Wirecard Fraudsters Looted $1 Billion From The Company Just Before ‘The Hammer Came Down’

Wirecard Fraudsters Looted $1 Billion From The Company Just Before ‘The Hammer Came Down’

Tyler Durden

Fri, 08/07/2020 – 16:45

Yesterday, we reported that a former Wirecard business partner named Christopher Bauer who likely played a key role in the $2 billion accounting fraud that was exposed in June, precipitating the company’s slide into bankruptcy, had apparently turned up dead in Manila. Or that’s at least what Bauer wanted the world to think.

As the FT’s digging into Wirecard’s sprawling fraud takes its reporters across Southeast Asia, the paper’s intrepid reporters have apparently found a series of suspicious loans to Bauer’s third-party company, an couple other Wirecard ‘payment partners’ that look more like the company was being looted by executives and probable participants in the fraud right before the hammer came down.

That hammer came in the form of KPMG’s independent report, which was, ironically, commissioned by the company under pressure from the media and investors. These loans were made to partner companies in the Dubai, Singapore and Philippines, further complicating, and potentially obscuring, the fraud. Bauer’s former company, PayEasy, and a handful of others named below.

Here’s more from the FT:

Money flowing out of the company accelerated in the months before the collapse. About €155m appears to have been paid out over the first three months of 2020. The bulk of the new loans extended in early 2020 went to Ocap — a Singapore-based company run by a former Wirecard executive whose wife at the time still worked in a senior position at the company. In the first quarter, Ocap received almost €100m, giving it a total debt to Wirecard of €230m, according to a document seen by the FT and two people familiar with the matter. Ruprecht Services, another Singapore-based payments company, received a loan of €40m in the first quarter, lifting its total outstanding debt to Wirecard to €53m, according to a person familiar with the details. It suspended operations this week. The additional lending to the two Singapore-based entities pushed Wirecard’s total loans to business partners in Asia to €870m ($1bn) by March 2020, according to a document seen by the Financial Times. The additional lending came even as KPMG was conducting a special audit at Wirecard in an effort to confirm or refute allegations published in the FT about accounting fraud at the company. Loans also went to Al Alam in Dubai, PayEasy in Manila and Senjo in Singapore — three companies that Wirecard has in the past said processed credit card payments on its behalf in jurisdictions where it did not have its own licences to operate.

Meanwhile, authorities in Singapore have arrested another senior Wirecard executive who allegedly helped the company hide the $2 billion hole in its balance sheet by signing off on fraudulent reports.

Here’s more on that from BBG:

Singapore has accused a director of a local accounting firm of falsifying documents, making its first charges in relation to the scandal surrounding disgraced German payments company Wirecard AG.

R. Shanmugaratnam, a director of Citadelle Corporate Services Pte, was charged with “wilfully and with intent to defraud” falsifying letters to Wirecard, stating that the Singapore firm held tens of millions in euros in escrow accounts, according to charge sheets filed last month and seen by Bloomberg News.

The 54-year-old Singaporean is the first person to be indicted in the city-state over the spectacular collapse of Wirecard, a scandal which has reverberated across the world. The German digital-payments company filed for insolvency in June after saying that 1.9 billion euros ($2.3 billion) previously reported as assets didn’t exist.

The first of the four charges against Shanmugaratnam says that in March 2017, he falsely stated that there was a balance of 177.5 million euros held by Citadelle in an escrow account on Dec. 31, 2016. The other three charges say that in March 2016, he misrepresented that there was 66.4 million euros, 47 million euros and 30 million euros held by Citadelle in three escrow accounts on Dec. 31, 2015.

Singapore was the headquarters of Wirecard’s mostly fraudulent southeast asian business. As far as the loan money goes, our original theory, that Bauer was knocked off by organized criminals nervous about his knowledge of Wirecard’s work with front companies for organized crime.

But since he disappeared in the Philippines and officials apparently haven’t seen a body, we strongly suspect that Bauer may have taken his share of the stolen billion (a large slug worth hundreds of millions of euros) and vanished to live out his days on a beach somewhere (probably in Russia).

via ZeroHedge News https://ift.tt/33yhAng Tyler Durden

Diversity Training Isn’t Just Expensive, It’s Counterproductive

college

“In response to the killing of George Floyd, the massive Black Lives Matter protests and pressure from students,” write Amna Khalid and Jeffrey Aaron Snyder, “dozens of colleges and universities have made public commitments to new anti-racism initiatives.” Unfortunately, the Carleton College faculty members say such efforts are not only expensive but often counterproductive, actually stoking the very divisions they are supposed to heal.

