Photo Trivia

Ten points if you can identify the woman on the left. (Hint: there's a reason I posted this today.)

Microcredit in China

Attended a panel on microcredit in China this evening. One interesting take-away was that although the default rates on microloans are widely known to be very low, it is often because borrowers rely on family members or others--as opposed to surpluses from successfull investments--to help them make repayments. Many models (including, I believe, the Grameen model, though don't believe Grameen itself operates directly in China) require borrowers to enter into small "borrower groups" that are jointly liable for repayment. Interestingly, borrowers are often not permitted to join borrower groups with their family members, though aside from that restriction they can choose their group freely. These groups help exert social pressure on each individual borrower to repay, though they also serve as what was called "social collateral" (i.e., if one member can't pay, the others will). Of course, if the only capital the group had access to were the microloans, then one could argue that on net the impact must be positive if default rates are low, even if not every investment is successful. But even among the very poor, there are often other sources of capital (such as family, possessions, or land), and I got the sense that these sources often filled in the gaps when it came time to make repayments.

I also found the discussion of costs to be interesting. One panelist noted that scale was a key consideration for those institutions attempting to make microlending competitive. She observed that this had a tendency to refocus microfinance institutions on urban areas (or other areas of high concentration) where more loans could be serviced in a short period, even if the deepest poverty in a given country like China actually existed in the remote countryside. Another panelist (the one most closely tied to a particular microfinance institution in China) mentioned the need to provide business training (a.k.a. "technical assistance") in addition to access to capital. Left me wondering again about the sustainability of a business-oriented model that would inherently involve high costs such as technical assistance and heavy loan servicing (given the high number of small loans and the necessity of unsophisticated servicing techniques). Some of the costs can be minimized, of course, but that may be difficult to do without blurring the mission.

There was also a broad discussion of the types and effectiveness of various microlending institutions in China, as well as regulatory changes that could make the microlending environment there more favorable, but I would need to go back to the slides to really remember all the points on those issues. I think they may get posted online somewhere, so if I find them I will try to post a link.

Incidentally, one of the panelists was the founder of a microcredit intermediary focusing on China called Wokai. I set up a meeting to talk to her more about her experiences, so I'll report back what I learn.

Rural Development Institute

Nonprofit Management today was focused on an organization called the Rural Development Institute. It was held up as probably the most successful individual nonprofit we had studied so far. RDI's mission is to contribute to the alleviation of poverty by "helping the rural poor in developing countries obtain legal rights to land." Essentially, they research and design land reform programs in developing nations and then work with governments and third parties to implement those programs. While there can be many benefits of land ownership, the two mentioned that I found the most interesting were serving as a potential source of economic surplus (and hence investment -- a model often discussed as one of the first steps toward capitalist reform in China) and providing access to credit by serving as collateral (again facilitating investment).

I also found it interesting that the organization's focus was arguably libertarian: make sure the government protects private property rights and let economic efficiency emerge through bargaining. But this really only applied in countries where they were advocating privatization. Since they also seemed to advocate redistribution where property rights were held privately, I asked the guest speaker why bargaining wouldn't occur spontaneously in such contexts. His answer had to do with the transaction costs associated with buying and selling small plots of land. Essentially, he argued that large-scale reform plans could help reduce those costs by aggregating the plots before placing them on the market. But I wonder whether an argument could also be made in favor of reform on the basis of promoting free and fair competition. In other words, similar to monopolies/oligopolies, leaving property rights in the hands of a few wealthy landowners could prohibit the most efficient outcomes.

Incidentally, our guest speaker, RDI's founder and president emeritus Roy Prosterman, was a former lawyer at Sullivan & Cromwell (who has also twice been nominated for the Nobel Peace Prize), so score one for lawyers in management.

EPA and PADN

I'm going to keep this post short, because I'm not sure it's appropriate to make a lot of comments on this situation. But I happened to notice a story in the Palo Alto Daily News (PADN) entitled, "Man shot multiple times, no arrests," with the subtitle, "It's 3rd shooting of the week in East Palo Alto."

Most importantly, it is just a very sad story. But secondarily, I found it a little disconcerting that it was not at all a front-page story in the print version. I can't remember exactly what page it was on, but it was something like 3 or 5. Note: the paper is small, and that is part of the point. I grew up in Washington, DC and I must admit I became accustomed to stories like this getting buried in the Washington Post. It was unfortunate, but at least one could say that in Washington, there was quite a lot of other news to report. Perhaps a questionable argument, but one that could be made.

