Jack

Sylvia Bloom worked for 67 years as a secretary at the law firm Cleary Gottlieb Steen & Hamilton, and accumulated a personal fortune of more than $9 million.

Bloom did this by being "frugal" and "by shrewdly observing the investments made by the lawyers she served," reports The New York Times, which broke the story Monday on its front page.

The story resonates in part because it reinforces a hopeful narrative, which is that wealth is a reward for virtues such as frugality, shrewdness, and patient savings. It helps, too, that the childless Bloom also left the bulk of her estate to charity—another virtue.

But the mechanics of the wealth accumulation, at least as the Times describes it, raise some other questions that are left unexplored by that newspaper's initial report.

The Times quotes Bloom's niece, Jane Lockshin, the executor of Bloom's estate and the treasurer of the charity receiving $6.24 million from it, as explaining "She was a secretary in an era when they ran their boss's lives, including their personal investments…So when the boss would buy a stock, she would make the purchase for him, and then buy the same stock for herself, but in a smaller amount because she was on a secretary's salary."

Perhaps inside every Cleary Gottlieb lawyer is a brilliant portfolio manager struggling to get out. Or perhaps Bloom's returns were about what someone would get simply by investing in a stock index fund over this time period, given the power of compounding over a period of time as long as 67 years. The span coincided with the long post-World War II bull run of the U.S. stock market.

But there's another possible explanation of Bloom's fortune that is less favorable. That is the possibility that she used her privileged access to confidential information to make money.

Other people—even at least one other person who worked at Cleary Gottlieb—have gotten in big trouble for this. A Bloomberg News article published by The New York Times back in 1998, for example, reported, "A former associate at the New York law firm of Cleary, Gottlieb, Steen & Hamilton pleaded guilty yesterday to insider trading for misusing confidential information about one of the firm's clients."

In that case, a Cleary lawyer bought options betting on the price of a company after being assigned by the law firm to help draft documents related to a takeover bid. Maybe that person, who got caught, is the only Cleary lawyer who ever traded based on inside knowledge.

I'm not a big believer in the expansive interpretations of securities law that create these insider trading cases. But in 2016, the same year Bloom died, the Supreme Court ruled unanimously in Salman v. United States that the Securities Exchange Act of 1934 and a subsequent Securities and Exchange Commission rule "prohibit undisclosed trading on inside corporate information by individuals who are under a duty of trust and confidence that prohibits them from secretly using such information for their personal advantage."

It's not clear whether Bloom's bosses at Cleary knew what she had been doing, let alone whether Cleary's clients knew. But no matter what one's view of insider trading law, you don't have to think about it for too long to realize that stock trading by individual confidential secretaries at large corporate law firms poses potential legal and moral complexities. I'd prefer these be handled by agreement among the law firm, its clients, and its employees, rather than by criminal or civil government enforcement actions.

It's complicated stuff, involving, potentially, not only impending mergers and acquisitions but also even ongoing litigation. Imagine a lawyer representing a tobacco company in a liability case who knows that unfavorable documents found in pre-trial discovery will soon emerge in a public court filing, or in an investigative news article. Imagine the lawyer selling, or short-selling, the tobacco company stock based on that information. Imagine the lawyer's secretary doing the same for her own account.

As a legal secretary who lived in a rent-controlled apartment in Brooklyn, Bloom may seem not to fit the stereotypes of rich people. Actually, though, she's precisely representative of the paradox of America's attitude toward wealth. We admire the virtues that create it and simultaneously suspect that there may be another side to the story. Warren Buffett is a brilliant investor and he's also getting rich from selling stuff (Dairy Queen, Coke, fake Wells Fargo accounts) that may not be too good for you. Mark Zuckerberg created an amazing product as a college student and also isn't that careful about your privacy. The Walmart Waltons and Jeff Bezos of Amazon created amazing value for customers and also hurt some local retailers.

Cheer Sylvia Bloom's accomplishment, sure. But you may also want to double check with your secretary—or with your lawyer's secretary—that you all have the same understanding about whether your confidential information is going to be used for private profit, even if those profits eventually go to charity.

Ira Stoll is editor of FutureOfCapitalism.com and author of JFK, Conservative.

