The best new ideas in applied science

Read this feature article from Popular Science magazine, or just buy the December issue. My two favorite new products are the following:

1. Binoculars that repeat the last 30 seconds. Instant replay, right there in your hands, and only $600 from bushnell.com.

2. Speakers that know how to listen. The speakers can measure what kind of sound they are producing in a particular room, and adjust their output accordingly to sound even better, they are called Beolab 5. This item costs a steeper $16,000, I will buy them when they start paying bloggers, from Bang-Olufsen.

Alex will be interested to hear about the new “Lifeport Kidney Transporter,” see organ-recovery.com, now FDA-approved, which makes it easier to move kidneys around the world, the device makes a soon-to-be transplanted kidney last for 17 more hours than previous technologies.

Hollywood Heavies

While Hollywood lobbies Congress for protection in the more gentile manner (see Tyler’s post today) the Teamsters have taken direct action. Axium International planned to hold a symposium in LA on the Canadian Tax Credit Incentive for film production. The Teamsters threatened to bring hundreds of supporters and 30-50 trucks to shut the hotel down where the symposium was to be held. Axium backed down, cancelled the lectures and wrote a craven letter to Arnie in Daily Variety – “please exert your utmost through the California legislature, the Governor’s office or the federal government to enact legislation ensuring that the entertainment production business remains, for now and ever, in California.”

Note that I have a bias on this issue – see the post below.

Movie IPOs

An investment firm is raising money to finance movie projects by letting film buffs buy a piece of Ethan Hawke, or at least a share in a project he’s involved with, and trade that as a stock.

This isn’t a pretend Internet stock exchange based on the rise and fall of Hollywood stars. Chicago-based brokerage Civilian Capital is letting investors buy actual shares in a film.

(More here.) Why not? You can own stock in the Green Bay Packers and bonds backed by the music of David Bowie. This is a method of generating buzz, a natural audience, and capital. Thanks for the link go to my brother Nic Tabarrok, a movie producer in Toronto. I once invested in one of his films. I lost money but a lot less than in Webvan – I’d do it again.

What Arnie wants for Hollywood

Privileges and protection, it would seem. Newsmax tells us the following:

Included in the Hollywood wish list is a bill now in a congressional conference committee that could provide about $250 million over five years in incentives for keeping small- and medium-budget productions in the United States.

Under an amendment, films would qualify for a tax deduction if half of the wages paid to actors, producers, directors and others are kept inside the United States.

According to a recent report, the U.S. economy has lost about $4 billion in economic benefits – about 25,000 jobs per year – since Canada began offering tax subsidies in 1998 to film production companies.

It is believed that Arnie can use his bully pulpit to help push the measure into law.

My take: If Canada wishes to subsidize Hollywood cultural exports, and then cry about the supposed decline of cultural diversity, let the production companies take the money and laugh all the way to the bank.

What is the hot Christmas toy this year?

Just click here to see it. It is called “Lunar Stunt Car.” I can’t for the life of me imagine what is special about it, though of course I am not the typical buyer in this market. It is already hard to get in stores, but of course they are not raising the price, creating yet another puzzle in price theory, in fact they are advertising that it is on sale.

My best guess: They keep the prices low to generate publicity, to drive a fad, and the artificial scarcity makes it an especially sought-after item. Furthermore it may generate trips to the toy store, leading parents to buy other toys, although whether these gains rebound to the Lunar Stunt Car manufacturer is unclear. That all being said, once the toy takes off, I still don’t see why they don’t raise the price to capture higher profits.

Joe Lieberman vs. Howard Dean

Score one for Lieberman, read Jacob Levy’s comparison of the two on economic policy. Dean recently called for the “re-regulation of business”, Lieberman countered with the following:

“Howard Dean doesn’t understand how Bill Clinton created 22 million jobs in 8 years. By responsibly deregulating markets, Bill Clinton allowed exporters to sell more American products to foreign markets and brought competition to existing monopolies.

“Howard Dean would usher in a new era of big government with his re-regulation proposal. He would give us a treacherous trifecta of policies that turn back the economic clock: new trade barriers, a larger tax burden on our middle class, and now bigger bureaucracy. Either he doesn’t know how to turn the economy around, or this is another reckless mistake.

“We need to toughen the integrity of our marketplace, put real enforcers in regulatory posts, and put wrongdoers in jail. We don’t need to cripple the economy with a whole new set of broad re-regulation as Howard Dean proposes.”