By contrast, one of the stories that did make PADN's front page today was, "Three ideas in play for Kelly Park," with the subtitle, "Each plan includes turf and lighting; commission to choose a proposal."

Now, one might think, "Ok, but this is the *Palo Alto* Daily news, after all, not the East Palo Alto Daily News." (Note: they are separate towns.) The problem with that is that Kelly Park is in the town of Menlo Park, not Palo Alto. Both Menlo Park and East Palo Alto border Palo Alto directly, but Menlo Park is quite a bit wealthier in most parts.

In addition, PADN's own tagline reads, "Serving Atherton, East Palo Alto, Los Altos, Los Altos Hills, Menlo Park, Mountain View, Portola Valley, Stanford, Sunnyvale, Woodside." (Curiously, Palo Alto itself isn't listed, though perhaps it is simply assumed from the name of the paper, the implication being that the other towns are secondary audiences.)

In any case, I think really what we have is another case of fatigue, or desensitization, or perhaps institutionalized racism/classism, or whatever you want to call it. I openly admit to having been guilty of all of those things along the way at various points, as I am sure I will continue to be in the future. In fact, even talking about this story in those kind of abstractions probably evidences a bit of the same. So I'm not so much pointing the finger as just observing. Having said that, there may also be an even more cynical interpretation, having to do with the fact that PADN's readership (and therefore ad revenue) could be higher in Menlo than in EPA. But the point is, when you have the third shooting in a week in a town that that you supposedly serve, it seems you might want to make some room for that on your front page. Unfortunately, it may be precisely because it was the third one in a week that it didn't end up there.

Regardless, it is sad news.

Unhappy Donuts

Happy Donuts is the biggest P.O.S. institution on the planet. By contrast, the Stanford Avenue Starbucks is just the dumbest P.O.S. institution on the planet. These are subtle distinctions, so let me explain.

The Stanford Avenue Starbucks, as many people around here know, has an unfortunate parking situation. And by unfortunate, I mean completely f'ing stupid. They never have enough parking, and today they lost my business for that reason, even though there are plenty of (unusable) spots right outside--but we'll get to that. Then *later* in the day (this evening), they lost my business because they didn't have enough seating.

The Coase Theorem ought to take care of this situation. According to Wikipedia (where else?), "The [Coase] theorem states that when trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights."

Don't worry about the "in an externality" part. The point is that regardless of the initial allocation of property rights, interested parties will end up negotiating for the most efficient allocation, barring any obstacles like transaction costs that might get in the way. In this case, the theorem is relevant because there are *always* a TON of empty parking spaces right outside the Starbucks that "belong" to other institutions next door. I'm not sure which ones exactly, but I know there are a BBQ store (grills, charcoal, etc.) and an inn right there, and I think maybe someplace I'm forgetting, like a restaurant. The idea behind the theorem is that even if the inn or the BBQ store or wherever technically has property rights in the empty parking spaces, Starbucks should be able to negotiate for rights to those spaces by offering those other places some money for use (or even outright ownership) of them.

Now, one might think that the spaces are actually more valuable to the BBQ place or the inn or wherever than they are to Starbucks, so Starbucks just isn't willing to offer enough to those places to use their spaces. One could imagine, for example, that the net revenue generated on average for use of the space is actually more over time for the other places than it would be for Starbucks. So, for example, if only one person parks in a given space owned the bbq place per hour, but each person who does buys a $200 mini grill that's marked up 100%, thereby generating $100 per hour per space for the BBQ place, then that may be more than Starbucks would generate even if 5 people per hour parked in a space, bought a $5 cup of coffee each, marked up at 500%, thereby generating $20 per hour per space for Starbucks.

If that's really the case, then fine. But I can tell you from empirical observation that those BBQ spaces are empty *all the time.* And furthermore, the BBQ place ought to have a pretty good sense of the variability of its customer arrival rate (how many people buy a mini grill between 8 and 10 a.m. on a Tuesday morning?), meaning there ought to be at least some negotiation possible for those times when customers are going to Starbucks but not the other places. Granted, it might require some big, funny signs, like "THIS SPACE BELONGS TO STARBUCKS FROM 8 TO 10 AM MONDAY THRU FRIDAY AND AFTER 6 PM MONDAY THRU THRUSDAY. ALL OTHER TIMES THIS SPACE FOR BBQ PLACE ONLY." But how high of a transaction cost would that really be? And ok, you might still need security people to enforce something like that, but, as noted below, they're clearly doing that already.

