Month: March 2004
Marc Andreesen on comparative advantage
What a delight, Marc Andreesen, the internet pioneer, correctly explains comparative advantage to John Robb and then goes on to list America’s advantages. Tyler earlier pointed out this USA Today piece on Andreesen’s support for outsourcing.
Punkers for capitalism
With his mohawk, ratty fatigues, assorted chains and his menagerie of tattoos – swallows on each shoulder, a nautical star on his back and the logo of the Bouncing Souls, a New York City punk band, on his right leg – 22-year-old Nick Rizzuto is the very picture of counterculture alienation. But it’s when he talks politics that Mr. Rizzuto sounds like a real radical, for a punk anyway. Mr. Rizzuto is adamantly in favor of lowering taxes and for school vouchers, and against campaign finance laws; his favorite Supreme Court justice is Clarence Thomas; he plans to vote for President Bush in November; and he’s hard-core into capitalism.
“Punks will tell me, `Punk and capitalism don’t go together,’ ” Mr. Rizzuto said. “I don’t understand where they’re coming from. The biggest punk scenes are in capitalist countries like the U.S., Canada and Japan. I haven’t heard of any new North Korean punk bands coming out. There’s no scene in Iran.”
Here is a New York Times article, don’t forget to check out the pictures (password required). Here is a website for GOP punkers, they seem to approve of Reagan’s famous threat to bomb the Soviet Union. Or perhaps it is just irony. They stress that they are not libertarians because America is “at war” with the left, and the libertarian philosophy is not well-suited to fighting a war. Here is their cited critique of the Canadian health care model. Good economics, but these punkers, oppositional by nature, feel a kneejerk need to defend every action of the Bush administration. Here is the ConservativePunk.com website, which offers an interview with right-wing punker Johnny Ramone. Here is yet another site, which cites right-thinking punk bloggers. And will National Review be pleased that MyEvilMinion.com links to them approvingly?
My take: Punk music needs an idea of evil and an oppositional stance. So punkers will adopt every position of defiance they can find, including in-your-face right-wing politics. But in the long run? Remember what The Clash sung: “You grow up, you calm down, working for the clampdown…”
Is Microsoft the new language arbiter?
Microsoft has decided to write Windows for Welsh.
Microsoft programmes already run in 40 languages including English, Spanish, Arabic and Chinese variants.
A Welsh start menu and some commands will be available in about six months.
Microsoft said it has received complaints from places such as Catalonia, Malaysia and the Arctic regions of Canada.
They claim the switch from native languages online is also affecting everyday speech, said BBC North America Business Correspondent Stephen Evans.
Some argue the fewer languages the better for global trade and understanding, but Microsoft is siding with “linguistic diversity”, he said.
The other big linguistic groups to benefit from the expansion will be speakers of Gujarati and Tamil in India, of Catalan in Spain, and of Bahasa in Malaysia.
Native languages from Northern Canada and Ethiopia will also be added.
My take: Whether or not a language is focal will be determined with increasing rapidity.
Thanks to Cronaca.com for the link.
Small families can decrease social mobility
…it is among larger families that the household or kin effects on the success of children are the weakest. Not only do children from larger families do worse on average than those from smaller families, but they also experience more randomness. In other words, parents’ class status affects their offspring more weakly in large families than in small ones. Likewise, siblings resemble one another less in larger families. For example, sibling similarity in income levels is approximately 24 percent stronger in families with three siblings or fewer than in families with four or more children. For net worth levels…the degree of sibling similarity is 59 percent greater in smaller families.
Those are significant effects, what will they mean?
What all this means for the class structure of American society is that as families get smaller, there may be less socioeconomic mobility, not more. Parents will be able to more carefully control the environments of their offspring and thereby reproduce their own class status.
There is a caveat:
Of course, this depends not just on the overall average number of kids that families are having, but also on the distribution. If the most dramatic declines in family size occur among the economically disadvantages segments of American society then we could have more equality of opportunity.
In other words, having larger families, across the board, will mean that subsequent income is less correlated with family history. But on average it will not raise the prospects of people from poor families.