A federal judge sharply criticized the special-counsel prosecution of Paul Manafort in court this afternoon, accusing Robert Mueller’s team of attempting to unseat the president by proxy. Judge T.S. Ellis told prosecutors that “you don’t really care about Mr. Manafort’s bank fraud,” and questioned whether Mueller had gone beyond his jurisdiction in bringing the case:

A federal judge expressed deep skepticism Friday in the bank fraud case brought by special counsel Robert Mueller’s office against former Trump campaign chairman Paul Manafort, at one point saying he believes that Mueller’s motivation is to oust President Donald Trump from office.

“You don’t really care about Mr. Manafort’s bank fraud,” District Judge T.S. Ellis said to prosecutor Michael Dreeben, at times losing his temper. Ellis said prosecutors were interested in Manafort because of his potential to provide material that would lead to Trump’s “prosecution or impeachment,” Ellis said.

“That’s what you’re really interested in,” said Ellis, who was appointed by President Ronald Reagan. He repeated his suspicion several times in the hour-long court hearing.

This might revive an issue that Manafort had lost last month. Judge Amy Berman Jackson had dismissed a civil suit over the issue of Mueller’s jurisdiction, but pointedly not on the merits of the complaint. “A civil case is not the appropriate vehicle for taking issue with what a prosecutor has done in the past or where he might be headed in the future,” Berman Jackson ruled in dismissing the lawsuit, which puts the issue squarely on Ellis’ plate.

Ellis notes that the evidence gathered on Manafort has nothing to do with the special counsel probe, and that the Department of Justice had most of it before they began investigating the 2016 Trump campaign. Shouldn’t this have been handled by a US Attorney rather than the special counsel, Ellis asked:

Bank fraud charges did not arise from the Mueller probe and unrelated to #Russia or the @realDonaldTrump campaign, says federal judge.

— Steve Herman (@W7VOA) May 4, 2018

Ellis accused special prosecutors essentially of extorting testimony from Manafort. However, Ellis stopped short of tossing the case out of court:

Judge T.S. Ellis III suggested the real reason Mueller is pursuing Manafort is to pressure him to “sing” against Trump.

Ellis withheld ruling on dismissal of the indictment.

Ellis says he will consider his judgment after reviewing the Rod Rosenstein memo under seal, assessing whether Mueller has jurisdiction over this case. That may not be enough to convince Ellis, at least considering the breadth of his remarks from the bench. Jurisdiction is one thing, but malicious prosecution — which Ellis seems to be accusing Mueller of doing — can occur within proper jurisdiction, too. And a judge can certainly dismiss charges under those circumstances.

If Ellis tosses out the indictment, it might cripple the overall investigation, assuming that it doesn’t get reinstated on appeal. Mueller has gotten a lot of support based on his history of personal integrity even as the expanding scope of his investigation has raised questions. If a judge throws out the one substantial and serviceable indictment he’s produced over ethical questions, it will undermine Mueller’s reputation and that of his investigation, perhaps fatally in terms of prompting congressional intervention against Donald Trump. Even a reversal from an appellate court might not cure the political damage that a dismissal might create.

Update: Bear in mind, too, that this still doesn’t mean that Manafort’s off the hook. Even if Ellis dismisses these charges with prejudice, some of these charges could get refiled by state prosecutors. One of the more curious aspects of the Manafort case was why the DoJ didn’t prosecute him in 2014, when they had nearly all of the components of the case except for a few process crimes allegedly committed during this investigation. At the time, BuzzFeed reported in February, he was considered too small a fish:

In the summer of 2014, an FBI special agent questioned Manafort at his attorney’s office in Washington, DC. Manafort denied knowing anything about money reportedly stolen by the Yanukovych government, according to internal FBI emails reviewed by BuzzFeed News, and promised to turn over documents to the Bureau. He never did, according to the two officials.

“We had him in 2014,” one of the former officials said. “In hindsight, we could have nailed him then.”

The FBI’s top brass, both of the former officials said, deemed Manafort’s suspected financial crimes as too petty: They amounted to only tens of millions of dollars — small potatoes compared to what Manafort’s boss, Yanukovych, was suspected of stealing.

Mueller is cleaning up the DoJ’s fumble, but that doesn’t fall within his mandate. Or at least it shouldn’t, since those crimes had nothing to do with the 2016 campaign. If the DoJ wanted to reinvestigate Manafort, it should have done so on its own.

Update: The Washington Post provides some background to the drama:

The longtime lobbyist has argued that Deputy Attorney General Rod J. Rosenstein overstepped, giving the special counsel’s office a “blank check” to go after Manafort for conduct the Justice Department was investigating as early as 2014.