Similar considerations would go into negotiating for more space on the lot to expand, but that gets a little more complicated and probably isn't worth getting into here.

Anyway, as far as I can see, nothing like this is happening. Instead, I have been shooed away by the security guards on several occasions when trying to park in the non-Starbucks spots. What's funny is I'm pretty sure they shoo you away even before you get out of the car, meaning they *assume* you aren't going to whatever place the space is reserved for.

Of course, it could be that this is just a negotiating tactic on the part of the other places to make Starbucks offer more. If it's obvious that there's high demand for the spaces, then Starbucks could have a harder time offering a lower figure. So maybe this is all just a charade, and the deal will close eventually.

But in the meantime, it means I am typing this at Happy Donuts. And Happy Donuts sucks. BIG TIME. It's just depressing and awful. I'm not sure which is worse, the one here or the one by Caltrain and the stadium in SF (I've been to both), but they both suck. I think this one is worse, because at least in SF you know there are other places you *could* go if you weren't hanging out waiting for Caltrain (btw, if it's open, I recommend the Borders instead). But here in the South Bay, Happy Donuts just reminds you of what a complete and utter cultural void you live in, filled with nothing but meaninglessness and stupid business that can't learn to sit down at the negotiating table. I mean, remember, this whole post is about how much I'd rather be at a *Starbucks.* And that is just sad.

Employment Law Center

Went to a lunch talk with an attorney from the Legal Aid Society - Employment Law Center in San Francisco today. She seemed like a terrific attorney and definitely inspired me to think more about the plaintiff's side option. My favorite story was one in which she had 79 very compelling plaintiffs, but was facing an argument from the other side that that the law prevented her from joining them all in a class action. So in response, she and the Employment Law Center filed 79 separate claims. She said there was a "crushing weight" in their office due to a lack of resources, but as soon as they filed the claims, opposing counsel turned around and said there was a "crushing weight" at their big corporate firm and changed their whole tune on the class action issue. Awesome. Just awesome.

Oola

SoMa in SF is a funny place. I'm not sure what exactly I find so amusing about "industrial chic," but maybe it's the fact that the only way to really think that bricks and warehouses are cool is to be so far removed from that kind of thing as part of everyday life that it somehow seems novel to you. In any case, I met a friend in SoMA (he happened to be staying at a hotel in the area) at this restaurant called Oola, which was very hip in a SoMa kinda way. Brick walls, low lighting, an open-space kinda feel. The food was sorta overpriced and nondescript (though not really bad). But it was nice to see my friend, who was also a Michigan poli sci guy and lived in Shanghai during the time I lived in Beijing (so we saw each other a few times in China). He'll be out in SF this summer, but sadly I will probably be interning elsewhere at that time.

In other semi-mundane news, after I got back I tried a single malt Scotch whiskey called Laphroaig ("la-FROYG"), which my roommate bought on the recommendation of another friend of ours. It's quite flavorful, but also quite strong (around 40% alcohol by volume). Apparently it is produced at a distillery on the island of Islay off the west coast of Scotland. Pretty good stuff, and another plug for free trade.

Brita, Lead, and DC

Remember this?

"BRITA Donates 10,000 Water Filters to District"

Then you might want to read this:


"Water-pitcher filters miss lead particles"

Here are some relevant excerpts:

From the city's 2000 announcement: "Mayor Anthony A. Williams and DC Water and Sewer Authority (WASA) Board Chairman Glenn S. Gerstell today announced that The Brita Products Company is donating 10,000 water filtration pitchers for distribution to District families with children under age 6 and women who are pregnant or breastfeeding who live in areas with lead service lines... BRITA water filtration pitchers are certified by NSF International, the nation's leading independent test lab for the certification of water filtration products, to remove 98 percent of lead in tap water. Each filter has a usage life of two to three months and can provide up to 40 gallons of filtered water. The donated pitchers have a retail value of $26.99 each... Last month, the DC Department of Health recommended that children under age 6 and women who are pregnant or breastfeeding in the 23,000 homes with lead service lines not drink unfiltered water."



And from the more recent article on Brita's (lack of) effectiveness: "Water-pitcher filters may not reduce lead concentrations to acceptable standards in homes that have elevated levels of the metal in their tap water, because the filters do not remove lead particles, according to the Ontario Ministry of the Environment Canada. The ministry's declaration was issued just days after it received new advice from NSF International, the organization that certifies water filters."