There is evidence…that introducing people to the most commonly used readings about white privilege can reduce sympathy for poor whites, especially among social liberals.

There is also evidence that emphasizing cultural differences across racial groups can lead to an increased belief in fundamental biological differences among races. This means that well-intentioned efforts to celebrate diversity may in fact reinforce racial stereotyping.

With its emphasis on do’s and don’t’s, diversity training tends to be little more than a form of etiquette. It spells out rules that are just as rigid as those that govern the placement of salad forks and soup spoons. The fear of saying “the wrong thing” often leads to unproductive, highly scripted conversations.

Khalid, a historian, and Snyder, who teaches in the education school, cast a gimlet eye on forcing students to engage in activities such as “privilege walks” (in which participants are moved ahead in line based on parental income or educational attainment) and “culture bingo” (which asks students whether they can define melanin or if they know Chinese birth signs). Summarizing research of similar corporate programs, they note

the impact of diversity training at more than 800 companies over three decades…[was] that the positive effects are short-lived and that compulsory training generates resistance and resentment.

Citing costs of between $2,000 and $6,000 for one-day training sessions of 50 people, Khalid and Snyder instead counsel budget-conscious schools to use funds to increase the number of people from historically under-represented populations (including class along with race, gender, and sexual orientation). They argue that teaching primary texts in classroom settings will do more to spur discussion and common understanding than exercises typically run by administrators or outside consultants.

Campus communities don’t need diversity consultants to lead workshops about terms such as “microaggressions,” “micro-invalidations” and “micro-insults.” Instead they should discuss thought-provoking works such as poet Claudia Rankine’s book “Citizen,” a personal account that “strips bare the everyday realities of racism.”…

To explain the concept of “intersectionality,” replace “social identity wheel” exercises with an examination of the 1977 Combahee River Collective Statement, whose Black feminist authors insisted that it was not possible to “separate race from class from sex oppression.”

Their whole case is here.

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In Committee v. McGahn, There is no Equitable Cause of Action to Enjoin Unlawful Executive Action

Today the en banc D.C. Circuit decided Committee on the Judiciary v. McGahn. (Jon Adler blogged about it earlier). The majority held that the House had standing to proceed, but declined to consider whether the Committee has an equitable cause of action. Judge Rogers wrote for the majority:

Consideration of McGahn’s other contentions — including threshold pre-merits objections that there is no subject matter jurisdiction and no applicable cause of action, and potential consideration of the merits if reached — remain to be decided and are remanded to the panel to address in the first instance.

Was this the only way the court could have approached the jurisdictional issues in this case? Should a court decide whether the parties have standing, before deciding whether there is subject matter jurisdiction, or an appropriate cause of action? If there is no subject matter jurisdiction, or no cause of action, the case ends, even if there is an injury in fact. In other words, does standing have to come first. Sometimes standing is easy to decide. In this case, the standing analysis was quite elaborate, and presented an issue of first impression.

For example, let’s say a case presents a really difficult injury-in-fact question. But it turns out the amount-in-controversy was only $75,000.00. A penny short of the amount in controversy for diversity jurisdiction. In that case, court the court avoid the injury-in-fact question, and dismiss the case for lack of subject matter jurisdiction? Any single jurisdictional ground warrants dismissal. Is there any obligation to start with standing?

In the McGahn case, wouldn’t it have been simpler to find there was no cause of action, or there was no subject matter jurisdiction, to avoid deciding the congressional standing issue? Can a court select alternate jurisdictional grounds to dismiss a case?  Is there an order of operations for Article III jurisdiction?  Please excuse my dear Aunt Sally.

In dissent, Judge Griffith found that the Committee lacked standing. He also found that the Committee lacked an equitable cause of action:

Even if the panel were not bound by this precedent on remand, the Committee would still lack a cause of action. The Committee argues that it has an implied cause of action under Article I, that it can invoke the traditional power of courts of equity to enjoin unlawful executive action, and that theDeclaratory Judgment Act provides a separate basis for this suit. None suffices.

