There may be many moving pieces surrounding what has happened with FTX, but a general takeaway from this saga is that the fall of FTX is a firm reminder of why cryptocurrency was created in the first place: to remove the need for third party intermediaries. With that in mind, Erik Voorhees, founder of ShapeShift, said it well when he noted: “The solution [to FTX] is right in front of us: decentralized protocols solve these very problems. … There’s just such hesitancy for people to step into the actual promise of crypto because they are comfortable in these walled gardens.”

It’s certainly unfortunate that it took something like the events of the past few weeks to break through the hesitancy Voorhees described, but that seems to be what is starting to happen (Figure 1). At the very least, the rise in Google activity around terms like “Ledger Wallet,” “Trezor Wallet,” and “Cold Storage Wallet” suggests that people are aware that the full potential of cryptocurrency is better achieved by decentralization.

Self-custody, however, is not just important for protecting oneself against questionable custodians. As Representative Warren Davidson (R‑OH) pointed out when Canada froze the bank accounts of protestors, much of the protections from the state that decentralized cryptocurrencies like Bitcoin offer also depends on self-custody. For example, where current financial surveillance and control largely depends on the third-party doctrine, government officials would be required to secure a warrant to collect private information on someone holding cryptocurrencies in a self-hosted wallet because then exchanges only involve two parties.

The history of the third-party doctrine and the Bank Secrecy Act has been a consistent erosion of Americans’ financial freedoms, yet government agencies do not appear satisfied with their existing level of authority. In late 2020, the Financial Crimes Enforcement Network (FinCEN) attempted to expand its authority to cover self-hosted wallets. And similarly, the Department of Justice (DOJ) recently took a jab at self-hosted wallets in a report explaining cryptocurrency to the Biden administration. Such attempts to expand their reach have been unsuccessful thus far, but it was with these events in mind that Representative Davidson introduced the Keep Your Coins Act—a bill specifically designed to protect Americans from government agencies seeking to restrict the use of self-hosted wallets.

As the dust on FTX settles, Congress should remember that problems with third-party bad actors (custodians and governments, alike) are very different from problems with decentralized cryptocurrencies or self-hosted wallets. Based on current online trends, it seems that people around the world are clearly taking note of this difference.

As I and others have observed, the state of Florida bounced back from its 2000 electoral fiasco by embarking on a bipartisan overhaul of its election administration whose success is worth studying as a possible model for other states. This year Florida conspicuously achieved a prompt count, while also allowing no-excuse mail voting to all voters, in contrast to various other states which took a week or more to resolve close races, typically with large volumes of mail ballots remaining to be counted after Election Day.

The Florida approach involves a variety of different practices, including adoption of strong technology, training and funding of election workers and offices, and more. One of its key aims is to complete the pre-processing of mail ballots in advance, so that personnel can as much as possible turn their full attention to the in-person vote on Election Day. Pre-processing involves the sequence of steps such as reading bar codes, checking dates and signatures, identifying which ballots might be subject to challenge or “cure” based on these factors, and so forth – everything short of actually getting a count of the resulting votes.

Achieving these efficiencies does not come without trade-offs, and it’s worth identifying what some of these trade-offs are.

Florida strongly encourages those who vote by mail to do so without waiting till the very last minute. In particular, if you wait that long in Florida, you can’t just vote your mail ballot at a regular polling place; you have to get in line and cast a regular Election Day ballot (which tabulates more quickly).

Moreover, like most states, Florida requires of nearly all voters that their mail ballots be received at the central election office, not merely postmarked, by Election Day. To account for mail lags, election officials accordingly advise that “you should allow at least one week for your ballot to reach our office.” Building in that time margin means that when special extra steps are needed, such as challenge or “curing” of ballots with a missing date or doubtful signature, those steps can get underway before the very last minute.

Contrast with Arizona, subject of a helpful thread on Twitter yesterday by Maricopa County (Phoenix) Recorder Stephen Richer. Richer notes that “In this November election, we [in the county] received approximately 290,000 early ballot drop offs on Election Day” – almost 20% of voters in the election, and enough to guarantee a drawn-out count even if there hadn’t been widespread tabulator/​printer failures, as there were.

The trade-offs here are real, since as Richer acknowledges many voters do value the convenience in being able to hold off on a decision till Election Day, fill out a ballot at home, and just drop it off. This voter interest in convenience is in inevitable tension with the interest of the wider public in quick resolution of who won, as well as effective allocation of staff and volunteer time.

