Month: February 2005

Honesty about illegal file-sharing

The Supreme Court has been hearing a major case on file-sharing.  Should Grokster and other web-based file-sharing services be held liable for contributory copyright infringement?  Forget about the law, what does the economist say?  Yes "fair use" provisions are excessively stringent, but here are three reasons why I cannot accept the radical anti-copyright position.

1. In ten year’s time, what will happen to the DVD and pay-for-view trades?  BitTorrent allows people to download movies very quickly.  Note that DVDs already account for more than half of Hollywood domestic revenue.  Furthermore the process will be eased when TVs and computers can "talk" to each other more readily.  Yes, I am familiar with Koleman Strumpf’s excellent work showing that illegal file-sharing has not hurt music sales.  But a song download can be a loss leader for an entire CD or a concert tour.  Downloading an entire movie does not prompt a person to spend money in comparable fashion.

2. Perhaps we can make file-sharing services identify (and block) illegally traded files.  After all, the listeners can find the illegal files and verify they have what they wanted.  Grokster, sooner or later, will be able to do the same.  Yes, fully decentralized and "foreign rogue" systems may proliferate, and any identification system will be imperfect.  But this is one way to heed legitimate copyright suits without passing the notorious "Induce Act."

3. I question the almost universal disdain for the "Micky Mouse" copyright extension act.  OK, lengthening the copyright extension does not provide much in the way of favorable incentives.  Who innovates with the expectation of reaping copyright revenues seventy-five years from now?  But this is a corporate rather than an individual issue.  Furthermore economic research indicates that current cash flow is a very good predictor of investment.  So the revenue in fact stimulates additional investment in creative outputs.  If I had my finger on the button, I still would have pushed "no" on the Mickey Mouse extension, if only because of the rule of law.  Privileges of this kind should not be extended repeatedly due to special interest pressures.  But we are fooling ourselves if we deny that the extension will benefit artistic output, at least in the United States. 

Is HOPE a virtue?

In response to middle-class anxiety about college costs, states have dramatically increased funding for "merit-based" scholarships.  Georgia’s HOPE program (Helping Outstanding Pupils Educationally), begun in 1993, is the model.  HOPE covers tuition, fees and book expenses for any high-school graduate earning a B average. 

David Mustard, who spoke here last week, and co-authors have written a series of papers asking in effect, Is HOPE a virtue?   Predictably, high-school GPAs increased markedly after 1993 with a pronounced spike at B.  SAT scores, however, did not increase so grade inflation, not academic improvement, appears to be the cause.  Once in college students must maintain a B average to keep their scholarship – the program is rather lax on how many or what courses must be taken however.  The result is that scholarship students take fewer classes, take easier classes and when the going gets tough they withdraw more often.  Apparently HOPE comes at the expense of fortitude.

HOPE increases the number of students enrolled in GA colleges only modestly and the bulk of the increase comes from students who are induced by the cash to stay in GA, instead of going to school in another state, rather than from students who, without HOPE, would never have gone to college.  What do the students do with the cash they save on tuition?  Cornwell and Mustard (2002) find that car registrations increase significantly with county scholarships!

Bottom line: HOPE is neither charitable nor prudent.  The bullk of the money is a simple transfer to students and their parents.  To the extent that HOPE has incentive effects these appear to reduce not increase educational effort and achievement.

Tyler and the Global Cultural War

Tyler is in Paris again, a major player in what the NYTimes calls a global cultural war.

The idea of promoting cultural diversity around the world seems reasonable enough. It recognizes that everyone profits from the free flow of ideas, words and images. It encourages preservation of, say, indigenous traditions and minority languages. It treats the cultures of rich and poor countries as equal. And most topically, it offers an antidote to cultural homogeneity.

Try turning this seemingly straightforward idea into an international treaty, though, and things soon become complicated. Since October 2003, Unesco’s 190 members have been working on what is provisionally called the Convention on the Protection of the Diversity of Cultural Contents and Artistic Expression. It is intended to be approved by consensus this fall, but don’t count on it. There is still no agreement on its final name.

But that is a minor issue compared with more fundamental differences. Led by France and Canada, a majority of countries are asserting the right of governments to safeguard, promote and even protect their cultures from outside competition. Opposing them, a smaller group led by the United States argues that cultural diversity can best flourish in the freedom of the globalized economy.

