Why can’t you find your favorite song?

… fans who venture onto any of the pay music sites will not find the most popular band ever, the Beatles. They will not find other top-selling acts, such as the Dave Mathews Band, Garth Brooks, the Grateful Dead, AC/DC and the Cars.

They will find that top-selling acts Madonna and Red Hot Chili Peppers sell their songs by the album, but not as singles.

They will find some musicians on one service, but not on others. They will find puzzling choices: Led Zeppelin fans can buy a 47-minute spoken-word biography of the band online, but no Zeppelin songs because the band has not licensed them for sale on the Internet.

Why are these potential gains from trade not being exploited?

1. Some artists are holding out for a higher price or better terms. This can mean either a better cut for the artist, or the artist does not like the “all songs for 99 cents” model of iTunes.

2. Many artists feel that selling songs on an individual basis takes them out of proper context or cannibalizes sales for the album.

3. Pre-1998 contracts do not specify Internet rights to the songs. Assignment of Internet rights can require the underlying contract to be renegotiated.

4. Renegotiations must involve both the performer and the songwriter.

5. Often the relevant parties cannot be found or are otherwise difficult to deal with. One executive said: “You can be sure the heirs are a son and daughter who aren’t talking to each other and one of those two is getting divorced.”

Here is the full account. You will find stories of high transaction costs, poorly defined property rights, and stubborn holdouts, all the classic predictions of institutional failure theories.

The bottom line: Selection, not just price, remains a big advantage for non-legal downloading. If iTunes and related services are to make it in the long run, they will need to offer near-universal choice of music.

Live – from Dubuque, Iowa!!

Readers with XM radio are encouraged to tune to channel 132 – C-Span radio! There is a live democratic caucus in Dubuque, Iowa. If you have ever wondered what it’s like in a famed Iowa caucus, this is your chance. It’s noisy and chaotic – people argue over the rules and the candidates and it’s hard to decipher what’s happening. People wander from group to group looking for enough people to give their guy a delegate. People are trying to pull each other from group to group.

People just clapped when a Kucinich person migrated to a Dean group… followed by a football fan style “EDWARDS!! EDWARDS!! EDWARDS!!” chant… heady stuff… tune in before you miss it!

What is the most corrupt state?

In a recent study Louisiana only comes in third, Mississippi takes top honors, followed by North Dakota. The District of Columbia has a disproportionate share of convictions, but it does not count as a state. Nebraska is measured as the least corrupt state, Oregon, New Hampshire, and Iowa are also near the bottom. Here is the story, here is the source account and study.

A Baton Rouge headline reads “La. not No.1 in Corruption.” Former governor Edwin Edwards received ten years in prison for corruption-related charges, one case of many in Louisiana history. The last three insurance commissioners have gone to jail for corruption.

Crime, cocaine, and marijuana

Serious and violent crimes dropped more than forty percent during the 1990s, more than can be explained by demographic shifts. One reason for the crime drop has been the shrinking trade in crack cocaine, here is one account and a more detailed treatment. For whatever reasons, crack has turned out to be a one-generation drug. As crack fell in popularity, crime rates have fallen in turn.

Richard Rosenfeld, writing in the February Scientific American, raises but does not answer the question why crack markets have bred so much violence compared, say, to marijuana markets. I have thought of several possible and related hypotheses:

1. Cocaine supply, which requires processing in Colombia labs, is more centralized in nature. Centralization leads to monopoly profits and thus a greater incentive for violence to protect territory. There will be mobs and mafias at the top of the supply chain. They will feel threatened if anyone invades their turf, and the tendencies for violence work their way down to the retail level.

2. Marijuana is closer to a constant cost supply drug. You can always grow some in your backyard. The power of mobs is limited correspondingly and the incentive to invest in marketing and addicting your customers is weaker.

3. Marijuana is more of a depressant than is crack. Users are less likely to turn violent when deprived of the drug. Marijuana is less addictive in the sense of inducing total desperation.

4. Crack, which was essentially a new drug, required greater marketing than did marijuana. Marketing led to fights over turf and to violence.

5. Marijuana is used by many members of the middle and upper middle classes. Crack has been more popular in ghettos and with lower income groups, in part because it is potent and cheap. The reasons for the violence differential are found in the nature of the respective clienteles, rather than in the nature of the drugs per se. For instance, when drug carriers walk through a ghetto to supply their customers, they are at greater risk, more likely to carry a gun, more likely to meet with a gang, and so on.

