Labor Standards and Bicycle Helmets

Robert Samuelson writes in today’s Washington Post (registration required) that China, though in many ways an abominable economic landscape is a lot like the US 100 years ago. He argues that while growth is a messy thing, there is hope for the future in China, and recent progress is encouraging. He notes (citing the World Bank as his source):

†¢ From 1978 to 2002, the average annual per-person income rose from $190 to $960. It’s probably now above $1,000. (The U.S. figure: about $36,000.)

†¢ Life expectancy increased from 61.7 years in 1970 to 71 in 2002.

†¢ Adult illiteracy fell from 37 percent in 1978 to less than 17 percent in 1999.

†¢ Infant mortality dropped from 41 per 1,000 live births in 1978 to 30 in 1999 (the U.S. rate: about seven).

As the election heats up, we’re going to hear a lot about labor and environmental standards and how we need to level the playing field in trade. China remains a very poor country. It cannot afford the luxury of our standards of today any more than America could have afforded them 100 years ago when the average work week was 67 hours (down to 34 today) and the work place was a much more dangerous place.

One way to see this is to think about bicycle helmets. Where are more bicycle helmets worn–Chicago or Shanghai? Manhattan or Mexico City? More are worn in Chicago and New York. Don’t people in China and Mexico know that it’s dangerous to ride a bike in traffic without a helmet? I suspect they do. It’s just too expensive. Poor people are better off foregoing the helmet, keeping their kids in school a little longer and doing the best they can to avoid being hit by a car. Making the Chinese have factories as safe and clean as ours is like forcing them to wear bicycle helmets. It’s a bad deal for them even though there are benefits.

Tax and Spend

On my way in to work today, I heard a snippet of a President Bush speech on C-Span radio. “Tax and spend is the enemy of job creation,” he said.

That’s probably true. Unfortunately for the President, if tax and spend is the enemy of job creation, so is “borrow and spend,” the President’s recent formula.

The size of the budget and what it’s spent on is more important than how it’s financed. There are really only two choices for financing–taxes today and taxes tomorrow. Borrowing just means taxes tomorrow. The President likes to describe tax cuts as letting people keep more of their own money. I like that idea. Unfortunately, I agree with my hosts Tyler and Alex that the current administration has raised our taxes by increasing spending. So ultimately we’re keeping more of our money today and expecting to give back even more tomorrow.

Ironically, Bush has raised spending in what I would guess is a labor intensive way. By expanding homeland security, a lot of workers have been drawn into public employment rather than the private sector.

Last month’s job growth was “small” and almost all of it was in the public sector. That’s most likely a result of government spending pulling people into public sector jobs rather than the private sector.

This Friday is a big day for Bush and Kerry. The job numbers for March will be released. If they are weak again, Bush will have to keep talking about home ownership being up.

Was Nietzsche right?

In recent weeks there’s been a furor in the Washington D.C. area over lead in the District’s water supply. Today, the Washington Post (registration required) looks at why lead is bad for you and covers some of the science and public policy. That lead is bad for you is open and shut. Too much lead kills you and for kids, too much is not that much. But I am skeptical of recent studies that find that the worst effects of lead happen at the lowest levels of exposure.

Here‘s a typical newspaper account of one of those studies and a quote from a leading researcher on the topic:

“There is no safe level of blood lead,” said Dr. Bruce Lanphear, lead author of the lead study presented Monday at the Pediatric Academic Societies annual meeting.

Edward Calabrese would not agree. Calabrese is a toxicologist at UMass-Amherst and a leading scholar of hormesis, the phenomenon that most if not all toxins are actually good for you at sufficiently low doses. This does not imply that you should start adding mercury to your eggs or lead back into your pots. But the impact of toxins appears to be U-shaped–good for you at sufficiently low levels then bad as exposure increases. Whatever doesn’t kill you makes you stronger.

Hormesis also implies that linear models or threshold models of toxic impact are misspecified and understate the impact of toxins over some ranges of exposure.

Here’s a Scientific American article on Calabrese and hormesis.

Here’s my take on the economics and policy implications of hormesis.

A nation turns its lonely eyes to you

Traveling last week and removing my shoes as I snaked through the rope-lines made me wonder whether the airline security people might not benefit from a consultation with the remarkable Temple Grandin. She works at finding ways at making cattle comfortable as they are led to slaughter. Oliver Sacks profiled Grandin, who is autistic, in his marvelous An Anthropologist on Mars.

Bootleggers and Baptists

The Arizona Daily Star reports that Nogales, Arizona will be opening a new state-of-the-art truck inspection station:

The governor touted the new Motor Carrier Inspection Station as a state-of-the-art facility that will improve homeland security while not slowing down international traffic between the United States and Mexico.

It gives state and U.S. federal officials a one-stop shop to inspect drivers’ immigration papers, the safety of their semi-trucks, and the quality and safety of cargo crossing into the country.