The charges are a “potpourri of purported misdeeds that have nothing to do with alleged coordination between the Trump campaign and the Russian government,” defense attorneys Kevin Downing and Thomas E. Zehnle wrote in a court filing earlier this month.

Prosecutors countered in their own filing that an investigation into possible collusion between the Trump campaign and the Russian government “would naturally cover ties that a former Trump campaign manager had to Russian-associated political operatives, Russian-backed politicians, and Russian oligarchs.”

Manafort’s defense attorneys have filed similar arguments in his DC circuit court trial, which is hearing charges of money laundering and the process crimes related to the investigation. We’ll see how far that gets.

Update: One more thought on Ellis’ upcoming decision. He could dismiss the charges without prejudice, which would allow the US Attorney to pick up the case. Presumably, that would fall into the lap of Tracy Doherty-McCormick, appointed by Donald Trump after serving as the First Assistant US Attorney appointed by Barack Obama.

If you’re doing a specific therapy for a specific problem (as opposed to just trying to vent or organize your thoughts), studies generally find that doing therapy out of a textbook works just as well as doing it with a real therapist.

That is from Scott Alexander, who considers ways of saving money on mental health care.

A 2016 academic analysis by David Albouy, Gabriel Ehrlich and Yingyi Liu estimated that, in general, rents decrease by 3 percent for each 2 percent increase in the housing stock. (This estimate is close to the estimate of a lengthy blog post analysis at Experimental Geography, done two years ago, looking specifically at San Francisco’s history over the last six decades.)

If our goal is to reduce the average market-rate apartment rent to 27.5 percent of median household income (the midpoint between the 25-30 percent range that is normal), that means reducing the rent from $43,200 to $24,895, a 42.4 percent reduction. Using our ratio of a 2 percent housing stock increase leading to a 3 percent decrease in rents, that means, keeping all else equal, the Bay Area would theoretically need to increase the number of housing units overnight by 28.3 percent. (Let’s round up to 30 percent to make the subsequent calculations more intuitive).

…For example, if it takes 20 years to make up our housing deficit, and underlying trend growth for the U.S. population is 0.7 percent per year (15 percent over 20 years), and the average household size remains 2.3 persons, then the Bay Area will need to grow households 30 percent more than the amount of households needed to accommodate trend U.S. population growth (i.e. 30 percent more than the underlying 15 percent population growth), for a total growth of housing stock of approximately 50 percent over 20 years.

Let’s state it plainly: The Bay Area must increase its total housing stock by 50 percent over the next 20 years to bring affordability down to a reasonable level.

That is from the excellent Patrick Wolff.

Legislative gridlock is often viewed as a uniquely democratic phenomenon. The institutional checks and balances that produce gridlock are absent from authoritarian systems, leading many observers to romanticize “authoritarian efficiency” and policy dynamism. A unique data set from the Chinese case demonstrates that authoritarian regimes can have trouble passing laws and changing policies—48% of laws are not passed within the period specified in legislative plans, and about 12% of laws take more than 10 years to pass. This article develops a theory that relates variation in legislative outcomes to the absence of division within the ruling coalition and citizen attention shocks. Qualitative analysis of China’s Food Safety Law, coupled with shadow case studies of two other laws, illustrates the plausibility of the theoretical mechanisms. Division and public opinion play decisive roles in authoritarian legislative processes.

That is from Rory Truex, via the excellent Kevin Lewis.

Transit ridership fell in 31 of 35 major metropolitan areas in the United States last year, including the seven cities that serve the majority of riders, with losses largely stemming from buses but punctuated by reliability issues on systems such as Metro, according to an annual overview of public transit usage.

…Researchers concluded factors such as lower fuel costs, increased teleworking, higher car ownership and the rise of alternatives such as Uber and Lyft are pulling people off trains and buses at record levels.

I know, I know — if only we would spend more money, do it better, and so on.  An alternative and really quite simple hypothesis is that mass transit is largely a 20th century technology, it is being slowly abandoned, and in the United States at least its future is dim.  The more you moralize about the troglodyte politicians and voters who won’t support enlightenment, the harder it will be to give that hypothesis an analytically fair shake.

And what about the D.C. area?:

Metro’s ridership dropped by 3.2 percent. The trend was largely driven by a 6 percent decline in bus ridership. Dramatic losses to subway ridership, including a 10 percent decline in 2016, had appeared to level off by 2017, when the total number of trips fell by about a percent and a half.

