Topic: General

Krugman vs. Krugman on Statutory Interpretation

To follow-up on my colleague Walter Olson’s earlier post on the Paul Krugman piece on King v. Burwell, what struck me was Krugman’s flexible approach to statutory interpretation.

Here he is in today’s piece:

Last week the court shocked many observers by saying that it was willing to hear a case claiming that the wording of one clause in the Affordable Care Act sets drastic limits on subsidies to Americans who buy health insurance. It’s a ridiculous claim; not only is it clear from everything else in the act that there was no intention to set such limits, you can ask the people who drafted the law what they intended, and it wasn’t what the plaintiffs claim. …

 if you look at the specific language authorizing those subsidies, it could be taken — by an incredibly hostile reader — to say that they’re available only to Americans using state-run exchanges, not to those using the federal exchanges.

As I said, everything else in the act makes it clear that this was not the drafters’ intention, and in any case you can ask them directly, and they’ll tell you that this was nothing but sloppy language. …

So, don’t worry so much about the specific language; instead, look at the drafters’ intent and the surrounding context. Got it.

On the other hand, here’s Krugman from January of 2013, writing about the idea of a platinum coin:

Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.

So in this situation, you should stick to the “letter of the law,” and not worry so much about the drafters’ intent.

Hmm, how to reconcile those two Krugman assertions about the proper approach to statutory interpretation?  That’s a tough one.  Wait, I got it!  We’ll call this the Krugman canon of construction: “Interpret statutes in whatever way makes them consistent with your policy preferences.”

How to Repeal ObamaCare through the Same Process that Gave Us ObamaCare

From my latest at Darwin’s Fool:

Republicans won an impressive number of victories last night, including a larger and more conservative House majority and enough wins to give the GOP at least a 52-seat majority in the Senate. As Jeffrey Anderson and Robert Laszewski have noted, Republicans made ObamaCare a major issue in the election  (the New York Times’ denials notwithstanding). Senate Republicans will fall several seats short of the 60-vote super-majority needed to overcome a Democratic filibuster of an ObamaCare-repeal bill, though. ObamaCare opponents are therefore debating whether and how Republicans could repeal some or all of the law via the Senate’s “budget reconciliation” process, which allows certain legislation to pass the Senate with only 51 votes. Some opponents have proposed getting around these difficulties by getting rid of the filibuster entirely. I think there’s a more prudent, targeted way Republicans could put ObamaCare repeal on the president’s desk, give Democrats a taste of their own majoritarian medicine, and convince Senate Democrats of the virtues of restoring the filibuster on legislation and judicial nominations.

It goes like this…

Read the whole thing.

The World Misery Index: 109 Countries

Every country aims to lower inflation, unemployment, and lending rates, while increasing gross domestic product (GDP) per capita. Through a simple sum of the former three rates, minus year-on-year per capita GDP growth, I constructed a misery index that comprehensively ranks 109 countries based on “misery.” Below the jump are the index scores are for 2013. Countries not included in the table did not report satisfactory data for 2013.

The Costs of Ebola: Guinea and Sierra Leone

For a clear snapshot of a country’s economic performance, a look at my misery index is particularly edifying. The misery index is simply the sum of the inflation rate, unemployment rate and bank lending rate, minus per capita GDP growth. 

The epicenter of the Ebola crisis is Liberia. My October 15, 2014 blog reported on the level of misery in and prospects for Liberia.

This blog contains the 2012 misery indexes for Guinea and Sierra Leone, two other countries in the grip of Ebola. Yes, 2012; that was the last year in which all the data required to calculate a misery indexes were available. This inability to collect and report basic economic data in a timely manner is bad news. It simply reflects the governments’ lack of capacity to produce. If governments can’t produce economic data, we can only imagine their capacity to produce public health services.

With Ebola wreaking havoc on Guinea and Sierra Leone, the level of misery is, unfortunately, very elevated and set to soar.

Bulgaria: Liquidate KTB, Now

The long-awaited audit of the Corporate Commercial Bank’s (KTB’s) assets has been released by the Bulgarian National Bank (BNB). In its wake, a debate has arisen about the future of the KTB: Should it be recapitalized? And if KTB is recapitalized, should the Bulgarian or the European authorities be responsible? However, it is clear from the results of the audit that, once the obscurity of the technocratic arguments is stripped away, there can be no debate. KTB should be liquidated as soon as possible, and whatever proceeds can be obtained in liquidation should be used to reimburse guarantees to depositors paid from the Bulgarian Deposit Insurance Fund (BDIF).

KTB should be liquidated because it is not, and apparently never has been, a commercial bank. Had KTB been operated according to commercial banking principles, it would be virtually impossible for KTB to destroy value on the scale witnessed by the independent auditors. As of September 30, 2014, the auditors estimate that 76% of the asset value in KTB’s non-financial loan portfolio, which accounts for 80% of KTB’s assets, has been lost.

