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Paris advice

1. A few of the best restaurants are Pierre Gagnaire, Taillevent, Le Cinq, and perhaps Guy Savoy.  Most critics might put Gagnaire as number one.

2. Michelin "two-forkers" are quite good, but you must book to get in.  In general you can’t get a seat in a decent Parisian restaurant unless you either book or show up at opening.  If you are wandering around looking for good food at 8:30 p.m., or for that matter 1 p.m., you are unlikely to do well.

3. In The Louvre, spend an hour in the Poussin room and also obsess over Watteau’s Voyage to Cythera.

4. In Musee d’Orsay, gaze at Courbet’s Origin of the World (sorry, I can’t link to the image on a family blog but do Google it) and Puis de Chavannes, in addition to the usual delights.

5. Go see the medieval tapestries at Musee Cluny.

6. Spend a few hours walking the main roads of the Left Bank.  Start at Invalides and take the major arteries through to the Islamic Center.  Walk, walk, walk.

7. Watch The Triplets of Belleville and spend hours walking through the (rapidly gentrifying) working-class neighborhoods of the Right Bank.  The Metro is splendid but it robs you from seeing the greatest walking city on earth (Buenos Aires is number two).  Don’t take it.  Walk, walk, walk.

8. Go into a good cheese shop and spend $40.  Focus on the weirder cheeses.  Buy the non-pasteurized delights.  Sit down with a baguette and some fruit as well, finishing the meal with small squares of outrageously priced dark chocolate.  Throw in a sausage for good measure.  Keep the cheese leftovers in your room at night and eat them for breakfast the next day.  And the day after that.  See how many days they will keep, you will be surprised.

9. Rue de Bussi and thereabouts has a convenient collection of cheese, fruit and bread shops, and it is in an excellent part of the Left Bank.

10. Internet Cafes are hard to come by.  You must rely on the dumpy area near Centre de Pompidou.  I find Paris to be the hardest city to blog from.

11. See a "world music" concert from Algeria, Madagascar, or the Congo.  Or try contemporary music at IRCAM.

12. Here is my previous post My Favorite Things French.  Douse yourself in Godard films  before going.  Start with Breathless, Band of Strangers, and My Life to Live.

13. If you want to read recent French social science (if you can call it that), try Bruno Latour’s We Have Never Been Modern, Jean Baudrillard, Alain Badiou’s Metapolitics, and Gilles Deleuze’s Anti-Oedipus.  Don’t get too upset if these books only make intermittent sense.  At least they are alive.  For a recent hit novel, try Houllebecq’s The Elementary Particles.

Comments are open, and I encourage all of you but especially John Nye and Barkley Rosser — both Paris experts — to make a few suggestions for my friend.

Why does America have inferior raw ingredients?

Mostafa Sabet, a reader, writes:

I agree with your point [TC: my link] about raw ingredients and wonder why the richest nation in the world has such crappy raw ingredients?  We can afford it and obviously people can tell the difference.  Sure it won’t affect the McDonalds’ and freezer section food, but why does it go all the way downstream unless you pay exorbitant amounts of money for it?  When I was in Egypt, not exactly first world, the raw ingredients were far superior to the ones here.  Any ideas? 

A tough question, I see a few major hypotheses:

1. Things are changing rapidly, just visit Wegmans.  OK, but why has it taken so long?  And of course the revolution remains far from complete.

2. It is an exogenous demand-side question.  Americans have bad taste in food, just as the Chinese have bad taste in lounge music.  Why, for that matter, do the Japanese like karaoke so much?  Why do the Scots serve deep-fried Mars candy bars?  Note that more detailed versions of this hypothesis blame the British connection, Protestantism, and possibly the rule of law as well.

3. Food transportation in the U.S. exhibits economies of scale to an unprecedented degree.  The relative price of canned and frozen and mass-branded goods is thus especially low here.  This discriminates against both quality and freshness.

4. U.S. agricultural is so efficient that large farms replace small farms.  At the margin this raises the marginal cost of "artisanal production" of gourmet items.  The more heavily subsidized European agriculture has preserved many more small farms, which favors quality artisanal production.

