Category: Current Affairs

Markets in Everything – Character Development

Acclaimed author Will Shetterly is auctioning the rights to be a character in his next novel.

If you win this auction, you or a character with a name and description of your choosing will make a cameo appearance in The Secret Academy, a novel that will be published by Tor Books. I’m Will Shetterly, award-winning author of novels and short stories. My best-praised book, Dogland, was called “A masterwork (that) deserves the widest possible audience” by Ellen Kushner, host of National Public Radio’s “Sound & Spirit.” Publisher’s Weekly said it was “A deceptively simple story, rich with complex characters and timeless themes.” And Kirkus called it, “Compelling, absorbing, hard-edged work, lit by glimpses of another, more fantastic reality … child-centered but tackling adult themes fearlessly and with great charm.”

I can’t promise that this book will be as good as Dogland. If you want to peek at what it looks like so far, I’m posting the current draft in installments at: http://secretacademy.blogspot.com

Your role may be brief, but I’ll do my best to make it memorable. The book is set around 1970, so you may have to be modified for the sake of the story. (It was a dangerous time for hair; be warned!) Most likely, you’ll end up being a student or a teacher. I wouldn’t make you an unlikeable character without getting your permission in writing first. (Alas, it’s not a melodrama, so you can’t be a villain, which is the part I would want in someone else’s book. Maybe another writer will provide the opportunity if this auction does well.)

Thanks to Cory Doctorow at Boing Boing Blog for the tip.

Vaccines: The Short Run

President Bush was correct when he said that liability risk is one factor in the recurrent shortage of vaccines. Based on a post by Mark Kleiman, suggesting that flu vaccines are immune from liability due to the Vaccine Injury Compensation Program, Brad De Long called Bush’s claim an “eternal lie.” To his credit, Kleiman (but not DeLong) quickly retracted his post when others pointed out that the VICP applies only to pediatric vaccines.

Liability is not the only issue, however. Costly FDA regulations and requirements, for example to remove thimerosal from vaccines despite no evidence of safety problems, have pushed firms out of the industry. See this paper in the The Independent Review (I am an assistant editor) for more on these regulations and their consequences.

A further problem is that the federal government is the major purchaser of vaccines, although not the flu vaccine, and it uses its monopsony powers and the law to require companies to sell at low prices. Firms have left the industry because they are squeezed on one end by regulation and on the other by low prices and, for vaccines like the flu vaccine not covered by VICP, potential liability. Note that even if the prices are high enough to earn the company a modest profit the point is that they are not high enough to make it worthwhile to make a surplus of vaccine that can be sold in the event of a contamination problem, as has happened this year. If the firms can’t price high during a shortage then there is no incentive to plan for a shortage.

Even without legal price caps there are significant disincentives to high prices. Here is a CDC spokesperson (link to audio file) on recent price increases:

Shame on the people who are price gouging. This is a reprehensible thing to be doing. I think an immoral thing.

Is it any wonder that firms don’t want in on this market?

Henry Miller, a former head of the FDA’s biotechnology division, summarizes well:

The fundamental problem is that government regulatory policies and what amounts to price controls discourage companies from investing aggressively to develop new vaccines. Producers have abandoned the field in droves….Although their social value is high, their economic value to pharmaceutical companies is low because of vaccines’ low return on investment and the exposure to legal liability they bring manufacturers….

Moreover, the FDA has a history of removing safe and effective vaccines from the market based merely on perceptions of excessive side effects — a prospect that terrifies manufacturers.

We need a fundamental change in mind-set: The rewards for creating, testing and producing vaccines must become commensurate with their benefits to society, as is the case for therapeutic pharmaceuticals.

Read Henry’s article for more on dealing with the problem today, (he notes, for example, that it may be possible to dilute current stocks and still maintain good effectiveness). Also, as Tyler reported last year, simply targeting vaccines to at-risk people is not necessarily the best approach. A better approach is to target super-spreaders, people who may not be at great risk themselves but who can and will spread it to many others.

Tomorrow: Vaccines: The Long Run.

Should we buy weapons from Iraqis?

Payments for weapons handed over in Sadr City on Monday reportedly ranged from $5 for a hand grenade to $150 for an AK-47 to $2,000 for a highly specialized mortar. It appeared that both noncombatants and Mahdi Army insurgents were taking part in the buyback.

Abdulla Abu Ghassan, a bakery owner, received $1,200 after turning in a grenade launcher, an assault rifle and ammunition, all of which he said he had kept after serving in the now-disbanded Iraqi army.

The idea, presumably, is to take weapons out of the hands of terrorists. But will this work?

Under an optimistic scenario, the weapons are gone and the Iraqis are richer. Under a pessimistic scenario, the terrorists use weapons sales to finance future operations. If the terrorists have accumulated large weapons inventories, this should not be hard to do.

The dynamic problems are formidable. By bidding up the price of weapons, we raise the return to accumulating large weapons inventories in the future. We also make the weapons market more liquid. So weapons buy-back plans become less effective over time, unless we create the expectation that price will be falling. This means we had better get it right now, if indeed we can.

