On Galata Bridge
On the famous Galata bridge fisherman cast from the top level while outdoor restaurants line the walkway below. The fishermen’s lines are hard to see so dining at dusk you are surprised when silvery fish, glittering in the last light of the sun ascend to the sky as if swimming to the heavens.
On being lost
I am in Turkey this week. (Where else can you go where the secularists are protesting in the streets! Awesome.) Aside from seeing things, I like to travel for the challenge.
Getting to that interesting restaurant reviewed in the New York Times you have to find the ferry station, purchase the right ticket, get off at the right stop, find the restaurant on the streets with no names (ah there’s the bull statue! must be somewhere to the east!) and overall get lost many times. It’s a bit like running a marathon but the honeyed pumpkin at the finish line tastes sweeter for all the running.
I don’t like being lost, but I like having been lost.
FDA Delay
Last year the Abigail Alliance won a stunning decision from the DC Circuit Court of Appeals that dying patients have
a due process right to access drugs once they have been through
FDA approved safety trials. Here’s a sad update from Kerry Howley writing in the Aug/Sept. issue of Reason Magazine (not yet online):
After last year’s ruling in the alliance’s favor, the FDA argued that the group no longer had legal standing to sue it, since none of the patients who had signed the original affidavits were still members. They were all dead.
See FDAReview.org for more on the FDA.
China and Industrial Policy
Brad DeLong’s post on China and industrial policy combines a deep knowledge of history, politics and economics. It’s a superb post, one of Brad’s best ever so do read the whole thing then come back here for some minor quibbles.
Brad goes over the top for Deng Xiaoping ("quite possibly the greatest human hero of the twentieth century.") Without denying Deng’s importance, I would say that China’s great leap forward came with the death of Mao Zedong. Once Mao – quite possibly the greatest human killer of the twentieth century – was dead, China could almost not help but improve.
Second, the Chinese people, especially the peasant farmers, deserve a huge amount of credit. Here’s a couple of paragraphs I wrote recently:
The Great Leap Forward was a great leap backward – agricultural land was less productive in 1978 than it had been in 1949 when the communists took over. In 1978, however, farmers in the village of Xiaogang held a secret meeting. The farmers agreed to divide the communal land and assign it to individuals – each farmer had to produce a quota for the government but anything he or she produced in excess of the quota they would keep. The agreement violated government policy and as a result the farmers also pledged that if any of them were to be jailed the others would raise their children.
The change from collective property rights to something closer to private property rights had an immediate effect, investment, work effort and productivity increased. “You can’t be lazy when you work for your family and yourself,” said one of the farmers.
Word of the secret agreement leaked out and local bureaucrats cut off Xiaogang from fertilizer, seeds and pesticides. But amazingly, before Xiaogang could be stopped, farmers in other villages also began to abandon collective property.
Deng and others in the central leadership are to be credited with recognizing a good thing when they saw it but it was the farmers in villages like Xiaogang that began China’s second revolution.
Addendum: For the story of Xiaogang I draw on John McMillan’s very good book, Reinventing the Bazaar.
China Fact of the Day
Ah, this is good to see. China’s "communist" rulers oppose price controls.
Live, or Die Free
Johnson & Johnson has proposed that Britain’s national health service pay for the cancer drug Velcade, but only for people who benefit from the medicine, which can cost $48,000 a patient. The company would refund any money spent on patients whose tumors do not shrink sufficiently after a trial treatment.
The groundbreaking proposal, along with less radical pricing experiments in this country and overseas, may signal the pharmaceutical industry’s willingness to edge toward a new pay-for-performance paradigm – in which a drug’s price would be based on how well it worked, and might be adjusted up or down as new evidence came in.
More here. Contingency fees for doctors and pharmaceutical companies are a very good idea (one I have long supported). For more see Hyman and Silver’s excellent paper.
Meta Performance Art
I’m not a huge fan of performance art but I love this piece of meta performance art. Damien Hirst (whose work features chopped up animals and maggots and flies) recently unveiled the most expensive piece of contemporary art ever, a skull encrusted with millions of dollars worth of diamonds. In response, "Laura" created a similar skull using Swarovski crystals and in the middle of the night she dumped it outside the gallery along with a pile of trash. Priceless.
Boudreaux v. Rodrik
Boudreaux v. Rodrik is a knockout for GMU chair Don Boudreaux. I’m biased? Of course, but the call is made by Brad DeLong.
Mental Accounting for Dummies
The Bank of America’s Keep the Change program freaks me out. Every time you make a charge with your B of A debit card it rounds the figure up to the nearest whole amount and transfers the change to your checking account.* Commercials for this service are all over the television and radio – tagline: “you don’t even have to think about saving” – and every time I see one I feel the gulf between me and the rest of humanity widening (MR readers excepted of course).
Look, I can understand Ulysses tying himself to the mast, I can understand locking the refrigerator and I can understand Christmas accounts but I will never understand how anyone can increase their savings by taking money from one account and putting it into another. I think I will write a book, I will call it Mental Accounting for Dummies:
The secret to saving more money is simple. In your right hand is money for spending. In your left hand is money for savings. Now take some money from your right hand and put it into your left hand. Tada! Wasn’t that easy?