5. It can take hours to make a really good mole sauce.  America has high wages, nighttime shopping, plus the best TV shows in the world.  The opportunity cost of good cooking and fine, slow dining is very high here. 

Tyler’s Ideas for Bush’s Second Term

Here from an earlier post are Tyler’s ideas for a second term. Good ideas all. Keep your fingers crossed.

1. Eliminate all farm subsidies, tariffs, quotas and price supports.

2. Tell Western Europe it is paying for its own defense from now on.

3. Admit that the Medicare drug prescription bill was a mistake. Repeal it, and consider a revenue-neutral benefit that does not discriminate against prescription drugs. Introduce means-testing for Medicare to stop that program from bankrupting us. I would rather cut this benefit than repeal the tax cuts [tax shifts, correctly, though spending discipline could turn them into real tax cuts.] The long-run benefits of greater capital accumulation remain significant.

4. Negotiate bilateral free trade agreements as rapidly as possible. Start with Japan, the second largest economy in the world.

5. Strengthen America’s commitment to science. This will have implications for educational policy, immigration policy, and regulatory policy. Don’t restrict stem cell research. Hope that science comes up with affordable and politically sustainable solutions for global warming and clean energy independence. You might have libertarian objections to science subsidies, but the realistic alternative today is more government intervention.

6. Strengthen early warning systems against infectious diseases. Increase research into cures, vaccines, immunity, and the like. We don’t want the world to lose fifty million people to avian flu or some other malady.

7. Take in more immigrants, but demand higher levels of skills and education. At the very least, take in any revenue-positive immigrant.

8. Abolish the Department of Education.

9. Abolish the Department of Energy.

10. Repeal all corporate welfare.

11. Repeal the corporate income tax. Repeal the Alternative Minimum Tax. Admittedly these are “ifs,” depending on fiscal considerations.

12. Get on TV and tell the nation that a free economy is a critical source of our strength. Tell them you mean it, and then mean it. Economic growth is the greatest long-run gift we can give to the world.

The Bush vision for term two

The Bush team apparently has announced its economic priorities for a second term. The general vision speaks of an “ownership society,” here is one sketchy summary. Partial social security privatization stands at the center of the plan. Brad DeLong wonders where the money will come from. Rather than pursuing this issue, I have wondered what the vision should look like. Here are a few ideas:

1. Eliminate all farm subsidies, tariffs, quotas and price supports.

2. Tell Western Europe it is paying for its own defense from now on.

3. Admit that the Medicare drug prescription bill was a mistake. Repeal it, and consider a revenue-neutral benefit that does not discriminate against prescription drugs. Introduce means-testing for Medicare to stop that program from bankrupting us. I would rather cut this benefit than repeal the tax cuts [tax shifts, correctly, though spending discipline could turn them into real tax cuts.] The long-run benefits of greater capital accumulation remain significant.

4. Negotiate bilateral free trade agreements as rapidly as possible. Start with Japan, the second largest economy in the world.

5. Strengthen America’s commitment to science. This will have implications for educational policy, immigration policy, and regulatory policy. Don’t restrict stem cell research. Hope that science comes up with affordable and politically sustainable solutions for global warming and clean energy independence. You might have libertarian objections to science subsidies, but the realistic alternative today is more government intervention.

6. Strengthen early warning systems against infectious diseases. Increase research into cures, vaccines, immunity, and the like. We don’t want the world to lose fifty million people to avian flu or some other malady.

7. Take in more immigrants, but demand higher levels of skills and education. At the very least, take in any revenue-positive immigrant.

8. Abolish the Department of Education.

9. Abolish the Department of Energy.

10. Repeal all corporate welfare.

11. Repeal the corporate income tax. Repeal the Alternative Minimum Tax. Admittedly these are “ifs,” depending on fiscal considerations.

12. Get on TV and tell the nation that a free economy is a critical source of our strength. Tell them you mean it, and then mean it. Economic growth is the greatest long-run gift we can give to the world.

What I liked about Bush, way back when, was that he seemed willing to talk tough truths and then follow through. Where has that gone?

What price lower insurance rates?

In two new tests, car owners will be able to let insurance companies monitor their driving via new technology in exchange for lower rates. The technology will track some combination of when, where, how far and how fast they drive, giving insurers a way to reward low-risk driving. Now just experiments, the technology might be a glimpse of the future of car insurance.

