Microfinance as a Community Institution

A first person account of microfinance in Malawi:

As far as underwriting criteria go, the one thing that gets the loan officers comfortable with the borrower is monitoring. This is a country where few borrowers have access to paper, and no one I saw had electricity in their house, so no one had an in-home computer. Never mind the Internet. Documentation on business revenues, cost, and profits is probably nonexistent before the first loan. So, loans begin very small — about $100-150. The timeline to repay is short — a month or two. The interest rate is not nominal — 2.5% a month. If the first loan is repaid, then the borrower may get a second loan. There are no refinancings of unpaid loans. And, borrowers must have an “exit plan” — a plan to build up savings so as to quit borrowing at some point. To get there, borrowers are required to deposit weekly into a security account with their trust group (more about that in a minute) and into a savings account. Borrowers are also taught how to keep business records and calculate profits.

But describing the mere mechanics of the loan process gives a very shallow picture of what’s really happening here — the microlending operation goes far beyond merely giving out small loans. It’s a comprehensive system that involves careful oversight by the “Transformation Officers” (loan officers), hands-on financial education for new borrowers, community support and accountability in the form of weight watchers-style monthly meetings, village co-ops that serve to guarantee each other’s loans, and a bank-on-wheels.


So what’s the IP value of a metro schedule?

The Washington Metropolitan Area Transit Authority is being short sighted in its refusal to make its metro scheduling data free for use. Trying to score a few dollars in ad revenue by losing an opportunity increase the value of their product to consumers? Not the best business strategy. And although bit by bit they’ve been conceding some ground on the issue, they seem set on maintaining control of their transit data for now.

In comparison, the Obama administration appears to be on the right path: http://www.data.gov/. Okay, admittedly, it’s a bit easier for the federal government to take such a step than it is for state level transport agency to do so, as under 17 USC § 105.59 “Copyright protection … is not available for any work of the United States Government.”

(Edited to add: For the record, WMATA is not a federal agency. )

The D.C. government is already on board with governance in the age of wikipedia, with programs like Apps for Democracy and publishing DC city operational databases online.

So what’s the deal with the Metro, then? Why aren’t they trying to encourage this sort of user-driven expansion of their services?

As a policy matter, Metro and other transit agencies should be taking the open source route. There are hundreds of public transport applications out there. The market has shown that it will happily provide them. And this is a best case scenario for consumers — google around until you find an app with good reviews, and spend a few bucks on it.

Refusing to hand the transit data out or giving exclusive monopoly rights to any single company for distribution is 1) unnecessary, as this product is being supplied on the market already, and 2) is also extremely unlikely to result in a better quality service, as the ones out there already appear to be doing a good job. Not to mention, it is obvious that WMATA is never going to get paid for it.

But even if it’s a bad policy, that doesn’t mean they don’t have the legal ability to claim exclusive rights to it.

As every good little law student knows, you can’t copyright a fact. Feist Publications, Co. v. Rural Tel. Serv. Co., 499 U.S. 340 (1922). This isn’t just under the Copyright Act, it’s a constitutionally mandated requirement, under Article I, 8, cl. 8. Congress can only give IP protections where there has been “independent creation” + “modicrum of creativity.”

So can you copyright public transit data or not? Well, that depends — there are a lot of different questions going on here.

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Why You Can’t Use Google Transit in D.C.

It’d be fair to describe me as somewhat hostile towards intellectual property rights. Intellectual property rights exist only to the extent necessary to ensure that future creators of intellectual property will continue to produce. Full stop. Past creators of intellectual property are entitled to not a bit more; they have no legitimate claim to any profits generated from their works beyond that.

Which is why I hope public transit agencies who are wrongly claiming to posses a “copyright” and other intellectual property rights in their transportation routing and scheduling data lose, and lose horribly.

For the record, not all local governments are behaving this way. San Francisco, Boston, and Portland in particular have all been exemplary in making their public transport data available for free, even linking on their websites to independently created applications, for iPhones or other devices, that provide passengers with updates and route planning information.

Oh, but not the DC Metro. The DC Metro thinks that, rather than providing improved, more useful transportation services, it should be getting paid for the transit data it incidentally generates in the course of operating its trains and buses.

How much do they want to be paid? Apparently enough to justify a half million in investigating what they could be paid! From July,

In the recently-approved budget, Metro staff included a $500,000 item to hire a consultant for “Intellectual Property Valuation” service. A Metro spokesperson said that they were interested in figuring out what valuable intellectual property they have and what it might be worth in the market.