Metro has said about 30 percent of its ridership losses are tied to reliability issues, with teleworking, a shrinking federal workforce, Uber and Lyft, and other factors to blame for the rest.

Here is the full WaPo story by Faiz Siddiqui.

Earlier this week, members of the Polk County, Iowa, Board of Adjustments decided not to force the lone for-profit farm in Des Moines, the county's largest city, out of business.

While that sounds like the county played nice, the truth is that the small, beloved farm, Dogpatch Urban Gardens, faced this grave crisis for no legitimate reason whatsoever.

Farm owners Jenny and Eric Quiner launched Dogpatch "to promote health/nutrition, enhance community, environmental conservation, and instill family values for their children." Last year, Dogpatch's second in business, the farm "produced over 7,500 pounds of organically grown food," an impressive amount given its quarter acre of active farmland.

But regulators' growing demands on Dogpatch have proven costly and legion. According to The Des Moines Register, among the changes the county required or sought to require of Dogpatch were creation of a site plan; installation of restrooms, a septic system, a paved parking lot, and fencing; the planting of dozens of trees; and creation of "a berm in accordance with a flood plan for the area, a[l]though they'd already spent $7,500 adding drainage tile to mitigate the threat of their crops flooding."

This week's hearing was described as the thing that could "tip the scale on whether the couple's two-year-old business ultimately succeeds or fails."

The Quiners say they're happy with the outcome of this week's board meeting. But uncertainty over the future of their business has proven costly. The couple has spent about $10,000 so far, and anticipates even after the board's decision this week that their that the costs will rise.

"The added costs due to our county regulations have put some of our new business ideas on hold as we had to shift our focus to regulatory compliance rather than enhancing our business endeavors," Jenny Quiner told Reason.

But it's not just the money, Quiner says.

"Aside from the financial aspect, this past year has been very stressful," she says. "There were a lot of unknowns with the business and it seemed like every time we had a conversation with our county we had to spend thousands of more dollars to stay in compliance with their regulations."

One thing is certain about Dogpatch: locals have been quick to eat up Dogpatch's bounty.

"The local restaurants who utilize her organic produce are a who's who of the Des Moines culinary scene," the Register reported this January, before regulators came calling. The paper also included Jenny Quiner on its list of "People To Watch for 2018" and notes she's "a leader in the Des Moines food scene."

I traveled to Des Moines in fall 2016. On that, my second trip to Iowa, I served as a guest faculty member at a student food-law summit at Drake University Law School and also gave a book talk at the city's great Beaverdale Bookstore.

Des Moines is a foodie heaven. It boasts easily the best farmers market I've been to in the United States. Downtown's Iowa Taproom features 120 Iowa craft beers (not a typo) on tap.

But costly regulations like those that have threaten Dogpatch are frustratingly common in the area.

Polk County is also home to Clare Heinrich, a teen beekeeper. It was just before my 2016 visit to Iowa that I learned Heinrich's hometown, Urbandale, had ordered her to get rid of her bees, claiming the bees amounted to illegal livestock.

"It's hardly a stretch to suggest that we should be making it easier for local farmers to connect with eager consumers," I wrote in an op-ed that appeared in The Des Moines Register. "And yet rules so often do the opposite."

Small farms such as Dogpatch are becoming increasingly rare in Iowa. "Iowa farms are dwindling in number and growing in size," the Register reported in 2014. According to USDA data, Polk County lost more than 20 percent of its farmland between 2007 and 2012.

Dogpatch and other small farms in Iowa and across the country already face uphill battles as they fight for consumer dollars. The last thing they need is for regulators and regulations to simply pile up more existential obstacles.

