Should Bernanke be reappointed?
Mark Thoma says yes (with links to a debate) and I think his analysis is on the mark. Nonetheless he is leaving out one very strong point in favor of his view. The Obama administration has done plenty of interfering with the car companies and also with executive compensation. These episodes make me nervous. Reappointing Bernanke, who is from an opposing party, is a signal that such meddling won't be applied to the Fed and that the Fed will be allowed to regain some of its autonomy vis-a-vis Treasury. Not reappointing Bernanke would make the markets very nervous about the future autonomy of the Fed. (Even if Alex is right more generally about central bank independence, I don't want the current Fed to resemble General Motors or Chrysler.) There's lots of talent in the current White House, but given how much policy has been run from the White House, it would be a bad signal to look to the White House for a Fed pick. Many of the other possible picks seem to be largely untested at a major league level. You can complain about Bernanke all you want but his likely successors probably have the same list of drawbacks that perhaps you are ascribing to him.
So yes, Bernanke should be reappointed.
Newsweek coverage for *Create Your Own Economy*
…the author has crafted a how-to guide for living in the
information-glutted 21st century, and a convincing defense of our
just-Google-it culture, which many say is dumbing down the species. His
four best ideas:
The Rain Man stereotype is wrong.
Many people with autistic traits function quite well in society. In
fact, we can learn from this neurodiversity," since autistics excel at
mentally ordering information, a key trait in the digital age.
Our
constant Twittering and e-mail checking may look like ADD, but they
actually mean we're paying better attention to long-running stories,
such as a presidential election or a family member's career.
Google is making us smarter. The Internet has rendered it
unnecessary to store a lot of "general knowledge" in our heads.
Instead, we can specialize in the areas that truly matter to us.
As
culture moves online, it becomes easier to copy and share. "When access
is easy," writes Cowen, "we tend to favor the short, the sweet, and the
bitty." Hence the rise of Twitter, six-word memoirs, and other small
doses of culture.
The link is here.
European health insurance bleg
Yana is moving to Paris for the fall semester and some (but not all) family members believe that she should buy additional health care insurance for this event. I fear this is a market which does not work very well, since so many customers don't file claims or have repeated interactions with the company. So I ask you all — and thank you in advance — for advice on the best way to make this transaction and find a reliable company. Web evaluations of the leading suppliers are not obviously impressive and she won't have a French institution to cover her with a local program.
This is a post rich in health care economics, I am sorry to say. And I know how much you all love health care economics.
Assorted links
1. Being overweight as a function of region.
2. Coffee shortage in Venezuela.
3. Laura Miller on drugs; she remains one of my favorite current writers.
The best two sentences I read this morning
Nemutan doesn't really have a leg. She's a stuffed pillowcase — a
2-D depiction of a character, Nemu, from an X-rated version of a PC
video game called Da Capo, printed on synthetic fabric.
The culture that is Japan. I thank Arpit Gupta for the pointer.
Markets in Everything: Impulse Buying
Hat tip to Boing Boing. Do note the name of the company.
Examples of free market health care
There are, however, no examples of successful health care based on the
principles of the free market, for one simple reason: in health care,
the free market just doesn’t work.
That's Paul Krugman. I would frame this point a little differently. There are in fact plenty of people who buy their health care in a more or less free market setting, most of all in Latin America but all over the world. It's far from obvious that these markets fail in efficiency terms ("compared to what?" is the obvious follow-up). For the wealthy in Latin America these markets seem to work well. They work much less well for the poor but is that because of market failure or because these poor simply don't have much money to spend?
One possibility is that the main problem with these markets is distributional rather than efficiency. (Krugman's third paragraph recognizes this, but he doesn't use the point to reorganize the analytics of his critique. Also note some tricks. When markets fail at providing insurance, ex ante this is a possible efficiency problem but ex post it will be a problem of distribution.)
Another way to state the health care problem is this: once we try to obtain distributional objectives, supply becomes less efficient. That understanding might focus your attention on a voucher-like system, combined with deregulation. rather than government interference in provision. Another option is for government to provide nudges to have better monitoring of HMOs or insurers, to make them more trustworthy. Or maybe catastrophic-only insurance, to overcome the distributional problem where it is most severe.
You can understand the French system by citing the incentive for overtreatment and now we are back to the possibility of efficiency being the primary problem. If you limit overtreatment, by organizing doctors into poorly paid, fixed salary co-ops, you keep costs down and make some parts of the distribution problem easier to solve.
There are plenty of health care services in this country, such as laser
eye surgery, or plastic surgery, which are supplied in more or less
market settings. I don't consider their efficiency an open and shut case, but it's quite possible we'd be delighted if other areas of health care worked this well in terms of cost-lowering and innovation and even availability. It could be that these services are more transparent or it could be they are simply less regulated and further removed from third-party payment.
Read this post of Bryan Caplan's and ask yourself whether the Arrow problems are in fact what motivate most of the health care intervention we observe in the U.S. Maybe France is the country which took Arrow seriously.