A bid to break the deadlock is now under way at the Paris headquarters of Unesco…

Tyler will continue to blog from Paris but we are also pleased to be joined this week by our returning guest, Fabio Rojas.

My favorite things French

I do one of these every time I go somewhere.  I’ve held off on France out of fear of excess choice, but here goes:

French opera: Debussy’s Pelleas et Melisande is ravishing, try to find the old version conducted by Roger Desormiere.  Messiaen’s St. Francis wins an honorable mention; my favorite piece of French music might be Messiaen’s Vingt Regards.

French restaurant: I’ve yet to get into Pierre Gagnaire, considered the world’s greatest restaurant by many.  For quick notice, I’ve done well at the Michelin two-stars Savoy and Hotel Bristol, the latter is even open for Sunday lunch, a Parisian miracle.

French novel: Proust is the only writer who makes me laugh out loud.

French pianist: Yves Nat has done my favorite set of Beethoven sonatas.  These recordings are brutally frank and direct, and deep like Schnabel, albeit with fewer wrong notes.  Few aficionadoes know this box, but it stands as one of my desert island discs.  Note that French pianists are underrated in general.

French artist: I find much by the Impressionists sickly sweet and overexposed.  I’ll opt for Poussin (this one too), Seurat’s black and whites, and Cezanne watercolors.  Right now I would rather look at Chavannes and Bouguereau than Renoir or Monet.  As for the most underrated French artist, how about Delacroix?  A few years ago some of his small canvases were selling for as little as $60,000.

French popular music: Serge Gainsbourg is often called the "French Bob Dylan," but he is more like "the French Beck."  Buy this set for a truly eclectic mix of styles.

French movies: If you don’t usually like French movies, you still should watch Robert Bresson’s A Man Escaped, Jean Pierre Melville’s Bob Le Flambeur (a big influence on John Woo, also try Le Samourai), and Theodor Dreyer’s Joan of Arc.

Is there life on Titan?

Their home lies further beneath sea level than Everest’s peak rises above it. And yet tiny organisms have been found living at the very bottom of the Pacific Ocean’s deepest trench, the remotest spot on the globe.

The microscopic organisms, called foraminifera, live in mud at the bottom of Challenger Deep in the Mariana Trench, almost 11 kilometres beneath the waves of the western Pacific Ocean. The pressure at this depth is a crushing 1,090 times that at the surface.

This recent story causes me to raise my prior ever so slightly…

Markets in everything

When I originally heard about First Contact, a trip offered by Woolford’s trekking company, Papua Adventures, I couldn’t believe he was really doing what he claimed to be doing. An easygoing American expat from Springfield, Missouri, who jokingly describes himself as a "hillbilly," Woolford marches into the jungle in search of uncontacted native tribes who have never seen outsiders–and who aren’t supposed to mind tourists barging into their lives. I had trouble buying the idea that, in the 21st century, there were still nomadic hunter-gatherers out there using stone tools and rubbing sticks together to start a fire. But there are, Woolford assured me. From his home in Ubud, Bali, he explained the strategy behind his First Contact trips.

"There are a handful of places in West Papua that are untouched–still Stone Age tribes, still cannibals," he said. "It’s just that a lot of people are too scared to go look for them."

Making contact with tribal people is a risky business–a simple flu could wipe them out. But Kelly Woolford insists that he’s mindful of such risks. "We don’t try [sic] to corrupt them," he says. "Five minutes is all we do."

Here is the story.  Here is the company’s website.  Thanks to the ever-useful for the pointer.

Modeling Intellectual Property

For over half a century, kits have been sold that enable military history
buffs to assemble scale models of military ships, aircraft and vehicles. But
that era is coming to an end, as the manufacturers of the original equipment,
especially aircraft, are demanding high royalties (up to $40 per kit) from the
kit makers….Models of a company’s products are considered the
intellectual property of the owner of a vehicle design. Some intellectual
property lawyers have pointed out that many of these demands are on weak legal
ground, but the kit manufacturers are often small companies that cannot afford
years of litigation to settle this contention.

That’s from James Dunnigan.  Dunnigan points to an ironic unintended consequence of this use of intellectual property law.  To avoid the levies kit manufacturers are turning to items for which there is no royalty – items like aircraft from Nazi Germany.

Thanks to Cory Doctorow at BoingBoing for the pointer.

Blogging vs. long-term research?

Virginia Postrel and Andrew Sullivan ask whether blogging interferes with one’s long-term projects and commitments, such as writing books.

