Month: July 2017

My favorite things Delaware

I am in Delaware only briefly.  I have not covered the state before, so here are some of my picks:

1. Chemicals manufacturer: I think that one has to go to the Duponts, I enjoyed the Gerard Zilg biography of the Dupont family and history.

2. Economic historian: Alfred Chandler.

3. Monetarist who studied policy instruments and uncertainty: William Poole.

4. Semi-libertarian journalist: Dave Weigel.

Hmm…music?  I don’t like George Thorogood.  A quality novelist?  How about a painter or sculptor?  Some big time NBA star?  Biden is my favorite of Obama’s VPs.  It is claimed that the movie Fight Club is set in Delaware.  So many special dishes too, in the local cuisine.

The bottom line: Small wonder it is!

Why do Americans spend so much on health care?

That is the topic of my latest Bloomberg column, here is one excerpt:

As outlined by the blog Random Critical Analysis, U.S. health-care expenditures go well beyond what the U.S.’s relatively high per capita GDP might lead us to expect. But viewed through the lens of consumption behavior, American health-care spending is typical of this nation’s habits and mores. Relative to GDP, Americans consume a lot more than Europeans, and our health-care spending is another example of that tendency.

And to channel Megan McArdle:

Furthermore, we shouldn’t take the lower health-care spending in many European nations as a sign of better health-care policy. It’s a reflection of a broader cultural difference. If the U.S. someday did move to a single payer system for health care, it probably would be a relatively expensive version of that idea. The U.S., of course, does have a partial single payer system through Medicare, and it is still more expensive per beneficiary than its European equivalents.

Keep in mind that high consumption expenditures also help explain various “anecdotes of outrage,” such as billings for $400 band-aids and the like.  To some extent such charges are fraud, and to some extent they are simply an unusual allocation of fixed costs.  Both practices are more likely in a non-Spartan society keen on spending a lot of money on health care and the very latest.

Who’s complacent? (arbitrage for Ontario)

A Toronto man who spent $550 building a set of stairs in his community park says he has no regrets, despite the city’s insistence that he should have waited for a $65,000 city project to handle the problem. The city is now threatening to tear down the stairs because they were not built to regulation standards.

Retired mechanic Adi Astl says he took it upon himself to build the stairs after several neighbours fell down the steep path to a community garden in Tom Riley Park, in Etobicoke, Ont. Astl says his neighbours chipped in on the project, which only ended up costing $550 – a far cry from the $65,000-$150,000 price tag the city had estimated for the job.

“I thought they were talking about an escalator,” Astl told CTV News Channel on Wednesday.

Astl says he hired a homeless person to help him and built the eight steps in a matter of hours.

Astl’s wife, Gail Rutherford, says the stairs have already been a big help to people who routinely take that route through the park. “I’ve seen so many people fall over that rocky path that was there to begin with,” she said. “It’s a huge improvement over what was there.”

The city says the stairs are unsafe and has cordoned them off, banning their use:

“We just can’t have people decide to go out to Home Depot and build a staircase in a park because that’s what they would like to have.”

Here is the article, with photos, via Rob Gray.

What I’ve been reading

1. Robert Knapp, The Dawn of Christianity: People and Gods in a Time of Magic and Miracles.  Jews, Christians, and polytheists, mostly in the first century after the birth of Christ.  Strongly conceptual, rather than a string of hard-to-remember facts and citations.  Here is a useful summary review.

2. Samanta Schweblin, Fever Dream.  A well-known Argentinean novel, finally available in English.  A kind of ghost story, imagining wondering if the soul of your dying child really has been transferred to another person.  Short and very powerful.  Here is one very good review.

2. Hollis Robbins and Henry Louis Gates, Jr., The Portable Nineteenth-Century African American Women Writers.  Plenty of libertarian thought in here, and many historical tidbits of interest, for instance Julia Caldwell-Frazier, “The Decisions of Time” (1889) p. 486:

What obstacles and failures Prof. Morse encountered when he completed his rough model of the recording electro-magnetic telegraph; but see of what inestimable value his invention has been to mankind! Was not public opinion opposed to the telephone?—styled it “a useless thing.” But within a decade the telephone has become the most patronized means of urban intercommunication. Through all the innumerable obstacles and oppositions, we see, by the decisions of time, science tracing the wild comet in its vast eccentric course through the heavens; we see science bringing down the very lightning from the clouds, making it a remedial agent and a messenger, quick as light, to carry our thoughts.