It makes a difference whether you view the case against the market as starting with issues of efficiency or distribution and usually those concepts are jumbled together.
Sometimes I wonder how wealthy we all would have to be before we could just pay cash for our health care. I call this the Pablo Escobar solution. It's a long way away but is it imaginable at all? Does it recede as we approach it? Do we have to give up some distributional objectives to ever get there? Do we simply embrace it when the poverty line is defined as standing at $200,000 a year?
Akst on Organ Buying and Selling
Daniel Akst has some good questions:
It's illegal in this country to buy or sell organs for transplant. This is an unjust law made and enforced by people who desperately need neither organs nor money. It condemns kidney-disease sufferers to death and potential organ donors to poverty. It's a law that I will unhesitatingly break if one of my children needs a kidney, and I hope you will have the decency to do the same if a member of your family is in a similar situation.
…The unearned piety of those who condemn these transactions strikes me as outrageous. If someone has the right to abort her own fetus, why does she not have the right to sell her own kidney? By what authority does the state tell me I cannot save myself or my family members by paying money I earned to a willing seller of a surplus item?
The highest praise for a book?
This comes when, after you finish a book, you are still so wrapped up in it that you can't bring yourself to pick up another one and leave behind the mental and emotional world from the previous book. Natasha claims that reading A Happy Marriage has paralyzed her. Here's hoping that I get my reading wife back; in the meantime I still have my wife.
Assorted links
1. Critique of "the neg" — a long post. Does it really make the woman feel bad? (She might feel she is receiving attention from a high-status man.) Still, I believe it is a suboptimal path to a happy marriage.
2. Via Chris Masse, open source won't do it, so abolish academic copyright.
3. Scott Sumner and John Cochrane, discussing monetary policy, self-recommending and indeed recommended (highly).
4. Via JM, Miss Teen South Carolina, on economics (SFW).
5. Via Jeff Sommer, review of the new Thomas Pynchon.
Most Surprising Sentence I Read Today
A global shortage of a radioactive drug crucial to tests for cardiac disease, cancer and kidney function in children is emerging because two aging nuclear reactors that provide most of the world’s supply are shut for repairs.
From the NYTimes.
Behavioural Economics 101: What to do with the olive pits
From Bob Nease at Consumerology.
My favorite things Mars
This was a reader request, so here goes:
1. Song about: Venus and Mars, by Paul McCartney and Wings. The melody is nice, the synthesizer is used well, and the song doesn't wear out its welcome.
2. Album about: David Bowie's Ziggy Stardust and the Spiders from Mars. Venus and Mars is not overall a good album; it is mostly dull and overproduced. So Bowie is a clear winner here.
3. Novel about: The Martian Chronicles, by Ray Bradbury. Worth a reread, especially if you first encountered it when young. Red Mars by Kim Robinson is a runner-up. What else am I missing?
4. Film about: Mission to Mars. Underrated de Palma, much better on a big screen, where it has a nice poetry of motion. I already know that some of you hate this movie, so there is no need to pillory me again on this count. I have never seen The Eyes of Laura Mars. What's that old science fiction movie modeled after The Tempest?
5. TV show about: Veronica Mars, especially season one. Excellent dialogue, and it asks what family really consists of. One of my favorite years of any TV show. Is the British show Life on Mars good? I vaguely recall My Favorite Martian from when I was a kid. Was it actually about being gay?
6. Musician: Sun Ra.
7. Mars, painting of: Jacques Louis David probably wins this one. This image is from Pompeii.
8. Best Cato Institute essay about Martian economics: By Ed Hudgin.
The bottom line: It's not just a culture, they've got a whole planet to work with.
The mass sterilization of half of humanity
Bill, a loyal MR reader, asks:
A freak solar event "sterilizes" the half of the planet (people, animals, etc) facing the sun. What happens?
Putting aside, the "which half" question, I would predict the collapse of many fiat currencies and the immediate insolvency of most financial institutions. Who could meet all those margin calls? Unemployment would exceed 20 percent and martial law would be declared, food rationing and guys with rifles on street corners. The affected countries would take in larger numbers of immigrants, especially young immigrants from poorer countries, to keep their societies going and to use and maintain the still-standing capital stock. Many of those immigrants might be better off in the longer run, especially if they could internalize the norms of the host country by the time the original inhabitants perished. If you let me "cheat," I'll postulate that genetic engineering is used to perpetuate the genes of the original inhabitants.
If a poor country were hit by this blast the eventual result probably would be mass starvation. There is a chance that social order would collapse across the entire globe, due mostly to contagion effects, multiple equilibria, and bad expectations.
To some of you these mental exercises may seem silly. Indeed they are silly. But what's wrong with silly? Such questions get at the stability of social order, the sources of that stability, and the general importance of demography and intergenerational relations. Those are all topics we don't think enough about. Because we're not silly enough.