Further ideas from readers are welcome.

The bottom line: When it comes to crime, it matters a great deal which drugs people are taking. Furthermore, if we are able to legalize some but not all drugs, we should consider legalizing the most objectionable drugs, not the tamest ones. Legalizing marijuana, whatever its merits and demerits, would not make a huge dent in the crime rate.

Addendum: Ed Lopez adds the following:

1. Crack is split up a lot more than marijuana so it has (had) far higher markup once it hit the street.

2. The early profiteers were the street distributors who discovered how to multiply the number of doses from the uncut cocaine. That gave suppliers higher up the chain something to grab at.

I think a lot of the violence question boils down to risk-takers competing for rents that weren’t protected by contract.

3. Crack is more ephemeral than pot and used with greater frequency, so users are more prone to commit crimes to acquire additioanl doses.

What are the Democrat health care plans?

Dr. Rangel offers a summary:

1. Universal coverage with the Federal government as the single payer. Proponents; Braun, Kunicinch, and Sharpton. Cost; over a Trillion per year at least. Needless to say, none of these candidates are anywhere near the front runners in the polls. Do these people even remember Hillary Clinton and the early ’90s? Under such a system costs would be contained via price controls, restrictions, and rationing and for all this reduced care most Americans will be hit with either higher taxes and/or higher consumer prices (in order to raise most of the trillions needed to pay universal health care many of these plans would target businesses and investments with massive tax increases and these costs would in turn be passed on to the consumer).

2. Universal coverage via employers. Proponent; Gephardt, who would mandate that all employers pay for health insurance for their employees. Employers would be able to deduct 60% of the costs of the insurance premiums (the 60% would also be for the self employed and for government workers). Requiring all employers to provide for some type of health insurance for their employees is a great idea but in it’s current form as proposed by Gephardt it is potentially the most disastrous as far as containing health care costs is concerned.

What he is essentially proposing is that we massively expand the same system that has effectively insulated patients from the real costs of health care, prevented any type of competition or market forces from controlling costs and allowed health care expenses and usage to get out of control in the first place (see my post on this issue)! Without any market forces or direct governmental restrictions to control costs, usage of health care resources would expand ad nauseum and ultimately bankrupt the system. Cost; $215,000,000,000.00 a year assuming that health care costs remain level (likely to be several hundred Billion above these estimates).

3. Expansion of current programs or new government programs. Proponents; Clark, Dean, Edwards, Kerry, Lieberman. Costs; Anywhere from about $50 to $100 billion a year. With minor differences most of these proposals would expand coverage for children, provide for more coverage for people in between jobs, and increase tax relief for employers providing health insurance coverage (though not as much as Gephardt’s plan).

What is the bottom line?

None of these plans would institute any meaningful market reforms that may help to control health care costs. They claim their plans would make health care “more affordable for all Americans” but it all amounts to little more than political slight of hand. Health care wouldn’t be made cheaper nor more affordable. The costs would just be shifted and spread around. Higher costs for employers would be passed off to consumers and the rest would be paid by taxpayers in one form or another.

The danger of many of these plans is that the more money they pour into the system the more they will stimulate health care usage and this will lead yet again to large cost increases. I would be willing to bet that any one of these plans to expand health care coverage will be costing two or three times as much as projected in the next few years alone.

Government, when it simply transfers money (e.g. Medicare), can face lower marketing and administrative costs than does a private insurance company. Or government can save money by simply getting out of the way. These cases aside, the only way government can save real resources on health care is to restrict access, typically through some form of rationing. See also my earlier post on who are the uninsured.

Interview with Brad DeLong

Courtesy of Norman Geras. My favorite part:

What philosophical thesis do you think it most important to disseminate? > That science works.

My least favorite part:

What is your favourite song? > ‘Five Variations on a Theme of Dives and Lazarus’, by Ralph Vaughan Williams.

I’ll sympathize with Brad’s loyalty to Beethoven, but as for a favorite classical song I might opt for “Im Fruehling” or “Der Hirt auf dem Felsen,” both by Schubert. If we expand the domain I would consider the Beatles’s “Rain” or “You Won’t See Me,” or perhaps the Byrds’s “Eight Miles High.”

Google gets better

Enter an airline flight number — for example, “united 80,” — and the popular search engine will provide links to reports on that flight’s status at Travelocity.com and Fboweb.com, including maps showing its progress.