It is a shame that Lieberman has no chance within the Democratic party.

What is the fair use doctrine?

Wired.com offers this very brief and useful summary, thanks to Geekpress.com for the pointer. This is the best simple statement I have seen of what “fair use” is all about. Note that the fair use doctrine will increase in importance, as companies put up tougher gates around their intellectual property. Bloggers must know about fair use as well, lest they quote too freely from copyrighted material and incur legal penalties.

For this economist, the courts aren’t nearly liberal enough in interpreting fair use. I think, for instance, that rappers should be able to sample songs without clearing copyright, at least provided they are doing more than simply copying large blocks of the song verbatim. Read Robert Christgau’s account of the famous Gilbert O’Sullivan case; O’Sullivan objected when rapper Biz Markie sampled his “Alone Again, Naturally,” a transformative use if I ever heard one. Will more sampling make rap better and cheaper? Yes. Will it diminish the supply of sample-ready material? Unlikely. So why not interpret fair use more liberally in this regard?

The new replacement for Google?

A news-gathering web site that tailors the stories selected to individual users is being tested by Microsoft. Once MSN Newsbot is fully functional, Microsoft says the site will personalise results within 10 minutes of a user starting to browse.

If successful, the site is likely to be a direct rival to the highly popular Google News, which clusters information from over 4000 news sources according to topics but does not customise results.

For the full story, read here.

How might such a service work? One possible algorithm follows the Amazon.com model, and compares the user to what previous like-minded users have been looking for. But if I could ask for one improvement, it would not be this. My searches are so wide-ranging, so strange, and so eclectic, I am perhaps immodest enough to think I have few useful doppelgaenger [“doubles,” roughly, from the German] in this regard. I would prefer the ability to type in questions, often of a conceptual or abstract nature, and receive a ranking of relevant web sites. In short, a better version of askjeeves.com would be most likely to draw my loyalties away from google.

Are web tunes profitable?

Apple Computer has been selling songs for 99 cents apiece through its new iPod technology, Napster is selling music at the same price. But will anyone make money?

The November 19 Wall Street Journal, “With the Web Shaking Up Music, A Free-for-All in Online Songs,” suggests maybe not. It is estimated that for each song, 65 to 79 cents must be paid in wholesale costs to music companies and various intermediaries. Then add credit card processing fees, bandwidth charges, and customer service costs. Not much is left over in terms of profit.

Apple hopes to make back the money by selling iPod players, Steve Jobs admitted as such publicly. But what will happen once competitors copy iPod, pushing down its price? Many of Apple’s rivals hope to make money, not on individual songs, but rather by selling music subscriptions. The subscriptions, however, typically let consumers hear the songs but not own or transfer them, a model which has yet to prove popular. It is hard to ignore that shares of Roxio, the company that owns Napster, have lost half their value in the last month or so.

Wal-Mart plans to enter the business, it will sell songs and hope to draw listeners to its web-site, where they can view and buy offerings of electronic goods.

My conclusion: None of these ideas is a proven winner. I still expect free file-sharing, whether legal or not, to serve as the industry norm.

Addendum: Winterspeak offers some interesting observations on the market.

Sleazeball lawyer in a low-cut dress

I am speaking of Erin Brockovich. Sure, I liked the movie but the true story on which it was based was a lie. There was no cancer cluster in Hinkley, no scientific theory of harm, no coverup at the water office (see here for links). Having had one success in Hollywood, Brockovich is now after another this time by fanning hysteria that the kids at Beverly Hills High School (yes, 90210) are getting cancer from a nearby oil well. I smell a movie in the works.

The forthcoming energy bill

Here is Andrew Sullivan, quoting John McCain and commenting on him:

“I’m not saying that this bill won’t generate some energy. It will certainly fuel the coffers of big oil and gas corporations. It will propel the wealthy special interests. And it will boost the deficit into the stratosphere. Indeed, this legislation can be fairly called the Leave no Lobbyist Behind Act of 2003.
There are also four proposals known as ‘green bonds’ for construction of commercial buildings that will cost taxpayers $227 million to finance approximately $2 billion in private bonds. One of my favorite green bond proposals is a $150 million riverfront area in Shreveport, Louisiana. This river walk has about 50 stores, a movie theater and a bowling alley. One of the new tenants in this Louisiana Riverwalk is a Hooters restaurant. Yes my friends. Here we have an energy bill subsidizing both hooters and polluters.” – Senator John McCain, on the monstrosity otherwise known as the Energy Bill. How any principled, small-government, free-market Republican could vote for this vast waste of public money is beyond me. But we’re beginning to realize that GOP has nothing to do with small government or fiscal sobriety. It’s a vehicle for massive debt and catering to the worst forms of corporate welfare. Thank God for McCain. Bush should veto this bill, until it is de-porked. He won’t, of course. He has yet to veto a single big-spending bill. He doesn’t seem to give a damn about what is happening to the fiscal health of this country.