For that reason, democracies around the world, as well as U.S. states, typically draw up rules that are somewhere in the middle between treating voter convenience as everything and treating it as nothing. For example, the 30 states that require mail ballots to be received by election authorities (not merely postmarked) by Election Day include not just Florida but relatively progressive states like Colorado, Connecticut, Hawaii, Minnesota, Rhode Island, and Vermont. Meanwhile, the 35 states with no-excuse absentee voting, an important concession to convenience, include not just Florida but many relatively conservative states across the Rocky Mountains and Great Plains.

What’s not very helpful is to treat the trade-offs here as if they constituted some index of “voter suppression” or “ballot integrity” about which to have a big Red/​Blue food fight.

The Deferred Action for Childhood Arrivals (DACA) program offers immigrants over the age of 16 temporary authorization to live and work in the United States if they came to the country before the age of 16 and before June 15, 2007. The government has approved more than 835,000 immigrants for DACA since it was created in 2012, but many DACA participants have left the program. In 2022, fewer than 600,000 immigrants were active in DACA.

Since September 2017, the government has released data showing the number of currently “active” participants in the DACA program. At that time, nearly 110,000 immigrants had already left the program, leaving a currently active population of about 690,000. But by June 2022, that number had declined by nearly 100,000 to about 594,000, even as the total number of approvals increased by about 36,000. Overall, nearly 241,000 immigrants approved for DACA at one time are no longer active in the program.

Altogether, 29 percent of DACA recipients had left the program between 2012 and June 2022. This includes 27 percent of the Mexican DACA recipients and 36 percent of the non-Mexican recipients (Figure 2). This means that Mexicans are less likely to leave DACA, while also being more likely to apply for DACA than non-Mexicans who were eligible, according to estimates by the Migration Policy Institute (MPI). Conversely, non-Mexicans are less likely to apply for DACA and more likely to leave it.

Giving Up DACA

Some DACA participants may have left the country. Facing stagnation in Congress, it would not be surprising to see some people giving up on their dream of becoming U.S. citizens. Another possibility is that some DACA participants failed to renew their status as required every two years because they could not afford the $495 filing fee. Many DACA-eligible immigrants cite cost as their primary difficulty in applying. MPI has found that income was a strong predictor of who applied for DACA initially.

Involuntary Departures

About 25,000 DACA participants (10.4 percent of the departures) have had their DACA renewals denied. Some of those people might have reapplied with corrected information and were later approved. USCIS also revokes DACA authorization for criminal violations but as of 2019, only 15,903 DACA participants were arrested for any crime of any kind, including minor offenses that would not jeopardize their place in DACA. Denials and revocations are not the main way that DACA participants leave the program.

Replacing DACA

Another way to leave the DACA program is through adjustment of status to legal permanent residence, which would grant them a green card. Adjustment of status is possible usually through close family connections or employer sponsorship for certain immigrants, but the employer sponsored path appears quite rare.

Under the law, people who entered illegally cannot typically apply to adjust status. However, two types of DACA participants would be generally eligible: those who originally entered the country legally and overstayed their visas and those who obtained travel authorization—known as “advance parole”—through the DACA program, left, and re-entered legally. As of 2017, 45,447 DACA participants had been granted travel authorization—roughly 9,000 per year. DACA travel was suspended from then until 2021, but has since resumed.

No one apparently has obtained statistics on the number of DACA participants adjusting status to legal permanent residence. According to the Congressional Research Service, about 5,000 of the 22,340 DACA participants who obtained travel authorization as of December 2015 had applied for green cards (about 3,000 had already been approved at that point).

This 2015 count excludes anyone adjusting who had originally entered legally, and by 2017, DACA travel authorizations had doubled. Moreover, most DACA recipients adjusting based on family connections would be marrying U.S. citizens, and most DACA participants are now of the age where they are likely to be getting married. Although it is not possible to say for sure, it is quite likely that many DACA participants have left DACA by adjusting to permanent residence.

Fewer New Entrants

Another important reason for the declining population is that fewer new entrants have been able to join it and replace those who are leaving. Thanks to the Trump administration’s attempted rescission and later court orders, almost no new applicants have been permitted. Many immigrants were unable to apply initially because they were too young (under age 16). Only those who are over the age of 16 when they applied can be approved. Others failed to apply because the costs were too high at the time or because they never learned of the program.

