars are one of the great advances of human civilization. Think about it for a moment: you sign your name (and if you’re a member of a rental car company’s membership program, not even that) and you are given the keys to a vehicle that costs usually $20,000 or more. No questions asked. That’s a real hallmark of trust in markets and highly developed institutions.

via View from the Wing

I’ve wondered sometimes how we should treat the costs of locks.

On the one hand, you buy a lock, that is counted as part of GDP. Well-used locks genuinely make you safer; they add to your welfare function. A world in which you are allowed to have a lock, and can afford locks when you need them, is for you a better world than one in which you are not allowed locks, or they are priced out of your reach.

On the other hand, a world in which you need a lock is not as good a world in which, all other things being equal, you do not need a lock. If you could rely on something free — magic, social conditioning, hardwired biological morality — to secure your places and possessions, then you could save all that lock money and spend it on something else, raising your utility even further. So in this view, each expenditure on a deadbolt is a deadweight loss, a sign of a social and economic failure, a waste of resources that could more profitably be employed for something else.

Posted in Econ & Money, Law | 11 Comments

EFF Is Accepting Bitcoins Again

Posted on May 17, 2013 by Michael Froomkin

EFF Will Accept Bitcoins to Support Digital Liberty. This follows a 2-year moratorium.

One key difference from past practice: EFF will liquidate any Bitcoins it receives as soon as it gets them.

EFF’s announcement pointed me to this recent (March 18, 2013) Fincen guidance document, Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies which I had missed. Key graph:

A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB [Money Services Businesses] under FinCEN’s regulations. Such activity, in and of itself, does not fit within the definition of “money transmission services” and therefore is not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs.

Posted in Cryptography, Econ & Money | Leave a comment

The Facts Have a Liberal Bias

Posted on March 6, 2013 by Michael Froomkin

While I’m away, enjoy this video:

Remember this the next time we debate inheritance taxes and progressive taxation.

Posted in Econ & Money | 1 Comment

The Mail Is In the Bill

Posted on February 28, 2013 by Michael Froomkin

Scrivener’s Error has a great idea:

One of the major consequences of the forthcoming end of Saturday mail delivery will be a spike in late fees, interest charged, overdraft fees, and so on as consumers’ bills arrive on Monday (or Tuesday, all too often, after a three-day weekend) instead of Saturday… and the same for their payments, which is even worse, because they won’t get into the outgoing mail until Tuesday (or Wednesday), frequently reaching their endpoints on Saturday (or the following week, especially for all of those credit-card payments going to South Dakota). This is going to be a particular problem with mortgage payments by senior citizens, many of whom do not and/or cannot use electronic transfers. This represents a windfall for the finance industry. It’s a preventable windfall. I therefore modestly propose the following:

No late fee, overdraft fee, interest, finance charge, or any other fee based on timeliness of payment may be asserted or charged on any consumer obligation on or for any day on which there is no United States Postal Service delivery of first-class mail, excepting only twelve (12) designated federal holidays each year.

I suspect that the finance industry would fall all over itself to rescue Saturday (and even Sunday) delivery of the mail under such circumstances. It would cost somewhere around one cent per month per customer account across the industry to fully fund the USPS — and the finance industry would get all of that back, and more, in interest (etc.).

I’m for it!

Posted in Econ & Money | Leave a comment

About that Stadium

Posted on February 11, 2013 by Michael Froomkin

Just about everything that is wrong with the discussion about the Miami Dolphins’ attempt to hold up the taxpayers of Miami-Dade county for a giant bit of corporate welfare is visible from the first sentence of Sunday’s Miami Herald story on the ~~lead~~trial balloon:

The Miami Dolphins have agreed to seek voter approval of tax dollars for Sun Life Stadium, with team executives dropping their objections to a referendum on the controversial plan, sources close to the matter said Saturday.

The Dolphins have “agreed” to let voters be consulted directly! Get that? We can’t have a referendum unless they agree? It’s as if Miami-Dade were negotiating with another sovereignty — a county in Texas, or a country in South America. Next if we are lucky we will read that Dolphins have “agreed” to follow certain locals laws that they happen to approve of.

Sorry guys. Taxpayer-funded stadiums are just about always a bad idea. Here are just some of the reasons:

Owners game the system, pitting municipalities against each other, and abandoning cities that don’t subsidize them … and sometimes abandoning those that subsidize them if some other town makes a better taxpayer-subsidized offer.
The economics behind the supposed financial benefits is highly suspect: mostly they do not exist. See Dennis Coats & Brad Humphreys, The Stadium Gambit and Local Economic Development, 23:2 Regulation 15 (2000). In any case, there are many other capital improvements one could make with that kind of money that would show a much larger return. (The right question isn’t “will this show a benefit” but rather “compared to what”.)
In addition to the teams’ multi-millionaire (or billionaire) owners, the big winners are the corporations and .1%ers who get to use the skyboxes added to the stadium.
Ticket prices to the events are beyond the means of many of the very taxpayers who have to pay for the project.

In addition to those generic problems, this particular stadium upgrade, now, is a super-bad idea for these extra reasons:

To whatever limited extent the area will benefit from increased tourism revenue, Broward county will get about half the benefit — but the savvy authorities in Broward have said they won’t pay a penny (and there will be no referendum there, either!).
Super Bowl weekend will overlap the Boat Show, when hotels are sold out anyway. Not only will there be no extra benefit to the area in terms of occupancy but there will be chaos. I suppose there may also be price gouging, which might feel like a benefit to the hoteliers in the short run, but that just risks driving the Boat Show away in the long run.
Our elected officials can’t be trusted to negotiate a decent deal – or to ensure taxpayers benefit from any profits.

This proposal is worse than socialism: in Miami we socialize the (high) costs of stadiums, but privatize the benefits.

Here’s a modest proposal: How about, as a condition of any proposal that we pay for this turkey, we require that 15% of the tickets — including some of the good seats — be given away free by lottery (limited to local taxpayers) for every home game?

Posted in Econ & Money, Miami | 1 Comment

More on the Temporary Debt Limit Waiver

Posted on January 24, 2013 by Michael Froomkin

The House duly passed the debt limit waiver bill 285 to 144, with 33 Republicans and 111 Democrats voting no. House GOP leaders duly made statements about what a great achievement ‘no budget no pay’ was, perhaps an attempt to distract from how great a climbdown the main part of the bill was.

Most lawyers I’ve communicated with took the view that most every court, and certainly the Supreme Court, would not choose to declare the debt ceiling waiver unconstitutional — even if both mechanistic and good-faith application of current severability doctrine would suggest that it should. That’s probably correct predictively, which says something about the importance of realpolitik in Constitutional interpretation. Although anyone who ever read Dames & Moore v. Reagan should already know that….

Meanwhile Seth Barrett Tillman has proposed a nice way to avoid the severability question altogether. Since the text of the 27th Amendment says “No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened” the remedy for a bill that violates this provision is an injunction staying the pay terms until the next election. Under this elegant formulation, the pay provision of the bill is not held to be unconstitutional as such, just given no effect until, in this case, it has no remaining effects. Very neat.

Posted in Econ & Money, Law: Constitutional Law, Politics: The Party of Sleaze | 1 Comment