Millions have signed up for Keep the Change and the program has been written up by Business Week as "a radically different product that broke the paradigm." Sigh.
* n.b. It is true that B of A tops up the amount transferred but this part of the program, the only part that makes any sense, is hardly advertised at all.
Sadly, the average economist is no Milton Friedman.
It beggars belief when economists at Princeton, Harvard and Berkeley claim that they are lone voices in the wilderness boldly striking heterodox positions against the hegemony of “free market economics.”
David Card, for example, says “You lose your ticket as a certified economist if you don’t say any kind of price regulation is bad and free trade is good.” Really? Card and Krueger’s famous paper on the minimum wage was a 1993 NBER working paper published in the AER in 1994. What happened then in 1995? Was Card decertified, drummed out of the profession, vilified by his peers? Hardly, in 1995 David Card was honored (deservedly imho) by the American Economic Association with the John Bates Clark medal.
Dani Rodrik says “I fall into the methods of the mainstream, but not the faith,” which he defines as the belief that more markets and free trade are always good and government regulation is always bad. Give me a break. Let’s go to the data.
Klein and Stern surveyed members of the AEA on a host of policy questions bearing on markets and government regulation. The result, “Only a small percentage of AEA members ought to be called supporters of free-market principles.”
Even on the minimum wage, support for which Card says gets you decertified, the mean economist position is in between “support mildly” and “have mixed feelings.” Indeed, even Card has mixed feelings about the minimum wage! (See his book with Krueger in which he points out that the minimum wage is not a very effective way to help the poor). On a host of other issues concerning government regulation, like support for OSHA, the FDA, and the EPA, the mean economist is somewhere between strongly and mildly support.
Only on free trade is there strong opposition to government regulation in the form of tariffs. Thank goodness for small mercies.
Markets in Everything: Replacement Drivers
The NYTimes reports on Korean replacement drivers – they drive drunks home in the drunk’s own car.
Their work has become such an essential part of life in Seoul and other
major cities of South Korea that the national statistical office last
year began monitoring the price of replacement driver services as an
element in calculating the benchmark consumer price index. An estimated
100,000 replacement drivers handle 700,000 customers a day across the
country, the number increasing by 30 percent on Fridays, according to
the Korea Service Driver Society, a lobby for replacement drivers.
This seems like a great idea and it’s obviously a huge success in Korea. Why not in the United States?
Tyler on UFOs
Discover Your Inner Economist has lots of great insights. But this one Tyler gets all wrong.
Small changes in incentives can make a big difference in our beliefs. For instance, UFO sightings are down dramatically in the last decade…I think [one factor is] cell phones and cell phone cameras.
"The spaceship was in a no-call dead zone. And you didn’t snap a picture?"
…The story is suddenly a little harder to swallow. Most of all, it is harder to fool oneself, not just one’s spouse and friends.
I mean really. Why jump to conclusions? OBVIOUSLY the aliens know we have cell phone cameras now.
Worse than Viruses
Public computer surfaces are reservoirs for methicillin-resistant staphylococci.
The role of computer keyboards used by students of a metropolitan
university as reservoirs of antibiotic-resistant staphylococci was
determined. Putative methicillin (oxacillin)-resistant staphylococci
isolates were identified from keyboard swabs following a combination of
biochemical and genetic analyses. Of 24 keyboards surveyed, 17 were
contaminated with staphylococci that grew in the presence of oxacillin
(2 mg l-1). Methicillin (oxacillin)-resistant Staphylococcus aureus (MRSA), –S. epidermidis (MRSE) and –S. hominis
(MRSH) were present on two, five and two keyboards, respectively, while
all three staphylococci co-contaminated one keyboard. Furthermore,
these were found to be part of a greater community of
oxacillin-resistant bacteria. Combined with the broad user base common
to public computers, the presence of antibiotic-resistant staphylococci
on keyboard surfaces might impact the transmission and prevalence of
pathogens throughout the community.
Thanks to Monique van Hoek for the pointer.
Creative Destruction?
I met a friend recently that I hadn’t seen since high school. I told her I was an economist. "Oh," she said in the nicest possible way, "I’m surprised, you were so creative in high school." Sigh.
Money can’t buy you love but in Illinois it can compensate
Arthur Friedman asked his wife to have sex with other men. She said yes and fell in love with the third wheel. Art then sued the invitee and won $4,802 under Illinois’s alienation of affection doctrine.
Aside from voyeurism the case raises some interesting issues. Friedman surely does not have a right to his wife’s affection – he can’t sue her if she doesn’t love him – so if another man steals what Friedman does not own how can Friedman have a claim against the other man? It’s cases like this that push me towards Murray Rothbard’s position that you don’t have a right to other people’s thoughts. As a result, there can be no just laws against alienation of affection but also since you do not have a right to your reputation (it is in other people’s heads) there can be no just laws against libel.
Thanks to Monique van Hoek for the pointer.