Category: Current Affairs

Crony Statism

Johan Norberg provides some depressing information about the situation in Russia.

Russian President Vladimir Putin’s chief of staff, Alexander Voloshin, is said to have resigned. This is another sign that the so called power clan, “siloviki”, with its base in the FSB (former KGB) is strengthening its grips on power, and that both the liberal economists and the allies with former President Yeltsin are losing out. This is bad news for Russia. It all began with the brutal arrest of the oil magnate Mikhail Khodorkovsky this Saturday. The difference between Khodorkovsky and other oligarchs is not that he is more corrupt or unscrupulous, on the contrary, his oil company Yukos is renowned for being relatively transparent and law-abiding for a Russian company. The difference is that he has challenged Putin by supporting democratic forces, like the parties Yabloko and SPS. Before the arrest FSB also made a raid on Yabloko’s headquarters and stole their servers with their planning for the parliamentary election on December 7th. First the destruction of the free media in Russia and now this. It is no longer possible to call Putin’s Russia a democracy. It is more like a “democtorship” (“demokratur”), as the Swedish novelist Vilhelm Moberg once called a dictatorship with democratic rituals….

Addendum: More on the rise of the siloviki.

Newspapers in small countries

Consider this list of newspapers per capita. This is the number of papers, not how many people read papers. Here is the top ten:

1. San Marino 108.19 per 1000000 people
2. Gibraltar 36.08 per 1000000 people
3. Andorra 29.24 per 1000000 people
4. Macau 21.65 per 1000000 people
5. Greece 19.45 per 1000000 people
6. Norway 17.9 per 1000000 people
7. Bermuda 15.63 per 1000000 people
8. Estonia 11.3 per 1000000 people
9. Switzerland 11.09 per 1000000 people
10. Latvia 10.99 per 100000 people

Rounding out the top fifteen are Iceland, Cyprus, and Malta, along with such giants as Sweden and Finland. And note the gap between the frontrunner, San Marino, and number two; San Marino has almost three times as many newspapers per capita.

The United States is not in the top sixty-seven and does not stand on the list at all, it appears not to be in the database. A separate data source lists America as having 1,228 daily newspapers, which if correct would put us in per capita terms at number 28, between Mauritius and Bolivia. Why so low? Well, we rely on TV more, we have more concentrated media (most cities have only one daily paper, and perhaps smaller countries like the gossipy element that follows from a large number of small circulation newspapers.

Note: I have modified the initial version of this post, due to helpful comments from Frank Quist.

Drug reimportation

Most libertarian economists oppose drug reimportation, on the grounds that the resulting lower prices would harm the incentives for R&D. Richard Epstein provides a good statement of this case, with links to the relevant debates, including some libertarian dissenters, such as Ed Crane and Roger Pilon, both of Cato.

I have wondered, however, whether libertarians ought to reconsider their opposition to reimportation. Recall that the libertarian position paints the FDA as a significant obstacle to drug research.

I suspect that allowing drug reimportation would, in the long-run, break down the authority of the FDA. Once Americans are looking to abroad for medicines, the flood gates will be opened. They will want to buy medicines from Mexico, Europe, and indeed from all over the world. These medicines, of course, will not have met with FDA approval. It is not a matter of pure logic that legal reimportation would lead to this broader class of imported drugs, but I think it is what the political equilibrium would look like. Illegal drug importation is already on the rise; legal reimportation would legitimize and publicize the overall idea of getting drugs from other countries.

So, if we allow reimportation, the FDA will either have to become much stronger, and more intrusive (in conjunction with other governmental agencies, such as customs perhaps), or the FDA will cede much of its effective power, while likely keeping its nominal powers. But in the long run it is hard to see how to enforce restrictions on drug importation, especially once reimportation is legal. Drugs don’t take up much space, and the exact nature of their content is not easily tested. You can have a customs dog sniff for pot, but that same dog cannot tell whether a drug is of pure quality of adulterated, or is something else altogether. If libertarian think that the FDA does more harm than good, perhaps they should welcome reimportation as moving us toward a greater reliance on markets.

