Regulating Sausages

by  Alex Tabarrok in

In the comments on Sunstein on DOGE many people argued that regulations were mostly about safety. Well, maybe. It’s best to think about this in the context of a real example. Here is a tiny bit of the Federal Meat Inspection Act regulating sausage production:

In the preparation of sausage, one of the following methods may be used:

Method No. 1. The meat shall be ground or chopped into pieces not exceeding three fourths of an inch in diameter. A dry-curing mixture containing not less than 3 1⁄3 pounds of salt to each hundredweight of the unstuffed sausage shall be thoroughly mixed with the ground or chopped meat. After being stuffed, sausage having a diameter not exceeding 3 1⁄2 inches, measured at the time of stuffing, shall be held in a drying room not less than 20 days at a temperature not lower than 45 °F., except that in sausage of the variety known as pepperoni, if in casings not exceeding 1 3⁄8 inches in diameter measured at the time of stuffing, the period of drying may be reduced to 15 days. In no case, however, shall the sausage be released from the drying room in less than 25 days from the time the curing materials are added, except that sausage of the variety known as pepperoni, if in casings not exceeding the size specified, may be released at the expiration of 20 days from the time the curing materials are added. Sausage in casings exceeding 3 1⁄2 inches, but not exceeding 4 inches, in diameter at the time of stuffing, shall be held in a drying room not less than 35 days at a temperature not lower than 45 °F., and in no case shall the sausage be released from the drying room in less than 40 days from the time the curing materials are added to the meat.

The act goes on like this for many, many pages. All to regulate sausages. Sausage making, once an artisan’s craft, has become a compliance exercise that perhaps only corporations can realistically manage. One can certainly see that regulations of this extensiveness lock-in production methods. Woe be to the person who wants to produce a thinner, fatter or less salty sausage let alone who tries to pioneer a new method of sausage making even if it tastes better or is safer. Is such prescriptive regulation the only way to maintain the safety of our sausages? Could not tort law, insurance, and a few simple rules substitute at lower cost and without stifling innovation?

Prediction Markets Podcast

by  Alex Tabarrok in

I was delighted to appear on the a16z crypto podcast (Apple, Spotify) talking with Scott Duke Kominers (Harvard) and Sonal Chokshi about prediction markets. It’s an excellent discussion. We talk about prediction markets, polling, and the recent election but also about prediction markets for replicating scientific research, futarchy, dump the CEO markets, AIs and prediction markets, the relationship of blockchains to prediction markets and going beyond prediction markets to other information aggregation mechanisms.

Favorite fiction of 2024

by  Tyler Cowen

Itamar Vieira Junior, Crooked Plow.

Karen Jennings, Crooked Seeds.

Richard Flanagan, Question Seven.

Guadalupe Nettel, La hija única, or Still Born

Sally Rooney, Intermezzo.  Here is a good Henry Oliver review.

Of those I would pick Crooked Plow as the best.  The new novels by Alan Hollinghurst and Murakami stand some chance of making the list.  I will start them soon, and report back if I like them.

Alcohol estimates

by  Tyler Cowen in

The number of deaths caused by alcohol-related diseases more than doubled among Americans between 1999 and 2020, according to new research. Alcohol was involved in nearly 50,000 deaths among adults ages 25 to 85 in 2020, up from just under 20,000 in 1999.

The increases were in all age groups. The biggest spike was observed among adults ages 25 to 34, whose fatality rate increased nearly fourfold between 1999 and 2020.

Women are still far less likely than men to die of an illness caused by alcohol, but they also experienced a steep surge, with rates rising 2.5-fold over 20 years.

The new study, published in The American Journal of Medicine, drew on data from the Centers for Disease Control and Prevention.

Here is more from Roni Caryn Rabin at the NYT.

Against federal usury laws for credit cards

by  Tyler Cowen in

That is the topic of my latest Bloomberg column, here is one excerpt:

Given that background, simple economics would indicate that an interest rate cap of 10% would mean that only people with strong credit ratings would be able to borrow money on their cards. Those with lower net wealth, or poorer payment histories, would be blocked from using credit cards for credit, because they would no longer be profitable to serve. They would also find it harder to get the other services of credit cards, such as rewards or payment conveniences. Keep in mind that the average borrowing rate on credit cards today is more than 20%.

Then there are the secondary consequences. If someone cannot borrow against his or her credit card, maybe payday loans will be the next option. Are they so much better? The logic of the Sanders-Trump proposal, pursued consistently, would choke off borrowing for people with high credit risk. Should the government close all the pawn shops as well? In the limiting case, there are loan sharks and other more desperate measures. Why give those businesses greater opportunities to expand?

It is a legitimate question, of course, whether so much consumer borrowing is productive and beneficial. Many people borrow money to engage in sports gambling, for example, a negative-sum and sometimes addictive pursuit. Yet productive uses of borrowing are legion. What if you are a recent immigrant who just got your first job, and want to buy your kids some sports equipment so they can play after school? Should the federal government be making this more difficult for you?

The right to borrow money is inextricably linked with other liberties. Sanders, for instance, is pro-choice when it comes to abortion. So why would he support restricting a woman’s right to borrow money to finance that abortion, or to borrow money to travel across state lines? The question is all the more pressing in a post Roe v. Wade world, where the costs of obtaining an abortion have been rising.

Ultimately, freedom of choice is intertwined with the freedom not only to spend money, but also to borrow it. And since money is a general medium of exchange, there is no way to stop only the “bad uses” of borrowed money. Thus there arises a fundamental question: Who is more qualified to make the final decisions about how best to use their financial resources, US citizens or their government?