How about this?

In Minnesota, where the highway speed limit is 70 mph, drivers who go over 75 less than 0.1% of the time get an extra 5% discount. Drivers who avoid the most dangerous times – midnight to 4 a.m. on weekends – get bigger discounts than those who don’t.

Not surprisingly, one of the experiments is in Great Britain, the land of near-universal surveillance (I’m still waiting for those camera-based speeding tickets to arrive from Scotland). Insurers on both sides of the Atlantic are watching the experiment closely.

Here is the full story.

My take: I used to think that Amartya Sen’s Paretian liberal paradox had few real world implications. Now I’m not so sure.

Overall I don’t view this as a welcome development [addendum: though I don’t favor regulation]. Better monitoring and quality differentiation can make insurance markets work worse rather than better. In the limiting case, if the company could predict exactly who will have an accident, they won’t sell insurance at all. Plus my libertarian blood gives me “slippery slope” fears about this information ending up in the hands of government. Furthermore it is easy to imagine the practice becoming less voluntary over time. Yes people will drive slower but right now I’ll just say “Nein, danke.”

Addendum: Young women are rapidly becoming much worse drivers.

Why has Russian health collapsed?

The health care collapse in the former Soviet Union is old news, less well known is the contrast between Russia and Poland:

…another Slavic nation with a traditional affection for vodka — Poland — is experiencing one of the greatest improvements in health ever known. The difference tells a story of how democracy has transformed the center of Europe in the past 15 years — and how it has failed in Russia.

Start with the figures. In the early 1980s life expectancies in Soviet Russia and Communist Poland were roughly similar, and both were starting to get worse. Cancer and cardiovascular disease were beginning a rapid rise, in lock step with their prime causes: smoking and alcoholism.

Two decades later, Poland’s life expectancy for men, at 70, has risen by four years since the collapse of communism and now is more than 10 years longer than that of Russian men. In Poland, cardiovascular disease has fallen by 20 percent in a decade, while in Russia, it has risen by 25 percent. Sudden deaths from accidents and other external causes have fallen 19 percent in Poland, while in Russia the rate has soared to an unprecedented level. Poland’s rate of HIV infection is one of the lowest in Europe; Russia has one of the world’s highest rates of new infection.

Polish researcher Witold Zatonski has an explanation for this difference:

…he has boiled his answer down to a simple slogan: “Democracy is healthier.” “It’s the only way to explain what has happened,” he said during a recent visit to Washington. “It turns out that the free-market economy and a free political debate correlate directly with good health in Eastern and Central Europe.”

I was incredulous when I first read this, apparently I was not the only one:

That conclusion used to be doubted by some of Zatonski’s colleagues, both in Poland and in the West. After all, democracy brought Poland freedom for cigarette and alcohol advertising, Western brands, and a parliament presumably susceptible to special interests. Tobacco companies spent $100 million a year on marketing to Poles in the 1990s.

Remarkably, though, all that money and influence have been outweighed by the other products of a free society, especially independent civic organizations and media that promote knowledge and open debate about health issues.

It is well known from happiness surveys (see the work of Bruno Frey) that people are happier in democracies, so maybe there is a link to health as well, even after adjusting for income.

What about the comparative statics?

In addition to Poland, the Czech Republic, Hungary and other newly democratic states have recorded dramatic gains in health. But Ukraine and Belarus, which have followed Russia’s political course of far more restricted freedom, have seen their health measures decline. The Baltic states of Latvia, Lithuania and Estonia, which were once republics of the Soviet Union, at first shared Russia’s downward spiral; but since 1995, as they have built Western-style democracy, they have reversed the trend and now follow Poland’s path.

Here is a comprehensive paper with data and cross-country comparisons. From this excellent piece I learned the following:

1. Health in Belarus has continued to decline. Since Belarus has stayed largely communist, the country may serve as a possible control for where Soviet health was headed before communism fell.

2. In Russia, many of the biggest negative health changes have come for the 18-34 group, not for the elderly.

3. In the CIS countries, injuries and violence account for a quarter of all deaths about men aged 25-64; this is six times higher than the death rate from Western Europe.