Losing 76% on a commercial loan portfolio must be put into perspective. In making loans, commercial banks generally require a senior secured position. This means that in the event of default, the bank may take collateral from the borrower and use the proceeds from selling the collateral to recover the bank’s principal, prior to any other creditor. From 2003 to 2012, Standard and Poor’s found that European lenders recovered 78% of their principal, on average, from defaulted loans with these characteristics. Even where defaulted loans were not secured by collateral, European lenders averaged a 48% recovery rate. Compare these recovery rates to KTB’s pathetic implied recovery rate of 24%, and it becomes clear that KTB was not operating as a real bank.

The KTB audit report tells a story in which KTB blatantly ignored the basic pillars of commercial lending. According to the report, there is little evidence that initial loan underwriting and subsequent credit monitoring ever took place at KTB.

If KTB’s management were just grossly incompetent, it would be bad enough. But it appears they were also criminals. The BNB is forwarding the audit results to the Sofia City Prosecutor’s Office. The auditors state that KTB lied to and misled BNB banking supervisors, and engaged in transactions with no evident commercial purpose. The suspicion of criminal activity is just another reason why KTB should be liquidated, now.

Americans Don’t Know How Good They Have It

CAIRO—“I could be arrested when I leave here,” said a journalist who I met at the tiny Marriott near Cairo’s Tahir Square.  A student activist observed that he could be detained at any time. 

A veteran human rights activist calmly stated:  “Some of our groups will be closed.  Some of us will be imprisoned.  It is inevitable.”

Most foreigners travel to Egypt to play tourist.  I visited with a human rights delegation, reminding me yet again about how lucky Americans—and, indeed, most Westerners—are.

Most important are the basic characteristics of a free society.  The rule of law.  Civil liberties.  Criminal procedures.  Legal safeguards.  Democratic processes. 

Obviously, even nations which purport to have all of these often fall short.  However, few Americans or Europeans, or citizens of democratic Asian nations live in constant fear of arrest, imprisonment, and torture. 

In Egypt the uncertainty began when arriving.  On both of my trips the government knew our delegation was coming.  Both times I was pulled aside. 

On the first trip an entry guard took my passport and I waited for an hour before officials returned it and waved me on.  The second time after far shorter delay security officials formally welcomed me—after asking for my phone number and hotel destination. 

Of course, the U.S. occasionally stops people from entering, but not typically because they want to assess America’s human rights record.  Even after leaving the arrivals area on my first trip I had to wait again while the videographer joining us unsuccessfully attempted to persuade officials to let him bring in his camera. 

Both visits were filled with interviews—relating all sorts of harrowing stories.  Most every society has injustice and errors are sadly common in U.S. jurisprudence.  However, most Americans don’t expect a visit to a friend to turn into a stint in prison.

In Egypt for reasons of political repression and personal revenge people face arbitrary arrest, perpetual detention, fraudulent trials, and horrific imprisonment.  Some of the accounts we heard could be exaggerated or even false, but reports from people in many walks of life and across the political spectrum suggested that the slightest resistance to state authority risks freedom and even life.

Bill Gates Recognizes the Improving State of Humanity

With the newspapers full of crises, it can be hard to maintain a proper perspective on the progress humanity has made, and to remember that there are individuals striving every day to make the world a better place. In a recent interview, businessman and philanthropist Bill Gates discussed the improving state of humanity, and the work that he is doing through private charity to help those in need.  He said,

I think the idea that people are worried about problems, like climate change or terrorism or these challenges of the future, that’s okay. But boy, they really lose perspective of what’s happened over the last few hundred years. And how science and innovation have been a central factor of that. And I think that’s too bad, because people are lucky to live now. And they should see that progress is actually taking place faster during their lives than at any time in history.

One of the major initiatives of the Gates Foundation, for example, aims to eliminate polio. The data bear out how much progress has already been made towards that end:

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In 1980, about half of all children received the polio vaccine. Today, around 90% of children receive the vaccine, and eradication of the condition is in sight – just as people eradicated smallpox in 1979.

Gates is also among the many caring individuals working to eliminate malaria and malnutrition, areas where humanity has already made great strides. Insecticide-treated mosquito nets, for example, protect more children from malaria in Sub-Saharan Africa:

blogchart2

Malnutrition among children is also declining. In populous developing  regions, such as East Asia and the Pacific, malnutrition affected about 20% of children in 1990. More must be done, but today malnutrition affects fewer than 6% of children in those areas.

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Even one child afflicted by polio, malaria, or malnutrition is too many, but the dramatic improvements the world has made on these fronts should be celebrated. Like Gates, while working to make the world better we must not lose a proper perspective on the progress humankind has already made.