But a legal challenge hangs over the new facility:

Attorneys about to argue a federal lawsuit against the NAFTA plan allowing Mexican trucks into the United States aren’t satisfied. They will plead their case before the the U.S. Supreme Court on April 21.

The problem with the new station: It isn’t required to check emissions on incoming trucks.

That means they aren’t being held to the same standards as U.S. trucks and will only worsen air quality standards, said John Weissglass, the San Francisco-based attorney representing the International Brotherhood of Teamsters in the lawsuit. In 2002, the Teamsters, watchdog group Public Citizen, and environmental groups sued the U.S. Department of Transportation to stop the NAFTA plan, citing environmental concerns, which eventually forced the government to conduct a $1.8 million study looking at the plan’s environmental impact.

They say politics makes strange bedfellows, but the Teamsters and Public Citizen? Bruce Yandle of Clemson explains it with a theory he calls Bootleggers and Baptists. The bootleggers like prohibition because it gets rid of competitors. But a politican who wants to listen to the bootleggers needs a more high-minded cause to sell to the public. The Baptists give the politicians cover with the argument that drink is from the devil–it leads to social unrest, unemployment, higher social costs and so on. Same with Mexican trucks. Who can justify keeping out lower cost Mexican trucks just to keep the wages of Teamsters high. Enter Public Citizen. This isn’t about greed. It’s about keeping American air clean.

The appeal of self-righteousness partnering with self-interest also explains why companies often support regulation of their industry. They’ll claim a concern for safety or the environment but often such regulations fall more heavily on smaller competitors and will drive them out of business.

There’s nothing wrong with politicians having both high-minded and low-minded motives. The real problem is that the bootleggers always push the form of the regulation to create higher profits.

NAFTA was supposed to allow Mexican truck companies to compete in the US. We’re still waiting. Before the environmental issue, the alleged worry of the Teamsters was safety. My take on that claim is here.

Nothing Secedes Like Secession

I’m in Tucson for a conference. Haven’t been here for a while and it’s striking how different the world looks here in the Southwest compared to the East Coast and most everywhere else. Desert. Cacti. The architecture. Javelinas–little wild boars. Saw some on the 18th hole of the resort’s golf course, wandering around. Even the squirrels are different here.

We take it for granted that this is part of America. But this nation from sea to shining sea could easily be lots of different countries a la Europe. Jay Winik in April 1865: The Month That Saved America talks about how unlikely it appeared in say, 1790 or 1820 that the US would become what it is today. Before the Civil War, the Whiskey Rebellion threatened to split off the western part of the United States. New England almost signed a treaty with England and split rather than join in on the War of 1812. California and Oregon considered forming a Pacific Nation.

By the end of the 1820s and into the early 1830s…when many Americans spoke of the Union, however much they had come to love it, they spoke of “our confederacy,” or more simply of “the Republic.” The Constitution, however revered, was a “compact.” The United States was just as often “the states United,” or “the united States,” or even “a league of sovereign states,” and was invariably spoken of as a plural noun.

Would it make any difference if Arizona were another country? Besides the hassle of going through customs for this conference, it might make a lot of difference. It would depend on the institutions and culture. Without American culture, trust, legal system and so on, there might not be a resort here, there might not be a booming Tucson. And of course, it could be even better. And had Arizona or other states broken away, it would have changed how the rest of the country evolved along the way.

Here’s David Friedman’s theory of the size and shape of nations.

“Curing” Obesity

Researchers claim to have discovered one of the key causes of obese America. The AP reports:

Researchers say they’ve found more evidence of a link between a rapid rise in obesity and a corn product used to sweeten soft drinks and food since the 1970s.

The researchers examined consumption records from the U.S. Department of Agriculture for 1967-2000 and combined it with previous research and their own analyses.

The data showed an increase in the use of high-fructose corn sweeteners in the late 1970s and 1980s “coincidental with the epidemic of obesity,” said one of the researchers, Dr. George A. Bray, a longtime obesity scientist with Louisiana State University System’s Pennington Biomedical Research Center. He noted the research didn’t prove a definitive link.

I like the hedging–the link isn’t “definitive.” No, I guess it wouldn’t be. Obesity is surely also “linked” to the Iran hostage crisis and the stagflation of the late ’70s and early 80s. Maybe I shouldn’t be so skeptical. The study may be a little more scientific than merely looking at correlation rather than causation. But if the research is right, it will be easy to make America thin again. Just ban those high fructose sweeteners. One problem with this will be explaining why the advent of low calories sweeteners didn’t stem the tide of fat that allegedly threatens to overwhelm us.

