The Free Harbor Fight: Transportation Meets Chinatown

Unlike its natural rivals—San Diego, San Francisco, and Seattle—Los Angeles is a rotten place for a port. But that hasn’t stopped the city known for inventing and reinventing itself from becoming the busiest container traffic hub in the US. The story of how L.A. transformed itself into one of the world’s great shipping centers is rife with corruption, power politics, double-dealing, bribery, and betrayal. It’s a story that could only have dripped from the pen of one of the city’s Hollywood hacks--if it weren’t true.

Despite its worldwide association with sand and surf, Los Angeles began life as an inland community. Its original port was at San Pedro, roughly 25 miles to the south. But San Pedro had been cursed by nature. There was no shelter from waves and wind; it was far too shallow to accommodate shipping; and its bottom was mudflats, making construction of heavy piers or breakwaters difficult. Bringing cargo ashore meant transferring it to longboats from ships anchored several miles out at sea, rowing it ashore, and then hauling it by hand across a rocky beach and up a steep slope. The only alternative to this difficult operation was to beach the ship, an even more challenging undertaking. Writing in his 1834 account of his time as a sailor on a ship plying the California coast, Two Years Before the Mast: And Twenty-Four Years After, Charles Henry Dana called San Pedro a “hated… thoroughly detested spot.”

Should We All Just Give Cash Directly to the Poor?

Silicon Valley heavyweights like Facebook co-founder Chris Hughes and Google have a new favorite charity: GiveDirectly, an organization that makes direct transfers (via M-Pesa) to poor people in the developing world. From Forbes:

“Instead of building hospitals, why don’t we just give poor people money? Research shows it’s effective,” [Hughes] said. Hughes, who purchased The New Republic magazine in early 2012 and serves as publisher, also joined the board of GiveDirectly.

Backing up Hughes’s point was Jacquelline Fuller, Director of Giving at Google. She told the crowd Thursday night that one of her superiors at Google was extremely skeptical when Fuller first suggested that Google back GiveDirectly. “I was told, ‘You must be smoking crack,’ ” Fuller recalled. But GiveDirectly had exactly what Google wanted: lots of data on how the recipients of cash used it to improve their nutrition, their health and their children’s education. After looking at the data, Google donated $2.5 million to GiveDirectly.

GiveDirectly stems from economist Paul Niehaus's research in India, where to limit corruption the government  makes direct cash transfers via mobile phones.  “A typical poor person is poor not because he is irresponsible, but because he was born in Africa," says Niehaus, adding that GiveDirectly's transfers have had positive impacts on nutrition, education, land, and livestock -- and haven't increased alcohol consumption.  The charity is also No. 2 on Givewell's list of recommended charities.

(HT: Marginal Revolution)

Why Doesn't the Government Fix Sporting Events?

This blog has clever readers. One of them, Corey Forbes, writes in to say:

We know that point shaving, game throwing, match fixing and referee scandals have existed in professional and college sports since as long ago as the 1919 Chicago White Sox. Knowing this, why doesn’t the U.S. Government just fix a sporting event(s) to pay off its debts … or are they doing this already?

I love the "or are they doing this already?"

Anyway: why not indeed (other than the potential p.r. and financial disasters)?

A Better Way to Rank Colleges?

Amidst another scandal surrounding U.S. News and World Report's college rankings, economists Christopher N. Avery, Mark E. Glickman, Caroline M. Hoxby, and Andrew Metrick have proposed another option: rankings based on students' revealed preferences. Here's the abstract:

We present a method of ranking U.S. undergraduate programs based on students’ revealed preferences. When a student chooses a college among those that have admitted him, that college “wins” his “tournament.” Our method efficiently integrates the information from thousands of such tournaments. We implement the method using data from a national sample of high-achieving students. We demonstrate that this ranking method has strong theoretical properties, eliminating incentives for colleges to adopt strategic, inefficient admissions policies to improve their rankings. We also show empirically that our ranking is (1) not vulnerable to strategic manipulation; (2) similar regardless of whether we control for variables, such as net cost, that vary among a college’s admits; (3) similar regardless of whether we account for students selecting where to apply, including Early Decision. We exemplify multiple rankings for different types of students who have preferences that vary systematically.

Chinese Corruption?

