Kevin Drum - August 2013

Why Is Murder Down in São Paulo? The Answer is…

| Fri Aug. 2, 2013 5:00 AM EDT

Members of the Police during a security operation at the ParaisOpolis shanty in Sao Paulo, Brazil.

By now, you've all read my story about the link between the decline of leaded gasoline and the decline of violent crime, right? Here's an update from an unexpected source: the state of São Paulo in Brazil.

Obviously the United States isn't the only place that got rid of leaded gasoline, which means the United States isn't the only place that should have seen declines in violent crime. But other countries made the switch at different times, which means their declines in violent crime should also have taken place at different times. Rick Nevin has done a lot of work on crime trends outside the U.S., so after my piece appeared, I asked him for his predictions for other parts of the world. Here was one of them: "Crime will also plummet over the next 10 to 20 years in Latin America, where leaded gasoline use and air lead levels fell sharply from around 1990 through the mid-1990s." (Crime rates generally start to decline about 20 years after unleaded gasoline is introduced.)

Well, guess what? A few days ago the Wall Street Journal ran a piece about killings by police in São Paulo state. As an aside, they printed the chart on the right, which shows São Paulo's homicide rate, and as you can see, it's declined considerably since 2000.

Is this another triumph for unleaded gasoline? Sort of, but the story is actually a little more interesting than that. Here's Nevin, after noting that air lead levels in São Paulo declined by 65 percent in the early 80s, earlier than in most other Latin American regions. But why?

The 1980-1985 drop in São Paulo air lead was not the result of a deliberate effort to reduce lead exposure: It was the side effect of efforts to reduce Brazil’s dependence on imported oil. Brazil started its gasoline substitution program in 1975, and began large-scale production of E95 (lead-free) fuel ethanol for vehicles running on straight alcohol in 1979. By 1984, E95 fuel accounted for almost one-third of all vehicle fuel in Brazil, and E95 accounted for almost half of all vehicle fuel in Brazil in 1987.

Why the murder decline in São Paulo, when the rest of Brazil hasn't seen similar results? "Ethanol production in Brazil surged from 1976 to 1986, but most of that growth was in São Paulo state, where ethanol distilleries are heavily concentrated, and where sales of E95 fuel were heavily concentrated in the 1980s."

There's more in Nevin's full paper, including some bad news for one Latin American country: "Venezuela did not even introduce unleaded gasoline until 1999, and was one of the last countries to eliminate leaded gasoline, in 2005. In 2010 and 2011, Venezuela had the fourth highest national murder rate in the world. Nobody should be surprised if it records the highest national murder rate sometime in the next few years." So be careful if you plan to visit Caracas anytime soon.

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The Media Loves a Scandal, But Loses Interest When the Scandal Turns Out to be Bogus

| Fri Aug. 2, 2013 12:11 AM EDT

This probably won't come as any surprise, but it turns out that media outlets pay a lot of attention when a shiny new scandal erupts, but a whole lot less attention when the scandal turns out to be a nothingburger. As an example, Brendan Nyhan presents this chart showing coverage of the IRS scandal:

As Nyhan says, this is sort of a subset of the general tendency of the media to pay lots of attention to a new event when it first erupts, and then less as time goes by. This is perfectly normal: public interest in something like the Sandy Hook massacre or the Boston bombings only lasts so long, after all. Eventually there's nothing new to report and we all move on.

But in the case of an event like the IRS scandal, this can leave the public with a serious misimpression. Everyone heard about it when it first happened, but a month later hardly anyone heard about the new revelations that turned it into a non-scandal. This means that an awful lot of people are left thinking it was a big scandal even though it wasn't.

I think the most interesting followup question about this is whether this is just normal behavior or whether it's driven by the fact that conservative media promoted the original story heavily but didn't promote the followups. Perhaps a bit of both. Stories don't last forever, and the followup coverage tends to be a lot less exciting than the original allegations. So diminishing attention is hardly surprising. At the same time, it's hardly plausible that coverage of the followup stories would have been so meager if the Fox/Drudge/Limbaugh axis had been promoting them heavily. Try as it might, the liberal media still doesn't have the same kind of clout when it comes to driving media narratives.

Does the FBI Monitor All Your Google Searches?

| Thu Aug. 1, 2013 2:38 PM EDT

UPDATE: The Suffolk County Police Department says today that they recently received a tip "from a Bay Shore based computer company regarding suspicious computer searches conducted by a recently released employee." Based on that, they paid him a visit. The FBI apparently wasn't involved, and neither was any kind of surveillance of Google searches. More here.