My theory is that we’re fat because we enjoy it. We like food. It gives us pleasure. We’re wealthy and food’s cheap so we’re taking on a few pounds. Alex points out that the entire increase in weight over the past several decades can be explained by an extra Three Oreo Cookies a day! Here is a paper by Glaeser, Cutler and Shapiro that takes the economists’ approach to weight gain.

Here’s my take on the claim that we should tax fatty foods because of the externalities.

Water on Mars

Maybe there was once water on Mars. Maybe not. Reuters reports:

“We think Opportunity is now parked on what was once the shoreline of a salty sea on Mars,” said Steve Squyres, principal investigator for the science payload on Opportunity and its twin Mars exploration Rover, Spirit.

On March 2, astronomers announced that the Red Planet was “drenched with water” at some point. But the rovers’ analysis of Mars rocks has now produced the first concrete evidence that liquid water might actually have flowed on planet’s surface.

“If you have an interest in searching for fossils on Mars, this is the first place to go,” said Ed Weiler, NASA’s associate administrator for space science.

Love that alliteration–the shoreline of a salty sea. It conjures up images of beachcombers and cottages or at least seashells and seaweed with terns turning in the sunlight. Seems like a bit of a stretch. NASA thinks they’ve found not just moisture, not just a few molecules of H2O but a sea with rocks drenched with salty spray, rocks lovingly shaped by streaming water. Pardon my skepticism, but it seems that NASA has just a bit of interest in stretching the results. Notice that even Reuters uses the word “might.”

This hasn’t dampened any of the enthusiasm. Here’s one analysis headlined “Mars water discoveries loom huge” that compares the finding to Galileo’s discoveries.

…the sheer disclosure of the presence of water on a planet other than our own is monumental. It ranks with the moment, nearly 400 years ago, when Galileo Galilei peered through his telescope and discovered spots on the sun, mountains on the moon and four tiny bodies circling Jupiter.

Those revelations, which today are taken for granted, also were monumental in their day. Prior to their disclosure, people confidently — even fervently — believed Earth was the immovable center of the universe, surrounded by all the heavenly bodies, each of which was a perfect, featureless sphere. Galileo’s announcement was considered so shocking at the time he was charged with heresy by the Roman Catholic Church.

Opportunity’s findings have been treated more matter of factly, with NASA officials holding a news conference and bubbling over with enthusiasm at the images Opportunity has transmitted, and members of the media duly reporting the information and displaying the rover’s images.

Yet the importance of this finding cannot be overstated.

Until now, we have known for sure of only one planet on which liquid water has flowed — and water is absolutely essential for supporting life as we know it. There are no chemical processes that will permit the formation of the long, complex organic molecules composing living organisms other than in the presence of water.

It is an extremely simple rule: No water, no life. As long as Earth was the only planetary body containing liquid water — and, more particularly, seawater — then it was the only place in the universe where life was possible.

Now, suddenly, there are two.

Is this a huge discovery? Huge for NASA, certainly, eager to send people to Mars in search of fossils or at least an abandoned sailboat.

I’m in the middle of Simon Morris’s Life’s Solutions: Inevitable Humans in a Lonely Universe. I suspect Morris is unimpressed with the latest Martian chronicle. He argues that it is very likely that we’re alone in the universe. The first part of the book that makes this claim is fascinating with quirky writing and lots of good information. The rest of the book argues for the inevitability of humanity evolving. The writing and narrative of the second half is less spritely and slower going but the first part of the book is very much worth a look.

Stadium Construction and Broken Windows

USA Today reports on a study by University of Dayton economists Marc Poitras and Larry Hadley: privately financed sports stadiums pay for themselves. Tax dollars aren’t necessary to make them viable. Somehow I doubt that the study will slow the pace of publicly financed sports stadiums. While it may make it more embarrassing for franchise owners to ask for public handouts, what’s a little stigma among friends? The success of the begging strategy is mainly due to the threat of exit–owners demand public financing as a way of extracting money from cities fearful that teams will leave. There isn’t free entry into sports leagues–leagues tightly control new entrants–so cities are always vulnerable to the threat of a team leaving.

The claim that sports teams and new stadiums are good for the economy is a classic case of the “broken window fallacy” of Bastiat. The benefits are seen–the jobs building the stadium, the fans who spend money at the restaurants near the stadium. Unseen are the jobs lost elsewhere and the restaurants on the other side of town that lose business. Roger Noll and Andrew Zimbalist found that the net benefit of public stadiums is basically zero–there’s no stimulus to the local economy worth talking about. Their conclusion:

In our forthcoming Brookings book, Sports, Jobs, and Taxes, we and 15 collaborators examine the local economic development argument from all angles: case studies of the effect of specific facilities, as well as comparisons among cities and even neighborhoods that have and have not sunk hundreds of millions of dollars into sports development. In every case, the conclusions are the same. A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.

The U of Dayton study is here.

You can find the entire Noll and Zimbalist book online here.