Here is useful NYT coverage.  There is also:

Michael Vatikiotis, Blood and Silk: Power and Conflict in Modern Southeast Asia, a useful introduction to why that part of the world has not turned into paradise.

Jimmy Soni and Rob Goodman, A Mind at Play: How Claude Shannon Invented the Information Age, is a quality treatment of its topic material.

Jesse Eisinger, The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives, is a useful look at why so many cases are leveled against the company rather than the CEO. I found the book worthwhile, but don’t think he offered much of an argument as to why that should be bad.

Bradley M. Gardner, China’s Great Migration: How the Poor Built a Prosperous Nation, is a good introduction to what the title promises.

Mexico City eliminates minimum parking requirements (bravo)

The largest city in North America has done away with one of the biggest hidden subsidies for driving: minimum parking requirements.

Mexico City eliminated requirements that force developers to build a minimum number of parking spaces in each project. The city will instead cap the number of parking spaces allowed in new development, depending on the type and size of the building. Existing parking spaces can also be converted to other uses.

Mexico City Mayor Miguel Mancera signed the new regulations into effect last week.

The policy change applies to every land use and throughout the entire city of 8.8 million residents. It promises to make housing more affordable, reduce traffic, and improve air quality.

…The old rules mandated parking even though only about 30 percent of Mexico City residents own cars and the city has a well-developed subway system.

There are now parking maximums in place instead of minimums…

Within the central city, the new rules also require developers to pay a fee if they build more than 50 percent of the maximum parking allowed…

Revenues from the parking fee will be used to improve transit and subsidize housing.

Here is the story, via John Chamberlin.  Here is my earlier NYT column on this topic.

The economics of the Protestant Reformation

Here is the abstract of a new paper by Davide Cantoni, Jeremiah Dittmar, and Noam Yuchtman:

The Protestant Reformation, beginning in 1517, was both a shock to the market for religion and a first-order economic shock. We study its impact on the allocation of resources between the religious and secular sectors in Germany, collecting data on the allocation of human and physical capital. While Protestant reformers aimed to elevate the role of religion, we find that the Reformation produced rapid economic secularization. The interaction between religious competition and political economy explains the shift in investments in human and fixed capital away from the religious sector. Large numbers of monasteries were expropriated during the Reformation, particularly in Protestant regions. This transfer of resources shifted the demand for labor between religious and secular sectors: graduates from Protestant universities increasingly entered secular occupations. Consistent with forward-looking behavior, students at Protestant universities shifted from the study of theology toward secular degrees. The appropriation of resources by secular rulers is also reflected in construction: during the Reformation, religious construction declined, particularly in Protestant regions, while secular construction increased,especially for administrative purposes. Reallocation was not driven by pre-existing economic or cultural differences.

For the pointer I thank the excellent Kevin Lewis.

Which of our public policy institutions are working well right now?

Chad R. asks me:

Which of our public policy institutions are working well right now?

It seems there are plenty of takes about *why* our institutions are under extreme stress, but precious few about which are still working properly.

The Supreme Court comes to mind…

I say plenty of them are working well:

1. The CBO remains independent and effective, even though I think they are treating the health care mandate incorrectly and overestimating its impact.

2. As for the courts, they remain powerful and effective.  But note: while I strongly disagree with Trump’s travel ban, some of the lower courts overstepped their bounds by taking away too much power from the executive, relative to law.  It’s as if the courts have become too strong — perhaps optimally so — in a kind of overshooting model.

3. The Senate.  Even though one party controls all branches of government, a variety of bad health care bills have come to naught, and that is after many earlier votes to repeal Obamacare.  It is less clear to me how the House is working, but that’s why we have bicameralism.  I don’t care how stupid you might think the process is, so far it is generating acceptable results.  Yum, yum, yum, I just love that democracy!