Judge Griffith makes standard arguments based on Ziglar and Grupo Mexicano.

The Committee suggests that—even if Article I alone doesn’t provide a cause of action—the court may exercise its”traditional equitable powers” to grant relief. Ziglar, 137 S. Ct.at 1856. But those powers remain “subject to express and implied statutory limitations,” Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 327 (2015), and are further limited to relief that was “traditionally accorded by courts of equity,”Grupo Mexicano de Desarrollo S.A. v. All. Bond Fund, Inc.,527 U.S. 308, 319 (1999). Again, “implied statutory limitations” foreclose suits by the House and suits that implicate a governmental privilege; this one checks both boxes.Anyway, there’s nothing “traditional” about theCommittee’s claim. The Committee cannot point to a single example in which a chamber of Congress brought suit for injunctive relief against the Executive Branch prior to the 1970s. Interbranch suits “lie[] far from the model of the traditional common-law cause of action at the conceptual core of the case-or-controversy requirement.” Raines, 521 U.S. at833 (Souter, J., concurring in the judgment). While equity maybe “flexible,” “that flexibility is confined within the broad boundaries of traditional equitable relief.” Grupo Mexicano,527 U.S. at 322. We cannot simply reference “equity” to justify a vast expansion of our authority to enforce congressional subpoenas.

The dissent reads Grupo Mexicano correctly. However, the correct answer runs far deeper. Indeed, this precise issue keeps arising in executive branch litigation. In the Emoluments Clauses litigation, the Plaintiffs have asserted an equitable cause of action to enjoin unlawful executive action. Likewise, the Plaintiffs in the “Wall” litigation have asserted the same cause of action.

I responded to this argument in three posts (1, 2, and 3), the first co-authored with Seth Barrett Tillman. Like in the Emoluments Clauses cases, plaintiff’s mere allegation that the government is acting ultra vires is not enough to establish an equitable cause of action. Eventually, the Supreme Court will have to address these issues. These parties keep citing Youngstown and Free Enterprise Fund. And those cases simply do not support this erroneous conception of equitable jurisdiction.

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How Cancel Culture Violates Intellectual Freedom

v2

“An open society is a place that has a lot of intellectual pluralism,” says Jonathan Rauch, a senior fellow at the Brookings Institution and the author of the landmark 1993 book Kindly Inquisitors: The New Attacks on Free Thought.

“Canceling comes from the universe of propaganda…it’s about making an idea or a person socially radioactive.”

In this short video essay, Rauch explains why canceling is different from criticism. The open society “is the most successful social principle ever invented” because it allows individuals to make errors as they seek out the truth.

This video is excerpted from a recent podcast interview with Nick Gillespie.

Edited by Paul Detrick; interview by Nick Gillespie; graphics by Lex Villena and Detrick; music by Villena.

Man, blindfold, close: ID 88555518 © Lightfieldstudiosprod | Dreamstime.com, Building, ID 24052982 © Darwin Lopez | Dreamstime.com, Court building, ID 75259710 © Palinchak | Dreamstime.com, Walkup building, ID 5084245 © Typhoonski | Dreamstime.com, Empire state building, ID 49002437 © Lunamarina | Dreamstime.com, Galileo statue: ID 1977308 © Paul Van Eykelen | Dreamstime.com, Typewriter: ID 9786041 © Carroteater | Dreamstime.com, Apple computer: ID 16015038 © Hannu Viitanen | Dreamstime.com, Equation: ID 32998611 © Cienpies Design / Illustrations | Dreamstime.com, Man with microscope: ID 32595853 © Brad Calkins | Dreamstime.com, Error messages: ID 172070111 © Tartilastock | Dreamstime.com, Columbia University: ID 121436904 © Bumbleedee | Dreamstime.com, Microphone: ID 92421717 © Andrianocz | Dreamstime.com, Microphone: ID 92421780 © Andrianocz | Dreamstime.com, Microphone: ID 92920322 © Andrianocz | Dreamstime.com, Man screaming: ID 22650753 © Pixattitude | Dreamstime.com, UCLA Royce Hall: ID 7614737 © Ahdrum | Dreamstime.com, Woman with suitcase: ID 130537458 © Mimagephotography | Dreamstime.com, Woman with briefcase: ID 24865002 © Ljupco | Dreamstime.com, Man writing: ID 115719527 © Ljupco | Dreamstime.com, Woman with bag: ID 102935990 © Ljupco | Dreamstime.com, Man with phone: ID 120330171 © Mimagephotography | Dreamstime.com

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First Amendment Protections in K-12 Schools Not “Restricted to Only Core Political Speech”

So holds the First Circuit in yesterday’s decision in Norris v. Cape Elizabeth School Dist., and I think that’s exactly the right reading of the Supreme Court precedents (and consistent with other circuits’ decisions).