From Dalton Conley’s excellent The Pecking Order: Which Siblings Succeed and Why. Follow this link and here for my earlier writings on Conley.
Income inequality over time
How great a share has the top ten percent of the American income distribution earned over time?
Ben Muse tells us (based on, Income Inequality in the United States, 1913-1998, by Thomas Piketty and Emmanuel Saez):
In 1917, the top 10% of “tax units” had about 40% of national income. The percent of the income earned by this group rose until about 1929, ranged from about 44% to about 46% until 1940, then plummeted to the area of 32% during the war, and sat there until about 1972. From 1972 to 1998, the share of income received by this group rose almost continuously, ending the period in the area of 42%.
Here is the graph (click to expand):
Breaking the top 10% into even finer gradations we see that:
Percentiles 90-99 appear to rise gradually from 1917 to 1940, do the 1940 WWII drop, then, following the war, begin a long sustained increase through 1998.
But the top percentile is all over the place. The authors had enough data to start this series up in 1913, before the start of WWI. It plummets on U.S. entry into the war and during a post-war depression, rises through the boom of the 1920s, peaking in 1929, plummets with the onset of the Great Depression, and again with the onset of WWII, then continues to fall following the war, bottoming out about 1972, and then rising over the period 1972-1998. A large part of this last rise takes place in 1987 and 1988, following the Tax Reform Act of 1986….
What else do we learn? War and other disruptions appear to damage capital income more than labor income. If that is the case, a healthy and peaceful society might have increasing income inequality. In other words, if we are lucky, income inequality will increase even more.
A bloody fool
Istvan Kantor has been banned from many of the finest museums for scrawling a large X in his own blood on the walls of the Museum of Modern Art in New York, the Ludwig Museum in Cologne, the National Gallery of Canada in Ottawa and other galleries. (NYTimes)
Thus it might not seem surprising that On March 10, Kantor found himself once again being escorted by several security guards at Canada’s National Gallery. Except this time, Kantor was being escorted into the building to receive the Governor General’s award in visual and media arts, one of the highest artistic awards in Canada. Along with the award came more than $12,000 in taxpayer funds.
Kantor’s other artistic achievements? “A video showing two performers slashing the throats of two cats and wearing their bleeding bodies as hats.” Also a peformance ensemble featuring fornicating file cabinets.
I try to keep an open mind about the avant-garde, really I do, but it’s this sort of nonsense that gives Jesse Helms a good name.
Acting white
When John McWhorter argued in Losing the Race: Self-Sabotage in Black America that aspects of African-American culture, such as anti-intellectualism, were debilitating and counter-productive he was accused by some of being a self-hating sellout. It’s going to be harder to take that line against Henry Louis Gates, distinguished scholar and chair of Harvard’s African and African American Studies Department.
At a recent talk in Washington to promote his new book, Behind the Color Line: Dialogues with African Americans, Gates had this to say:
I remember a poll where black kids were asked to list the things they considered ‘acting white. The top three things were: making straight A’s, speaking standard English and going to the Smithsonian. Now, if anybody had said anything like that when we were growing up in the ’50s, first, your mother would smack you upside the head and second, they’d check you into a mental institution.
Talking about the misogny, homophobia, and violence found in hip-hop culture Gates said:
What I’m trying to figure out is why our kids…embrace those modes of behavior as authentically black. It is killing our people. And it makes me sick….Our leaders are geniuses at jumping on white racism…when anti-black racism by anybody manifests itself, I’ll be right there pouncing on it, too. But unless we do the second, necessary, act of leadership, which is to critique pathological forms of behavior with any African American community, our people will be doomed, doomed to perpetuate the class divide…
Was it good for you?
Tyler blogged about the economics of orgasm several weeks ago, but if you want more – and who doesn’t – Steve Landsburg explains what the subject has to do with the fourth and fifth amendments to the constitution. I kid you not.
Born to Sue?