4. Homicide and suicide rates in CIS countries exceed those for the West by about 20 times.

5. In Russia, deaths from all external causes correlate closely with deaths from alcohol poisoning.

6. Men of low educational background have been to most vulnerable to bad health.

7. Russian life expectancy has declined but it actually improved during the 1994-8 period and has moved with economic crises.

Here is some additional information on mortality trends in Eastern Europe, here is another related link. Zatonski has a longer essay, which I do not currently have access to.

The bottom line: Here is what I used to think: “I blamed the Russian health collapse on the loss of relative status for the elderly. While market reforms have increased aggregate wealth, this has been mostly for the young. Older people have lost their grip on power, and suffered psychologically through their loss of international relative status as well. They lost the will to live and died early.”

Here is what I now think: “Russian young and middle-aged men have found few useful institutional supports during the transition. They’ve gone crazy with drinking and violence.” That being said, I don’t think we have sorted out the relative importance of economic and political factors.

Should we ban HIV-positive immigrants?

Jonathan Rauch says no. He argues that allowing HIV-positive individuals to apply for residence will bring those individuals into mainstream medical institutions. The alternative may bring undocumented HIV-positive individuals who never receive good medical care or perhaps never even discover their HIV status, infecting others in the process. Rauch writes:

The ban on aliens with HIV was first imposed administratively, by the Public Health Service, in 1987, when fear of AIDS was at its peak and the disease was effectively untreatable. As therapies became available, public health authorities soon came to believe that the policy merely drove the disease underground and thus was ineffective, if not counterproductive. The first Bush administration and then the Clinton administration tried to revoke it. To no avail: In 1993, Congress wrote the HIV ban into law. No other disease faces such a statutory ban.

Even in 1993, the ban made little sense. America was the world’s epicenter of AIDS, exporting rather than importing the disease, and so aliens were far more likely to get HIV in America than to bring it in. Anyway, the policy never required an HIV test for entry; only when an alien seeks permanent-resident status, usually after having already been in the country for years, is the blood test routinely required. So the policy, as put into practice, is about kicking people out, not keeping them out.

Congress was worried about the costs of welfare and publicly funded care for immigrants with AIDS. A valid concern, but one addressed by the underlying immigration law, which bars aliens deemed likely to become a “public charge,” whatever their disease. Today, diabetics and cancer patients can visit and live in the United States on showing they have insurance or resources to keep themselves off the welfare rolls; only people with HIV are barred, whether they are sick or not. This is discrimination, pure and simple.

The numbers suggest that much is at stake: for instance about 1 in 12 Africans is HIV-positive, by some estimates. Singapore has faced related issues with foreign prostitutes.

Rauch’s proposal, obviously is not a political winner, even though the Bush administration has been relatively sympathetic on the AIDS issue. I am interested in considering the deportation question more generally. Should we, for instance, deport SARS carriers? SARS is highly contagious to larger groups in a shorter period of time. Unlike HIV-positive status, you can’t (it seems) just walk around with SARS for years. You might argue that if we deport SARS carriers, undocumented immigrants with SARS will be reluctant to report to hospitals. A good point, but I suspect that many of them rather quickly cannot continue on their own without dying. On the other hand, say you have an undocumented SARS patient on your hands. It is crazy to put them on a plane (we cannot over time afford many quarantined flights), best to leave them in a hospital. Nor does it gain you much to deport them once they are better.

So in looking for standards for deportable diseases, we might focus on rapidity of contagiousness, and ability to deport without infecting others in the process. Whether an individual can serve as a “silent carrier” can cut either way. On one hand, silent carriers can infect others for a longer period of time, which suggests a reason to boot them out (though of course they must go somewhere). On the other hand, it is the silent carriers that you want to report to the medical establishment. There is also a question of stock vs. flow. If the potential future flow of HIV-positives is high, that argues for deportation, as an incentive to keep others away. But if the stock is high relative to the flow, that argues for greater tolerance.

Sometimes it puts the world at risk to deport individuals before their treatment is complete, read this story on tuberculosis. And of course some of the deported will simply die without the medical care of the wealthier nation.

Medicare, continued

Debates over the Medicare bill focus on two key aspects. First, it is fiscally irresponsible. Second, will the encouragement of competing private health plans raise or lower costs?