I don’t make macroeconomic predictions myself

Ray Fair is a prominent macroeconomic forecaster. He tells us:

Real Growth and the Unemployment Rate: The predicted growth rates for the next four quarters are 4.1, 3.6, 3.5, and 3.4 percent, respectively. The unemployment rate is predicted to fall to 5.6 percent by the middle of 2004.

Inflation: Inflation as measured by the growth of the GDP deflator (GDPD) is predicted to rise to 2.5 percent by the middle of 2004.

Here is the whole memo. The link is from Here is Paul Krugman telling us not to be too happy about today’s announced quarterly 7.2 growth rate, Brad Delong adds to Krugman’s concerns. Andrew Sullivan gets his digs in on Krugman.

Here is a thoughtful defense of macroeconomic forecasting. Here is a more critical view of forecasting, closer to my own view.

My take: You can squabble about the numbers all you want, at this point the Bush people have to be pretty happy.

What do Scandinavians export?

It is commonly known that Sweden and Norway stand among the top five nations for foreign aid per capita.

It is less commonly known that, in per capita terms, they are among the top five arms exporters in the world.  Here is the whole list, along with a color-coded map.

And who is number one on the list?  Macedonia.  The U.S. is number ten, France number seven.

From, a valuable data source, growing by the day.

Do you want to know cinema attendance per capita?  The U.S. is number two, just behind Iceland.  Georgia is number six, and Lebanon is number ten.

More on remittances

1. Almost one Mexican in five receives remittances from relatives working in the United States.

2. These payments help feed, house, and educate at least a quarter of the 100 million people in Mexico.

3. The total sent amounts to about $14.5 billion for this year.

4. Some 450,000 Mexicans entered the United States illegally last year.

The New York Times notes:

Most of the money is spent on food, clothing and housing. But Mr. Suro said a growing portion was invested in small business or helped to pay for high school and college educations.

Across much of central Mexico, where men and women have migrated to the United States for so many decades that crossing the border has become more a rite of passage than an escape from poverty, remittances exceed state public works budgets and pay to build roads, schools, water systems and baseball stadiums.

In recent years the United States and Mexico carried out reforms aimed at making it easier and more affordable for migrants to transfer money home. Companies like Western Union cut the fees they charged for wire transfers, halving the cost of transferring money, and American banks have begun allowing illegal immigrants to open accounts so relatives at home can withdraw funds from automatic teller machines.

Bravo, I say. I have spent a good deal of time in rural Mexico and I can attest that these funds make an enormous difference in the lives of millions. By the way, Daniel Drezner offers insightful commentary on my earlier post on remittances.

Technology and the environment

How many persistent toxins, such as PCBs, would be in the environment a century hence if Bush were president vs. Gore? He didn’t like my answer–that on that question, the election results made no difference. The time scales are off. Technological innovation, not environmental regulation, will determine the state of the earth in 100 years.

This is Virginia Postrel, here is her complete blog post. And I couldn’t agree more.

Tuned-in tots

According to the 1,065 parents surveyed for the national study “Zero to Six: Electronic Media in the Lives of Infants, Toddlers and Preschoolers,” a quarter of children under 2 have televisions in their bedrooms. Two-thirds of kids under 2 use some kind of screen media (computer, DVD, television) on a typical day, for an average of about two hours a day. And for children under the age of 6, the average of two hours a day spent with screen media is more than three times the amount of time they spend reading or being read to.

For the full story, click here.

And here is a whack at Teletubbies:

“When children watch television, they are being marketed to,” he said. ” ‘Teletubbies’ was targeted to 1-year-old children, when the purpose was to market those toys and it was effective. They sold a lot of toys. . . . We are making children consumers at age 1. I don’t know what’s educational about it. They are walking around going ‘ooh-ooh, ugh-ugh,’ and they talk like babies.”

My take: I am from an older generation (41!), and I love books far more than electronic media. So part of me is sad to read this. More realistically, I realize that the next generation will need significant computer skills, and that such skills will bring great benefits to the world. So I don’t see the harm in this, provided that electronic media become a complement to time spent with grown-ups, not a substitute for such time.