For a less polemical assessment, but ultimately a similar evaluation of the substance, see the ever-reliable Lynne Kiesling, start at this permalink and scroll downwards for running commentary and links.

Addendum: Senators from both parties criticize the bill as well, read here.

Howard Dean disappoints me

After years of government deregulation of energy markets, telecommunications, the airlines and other major industries, Democratic presidential candidate Howard Dean is proposing a significant reversal: a comprehensive “re-regulation” of U.S. businesses.

And what are the proposed candidates for such a re-regulation?

…utilities, large media companies and any business that offers stock options. Dean did not rule out “re-regulating” the telecommunications industry, too.

He also said a Dean administration would require new workers’ standards, a much broader right to unionize and new “transparency” requirements for corporations that go beyond the recently enacted Sarbanes-Oxley law.

Somehow either Dean or the source article left out mutual funds.

OK, some of these are complex issues, where you might argue that laissez-faire is impossible, and that more regulation could be better than current hybrid structures. But we are not choosing policy today. For the time being, forget the detailed debates, and ponder what this suggests about Dean’s instincts, what kind of campaign he will run, and what kind of voters he will appeal to. Ugh, and the libertarians should have never wondered whether Dean might be a small government guy in disguise.

Blood supply and the FDA

Have you ever heard of Chagas disease? It is rare in the United States but common in Latin America, where 18 million people are infected and 50,000 die of it every year. Some little thingie crawls down your mouth and sucks your blood when you are sleeping (lovely), beware the thatched hut, and next thing you know, maybe about ten or thirty years later, your weakened heart or organs explode. There is no known vaccine, cure, or treatment.

Chagas is now making its way into the United States blood supply. Ideally, all donated blood should be screened for Chagas. But, can you believe this, the FDA needs to approve all blood tests of this kind. They haven’t approved any test for Chagas, nor have they shown much urgency in this regard, here is the full story.

About 30 tests are currently in use in Latin America, but none would appear to meet the FDA’s accuracy guidelines. In the meantime it appears someone would prefer that we have no test at all.

The New York Times put it as follows:

The failure of the blood industry and its regulators to develop a test since it was endorsed by a Blood Products Advisory Committee in 1989 seems to be a combination of bureaucratic inertia and divided responsibility for such a decision. Blood banks cannot use a test that the F.D.A. has not approved. The agency usually defers to its advisory committees, which have many experts from blood banks as members.

“It’s a political process that is not always fully engaged,” said Dr. Stuart J. Kahn of the Infectious Disease Research Institute, a Seattle group hunting cures for tropical diseases.

Whatever you think of the FDA as a regulator of drugs, this kind of bureaucratic control is hard to understand. Now it is longer enough for you to beware the thatched hut, you have to worry about the blood supply as well.

Glenn Hubbard’s consistency test

Glenn Hubbard (registration required), in a Financial Times review of Robert Rubin’s new book, throws down the gauntlet. You might recall that Hubbard was one of the architects of Bush’s dividend tax cut plan.

Hubbard argues that deficit-cutting is motivated by the view that lower real interest rates will stimulate private investment. But then private investment must be sensitive to price incentives, and a tax cut on investment returns should stimulate investment as well. He describes Rubin (and others) as believing in an asymmetric response, whereby investment is interest-sensitive but not tax-sensitive. Either investment is price-sensitive or it is not, and we should hold a consistent attitude for either lower interest rates and lower tax rates.

My take: Hubbard is right. We should not hastily conclude, however, that a tax cut on dividends was the best way to go. Dividends transfer money from one pot to another, and this is distinct from constituting a real net rate of return. I would sooner have cut and reformed the corporate income tax. In the meantime, however, let us all apply this consistency test to ourselves, are you listening deficit hawks?