Frank Sulloway’s Born to Rebel (BTR) was a smash hit when it was published in 1996. Sulloway’s thesis, that laterborns are born to rebel while first-borns are conformist defenders of the status quo, was initially greeted with some skepticism among experts who knew of an earlier review of the large literature on birth order that had found little evidence for an effect on personality. The thesis struck a cord with the public, however, and Sulloway seemed to have gathered so much data from so many different sources (including scientific revolutions, political revolutions, religious revolutions etc.) that with a few exceptions (such as the great Judith Harris) the book won over skeptics and carried the day. Michael Shermer, Mr. Skepticism himself, said, for example, that Born to Rebel was “the most rigorously scientific work of history every written.”
Two devastating studies of BTR, however, have just now been published in the September 2000 issue of Politics and the Life Sciences (alas this issue is not online, perhaps for reasons discussed below). After exhaustive efforts, the studies failed to replicate key results in BTR – that is the authors tried to replicate what Sulloway said he did, on the data that he said he used and they could not reproduce anything close to his results. Now, you may be asking, how it is that the September 2000 issue of PLS has only now been published? And therein lies a story.
When Politics and the Life Sciences decided to publish the initial critique of BTR by Frederic Townsend, after peer review by four referees, it invited Sulloway to respond along with a number of others in a roundtable format that they had used in previous debates. Sulloway was guaranteed ample room to respond to Townsend and was invited to submit his own names for roundtable participants. He initially agreed but shortly thereafter he wrote to Gary Johnson, the editor of the journal, threatening that if the critique were published he would sue both the journal and the editor personally for what he considered to be defamation. Even if the Townsend article were thoroughly revised he insisted to the editor that it would be “appropriate – indeed legally mandatory – for you to preface his article with an editorial forewarning that reads more or less as follows”:
It is not normally the policy of this journal to publish data that are known, in advance, to be actually or potentially in error, especially when such data are being used in an attack on another scholar. However, as editor of this journal, I have decided…to publish these erroneous data in their present form. Readers are warned, however, that none of Townsend’s empirical claims, or the conclusions based upon them, can be trusted with any degree of certainty. Townsend has also made other blatant errors of fact and interpretation that are now known to the editor and that seriously affect the credibility of this paper….
Of course, the editor refused this absurd request. Sulloway later wrote to the president of the editor’s university (with copies to the chair of the Board of Trustees and the university’s legal counsel), saying:
…I intend to file charges of misconduct against one of your faculty members, Gary R. Johnson….these allegations include, but are not necessarily limited to: defamation/libel, false light invasion of privacy, fraud, promissory estoppel, and breach of fiduciary duty…I will also be blowing the whistle by filing formal charges of scientific misconduct against Gary Johnson with the American Political Science Association, the Human Behavior and Evolution Society, members of Congress who have shown a concern about science fraud, and all other professional organizations with which Professor Johnson or his journal….are affiliated.
Bear in mind that Johnson is only the editor of the journal and not even the primary critic! Naturally, Sulloway’s threats delayed publication of the journal, as more referees were involved and revisions took place, but the worst was yet to come. The journal’s publisher refused to publish the debate unless the parties involved committed not to sue him, his printer, his distributor, the journal, or the association. Of course, Sulloway refused. The heroic Johnson and the association then decided to publish the journal on their own. As a result, the final publication, including Sulloway’s response, is nearly five years late.
All of this, and there is much more that I have not reported, is from Johnson’s shocking editorial explaining the long delay. Perhaps the most disturbing aspect of the whole ordeal is that our legal system, sometimes described as Russian Roulette, has gotten sufficiently capricious and arbitrary that Sulloway’s abusive legal threats were nearly successful. Johnson writes:
The virtual terror that Sulloway’s legal threats have prompted in some of those associated – directly or indirectly – with the events described in this editorial suggests to me that contemporary science must adapt to a changed socio-legal environment if the capacity for open dialogue and critical exchange that is the lifeblood of science and scholarship is to be protected. Scholars, scientists, and publishers cannot focus properly on what should be their principal concerns if the threat of catastrophic legal costs hangs over them and their organizations and journals.
How to market culture, Italian style
When all else fails, offer a discount:
The cover of the current issue of Poesia, an Italian poetry magazine, shows a caricature of Eugenio Montale, a Nobel laureate in literature, standing on a cloud next to a tall stack of books. The headline reads, “One million volumes.”