The outgoing leader of China, Hu Jintao, has made fighting corruption one of the centerpieces of his party's agenda.  Perhaps because of that, my corruption antennae were working overtime while I was in China. 

In Beijing, it seemed like our tour guide was perhaps a little corrupt.  For example, we attended an acrobatic show one night.  Included in the tour package were regular tickets to the show.  There were also two more expensive classes of tickets available, we were told, that would afford a better view.  The difference in price was not that great – maybe an extra $10 per person for the best tickets, and $5 more for intermediate tickets.  We gave the tour guide the extra $10 per person and told him to upgrade us to the most expensive tickets.  Our seats were indeed not bad, roughly the twentieth row of a theater that had perhaps 60 rows.  The back of chair was emblazoned with the letters “VIP.”  But here is the thing:  almost every seat in rows 16 to 20 was filled.  Rows 3 to 15 were completely empty (as were rows 40-60…it was not a big crowd on hand).  Rows 1 and 2 were completely full.  The only logical conclusion I could draw was that within each price range, the theater filled seats from front to back, and that our tour guide had taken the extra $10 per person, pocketed half of it, and bought us tickets in the intermediate price range.  Had the theater not been so empty, his scheme wouldn’t have been at all obvious – we would have thought it was just bad luck that we were in the back of the VIP section, but the empty rows gave him away.

Can the SEC Cut Down on Foreign Corruption?

Resource-rich developing countries have long struggled to overcome the "resource curse," which includes a strong streak of corruption, but now they're getting a little help from the SEC.  Here's Jeff Colgan of Foreign Policy:

[T]he SEC finally enacted long-overdue regulations requiring any oil company that is publicly listed on a U.S. stock exchange to report the tax, royalty, and other payments it shells out to foreign governments where it operates. Previously, companies were able to conceal this information, enabling a culture of corrupt payoffs that kept the petrodollars flowing into authoritarian leaders' coffers -- even where it directly contravened U.S. interests.

Colgan argues that in addition to helping developing countries, the regulation will reduce violence, which is good news for the U.S. as well.  "Research shows that oil-producing states led by revolutionary governments like that of ousted Libyan leader Muammar al-Qaddafi are more than three times as likely to instigate militarized international conflicts as a typical state," he writes.

Deforestation, and the Incentivized Eco-Crime of Indonesia

There are books that governments keep officially, and then there are the other books - accounts of what people are actually doing and profiting from that are never mentioned in any legal context. A team of researchers from MIT, the University of Maryland, the London School of Economics and the World Bank cleverly used MODIS satellite imagery to uncover this kind of discrepancy as they investigated deforestation in Indonesia.

The satellite pictures allowed for comparison of legal and illegal logging operations. What they found (and write about in a new paper for NBER) shows how an increasingly decentralized government, coupled with very real monetary incentives for local officials, leads to eco-crime.

Indonesia contains one of the largest pieces of tropical forest in the world, rivaled only by Brazil and the Democratic Republic of the Congo. It's also the third largest producer of greenhouse gases behind the U.S. and China, due largely to its "forest extraction" practices. The paper examines three main forces that affect the decision-making and corruption of bureaucrats and government officials in charge of the logging-heavy jurisdictions of Indonesia.

A Corruption/Parking Tickets Map

Forbes's Jon Bruner has made a cool map of economists Raymond Fisman and Edward Miguel's paper "Cultures of Corruption: Evidence From Diplomatic Parking Tickets" (noted here earlier). The paper measured diplomats who used their immunity to dodge parking fines, resulting in a list of violations per U.N. diplomat. Kuwait tops the list at 246 violations per diplomat. The map is paired with corruption scores from Transparency International, Bruner notes:

Fisman and Miguel set out to use the parking data to understand the impact of social norms on official corruption. The idea is that diplomatic parking violations are essentially consequence free, except for any approbation that might come from the diplomat’s home state. A political culture that doesn’t mind its diplomats racking up parking tickets might not mind outright corruption.

FREAK-est Links

This week: Why is our vision getting worse? Could an airline-style loyalty program work for public transportation? Why rich people are bad at reading the emotions of strangers, and a Cornell study uncovers corruption among Amazon's top reviewers.

Have D.C.'s "Best Schools" Been Cheating?

A handful of Washington D.C. schools are embroiled in a scandal over whether teachers corrected wrong answers to boost students' test scores, and thereby, increase their bonuses.