For me it has been simple.  I’ve always tended to work on too many topics and questions in the first place.  Daily blogging satisfies my intellectual "Wanderlust" very well.  This makes it easy to concentrate on more specialized research, namely my main field of economics and culture.  Since I’ve started blogging my research has become more focused, which is overall a good thing.  In other words, the portfolio effect has outweighed the substitution effect.

Social security and our future

Given President Bush’s State of the Union address, and a number of reader requests, I am reprising my earlier posts on social security reform.  I don’t pretend to have remembered them all, but here are a few links, some retitled to sound more descriptive:

Why I fear proposed reforms

Will reforming social security yield an equity premium? (the most neglected of the lot, but in my mind one of the most important; read Alex also)

Should we opt for forced savings?

Why the transition scares me

The Argentina example

Should we gradually freeze social security benefits in real terms?

Is such a reform politically feasible?

My Econoblog debate with John Irons, summarizing my views

Addendum: Here is one account of what Bush actually said, I was at a flamenco concert.

George Bush and Reason

Reason magazine asks well-known libertarian bloggers and others (including Vernon Smith, Nadine Strossen, Virginia Postrel, Jacob Levy, Daniel Drezner, Glenn Reynolds, and yours truly) to state their biggest hopes and fear for the next four years.  Thanks to Daniel Drezner for the pointer. 

And if you like Reason, check out the new volume Choice: The Best of Reason, edited by Nick Gillespie.

What’s wrong with polygamy?

Polygamy makes perfect sense to many rich men in poorer countries but it is bad for the economy overall, according to a report called The Mystery of Monogamy by three economists.

The study, published recently by the Centre for Economic Policy Research, argues that mass polygamy, which still exists in sub-Saharan Africa, Egypt and Thailand, can make it hard for economies "to break out of the poverty trap".

The practice, it says, allows rich men "to spend their money on quantity rather than investing in child quality" and stretches a wealthy man’s resources across a larger number of children.

The authors also argue that the practice has only died out in the west because it no longer makes economic sense for the middle classes, who can no longer afford more than one wife.

Read more here.  Here is the paper in html, I can’t get the pdf versions to open (addendum: try this one).

My take: I am not convinced.  Polygamy does not contradict the idea of quality children, relative to available alternatives: the kids get papa’s good genes and full-time attention from mama.  Keep in mind if this is worse on average than other options, women won’t want the deal.  If there is a social cost from polygamy, it more likely stems from the young men who cannot find wives and resort to violence and risky behavior.  Polygamy ends when children cease to be a net economic asset.  As society progresses and urbanizes, there are cheaper ways of having sex with multiple women, if that is one’s goal. 

The Fountainhead

If ethics is about the virtuous man then politics is about the social requirements for the virtuous man to exist (the modern literature lags behind Rand in connecting ethics and politics). One can  understand Rand’s novels as an extended disquisition on virtue ethics and the political and social requirements necessary to practice such an ethics. In particular, she argued that rights, a legal concept creating a protected sphere for independent action, were a necessary condition to live a life of virtue.

One need not buy Rand’s deductive argument that laissez-faire capitalism is the sine-qua-non of ethical action to appreciate her insights connecting the good man and good woman with the good society. Ayn Rand was absolutely right to say that capitalism requires a moral defense. Moreover, the only plausible defense must involve the virtue of selfishness. It is all too obvious that capitalism promotes and rewards self-interest and, Mandeville nothwithstanding, no defense which simply excuses this fact will succeed.

Rand’s language hasn’t done much to advance her case and indeed it has obscured areas where her insights are now widely accepted. Today, for example, you can find many books
attacking the evil of altruism. Surprised? Of course, the books don’t use those terms, instead they call it the problem of codependency (or some other such). Relatedly, it’s no accident that Hillary Clinton was once an avid Randian (recall her political career started with Barry Goldwater) because Rand is an important feminist. Rand’s portrayal of strong, independent, intelligent women is coming to be recognized as a landmark in fiction but in addition Rand’s attacks on self-sacrifice have special meaning in a culture that has long used the “caring ethic” to bind women to the service of others.

Of weaknesses there are many, most of which flow from the combination of Rand as philosopher, novelist and powerful personality. John Galt, for example, is but one instantiation of the Randian/Aristotelian virtue ethic, an instantiation which was created for a particular aesthetic purpose by a particular person. To often both Rand and her detractors have taken the instantiation for the class thereby limiting the vision.