Month: March 2007

European secularism

by  Tyler Cowen in

Why is Europe becoming ever more secular?

As in American academia, European secularism is a mark of identity and (supposed) reasonableness.  Europeans are surrounded by Islam on one side, Russia on another, and the United States across the ocean.  Reasonableness is a natural identity for their smart people to slot themselves into.  Yes state churches have made European religion bureaucratic and sluggish, but that is not the main story.  Competitive religious alternatives, albeit unfunded by government, could have sprung up and captured hearts and minds but they didn’t. 

Nonetheless the rise of European secularism will be reversed.  Most people are only casually religious, but a chunk of every society has a tendency to be enthusiastically religious.  European religions will restructure and make a comeback, at least among this chunk.  Unlike in times past, I doubt if this segment will have the social status to pressure many others to go along, but it would still represent a fundamental shift in the European intellectual climate.  This development would probably happen immediately, if not for the European fear of becoming too much like the United States.  In any case the identity of reasonableness is not a sustainable meme for so many people in the long run; it doesn’t demand enough from its adherents.  Hume wrote of cycles between monotheism and polytheism, had he lived later he could have tossed secularism into that mix.

And then there is Islam.

#32 out of 50.

By the way, Happy Fiftieth Birthday to the European Union.  For all its bureaucracy, it has done more for human liberty in the last ten years than any other institution.  I mean "enlargement" and Eastern Europe, of course.

The Liberty not to be Subordinate

by  Alex Tabarrok in

I once asked a wise professor of mine what the best thing about being a professor was.  He replied, "The fact that I can go into the office of the department chair, tell him he’s an #*$!%! and there’s not a damn thing he can do about it."  Shocked, I said, "but you’re a level headed, nice guy, you would never want to do that."  He replied "yeah, I never would, but the thought that I could if wanted to is worth a huge amount."

The lesson?  Liberty is not always an instrumental value subordinate to positive capabilities.   

FDA payola?

by  Tyler Cowen in

The FDA will soon stipulate that researchers who accept more than $50,000 in corporate grants, contracts and consulting fees cannot sit on FDA advisory committees.  This will rule out many current advisors.

First, I wonder how this fits into the old Sam Peltzmann story that the FDA is too conservative in approving new drugs.

Second, what if we reformed in the opposite direction?  Why not do away with all the mandatory drug trials and the like, and simply let drug companies purchase approval for new drugs?  Think of the companies as posting bonds, and of course they still can be sued ex post if the drug harms somebody.  The companies still will have reason to conduct their own tests.  Set the price high if you wish.

To be sure, how much a company will pay for approval will depend on expected profits, not social welfare.  But even with market power there is usually some connection between those two magnitudes.  Or maybe the fear of lawsuits won’t deter poorly capitalized companies, but at the very least we could let the corporate giants take this path.

Some companies might be too overconfident about their drugs.  If you believe that, I hope you are buying puts on them.  Other companies might have excessively short time horizons.  If you believe that, I hope you are loading up on drug companies with heavy R&D and raking in your excess returns.

So does this idea have any takers?  If not, why not? 

Addendum: Matt Yglesias argues regulation is a substitute for litigation.

Tom Palmer on positive and negative liberty

by  Tyler Cowen in

My view, simply put, is that "Libertarian Liberty" (to be specific with the terminology) is for the most
part an instrumental value subordinate to the enhancement of positive
capabilities.  When the two conflict, I opt for the capabilities, and
in that sense I admire the philosophical premises of many contemporary
American liberals.  I also believe in a governmental safety net, unlike many of the people at Cato, and partly for this reason.

On the other hand, I favor zero taxation of capital income, deregulation of the medical sector, cuts in government spending, no special privileges for labor unions, and I reject the philosophy of egalitarianism.  So I’m not quite ready to be writing for The American Prospect and competing down the wages of Matt and Ezra.

My worry about vouchers

by  Tyler Cowen in

Here is one good bit, you can trace back an interesting debate through Kevin Drum, Matt, Ezra (can’t find the link), and Jane.  I have two worries:

1. The federal government will pay for vouchers, to some extent, and thus extend its control over schooling.  Admittedly this is happening anyway.

2. No politically feasible vouchers program will apply immediate depth charges to current public schools or even reduce their initial budgets ("oh, you aren’t letting public schools compete…).  That means the new money must come from somewhere.  That means our taxes will go up.

Vouchers would create a new middle class entitlement, ostensibly aimed at education but often simply capitalized in the form of cash.  In the meantime public schools would require additional subsidies to stay open.  How pretty a picture is this?

For sure, I favor selective vouchers for inner cities and voucher experiments.  But Yana is finishing high school now, and we have had quite a cozy local arrangement in Fairfax County.  I don’t wish we had had vouchers, and I’m a libertarian (Bryan can laugh if he wants).  That’s why the vouchers idea has not really gotten off the ground.