The Metro is concerned with potentially losing ad revenue from their website if they allow outside organization to offer route finding services. And what do they make per a year from their website? Well, last year it was $68,000. As one commenter pointed out, if releasing their transit data recruited a mere 88 new passengers, it pays for itself. That’s even assuming the WMATA somehow lost all of its web traffic as a result.

Greater Greater Washington has a great take down of the Metro’s refusal to make their data available, stretching back to the beginning of the wrangling with Google Transit. Check out the latest update here:

Metro’s real business is transportation. The ad revenue is a nice sideshow, but it shouldn’t trump convenience to riders. Wilson was arguing that Metro should not help riders in order to force them to use the Web site against their will, all to protect this tiny sliver of revenue. Why not charge for the trip planner entirely? Should Metro promulgate a new policy that every train will pause for 15 seconds after it reaches a station and before the door opens, in order to force riders to look at the ads on the walls? What’s the difference?

The WMATA does now make its data available online, for not fee, but with a ludicrously restrictive license. Note that “WMATA maintains title, ownership, rights and interest in and to the Data.” What ownership rights would these be? Well, it’s not going to be trade secret if it’s publicly released. It’s not trademark. It’s certainly not patent. So what is it?

Apparently, copyright. Next up, a glance at whether Metro has a legal leg to stand on.


In John Frum We Trust

On Tanna, an island in the Vanuatu archipelago, there is a volcano god known as Kerapenmun.

Kerapenmun has two sons, and they are still worshipped today. The first was John Frum.

This is February 15, John Frum Day, on the remote island of Tanna in the South Pacific nation of Vanuatu. On this holiest of days, devotees have descended on the village of Lamakara from all over the island to honor a ghostly American messiah, John Frum. “John promised he’ll bring planeloads and shiploads of cargo to us from America if we pray to him,” a village elder tells me as he salutes the Stars and Stripes. “Radios, TVs, trucks, boats, watches, iceboxes, medicine, Coca-Cola and many other wonderful things.” [DOC]

The John Frum Movement sprung up sometime in the late 1930’s, and quickly became associated with the American GIs who were stationed at Vanuatu.

In 1943, the U.S. command, concerned about the movement’s growth, sent the USS Echo to Tanna with Maj. Samuel Patten on board. His mission was to convince John Frum followers that, as his report put it, “the American forces had no connection with Jonfrum.” He failed.

That’s not the only cargo cult on Tanna, however. John Frum has a brother, too — Prince Philip, the Duke of Edinburgh, and husband to Queen Elizabeth II. The Prince Philip Movement believes that Prince Philip is “a divine being, the pale-skinned son of a mountain spirit and brother of John Frum. According to ancient tales the son travelled over the seas to a distant land, married a powerful lady and would in time return.” Their faith is strong:

London may be half a world away from this obscure corner of Melanesia, but villagers say the spirit of Prince Philip is close. “We can’t see him, but sometimes we hear his voice,” said Chief Jack.

He knows that Prince Philip is, like him, in the twilight of his life, but Chief Jack is unfazed, believing the prince may be immortal.

If not, the villagers might switch their allegiance to Prince Charles or his sons.

“We don’t know where England is but we know he lives there and he has four children: Charlie, Andrew, Edward and Anna [sic],” said Jimmy Nipil, a tribe member in his thirties. “We believe England is a very special place.”

And as a bonus, here’s the quote of the day:

In 1964, one cargo cult on New Hanover Island in Papua New Guinea offered the U.S. government $1,000 for Lyndon Johnson to come and be their paramount chief.


Justice delayed is justice denied, in more ways than one.

I was going to resist commenting on the Polanski affair, or maybe limiting comments to any issues raised by his extradition. There are too many appalling apologies out there condemning his arrest, and far too many attempts to minimize his crime, that make me reluctant to wade in to the fray. Let’s be clear: Polanski forcefully and statutorily raped and sodomized a 13 year old girl that he had drugged, over her repeated objections and attempts to fake an asthma attack to get him to stop. This man deserves no one’s sympathy or defenses of his character.

But completely ignoring the details of the crime, having a 30 year fugitive from the U.S. arrested while on a trip to Switzerland does make for an interesting thought experiment. There is a great post at Cheap Talk that I wish I’d written:

Should punishment depreciate as time passes? As usual the answer probably depends on whether you think of punishment as justice or as a mechanism to internalize externalities.