The particular speech in that case was an anonymous “sticky note on a mirror in a Cape Elizabeth High School girls’ bathroom that stated ‘THERE’S A RAPIST IN OUR SCHOOL AND YOU KNOW WHO IT IS.'” One might argue that this is core political speech, because it’s an implicit accusation that the school isn’t doing anything about this, but the court’s decision makes it unnecessary to draw the political/nonpolitical line. “Because we conclude that Tinker is not limited to political speech, we need not decide if A.M.’s sticky note, understood in the context of her prior activities related to sexual assault activism including her statements to the Cape Elizabeth H.S. school board, was objectively viewed as political.”

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COVID-19 and the Tragedy of the Open Access Health Commons

dreamstime_xxl_177378326

The COVID-19 pandemic resembles a tragedy of the commons—a situation where people have little incentive to invest in conserving or producing a resource because they cannot prevent other people from using or taking it. The results are overconsumption, underinvestment, and ultimately the depletion of the resource.

Classic examples of the tragedy of the commons include overfishing, air pollution, water pollution, and overgrazing. In the case of COVID-19, the resource is the public spaces that we all share with one another. Many of these are privately owned, such as grocery stores, salons, bars, restaurants, theaters, and concert venues. Others are not, including public schools, public subways, public parks, and city sidewalks.

Disease microbes treat human bodies as a resource they use for reproduction. To prevent the microbial overexploitation of the health commons requires germ management. The best way to prevent invasive viruses, bacteria, and fungi from wreaking havoc is to enclose the commons of human bodies by erecting barriers to forestall the transmission of germs from person to person. Good fences make good healthy neighbors.

Social distancing measures, facial coverings, and—hopefully soon—safe and effective vaccines are the best ways to enclose the health commons against the COVID-19 scourge. Let’s take a look at each of these barriers to coronavirus transmission.

Social distancing measures include limiting large gatherings of people, closing buildings, and canceling events. They include encouraging people to telecommute for work; closing bars, restaurants, theaters, gyms and schools; canceling sporting events and concerts; and advising people to try to maintain a personal space of six feet when interacting with others in public.

Let’s consider the case of closing restaurants and bars. Many individual restaurateurs and bar owners would surely voluntarily assume the costs of such pandemic precautions as limiting indoor service, spacing tables further apart, setting up physical barriers, and restricting the number of customers served at a time. Taking such costly precautions also benefits the entire economy, and people who are not customers, by reducing the risks of an outbreak and enabling recovery to begin. But if all other businesses are paying for such costly measures, a competing restaurant has an incentive to free-ride off a healthier pool of customers by easing its own social distancing rules. The tragedy of the health commons occurs as social distancing erodes among competing dining and drinking establishments, revving up the epidemic again. There is, therefore, a strong case for compensating the businesses that shut down to implement social distancing policies and their employees who had to stay home.

Social distancing really works. A new review of the initial effects of social distancing measures adopted prior to May 2020 in 10 countries, including the U.S., found that they “appeared to have [a] tremendously positive effect on limiting the COVID-19 spread.” In the absence of a robust testing, tracing, and voluntary quarantining system (which is another way to enclose the health commons), the easing of social distancing measures beginning in May by various states afforded the coronavirus greater access to the health commons. As a result, increasing virus transmissions fueled a second higher wave of diagnosed infections in June and July. That wave has fortunately not produced the same level of mortality that the first wave did. The lower case fatality rate likely results from a combination of factors, including improved treatment regimens, expanded medical capacities, and the fact that these diagnoses are concentrated among less immunologically vulnerable younger Americans.

How about the widespread wearing of facial coverings? A primary route of transmission of COVID-19 is likely via small respiratory droplets, and the virus is known to be transmissible from presymptomatic and asymptomatic individuals. A just-published study in JAMA Internal Medicine reports that asymptomatic carriers of the coronavirus are likely to be just as infectious those who experience symptoms of the disease.