4. The media as investigators have been excellent, though as summarizers of what is really going on I see their performance as much weaker, due to selective reporting.

5. Think tanks: the lack of Trump infrastructure at this level has raised my estimate of think tank importance.  That said, I am not sure how many think tanks are influencing policy right now, but if nothing else the inability to have or assemble a good think tank is indeed important.

6. The bureaucracy, for the most part, including the Fed.  Admittedly, some parts of the bureaucracy, such as the State Department, are being throttled by the Executive branch.

What’s not working well?

I say the executive branch and the White House.  Destroying or limiting the value of alliances is one of the easiest things for a blundering president to do.  I also see a significant opportunity cost from not having a legislation-oriented, detail-savvy White House.  Still, they are doing a good job on regulatory reform and an excellent Supreme Court appointment has been made.

Most of all, the appointments process is not working well, some of that being the fault of the Senate too.

The main lesson?  American government isn’t quite the train wreck you might think, and I haven’t even touched on the states, counties, and cities.

Sentences to ponder from the Dirtbag Left

On a recent episode of the popular podcast Chapo Trap House, co-host Will Menaker used a memorable metaphor in addressing calls for unity on the left. “Republicans in control of politics, that’s the problem,” he began. “However, to the pragmatists out there and the people who don’t like purity in politics, yes, let’s come together. But get this through your fucking head: You must bend the knee to us. Not the other way around. You have been proven as failures, and your entire worldview has been discredited. You bend the knee to us and then let’s fucking work together to defeat these things, not with fucking means testing or market-based solutions but with a powerful social democratic message.”

That is reported by Jeet Heer at The New Republic.

Wednesday assorted links

1. A science fiction look at Proust.

2. Contours of a third nuclear age.

3. Too many Americans live in a mental fog.

4. “Automation risk of US jobs drops from 38 to 9% when accounting for job-level tasks.

5. What is up with the China-India scuffle?  Keep an eye on this one.  And why China won’t help with North Korea.

6. China markets in everything.

7. Another way to look at TFP data.

My Conversation with Atul Gawande

Here is the podcast and transcript (no video), Atul was in top form.  We covered the marginal value of health care, the progress of AI in medicine, whether we should fear genetic engineering, whether the checklist method applies to marriage (maybe so!), whether FDA regulation is too tough, whether surgical procedures should be more tightly regulated, Michael Crichton and Stevie Wonder, wearables, what makes him weep, Knausgaard and Ferrante, why surgeons leave sponges in patients, how he has been so successful, his own performance as a medical patient, and much more.

Here is one excerpt:

COWEN: A lot of critics have charged that to get a new drug through the FDA, it takes too many years and too much money, and that somehow the process should be liberalized. Do you agree or disagree?

GAWANDE: I generally disagree. It’s a trade-off in values at some basic level. In the 1950s, we had no real FDA, and you had the opportunity to put out, to innovate in all kinds of ways, and that innovation capability gave us modern cardiac surgery and gave us steroids and antibiotics, but it also gave us frontal lobotomies, and it gave us the Tuskegee experiment and a variety of other things.

The process that we have regulation around both the ethics of what we’re doing and that we have some safety process along the way is totally appropriate. I think a lot of lessons about when the HIV community became involved in the FDA process to drive approaches that smoothed and sped up the decision-making process, and also got the public enough involved to be able to say . . . That community said, “Look, there are places where we’re willing to take greater risks for the sake of speed.”

People are trying to treat the FDA process as a technical issue. When what it is, is it’s an issue about what are the risks we are genuinely willing to take, and what are the risks that we’re not?


COWEN: The idea of nudge.

GAWANDE: I think overrated.


GAWANDE: I think that there are important insights in nudge units and in that research capacity, but when you step back and say, “What are the biggest problems in clinical behavior and delivery of healthcare?” the nudges are focused on small solutions that have not demonstrated capacity for major scale.

The kind of nudge capability is something we’ve built into the stuff we’ve done, whether it’s checklists or coaching, but it’s been only one. We’ve had to add other tools. You could not get to massive reductions in deaths in surgery or childbirth or massive improvements in end-of-life outcomes based on just those behavioral science insights alone. We’ve had to move to organizational insights and to piece together multiple kinds of layers of understanding in order to drive high-volume change in healthcare delivery.