In some models government does best by accumulating its own inventory. The government then precommits to selling its stock, and driving down prices, if private traders accumulate too many of the forbidden assets. Knowing this danger in advance, private traders might be reluctant to invest in large stocks. Now I am not suggesting this as a viable policy option (hey, why don’t we sell off some nukes from Colorado, and lower the world price? That would show those nasty North Koreans…). Nonetheless the scenario shows just how far buying weapons can be from an ideal, incentives-driven economic policy.

Addendum: David Nishimura offers more information.

If only it were true

George Bush during the second debate:

Non-homeland, non-defense discretionary spending was raising at 15 percent a year when I got into office. And today it’s less than 1 percent, because we’re working together to try to bring this deficit under control.

Kevin Drum makes it simple.

Here’s the truth about non-defense discretionary spending over the past six administrations:

Spending

Nixon/Ford: 6.8% per year

Carter: 2.0% per year

Reagan: -1.3% per year

Bush 1: 4.0% per year

Clinton: 2.5% per year

Bush Jr: 8.2% per year

All percentages are adjusted for inflation. The chart on the right shows raw figures for the past three administrations (from the Congressional Budget Office).

The X,Y, and Z Prizes

The founders of the X Prize are going to offer new prizes “to meet the greatest challenges facing humanity in the 21st century.” But they have not yet settled on exactly what fields or what accomplishments and they are soliciting public input. I’ve already given my suggestion you can give yours here.

The sponsors offer some valuable thoughts on how to choose appropriate fields and prizes:

The X PRIZE competition focused on jumpstarting a private space industry has re-proven the principle – strongly proven in the early years of the 20th century for the aviation industry – that innovation can indeed be catalyzed. ….

Although the idea of using the X PRIZE concept work in other areas is at first glance a simple and attractive one, a great deal of up-front thought needs to go into what challenges/opportunities would be selected. One could argue that there were certain qualities about the challenges and opportunities in both the aviation field and the space field that lent themselves extremely well to a private sector competition of the sorts which have occurred. Variables to be looked at might include:

The maturity (or lack thereof) of the technology around which the competition would be based?
The maturity (or lack thereof) of the related industries from which a new industry would be born
The number of potential “competitors” potentially able to meet the challenge or at least the depth of the pool from which potential competitors could be drawn
The level of the specificity of the challenge
The financial resources potentially available to finance the potential competitors
The financial resources potentially available to finance the Prize itself
How potentially compelling and exciting is the field around which the challenge would be based
The amenability of the target area to a threshold change in public expectation
The replicability of the challenge to other areas?
The level of the presumed long-term benefit to business and society

The list of questions above is by no means exhaustive, but does give a sense of how the selection of a new challenge is not as first as simple as it may seem. It is absolutely key that the right challenges are selected – sufficiently exciting to compel hearts and minds, sufficiently ambitious to reach beyond what is already likely going to occur soon and to have a truly substantial impact, and sufficiently focused to have a good chance of succeeding within a reasonable timescale.

Carmel stops licensing new art galleries

Art is dead in Carmel — or at the very least, its growth is stunted.

With a glut of art in the idyllic seaside village — about four out of 10 businesses [out of a total of about 300] are art galleries — the Carmel City Council is taking action to prevent new galleries from springing up.

As expected, the council unanimously agreed last week to impose a moratorium on licensing art galleries in the city.

Here is the full story. Is this a public choice story of old galleries keeping out upstarts? A slow growth movement? A rebellion against the horrible aesthetic quality of so many contemporary Western landscapes? All of the above?

More Lost Nukes

Concerning yesterday’s post on missing nuclear weapons Gerald Hanner wrote to say:

I once flew with one of the people involved in that lost nuke in South Carolina. It was being carried by a B-47, and they were on their way to a forward-deployed base in England to pull alert. For takeoff the weapon (no one in the business calls them “bombs”) is not pinned into the release mechanism so that it could be released if there was an aircraft emergency after takeoff. Since the “pit” was not installed in the weapon there was no chance of a nuclear detonation. In any case, after a safe takeoff the copilot went back to the bomb bay to place a safety pin in the release mechanism; the pin would not go into the slot it was designed for. After calling back to their departure base to discuss the problem, someone on the ground suggested jiggling the release mechanism a bit to properly align the parts. The copilot did. The next transmission from the aircraft was, “Shit! We dropped it!” The weapon released and went right through the closed bomb bay door; those were heavy dudes back then. You’ve read the rest of the story.

Dave Walker of Lockjaw’s Lair wrote to report on a still-missing nuclear weapon in North Carolina.

It was just after midnight on January 24, 1961. A B52G Stratofortress (one of the greatest airplanes ever to cast a shadow on this fine Earth, IMHO) suffered structural failure in its right wing near Faro, NC. The plane carried two MK39 hydrogen bombs.