A new paper (another summary) in Nature reports on what is perhaps the world’s biggest field experiment which has successfully shown how to, at scale, increase crop yields and reduce fertilizer usage in China. The scope of the 10 year experiment is astounding. The researchers first conducted thousands of field experiments all over China to discover and validate best practices:

A total of 13,123 site years of field trials were conducted from 2005 to
2015 for the three crops (n=6,089 for maize, 3,300 for rice and 3,734 for wheat), with sites spread across all agro-ecological zones…Each field trial included two types of management: conventional farmers’ practice (control) and ISSM-based recommendations (treatment; developed specifically for a given area). The recommended practices were discussed with local experts and participating farmers. Adjustments were made when necessary. Finally, the agreed-upon management technologies were implemented in the fields by the farmer; the collaborators provided guidance on-site during key operations, such
as sowing, fertilization, irrigation and harvest. Campaign collaborators recorded fertilizer rate, pesticide and energy use, and calculated nutrient application rate. At maturity, grain yield and above ground biomass were sampled by the collaborators for plots with a size of 6m^2 for wheat and rice, and 10m^2 for maize. Plant samples were dried at 70 °C in a forced-draft oven to constant weight, and grain yield was standardized at 14% moisture for all crops.

With validated best practices in hand the researchers and tens of thousands of collaborators then fanned out across the country to convince farmers to adopt the best practices.

During the campaign, about 14,000 training workshops, 21,000 field days, and more than 6,000 site demonstrations were organized by campaign staff; more than 337,000 pamphlets were distributed….During the campaign, we also encountered barriers and experienced challenges.  For example, we observed that some farmers appeared indifferent during some  outreach events. We later learned that it was mainly, because they could not comprehend the scientific content that we were trying to deliver. We solved the problem by having local (county or township) agents acting as an on-site ‘interpreter’ in  ways that speaks/connects with those farmers.

This was amusing:

It is also worth noting that the interests of agribusinesses do not always align with those of our campaign staff. For example, one of our main strategies used in the campaign was to select a site (for example, a village) for a given area, establish the base with field demonstrations of ISSM-based practices, then attract and engage more farmers from the same as well as neighbouring villages, creating  a snowballing and lasting effect. But sometimes, our partners in the private sector were more interested in changing sites so as to reach more farmer-clients. Vigorous  debates and discussion ensued. Eventually, the private sector personnel conformed to our reasoned schemes while using the established sites as demonstrations for  visitors from other areas.

Outputs and inputs among the treatment and control farmers were then measured (here I would have liked more information about the randomization. A lot can go wrong or be mismeasured at this stage.).

Farmers conducted all field operations. Campaign collaborators and/or extension agents were responsible for information and data collection. Typically, 10–30 farmers were randomly selected per ISSM-adopting site; another group of randomly selected 10–30 farmers from a nearby village without ISSM intervention served as a control/comparison. From the selected pool of farmers (roughly 14,600 paired data points), information on key management practices were obtained through a questionnaire survey, including crop varieties, planting densities, planting dates, fertilizer rates and harvest dates. For some sites, grain yields were directly measured in the same way as the field trials (see ‘Field trials’) for the selected 10–30 farmers. Yield and nitrogen rate were then averaged for each site.

The results were impressive.

Aggregated 10-year data showed an overall yield improvement of 10.8–11.5% and a reduction in the use of nitrogen fertilizers of 14.7–18.1%, when comparing ISSM-based interventions and the prevailing practices of the farmers. This led to a net increase of 33 Mt grains and a decrease of 1.2 Mt nitrogen fertilizer use during the 10-year period, equivalent to US$12.2 billion.

The entire experiment cost on the order of $56 million and generating $12.2 billion dollars of increased output, not including any environmental gains.

As if this weren’t enough the researchers then surveyed over 8 million smallholder farmers in China to estimate how much output could increase if the intervention were fully scaled.

What’s especially encouraging about this project is that no new technologies, seeds or infrastructure was involved–just basic science and a tremendous outreach campaign. Moreover, since the campaign increased profits it may continue to generate gains in the future even without further intervention as the practices spread. Repeated interventions will be necessary as climate changes, however. Information technology may makes this easier. China can be intimidating.

Iceland in particular stands out among the Nordic states, since it has a smaller welfare state than its larger Nordic cousins and also ranks among the highest share of female managers in the world. On the other hand, Denmark has the highest tax rate among all the nations in the Organisation for Economic Co-operation and Development and ranks at the bottom in terms of its proportion of female managers.

In the dataset for developed economies, there are three countries with equal or higher rates of female managers than Iceland: New Zealand, the United States, and Latvia. These countries have relatively low tax rates: 26.4 percent in the United States, 29.0 percent in Latvia, and 32.8 percent in New Zealand.

That is from a new Cato study by Nima Sanandaji.

Vodka, circuses, and public libraries are in decline.

Russians love Lada (why?), microwaves, and IKEA.  And contrary to what many people believe, the population is now growing.