Where is Medicare cost inflation coming from?

The major elements in the Medicare program’s overall rise in costs have been increased enrollment (from 20 million beneficiaries in 1970 to 40 million this year) and the same factors that have led to increases in health care spending in the nation as a whole–most notably, the development and diffusion of new medical technology. Other contributors to cost growth have been program expansions as a result of legislative and administrative changes.

In dollar terms, inpatient hospital care accounts for the largest portion of the Medicare program’s growth. Expenditures for skilled nursing care and home health services, though constituting only 5 percent each of current program spending, have grown particularly rapidly. Real spending for those services increased at an average annual rate of about 12 percent from 1975 to 2001, compared with an average annual rate of about 7 percent for total Medicare spending.

From testimony of Douglas Holtz-Eakin, former head of the Congressional Budget Office, a well-respected economist.

It is not obvious that private insurance companies will lower these costs, at least not under current institutional structures. Here is one balanced analysis:

Whatever its faults as a heavily regulated program, Medicare is efficient at holding down costs because it can set prices, has unmatched purchasing and negotiating power because of its size and virtually no overhead. Its administrative costs are about 2 percent.

Administrative, marketing and overhead costs for private insurers were 16 percent last year, according to the government’s Centers for Medicare and Medicaid Services. They also have to set aside reserves and still make a profit.

Reischauer said private insurers can make up a great deal of those costs through market efficiencies and innovations — such as preventive care and disease management, which could be particularly important with chronically ill Medicare patients. But even then, if costs are not far below traditional Medicare or slightly above, seniors are unlikely to be attracted, he said.

This problem is what led the nonpartisan Congressional Budget Office to project that only 10 percent more seniors would enroll in managed care plans by 2010 — which would constitute an abject failure in moving seniors into a supposedly more efficient managed care plan. That figure is in stark contrast to projections by the administration of 43 percent.

In other words, the bill may not mean the end of Medicare as we know it, as some critics have charged. Here is another estimate that switches to private plans will be modest. In this regard the bill may matter less than many people think. I’ll go out on a limb and predict that we have voted in prescription drug benefits, but without fundamentally changing the system as a whole or doing anything to control costs.

What is the key problem on the cost side? Medicare, however low its overhead, serves political constituencies and cannot be expected to cut people off from emergency measures in their last year or so of life. And given the existence of the Medicare option, private health plans cannot get tough on these costs either and still draw customers. Right now, for better or worse, we have no institutional option to stop people from spending large sums of money on health care in the last year of their lives.

As for prescription drugs, the new bill will displace private alternatives over time, read this analysis:

Of the just over 40 million Medicare beneficiaries, almost half (46 percent) already have fairly comprehensive drug coverage through an employer-sponsored retirement plan. Another 29 percent of Medicare beneficiaries have some drug coverage from another private or public source. It is only the remaining 25 percent of Medicare beneficiaries (about 10 million) who have no drug coverage at all.

I will also predict that employers, seeking to cut health care costs, will withdraw these benefits over time, making the bill an even worse fiscal nightmare than has been expected.

The bottom line: Ugh. But unless we are willing to be mean and nasty to dying old people, in the interests of drastically lowering costs, we have no one to blame but ourselves for the current problems. We can, however, in addition still blame the Bush administration for political pandering and lack of fiscal discipline.

Addendum: Read this article on whether the new bill will stick, thanks to David Levy for the pointer.

Understanding fashion

Why fashion? Why spend all that money on silk and sequins? Could it have to do with sexual selection?

With fashion in the game, a woman not only sends out face and figure cues–which are fairly easy to fake–but she also signals her knowledge of the rules of fashion and her strategies for coping with them–which requires a set of inputs that are much harder to fake. With fashion layered into the mix, men can now tell something about a woman’s alertness to social conventions and the world around her, about her problem-solving skills and about the financial resources she brings to the game. (If those financial resources are earned by the woman herself, that directly signals a certain degree of fitness; if the financial resources are provided by the woman’s family, well, that at least strongly implies that some fairly fit genes in her family tree, as well as potentially valuable social connections.)