Conclusion

The size of the future DACA population is important for policymakers and researchers to understand because it affects the likely costs and benefits of providing permanent legal status to this group. The Congressional Budget Office, for instance, has a static fiscal costs model that estimates that the costs will outweigh the benefits. This estimate—which conflicts with other research—is the only estimate that matters for purposes of the congressional budget, and if the population is smaller, it may actually make it easier for members of Congress to find a deal to preserve the program or provide a permanent replacement.

A couple years ago, I took to this blog to remind then-candidate Joe Biden of the numerous problems that “Buy American” laws, which require U.S.-origin materials in federal procurement projects, caused back when he was vice president and overseeing implementation of the 2009 American Recovery and Reinvestment Act’s infrastructure projects. Taxpayer costs were high; projects were delayed (if not scuttled); and uncertainty reigned, eliciting numerous complaints from American companies and local officials trying to carry out the federal government’s plans. 

My warning, unfortunately, was ignored by now-President Biden, who has repeatedly trumpeted his efforts to insert Buy American mandates into major pieces of legislation and to tighten existing local content restrictions by executive order. But, as detailed in a recent Route 50 piece, his brushoff hasn’t stopped history from repeating itself:

The Biden administration is pushing state transportation departments and their contractors to use more U.S.-made materials as they build new infrastructure, but many industry groups worry the federal government is rolling out the changes too quickly.

“AASHTO is still concerned that the quick implementation of Buy America requirements for such a broad range of materials will cause delays in project delivery while states, contractors, manufacturers, and suppliers continue working to determine how best to track and verify these materials,” wrote Roger Millar, Washington state’s secretary of transportation and the president of the American Association of State Highway and Transportation Officials, in a letter to federal officials.

“Delays and costs will likely increase, at least in the short term, as contractors are forced to shift material purchases to domestic suppliers, who in turn may struggle with availability due to limited quantities and high demand,” he added.

AASHTO isn’t the only group complaining. The American Public Transportation Association, which represents transit agencies, recently told the Biden administration that, “[g]iven the current supply chain constraints, moving to all U.S.-sourced construction materials will inevitably lead to project sponsors paying a premium to meet [Buy American] requirements. The question then becomes whether the market/​industry can absorb a doubling, tripling or even a quadrupling of costs for construction materials.”

Given cost, timing, and other practical considerations, transportation agencies from numerous states, including North Carolina, Idaho, Montana, North Dakota, South Dakota, and Wyoming, have asked for a broad waiver from the Buy American mandates. The latter five recently explained that strict Buy American rules would jeopardize federal projects and, in turn, their local economies:

As relatively rural states that may be considered ‘small market’ by vendors of some materials and products, we are particularly concerned that the burden of an absence of waivers could fall heavily on us, as scarce Buy America qualified products tend to be sent to more populous areas…

The blow to program delivery, local jobs, and transportation benefits that would entail could well be magnified by the short construction season in our northern, high elevation states – where even short delays and project disruptions can push project completion into the “next construction season.”

The Airports Council International – North America echoed these sentiments, noting that denying its members a broad-based waiver “is short-sighted and unnecessarily risks reducing the number of airport construction projects and associated U.S. construction jobs.”

If only someone could’ve warned us.

It was closer than many expected, but Democratic Congresswoman Karen Bass has been elected mayor of Los Angeles. She will be the first woman and only the second African American to be elected mayor of America’s second largest city.

Bass made solving the city’s growing crisis of homelessness the centerpiece of her campaign—and for good reason. There are more than 60,000 homeless Californians living in Los Angeles County. This represents not only a humanitarian tragedy for those living on the street, but a growing quality of life problem for the city’s residents and visitors.

During her mayoral campaign, Bass outlined her plan to address homelessness. Her first step will be to declare a state of emergency. Ambitiously, Bass has promised to shelter 17,000 homeless individuals within the first year of her term as mayor. Some of Bass’s proposals would be good, if modest, first steps. For instance, she would build more tiny homes and convert existing and unused commercial properties into housing units to quickly increase the city’s housing supply at a lower cost.

And her life-long commitment to fighting addiction and mental illness through her founding of Community Coalition will surely help her to develop mental health and substance abuse policies that will alleviate some of the symptoms and causes of homelessness without needlessly placing individuals in California’s prison system.