On top of all that, Vladimir Kramnik is playing brilliantly in the Candidates’ Tournament in Berlin.  I don’t know the time series on poisoning spies and double agents with WMD.

For the pointer I thank Ray Lopez.

Dan Hanson writes:

I wonder how many of the people making predictions about the future of truck drivers have ever ridden with one to see what they do?

One of the big failings of high-level analyses of future trends is that in general they either ignore or seriously underestimate the complexity of the job at a detailed level. Lots of jobs look simple or rote from a think tank or government office, but turn out to be quite complex when you dive into the details.

For example, truck drivers don’t just drive trucks. They also secure loads, including determining what to load first and last and how to tie it all down securely. They act as agents for the trunking company. They verify that what they are picking up is what is on the manifest. They are the early warning system for vehicle maintenance. They deal with the government and others at weighing stations. When sleeping in the cab, they act as security for the load. If the vehicle breaks down, they set up road flares and contact authorities. If the vehicle doesn’t handle correctly, the driver has to stop and analyze what’s wrong – blown tire, shifting load, whatever.

In addition, many truckers are sole proprietors who own their own trucks. This means they also do all the bookwork, preventative maintenance, taxes, etc. These people have local knowledge that is not easily transferable. They know the quirks of the routes, they have relationships with customers, they learn how best to navigate through certain areas, they understand how to optimize by splitting loads or arranging for return loads at their destination, etc. They also learn which customers pay promptly, which ones provide their loads in a way that’s easy to get on the truck, which ones generally have their paperwork in order, etc. Loading docks are not all equal. Some are very ad-hoc and require serious judgement to be able to manoever large trucks around them. Never underestimate the importance of local knowledge.

I’ve been working in automation for 20 years. When you see how hard it is to simply digitize a paper process inside a single plant (often a multi-year project), you start to roll your eyes at ivory tower claims of entire industries being totally transformed by automation in a few years. One thing I’ve learned is a fundamentally Hayekian insight: When it comes to large scale activities, nothing about change is easy, and top-down change generally fails. Just figuring out the requirements for computerizing a job is a laborious process full of potential errors. Many automation projects fail because the people at the high levels who plan them simply do not understand the needs of the people who have to live with the results.

Take factory automation. This is the simplest environment to automate, because factories are local, closed environments that can be modified to make things simpler. A lot of the activities that go on in a factory are extremely well defined and repetitive. Factory robots are readily available that can be trained to do just about anything physically a person can do. And yet, many factories have not automated simply because there are little details about how they work that are hard to define and automate, or because they aren’t organized enough in terms of information flow, paperwork, processes, etc. It can take a team of engineers many man years to just figure out exactly what a factory needs to do to make itself ready to be automated. Often that requires changes to the physical plant, digitization of manual processes, Statistical analysis of variance in output to determine where the process is not being defined correctly, etc.

A lot of pundits have a sense that automation is accelerating in replacing jobs. In fact, I predict it will slow down, because we have been picking the low hanging fruit first. That has given us an unrealistic idea of how hard it is to fully automate a job.

Chicago ranked #1 city in the world to live in for second year in a row https://t.co/FHQ4t6GNwO

— Austan Goolsbee (@Austan_Goolsbee) January 31, 2018

But wait, isn’t Chicago a fiscal mess? How about the state of Illinois?  It remains the case that living in Chicago is still remarkably affordable, and many of the neighborhoods have wonderful food, buildings, and offer a relatively safe (not always) and walkable environment.  You may even hope to find a parking spot.

I would put it this way: there are many ways to impose a Georgist land tax, fiscal insolvency being one of them.  Very wealthy people and institutions know that if they relocate to Chicago, they will be required to ante up for the final bill.  And so they stay away.  For a city of its size and import, Chicago just doesn’t have that many billionaires, nor do I think a rational billionaire should consider moving there.

In other words, there is a pending wealth tax.  Either directly or indirectly, this will place fiscal burdens on Chicago land, the immobile factor.  And this keeps down rents in Chicago now.

Overall, I do not recommend this fiscal course of action, and Chicago may well become a worse city due to eventual insolvency at the local and state levels.  Still, if you are wondering how it is that Chicago is so affordable — and wonderful — right now, this is part of the answer.

I also should note that not every neighborhood in Chicago benefits from this equilibrium, as in some parts gentrification is difficult to come by.