Again, accumulating evidence strongly suggests that the ubiquitous wearing of face masks does protect people from becoming infected. A June study in the Proceedings of the Royal Society A notes that some countries where face mask use by the public is around 100 percent have experienced significantly lower rates of COVID-19 spread and associated deaths. A July preprint reviewing the literature on the efficacy of facial coverings to prevent disease transmission notes that reducing the spread of disease “requires two things: first, limit contacts of infected individuals via physical distancing and other measures, and second, reduce the transmission probability per contact.” The researchers conclude find that “the preponderance of evidence indicates that mask wearing reduces the transmissibility per contact by reducing transmission of infected droplets.” They calculate that near universal masking could spare as much as trillion dollars in losses from the U.S. economy.

A June study in Health Affairs took advantage of a natural experiment by comparing COVID-19 transmissions between March 31 and May 22 among states that had adopted universal mask mandates and those that didn’t. While the researchers advise caution with respect to their calculations, they find that mandating face mask use in public is associated with a decline in the daily COVID-19 growth rates and estimate that mask wearing may have averted 230,000 to 450,000 cases before May 22. Interestingly, they find “no evidence of declines in daily COVID-19 growth rates with employee-only mandates.”

In any case: Whatever we think of governmental mask mandates, surely we can all agree that private businesses are free to adopt policies requiring that their customers wear face masks.

Masking works primarily by acting as a “source control.” That is, it prevents pre-symptomatic and asymptomatic infected folks from inadvertently transmitting their viruses to healthy people. Last week, an article in the Journal of General Internal of Medicine suggested that wearing facial coverings also likely protects uninfected people by reducing the amount of virus they ingest when they encounter an infected person. Lower viral exposure likely results in milder forms of the disease.

But the best way to enclose the health commons against the virus is the rollout of safe and effective vaccines. Fortunately, it looks increasingly likely that such vaccines will become available before the end of this year.

The goal of vaccination is to achieve herd immunity. Vaccines do not produce immunity in everyone, so a percentage of those are vaccinated remain vulnerable. Herd immunity works when most people are immunized against an illness, greatly reducing the chances that an infected person can pass his microbes along to other susceptible people, such as infants who cannot yet be vaccinated, immunocompromised individuals, or folks who have refused the protection of vaccination. Right now, epidemiologists typically estimate that the COVID-19 threshold for herd immunity is around 60 to 70 percent.

People who refuse vaccination are free-riding off herd immunity. Anti-vaccination folks are taking advantage of the fact that most people around them have chosen the minimal risk of vaccination, thus acting as a firewall protecting them from disease. But if enough refuse, no firewall gets built and the health commons remains open the virus. Disturbingly, a new Gallup poll reports that while 65 percent of Americans would take the personal responsibility to protect themselves and others by getting a COVID-19 vaccination 35 percent say that they would not. That is uncomfortably close to what epidemiologists believe is the threshold needed to enclose the health commons against COVID-19 by means of herd immunity.

With respect to the COVID-19 virus we are all living in an open access health commons. Given the data, we should all, as free and responsible individuals, seek to protect ourselves and others by enclosing that commons through social distancing measures, by wearing face masks, and by getting inoculated once safe and effective vaccines become available.

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In Committee v. McGahn, There is no Equitable Cause of Action to Enjoin Unlawful Executive Action

Today the en banc D.C. Circuit decided Committee on the Judiciary v. McGahn. (Jon Adler blogged about it earlier). The majority held that the House had standing to proceed, but declined to consider whether the Committee has an equitable cause of action. Judge Rogers wrote for the majority:

Consideration of McGahn’s other contentions — including threshold pre-merits objections that there is no subject matter jurisdiction and no applicable cause of action, and potential consideration of the merits if reached — remain to be decided and are remanded to the panel to address in the first instance.

Was this the only way the court could have approached the jurisdictional issues in this case? Should a court decide whether the parties have standing, before deciding whether there is subject matter jurisdiction, or an appropriate cause of action? If there is no subject matter jurisdiction, or no cause of action, the case ends, even if there is an injury in fact. In other words, does standing have to come first. Sometimes standing is easy to decide. In this case, the standing analysis was quite elaborate, and presented an issue of first impression.

