Lawyers are no fun
On Sunday I bought my five year old a sled which came with a series of warnings and disclaimers including this one:
Warning: Beware that sled may develop high speed under certain snow conditions.
I would hope so.
Queer Eye and the Future of Television
Queer Eye for the Straight Guy, the latest reality-tv show, features five gay men who remake a “style-deficient and culture-deprived straight man from drab to fab.” The show is a huge success and has created much commentary on the changing nature of social mores in America.
Less noticed is that the show is artfully disguised product placement. Each week the fab five carefully name each and every product that they use to remodel the straight guy – like Polo jeans, Ray Ban eyewear, KMS Hair care products, Benjamin Moore paint and Hold Everything furniture, to name a few recently featured items. Love that desk but miss the item number? Got to the website and you can find each product categorized by the show it appeared in.
As usual, a Ralph Nader connected group, Commerical Alert, is complaining that consumers are being ripped off. They want every paid product placement to be overlaid with an on-screen “advertisement” sign. The shift to within-show product placement, however, is a natural response to Tivo and other similar technologies that are making it easier to skip the commercials. I hope that within-show product-placement eliminates commercials altogether – this is the future of television.
Regulation by Litigation
Elliot Spitzer, New York’s Attorney General, apparently misunderstands so let me make it clear – it’s the rule of law not the rule of lawyers. As I feared, a real but relatively minor scandal in the mutual fund industry, is becoming the excuse for grandstanders promoting their own agendas that have little do with the original issues. Professor Bainbridge lays it out here (I recommend following up on his links but of course ignore any criticism you might find of my arguments! :)).
There is Plenty of Room at the Trough Also
Nanotech gets $3.7 billion to, among other things, formulate “strategies for transferring nanotechnology into the marketplace.” My pants say this is just more corporate welfare.
For more on Nanotech see Richard Feynman’s visionary speech and Eric Drexler’s book, Engines of Creation.
The Commanding Heights
PBS has put the entire Commanding Heights television series on the net. Wisely, in addition to longer sections, they have broken the series down in a variety of ways so that you can find short clips on people, countries or ideas. Here is a quicktime video about the the day the tide turned.
A Bit of Talmudic Commentary
The Wall Street Journal’s David Wessel featured Marginal Revolution as one of the five best econ blogs/web sites. Wessel cited our wide ranging interests accompanied by bits of “Talmudic commentary.” Brad DeLong, Stephen Roach, John Makin, and Venture Blog were also cited. Welcome to all the new WSJ readers!
Paying for Disability
The number of disabled people in the United States is increasing at a shocking rate – from 1984 to 2000 the number of disabled people more than doubled from 3.8 to 7.7 million. Today, over 5% of adults aged 25 to 64 are disabled. Even more worrying is that disability is increasing especially rapidly among the young. What is responsible for this awful increase? Workplace accidents? Chemicals in the environment? Gun violence? Naahh, it’s incentives of course.
By disabled I mean receiving Social Security Disability Insurance or Social Security Income. In 1984, it become significantly easier to qualify for these programs. Combine this with an increase in the effective generosity of these programs for people of low-income, brought about by increases in mean relative to median income, and you have the makings of an epidemic. Today, “annual disability expenditures exceed that of welfare (TANF), Unemployment Insurance, and the Earned Income Taxed Credit combined” write economists David Autor and Mark Duggan in an important paper that I have drawn from.
Increases in disability have come mostly in the form of “back pain” and other difficult to verify maladies. One of the elegant ways Autor and Duggan demonstrate that you get what you pay for is the following chart which shows that as the number of disabled increased dramatically their mortality rate declined equally dramatically! (Click on the graph to expand it.)
Workers on disability are not counted as unemployed. Thus, another consequence of the increase in the disabled is that our unemployment statistics are artificially low. (See Austan Goolsbee’s NYTimes op-ed on this also drawing on Autor and Duggan.)
Flu Shots II
I won’t scold you again but Robert Bazell writing in Slate reminds us of the positive externality:
Even if spending a week violently sick and bedridden doesn’t worry you, by immunizing yourself you vastly lessen the chances you will spread the virus to some child or older person (family member, friend, or stranger) who might die from it….An experiment in Japan proved that immunizing school-age children could cut deaths in the elderly by many thousands.
…Most appalling of all, only 34 percent of health-care workers got flu shots. The very people who are most at risk themselves and most likely to spread the virus to others are for the most part not getting their shots.
For those afraid of needles, Bazell notes that you can now get a flu mist instead of a shot.
Two things that you don’t want to see made
Hint: both contain a lot of pork. Senator John McCain has a list (link via Bruce Bartlett’s Talking Points.)
Here are a few of my favourites from recent legislation:
$1.5 million for the University of Nevada-Las Vegas to conduct safety and risk analysis. (I did some risk analysis in Las Vegas once, but not on taxpayer money).
$278,000 for asparagus technology and production (WA)
$2,000,000 for exotic pet diseases (CA)
$300,000 for future foods (IL)
Not less than $2,300,000 for the International Fertilizer Development Center. (Hmmm…Nahh, too easy.)
$1,000,000 for the Amanut Society.