Type an area code into the search box, and you’ll be pointed to a MapQuest.com map of the general region that area code covers. A U.S. Postal Service package tracking number yields a link to a delivery-status page at the Postal Service’s Web site. A vehicle identification number will call up a page describing the car’s year, make and model type.

Or you can type in a universal product code number — minus the dashes, but including any tiny numbers appearing to the far left or right under the bar code — and Google will look up the product’s full name, then generate a list of Web sites selling the item or providing other information about it.

Check out Google’s own explanation, or this article from The Washington Post. The real question is where search engines are headed, and whether Internet gatekeepers will get more or less centralized. I have already predicted that Google essentially has peaked, though I will confess I used Google to find that very link.

Hubble to die

At first, I was merely uninspired by President Bush’s plan to resend men to the moon and then on to Mars (Here are better ideas from MR readers). Now I am upset and saddened. The Hubble telescope is one of the great achievements of the recent space program, especially after the amazing in-space eyeglass repair job. Data from the Hubble have helped us to understand the universe in all its awesomeness and yet the Hubble will now die an early death because of the budget shift.

Here is Hubble’s picture of the eye of Sauron:

Hubble1.jpg

Just kidding about the last one, it’s MyCn18, a young planetary nebula, the glowing relic of a dying, Sun-like star.

This is the Cartwheel Galaxy, located 500 million light-years from Earth in the constellation Sculptor.

Hubble2.jpg

Here are two galaxies, NGC 2207, is on the left and IC 2163 on the right that are slowly colliding.

hubble3.jpg

Here are more Hubble pictures.

Kristoff on sweatshops

In a hard-hitting NYTimes op-ed, Nicholas Kristoff writes:

I’d like to invite Richard Gephardt and the other Democratic candidates to come here to Cambodia and discuss trade policy with scavengers like Nhep Chanda, who spends her days rooting through filth in the city dump….Here in Cambodia factory jobs are in such demand that workers usually have to bribe a factory insider with a month’s salary just to get hired.

Along the Bassac River, construction workers told me they wanted factory jobs because the work would be so much safer than clambering up scaffolding without safety harnesses. Some also said sweatshop jobs would be preferable because they would mean a lot less sweat. (Westerners call them “sweatshops,” but they offer one of the few third world jobs that doesn’t involve constant sweat.)…

The Democratic Party has been pro-trade since Franklin Roosevelt, and President Bill Clinton in particular tugged the party to embrace the realities of trade. Now the party may be retreating toward protectionism under the guise of labor standards.

That would hurt American consumers. But it would be particularly devastating for laborers in the poorest parts of the world. For the fundamental problem in the poor countries of Africa and Asia is not that sweatshops exploit too many workers; it’s that they don’t exploit enough.

Be sure and look at Kristoff’s heartbreaking audio-slide show, the Realities of Labor available at the above link, halfway down the right hand side. Hat tip to Life, Liberty, and Property.

Is music file-swapping down?

Maybe not, according to Business Week, from the issue of 16 January. Some sources will tell you the practice is plummeting:

Two widely cited surveys seemed to show that legal action, which began in September, was chilling file-sharing activity. In December, a phone survey by the Pew Internet Project of 1,358 U.S. Net users found music downloading had dropped by half since May. And in November, comScore Media Metrix, monitoring 120,000 U.S. users, saw big yearly declines at four popular file-sharing services — KaZaA, Grokster, BearShare, and WinMX.

But the reality is more complex:

…those surveys provide a relatively narrow view of the file-swapping universe. BayTSP, a Silicon Valley watchdog that works for three of the major record labels, tracks the number of songs available for download worldwide. It sees just a 10% drop since July and also notes steady migration from older, virus-ridden programs like KaZaA to hipper peer-to-peer networks such as eDonkey and Bit Torrent — which were absent from comScore’s tally.

And Los Angeles-based researcher BigChampagne, which monitors millions of global file swappers, actually sees a 35% increase in illegal traffic from 2002 to 2003. Given BayTSP’s and BigChampagne’s broader sample sizes, says John Palfrey, of Harvard Law School’s Berkman Center for Internet & Society, “They’re going to have more accurate empirical data.”

Note that the Pew study simply calls adults and asks them if they break the law. It underrepresents children and of course the respondent might think he is talking to the RIAA instead of a researcher. And much of the current growth in file-sharing is coming at the international level, not in the United States.

My predictions: Within two years Congress will revisit the 1998 Digital Act and give the music companies some extra legal weapons. It still won’t work, as downloaders will move to anonymous networks, possibly emanating from outside the United States.

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.