Doug Mataconis passes along a blog post from Michele Catalano about a recent visit her family got from six agents belonging to a joint terrorism task force. It turns out that she had been googling for pressure cookers, her husband had been googling for backpacks, and her son had been googling for news about the Boston bombings. This raised some red flags and produced the JTTF visit. Mataconis comments:

As Catalano notes in her post, as well as in several Tweets regarding the incident collected by Gizmodo, the agents were respectful of her family and didn’t disturb the house in any significant way while conducting their “search.”....Nonetheless, it does raise some interesting questions about exactly what kind of Internet surveillance is going on out there. Quite obviously, the FBI would not have shown up at the Catalano home if some connection had not been made between Google searches conducted several weeks in the past, their IP address, and eventually their home address. On a basic level, this would seem to require; (1) that there is a program out there monitoring seemingly random Google searches by American citizens, (2) that this program allows the government to track IP addresses, or obtain them from Google by some means, and (3) that they were then able to connect the IP address to a home address, presumably with information obtained from whichever company happens to provide the Catalano’s with their internet access.

All of this raises several legal questions, of course. For example, under what legal authority is the Federal Government monitoring the Google searches/Internet activity of American citizens, presumably without a warrant?....More important, though, is how the FBI managed to get its hands on this information and on the Catalano’s home address. Was there a FISA warrant issued?....Was there any warrant issued at all?

Why yes, those are good questions! They're especially good since the agents told Catalano's husband that they make about 100 visits like this each week. Inquiring minds would like to know more.

Shell Says Shale Oil Reserves "Difficult to Find and Develop"

| Thu Aug. 1, 2013 1:27 PM EDT

Here's an interesting tidbit from today's Wall Street Journal:

Royal Dutch Shell PLC on Thursday posted a 60% drop in second-quarter profit, largely because the oil and natural-gas giant wrote down the value of its North American shale assets by more than $2 billion after tax, highlighting the difficulties that energy companies face in finding new oil they can pump at a profit.

....Shell cited disappointing drilling results at its North American shale assets, which it said turned out to contain less oil than it had hoped. Even excluding the charge on those assets, Shell's earnings fell well short of analysts' expectations as the company struggled with production declines and rising costs.

I wouldn't make too much of a single report like this, but it does fall in line with other evidence suggesting that although North America has a lot of shale oil, it probably doesn't have quite the gargantuan quantities that some people think. What's more, the shale oil we do have has turned out to be fairly expensive to get at. Plus shale oil deposits tend to deplete rapidly. Bottom line: don't get too caught up in the shale oil hype.

POSTSCRIPT: Keep in mind that we're only talking about oil here. Natural gas fracking from shale is a different story. There's probably some hype there too, but it's of a different kind.

The Economy is Better, Except that No One Has a Job

| Thu Aug. 1, 2013 11:41 AM EDT

The LA Times reports on the economy today:

Improving economic data is making the prospects more likely that the Federal Reserve will start tapering its massive bond buying next month, a move that suggests the recovery is on solid ground....Economic growth unexpectedly picked up in the second quarter, though it still remained relatively weak. Corporate earnings are largely stronger. Consumer confidence is back to pre-recession levels.

This is all true, and it's all conventional wisdom. But it really shows how low our expectations have gotten. Take a look at the following two charts. The first one, from CBPP, shows that although the headline unemployment rate is down, this is mostly due to large numbers of people dropping out of the workforce and not being counted anymore:

The second one, from Pew, shows the employment rate specifically for workers under 30:

The employment rate of young people cratered between 2007 and 2010, and it hasn't rebounded since. The same report shows that young people are increasingly living at home—hardly a surprise if they can't find a job. And yet, our recovery is supposedly on solid ground. If this isn't the soft bigotry of low expectations, I don't know what is.

Price Wars for Books Are Probably Bad News for Authors

| Thu Aug. 1, 2013 10:52 AM EDT

Is heavy book discounting bad for authors? Matt Yglesias is puzzled:

Buzzfeed has a baffling article up about how Amazon and Overstock are waging a price war on physical books featuring deep discounting and huge wins for consumers. According to Andy Meeks this leaves authors "authors caught in the crossfire."....[But] authors are paid by publishers, who hand out advances and royalty checks. The royalties are based on a percentage of publishers' gross revenues so the retail price of the books sold doesn't mean authors get less money. If anything, retailer discounting is good for authors and publishers because it boosts book sales.