Note: the second article may require subscription (or access through a university site). Email me, kramer_christopher at hotmail.com, if you want the full article and can't access it with the link.

To be fair, it does seem that Brita had its design assessed by an independent agency, NSF. I don’t remember much from my first-year torts class, but I believe there’s only strict liability for manufacturing defects, whereas design defects are subject only to a negligence standard. In other words, the fact that Brita had their design checked out may be enough to cover them, but don’t take my word for it.

Still, you might think that parents and mothers who were pregnant or breastfeeding at the time would want to know whether they or their kids were drinking water that they thought was ok, when, in fact, it wasn't. Seems like it would also be interesting to know whether there was any contradictory research at the time and whether the kind of lead particles that aren’t caught, according to the second article, would likely have been a problem in DC. If the answer to the first question is affirmative, maybe the independent agency should be the one on the hook (though I’d guess their pockets are not as deep as Brita’s, but that might be a question worth looking into, as well).

Anyone know whether anyone has looked into this yet? The second article is from August 15, 2007, so for all I know this is old news. (Haven't had time to do a search yet.)

Update 2/25/08: Even if Brita was covered when they donated the filters, did they have a duty to warn or issue a recall after they learned from NSF that their filters weren't as effective as they thought? Did Brita do so? If not, would their liability only apply to the period after they learned this information, and would potential plaintiffs be able to sort out the extent of the damage that occurred after that point? Whose burden would it be to sort out the damage? Also, Brita operates on a "customer lifetime value" model (much like razors and blades), so how long would Brita assume that customers would continue buying new filters? Would that be different for customers who had received donated pitchers? And is Brita safe if customers fail to use the pitchers correctly (e.g., by replacing their filters)? If so, what percent of customers are still likely to be using their pitchers as instructed seven or eight years later? You might think Brita would have data on this, given that from a business perspective, Brita would want to know how often its customers would keep buying new filters (and what percent would drop out, at what point, etc.).

Red Rock Coffee

A plug for my favorite coffee shop in the area, Red Rock Coffee, at 201 Castro Street in Mountain View. I'm sitting on the second floor right now, and it's got a great view of downtown, plenty of seating, lots of outlets, and a quiet atmosphere. Oh yeah, and good coffee, too. Almost makes reading casebooks bearable.

In addition to being a great place to get coffee and study, Red Rock is also a great place for the community. I'll let them tell it their way:

"Red Rock was born when a group of people came together and wanted to create a place of genuine community. Not just a great place to meet and hang out, but a place that truly gave back and supported the community that supports it. That’s why the Red Rock functions as a not-for-profit business. We take all profits not used to support the ongoing business of the cafe and donate them to other non-profit and charity groups.

So, you can actually feel good about that triple vanilla latte with a side of carrot cake.

The point is, the more you support Red Rock. The more you support the community. We’re talking little leagues, food banks, community fairs and festivals, art endowments, homeless shelters, local schools, etc. It’s a little way toward making our small corner of the world a better place. An old idea, yes, but a good one."

(Note: I'm unclear whether they actually have 501(c)(3) status, though I guess I could just ask them, but... then I'd totally reveal myself for the big law dork that I am.)

---

One addition: I think it's kind of dumb that they close at 5 p.m. on Sunday. They may know better than I do, but it seems like they're missing out on a decent amount of business. It's 4:30 and there are defintitely still a lot of people here, though maybe by this time people have already bought their drinks and are just sitting here talking and studying (like me) and new people don't really come in around now. But I don't know why more people wouldn't come in to talk, work or study on a Sunday night. Oh also, they close at 10 on week nights, though I wish they'd stay open till midnight, but on that one the "customers are just sitting there" theory may apply. Still, all in all, I do really like this place.

Beer Making

Went up to San Francisco today to make beer with my friend Scott. It was a good time, but it turned out to be a lot less intense of a process than I expected. To a large extent it involved sitting and waiting. Scott got the equipment from San Francisco Brewcraft. The process was pretty simple: we put the grains in a big 5-gallon pot and warmed it up to let it steep, waited a while, took out the grains, warmed it up again, waited a while, added some more stuff (like hops) to the brew, warmed and waited some more, then cooled it down and mixed it with water and covered it. I'm oversimplifying of course, but there was definitely a lot of "and now we wait." And in fact, the process actually takes about 6 weeks, most of which is just waiting for fermentation (although there are a few more steps, including bottling), but yeah, it's definitely not a hobby designed for working off the pounds. Fun though.