I would be happier with vouchers if we were starting from scratch in designing educational institutions.  And while I agree with Jane that children have a positive right to an education, I think the out-and-out laissez-faire option doesn’t get enough attention.  Keep the public schools we have, but make them charge tuition.  I’m not sure that the number of good educations obtained would actually go down.  Even if we can’t institute this reform today, might it become possible at some level of per capita income?

When it comes to teachers’ unions, I don’t have much sympathy.

Tim Worstall asks

by  Tyler Cowen in

…is a single payer system actually any cheaper, once the deadweight costs of…taxes are taken into account?

More here, this man would warm the heart of Doug Gibbs.  I recall learning that deadweight losses from taxation are about 20 percent of revenue raised, which is just about the size of overhead costs for the private insurance industry.  Don’t ignore this sentence either:

The French system, the one that is generally rated as being number 1 globally, is neither single payer nor single provider.

Abolishing the middleman won’t make health care a free lunch

by  Tyler Cowen in

Have you ever heard that Medicare, or single-payer systems in Europe, have much lower overhead costs than does private insurance?  Don’t fall for that trick.  My NYT column drives home what ought to be a familiar point:

Medical insurance, whether private or government, is always going to be
faced with a fundamental problem: patients and doctors will try to get
the most out of any system.  When they aren’t paying directly, patients
will seek extra care and doctors will be happy to oblige.  To deal with
that problem, health care systems can offer services indiscriminately
and write off the resulting losses, spend money on monitoring, or limit
services and prices.  An analogous problem is faced by retail stores:
they must either put up with theft, hire security to limit theft, or
carry lower-value items.

Tiffany’s, which sells diamonds, has higher overhead costs than does a 7-11 store.  When you work through the different options, the overhead costs can be shifted or transformed, but they don’t go away:

Just as some items are harder to shoplift than others, so some medical
services are less prone to overuse.  European systems are relatively
good at providing prenatal care or mending someone hit by a car.  Few
people would try to get these services unless they were really needed.
No one but an expectant mother, for instance, will show up for a
prenatal checkup; nor would excess prenatal checkups cost a great deal.
The unwillingness of European systems to spend on overhead means they
will do best specializing in these kinds of services.

When it comes to expensive, discretionary health care benefits, single-payer systems are more likely to resort to queueing, lack of comfort or convenience (compare U.S. and European hospital rooms) or to remove the service altogether.  My conclusion:

…as populations age and the value of medical technology grows, the
overhead costs of private insurance will prove an increasingly wise
investment.  For all its high immediate expenses, the American health
care system is looking toward the future rather than the past.  In the
long run, the hidden and indirect costs of single-payer systems are
harder to measure and thus are ultimately harder to control.

I should note that I drew the point about young vs. old (see the full article) from a Bloggingheads.TV dialogue (Megan McArdle vs. Henry Farrell), though it was not possible to cite that in the published piece.

Addendum: Mark Thoma offers commentary and Paul Krugman cites.

The Grey Lady Today

by  Tyler Cowen in

1. Some brain injuries make people more like consequentialists: "Damage to an area near the center of the brain, several inches behind
the eyes, transforms the way people make moral judgments in
life-or-death situations, scientists are reporting.  In a new study,
people with this rare injury expressed increased willingness to kill or
harm another person if doing so would save others’ lives."

2. Apropos Alex, here is Dave Leonhardt on credit: "It’s easy to see everything since then as a step in the wrong
direction, to romanticize a time when debt was less common.  But think
about what life was like before easy money.  Think about how hard it
would be to buy a house or pay for college if a 42 percent interest
rate still seemed normal. Some of the changes are surprisingly
recent.  Just a generation ago, a temporary setback, like illness,
divorce or job loss, was much more likely to force a family to take
drastic measures than it is today.  That’s in large measure because of
debt, which allows families to smooth out the rough edges of their
financial lives.

You can see this change in the national statistics on consumer
spending.  Since the early 1990s, the peaks in spending growth rates
haven’t been as high as they were in the 1960s, ’70s and ’80s, but the
valleys haven’t been as low, either.  Not coincidentally, recessions
have come less often over the last two decades and they have been
fairly mild."

How Doctors Think

by  Tyler Cowen in

…the sickest patients are the least liked by doctors, and…very sick people sense this disaffection.  Overall, doctors tend to like healthier people more.

That is from Jerome Groopman’s new and excellent How Doctors Think.  The book claims that by asking your doctor better questions, you can help him or her overcome cognitive and emotional biases.  For instance doctors too frequently assume that the recent cases they have seen constitute a real trend, or they too quickly assume that what they see fits a known medical pattern.  Here is one story on the book.  Here are Groopman’s New Yorker articles.  Here is Groopman summarizing the book in The New Yorker.