I think there's a fairly straightforward way that this could be bad for authors. Amazon has been waging a battle for years now to get consumers accustomed to low prices on both e-books and physical books. So far, this means only that Amazon doesn't make any money on books. So far.

But what happens when Amazon drives everyone else out of business and there's no one left but Amazon selling books? One possibility is that prices go back up to their old level. Another is that consumers have become so accustomed to price-war pricing that they just won't pay more. Amazon, however, will no longer be willing to lose money on books, so it will demand lower wholesale prices from publishers. The publishers will have little choice but to agree, and authors will get squeezed.

Nobody knows if this is how things will eventually shake out. But there's not much question that Amazon really, really wants to train consumers to expect low prices for books. Unless you believe that Amazon is doing this out of a sense of public spiritedness and will continue losing money on books forever, eventually the piper is going to be paid. That's likely to be bad news for authors.

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Government Action is the Only Way to Raise Fast Food Wages

| Thu Aug. 1, 2013 10:15 AM EDT

The goal of strikers at the nation's fast food restaurants is higher wages. But what's the strategy for getting there?

The strategists know they want to achieve a $15 wage, but they seem to be ad-libbing on ways to get there. Perhaps they will seek to unionize workers at dozens of restaurants, although some labor leaders scoff at that idea because the turnover rate among fast-food employees is about 75 percent a year. Or the strategists and strikers might press city councils to enact a special “living wage” for fast-food restaurants. Or perhaps by continually disrupting the fast-food marketplace from counter to counter across the country, they can get McDonald’s, KFC and others to raise wages to end the ruckus. The protests’ organizers acknowledge that yet another goal is to push Congress to raise the federal minimum wage and pressure state legislatures to raise the state minimums.

I would put my money squarely on the last one. Here's the problem: just like any big company, fast food restaurants respond to public pressure. But they only respond on issues that don't threaten their very existence. So if the public yells loudly enough, maybe they'll stop using trans fats, or put their burgers in environmentally friendly containers. That stuff doesn't really cost them very much.

But higher wages? That's existentially threatening for any single chain. Fast food customers are notoriously price sensitive, and if McDonald's raises its wages, its burgers will cost more and its customers will flock to Taco Bell. No amount of public pressure can overcome that. Period.

This wouldn't be a problem, of course, if McDonald's and Taco Bell signed a truce and both agreed to raise their wages. But that's illegal. Collusion isn't allowed even in a good cause.

But collusion is necessary to make progress. So the only way to square this circle is via a privileged actor who's legally allowed to collude. There are basically two choices here. The first is a union. I'd be all in favor of unionizing fast food employees, but given the state of current labor law; the nature of fast food franchises; and the 40-year death spiral of private sector unions in America, I'd say a successful unionizing drive is unlikely in the extreme. So that leaves only one possible colluder: state and federal legislatures. They can set minimum wages across the board, thus preventing any one company from losing business to another because their wages have gone up. There's no way they're going to increase wages to $15—and given the threat of automation, they probably shouldn't—but it's not impossible to imagine minimum wages going up to $10 or $11. I can also imagine a more generous EITC, and I can imagine a true national healthcare system that raises fast food compensation by a considerable amount. All of these things together could actually get you pretty close to an effective wage of $15.

None of this would be easy, especially now, with the war cry of the tea party ringing through the halls of Congress. But at least it's possible. If you really want to improve the lives of fast food workers, this is what to focus on. Collective action via the government is the only real hope of progress.

For more on this, check out "Could You Survive on Fast-Food Wages?" Our fast food wage calculator lets you see just how you'd do if you earned as much as an average burger flipper.

The NSA's Massive Call Record Surveillance Program Barely Accomplishes Anything

| Thu Aug. 1, 2013 12:41 AM EDT

So how effective is the NSA's massive program to collect call records for every phone call made in the United States? Today they told us:

John C. Inglis, the deputy director of the N.S.A., said there had been 13 investigations in which the domestic call tracking program made a “contribution.” He cited two discoveries: that several men in San Diego were sending money to a terrorist group in Somalia, and that a suspect who was already under scrutiny in a subway bomb plot was using a different phone.

Assuming generously that we're talking only about the program's current incarnation, which dates from 2006, that's about two investigations per year in which it made a "contribution." And if the two plots they're willing to talk about are typical, those contributions are pretty damn meager.

If the call record program were stopping 9/11-style events, or jumbo jets being brought down over the Atlantic, we might all hold our noses and decide that the loss of privacy and the cost of the program was worth it. But for two modest "contributions" per year? That doesn't really sound like a hard call.