But Bass’s hesitancy to revise zoning codes within Los Angeles will surely prove these respectable efforts to be worthless. While her campaign website states her desire to update the city’s comprehensive Zoning Code and General Plan, it also notes that she will take “targeted reforms [towards zoning]…while ensuring that new construction is consistent with the neighborhood character…”

And while Bass notes that she hopes to streamline approval for affordable housing projects, it would be more beneficial for her city to move to a fully by-right approval process for all housing developments—not just those that are 100 percent affordable housing. Los Angeles will never be able to bring down the high cost of housing unless it fully eliminates all forms of exclusionary zoning.

Bass’s initial plans suggest that she has an understanding of the problems driving the city’s homelessness crisis. But they also suggest that she will be unnecessarily timid in following through. Given the magnitude of the problem, a much bolder stance will be required.

The American media’s coverage of Colombia’s supposedly new drug policy has been odd. As I argue in my recent piece in Foreign Policy, left-winger Gustavo Petro, who became president last August, has been offering the same old prohibitionist formulas despite claims to the contrary in The New York Times, The Washington Post, and other traditional media outlets.

Take, for instance, the Colombian government’s claim that a change to regional drug policy is imminent because, as Petro’s “drug czar” stated, this is “a rare moment in which many key governments in the region — including the cocaine-producing countries Colombia, Peru and Bolivia — are led by leftists.” This is a strange line of reasoning. After all, communist Cuba and Nicaragua, a de facto left-wing dictatorship, have ruthlessly applied some of Latin America’s most draconian drug laws. In Peru, President Pedro Castillo, who belongs to a Marxist-Leninist party, was elected on an authoritarian platform that included his opposition to legal marijuana, and he frequently boasts of his “frontal assault” against drug traffickers.

Castillo’s traditional drug warrior stance undermines Petro’s hopes that, as Samantha Schmidt and Diana Durán write in The Washington Post, “a unified regional bloc can renegotiate international drug conventions at the United Nations.” Nevertheless, Latin American countries are not the main obstacle to UN-level drug reform as much as the world’s most powerful authoritarian regimes are. China’s ruling Communist Party, which ruthlessly eradicated all opium consumption and production in the mid-20^th century, still executes drug traffickers. For his part, Russia’s Vladimir Putin stated in 2013 that “the legalization of so-called ‘soft drugs’” in Western countries was “a very dangerous path.”

Putin also made clear that there should be no change to “the current international legal framework in this area, which rests above all on the three basic UN conventions” on narcotics (those of 1961, 1971, and 1988). At the 2016 UN General Assembly’s Special Session on Drugs, the Kremlin sabotaged the attempt to make “harm reduction” the centerpiece of a new global approach to drugs. This should beg the question of why an unaccountable transnational bureaucracy was allowed to set the framework for a global drug policy in the first place. Petro, however, insists on the need for “a new international convention that accepts that the war on drugs has failed,” receiving much fanfare in the global press.

This claim, however, is hardly a novelty as far as rhetorical flourishes from sitting Colombian presidents go. During a 2011 speech at Brown University, former President Santos called for “a new global discussion” on drug policy, which required “new strategies, new visions, and new methods.” Like Petro, Santos sought to leverage Colombia’s victim status in the drug war, but his efforts to change the terms of the global drug debate came to naught. Then as now, it was clear that the moral outrage of Colombian politicians, however justified, was unlikely to alter drug policies in the developed world.

Of all the available possibilities to end the country’s decades-long drug war, unilateral legalization is Colombia’s least-worst option. Under a far leftist government that is oblivious to the drug trade’s market dynamics, however, the best bet is not even on the table.

Downtown San Francisco may be in for an extended period of reduced office occupancy resulting in lower revenue for local government. While it is tempting to view the current downturn as cyclical, there are reasons to believe any rebound will be long in coming. That being the case, San Francisco’s public sector should start downsizing now to avoid a fiscal crisis later.

The shift to remote work and the more recent round of tech layoffs have taken an especially heavy toll on San Francisco. Kastle Systems’ back-to-work barometer recently showed San Francisco office occupancy at 41.6% of pre-pandemic levels compared to an average of 47.5% across the ten major markets the company tracks.