It is a reference to the special edition of Montale’s poetry distributed during February with some copies of the Milan newspaper Corriere della Sera, which has a daily circulation of 686,000. Though the book reached that number in part because it was a giveaway, experts were nonetheless impressed, as well as by the book offered as an option along with the newspaper the following Monday: poems by Pablo Neruda. That book cost readers 5.90 euros, or about $7.20, and it sold more than 250,000 copies. There’s more poetry where that came from. Corriere della Sera plans a series of 30 books featuring the works of great poets, one each Monday, and at a relatively low price…
The strategy has been so successful that today nearly every Italian paper on the newsstand sells at least one discounted product – a book, DVD, CD or videotape – at least one day a week. The sales have helped raise circulation modestly and have given an unexpected infusion of cash to newspapers.
In other words, give newspapers a high prestige gloss, to mobilize eyeballs for advertisers. Note that cheap advertising than subsidizes quality poetry. Here is some more on the economics:
Gruppo Editoriale L’Espresso, which publishes La Repubblica and the weekly L’Espresso, last month cited the editorial initiatives as a reason that its net profit rose 47 percent last year, to 67.8 million euros, or about $82.9 million. In 2003, the two newspapers sold 34 million books, 2 million DVD’s and 1.6 million compact disks at prices ranging from 4.90 to 12.90 euros. La Repubblica itself costs 1.20 euros at the newsstand; L’Espresso costs 2.80 euros. Cost-cutting and improvements in online operations also helped raise profit, the company said.
“We thought we were going to appeal to a niche market because Italians aren’t known as being great readers,” said a spokesman for Gruppo Editoriale L’Espresso, who said company policy required anonymity.
He said the publisher expected to break even by selling 50,000 copies in the first series, but that around 500,000 copies of each of 50 volumes of 20th-century masterpieces were sold.
“It was instead an incredible success,” he said, “and created a new phenomenon for the Italian market.”
La Repubblica is now selling a six-volume set of Italian poetry from the 13th century to the present. The paper has sold about 120,000 copies of each volume at 7.90 euros a book.
If the numbers are good for newspapers’ bottom lines, they have book publishers worried. Almost half of the 100 million books sold in Italy in both 2002 and 2003 were sold with newspapers and magazines at newspaper kiosks, according to the Italian Publishers Association.
“Newspapers are no longer just vehicles for information – they’ve become a distribution system,” said Federico Motta, president of the publishers association.
Newspapers have several advantages over traditional book publishers, he said, starting with a distribution network of around 40,000 newsstands throughout Italy.
Click here for the full story. Americans, in contrast, sell books at discount superstores, such as Wal-Mart. Or now you can buy digital music at Starbucks. Not to mention those Picassos
The bottom line: The sale of culture is increasingly about the best way to mobilize notice and attention. Over the next century, expect traditional cultural intermediaries to disappear or be radically transformed. When you buy art from a traditional gallery, sales and certification are bundled together in the same institution. As the division of labor increases, we should expect sales and certification to become separate functions, performed by separate groups of people. The reality is that coffee shops, newspaper stands, Wal-Marts, or whatever are now the institutions that hold our attention. They will become our new cultural suppliers.
Off-label drugs
Alex has written much about the importance of off-label uses for drugs, which are not generally restricted by the FDA. I came across the following in the 17 March 2004 Wall Street Journal, Marketplace section:
A high-price biotech drug, developed in the 1980s to treat a rare form of hemophilia, is fast becoming a blockbuster, with physicians around the world using it to stanch severe bleeding from car accidents, gunshot wounds and postsurgery hemorrhaging.
But here’s the rub: The drug, a human bloodclotting protein called NovoSeven that costs $5,000 a dose, hasn’t been approved by the Food and Drug Administration for such uses…Some doctors are hailing NovoSeven as a lifesaver, with word spreading about near-miraculous cures of dying patients. It’s the new wonder drug,” says Thomas Scalea, director of the shock trauma center at the University of Maryland Medical Center. He says the center has used the drug 80 times in three years, saving about 35 lives.