Definitely recommended, this was one of my favorite “episodes.”

What if you hold a meeting without bringing your own translator?

No, I don’t approve of the second Putin-Trump meeting, but I’d like to consider this as a game theory problem without its current political connotations.

Why is it bad to attend such a meeting without your own translator?

Let’s say I meet with a Greek, to talk about debt renegotiation, and don’t bring my own translator.  You might think I am at the mercy of the other translator, the one hired by my Greek peer.

But how so?  If the Greek speaker wishes to mislead me, he doesn’t need a biased translator to do so.  He can just lie to me or otherwise mislead me in the original Greek.  Either translation, from an American or Greek translator, will communicate the same lie or deception.

Alternatively, assume I believe there is some “noise” between the Greek statement and its translation into English.  Some of this may stem from the imperfections of the translation process itself, or perhaps the translator has her own agenda.

If I bring my own translator, that removes the influence of the agenda of the Greek translator, but probably keeps the noise and imperfections.  But is that good or bad on net?

1. I now face risk from the agenda of my own translator.  That may be more biased or skewing than the agenda of the Greek translator, especially since it may relate to splits within American rather than Greek politics.

2. It might be better if I am fooled by a Greek translator who to some extent wishes to subvert the interests of her own government.  For instance, the Greek translator might wish to keep smooth relations by not communicating all of the cuss words behind a threat.

3. The Greek speaker might in fact know he is regularly subverted by his own translator, and adjust his words accordingly.  The “subverted” communication, as conveyed by the Greek translator, may in fact be the intended message, and thus there is little harm from the subversion.

4. By not having your own translator present, you are keeping as private information what and when you will reveal to your own countrymen.  That may put you in a stronger bluffing or bargaining position.

4b. In the other direction, note you may wish to have your own translator so that your negotiating partner can do without his!  That may put him in a stronger position with respect to his home interest groups and thus facilitate a deal.

Overall, it is not obvious that I am so much better off having my own translator.  In fact, it seems your own translator is there, to some extent, to constrain you, as is evident from some of the discussion of the Putin-Trump meeting.  For instance, it is being claimed Trump might have wanted to say things to Putin that no American functionary could be allowed to hear.  If that is true, it might be bad for America, but it need not be bad for Trump’s self-interest.

On this question, the economics of having your own note-taker, or your own taping mechanism, might be very different from that of translator, but that would be another post.

China sentences to ponder, gray rhino edition

“The message from the leadership last weekend was very clear — financial stability is now regarded as an important element of national security,” said Raymond Yeung, the Hong Kong-based chief economist at Australia & New Zealand Banking Group Ltd.

An editorial in the Communist Party’s People Daily newspaper on Monday pointed to the seriousness of the campaign, warning of potential “gray rhinos” — a variation on the black swan events popularized during the global financial crisis, with the difference that the danger from a charging rhino is more immediate and the animals are less rare.

Here is the Bloomberg story, via Bill Bishop’s excellent China newsletter.

Arbitrage, self-made coffin edition

A coffin-making community group has popped up in Tasmania’s north-west, allowing people to make their caskets dirt cheap.

The Community Coffin Club meets once a week at the Ulverstone Community Shed, where mentors help people make coffins for themselves and their family.

Sheree Whittington has been working on her coffin for the past month.

“I’ve always had a bit of a morbid side to me and loved the Addams family and that sort of thing,” Ms Whittington said.

“When I found out about the Coffin Club I thought what better way: make my own coffin.”

Ms Whittington said she planned to put her coffin to good use before she needed it.

“It is going to be a coffin for when my time eventually comes, but in the meantime I’m going to have shelves put in it so I can use it as a CD and DVD rack.”

“It’s an actual, functional piece of furniture.”

Is this true?:

Facing death ‘easier if you’ve got coffin ready’

Maybe so:

“I don’t know what the funeral directors think about it, but we can make them for probably a tenth of the cost.”

When Mr Game’s is finished, his casket will have cost less than $200 to make.

Here is the full story, via NinjaEconomics.