For example, let’s say a case presents a really difficult injury-in-fact question. But it turns out the amount-in-controversy was only $75,000.00. A penny short of the amount in controversy for diversity jurisdiction. In that case, court the court avoid the injury-in-fact question, and dismiss the case for lack of subject matter jurisdiction? Any single jurisdictional ground warrants dismissal. Is there any obligation to start with standing?

In the McGahn case, wouldn’t it have been simpler to find there was no cause of action, or there was no subject matter jurisdiction, to avoid deciding the congressional standing issue? Can a court select alternate jurisdictional grounds to dismiss a case?  Is there an order of operations for Article III jurisdiction?  Please excuse my dear Aunt Sally.

In dissent, Judge Griffith found that the Committee lacked standing. He also found that the Committee lacked an equitable cause of action:

Even if the panel were not bound by this precedent on remand, the Committee would still lack a cause of action. The Committee argues that it has an implied cause of action under Article I, that it can invoke the traditional power of courts of equity to enjoin unlawful executive action, and that theDeclaratory Judgment Act provides a separate basis for this suit. None suffices.

Judge Griffith makes standard arguments based on Ziglar and Grupo Mexicano.

The Committee suggests that—even if Article I alone doesn’t provide a cause of action—the court may exercise its”traditional equitable powers” to grant relief. Ziglar, 137 S. Ct.at 1856. But those powers remain “subject to express and implied statutory limitations,” Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 327 (2015), and are further limited to relief that was “traditionally accorded by courts of equity,”Grupo Mexicano de Desarrollo S.A. v. All. Bond Fund, Inc.,527 U.S. 308, 319 (1999). Again, “implied statutory limitations” foreclose suits by the House and suits that implicate a governmental privilege; this one checks both boxes.Anyway, there’s nothing “traditional” about theCommittee’s claim. The Committee cannot point to a single example in which a chamber of Congress brought suit for injunctive relief against the Executive Branch prior to the 1970s. Interbranch suits “lie[] far from the model of the traditional common-law cause of action at the conceptual core of the case-or-controversy requirement.” Raines, 521 U.S. at833 (Souter, J., concurring in the judgment). While equity maybe “flexible,” “that flexibility is confined within the broad boundaries of traditional equitable relief.” Grupo Mexicano,527 U.S. at 322. We cannot simply reference “equity” to justify a vast expansion of our authority to enforce congressional subpoenas.

The dissent reads Grupo Mexicano correctly. However, the correct answer runs far deeper. Indeed, this precise issue keeps arising in executive branch litigation. In the Emoluments Clauses litigation, the Plaintiffs have asserted an equitable cause of action to enjoin unlawful executive action. Likewise, the Plaintiffs in the “Wall” litigation have asserted the same cause of action.

I responded to this argument in three posts (1, 2, and 3), the first co-authored with Seth Barrett Tillman. Like in the Emoluments Clauses cases, plaintiff’s mere allegation that the government is acting ultra vires is not enough to establish an equitable cause of action. Eventually, the Supreme Court will have to address these issues. These parties keep citing Youngstown and Free Enterprise Fund. And those cases simply do not support this erroneous conception of equitable jurisdiction.

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How Cancel Culture Violates Intellectual Freedom

v2

“An open society is a place that has a lot of intellectual pluralism,” says Jonathan Rauch, a senior fellow at the Brookings Institution and the author of the landmark 1993 book Kindly Inquisitors: The New Attacks on Free Thought.

“Canceling comes from the universe of propaganda…it’s about making an idea or a person socially radioactive.”

In this short video essay, Rauch explains why canceling is different from criticism. The open society “is the most successful social principle ever invented” because it allows individuals to make errors as they seek out the truth.

This video is excerpted from a recent podcast interview with Nick Gillespie.

Edited by Paul Detrick; interview by Nick Gillespie; graphics by Lex Villena and Detrick; music by Villena.