How to advertise money

Earlier this month the U.S. Treasury Department’s Bureau of Engraving and Printing brought out a new $20 bill. Curiously, the debut of this redesigned piece of currency was accompanied by a marketing campaign–at a reported cost of $32 million. That’s a decent budget and includes events, print ads, some Web goodies, and even TV spots…The ads have been in heavy rotation, and they raise an obvious question: Why bother to advertise money itself?

Here is a description of one commercial:

In one spot, a guy with glasses gets some dough from an ATM, but the upbeat, swingy background music hints that this no ordinary withdrawal. And indeed, the machine spits out a stack of new $20 bills. He pauses and holds one up to study it closely (always a good idea to raise a twenty in the air and lose yourself in thought on a city sidewalk). An announcer says, “You can see right away that things are different.” A smile of satisfaction creeps over the guy’s face. “We’ve added color,” the announcer says, “and changed the portrait.” We follow Mr. Glasses as he buys some flowers, paying with a new $20 bill that seems to vaguely impress the vendor. The announcer mentions improved “security features” and assures us that the new twenty, like the old one, is worth 20 bucks. He then concludes with the new money’s tag line: “Safer, smarter, more secure.”

My take: We need to advertise the money to limit counterfeiting, and to maintain the status of the U.S. dollar in black markets and abroad. We need to tell the world that the $20 bill has changed.

Here is the full story, which includes a video link to one of the commercials. Thanks to Eugene Volokh for the pointer. By the way, I’ve yet to receive one of these bills.

Watch out for Dad

Many of Ms Sternheimer’s points are as striking as they are valid – as when she points out that for all the overheated media reaction to the shootings at Columbine High School in Colorado in 1999, far more children are killed by their parents than by their classmates. In that year alone, she says, 1,000 children were killed by their parents – compared with 35 killed by their classmates.

Karen Sternheimer, a 34-year-old sociologist at the University of Southern California, just published a book It’s Not The Media: The Truth About Pop Culture’s Influence On Children, arguing that the media doesn’t ruin our children as much as we imagine. Here is a useful review of the work. Thanks to for the pointer.

Here is a good bit from the review:

‘Young people today are less likely to be violent, sexually active, smoke or use drugs compared with their parents when they were young.’

Arrest rates for violent offences among people under 17 fell steadily through the 1990s. Only 13 per cent of 12- to 17-year-olds drank alcohol in 1999, compared with 33 per cent in 1990, and 50 per cent in 1979.

The teen birthrate declined 22 per cent in the 1990s and is now at what Ms Sternheimer says is an all-time low. (In 1950, the pregnancy rate for 15- to 19-year-olds was 80.6 per thousand, whereas by 1999 the rate had dropped to 49.6 per thousand.)

We’ve needed a book like this for some time now.

Addendum: Many of you have written to suggest that the blog post title should have been “Watch Out for Mom.”

How generous is the United States?

Immigration and remittances are the most effective welfare programs ever devised. Anyone who claims to speak for the world’s poor should embrace them. Here are some relevant facts:

1. Total remittances around the world are now about $80 billion a year, twice the amount of so-called “foreign aid,” which often goes to corrupt governments, not poor citizens.

2. Remittances are now ten times the amount of net private capital flows, after adjusting for profit repatriation and interest payments.

3. Mexicans working in the United States send back home $20 billion every year. This sum is twice the value of Mexico’s agricultural exports, and over a third more than tourist revenue.

All the figures are from the November/December issue of Foreign Policy, not yet on-line.

My take: There is altogether too much talk about the United States being ungenerous with foreign aid. We show up as 21st in the rankings, in per capita terms, according to one estimate. These figures neglect remittances, where the U.S. is a very clear first with $28.4 billion a year sent to other countries. The bottom line: when it comes to other nations, the United States is the most generous country in the world.

Are you interested in the rest of the top ten, for remittances? Saudi Arabia, with $15.1 billion a year, is a clear number two. Then you have Germany, Belgium, Switzerland, France, Luxembourg, Israel, Italy, and Japan. The Scandinavian nations receive so much kudos for their high foreign aid per capita, but when it comes to remittances, even tiny Luxembourg, population 437,389, beats them out.