Bear in mind that these projects have not been through any sort of peer-review process – these are pet projects of particular members of Congress that are inserted into larger bills.
Society without a State
Understanding how criminal markets work is important if we want to understand the power and the limits of markets in the absence of state-enforced property rights. A recent Wired magazine article written by a mafia computer expert has some revealing information. The anonymous author writes:
…there’s the misconception that if you don’t pay your debts, the mob will break your legs. I’ve seen that on TV but never in real life. Sure, some agents make their collection runs with a bodyguard, but wouldn’t you want some muscle around if you were carrying tens of thousands of dollars in cash? Breaking people’s legs is bad business. If somebody doesn’t pay their debts because they’re broke, maiming them isn’t going to put cash in your bank account. Still, the threat of pain remains a valuable deterrent. Tell your customers that you’re breaking people’s legs and there’s no reason to actually do it. Truth is, when people don’t cover their debts, we put them on a payment plan. If that doesn’t work, we spread the word that they’re a bad risk. Basically, we fuck up their underground credit rating.
Surprisingly,
The whole business of taking bets and paying out is based entirely on trust. The wagers are a form of credit, advanced on trust between the agent and the players. The people placing the bets trust that they’ll get paid if they win. Everyone trusts that nobody is going to call the cops.
In this context, markets appear very robust. In other areas, however, especially in the drug markets we don’t see cooperation and trust but terrible violence – we get anarchy instead of anarcho-capitalism. Why the difference? I don’t think anyone has written much on this but it strikes me that an imporant clue is that the first market is between a buyer and seller with largely compatible interests while the latter interaction is between competitors with less compatible interests. We may need the state more to govern the actions of competitors vis a vis one another than vis a vis their customers. (Alas, this does not speak well for the anarcho-capitalist dream of competitive private-defense firms.)
Don’t let the bed bugs bite
…or Judge Posner will punish you. The punitive damages exceeded the compensatory damages in this bed bug case against Motel 6 by some 37 times. The Supreme Court’s recent line of argument in Pacific Mutual v. Haslip, State Farm v. Campbell and BMW v. Gore has suggested that “four times the amount of compensatory damages might be close to the line of constitutional impropriety.”
But the four-times figure is arbitrary. Judge Posner comes to the Supreme Court’s rescue by cogently laying out the theory of punitive damages, gently taking the Court to task in the process. A high multiple may be justified when the action to be punished is unlikely to be discovered or when the actual compensatory damages are low and would not motivate plaintiffs to otherwise bring suit against a legally-aggresive defendant. Both factors play a role in the bed bug case but would not justify absurdities such as the billions of dollars in punitive damages awarded against Exxon in the Exxon Valdez case.
My only worry with Posner’s analysis is that juries and judges may not be able to handle it. Perhaps the Supreme Court knows this and instead promulgates a foolish rule that is nevertheless easier to follow.
Addendum: Posner is the only person alive who deserves both a Nobel Prize and a seat on the U.S. Supreme Court. I put greater odds on the former than the latter but I happen to know that he recently visited the White House. Remember where you read it first.
African Americans and Government
Tyler may be correct that “the government as employer has done more for black communities than the government as purveyor of affirmative action.” But isn’t there something disturbing about this? Consider the following: Who do you think wrote:
The widely proclaimed growth in the black middle class in the 1960s and early 1970s associated with claims of “dramatic black progress” were in large measure attributable to the expansion of Great Society programs and the professional employment repercussions at levels of government. These programs played less of a role in generating an increase in the black middle class by uplifting the black poor than by providing direct employment to many blacks as social service providers to other impoverished blacks. Thus, one of the main legacies of the Great Society was to cement the symbiosis between the black poor and the black middle class – the former as the clients of the social service system and the latter as the service providers.
No, it wasn’t Charles Murray. It was the radical-leftist economist William Darity Jr., himself an African-American, writing in the May 1990 issue of the AER (JSTOR link). If true, what this suggests is that even middle-class black Americans were, and perhaps are, much less well integrated into the American economy than we might think from income statistics. I find this disturbing from just about any angle.
Get your Flu Shot!
We do not respond to risks rationally. We are scared of Ebola, pesticides, nuclear radiation and terrorists but the flu? Who cares about the flu? You should. In an average year, the flu kills almost as many people as die in auto accidents (36,000 for the flu, 42, 815 for highway accidents in 2002) and this year experts expect some 50-70 thousand flu deaths. True, those over 65 years of age and older are most at risk but thousands of younger people die from the flu every year. A flu shot reduces your chances of death by 50 percent. (Here is more flu info from the CDC.)
Buy, Eye in the Sky
For those who have nearly everything and can afford more, you can now buy your own space mission (on Ebay naturally). The offer, from SpaceDev, a real firm that sells micro-satellites, does not appear to be a hoax. Although, like space tourism, this is obviously in the early stages and something of publicity stunt it is also another important step towards the private exploration of space. For more on the offer see this item in Wired News.
More on Private Schooling in India
The Centre for British Teachers has an interesting report by James Tooley and Pauline Dixon on private schools in India. See also my earlier post on this subject and Tooley’s chapter in The Voluntary City.