The two weapons were jettisoned from the plane. One parachuted safely to the ground, receiving minimal damage. The other plummetted to Earth, partially breaking up on impact. Part of the weapon, however, was never found. The lost portion was the uranium-containing part, as well. Crews dug to a depth of 50 feet in the boggy field, but could never retrieve the warhead. To this day, the lost weapon continues to lie in this field.

Radioactivity tests have come up negative, and the Air Force has purchased an easement on the property to prevent anyone digging. If you’d like to read further on the case of the lost warhead, check out this link.

Truth is Stranger than Fiction Department

In 1958 a nuclear bomb 100 times more powerful than that dropped on Hiroshima was accidentally lost over the coast of Georgia. Amazing! But it doesn’t stop there. At first, there was an intense search but the search petered out when several weeks later another bomb was accidentally dropped near Florence SC – fortunately the latter weapon, although nuclear, was not primed. The bomb’s conventional components, however, detonated on impact creating a huge crater and injuring several farmers. The weapon lost over the Georgia coast may have been found recently by a private radiation expert who measured radiation levels 3,000 times above normal near where the bomb was said to have gone down.

Who Won the Debate?

The TradeSports contract for “Bush Reelected” at 8:36 p.m. last night was “Bid: 65.0 Ask: 66.0”. That is the price of a share that pays a dollar if Bush wins.

The debate started at 9 p.m., EST.

At 9:55 p.m. the contract was up to 67.0, 67.4.

At 10:30, at the close of the debates, Bush stood at 66.9, 67.4.

So at the time people thought Bush won handily. But Friday morning, at 7:26 a.m., Bush was down to 62.1, 63.6, apparently Bush lost the post-debate “spin”…

Addendum: There are at least two ways of reading these numbers. First, bettors realized that Bush was connecting with the American public. But then the “left-wing press” gave the debates a pro-Kerry spin, and voters now buy into this interpretation. Second, the press is better at reading the debates than are the bettors. The bettors got it wrong at first, but fell into line once the press spoke.

Second addendum: By 10:22 a.m., Friday morning, Bush was back to where he started before the debates. And by 11:19 a.m., Bush is at 65.5, 65.9, slightly up from before the debates.

Oh Berkeley!

At Colonial Williambsurg you can immerse yourself in a different time and place and see how people lived in the past; how they dressed, ate, worked and lived. It’s a wonderful and unique experience. That’s why I truly miss Berkeley, the Colonial Williamsburg of the 1960s. My friend Carl Close, who remains in the area, sends me this wonderful reminder of what makes Berkeley great (not entirely work safe). Thanks Carl!

Bombing Iraq to Prosperity

The actual headline is no less absurd: “Economic Growth from Hurricanes Could Outweigh Costs”. The story is here, courtesy of USA Today.

The body of the story is worse:

Although natural disasters spread destruction and economic pain to a wide variety of businesses, for some, it can mean a burst in activity and revenue.

For that reason, economists tallying the numbers expect the hurricanes will be neutral in their effect on the U.S. economy, or may even give it a slight boost, particularly because of an expected reconstruction boom in the already red-hot construction industry.

Or how about this?

Cochrane estimates that in Florida, the state hit hardest by the storms, 20,000 jobs will be created that otherwise would not have been. Two-thirds of those jobs will be in construction. The rest will be in areas including utilities, retailing, insurance and business services. Another 2,500 jobs will likely be added in Mobile, Ala., according to Economy.com.

Economic consulting firm Global Insight estimates the hurricanes at most will shave two-tenths of a percentage point off gross domestic product, the broadest gauge of U.S. economic activity, in the third or fourth quarters. That will be offset by reconstruction activity.

I would not have dared this as satire. Nor is it presented as a sophisticated critique of national income accounting, which in fact does treat such expenditures as productive. Will it next be suggested that excess productivity is our main economic problem?

That is all for tonight folks, I am headed out to the crying bar.

Haitian update

Can it get worse? With Haiti the answer is always yes. This is from The Independent:

It now looks certain that more than 2,000 Haitians lost their lives in the flooding that followed Tropical Storm Jeanne last weekend. A similar number drowned in floods in May…simply a light rainstorm that swept away their shanty homes.

That is just the beginning. At least a quarter of a million Haitians face two more coming storms. They have no food and many are still living on rooftops. Human and animal corpses are drifting down the dirty river, which currently provides the only source of drinking water. Starving dogs have been seen tearing off the limbs of human corpses. The morgues are not working and there is risk of a large-scale epidemic. And social cooperation has broken down. The Washington Post reports:

Hungry, thirsty and increasingly desperate residents attacked each other in a panic Thursday to get scarce food and water as workers struggled to bury hundreds of corpses five days after the city was struck by Tropical Storm Jeanne.

To make matters worse, radical deforestation, caused by ill-defined property rights, may make Haiti a virtual desert by the end of the decade. In the 1950s, 25 percent of the country was forest, now it is 2 percent. Floods of this kind will only get worse.

Outside of wartime, Haiti represents new depths in how bad things can get. The current standard of living is well below that of most hunter-gatherer societies. We don’t spend much time studying economies with negative real rates of return; I am sorry to report that developing such a theory is becoming increasing relevant.