The post points out three interesting questions this raises. First, after a span of thirty years, we are effectively a new person from who we were before; can a punishment for a crime committed half a lifetime ago then serve any purpose? Second, might the long delay between act and punishment be an argument for increasing the punishment? After all, thanks to the human tendency to engage in future discounting, a punishment of equal severity that is administered later in time is effectively a lesser punishment than one administered immediately. And, third, given that the cost of a prosecution spanning three decades (and three countries) is much greater than the cost of a quicker one, but also given that prosecutors who have all the time in the world are likely to be much more successful in getting a case together, there is always the risk that “the freedom to delay induces prosecutors to optimally impose costs on the innocent [and on the criminal justice system as a whole] in order to maximize chances of conviction.” Should we then be more hostile to such delayed prosecutions, in order to keep this bad incentive in check?

(Any dangers in falsely proving guilt that are posed by decay in the quality of evidence are minimal, the post points out, when the defendant has confessed to the crime as Polanski has.)

To expand on this some, the three major justifications for criminal punishment are rehabilitation, retribution, and deterrence. (You can add others in there, such as compensation and denunciation. But compensation is more civil in character, and denunciation can bit fit under both deterrence and retribution. I’ll stick with three categories for now.) A delay of 30 years inevitably changes the rationales for each one.

Rehabilitation is the weakest of the three, by far. There is no evidence I’ve seen to suggest Polanski has been a serial rapist during his years on the lam, and at 76 years old I’d be willing to accept for purposes of argument that he no longer is a threat to others.

Retribution is a harder question, although made somewhat simpler by the fact that the victim involved has publicly forgiven Polanski, and would rather be out of the spotlight than to have the whole ordeal gone through again. However, retribution isn’t merely for the benefit of a criminal’s victims. “Retributionists regard punishment, like justice, as an end in itself. In fact, they regard punishment as a requirement of justice. Retribution is the philosophy that the offender deserves to suffer. The physical harm inflicted on the offender or the damage done to his property is not a means to some other end such as compensation, deterrence, or reform. Punishment itself is the end.” Retribution also serves to sake society’s thirst for vengeance — to give people an outlet for such desires within our system of courts and law, rather than to engage in vigilantism to achieve it.

As is clear from all the meta-commentary over Polanski’s arrest, there are a lot of strong feelings out there about the necessity of punishing Polanski. And remember: this is a double headed crime here. Rape is not the only crime he committed, he also became a fugitive by skipping out before his sentencing hearing and fleeing to France.

So whatever muting effect three decades might have had on the desire for retribution over the rape is more than outweighed by a widespread feeling of anger that he has managed to escape justice for so long. Under this approach, Polanski’s crime was not committed 30 years ago, but rather began then and has been committed anew every day since then that he has avoided standing trial. During that time, he has lived life as a free man, under his true name, making movies, and winning Oscars. Unlike most decent fugitives, he hasn’t kept his head down, acquired an alias, and quietly made a new, honest life for himself.

American egalitarianism is most often expressed by the idea that “no one is above the law.” Polanski attempted to prove that this didn’t apply to him, and for thirty years he succeeded. The loudest and angriest cries for blood that are going on now stem not from the underlying crime itself, but rather from his successful evasion of punishment for so long. Moreover, there is a feeling that it was Polanski’s wealth, fame, and foreign connections that enabled him to do so — and there is nothing more sure to raise American desire for retribution than that.

Deterrence would also be served — at least in some measure — by punishing Polanski, although for the rape this would be of only minimal justification. While I do in some respects believe in the ‘economic lawbreaker,’ where a criminal’s willingness to commit crimes varies with the expected punishment to be imposed, I cannot for the life of me conceive of a rapist who stays from committing a crime because, “well, if I commit it, but get caught, but then escape to France for 30 years, I can still live there as a free man while eating good bread every day, so I think it’s worth it.”

Rather, the deterrence value would be against would-be fugitives. Had Polanski not fled to France, he almost certainly would have been sentenced to prison — but he would almost just as certainly have been released from it twenty years ago, likely more. Instead, Polanski will now probably die in prison. And for the last 30 years has been unable to engage in extensive travelling, always living in fear of capture and extradition. He may have had a nicer life as a fugitive than most, but he was still a fugitive. Let this be a lesson to other accused defendants, then: go through the court system, serve your time now, and one day you will be a free man again.

All that aside… The most important and profound statement I’ve seen yet on the matter comes from Polanski’s victim.

“The one thing that bothers me is that what happened to me in 1977 happens to girls every day, yet people are interested in me because Mr. Polanski is a celebrity.”

Amen. Polanski’s crime is hardly sui generis. Although punishing Polanski would be warranted, it’s only a drop in the ocean towards achieving justice .