The cost of radio time

To be interviewed free, Mr. Holland said, “you have to be a senator. You have to be a president. You have to be a secretary of state. You’d have to be huge. Or you’d have to have influence with us. It’s a gift.”

Sky Radio, which also produces programming for United, Delta, Northwest airlines, charges guests to appear on its public affairs programs. Oracle, Dell, many major tech companies, most of the pharmaceutical companies, and all the big energy companies have paid these fees. One typical appearance went for $5,900.

Now a complaint has been filed with the Federal Trade Commission. Here is the full story, from The New York Times.

My take: Is this really such a big deal? I’m all for disclosure, but we should recognize that most listeners won’t hear, digest, or comprehend the announcement that the content is paid for. That being said, what is the worry? Anyone who pays to be on the radio is likely very boring. So what if listeners hear a steady stream of corporate drones, all claiming that their companies are wonderful? As it is, business scandals certainly get plenty of room on TV and in the newspapers, and I am not afraid of people being brainwashed into becoming followers of Ayn Rand.

By the way, I was once asked to pay to be on the radio. I declined to pay, if only because I thought I was doing them a favor, and in part because I saw no personal benefit from the appearance. I was told that many independent radio stations make their living this way.

Kidnapping facts

1. The number of reported kidnappings ranges between 12,500 and 25,500 a year, and it is estimated that only one-tenth of all kidnappings are reported. Nor do these numbers include the Chechen children sold back to their families by Russian soldiers.

2. London alone collects $130 million a year in premiums for kidnapping insurance, here is a link to one company, the visual introduction to this link is very effective.

3. About 90 percent of all kidnappings take place in the ten riskiest countries (the link also has tips on kidnapping etiquette), with Colombia a clear leader, reporting 10 kidnappings a day, more than half of the total. The police in Colombia admit that 1500 kidnapped hostages are held currently, the true number is likely much higher. Kidnapping is estimated to be a $200 million tax-free business in Colombia.

4. Kidnappers in the Philippines perhaps have read Thomas Schelling on credible precommitment. They now demand the names of two other likely victims and an estimate of their net worth, before releasing kidnapped children from wealthy families.

5. If you wish to buy one million dollars worth of kidnapping insurance for Colombia, it costs about $20,000 to $25,000 a year. Many people and companies buy much larger policies than this. Many kidnappers consider a ransom of less than a million to be a joke.

6. In Colombia a mere three percent of (reported) kidnappers are prosecuted; in the United States it is 95 percent.

7. The fatality rate on security-consultant-handled kidnappings is about 2 percent. You are most likely to die if they try to rescue you. You are most likely to win a safe release when kidnapping is done in conjunction with the police. Your time in captivity is likely longest when your kidnappers are Marxist revolutionaries.

From Robert Young Pelton’s The World’s Most Dangerous Places. I have been to only four of the place he lists (Bosnia, Russia, U.S., and Yemen), noting that it would be five, but he doesn’t even bother to put Haiti in the current edition, it might be too dangerous for inclusion, it certainly has not become safer. Given that Mexico is number two on the kidnapping list, it represents an odd omission as well.

Russia arrests its wealthiest man

Black-uniformed special forces swept onto the airplane of Russia’s wealthiest man Saturday and forced him back to Moscow, where he was ordered jailed on criminal charges – a dramatic escalation of the politically charged probe into Russia’s largest oil company.

Mikhail Khodorkovsky was charged Saturday with fraud, forgery and other crimes hours after the special forces troops, weapons drawn, surrounded his private plane at a Siberian airport.

This can’t be good news for a country. I can’t begin to understand the byzantine ins and outs of Russian politics. But either the wealthiest man doesn’t deserve to be arrested, in which case this is a tragic oppression or scapegoating. Or the wealthiest man does deserve to be arrested, which is tragic as well. What does it say about how wealth is earned in the country?

Somehow, this being Russia, one suspects that both case A and case B are true at the same time, which makes it even worse, and no, you need not lecture me on Aristotle’s Law of the Excluded Middle.

Click here for the full story.