Recommended.

*Gray Matters*

by  Tyler Cowen in

The author is Theodore M. Schwartz and the subtitle of this excellent book is A Biography of Brain Surgery.  Excerpt:

Whil there is no proven ideal age for a brain surgeon, let’s just say that during the first five years after residency, we are still getting our sea legs.  Over time, as with any learned skill, a subtle transition occurs.  Suddenly, surgeries seem to take less effort.  Movements become second nature as wel enter what psychologist Mihaly Csikszentmihalyi called a “flow state,” where pursuit of a single goal creates a transcendental state of purposeful concentration the task.

…One well-known neurosurgeon was once asked how he became so good at his craft.  His answer? “there’s a graveyard full of my mistakes behind the hospital.”

Definitely recommended, the book also offers considerable detailed information about how brain surgery is done, which maladies lie behind brain surgery, and much more.

Why more South Asian than East Asian CEOs?

by  Tyler Cowen in

Analyses revealed that East Asians faced less prejudice than South Asians and were equally motivated by work and leadership as South Asians. However, East Asians were lower in assertiveness, which consistently mediated the leadership attainment gap between East Asians and South Asians. These results suggest that East Asians hit the bamboo ceiling because their low assertiveness is incongruent with American norms concerning how leaders should communicate.

That is from a new piece by Jackson G. Lu, Richard E. Nibett, and Michael W. Morris, via the excellent Kevin Lewis.

Milei and populism

by  Tyler Cowen in

Bryan Caplan and Daniel Klein both opine on Milei and populism, Dan being very enthusiastic, while Bryan praising Milei but more reserved in his praise of populism.  I too am a big fan of Milei, and I think he is still on a good track.  If his reforms do not succeed, likely it will not be his fault, but rather the result of soft commodity prices, pending credit lawsuits (predating him), and an impatient public.  But so far things are holding up.

What neither Klein nor Caplan mentions — and it is very very important for this issue — is that Milei has hewed pretty closely to the IMF playbook for his most important reforms.  He named a very serious and mainstream finance team to oversee his changes.  And his plan is dependent on an IMF bailout.  The more “populist” elements of the original promises, such as rapid dollarization, have been put on hold indefinitely.  In other words, the actual policies, for the most part, are not populist at all.

It is fine to call Milei a populist in some very critical rhetorical regards.  But the project is working because he has turned his back on a lot of populism and is mainly following the recommendations of expertise, as well as relying on the IMF.

Parents should believe in upward mobility

by  Tyler Cowen in

There is a new paper on this topic, with multiple authors by led by Rebecca Ryan.  Here is the abstract:

Research in economics and psychology shows that individuals are sensitive to cues about economic conditions in ways that affect attitudes, beliefs, and behavior. We provide causal evidence that parents’ beliefs about economic mobility prospects shape parental investments of time and money in children. To do so we conduct an on-line information experiment with ~ 1,000 socioeconomically diverse parents of children ages 5-15. The information treatment aimed to manipulate parents’ beliefs in the possibility for future upward (downward) economic mobility in US society. The experimental results yield three conclusions. First, parents are highly sensitive to signals about future economic mobility prospects. Second, parents who are induced to believe in the likely possibility of future upward mobility increase their beliefs about the return on their own investments of time and money. Using a novel measure of time investment we developed, these parents also increase their time investments in the service of boosting children’s skill. Finally, they report being more willing to pay for resources that would boost their child’s skill development. Third, these patterns are true for economically advantaged and disadvantaged families alike. We discuss the implication of these results in terms of reports showing that Americans are losing faith in “The American Dream.”

No, researchers should not lie, but perhaps this gives some additional perspective on who exactly is harming the world.  There can be a cost to publishing neurotic, untrue ideas.

Via the excellent Kevin Lewis.

Sunstein on DOGE

by  Alex Tabarrok in

Good advice from Cass Sunstein, who did improve government efficiency as head of OIRA:

There is a major focus these days on the topic of government efficiency, spurred by the creation of what is being called a “Department of Government Efficiency.” I have had the good fortune of being involved in simplification of government, and reduction of paperwork and regulatory burdens, in various capacities, and here are six quick and general notations.

  1. The Administrative Procedure Act is central to the relevant project. It needs to be mastered. It offers opportunities and obstacles. No one (not even the president) can clap and eliminate regulations. It’s important to know the differences among IFRs, TFRs, NPRMs, FRs, and RFIs. (The best of the bunch, for making rules or eliminating rules: FRs. They are final rules.)
  2. The Paperwork Reduction Act needs to be mastered. There is far too much out there in the way of administrative barriers and burdens. The PRA is the route for eliminating them. There’s a process there.
  3. The Office of Information and Regulatory Affairs is, for many purposes, the key actor here. (I headed the office from 2009-2012.) A reduce-the-regulations effort probably has to go through that Office. Its civil servants have a ton of expertise. They could generate a bunch of ideas in a short time.
  4. It is important to distinguish between the flow of new burdens and regulations and the stock of old ones. They need different processes. The flow is a bit easier to handle than the stock.
  5. The law, as enacted by Congress, leaves the executive branch with a lot of flexibility, but also imposes a lot of constraints. Some of the stock is mandatory. Some of the flow of mandatory. It is essential to get clarity on the details there.
  6. The courts! It’s not right to say that recent Supreme Court decisions give the executive branch a blank check here. In some ways, they impose new obstacles. Any new administration needs a full understanding of Loper Bright, the major questions doctrine, Seila Law, and much more (jargon, I know, I know).