In a recent Bond Buyer article, Economist Christopher Thornberg expressed the conventional, optimistic long-term view of the San Francisco tech economy. Reflecting on the collapse of the turn-of-the-century dot-com bubble:

People said then that San Francisco would empty out, but the tech industry came back in the next few years, even stronger…Keep in mind in 2000, there were 550,000 tech jobs in San Francisco before the tech market collapsed … Everyone wondered what would happen. Ten years later, there were 750,000 tech jobs.

But there are a couple of reasons to think that a similar rebound this time is not in the offing. First, in 2000, the internet was still at a nascent stage. Today, most people in the developed world have some form of high-speed internet access, and most people in the developing world can experience the internet on inexpensive older-generation smartphones. With so many people already connected and already engaging with online content for several hours each day, the room for further growth is limited, and thus the tech sector rebounding to a higher level is less likely.

Meanwhile, recent events at Twitter are raising a red flag for tech employment prospects. Under Elon Musk, the company has shed over half its workforce and is still serving a record number of users. If Twitter gets through the current turmoil without taking an extended outage, it will send a signal to other large tech companies that they are overstaffed. Management at these firms may respond with more layoffs, attrition, and hiring freezes. If management is not inclined to make these changes, it will face pressure from Wall Steet to do so.

On the other hand, Musk is an opponent of remote work. If other firms follow his lead in demanding office attendance, more workers may return to downtown San Francisco. But the city could also see the worst of both worlds: lower employment by tech firms and a low percentage of those still employed coming into the office.

A prolonged downturn in office utilization will adversely impact several local government revenue streams. Office buildings will be reassessed at lower valuations, reducing property tax receipts. Fewer commuters shopping at downtown stores and dining at downtown restaurants will reduce sales tax revenues. Fewer bus and rail riders will translate into lower fare revenues. Divided government in Washington is likely to mean less federal grant revenue, while the State of California’s less optimistic revenue forecasts could mean less state aid, especially for local schools.

These circumstances may force the city’s public sector to go on a diet. Up until now, surging tax receipts combined with generous state and federal aid have supported high levels of local spending. This year, San Francisco’s combined city and county government has an overall budget of $13.95 billion, which covers general fund spending as well as the publicly owned airport and other municipal enterprises.

But some governmental services are provided by independent entities, including San Franciso Unified School District, City College of San Francisco, the San Francisco Housing Authority and the Transbay Joint Powers Authority, which runs the multi-billion-dollar bus terminal that recently opened downtown. When the budgets of these four entities are added to the city/​county budget, total spending reaches $15.53 billion, or over $19,000 per resident. Even this number fails to cover all local government spending because it does not include regional entities such as the San Francisco Bay Area Regional Transportation Authority (BART).

While San Francisco’s government seems expensive in absolute terms, comparative analysis is challenged by differences in local government structure across the United States. Unlike most major cities, San Francisco’s County and municipal governments are consolidated. Among cities of comparable size, only Jacksonville, FL and Nashville, TN have a similar structure.

Comparing Fiscal Year 2021 audited financial statements for the three entities, excluding enterprise funds and including school district expenses yields the following comparison:

This analysis shows that the cost of core local government services per capita in San Francisco is more than 2.5 greater than its city/​county peers. That said, it is worth noting that the cost of living is far higher in San Francisco than in the Southeastern U.S., so it may not be reasonable to expect San Francisco to operate at similar cost levels.

But anecdotal evidence suggests that San Francisco government is inefficient. Among these anecdotes are stories of $20,000 trash cans, $1.7 million public restrooms, a $1.9 billion two-mile underground light-rail line, and affordable housing projects costing more than $1 million per unit. On a macro level, the municipal government has a homeless budget exceeding $1 billion, yet the city continues to face a homelessness crisis.

San Francisco’s dynamic tech-powered economy has been able to afford these excesses for many years. But with revenues starting to fall, the time has come to find cost savings. If downtown tech employment and the government revenues it generates are indeed going to be lower over the long term, it will be far better to economize on government now than to kick the can down the road. Maintaining high spending in the face of declining revenues would require overt or covert borrowing to cover operating costs, a bad fiscal practice that shifts the burden onto future residents.

Instead, local leaders should consider initiating a Zero-Base Budgeting (ZBB) process that would require all departments to justify each of their activities. Rather than base subsequent year budgets on prior year spending, ZBB begins with a base of zero. Perhaps the thorough examination of all spending that this exercise requires will bring some discipline to San Francisco government spending.