That is the topic of my latest Bloomberg column, here is one bit:

Or consider Nigerian-Americans, Nigeria being the most populous nation in Africa. Their education levels are among the very highest in the U.S., above those of Asians, with 17 percent of Nigerian migrants having a master’s degree.

And:

Economist Edward Lazear suggests a simple experiment. Consider immigrants to the U.S. from Algeria, Israel and Japan, and rank them in order of most educated to least educated. The correct answer is Algeria, Israel then Japan. Although that’s counterintuitive at first glance, it’s easy enough to see how it works. If you are Algerian and educated, or aspire to be educated, your prospects in Algeria are relatively poor and you may seek to leave. A talented, educated person in Japan or Israel can do just fine by staying at home. These kinds of considerations explain about 73 percent of the variation in the educational outcomes of migrants.

Do read the whole thing.

The Guardian…Kelly the dolphin has built up quite a reputation. All the dolphins at the institute are trained to hold onto any litter that falls into their pools until they see a trainer, when they can trade the litter for fish. In this way, the dolphins help to keep their pools clean.

Kelly has taken this task one step further. When people drop paper into the water she hides it under a rock at the bottom of the pool. The next time a trainer passes, she goes down to the rock and tears off a piece of paper to give to the trainer. After a fish reward, she goes back down, tears off another piece of paper, gets another fish, and so on.

…Her cunning has not stopped there. One day, when a gull flew into her pool, she grabbed it, waited for the trainers and then gave it to them. It was a large bird and so the trainers gave her lots of fish. This seemed to give Kelly a new idea. The next time she was fed, instead of eating the last fish, she took it to the bottom of the pool and hid it under the rock where she had been hiding the paper. When no trainers were present, she brought the fish to the surface and used it to lure the gulls, which she would catch to get even more fish. After mastering this lucrative strategy, she taught her calf, who taught other calves, and so gull-baiting has become a hot game among the dolphins.

The dolphins are not only gaming the system they are saving and using a capital structure to increase total output.

The more we learn, the smaller appears the gap between humans and other animals. Over twenty years ago, I read When Elephants Weep: The Emotional Lives of Animals. I was convinced. But at that time it was a controversial book. Today, with thousands of youtube videos of animals clearly having fun or exhibiting other emotions, it seems obvious.

Animal consciousness is still controversial but the gap between other minds and other non-human minds appears to me to be very small. If I can believe in the first, I can easily believe in the second. As the Cambridge Declaration put it:

Convergent evidence indicates that non-human animals have the neuroanatomical, neurochemical, and neurophysiological substrates of conscious states along with the capacity to exhibit intentional behaviors. Consequently, the weight of evidence indicates that humans are not unique in possessing the neurological substrates that generate consciousness. Nonhuman animals, including all mammals and birds, and many other creatures, including octopuses, also possess these neurological substrates.

A few points:

1. Facebook can now claim it is truly addressing the problems (way exaggerated in my opinion) associated with the 2016 election.  This looks decisive, and the company can present it as a turning point.

2. In essence, they are blaming the media, without having to throw the stones themselves.  Americans respond positively to attacks on the media, so this is a strong public relations move.  Facebook retains the option of blaming the media more explicitly for its previous troubles, if need be.

3. The news feed can always be reintroduced under another name or guise.  Two years from now, the entire dialogue about the major web companies is likely to be different, one way or another.

4. I do understand this may devastate some marginal media outlets, and in fact many media outlets are marginal these days in economic terms.  Still, in the longer run I prefer a scenario where other web sites try to compete with Facebook rather than being co-opted by it and dependent on it.

5. Does this mean more ads will turn up on Instagram, chat apps, Facebook Messenger, and other Facebook services?

There is also this angle (NYT, speculative):

Facebook’s pulling back from the news — which necessarily depends on conflict — and elevation of homier material may bolster the company’s attempt to enter China, where it has been met with stiff resistance.

“Facebook is just desperate to get into China, and it will never do that unless it censors news — and this is actually a neat solution to that,” Mr. Weisberg, the Slate chairman, said. “If you only have news on the platform shared by users, users who live under repressive regimes don’t have access to real news and can’t share it, because it’s legally prohibited.”

I’m not entirely happy about this last factor, but I also don’t see how it is better for China for Facebook to remain permanently outside the country.  And if the desire to enter China makes Facebook in some way worse for Americans, that is a potential problem, but I don’t see how this move makes the overall media environment worse for Americans.