…to fulfill its role in sexual selection as a sincerity-testing handicap, fashion cannot be about simply making women beautiful, despite the fact that designers always portray their craft in this light. Fashion (as opposed to the rag trade) is about creating a rapidly changing set of rules for dressing which are intentionally subtle, complex, and difficult-to-decode. To make fashion work even better as a sincere (i.e., hard to fake) signaling device, designers must create a hierarchy of rules from introductory to expert while also charging increasingly more for the garments necessary to play the game at advanced levels. Making women beautiful (providing positive face and figure cues) is actually a task that fashion deliberately makes more difficult and expensive.

The discussion can be found on www.2blowhards.com, one of my favorite blogs.

The standard economic story suggests that we should tax costly signaling. Note that an evolutionary perspective can overturn or modify this conclusion. If we have evolved to enjoy such signalling (this is surely one plausible mechanism for how we are led to do the signaling, and surely many people love fashion), the signaling suddenly looks more productive. Signaling has sorting benefits as well; fashion makes sure that the right people marry each other. We likely still have too much signaling, relative to a “first best optimum,” but practicable improvements are suddenly harder to find.

Is love predictable?

The advent of Internet dating has led rapidly to a search for better matching results, as detailed by a recent story. After all, reductionists may wonder just how many dimensions the problem can have. Consider the following:

[Researchers] decided to employ computer technology to find a few “simple, logical rules” that make up, well, the recipe for love. For help on the technical side, they turned to Michael Georgeff, director of the Australian Artificial Intelligence Institute. During his work on a NASA project at Stanford Research Institute, Georgeff had developed a methodology to teach Space Shuttle Discovery computers how to anticipate unexpected problems. Working with Thompson and Hutchinson, he applied the same principles to the design of dating software, employing many of the statistical methods common to social science research. “Say you score a 3 on the introvert scale, and a 6 on touchy-feely. Will you tend to like somebody who’s practical?” Using Georgeff’s software, Thompson and Hutchinson then developed an online quiz. Match.com, the highly popular online dating site, began using weAttract.com’s software this year to give users a rough sense of what proportion of the dating population might be attracted to their particular array of personality traits.

The new algorithms are designed to measure not only initial attraction, but also how well the would-be couple can live in harmony. Ten thousand people a day are signing up for eharmony.com, which also tries to do some simple lie-detecting. According to some accounts 30 percent of on-line daters are in fact married, and often lying about that fact.

Meredith Hanrahan, at Matchmaker.com, invokes a market metaphor:

If you want to buy a car, you get a lot of information before you even test-drive,” she says. “There hasn’t been a way to do that with relationships.”

Perhaps one web-dating entrepreneur put it best:

“Everyone is high maintenance. The trick is finding the precise sort of maintenance you need.”

The Economics of Child Labor

No, not paper routes or roadside car washes, this is about the tough stuff, like Moroccan children in carpet factories. 186 million children, between the ages of 5 and 14, perform illegal child labor. 111 million of these jobs involve hazardous work. Kaushik Basu offers his analysis and observations in the latest issue of Scientific American.

Obviously wealth is the best cure for hazardous and oppressive child labor. By the latter part of the 19th century, child labor was declining in the richer nations.

Basu notes that many anti-child labor campaigns backfire. A 1990s boycott of Nepalese carpets, made with child labor, led many of those children to become reemployed as prostitutes. Boycotts are ineffective when the available alternatives are worse. Anti-child labor regulations can backfire for another reason as well. Many children work simply to help their families achieve a threshold level of income, such as subsistence. The lower the wage that the children earn (think of the regulations as lowering the net returns from child labor), the more they will need to work to reach that threshold.

We learn also that history matters. Adults who worked as children are more likely to send their children out to work, even after adjusting for income.

Basu is skeptical of many interventions but he does not recommend laissez-faire. He argues that there are “multiple equilibria,” and that government can move an economy, in the right stage of development, from one equilibrium to another. The more children that work, the lower the overall level of wages, and the lower the stigma from sending one’s child out to work. Basu argues you can “tip” an economy into considerably less child labor. If you can cut out a big chunk of child labor, wages rise, making child labor for many other families less necessary. The stigma attached to child labor rises as well, and fewer people will send their children out to work. Once an economy is moving away from child labor, the process can happen quite rapidly.