Maceo Parker

Wow, amazing. Really amazing. I have a very limited vocabulary to describe music, unfortunately, but Maceo Parker and his band were unbelievable tonight. I've actually seen Maceo Parker once, but at a much bigger venue when he was opening for someone else with a very different style, so I don't think I was ready for the funk. And I have to admit I was a little uneasy at first with the whole funk scene -- in Santa Cruz, in particular, it seemed kinda like a bunch of oblivious middle-aged white people who didn't realize how incredibly dorky they were. But by the end of the concert I have to admit I was on my feet with everyone else, because he and his band were just so incredibly talented. And they were clearly really, really into live performance. (I think he actually does something like 200 shows a year... wow.) The venue also turned out to be terrific -- the Kuumbwa Jazz Center in downtown Santa Cruz. I understand why people say it's a small place -- it's not really *that* small for a jazz club, but then, jazz places tend to be small in general, and when you have totally A-list performers like Maceo Parker blasting out amazing tunes and exploding into the crowd, it *feels* really small. It also seemed kinda bare bones when we first walked in, but again, he and his band just completely filled the space and made it alive. Anyway, one of the best concerts I have been to in a long time, if not ever. Awesome.

Filing Fees

So already by post two, I'm tackling life's most interesting topics... such as... court filing fees!! Woo hoo!! Ok, so actually these are filing fees with the probation department in Santa Clara County. Before anyone asks, no, I'm not on probation. But I have learned through my work at the Stanford Community Law Clinic that Santa Clara County charges $120 to process record clearances, and basically won't waive that fee unless you are on some kind of government benefits program. I spoke to one person who actually said, "Even if you were homeless, we wouldn't waive it."

The reason this matters is that record clearance (also called expungement) is an important step for some people in turning their lives around. It can make it easier to get a job or a professional license, and it has a big psychological impact for some people to get that "stamp of approval" showing that they've moved on. (To be clear, law enforcement still knows and it still stays on your official record, but with an added line below a conviction and sentence that says "expunged.")

I honestly wasn't a huge fan of the idea of doing this work before coming to clinic, mostly because I was more interested in helping people who hadn't committed crimes than those who had. But having now seen some of the people who come in to get help with this process, I am amazed and highly impressed by many of them. Often they have gone through drug treatment programs, gotten involved with a church or some other religious institution, gone back to school, and/or become active members of their community. I think it's a pretty self-selective group, because the expungement process isn't one you are required to go through in any way. In other words, to decide that you want to come into our office, and then take on a process that can involve writing your own declaration (describing where you've been and where you're headed), and maybe even going through a court hearing, you have to be a pretty proactive person.

So what's unfortunate is that in some cases, the only thing that holds people back is the $120 filing fee. In neighboring San Mateo County (where we also do this work), you can file a fee waiver along with your expungement petition. But in Santa Clara, unless you can show you are on government benefits, they won't waive it. What makes this particularly frustrating is that this refusal to grant a fee waiver based on any other factors (such as income) is explicitly contradictory to the statute, which requires that a petitioner's "ability to pay" be considered and that it "shall not be a prerequisite to a person's eligibility."

So I am on a bit of a mission now to get this policy changed in Santa Clara County. The county Board of Supervisors has ultimate authority to set the fee that is currently being charged (although they've apparently delegated that authority to Probation), and the court has the authority to consider an applicant's ability to pay, so it seems that one of those two bodies should be able to effect a change here.

I guess we'll see how it goes. I'll keep you posted, as it were.

First Post

I feel like starting a blog is a bit like getting a gym membership. There may be admirable goals behind it, but somehow the endeavor often seems to peter out after a while. I've had experience with this on both fronts, so perhaps it's a bit silly to try again, but what can I say, here I am.

I think I like the idea of a blog as a reflective tool. I read an old friend's recently and it had a nice perspective on life's everyday happenings. I understand that most people probably don't have time to sit here and read my random thoughts, but I can say that reading hers, even once, was kind of inspiring. Of course, I may take this in a different direction -- political, most likely, given my roots. But for now I think I'll just try posting what's going on in my life, and try to use that as a way of reflecting on whether I feel like I've got the right balance.