Man, blindfold, close: ID 88555518 © Lightfieldstudiosprod | Dreamstime.com, Building, ID 24052982 © Darwin Lopez | Dreamstime.com, Court building, ID 75259710 © Palinchak | Dreamstime.com, Walkup building, ID 5084245 © Typhoonski | Dreamstime.com, Empire state building, ID 49002437 © Lunamarina | Dreamstime.com, Galileo statue: ID 1977308 © Paul Van Eykelen | Dreamstime.com, Typewriter: ID 9786041 © Carroteater | Dreamstime.com, Apple computer: ID 16015038 © Hannu Viitanen | Dreamstime.com, Equation: ID 32998611 © Cienpies Design / Illustrations | Dreamstime.com, Man with microscope: ID 32595853 © Brad Calkins | Dreamstime.com, Error messages: ID 172070111 © Tartilastock | Dreamstime.com, Columbia University: ID 121436904 © Bumbleedee | Dreamstime.com, Microphone: ID 92421717 © Andrianocz | Dreamstime.com, Microphone: ID 92421780 © Andrianocz | Dreamstime.com, Microphone: ID 92920322 © Andrianocz | Dreamstime.com, Man screaming: ID 22650753 © Pixattitude | Dreamstime.com, UCLA Royce Hall: ID 7614737 © Ahdrum | Dreamstime.com, Woman with suitcase: ID 130537458 © Mimagephotography | Dreamstime.com, Woman with briefcase: ID 24865002 © Ljupco | Dreamstime.com, Man writing: ID 115719527 © Ljupco | Dreamstime.com, Woman with bag: ID 102935990 © Ljupco | Dreamstime.com, Man with phone: ID 120330171 © Mimagephotography | Dreamstime.com

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First Amendment Protections in K-12 Schools Not “Restricted to Only Core Political Speech”

So holds the First Circuit in yesterday’s decision in Norris v. Cape Elizabeth School Dist., and I think that’s exactly the right reading of the Supreme Court precedents (and consistent with other circuits’ decisions).

The particular speech in that case was an anonymous “sticky note on a mirror in a Cape Elizabeth High School girls’ bathroom that stated ‘THERE’S A RAPIST IN OUR SCHOOL AND YOU KNOW WHO IT IS.'” One might argue that this is core political speech, because it’s an implicit accusation that the school isn’t doing anything about this, but the court’s decision makes it unnecessary to draw the political/nonpolitical line. “Because we conclude that Tinker is not limited to political speech, we need not decide if A.M.’s sticky note, understood in the context of her prior activities related to sexual assault activism including her statements to the Cape Elizabeth H.S. school board, was objectively viewed as political.”

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COVID-19 and the Tragedy of the Open Access Health Commons

dreamstime_xxl_177378326

The COVID-19 pandemic resembles a tragedy of the commons—a situation where people have little incentive to invest in conserving or producing a resource because they cannot prevent other people from using or taking it. The results are overconsumption, underinvestment, and ultimately the depletion of the resource.

Classic examples of the tragedy of the commons include overfishing, air pollution, water pollution, and overgrazing. In the case of COVID-19, the resource is the public spaces that we all share with one another. Many of these are privately owned, such as grocery stores, salons, bars, restaurants, theaters, and concert venues. Others are not, including public schools, public subways, public parks, and city sidewalks.

Disease microbes treat human bodies as a resource they use for reproduction. To prevent the microbial overexploitation of the health commons requires germ management. The best way to prevent invasive viruses, bacteria, and fungi from wreaking havoc is to enclose the commons of human bodies by erecting barriers to forestall the transmission of germs from person to person. Good fences make good healthy neighbors.

Social distancing measures, facial coverings, and—hopefully soon—safe and effective vaccines are the best ways to enclose the health commons against the COVID-19 scourge. Let’s take a look at each of these barriers to coronavirus transmission.

Social distancing measures include limiting large gatherings of people, closing buildings, and canceling events. They include encouraging people to telecommute for work; closing bars, restaurants, theaters, gyms and schools; canceling sporting events and concerts; and advising people to try to maintain a personal space of six feet when interacting with others in public.

Let’s consider the case of closing restaurants and bars. Many individual restaurateurs and bar owners would surely voluntarily assume the costs of such pandemic precautions as limiting indoor service, spacing tables further apart, setting up physical barriers, and restricting the number of customers served at a time. Taking such costly precautions also benefits the entire economy, and people who are not customers, by reducing the risks of an outbreak and enabling recovery to begin. But if all other businesses are paying for such costly measures, a competing restaurant has an incentive to free-ride off a healthier pool of customers by easing its own social distancing rules. The tragedy of the health commons occurs as social distancing erodes among competing dining and drinking establishments, revving up the epidemic again. There is, therefore, a strong case for compensating the businesses that shut down to implement social distancing policies and their employees who had to stay home.