Not all doctors agree about the merits of the drug, and insurance companies will not reimburse drug usage for this purpose.
Question: Should the FDA have regulatory power over the off-label use of this drug to stop traumatic bleeding? If it had had such power, would any of these lives have been saved at all? In his paper, Alex asks the requisite follow-up question. If it is bad idea to give the FDA regulatory power over off-label uses why give it so much power over initial uses?
As things stand now, the FDA will not allow “human trials” of the drug in the laboratory, although real life trials occur in hospitals on a regular basis. Furthermore the company’s sales force cannot promote the drug for non-hemophilia uses and must wait for doctors to ask, noting that it employs 25 full-time people simply to handle the flood of inquiries.
Further comment by Alex is welcome. This is his bailiwick not mine, I just thought the example was especially striking. Here is some basic information about the drug, here is the company’s web site.
Further thoughts on artificial hearts
A number of people emailed me or blogged (eg. here and here) on my post, Artificial heart won’t save lives. The number of transplants is constrained by the number of donated organs thus the main effect of the artificial heart, which is just a temporary stop-gap, is to redistribute organs. The artificial heart makes some people better off at the expense of other people who are made worse off. No one challenged this conclusion but it seemed to make some people uncomfortable. Two arguments were raised in opposition, both of which are weak.
First, the heart does allow some people to live a little bit longer – this is a benefit, but a few weeks of life while chained to a big machine doesn’t seem like a big breakthrough to me. Second, the artificial heart could allow for better matching. Theoretically true, but there are already many more patients on the waiting list than there are hearts available so the opportunity for better matching is negligible. Consider, that for a given heart there are now 3500 people on the waiting list to choose from – how much better is the match going to be if we add a few more people to this list?
I am not against artificial hearts (some people say I have one!) perhaps one day the technology will improve enough so that someone on an artificial heart can be taken off the list, but the issue is comparative. Suppose that we put the funds gong into artificial hearts into programs to increase organ donation. One donated organ is say good for 10 years of extra life. Average time on the artificial heat is 77 days and it is not clear how many of these days represent extra days of live. Let’s say very charitably that 50 days are extra then this means that one real heart is worth 73 times as much as an artificial heart (10*365/50) and that is before adjusting for quality of life.
Trade and child labor
Ben Muse’s economics blog continues to rise in my estimation. He reports on a recent study showing that child labor and trade are negatively correlated. The statistical result is the following: as a country’s measure of openness to trade increases by 1%, a measure of child labor is decreasing by 0.7%. Here is an earlier MR post on child labor.
Artificial heart won’t save lives
An FDA panel announced today that they would support approval of a new artificial heart. NPR and other media suggested that the new heart, which is designed only for temporary use and is not portable, would save lives by extending survival time until a transplant became available. But even if the artificial heart performs exactly as designed and even if it prolongs the lives of those who receive it, it won’t save lives overall.
The mathematics is simple; there are approximately 2200 hearts donated for transplant every year (data here). That means we can save 2200 lives a year and no more. All the artificial heart can do, therefore, is change who gets saved. Some people who previously died will live long enough to receive a transplant but this means there will be one less heart available for someone else on the waiting list. The artificial heart will make the waiting list longer but it will not save lives.
The only way we can truly save lives is to increase the number of organ donors. As readers of Marginal Revolution will know I have suggested financial compensation and organ donor clubs as the only realistic solutions.
Markets even in things you can’t imagine anyone would want
Read about restaurants where you do your own cooking, and no this is not just Korean barbecue. In some places you cook your own steak, at least they still wash the dishes for you.
The same article offers us some sad news:
Last fall, when almost 100,000 of the “surveyors” who contribute to the Zagat dining guides nationwide were asked what “irritates” them the most about dining out, 74% said service; only 6% said food.
And no, it’s not because they’re all dining at Matsuhisa.
That being said, I don’t think poor taste is the only culprit here. Often we blame the person we can see — the waiter — more than the person we can’t see, namely the chef. Economists have long understood the distinction between the seen and the unseen, let us not forget that the fallacy applies to other contexts as well.