Social distancing really works. A new review of the initial effects of social distancing measures adopted prior to May 2020 in 10 countries, including the U.S., found that they “appeared to have [a] tremendously positive effect on limiting the COVID-19 spread.” In the absence of a robust testing, tracing, and voluntary quarantining system (which is another way to enclose the health commons), the easing of social distancing measures beginning in May by various states afforded the coronavirus greater access to the health commons. As a result, increasing virus transmissions fueled a second higher wave of diagnosed infections in June and July. That wave has fortunately not produced the same level of mortality that the first wave did. The lower case fatality rate likely results from a combination of factors, including improved treatment regimens, expanded medical capacities, and the fact that these diagnoses are concentrated among less immunologically vulnerable younger Americans.

How about the widespread wearing of facial coverings? A primary route of transmission of COVID-19 is likely via small respiratory droplets, and the virus is known to be transmissible from presymptomatic and asymptomatic individuals. A just-published study in JAMA Internal Medicine reports that asymptomatic carriers of the coronavirus are likely to be just as infectious those who experience symptoms of the disease.

Again, accumulating evidence strongly suggests that the ubiquitous wearing of face masks does protect people from becoming infected. A June study in the Proceedings of the Royal Society A notes that some countries where face mask use by the public is around 100 percent have experienced significantly lower rates of COVID-19 spread and associated deaths. A July preprint reviewing the literature on the efficacy of facial coverings to prevent disease transmission notes that reducing the spread of disease “requires two things: first, limit contacts of infected individuals via physical distancing and other measures, and second, reduce the transmission probability per contact.” The researchers conclude find that “the preponderance of evidence indicates that mask wearing reduces the transmissibility per contact by reducing transmission of infected droplets.” They calculate that near universal masking could spare as much as trillion dollars in losses from the U.S. economy.

A June study in Health Affairs took advantage of a natural experiment by comparing COVID-19 transmissions between March 31 and May 22 among states that had adopted universal mask mandates and those that didn’t. While the researchers advise caution with respect to their calculations, they find that mandating face mask use in public is associated with a decline in the daily COVID-19 growth rates and estimate that mask wearing may have averted 230,000 to 450,000 cases before May 22. Interestingly, they find “no evidence of declines in daily COVID-19 growth rates with employee-only mandates.”

In any case: Whatever we think of governmental mask mandates, surely we can all agree that private businesses are free to adopt policies requiring that their customers wear face masks.

Masking works primarily by acting as a “source control.” That is, it prevents pre-symptomatic and asymptomatic infected folks from inadvertently transmitting their viruses to healthy people. Last week, an article in the Journal of General Internal of Medicine suggested that wearing facial coverings also likely protects uninfected people by reducing the amount of virus they ingest when they encounter an infected person. Lower viral exposure likely results in milder forms of the disease.

But the best way to enclose the health commons against the virus is the rollout of safe and effective vaccines. Fortunately, it looks increasingly likely that such vaccines will become available before the end of this year.

The goal of vaccination is to achieve herd immunity. Vaccines do not produce immunity in everyone, so a percentage of those are vaccinated remain vulnerable. Herd immunity works when most people are immunized against an illness, greatly reducing the chances that an infected person can pass his microbes along to other susceptible people, such as infants who cannot yet be vaccinated, immunocompromised individuals, or folks who have refused the protection of vaccination. Right now, epidemiologists typically estimate that the COVID-19 threshold for herd immunity is around 60 to 70 percent.

People who refuse vaccination are free-riding off herd immunity. Anti-vaccination folks are taking advantage of the fact that most people around them have chosen the minimal risk of vaccination, thus acting as a firewall protecting them from disease. But if enough refuse, no firewall gets built and the health commons remains open the virus. Disturbingly, a new Gallup poll reports that while 65 percent of Americans would take the personal responsibility to protect themselves and others by getting a COVID-19 vaccination 35 percent say that they would not. That is uncomfortably close to what epidemiologists believe is the threshold needed to enclose the health commons against COVID-19 by means of herd immunity.

With respect to the COVID-19 virus we are all living in an open access health commons. Given the data, we should all, as free and responsible individuals, seek to protect ourselves and others by enclosing that commons through social distancing measures, by wearing face masks, and by getting inoculated once safe and effective vaccines become available.

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